Filed under: Internet, Competitive strategy, Google (GOOG), Technology

Is Google (NASDAQ: GOOG) really feeling threatened by social networking property Facebook? Sensationalist media pundits think so, and the fuel is building on just when social networking websites will somehow “steal” customers from established internet properties like Google and Yahoo (NASDAQ: YHOO). Oh my, how the flavor of the month can get too many riled up in their seats.

After having perused Facebook for a while, I’m still in disbelief of how it’s such a hot topic these days. Perhaps it is the virtual mall for the tweener and early twenty-something set. No problem with that. But, didn’t MySpace.com have this title a year ago? How long is it since you’ve seen MySpace in the news outside of some sexual predator being busted for posting a profile there? I’m still wondering if Rupert Murdoch is secretly kicking himself over that one. Another question mark in my brain centers around Facebook founder Mark Zuckerberg, and why he has not cashed out at the pinnacle of his brainchild. Maybe the pinnacle is not there yet, but it’s getting very close.

A really cool social networking technology called Second Life had its day (a very short one), and word has it that fans of the site are leaving in droves just as corporate sponsors start littering the environment with their wares and marketing messages. Coincidence? Or, are the target demographics for social networking websites are finicky as all get out? If Google is chasing the new “innernet” where you connect with those you want to interact with (and only those) using images, voice, chat or whatever, then it’s chasing being un-innovative in this space. First-mover advantage is always where it’s at (ask Yahoo! about Yahoo! Mail), and social networking is still just the flavor of the month in its current incarnation.

It may persevere, but the proof is only partly there. Business models and profit run a business, not page views and ad inserts alone. Although Google may be losing some top talent to Facebook, many are likely looking to cash out once an IPO or buyout occurs. Loyalty is a forgotten term (even with many brainiacs), and social networking has a bit to go to provide a sustainable business platform that works long term and consistently.

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Filed under: International markets, Law, Google (GOOG), General Electric (GE), Procter and Gamble (PG), News Corp’B’ (NWS), Politics, S and P 500, DJIA

People who are opposed to the legalization of drugs should consider the following: cocaine is having a better year than the stock market.

This fun fact courtesy of WallStreetFighter paints a very grim picture of the War on Drugs. Addicts are paying more for less-pure Bolivian marching powder. From January through June, the average price per gram of domestic cocaine purchases rose 24% from $95.89 to $118.70, while purity fell. Retail (involving 10 grams or more) prices rose 15% while “mid-level” wholesale prices surged 33% and wholesale (1 kilogram or more) prices jumped 11%.

Cocaine is a helluva drug — just ask any celebrity. Heck, read any story on TMZ.com about Britney Spears and you’ll understand. Supplies are down and demand is steady. That’s the type of stable cash-flow business that usually attracts private equity, no?

Now consider that the Dow Jones industrial average rose 10.8% this year. The S&P 500 Index is up 7.98% while the tech-heavy Nasdaq Composite Index has surged more than 14% Cocaine has had a better year than many blue-chip stocks including General Electric Co. (NYSE: GE) (up 10%), News Corp. (NYSE: NWS) (up 5.5%) and Procter & Gamble Co. (NYSE: PG) (up 9.7%). Google Inc.’s (NASDAQ: GOOG) 35% does beat cocaine but not by much.

%Gallery-8748%

Unlike most products, cocaine really does sell itself as does pornography. Lots of people — mostly really bad people — are getting rich off drugs. Why shouldn’t the federal government? Researcher Jon Gettman estimates that the government loses $31.1 billion in taxes because of the prohibition against marijuana, according to the Marijuana Policy Project. You can bet that the figures would be similar for cocaine.

Imagine how much money Uncle Sam could reap if he taxed cocaine or marijuana? What does the War on Drugs cost? Hundreds of millions? That money could be used to fund a real war on drugs — treating addicts whose lives have been destroyed.

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Filed under: Internet, Competitive strategy, Google (GOOG), Technology

Is Google (NASDAQ: GOOG) really feeling threatened by social networking property Facebook? Sensationalist media pundits think so, and the fuel is building on just when social networking websites will somehow “steal” customers from established internet properties like Google and Yahoo (NASDAQ: YHOO). Oh my, how the flavor of the month can get too many riled up in their seats.

After having perused Facebook for a while, I’m still in disbelief of how it’s such a hot topic these days. Perhaps it is the virtual mall for the tweener and early twenty-something set. No problem with that. But, didn’t MySpace.com have this title a year ago? How long is it since you’ve seen MySpace in the news outside of some sexual predator being busted for posting a profile there? I’m still wondering if Rupert Murdoch is secretly kicking himself over that one. Another question mark in my brain centers around Facebook founder Mark Zuckerberg, and why he has not cashed out at the pinnacle of his brainchild. Maybe the pinnacle is not there yet, but it’s getting very close.

A really cool social networking technology called Second Life had its day (a very short one), and word has it that fans of the site are leaving in droves just as corporate sponsors start littering the environment with their wares and marketing messages. Coincidence? Or, are the target demographics for social networking websites are finicky as all get out? If Google is chasing the new “innernet” where you connect with those you want to interact with (and only those) using images, voice, chat or whatever, then it’s chasing being un-innovative in this space. First-mover advantage is always where it’s at (ask Yahoo! about Yahoo! Mail), and social networking is still just the flavor of the month in its current incarnation.

It may persevere, but the proof is only partly there. Business models and profit run a business, not page views and ad inserts alone. Although Google may be losing some top talent to Facebook, many are likely looking to cash out once an IPO or buyout occurs. Loyalty is a forgotten term (even with many brainiacs), and social networking has a bit to go to provide a sustainable business platform that works long term and consistently.

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Filed under: Deals, Consumer experience, Google (GOOG), eBay (EBAY), News Corp’B’ (NWS)

eBay (NASDAQ:EBAY) and News Corp (NYSE:NWS) are teaming up to promote two of their most widely distributed products. The two companies have made a deal where “Skype has agreed to put Internet calls into MySpace’s instant-messaging feature to gain more users and broaden the distribution of their two services,” according to The Wall Street Journal.

MySpace has 110 million users and Skype has more than 220 million. The Journal says that starting in November, MySpace users will be able to call people through instant message. MySpace users will also be able to link to Skype’s network and integrate features of their profile into Skype.

The trouble with the idea is that it is hard to see how anyone makes money. eBay wrote down its investment in Skype because the service has brought in so little money. MySpace has an ad sales deal with Google (NASDAQ:GOOG) that will bring in $900 million over several years, but it is not clear that marketers can capture social network users the way that they can visitors to AOL Finance. The social network crowd cannot be identified with one set of interests that makes it easy to figure out what products or services they want.

It is a classic case of a partnership where 1+1=0.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Filed under: International markets, Law, Google (GOOG), General Electric (GE), Procter and Gamble (PG), News Corp’B’ (NWS), Politics, S and P 500, DJIA

People who are opposed to the legalization of drugs should consider the following: cocaine is having a better year than the stock market.

This fun fact courtesy of WallStreetFighter paints a very grim picture of the War on Drugs. Addicts are paying more for less-pure Bolivian marching powder. From January through June, the average price per gram of domestic cocaine purchases rose 24% from $95.89 to $118.70, while purity fell. Retail (involving 10 grams or more) prices rose 15% while “mid-level” wholesale prices surged 33% and wholesale (1 kilogram or more) prices jumped 11%.

Cocaine is a helluva drug — just ask any celebrity. Heck, read any story on TMZ.com about Britney Spears and you’ll understand. Supplies are down and demand is steady. That’s the type of stable cash-flow business that usually attracts private equity, no?

Now consider that the Dow Jones industrial average rose 10.8% this year. The S&P 500 Index is up 7.98% while the tech-heavy Nasdaq Composite Index has surged more than 14% Cocaine has had a better year than many blue-chip stocks including General Electric Co. (NYSE: GE) (up 10%), News Corp. (NYSE: NWS) (up 5.5%) and Procter & Gamble Co. (NYSE: PG) (up 9.7%). Google Inc.’s (NASDAQ: GOOG) 35% does beat cocaine but not by much.

%Gallery-8748%

Unlike most products, cocaine really does sell itself as does pornography. Lots of people — mostly really bad people — are getting rich off drugs. Why shouldn’t the federal government? Researcher Jon Gettman estimates that the government loses $31.1 billion in taxes because of the prohibition against marijuana, according to the Marijuana Policy Project. You can bet that the figures would be similar for cocaine.

Imagine how much money Uncle Sam could reap if he taxed cocaine or marijuana? What does the War on Drugs cost? Hundreds of millions? That money could be used to fund a real war on drugs — treating addicts whose lives have been destroyed.

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Filed under: Before the bell, Earnings reports, Analyst reports, Google (GOOG), Yahoo! (YHOO), Apple Inc (AAPL), eBay (EBAY), Coca-Cola (KO), Amazon.com (AMZN), Intel (INTC), Walt Disney (DIS), JPMorgan Chase (JPM), Altria Group (MO), United Technologies (UTX)

A slew of earnings just came out:

• United Technologies Corp. (NYSE: UTX) reported a 20% increase in profit for the third quarter, earning $1.21 per share, and beating estimates of $1.16 per share. Shares are currently nearly flat.
• Altria Group Inc. (NYSE: MO) reported third-quarter profit fell 8.4%, but income from continuing operations rose 18.1%. The company also raised its full-year earnings guidance. The company beat per share earnings by reporting $1.21 EPS higher than the $1.14 expected. Shares are up over 0.9% in premarket trading.
• The Coca-Cola Co. (NYSE: KO) reported a 13% increase in third-quarter profit on a double-digit increase in sales, beating Wall Street expectations.
• JPMorgan Chase & Co. (NYSE: JPM) shares are rising over 3% in premarket action after the nation’s third-largest bank managed to turn out a 2% profit rise in the third quarter despite rocky market conditions and a rough lending climate. Earnings per share came to 97 cents, up 5% from 92 cents last year and handily beating the 90 cents per share analysts had expected.

Apple Inc. (NASDAQ: AAPL) shares are up over 2% in premarket trading to $173.00. Yesterday the company announced the release date — October 26 — of its new Leopard operating system. The new version will cost $129 for a single user and $199 for a family pack, a price many users have voiced their dismay on the blogosphere, especially what seems for now a lack of price point for students.

Along with Apple, and following Intel and Yahoo!’s strong results yesterday, many other tech stocks are trading higher in premarket action including Google, which reports tomorrow an is up over 2%, eBay, which reports after the close today and is up over 3%, and Amazon which is up over 2%. Barring any surprises, expect today to be a strong one for tech and the Nasdaq to lead gains. Many analysts have been raising target prices on Intel and Yahoo! this morning.

The Walt Disney Co (NYSE: DIS) is planning to spend $1.1 billion over five years to overhaul its California Adventure theme park, the Wall Street Journal reports.

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Filed under: Deals, Consumer experience, Google (GOOG), eBay (EBAY), News Corp’B’ (NWS)

eBay (NASDAQ:EBAY) and News Corp (NYSE:NWS) are teaming up to promote two of their most widely distributed products. The two companies have made a deal where “Skype has agreed to put Internet calls into MySpace’s instant-messaging feature to gain more users and broaden the distribution of their two services,” according to The Wall Street Journal.

MySpace has 110 million users and Skype has more than 220 million. The Journal says that starting in November, MySpace users will be able to call people through instant message. MySpace users will also be able to link to Skype’s network and integrate features of their profile into Skype.

The trouble with the idea is that it is hard to see how anyone makes money. eBay wrote down its investment in Skype because the service has brought in so little money. MySpace has an ad sales deal with Google (NASDAQ:GOOG) that will bring in $900 million over several years, but it is not clear that marketers can capture social network users the way that they can visitors to AOL Finance. The social network crowd cannot be identified with one set of interests that makes it easy to figure out what products or services they want.

It is a classic case of a partnership where 1+1=0.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Filed under: Before the bell, Earnings reports, Analyst reports, Google (GOOG), Yahoo! (YHOO), Apple Inc (AAPL), eBay (EBAY), Coca-Cola (KO), Amazon.com (AMZN), Intel (INTC), Walt Disney (DIS), JPMorgan Chase (JPM), Altria Group (MO), United Technologies (UTX)

A slew of earnings just came out:

• United Technologies Corp. (NYSE: UTX) reported a 20% increase in profit for the third quarter, earning $1.21 per share, and beating estimates of $1.16 per share. Shares are currently nearly flat.
• Altria Group Inc. (NYSE: MO) reported third-quarter profit fell 8.4%, but income from continuing operations rose 18.1%. The company also raised its full-year earnings guidance. The company beat per share earnings by reporting $1.21 EPS higher than the $1.14 expected. Shares are up over 0.9% in premarket trading.
• The Coca-Cola Co. (NYSE: KO) reported a 13% increase in third-quarter profit on a double-digit increase in sales, beating Wall Street expectations.
• JPMorgan Chase & Co. (NYSE: JPM) shares are rising over 3% in premarket action after the nation’s third-largest bank managed to turn out a 2% profit rise in the third quarter despite rocky market conditions and a rough lending climate. Earnings per share came to 97 cents, up 5% from 92 cents last year and handily beating the 90 cents per share analysts had expected.

Apple Inc. (NASDAQ: AAPL) shares are up over 2% in premarket trading to $173.00. Yesterday the company announced the release date — October 26 — of its new Leopard operating system. The new version will cost $129 for a single user and $199 for a family pack, a price many users have voiced their dismay on the blogosphere, especially what seems for now a lack of price point for students.

Along with Apple, and following Intel and Yahoo!’s strong results yesterday, many other tech stocks are trading higher in premarket action including Google, which reports tomorrow an is up over 2%, eBay, which reports after the close today and is up over 3%, and Amazon which is up over 2%. Barring any surprises, expect today to be a strong one for tech and the Nasdaq to lead gains. Many analysts have been raising target prices on Intel and Yahoo! this morning.

The Walt Disney Co (NYSE: DIS) is planning to spend $1.1 billion over five years to overhaul its California Adventure theme park, the Wall Street Journal reports.

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Filed under: Google (GOOG), Microsoft (MSFT), Starbucks (SBUX), Initial public offerings

Over the years, Ernst & Young has developed some useful resources on the Initial Public Offering (IPO) process.

And this week the firm has released some more material: a study that tries to isolate the success factors of IPOs. Can we find the next Google, Inc. (NASDAQ: GOOG), Microsoft Corporation (NASDAQ: MSFT), or Starbucks Corporation (NASDAQ: SBUX)?

However, the study is somewhat limited (covering the offerings from the start of 2006 to the mid-point of 2007, which includes 110 companies). Also, the criteria is kind of vague.

Despite all this, let’s take a look.

First of all, companies need to be seasoned. For example, the median age of a successful offering is about 8 or 9 years.

Other keys include: having global operations; strong institutional support (hopefully more than 80 of such investors); and a well-educated and highly compensated CEO.

What’s more, it also helps if a company does an M&A deal soon after the offering. After all, with a hefty valuation, why not buy companies at a cheap price?

But, I still think there’s another factor: a company must have a compelling value proposition. Yet, this is something you really cannot capture in a statistical study

Oh, and it helps if the equities markets are in the bull phase, which is the case now. So, if you want to check out some of the recent IPO activity, click here.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

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Filed under: Bad news, Insiders, Law, Countrywide Financial (CFC)

The SEC has begun an informal inquiry into the stocks sales by Countrywide Financial’s (NYSE: CFC) CEO Angelo Mozilo. The Wall Street Journal reports he “sold at least $130.6 million in company stock in the first half of the year through executive sales plans.”

Mozilo sold the shares under a standard 10b5-1 with allows insiders, executives and board members, to sell shares on regular schedules without the normal black-out dates for earnings releases and other events. The number of shares and dates are set ahead of time.

Although it is not clear, the issue here may be whether Mozilo altered his plan and accelerated his selling based on his knowledge. He could have kept his plan in place, but made alterations. This would likely have been against both the spirit and wording of these plans when they were first developed. As the Journal pointed out “If executives pledge they don’t have any insider information at the time the plans are established it can be used as a defense against insider-trading charges.” That does not cover what happens if they come by the information later and alter the plans.

The investigation is likely to be complex and may take a number of months.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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