I was browsing the latest issue of The Economist… and apparently, year to date, [of the markets they list], only one stock market index is in the black: Venezuela, at +3.1%.
All other stock markets [that they listed] are down year to date:
- China: -45%
- US: -13%
- Japan: -11%
- Britain: -15%
- Canada: -2%
- France: -21%
- Germany: -19%
- Russia: -13%
- India: -26%
- Australia: -20%
- Hong Kong: -18%
- Brazil: -9%
- Argentina: -8%
- Saudi Arabia: -18%
Regions:
- Europe: -21%
- World Developed (MSCI): -13%
- Emerging Markets: -15%
- World All (MSCI): -13%
Wow. Well… actually, I got out of the stock market in March, selling Yahoo! and Sina… at the time my last two holdings. Both are down 25% since I got out. Probably just a coincidence, I’m sure.
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WatchMojo NewsletterAt one point or another in the past few years, I’d owned shares of:
- aQuantive (acquired by MSFT for $6B)
- 247/RealMedia (acquired by WPP for $649M)
- Doubleclick (taken private for $1.1B - then acquired by Google for $3.1B)
- Fast Click (acquired by Valueclick)
Had Blue Lithium ever gone public, I would have bought up shares, too. As a former advertising and current new media executive, I knew all of those companies’ products and managers and knew which ones were valuable and which ones were not.
One company I’d never owned remained Valueclick. I frequently thought of getting in the shares - because sometimes market peers move up and down together - but for whatever reason, I’d stay on the sidelines. That’s the advice that UBS’s analyst is doling out today:
“Without confidence in our ability to call a bottom to how low revenue growth can fall, we remain on the sidelines and reiterate our neutral rating,” analyst Benjamin Schachter wrote in a note to clients, cutting his price target on ValueClick’s stock to $13 from $20.
I recall thinking of buying when this stock was in the low teens, or $1B, and then seeing it go all the way up to the low $30s, or $3B in market cap. By then, the music began to slow down, all of Valueclick’s competitors had found a dancing partner.
Then the music stopped: online networks became so passe, media companies began to launch networks themselves… and before you knew it, Valueclick’s opening had vanishes.
I have no clue if Valueclick will slide further down the spiral or find some room to appreciate. All I know is that Valueclick was overvalued and overhyped at $3B. But what at $1B? I just don’t know. But much the same way that some of the better deals are done in a cool market climate… and let’s face it: we’re in a cool climate now. Oh, and by cool, I mean sucky.
It’s a good thing that MSFT is based out of Seattle… because otherwise I would have considered selling my company to MSFT to run their Online Business unit (which includes MSN.com, their search engine, etc).
I’m sort of kidding… I think you have to be mad to want to run a publicly traded company these days, or, be at the helm of AOL, MSN, Yahoo! or even Google. The action is at startups even though the big companies can move the needle easier than anyone else. Look at what is happening to any one of those companies and ask yourself if a gig there is worth the aggravation.
Anyway, by startups, I’m not referring to the pointless Web 2.0 that proliferated the scene in 2006-2007 and dying out in 2008. I’m referring to those that with a bit of capital and a lot of creativity and drive can become something interesting.
Mind you, some “lame” startups go on to become tangible and successful businesses. This is what makes Josh Katone’s argument that MSFT should invest Y Combinator style so interesting. Katone bases his argument, in fact, on something former MSFT employee and CEO/founder of Blist Kevin Merritt suggested.
Not surprisingly given their backgrounds, both gentlemen focus on the software and in particular, cloud computing aspect of it… with an American Idol-esque panel consisting of Ray Ozzie, Don Dodge and Dare Obasanjo. Disclosure: Don Dodge is an advisor - albeit informally - to myself and our company.
However, I would strongly urge MSFT to do the same with new media and online business, which is where they lag and will continue to lag if they don’t take action. The problem for MSFT: relative to one another, [paid] software is an industry in descent, [online] advertising is an industry in ascent.
Let me say this: will software move increasingly to the Web? Of course. But does Google Apps or any other solution (including things like Blist, that sound great in theory but in practice lack punch) pose a threat any time soon?
Nope.
Moreover, online advertising represents a far greater opportunity that software does right now. Yet ad-supported SaaS is a joke, as a former ad executive, I just don’t see that happening… so if MSFT wants to be like GE and use its capital and brainpower to chase after the highest returns, then it needs to get into online advertising one way or another.
I agree with Steve Ballmer that Yahoo! was a tactic and not a strategy, and long term, Yahoo! remains an acquisition target - under a different strategy, and albeit at a lower likelihood due to buyer’s remorse and apprehension. But the fact remains: MSFT is losing money online. MSFT will also hire the first candidate for the Online Business who will tell Steve Ballmer what he wants to hear: that MSFT will be #1 in search in 5 or 10 years. That won’t happen, but it does not mean that MSFT cannot win in online advertising in general. There is a nuance there, and I don’t think MSFT’s vision is clear enough to realize the opportunity.
This is the key philosophical question: should MSFT remain a software company, or like GE, should it morph into something else as the business opportunities dictate. I covered this, too, in MSFT’s GE envy, but more in depth in this piece where I counter Henry Blodget’s belief that MSFT should remain focused on software.
Even if MSFT were to outright buy every promising new media startup, I am not sure it would work out, because MSFT remains a larger bureaucracy than Yahoo! and Google due to its software-centric business model. I would know, because in the past (before launching WatchMojo.com) I tried in vain to engage MSFT, but to no avail.
Some context:
- I contacted MSFT back in the day for Wallop, their social networking platform. That was a disaster. They ultimately spun it off to some guy, to do some thing. That’s the last we heard of it. I am pretty sure I blogged about it when it happened: here, and the result of their decision, here.
- My frustrating efforts to work with their search API, here.
Eventually, I stopped to focus on our technology products and instead put our efforts in media, mainly due to the demand vs. supply dynamics.
By focusing on our video efforts, WatchMojo.com subsequently became a leader in new media and video content in particular, whereas it would have been nearly impossible to make a dent in search (the Top 5 own 99% market share).
Forget software, I’m not a software guy. But I am a media guy, and I see MSFT as having the opportunity to make considerable investments in new media and online businesses in general. The company is not very good at working with startups in any sphere - be it software/technology or new media - but at least in the former, it has the competency; in the latter, it does not.
If MSFT is intent on positioning itself to win - or at least compete in the $500B advertising business, of which about $50B is online-based now - then maybe they should consider taking the incubator approach to new media instead of belly-flopping in it with all of their weight. All that did, frankly, was waste 8 months as it courted, chased and then cast off Yahoo! into Google’s arms… exasperating their problems.
I could get into the in and out’s some more… but that would suggest I was really interested in the MSFT Online Business job opening.
Sure, at $19.80 a share, Yahoo!’s shares now find themselves below even where they were on the eve of MSFT’s unsolicited $44.6B offer. But make no mistake about it: Jerry Yang has won.
Don’t get me wrong, the first thing you learn in finance is that the objective of the financial manager is to maximize shareholder value. But that misses one major point: up until this year, Jerry Yang was never the CEO (or CFO) of the company. He was Chief Yahoo and a legendary figure in web history. From the get-go, he and co-founder David Filo hired experienced managers to run the company and worry about the share price.
As a former shareholder who bought thousands of shares in the $20-25 range and ultimately sold my entire position in the $28-30 range, I won’t lie, I was displeased with Yang (and the entire Yahoo! board, that essentially “won” too by being voted back on).
But as a fellow entrepreneur, I give Yang a lot of credit and yes, respect, for proven to be resilient, persistent, tenacious and ultimately, hard headed enough not to listen to everyone (including me) who said “it’s over, YHOO is MSFT’s”.
Yang supporters - and MSFT denigrators” will argue that MSFT would have ruined YHOO, too. But that’s all moot now. YHOO is in bed with Google, Yang is in control… and having hinted at seeking to bring in former AOL chief Jon Miller to replace him - only to realize Miller was unavailable for at least one more year to a non-compete he signed with AOL upon his departure - Yang is in charge for some time to come.
Don’t get me wrong, Yang might very well seek a replacement anyway… and might very well do so now that he is in control, but that is the thing - Yang won the battle that he cared about: to retain control of an independent Yahoo!
Say what you want about all of this, but while it’s great to be aware of what others are telling you, remember that they are biased and have their own agenda. To Yang - a billionaire many times over, born in Taiwan but now sitting on the most popular global web media brand - this is all icing on the cake… and sticking it to MSFT, Carl Icahn et al. the cherry on the icing.
PLAY
