strategy

Don't be a sucker when it comes to stocks

Updated March 22, 2008. Edits explained at the end of the post. - ST

I was reading a news item about the resignation of Mathstar's chief financial officer. I was surprised to see a publicly traded semiconductor company I'd never heard of, so I checked it out.

Turns out that Mathstar is like a number of companies I've come across over the years: they come in under the radar screen and, as such, investors think they've found something special.

Sure, these companies are special, but not in a good way.

Mathstar markets itself as a development-stage fabless semiconductor company. Its products are called field-programmable object arrays, or FPOAs, and are targeted at high-performance, data-intensive applications like defense, security, medical imaging, and video.

Sounds good, right?… Read more

What makes the most valuable tech companies so valuable?

How do we value technology companies? Ingenuity and invention, quality of service, brand loyalty, manufacturing muscle, operating efficiency, supply-chain management, price, great place to work. There are lots of metrics.

For those unfamiliar with the wily ways of Wall Street, the stock market has its own way of expressing what it thinks of companies. It's called market capitalization or market cap for short.… Read more

Get some perspective

My in-laws were in town this past weekend, escaping the Wisconsin snowstorms for a few sunny days in Silicon Valley. Hanging out with them was a welcome break from all the usual nonsense we call day-to-day life.

It got me thinking about how infrequently we take a step back from our gadget-filled, workaholic lives to gain some perspective. How often do you ask yourself if you like what you're doing, if you're on the right track, or if you should be doing anything differently?

The same goes for companies. After all, companies are made up of people. Executives and directors are people. How often do they step back and assess the company's technology, products and services, and strategy with respect to the competition?… Read more

How to manage a crisis, any crisis

Crises happen. They happen to all companies and to all people. They happen in our personal lives and in our professional lives. By definition, crises bring change, big change. They can change the entire trajectory of your life or your company's future. That's why how we behave in a crisis, how we manage a crisis, is such a big deal.

For example, Yahoo is going through a crisis right now. It's attempting to reinvent itself. Microsoft's bid to buy the company further complicates matters. The way Yahoo's board handles this crisis will determine the fate of the company and its thousands of employees and shareholders. That's a pretty big deal.

One company's crisis can have a ripple effect on others. You might say that Microsoft is attempting to capitalize on Yahoo's crisis. In so doing, the software giant has created its own. Negotiating tens of billions of dollars to acquire a large company and remake its Internet business is definitely crisis material.… Read more

When Yahoo says no, it means yes

Yes, I know Yahoo rejected Microsoft's bid of $31 per share. But that's just standard negotiating strategy in the world of mergers and acquisitions.

Sure, Microsoft's offer - a 60% premium over the price of Yahoo's stock at the time - was designed, not only to get Yahoo's board's attention, but to back them into a corner. If no other suitors emerge - as I predicted in a prior post - it's an offer Yahoo's board can't refuse without risking shareholder litigation or revolt.

But that doesn't mean Microsoft didn't leave itself any wiggle room, and Yahoo's board knows that. They also know that this is Microsoft's big chance, perhaps its only chance, to jump to number 2 in internet search and advertising and challenge Google. That means Yahoo has some negotiating power.… Read more

Tell-tale signs of a bad CIO

CIO.com asks the question, "How do you spot a bad CIO?" With a nimwit CEO, it's a bit easier because the numbers tell the story: profits and sales falling, etc.

But how do you discern a failing CIO before she fails? CIO.com has some answers:

High employee turnover Rehashing the same ideas, projects and technologies that s/he's implemented in all previous CIO positions Firing existing employees and replacing them with people who've worked for him/her in the past

To this list I'd add:… Read more

Proxy marketing: It's the (other) product!

In this new age of " radical transparency," British firm Garlik has unveiled a new way to gauge popularity on the internet. The "QDOS" digital status rating system factors in how many times a person's name appears in a search, as well as a person's popularity, impact, and activity, among other criteria. Garlik's system plays on the phenomenon of "vanity searches:" googling" and comparing oneself to others. I couldn't resist the temptation: My QDOS score is Q3176 -- that's less than Nelson Mandela (Q6624) and Woody Allen (Q7764) but … Read more

Microsoft and open source: Welcome to the Borg?

Microsoft has an offer open-source startups are having a hard time refusing. Should they?

That's the question I asked myself while reading Mary Jo Foley's excellent article that dissects Microsoft's open-source strategy. As it turns out, it's very similar to Microsoft's general partner strategy: embrace and envelope. (Or embrace, extend, and extinguish, as used to be Microsoft's marching orders.)

Microsoft is looking at open-source software (OSS) as just another flavor of independent software vendors (ISV) software. Microsoft's goal is to convince OSS vendors to port their software to Windows. But Microsoft doesn't want OSS software to just sit on top of Windows; the company wants this software to be tied into the Windows ecosystem by integrating with Active Directory, Microsoft Office, Expression designer tools, System Center systems-management wares and SQL Server database.

Sounds OK, right? Sort of. As Mary Jo continues:

Microsoft's OSS strategy makes a lot of sense for Microsoft. It's another way for Microsoft to try to make Linux obsolete, and not look as obviously ruthless doing so.

Therein lies the problem. Most open-source applications get evaluated on Windows. Most go into production on Linux. There are good reasons for this.… Read more

MicroHoo: The effect on search and Web services

Just about everyone else on the Internet has written on the potential acquisition of Yahoo by Microsoft for $44.6 billion, but I thought that I would weigh in on what I think this might mean for search and Web services.

According to ComScore's search share numbers for December 2007, Google has 58.4 percent of the market share, with Yahoo and Microsoft trailing at 22.9 percent and 9.8 percent, respectively. If Microsoft and Yahoo combine forces and change nothing, that will put them at 32.7 percent to Google's 58.4 percent. While those numbers … Read more

Yahoo and Yang are (were?) in big trouble

Note: I wrote this on Thursday before Microsoft's latest bid for Yahoo; it's a follow-up to a post I wrote six months ago. I have two comments on Microsoft's offer: 1) It's aggressive and it's a sweetheart deal for Yahoo's shareholders; I think Yahoo's board will accept it; and 2) nevertheless, the issues I present are the same; it just becomes Microsoft's problem.

It's been seven months or so since Yahoo chief and co-founder Jerry Yang replaced Terry Semel at the helm of the ailing internet giant. At the time, I pondered the obvious question: Can Yang fix Yahoo?

For the record, I thought the board acted rashly in appointing Yang--a relatively inexperienced executive--to perform what would clearly be a challenging turnaround. I didn't think he had the experience to pull it off.

At the time, I thought that Yang--a visionary--wasn't what Yahoo needed. I thought Yahoo's problem was largely failed execution and missed opportunities in search advertising that allowed Google to leapfrog its more mature rival.

At this point, I'm even more convinced that Yang was the wrong choice. But I think the problem is bigger than missed opportunity and failed execution. The company does indeed need a new vision. And it needs a CEO who's capable of articulating and selling that vision down through the ranks and ensuring everybody's goals are aligned.

That's a tall order, but it can be done. Lou Gerstner did it at IBM, and that was no walk in the park. But Jerry Yang is no Lou Gerstner.… Read more