Filed under: Google (GOOG), Microsoft (MSFT), Interviews

MEDecision, Inc. (Nasdaq: MEDE) got its start in the late 1980s and has since built a broad offering of technologies for clinical data. In fact, the company’s customers manage healthcare for one in every six insured Americans.

I had a chance to interview David St.Clair, who is the founder and CEO of the company.

It seems that your company has a big long-term opportunity. What are some of the driving trends in your sector?

Clinical data exchange is by far the greatest driving trend right now both for the health care system in general and for MEDecision in particular. For health care, clinical data exchange can improve care quality, increase patient safety, reduce errors and, generally, make care more affordable. There is a general belief - and some studies to support it - that a higher quality of care in this sense translates to more affordable care.

What’s driving our company is the belief that insurers and other payer organizations will be the primary financial beneficiaries of that care improvement and so care management has become a greater priority for them. They’re looking to gain a competitive advantage through care management. The Gartner Group recently published a study indicating that care management is the number three concern for employers. So from a system and process perspective their number one priority is impacting care management and that plays nicely into MEDecision’s future because we have experience and know-how to work with our customers and help them deliver the kind of care management programs their customers want to see. Traditionally, the focus has been on insurance premiums and cost, but now the more astute employers realize that it’s not just how much you pay for the insurance, it’s the effect that the care management programs respective insurers bring to the table have on employee absenteeism and presenteeism. Employers are willing to pay more in premiums to have healthier employee populations, so care management becomes a very key competitive issue for insurers.

It’s been tough for healthcare IPOs and Medecision has had troubles too. What are some of the strategies to get the attention of the Street?

I would say that we have the market’s attention, now what we have to do is prove that we deserve it. Many investors recognize the long term opportunity with MEDecision and realize that we are ideally positioned to take advantage of that. We’ve been trying to put ourselves in just this position for 19 years. Investors realize our thought leadership and the opportunity that our large customers present for us. Now we have to execute. We have to get better operational control over our sales process, increase margins and show the adoption of clinical data exchange.

Microsoft Corporation (Nasdaq: MSFT) has announced an electronic record system and Google, Inc. (Nasdaq: GOOG) is making moves in the space too. Your take on these initiatives?

There are a couple of different ways to look at this…

From our perspective, the large insurance companies’ best strategy for engaging their members in their own health care relies on a multi-faceted approach that says they must meet their members where their members want to meet them. In other words, to a great extent, payers can’t have just a member portal, for example, as their sole strategy for connecting with their members. They have to be able to reach out to their members by way of third parties: Microsoft, Google, Dossia, and any other number of other players who are all trying to innovate to get consumers’ attention. There is no clear winner and will not be for many years because the technology to truly engage consumers in their own health care hasn’t been invented yet. Right now, our customers have to be prepared to connect to their members through a multiplicity of applications. Our job is to make sure we can connect our customers’ data and message to their members through Google, Microsoft, WebMD and so on.

The other part of this discussion has to do with opt-in and opt-out. What Google, Microsoft, Dossia, etc., have in common is that they’re fighting to engage consumers who have already agreed to engage. Theirs is, by definition, an opt-in strategy. They say, in effect, “If you think you want to engage in your health care, you can come to us and we’ll give you some tools to help you do it.” The problem is that, right now the number of Americans who actually do that is infinitesimally small. That will now, in and of itself, not have a profound impact on the health care system in the near future. What will is the ability to take pieces of data that are already electronically available and deliver them to the point of care for all those patients who are not engaged - essentially protecting them from their unwillingness to engage. In other words, when someone who is really sick but has not gone to a website to volunteer certain health information shows up in the ER, we’ll have data for them anyway. Just as an insurance company is meant to insure you on the financial side, they can also protect you by providing your doctor with the information they need to make you safer and your care better. At some time in the distant future there may be a greater percentage of people willing to actively manage their health care online. In the meantime you have these behemoths like Google and Microsoft fighting over the small percentage of Americans who are engaged. We feel that’s a fine battle, but not one we’re interested in becoming involved in.

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

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Filed under: Products and services, Competitive strategy, Google (GOOG), Technology

Just as gasoline prices promise to rise to record levels, Google Inc. (NASDAQ: GOOG) has found a new outlet for its Google Maps — the gas pump. I think this is a splendid idea, particularly for drivers who need gas and directions, although there seems to me to be some danger that Google could tarnish its Do No Evil brand by associating itself so closely with the oil industry.

The Associated Press reports that 3,500 gas pumps, made by Gilbarco Veeder-Root, will include an internet connection and will display Google’s mapping service in color on a small screen. Motorists will be able to scroll through several categories to find local landmarks, hotels, restaurants and hospitals selected by the gas station’s owner. After the driver selects a destination, the pump will print out directions. Eventually, Gilbarco Veeder-Root hopes to enable motorists to type in a specific address and get directions.

Google will not put advertisements on the maps but the participating retailers will be able to make extra money from other merchants that offer coupons on the service. Google seems to think that giving away its maps at the gas pump will increase the number of people who use the service in places where it does advertise. I just wonder whether people will feel good about Google as they watch the price of filling up their tanks climb towards $100.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

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Filed under: Bad news, Consumer experience, Competitive strategy, Marketing and advertising, Media World

The Wall Street Journal’s “The Numbers Guy” blogger Carl Bailik has an interesting post about sales of Radiohead’s latest musical effort, “In Rainbows”. The album was offered by the band directly to the public via the internet on a ‘pay as you see fit’ basis. Since I love the band’s music, I paid $12, which I thought a fair compromise between what the tunes were really worth to me and the cost savings they realized by this type of release.

Sadly, if Comscore’s stats as reported by Bailik are reflective of the purchasing public, my decision was way, way out of the norm. They show that, on average, purchasers thought that $2.26 was the free market price. Worse, 62% paid nada, depending on schmucks like me to support their habit. Worse yet, according to Forbes, over half a million people chose to download the album from illegal sites, even though they could get it for free (and legally) from Radiohead.

Bialik rightly calls into question the veracity of the stats, though. Since Comscore uses a self-selected group of two million that have agreed to allow the company to track their habits via software installed on their computers, one must question if these users accurately reflect the buying public in the aggregate. I know that my buying wasn’t part of that sampling. For example, I’m not a file-sharer as a rule. Perhaps the buying behavior of people like me would make the results less discouraging for those championing Radiohead’s model.

After listening to the tunes for a couple of weeks, though, I have to say I don’t begrudge a penny of my $12. This band has earned it with an excellent listen. Those of you listening on my nickel; I hope you enjoy it, too.

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Filed under: Deals, Microsoft (MSFT)

Microsoft Corp. (NASDAQ: MSFT) has announced a partnership with India’s Reliance Communications to launch that country’s first high-definition television service meant for exclusive distribution over the internet, according to both companies.

The $500 million deal will encompass the start of internet protocol television (IPTV) in 30 cities within India, beginning with Mumbai and New Delhi. Is Microsoft trying to head off Google, Inc.’s (NASDAQ: GOOG) YouTube outside the U.S. with internet-based television service here? While YouTube content is free (for now), that is precisely what Microsoft may be doing.

Microsoft CEO Steve Ballmer said he expects both India and the U.S. to be the leading markets for IPTV service within a year. As more and more information becomes digital (entertainment, news, etc.), that content will be sucked up by consumers in their homes at staggering rates. At least, that is the idea behind jettisoning the idea of broadcast television and replacing it with internet-based transmission where “one broadcast size fits all” no longer applies.

In India, it’s estimated that 71 million homes already have television and 61% of those homes have pay television using either cable or satellite. With 1.1 billion people in India, the market is there for the picking if the pricing can be delivered at the right levels.

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Filed under: After the bell, Major movement, Bad news, China, Market matters, Oil

The New York Times reports that the Dow lost 360 points — or 2.64% — back to where it was before Ben Bernanke cut the Federal Funds Rate an unexpectedly large 50 basis points last week. My message to Bernanke is that cutting rates just to keep the market from falling is not a winning strategy.

The Fed is supposed to keep inflation in check, and it’s failing at that job. How so? At $96.37, the price of oil is near an unprecedented $100, and gasoline prices — which blessedly dropped during the fall — are poised to rise about 50% to $4.50 a gallon, just as people step up their driving during the holidays. On January 19, 2001, oil was $24 a barrel – it has since quadrupled. Meanwhile, the cost of heating a home is hitting a record — $3.05 a gallon for home heating oil in Massachusetts. It may be higher elsewhere.

Then there’s the little problem that the Fed has engendered through its rate cuts — a dollar that’s plunging like a knife. Relative to the euro, the dollar has lost 13% from $1.30 at the beginning of January 2007, to its current $1.47. And since January 19, 2001, the dollar has lost 60% of its value! Back then, one euro bought 92 cents. In addition to Brazilian supermodel Gisele Bundchen, China is now seeking to switch from the dollar to the euro. So the dollar drop is feeding on itself.

Continue reading Markets plunge on near-$100 oil, a record-low dollar, and billions in distressed debt

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Filed under: Insiders, Wal-Mart (WMT)

Wal-Mart Stores, Inc. (NYSE: WMT) website CEO Raul Vasquez is looking forward to a very solid holiday shopping season this year. As Doug referenced this morning, Vasquez said Tuesday that the retailer’s Halloween shopping season had been a good one and bodes well for the world’s largest retailer if consumers step up to shop for holiday goodies at the same level as they did during the just-completed Halloween holiday.

Vasquez apparently saw a tremendous amount of shopping online for holiday goodies, which is surprising since research I’ve performed before shows most customers shop for decoration items in person instead of on the web. Regardless, Vasquez’s words sounded upbeat and I agree with him that www.walmart.com will probably see a pretty decent holiday shopping season this year. Heck, it already started the madness last week.

But then, Vasquez is predicting a rise of 40% to 60% this year for Walmart.com sales compared to last year. That level sounds too much like projective cheerleading than reality since customers will most likely tighten those spending belts more than in a long time — starting now. If Vasquez is correct, a rise of that level would indeed be a coup if those numbers became actualized after December.

Continue reading Wal-Mart.com CEO wishes for happy holiday sales this season

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Filed under: Morgan Stanley (MS)

Morgan Stanley (NYSE:MS) will take a $3.7 billion write-down from the firm’s U.S. subprime-related exposures, according to MarketWatch. The company ended its fiscal third quarter with $12.3 billion in U.S. subprime-related balance sheet exposures, representing $10.4 billion in net exposures at Aug. 31. As of Oct. 31, Morgan Stanley had net exposure of $6 billion.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Google (GOOG), Microsoft (MSFT), Interviews

MEDecision, Inc. (Nasdaq: MEDE) got its start in the late 1980s and has since built a broad offering of technologies for clinical data. In fact, the company’s customers manage healthcare for one in every six insured Americans.

I had a chance to interview David St.Clair, who is the founder and CEO of the company.

It seems that your company has a big long-term opportunity. What are some of the driving trends in your sector?

Clinical data exchange is by far the greatest driving trend right now both for the health care system in general and for MEDecision in particular. For health care, clinical data exchange can improve care quality, increase patient safety, reduce errors and, generally, make care more affordable. There is a general belief - and some studies to support it - that a higher quality of care in this sense translates to more affordable care.

Continue reading CEO Interview: MEDecision zeroes in on the e-healthcare megatrend

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Filed under: Earnings reports, Marketing and advertising, News Corp’B’ (NWS)

News Corp (NYSE: NWS) today reported better-than-expected fiscal first-quarter results thanks to a cartoon boy named Bart Simpson and a conservative talk-show host named Bill O’Reilly.

Net income dropped to $732 million, or 23 cents a share, from $843 million, or 27 cents, a year earlier. Sales rose 19 percent to $7.07 billion, beating the $6.52 billion consensus estimate of Bloomberg News. Profit matched analysts’ forecasts.

Filmed Entertainment, where operating income soared 51% to $362 million because of the huge box office of The Simpsons Movie, was a big plug. Cable Networks’ operating income rose 16% to $289 million, as profit at Fox News Channel more than doubled thanks to higher affiliate fees and increased advertising revenue.

Results in the other divisions were pretty lackluster. Operating income fell in the television, newspapers and magazine publishing businesses. The Direct Broadcast Satellite Television Business had operating income of $48 million compared with a loss a year earlier.

Shares of News Corp fell in after-hours trading. Maybe Wall Street was hoping for a better quarter from the Australian billionaire.

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Filed under: Exxon Mobil (XOM), India, China, Brazil, Middle East, Chevron Corp (CVX), ConocoPhillips (COP), BP p.l.c. ADS (BP), Mexico, Canada, Commodities, Oil, Stocks to Buy

It’s a reality of the era of elevated energy prices that the oil/natural gas services sector is likely to remain strong for the foreseeable future, baring the discovery of a cheap, widely-available alternative energy. And among oil/natural gas services companies, Transocean (NYSE: RIG) is a standout.

Transocean offers deepwater drilling services in the world’s major offshore oil-producing regions, including Africa, Asia, Brazil, Canada, India, Middle East, Gulf of Mexico, and the North Sea.

In general, analysts see RIG generating a 18%-25% total return on equity for 2007-2009, with an upside possible, given the company’s strong position in deepwater drilling, which offers a higher return potential than shallow water drilling. And currently, it looks like a 2008 upside is in sight for Transocean: of the company’s 82 offshore rigs, only seven have not been committed for 2008. Further, given a capacity shortage sector-wide, dayrates have increase substantially, and look for RIG’s pricing power to continue past 2009. (RIG’s dayrate for 2006 increased 35% to $142,000 and its rig utilization rate improved 5% in 2006.) The Reuters F2007/F2008 EPS consensus estimates for RIG are $8.01/$11.32.

The risks? RIG’s dayrate increases could slow if major oil companies begin to reduce exploration budgets. A U.S. recession could also substantially decease home building, which could lower the demand for oil.

The First Call mean rating for RIG is: Buy. [34 firms.] Mean 2007 target: $131.00. [high: $168, low: $89.] Transocean’s share were down $2.04 to $127.60 in Wednesday afternoon trading, but view that dip as a buying opportunity, as it’s reasonable to assume that the industrialized nations will need oil services companies for a few years, to say the least.

Stock Analysis: Transocean is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 1 year should be rewarded from RIG’s shares. Sell / Stop Loss: $84.

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