Sunday, November 30, 2008

Will Microsoft and Yahoo work out a deal?

Sooner or later, Microsoft and Yahoo will come to some sort of agreement on their common interests, even though they also have divergent interests, but the idea of a full acquisition of Yahoo is essentially a non-starter. Sure, Microsoft has a content business, but trying to outright merge it with MSN would not be worth the effort or the upfront or long-term costs. Maybe some form of blending or cross-promotion would benefit both parties. What Microsoft really should do is to become the search provider for Yahoo. Ultimately, Microsoft does not need to buy any assets at all, but simply should become the search service provider for Yahoo. But, since Yahoo has such a large investment in search, Microsoft may need to buyout some major chunk of that investment in order to convince Yahoo to make a deal happen. I suspect that what really needs to happen is for Microsoft to provide some form of preferential treatment for Yahoo content search results. And, maybe, Microsoft would abandon some, but not all, of its own content services in favor of associating with Yahoo content services.

One big unknown is the degree to which Yahoo would get out of the ad brokering business and rely on Microsoft to sell ad space on Yahoo content. I am sure Microsoft wants that, but Yahoo may not be willing to do that, at least in any initial search-provider deal. Longer term, this does seem the way that Yahoo should go, to limit and leverage its own resources.

This whole deal might be a multi-step process, a confidence-building process, with each step getting bigger until the final deal can be completed.

In any case, it is still likely that Yahoo would remain a separate corporation from Microsoft, even as Microsoft becomes a very significant service provider to Yahoo.

Ultimately, Yahoo needs to dramatically shrink its level of investment, effectively outsourcing that to Microsoft, who will be in a better position to leverage investment, so that Yahoo can focus on the content areas where it does best. And maybe then Microsoft can outsource some of its own content to Yahoo to leverage their investment as well. In essence, Microsoft is a platform company, with search and advertising being key platforms.

I suspect that Microsoft and Yahoo will in fact ultimately do some sort of deal. Maybe it will simply take some additional economic weakness to convince Yahoo to give up some of their overly idealistic fantasies of doing everything on their own.

Disclosure: I do own Microsoft stock.

-- Jack Krupansky

Tuesday, November 25, 2008

Still too much Old Economy deadwood holding the New Economy back

Although President-elect Barack Obama has ambitious plans for creating millions of "green" jobs, the sad fact is that the U.S. economy is still heavily overweighed with Old Economy jobs and way too light on New Economy jobs. Jobs to rebuild infrastructure and schools will still primarily focus on keeping the Old Economy on life support. We should be trying to accomplish much more of basic education online with modern communication and social networking tools rather than creating more or simply newer so-called "class" rooms that do more to stifle creativity and enthusiasm than leverage it.

I am not sure what the answer is, but it still seems so unfortunate that the New Economy has failed so miserably at supplanting the Old Economy in the U.S. economic order.

One would have thought that pumping money into the New Economy would be the way to go rather than propping up General Motors and our endless highways that seem geared more to wasting energy rather than leveraging it.

The really sad thing is how hopelessly dependent the New Economy is on the Old Economy.

For example, I have selected a 100% "green" power option for my electricity supplier here in New York City (Energetix, 60% low-impact hydro and 40% wind power.) But, even though my raw electricity cost for this "green" power was less than $5 last month, it cost $15 for Old Economy ConEdison to "deliver" that "green" power to my apartment.

Hopefully, that dependence will gradually begin to diminish, but it may be another five years or even ten years before we actually start to see some serious light at the end of the tunnel and can finally start to contemplate a truly New Economy U.S. economy.

But for now, it is quite frustrating that "fiscal stimulus" for the U.S. economy will mostly focus on the Old Economy, even if a small fraction of the money does get "targeted" for "green" investments.

-- Jack Krupansky

Friday, November 21, 2008

Is that the low for the stock markets?

Now that P-E Barack Obama has apparently selected Tim Geithner as the next Treasury Secretary to the approval of the financial markets, one might suspect that the stock market has set its low for this business cycle. Sure, it all depends on how well the rest of the new administration economic team comes together and hits the ground running after the inauguration with a robust fiscal stimulus plan, but it does look as if this is indeed likely to be the case. There is no guarantee any of this, but it does appear that the incoming Obama administration is coming together nicely and starting to set the stage for the beginnings of an economic renaissance in the Spring.

That said, it is possible if not very likely that short-term speculators will run the market up sharply and then back down sharply to "test" the low, and they may do that several more times before a solid bottom can be firmly established.

We will be getting a boatload of negative economic reports for months to come (e.g., the final report for Q4 GDP comes out in late March), but some of the leading economic indicators may start to show a little life sometime in January, particularly as retailers pursue post-holiday sales and euphoria over the new administration and the new fiscal stimulus plan take off. A GM, et al bailout "bridge" loan deal in December that gets the ball rolling for dramatic restructuring of Detroit could also provide the market with support. The FDIC and the Federal Reserve are both moving forward with additional support for the banks.

The most significant leading economic indicator of all is the stock market. People who sniff out a turnabout of economic activity place their early bets in the stock market. It may take weeks or even months before unemployment claims and mortgage applications begin to show a pickup in economic activity again, or at least start to show a slowing of the decline in activity.

The tentative intraday low for the Dow for this business cycle was 7,392.27. The closing low was 7,552.29, yesterday, Thursday, November 20, 2008.

The tentative intraday low for NASDAQ for this business cycle was 1,295.48. The closing low was 1,316.12, yesterday, Thursday, November 20, 2008.

The tentative intraday low for the S&P 500 for this business cycle was 741.02. The closing low was 752.44, yesterday, Thursday, November 20, 2008.

-- Jack Krupansky

Thursday, November 20, 2008

PC Magazine - RIP

Wow... PC Magazine bites the dust. Mind-numbing. Actually, it is about time. I remember how satisfying it was to leaf through the magazine back in... the 1980's, but I actually cannot recall when I last looked at the magazine, and it certainly was not in the past ten years. The companion Web site,, will soldier on and probably do reasonably well, but it is still sad to finally see that flagship "book" go the way of the dodo bird (and BYTE Magazine.)

PC Magazine -- RIP!

Read the details.

It turns out that Ziff will continue producing PC Magazine Digital Edition, which you can continue to subscribe to, download, and print on your own. But with advertising on a downtrend, what is the point? Sure, some of the articles are worth reading, but it was always the ads that made the magazine interesting. Now, PC manufacturers such as Dell and Toshiba (and Apple) simply dump their ads in my email inbox.

-- Jack Krupansky

Sunday, November 02, 2008

Oops... I missed daylight saving time

I use my vintage 2001 Sony Clie PDA as an alarm clock, causing me to miss the Fall transition from Daylight Saving Time to Standard Time. I needed to manually toggle the DST indicator on my PDA and simply had not seen any mention of DST in the past week since I was spending so much time focused on work, financial news, and political news. I did not even notice the transition until I booted my PC and noticed the correct time. I am still running Windows XP, but Service Pack 3 has all of the goodies to automatically transition for DST.

I was getting rather depressed by it being dark at 7:00 a.m. anyway. I would prefer to wake up with the sun, but I also prefer to get up reasonably early.

I suppose I need to start thinking of upgrading from this old PDA that I also carry around as a watch replacement. I am one of those few people who do not have a cell phone (simply because I do not want or need one). But my budget for electronic "gizmos" is $0 until I recover from the expense of moving to New York City back in May, as well as not having much work from the middle of August until the last week of October.

I am still having trouble having trouble adjusting to the fact that it is November already.

-- Jack Krupansky