All of my blog postings.

2020: It Was A Very Good Year

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That’s a sentence you don’t see too often.  However, if you like dividends, it was with the 500 largest public companies in the U.S. paying nearly $500 billion to their shareholders.  Any way you measure it, $500 billion is a big number.  

Net of the defense budget ($616 billion), the dividends paid by the largest U.S. companies were greater than the funding for almost every cabinet level department — Education, Homeland Security, Justice, Veterans Affairs, among 11 others as well as major agencies such as the EPA and SBA for 2019.   read more

Media Exposure By The Numbers

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Since November 2010, I’ve sent out 12,471 queries to the media.  I know this because the software platform I use keeps track of them. That’s about 5 a day for a decade.  The learning comes not so much from what I’ve sent out, but rather from what comes back.  Based on the responses I get, and the buckets they fall into, here’s what seems to drive media interest: 1) Serendipity; 2) Consistency; 3) Brevity.

First, reporters often get back to me not about what I’m pitching, but about something else they are working on.  The query reminds them my client is a source. read more

Why The Tax Cut Bonuses Ring False

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Every once in a while, when a baseball player hits one out of the park at an away game, the fan who catches the ball throws it back on the field. Why celebrate the opponent’s achievement? As rebukes go, it’s not subtle.

Sometimes I wonder if the rank and file employees who got $1,000 “tax cut” bonuses might give it back to their employer or use it to light a cigar. The list of companies giving $1,000 bonuses to employees in the wake of the tax cut keeps growing. AT&T, Alaska Air, Charles Schwab, U.S. Bancorp, Tyson Foods and Comcast, among others, have doled out $1,000 raises. read more

The Feminine Touch, Hopefully

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Jane Fraser was selected to be the next CEO of Citigroup, the first woman to run a “money center” bank.  One can only hope that she will best the performance of her predecessors.  Almost any time frame in which one might evaluate Citigroup shares, year to date, one year, five years, the performance is abysmal. 

And let’s not forget, Citigroup was a stock that was trading at $557 before the Great Recession.  At today’s price of about $50, the leadership prior to Ms. Fraser’s ascent lost more than 90% of the value once held by shareholders.    read more

Bullet Proof Balance Sheets

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While a focus on growth has always been in fashion, the advent of COVID-19 has enhanced the currency of balance sheets.  

I know this because an article I wrote with client Ken Berman of Gorilla Trades quickly generated more than 400,000 page views after we published it on Kiplinger.

The list of 25 companies includes predictable entries like Google, Amazon, Apple, which sport truly amazing balance sheets, but also fly-below-the-radar mid caps like data security firm Fortinet (FTNT), Cognex (CGNX), which develops machine visions systems, biotech’s Incyte (INCY) and Old Dominion Freight Lines (ODFL).  read more

Reminiscing The IPO Market

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The unicorns are filing one after another for initial public offerings and the excitement in the IPO market is taking me back to 1982, when I was working at a publication called Going Public: The IPO Reporter, the pre eminent journal tracking initial public offerings.

I joined the staff in late 1982, and the total tally of IPOs for the year was something like 300 deals. Then near the end of the year, a well placed venture capitalist predicted that next year’s haul would be something like 600 deals. read more

Elon Musk’s Mark Twain Moment

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Mark Twain was the pen name of Samuel Clemens. Clemens was a very clever writer. So it should come as no surprise the very name he chose for himself — Mark Twain — would be steeped in mystery and uncertainty.

Since time immemorial sailors have marked the depth of by throwing a weight in the water at the end of a sounding rope with knots every 6 feet. The second knot was known as the twain, and it marked 12 feet, the minimum amount of water the paddle boats during Twain’s time needed without running aground. So when sailors yelled out ‘mark twain!’ for the captain, it was a moment of uncertainty. Was the boat moving into deeper, safer waters, or was it heading into shallower dangerous waters? read more

Innumeracy Hurts

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Innumeracy — the numerical version of illiteracy — hurts.  It hurts more because unscrupulous parties use it to paint a convincing picture that is at odds with reality. Discourse, opposition, and needed change can all be suppressed by preying on innumeracy.  To see this in action, consider the case of Wal-mart back in the spring of 2015.  At the time, the inadequacy of the minimum wage was a raging national debate.  Fast food workers were organizing a walk out.  One after another, corporations were announcing increases in the minimum wages they paid to avoid a social media backlash. read more

When Capitalism Hurts: Amazon and Detroit

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When Amazon released its top 20 contenders this morning, I quickly scanned the list — not for my city, Philadelphia — but for Detroit.

I was sad Detroit didn’t make the cut.  It was a bad day for them and a bad day for the country, I thought.

It made me think about all the statements we’ve heard from iconic tech entrepreneurs about the transformative power of technology.  Well, Detroit is a place that needs to be transformed.  Where are these icons now?

To be sure, there’s a business case to exclude Detroit from the final cut.  Amazon said it was looking for a stable and business friendly environment and access to technical talent, probably not Detroit’s strongest suits. read more

And Now, Fake Earnings

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With earnings season here once again, and the term fake news ricocheting across social and traditional media, it’s not too great a leap to get to the concept of fake earnings.

Lots of companies present earnings that aren’t really earnings.  For example, in January Intel reported earnings of $10.3 billion, and then adjusted earnings of $13.2 billion, about 30% higher . . . At Google, net income was $4.9 billion but adjusted net income was $6.0 billion or 23% higher . . . Drug maker Celgene reported net income of $2 billion, but also presented investors with adjusted net income of $4.8 billion, 140% higher. read more

Getting Media Exposure: Sharing Matters

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For companies trying to develop relationships with the media, here’s another arrow for your quiver:  Share the stories they write with your social media networks.  This according to journalists and reporters themselves.  When asked in the 2017 State of the Media Report by public relations software firm Cision, ‘How can communications professionals improve their media relationships and improve the chances that their content gets media exposure?,’ 31% said ‘share my stories on social media,’ up from 27% in 2016. read more

The Myth Of The Mainstream Media

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It seems almost every reporter, anchor, radio host or ‘influencer’ out there likes to point out they are giving you information that ‘the mainstream media won’t report on.”

Sometimes it’s information the mainstream media “wouldn’t dare report on.”

I would offer that if you are trying to interpret the media landscape today, remove the notion of the mainstream media from your thinking because it doesn’t exist anymore.

The modifier mainstream implied wide distribution and consumption, which meant influence, which meant power.  While the venerable New York Times has a circulation of ~2 million (1.4 million digital only subscriptions and 600,000 print subscriptions), a big number, it cannot compete with even second tier social networks (i.e. not Facebook). Reddit, for instance, has ~540 million visitors per month.  Tumblr has a (disputed) 300 million monthly visitors. read more

More Cheating = More Regulation

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I kind of like seeing the CEO of Wells Fargo on the hot seat in front of the house and senate for the fraudulent opening of customer accounts.  I always felt Wells Fargo’s conduct in general and their attitude toward their customers was criminal.

I just didn’t know how accurate my sentiments were.  Don’t get me wrong. The rank and file are nice enough and hard working.  But they’re hamstrung by policies from on high that prevent them from acceding to customers needs.  And the imprint of senior management is imbedded in information systems that spit out a dizzying array of fees, penalties and abusive policies. read more

Media’s Future Will Follow Markets’

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Back in 1991, when I was freelancing, casting central newsman Bob Flaherty, then of Equities magazine and now head of his own financial news service, told me to get on a train to New York, visit the offices of something called Instinet and write a story about it.

Instinet, owned by Reuters at the time, was shaking up the trading business with its recently introduced “crossing” system which allowed institutional investors to trade directly with each other, effectively bypassing the exchanges and stock markets. read more

Active vs. Passive: Game Over

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I just finished a white paper for a large financial institution on the well worn topic about which is better: active or passive investment strategies.

Sometimes, it’s productive revisit old topics because they bring a fresh perspective that either reinforces ones’ conviction or makes a slight chink in the wall that slowly exerts its influence until the next time the subject is revisited.

No such change of conviction occurred about the superiority of passive investment strategies after a deep dive on behalf of my client.  While I managed to write about 2,000 words on the topic, to me, it boils down to this: read more

Failing Fast

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My friend, entrepreneur Marc Kramer has started about 20 businesses.  Some have succeeded, others have not.  Among his start-ups,  I asked him if he got signals early on that he had a clunker on his hands, and if so, what the signs were.

Generally, he said, he knew within about 120 days whether or not the concept is going to fly.  Here are some of the sign posts he saw along the way that informed his thinking.

Little word of mouth.  Kramer says word of mouth is the ultimate acid test.  “If consumers are using your product, and are not excited enough and satisfied enough to tell friends, family and colleagues about it, your product or service is unlikely to succeed.” read more

Telling Everyone All About It, Again

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I like earnings season because of the surprises.  But sometimes, you get to see something over and over again.  In what has become a tough reporting period, CEOs are taking to broadcast outlets explaining, first hand, the shortcomings of the most recently reported results.

Notable so far this season was Sally Smith of Buffalo Wild Wings and Jeff Weiner of LinkedIn both on the tube following earnings reports.  Ms. Smith went right into the crucible, appearing on Mad Money with Jim Cramer explaining among other items, the importance of takeout, while Mr. Weiner appeared on screen to unravel sequentially flat revenues and lumpy EBITDA. read more

Investor Relations:  The Long Conversation

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If a stock shows a significant positive change in revenues or earnings with an attendant rise in the price, do you believe portfolio managers will be moved to buy it?

Conversely, if there were a significant negative change in earnings or revenues, would they short or sell it?

Chances are the portfolio manager would not buy or sell.  They would observe, they would take in the new data points, but that might be it.

Remember, a managed fund portfolio might have 50 to 100 positions.  Some have even fewer.  The point is, adding and subtracting positions is the most carefully considered activity a portfolio manager undertakes.  It is, in fact, exactly what they are paid for.  As a result it’s unlikely they will make a change based on a singular data point. read more

Use Your Perch To Get Media Exposure 

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All businesses occupy a perch. By that, I mean the manner in which their business operates throws off data that sheds light on their industry, competitors, suppliers or customers. Here’s some examples:

• The number of times men click the profiles of fair-haired women on match.com answers the question whether or not gentleman do prefer blonds. Similarly knowing how beards fare in the romantic ecosystem might offer a clue about how long the current trend in facial hair is going to last. read more

The Book of Business

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I wrote this book for students of business, and maybe students of human nature too.

I say students because, for better or for worse, the people covered in these few short stories, all of them clients, taught me a lot of what I learned on both topics.

It’s a gallery of heroes, fools, visionaries and rogues who succeeded and failed on a grand scale. Some operated in the spotlight, but, like most of us, most toiled in relative anonymity.

In each story, I’ve offered up what I learned, but I hope readers will not get too caught up in that. Really, the main goal here is to entertain and amuse. read more

Generals Don’t Inspect The Bullets

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As the content arms race rolls on, I’m beginning suspect that some CMOs are getting off track in their approach to content marketing.

Too much oversight.  Too much strategy. Too much handwringing.

In my experience, the primary value of content marketing is catching a prospect at the moment they happen to be searching for the product or service your enterprise offers.  And in search, one of the primary variables driving rank is freshness.

Catching a prospect mid-search means, for better or worse, content distributed across social media platforms is nothing more than a rifle shot.   The only consideration after it’s been fired, beyond a brief evaluation of its effectiveness, is loading up the chamber and firing another. read more

What Might Happen in 2016

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Twitter will be acquired.  Wall Street loves a good story, but it hates losses.  With half a billion in losses in 2014, and the company on track to lose more this year than last, somebody is going to pull the plug.   Parenthetical prediction:  Twitter CEO Jack Dorsey will not survive the year and focus on Square, also losing money.

FANG stocks will accelerateFacebook, Amazon, Netflix, Google will continue to eat other industries with the possible exception of Netflix, where competition is coming out of the woodwork. read more

From Unicorn To Unicorpse In 12 Painful Steps

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My client was a unicorn way back in 2008, before the present day meaning of the word was repurposed to mean private companies valued at more than $1 billion.  Last time I checked, the company was worth about $10 million, a stunning loss of 99% of the company’s value.  Here’s how the company’s 12 step ascent and descent went:  

  1. Invent a new financial product.
  2. Validate the concept by putting personal capital at risk.
  3. Fearlessly try new ways to sell the product and show-up every day willing to reinvent the company.
  4. When when the right marketing mix that is found, make a huge, eight figure bet on it.
  5. When profits are accelerating, bring in private equity investors as majority shareholders to “scale” the business further.
  6. Begin by augmenting the founding entrepreneurial management team with professional managers.
  7. Let the professional managers refine the company’s processes and practices such that they are “customary and reasonable” to reduce/eliminate any liability claims from future shareholders or stakeholders.
  8. Use the stable earnings of the company to take on nearly a billion in debt and use the bulk of the proceeds to pay dividends to private equity investors and founders.
  9. Watch the founders get neutered then ousted by the private equity investor.
  10. Watch the private equity firm use its close ties to Wall Street to get a bulge bracket investment bank to take the company public.
  11. Months after the initial public offering, read a press release announcing a new strategic direction for the company.
  12. Watch the stock go into free fall as earnings swing from positive to negative under a massive debt load and management distraction.

The inflection point began at step seven in my view.  Perhaps this was nobody’s fault per se.  How could the company orchestrate a liquidity event with entrepreneurial skeletons in the closet?  For all the other unicorns out there, maybe this offers a cautionary tale. Step eight? Perhaps some restraint.  Step 11?  The most egregious in my view. Investment banks and private equity investors are all about the forecast, but in this case failed to see or acknowledge an oncoming train? read more

A Christmas Story

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Just a few weeks before Christmas, I was a volunteer at a holiday party for underprivileged children.  Underprivileged isn’t my word.  To get to the party they had to be identified as ‘at risk’ by their teachers.

I was helping my friend Carol who had been a volunteer at the event for several years and ran the ornament booth. Groups of kids, organized by their elementary school, descended upon our ornament station along their merry journey to all the booths, each one created exclusively for their delight. read more

The Spouting Whale Gets Harpooned

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With his high profile arrest and perp walk this morning, Martin Shkreli has a massive public relations problem on his hands.  As the photo demonstrates, the full force of the law is lined up against him.

Mr. Shkreli is the hedge fund manager turned pharmaceutical entrepreneur who provoked outrage when his Turing Pharmaceuticals increased the price of cancer and AIDS drug Daraprim by 5000%

I would offer his current problem with the media has its roots in a poor public relations strategy right out of the gate.   Sometimes blunting exposure is more important than gaining exposure.  Better to lay low and gauge sentiment than arrive on the scene with guns blazing.  His 5000% price increase might have ultimately faded from view if he stayed out of the spotlight.  And what he learned from the reaction of a smaller more manageable audience might have given him clues how to manage a larger national audience. read more

50 Questions Your Business Plan Should Answer

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Sadly, most investors don’t read business plans.  However, writing one is the only way you will be able to answer the following 50 questions you will be asked before investors show up to the closing table.

1. What is the price of your product or service and why?

2. How much capital is required to execute your business plan?

3. How much is the company is worth?

4. What are your company’s existing products/services?

5. What are the use of the proceeds?

6. On a summary basis, what is the historical financial performance of the company (even if, and perhaps particularly if, you have no revenues)? read more

APPL In, T Out & The Remains of the Day

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In March of this year, Apple Inc. was added to the elite, 30-member Dow Jones Industrial Index, and AT&T was unceremoniously removed.

In their press release, S&P Dow Jones Indices, said “The timing of Apple’s addition to the DJIA hinged on two stock splits: Apple’s 7:1 last June and Visa’s 4:1 on March 19th this year.”

Because the Dow is a price weighted index, the March 2015 Visa split underweighted the information technology sector, while Apple’s earlier split will enabled it to join the Dow index without a disproportionate effect. read more

Pfizer: Representation Without Taxation

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Inversion sure is the right word for the Allergan/Pfizer deal.  Because what got the colonists lathered up enough to fight a war against the one global super power at the time was taxation without representation.

Somehow that idea got turned on its head, and now one of the largest drug companies in America wants the representation the United States has to offer without the commensurate taxation (all this, mind you, from a voter registered as Republican).

From a shareholder perspective, it’s easy to connect the dots.  Lower taxes means higher earnings, and higher earnings means a higher stock price, and presto, shareholder value has been increased.  What else would anyone expect the senior leadership and board to do? read more

Where The Rubber Hits The Road: Investor Presentations

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Among investors, there’s a premium placed on the selling and presentation skills of the founder or CEO. Investors in private companies know their payday will only occur if the CEO or founder can sell the company or take it public. Investors in public companies want to know the CEO can continuously attract new investors that will offer them the liquidity they need to get out.

This is why you hear investors say things like: “I’d rather invest in a really good company where the founder/CEO ‘gets it’ than a great company run by a physicist.” And so, it this one regard, style actually does finally win one over substance. read more

American Funds: Call Me

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Like a lot of people in my business, I have Bloomberg TV and CNBC on all day in my office. I like the ads almost as much as I like the stories.

The ads interest me because I can see, or think I can see, the marketing strategy behind it.

At the moment, American Funds, a prolific advertiser, is running and ad that makes my Spidey sense tingle.

The tingling comes from the voice over which says something like this proven, unique approach has resulted in a superior long term track record.

Could it? My experience on the marketing end of financial services is that even facts which are true can’t be said for fear of blowback. And here’s a fact American Funds is broadcasting to the world that would be very difficult to be true in absolute terms. read more

Investor Relations and Public Relations: Uneasy Bedfellows

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The words investor and public relations roll off the tongue with such ease that it seems yet another confirmation the disciplines share a cozy symbiosis.

They don’t.

The notion that increased media exposure leads to increased investment rings false for issuers primarily focused on gaining institutional investors.

The reason for this is simple.  For equities, buy (and sell) decisions are primarily driven by earnings and earnings growth.  And with instantaneous access to new and consistently issued financial information every 90 days, spotting a meaningful, or at the very least an interesting change in earnings or earnings growth is easy.  In some cases, it’s just a matter of managing alerts. read more

Your Investor Relations Media Plan Made Easy

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If you are a public company and trying to decide what media you should be focusing on, then the answer is actually very simple: Dow Jones, Reuters and Bloomberg.

That’s it.

Other earned media exposure, wherever, is not useless in support of an investor relations program, but it represents a very inefficient way to make progress.

This simple strategy, on the other hand, owes its existence to the denominator problem, which is this: the amount of time investors have to consume messages is fixed while the amount of information, and now content, competing for their attention i.e. the denominator — is growing exponentially.

Numerically, it’s not a happy quotient.

Therefore, to grab the attention of investors, it’s best to focus on media outlets that are integrated, literally wired, into their workflow. Dow Jones, Reuters, and Bloomberg all have trading and portfolio management news solutions, and they sell them aggressively all over the world.

By focusing on these three media outlets only, you can deliver exposure to your prospects through a medium that he or she stares at for eight to 10 hours a day.

Hey, who doesn’t love a broadcast interview? But if you don’t have the time (and really, you shouldn’t), the best, most comprehensive alternative strategy is, thankfully a straightforward one.

Read more: http://www.nasdaq.com/article/your-investor-relations-media-plan-made-easy-cm538874#ixzz3qiL3Ez39

CEOs Who Made Me Scratch My Head

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In October, two CEOs made me scratch my head.  One in a questioning fashion, the other in an admiring fashion.

I admired Frank Bisignano CEO of First Data Corporation (FDC) for striding onto CNBC’s stage perched atop the New York Stock Exchange moments after his company went public.

OMG, every lawyer in the deal was probably having a coronary.

Silence and not conditioning the market after a public offering is a sacrosanct principal of securities law. At least, that’s how it’s been explained to me by legions of counsel over the years.  There is a fear that talking about any subject outside of what the prospectus says might be deemed as conditioning the market.  Then there’s a fear that the simple act of communicating, even if it’s what’s said is in the prospectus, might be deemed as conditioning the market. read more

What Is The Value of Media Exposure? Millions

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Almost every prospective client I’ve talked to over the last 30 years has asked, ‘What is the value of media exposure?’ My answer: Millions. Few prospects take my answer seriously even though they should.

However, the current U.S. presidential race offers an unusual degree of insight into the value of media exposure. Here’s the nib of it: Donald Trump has spent just 12.53% of what Hillary Clinton spent for the period 7/1/15 to 9/30/15. Despite this he’s in the thick of the race and is leading the Republican pack. read more

What Wealth Advisors Should Say To Clients Now

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With a dip of more than 11% in the S&P 500 since July 20 and continued volatility, what can advisors say to jittery clients?

For long term investors, nothing applies a calming salve better than a discussion about dividends.

Remember, during almost any 10-year period, approximately 40% of the total return from the SPY came from dividends.

Given this, a swoon in asset prices is concerning, but if dividends remain viable, there’s much, much less for investors to fret over. In fact, there are significant profits to be earned from dividends in a correction. read more

Bezos: Call Me

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Were it I was head of media relations at amazon.com when the New York Times revealed some less than civilized employment practices there.

Finally a media relations challenge that, in my view, will fill the pages of communications and crisis management text books for generations to come.

Unknown at this point: Will these case studies portray Amazon’s response as exactly what companies should do in crisis or exactly what they shouldn’t do?

Taking the temperature of this situation at this moment in time, I’d say Amazon has stumbled out of the gate. read more

What does Jack Dorsey see?

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At this point, I’m not sure.

Not to say that Mr. Dorsey will not earn his place in the pantheon of Silicon Valley legends.  He will.

What I’m less sure about is his understanding of the capital markets.   So after taking Twitter public, is he going to take mobile payments company Square, public too?

My read of Twitter’s income statement and balance sheet indicates they have not used the proceeds from their $1.8 billion IPO efficiently (or even completely).  Research and development expenses went from $594 mm in 2013 to $691 mm in 2014.  Marketing expenses went from $316 mm to $614 mm.   Even though Twitter posted a $577 mm loss in 2014, on a cash basis, its operating activities threw off $81 mm in cash. read more

FANG Today, Toothless Tomorrow?

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FANG stands for Facebook, Amazon, Netflix and Google.

The term, emblazoned on the front page of yesterday’s edition of USA TODAY, was popularized by CNBC’s Jim Cramer.

Some think the FANG clan is unstoppable, and looking at the trajectory of technology and commerce at this moment, it’s hard to see the dominance of these companies ever waning.

But many may remember the portmanteau Wintel as well, which referred to the total dominance maintained by Windows (as a proxy for Microsoft) and Intel.

Wintel had meaning inside the tech industry, but in the early 1990s among investors it represented the duopoly that was a ‘must have’ in any growth oriented portfolio. read more

The Media is Not Biased

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The most popular past time among people who care about the news and media is discussing how biased it is.

It’s not. Here’s why:

  • Almost all media in North America publishes on a for-profit basis.
  • Profitability requires providing audiences with what they want.
  • All editorial agendas are driven by satisfying the needs of the reader.
  • Looking at the media is like looking in a mirror. It serves up to you its best estimate of exactly what you want.
  • Metadata from digital publishing gives publishers ever better data upon which to base their editorial decisions.
  • People who say the New York Times is biased, are poor readers. Journalism 101 requires presenting the other side of the story, which the paper scrupulously adheres to.
  • Many who complain about the bias of the media have never worked in the media.

Another unappreciated facet of perceived media bias is that few journalists have the time for it. The chart shows on an inflation adjust basis, newspaper advertising revenue has retreated to 1950 levels.

To put this into perspective, consider when Google filed for an IPO on August 3, 2004, its total revenues were $2.6 billion on an annualized basis. In their 2014 annual filing, Google showed expenses of $49.5 billion. As a result, if Google’s revenues retreated to 2004 levels, they would report a loss a $46.9 billion. read more