Yesterday I asked how much longer Lloyd Braun would remove at Yahoo! When I did, I pointed out that Yahoo! could be doing a lot more in terms of video, be it in the areas of creation or aggregation. When I did, one of my contacts at Yahoo! who is busy “dialing it in” and reading this site emailed me and asked: “what would you do?”
I threw out a couple of ideas but told him that since we work in online video ourselves, I’d be remiss to tell him every idea I have, but I would tell him when I saw something.
He didn’t have to wait long.
Today I read that Microsoft had hired former Apprentice star Carolyn Kepcher on a contest looking for America’s best small business. I posted the news on FlickMojo.com, our blog covering film, TV etc.
Here’s the catch though: it’s not a TV show, it’s just a contest. Apparently, MSFT is trying the contest in with its new accounting software.
Contest? I could be wrong, but I think of TV show, and not accounting software.
I emailed a contact at MSFT and asked it this was a contest only or a show tie-in? As you can imagine, it’s just a contest.
Call me crazy, call me boring, but at a time when some of the best reality TV shows are popping up on TLC (in other words actually mean something), why isn’t MSFT making a show out of this?
After all, Kepcher is an attractive (well, not to me, I like brunettes, but sitting between The Donald and Steve Ballmer, she is fine), articulate woman who knows business. She is also a bona fide TV star who would be able to do something more than simply look there and look cute (yes, we’re talking about exactly everybody you think we are talking about - we’re not, but if that description connotes someone in your mind, then we’re doing our job and my Eight grade English teacher would be proud).
Point is: at a time when MSFT, YHOO! and all other companies are tripping over one another and their diluted, me-too user generated platforms, here is an actually good idea that MSFT is not maximizing.
Just last week I wrote “Is MSFT getting its Mojo back?“ But with all due respect to accounting software, if a contest looking for America’s best small business idea only conjures up images of a contest and not a TV show (for TV or the Web), then maybe I did the right thing in unloading my shares last month.
Think of the advertisers that would jump on this:
- American Express Small Business
- Staples
- etc…
Mainly, think of the number of surfers who would tune in week in, week out to check out the contestants, etc.
MSFT, if you need help taking this from concept to reality, just ask for help!
Disclosure: I own YHOO shares.
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WatchMojo NewsletterBarry Diller is one smart man. Nothing new there, not the first to say that.
The gentleman who started his career in William Morris’ mailroom climbed all the way to now being recognized as one of the main online players around.
The company he now leads, InterActive Corp., has had as many lives as your luckiest cat: Home Shopping Network used to be the main thing, I recall… and then it was Expedia. Of course, who can forget the acquisitions of Lending Tree and the spin-off of Expedia, and then there was…
Wait, are you getting dizzy yet?
You should. Hanging around Tenacious D - as for some reason we have started to affectionately call Mr. Diller - is a dizzying experience. Rumor had it a few weeks ago (not months folks, weeks!) that he was trying to win over Facebook’s CEO Mark Zuckerberg and failed to make up for missing out on MySpace:
“We looked at [MySpace] and decided we didn’t want to go there, either dumbly, or not. Time will tell.” Diller said.
Well, even though we recently pegged MySpace as the best online acquisition ever (mainly over the $900M ad deal it allowed News Corp. to sign with Google, though), we’re not sure anyone should be blamed for missing out on MySpace, after all, sexual predators have a limited shelf life. Of course, Viacom boss Sumner Redstone did blame his lieutenant Tom Freston for missing the MySpace train, but that was unfair.
Anyway, to suggest that Barry Diller likes to do deals and acquire companies is like saying Rosie O’Donnell likes cake. The point is: it’s an understatement.
But Tenacious D knows that his stock his hot, especially after his latest acquisition: Ask Jeeves (disclaimer: we used to own IAC after owning ASKJ ages ago and IAC bought ASKJ but got rid of it recently as it hit $30). Diller bought the #5 search engine, dropped the butler mascot and now has the #4 player in the red hot field of search. Must have been all the excess weight (cake anyone?)
But, Diller is smart and knows that a #4 search player is not going to cut it to keep his stock up. He sees old nemesis Rupert Murdoch’s stock being up some 25% this year after its acquisitions of IGN, MySpace and Scout and wants in on the action… [Diller left Murdoch’s company after the Australian-born media baron refused to cut Diller some equity in News Corp.]
But with some Web entrepreneurs feeling good about themselves again, low startup costs and a booming online advertising market, Diller knows he needs more than a good eye to find diamonds in the rough; he needs to knock down the prices of some of the gems and trip them in the dirt.
It’s not solely that the supply side does not necessarily want to cash out, it’s that the supply side is loading up on M&A experts to scoop up digital assets (CBS lures Quincy Smith, Viacom lures Philippe Dauman, Google and YHOO are always takers, etc) and Diller knows that the increase in attendance at the auction house will drive prices up.
So, what does Tenacious D. do?
He comes out and says that:
“We don’t see anything big to buy,” Diller told the Reuters Media Summit in New York. “We think that prices right now for most things Internet … are very overpriced at various stages from early capitalisation to venture capital stage.”
That’s clever. Earlier in the day, instead of coming out and saying that IAC is looking to make a move in social media or online news, he first comes out and says that he wants to start something new in news (which he might and should) and then in the afternoon comes out and says that prices are expensive.
Genius!
Considering that Chief Acquisitions Officer Ross Levinsohn stepped aside at News Corp. (suggesting the shopping spree at News Corp. is over), finally the media barons are realizing that showing too much of their excitement over digital assets is a bad idea: it only adds to the frothiness.
There is no doubt that Misters Dauman and Smith are experienced M&A veterans, but it will indeed be interesting to see how the man who rose the ranks in Hollywood all the way down from the mailroom of one of the most venerable talent agencies will fare against the polished lawyers.
Gotta love business.
Disclosure: All right, how can this be worded to balance ethical disclosure and not burning any bridges: Of the companies mentioned above, one is involved in litigation against our parent company and one has shown some degree of interest in our parent company, Mojo Supreme in the context of this article. Even if these were not so, we would still view Mr. Diller (or any senior manager’s claim that Internet prices are expensive - when they are adding to the rise in asset prices) with the cynical view we outline above. Lastly, I own shares in YHOO and owned shares of IAC up to last month.
News is huge. More people access news than porn. All right, probably not. But more people turn to the to access news than to be entertained (even though Johnny Carson was right in saying that people want to be entertained and not educated) or to get weather information etc.
You would think that if this was so (it is), then newspaper companies, whose greatest asset is their newsroom, would be cleaning up online.
Imagine a bizzaro world where newspapers had enough leverage to dictate terms to Google in terms of how much of its content Google could index because Google recognized that newspaper companies held the all important “first mile” from the front lines in the newsroom.
But no, newspapers have sat largely idle as others have eaten their online lunch.
Today Barry Diller said that IAC was not looking to buy a newspaper company but instead launch a new service. He is right that there there is a major “opportunity in news online,” but that is exasperated by the frightened strategy newspapers have adopted vis a vis the web.
To see our previous commentary on newspapers click here.
To read Mr. Diller click here.
Interesting to read this about Qualcomm, especially in light of us including QCOM - and omitting RIMM over legal and competitive issues - in the Top 10 Web/IT Stocks of the Past, Present and Future.
File this one under: Things that make you go hmm…
This past Sunday I wrote about my third book (which I am working on in my spare time, ie. not working on Mojo Supreme), Context is King. The book is essentially a combination of the macro-level trends around us now as well as the rationale behind the business model at our company here: context is king, vertical is the way to go.
I stressed that I was in no rush to publish it because it wasn’t like I was the first one pointing out the rise of importance of context, since contextual advertising has been driving revenue at Google, Yahoo!, etc. for some time. I mentioned that many have already been positioning itself for the boom in vertical markets. Looksmart totally repositioned itself along verticals. More and more companies are acquiring niche sites, CNET is one prime example, with its acquisitions of Chow.com.
Later on Sunday evening, I asked the major question of whether content is king in today’s era? Fittingly, another blogger commented moments later that it’s all about aggregation. This is why I love the Web in general and blogs in particular. You don’t write things in a vacuum, and you don’t need to wait too long to see if what you are saying strikes a chord or utterly sucks. Oh, you’ll know.
This morning I read on Paid Content about Bear Stearns report on how content aggregation along contextual, vertical lines is the best thing since sliced bread.
Later on today, MTV comes out and says that they will be launching a number of broadband channels along niche verticals.
Like I said: things that make you go hmm…
So with that in mind, here is something I am predicting (probably not alone in this world of 60M blogs):
We are going to see a lot more of this context is king, vertical-themed talk, sort of like everyone, their sister and neighbor refers and plugs to the “long tail” phenomena to explain anything and everything.
Mark my words. Fittingly, I’ve added a “context is king” tag to track developments and keep updates on how the book is coming along.
Disclosure: Of the companies mentioned, I own LOOK and YHOO
It’s hard to keep the hits coming. We’re talking about stocks and investor relations, of course, but that applies to many things.
After we penned our Top 10 Best Web Acquisitions, we knew we had to think of something better for our next Top 10 list. We thought long and hard and realized that there were few lists highlighting some of the best stocks in high technology, Internet or in wireless.
This list is for entertainment purposes and should not be construed as actual investment advice. That being said, we did not simply want to list a chart of historical performance of some marquee stocks. And, since previous performance does not guarantee future performance, this article is actually broken up into two:
1- a historical breakdown - or quantitative analysis - of 20 stocks that have simply outperformed the market and made investors a lot of money (please note that these are NOT the 20 stocks with the highest returns, but rather, 20 bellwhethers of sorts).
2- a subjective - or qualitative analysis - trying to balance the past, present and future. After all, finance is all about guessing the next move.
Again, this is not to be taken as investment advice and is for entertainment purposes only. All disclosures coming at the end.
Criteria:
- Historical performance matters quite a bit, but is not the main variable.
- If a stock is currently at an all time high, that is a major plus, especially if there are more aces up their sleeves, so to speak.
- We’ve tried to blend high technology stocks in software, along with consumer web companies, as well as those competing in wireless.
- We looked at 20 stocks and listed them all based on historical performance, but…
- Since historical performance does not guarantee future performance, and we did not want to simply look at the past, we have handpicked the Top 10 Stocks of the group, combining previous performance, where they are today and what the future holds.
- Somehow, we had to account for P/E, market capitalization in the second part. Otherwise, we’re plain speculators.
- The company’s stock must be traded today (all acquired firms are out).
- Finally, since goodwill does account for a company’s value, and brand equity is a major component of goodwill, we certainly considered that.
An example of all of this: Dell is arguably one of the best stocks from a historical perspective, but the company is in trouble these days and there are many competitors that question its future. While a finance student would marvel at the stock (the past), an investor would question its future firepower.
For Part 1, we ranked the 20 bellwethers returns today going back to the date of IPO (we also calculated a per annum return since some of these firms have been public for longer than others). Note also that for IBM and HP we did not go all the way back to the IPO dates but only 1962. Since we did not include these in the second part and do not pretend these lists to be exhaustive lists, we hope you forgive us.
And now, Part 2. Adding the current prospects and future outlook of the companies, we have handpicked the Ten Eleven Best Stocks:
#11 - Intel
We decided once again to offer you an eleventh selection, because it would have been practically heretic to leave off Intel and not give it an honorable mention. Judging by Intel’s past, the stock should place much higher: a 1986 IPO share began trading at less than $0.50 and at its peak in 2000 was worth over $75. But today, the stock is worth a third of that and while Intel is indeed inside many things, it faces severe competition and has some tough questions to ask over its future. Andy Grove’s legendary “Only the Paranoid Survive” is as memorable as the “Intel Inside” branding the company pulled off. For all of that, INTC weighs in at #10 but almost blasphemously misses the cut.
#10 - Apple
Trust me, Apple does not make the cut for sentimental reasons. It makes it because the company’s brand is ferociously strong, its user base are fanatically loyal, the stock trades at its all time high, and while its computer business is humming along, its music division is showing why it is king of the mountain. Oh, did we mention the iPhone?
Let’s face it: in some circles, Apple has more haters than OJ Simpson. But Apple has also got more lives than your average cat. The company is also far more than one based on a cult of personality, but having Steve Jobs steer the ship and keeping the hits coming has not hurt.
Right now, based on the future and present, Apple could place mich higher, but we are trying to balance past with present and future, so while Apple makes the cut, it comes in at #9.
#9 - Dell
If this were a strictly empirical, statistical, objective and/or quantitative list, Dell should be in the Top 3. But we’ll leave those lists for the junior analyst with the freshly minted MBAs. As far as we are concerned, yes, Dell’s IPO share - which traded for a split-adjusted price of $0.10 - would have appreciated nearly 5,000% to this day, but that is far, far off from its peak return of nearly 60,000%. ‘Nuff said. Michael Dell needs to do some serious soul-searching and kick Dell back into shape.
#8 - Oracle
Plain and simple, Oracle’s past helps it make the cut. The stock IPO’d back in 1988 and soared 25,000% to reach its peak. Of course, as the bubble burst, the stock fell and today the stock is up a mere 11,000%. Yes, we’re being cynical with the use of the term “mere.” Oracle’s done enough in the past 18 years to justify being on the Top 10.
#7 - Qualcomm
Back in the cooky days of 1999, Qualcomm was given a $1,000 price target. Of course, it never hit it, but who cares, the stock went on to be one of the market leaders of the Y2K era. Wireless was full of promise and few companies had as much to gain from the boom in mobile than Qualcomm. Today, Qualcomm’s CDMA Technology (QCT) is the largest provider of 3G chipset and software in the world in its sector. It owns a wide array of rich patents that trickle directly to the bottom line. Qualcomm makes the cut for its past, present and future.
#6 - Electronic Arts
No, we’re not gamers, but who cares, a helluva lot of people are. Video games are one of the fastest growing segments around. The video game industry is larger than the film industry. And the growth is coming from many subsets of the industry, not just in terms of sales of consoles, video games but also from in-game advertising: which is expected to triple this year over last year, to $164.7M. By 2010, advertisers will spend $733M on in-game advertising, and Electronic Arts - who owns rights to some of the strongest brands like Madden Football - will stand to benefit in more ways than one.
In fact, ERTS would place much higher on this list but it’s a darn expensive stock as the leader in a high growth field. Of course, it is not merely for its potential and future, it’s also because a share of ERTS (which went public in 1990) at a stock adjusted price of just over $0.50 has soared 6,000%. At $17B in market cap, the stock has room to move up.
#5 - Google
While many on the blogosphere are singing the praises of Google as they cash Google’s Ad Sense checks, the fact remains that 2 years a stock history does not make. Otherwise, it would be a fait accompli that Google is on pace to be worth more than MSFT and on its way to becoming the world’s first trillion dollar market cap company.
Has Google been a smashing success? It’s been practically the only IPO mega-success of the 21st century…
While Google’s stock has soared from $100 to over $500 - and that is simply breathtaking - the fact remains that many of the dot coms rose many times over as well, only to settle back down. Google has benefitted from many variables, one of which was a relatively small float of shares outstanding, but all of the naysayers can remain on the sideline as search advertising continues to grow, with estimates pegging the sector to garner 40% of all online advertising revenues by 2010. With a market share of 50%, Google is sitting pretty and should things continue, could find itself rising on this list as it has risen in the stock charts. However, while the stock is not obscenely expensive, at a market cap of $150B, it is not exactly cheap. Furthermore, unlike many other stocks, it had grown quite a bit before its IPO: for purposes of illustration, Cisco had revenues of $69M when it went IPO. Google? Try over $3B. Yep, that affects its placement on such a list.
In other words, while Google has been arguably one of the best investmets ever, it has not necessarily been the best stock of all time.
#4 - Yahoo!
A tale of the tape shows that Google is clearly beating Yahoo! but in many ways, that’s like comparing apples and oranges. Yahoo! stock - which went public in 1996 for a stock adjusted price of $2 - soared 4,000% at its peak - and is up 1,300% to this day. Those are not too shabby numbers considering that many of YHOO’s original Web 1.0 peer group are missing in action these days.
And, the only reason why YHOO nudges Google at #4 is simple: an investor wants a margin of safety and YHOO at less than $40B is probably a better bet than Google at $150B. Of course, that in itself is speculation.
When you look at the overall growth of online advertising and how marketers will continue to narrow the 25/5 divide - that is consumers spending 25% of their time online while marketers spend only 5% of their budgets online - and Yahoo!’s grip on global advertising agencies and Fortune 500 clients, Yahoo! comes in at #4.
#3 - eBay
eBay’s stock chart is arguably the most impressive one for the reason that unlike other Web companies of the 1994-2000 era, its genius business model was clear and investors ate it up. Unlike many companies that experienced a stock market meltdown in 2000-03, eBay’s income statement thrived, and it leveraged its balance sheet to acquire Paypal for $1.5B in one of the best Web acquisitions of all time which today contributes a growing share of its top and bottom line.
eBay is trading within a reasonable range of its all time high and considering the growth of eCommerce, its recent deal with Yahoo! and [admittedly expensive] acquisition of Skype, the company’s upside is considerable.
#2 - Microsoft
Love ‘em, hate ‘em, you have to respect Bill Gates and Microsoft. It made it founder the richest man on earth and its co-founder one of the luckiest. Microsoft has the ability to move oceans and its stock - despite its 21st century funk - has remained robust forever. The company might not be worth anywhere near its peak of $500B, but it still weighs in at a more than respectable $290B. That’s not too shabby. When the company decided to pay out a massive dividend a couple of years ago, the Department of Commerce had to insert a footnote in its monthly report.
At its peak, the stock had risen nearly 75,000%, today, it is up over 30,000%.
Microsoft would be number one on the list but…
#1 - Cisco Systems
Cisco Systems was - for one shiny day - worth more than Microsoft. Some were not caught off guard since “the network was the computer” and Cisco (and not Sun Microsystems) was the king of the Web, which connected everything.
Of course the Web imploded, VC money dried up, and everything changed. But it is precisely because Cisco managed to come back from a low in the teens to nearly $30 in the past few years (and creep back up to $150B market cap and a P/E of just under 40) that Cisco makes the list at #1.
The web is growing more than ever, and if you like companies like Akamai and Limelight, then you should love Cisco. As more and more data gets transferred online, Cisco is uniquely positioned to benefit from it all.
Oh, in case you’re counting, Cisco - whose IPO stock traded at a split adjusted price of $0.08 - grew nearly 100,000% at its peak and today has seen appreciation of over 32,000%. Its per annum growth has been nearly 10,000%.
Additional Honorable Mentions:
We were biased against Motorola, Hewlett Packard and IBM because these firms have been around for a while and while their future remains bright, they are blue chips and will not offer investors the kind of return that those reading such a list look for.
Adobe is a great company whose stock is up some 19,000% since its IPO. Adobe was always making the cut, especially between a market cap of $23B (with room to grow) and a P/E of 50 (admittedly rich)… but as the list took shape, two major risks made it miss the cut: a plethora of free online services that make Adobe less than necessary for most consumers and professionals and mainly, piracy. That being said, Adobe is the one dark horse than could make - and lead - such a list in a short few years (look at how YouTube leveraged Adobe’s Macromedia’s Flash video for a sign).
EMC too is a company with a tremendous past, but it has undergone some soul searching and putting it on the Top 10 would push off a more deserving stock.
For the record, some of these companies are more than honorable mentions. How could Research in Motion (see chart) not make the second round? The company is at an all time high, it put the potential mortal injunction behind it, but the simple truth is that the company has been massively volatile and faces tremendous competition. Will RIMM be worth 25% less than it is today in a few years? Probably not.
Sandisk is a company that would have made the list had 2006 looked a bit more like 2005. Here is a stock that flirted its pre-bust peak but then crashed but down, falling from the mid 80s all the way back down to the high 30s. For what it’s worth, that cost Sandisk the cut.
Amazon.com is a company that defined the Web 1994-2000 but has fallen on some hard times. The company is a glamorous retailer and Wall Street prices it at that. Had it made the cut, it would have simply been for sentimental reasons and would have, in our humble opinion, taken away from the list.
And, in the same vein, many other dot coms had dazzling stock charts up to the burst (Infospace, Inktomi, etc.) but we had to look the entirety of their lifetimes to really assess their impact. And in the case of Inktomi, companies that have been acquired - hence why AOL is off the list - did not make either list. Trust me, we thought of a way to sneak AOL in there, but it would have been like comparing apples with oranges.
Disclore: of the companies mentioned, in the past, we’ve been long Adobe, Sandisk, InterActive Corp., Motorola, Microsoft, Electronic Arts and EMC… we’ve also been short Sandisk at one point, though not at present time, to read that aventure, click here).
Currently, the only company we own is Yahoo!
