News and analysis to 17th August 2006

Flaming Laptops

Incendiary device maker Dell has been on a PR offensive with the announcement that six of its recently sold laptops have built-in spontaneous combustion technology. There is even a video advert circulating the Internet. There is some concern that not all Dell laptop owners have this facility enabled and so circa 4 million laptops, or at least their unique batteries, are being recalled. It is not known in the light of the success of their high profile campaign, whether Dell will rename its laptop series to something more relevant such as the Claymore or Barbeque range. Dell might consider some product placement in the next 007 or Stormbreaker movie.

 

IBM sorts out its paperwork

IBM has been on an acquisition binge of late. Most recently it coughed up $1.4bn for document management vendor Filenet. IBM is keen to bolster its Enterprise Content Management (ECM) credentials, particularly after rival EMC acquired Documentum. The problem ECM is trying to solve is the fact that 80% of a company’s data is unstructured, ie it doesn’t sit neatly in a database. The nirvana scenario for business is the paperless office, which looks no closer to happening than it did 10 years ago. However according to Gartner the ECM market has double digit growth, which I am sure will sit well with IBM’s focus on profitability.

 

Ads OL

Time Warner has decided to halt the inexorable death of AOL by abandoning its traditional subscriber model, with a view to offerings AOL’s software and services for free. It intends to generate revenues from AOL through pay per click advertising. This is quite a turning point for AOL, known primarily for the aggressive marketing of its ISP services, and its ruthless customer retention techniques. So no more AOL advertising bumpf falling out of magazines and cereal packets, and hopefully no more kidnapping of relatives if you threaten to discontinue your subscription.

 

Nasdaq probe lands on Apple

Stock option expensing and its impact on financial reporting has caused Nasdaq to investigate circa 80 of its listed companies, with a possible view to delisting them.  Probees include: Rambus, McAfee and Juniper Networks.  ‘Purer than the driven snow’ Apple has now joined the D-List Club. It has stated that irregularities in its stock option expensing may require it to restate its figures going back to 2002. For something like this to happen is bad news for Apple and the IT industry. CEO Steve Jobs would be advised to not book holidays too far ahead because jail is one of the remedies used on senior executives to date. The subsequent loss of market confidence can make companies vulnerable to a takeover, so Apple will have to contend with the lascivious leering of predatory would-be acquisitors.

 

Don’t Go Daddy

Go Daddy, the largest internet domain name registrar has pulled its planned Nasdaq IPO citing “unfavourable market conditions”. It had planned to sell $200m of stock, despite never ever making a profit. CEO Bob Parsons attributed his decision to delay floatation on hostilities in the Middle East, rising oil prices, inflation and the housing market. One of these would have sufficed, which suggests that perhaps none of them are the real reason. In any case the guys at Nasdaq are too busy scrutinising stock option irregularities to have time to get involved in an IPO.

 

Pay per Fraud

Pay per click advertising is theoretically a highly targeted marketing tool in that you only pay when someone takes an interest in your service, unlike direct mail where the approach is more ‘spray and pray’. But it has become apparent that there are people out there that will abuse the system by for example clicking with abandon on the adverts of rival companies, thereby squandering their marketing budget. As a result Microsoft, Google and Yahoo amongst others have temporarily buried their hatchets to work with each other to combat anti-click fraud. The aim is to give marketers some comfort that they are not throwing their money away by using pay per click advertising. An equally valuable exercise would be to set up a body to regulate the underlying algorithms used by the vendors to determine click price and advert positioning.

 

Mercury now in HP’s orbit

Printer to server maker, Hewlett Packard, has acquired software vendor Mercury Interactive for $4.5bn, making this its biggest acquisition since Compaq. Mercury specialises in applications management and governance. Ironically it was a lack of governance that resulted in a Nasdaq delisting for Mercury, causing its share price to drop to the point where it became attractive to HP. If Nasdaq continues with its purging mission, there will be a few more bargains up for grabs in the near future.