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Eric Benhamou: The Saga Of Palm (Part 2)

Posted on Thursday, Sep 13th 2007

With an unstable market, Eric knew the price of Palm was not going to sustain at those highs. But what exactly happened when the market crashed?

SM: It is hard to sustain that kind of price range … EB: We knew the price had to come down, but we did not exactly know how it would come down. We also saw how history unfolded in terms of the crash. It turns out that we started trading on March 1st of 2000, and I think NASDAQ had already passed 5,000 and was within 48 hours of its all time record. Had I wanted to time it better for our shareholders, I don’t think I could have come closer. >>>

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Web 3.0 & News Corp (Part 4)

Posted on Thursday, Sep 13th 2007

Acquisition Targets

Over the years, News Corp. has been acquiring businesses that would help it close the gaps in its portfolio. The MySpace acquisition helped it to leapfrog in the social networking space and with the recent acquisition of Dow Jones it will emerge as a leading player in the financial news and information space. The Company will, most likely, continue to pursue strategic acquisitions in the segments where it is weak or has a very small presence and with the help of some big-ticket acquisitions it would redress.

While talking about acquisitions in the online space, the first thing that comes to my mind is Monster, the leading job search engine. Monster has been struggling of late and has lost its leadership position in the US to CareerBuilder. The stock has fallen to $34.20 from its 52-week high of $54.79. The online job industry is getting very competitive for stand-alone companies and this plays well into the hands of News Corp. who doesn’t have a presence in the space and would be more than happy to create one at a good valuation. >>>

QualComm: The Aftermath

Posted on Wednesday, Sep 12th 2007

By Vijay Nagarajan, Guest Author

In the article “QualComm: Legal Battles Galore”, we reviewed the lawsuits that the company faced and also traced their genesis. In this article, we will look into the impact of these law-suits on QualComm (QCOM).

There was definitely some action following these rulings –

  • Verizon (VZ) signed an unprecedented agreement with BroadCom (BRCM) that allowed the former to sell the disputed phone models. The carrier agreed to pay $6 for every QualComm-based EV-DO handset, data-card or smart-phone that it sells. The deal also stipulates a maximum of $40 million per quarter and a life-time maximum of $200 million for the right to use all six patents disputed by the chip-vendors.
  • QualComm has devised a software work-around for the “ITC patent” and has been working with its customers to get it in. Whether this is infringement-free is unknown.
  • QualComm told the court that if it barred the company from making chips infringing the “Santa Ana patents”, Sprint (#3 US carrier) may lose up to $2 billion. The company admitted that it had not pursued a work-around until recently while Sprint (FON) does not have a fall-back for QChat, the feature affected by such a ban.
  • Louis Lupin, the company’s general counsel resigned following the continuous reversals and legal misconduct reports.


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Eric Benhamou: The Saga Of Palm (Part 1)

Posted on Wednesday, Sep 12th 2007

In this second interview series with Eric Benhamou, we discuss his involvement with Palm. If you haven’t already, do read the first interview series for context [here]. As you know, Palm is in the midst of a great deal of change at the moment. However, it is an important company that established the PDA category, then led the SmartPhone movement. Somewhere along the way, however, things went wrong, and this interview with Eric would help us understand the history of Palm, and perhaps, assess its turnaround prospects on which I have written extensively. Overall, in the convergence device category, I still think Palm has a great opportunity ahead, IF they can clean up their act.

SM: We stopped at the point where Donna and Jeff had left 3Com. Later, the time came when you were ready to spin Palm off as a public company. So we can resume the discussion from there. What happened from that point on in terms of valuation and industry dynamics? What did you find waiting for you on the other end? EB: This all occurred at the peak of irrational exuberance. This was when NASDAQ went from 4,000 to 5,000 in a couple of months. In fact, at the time when we did the road show in February of 2000, NASDAQ was flirting with 5,000 – it was near record level. >>>

Web 3.0 & News Corp (Part 3)

Posted on Wednesday, Sep 12th 2007

Web 3.0 Framework discussion

News Corp. has got its Context right. Be it sports (FoxSports or Scout), entertainment (Fox or AmericanIdol), Social Networking (MySpace), games (IGN or GameSpy), Men (AskMen) or Photo-sharing (Photobucket) the Company is bang on in terms of Context.

If I am looking for men’s fashion and lifestyle information, there is no better place than AskMen. If I want to upload and share photos with my friends then Photobucket is the place to go to. If I want to know about the latest gaming reviews and previews then IGN is really helpful. Similarly, if I am looking for quality information on college football or basketball then is the place. >>>

Online Video Beneficiaries: Extreme?

Posted on Wednesday, Sep 12th 2007

The increasing popularity of YouTube and its compatriot social video sharing sites is driving the online video trend. Other trends like video conferencing and IPTV are also contributing to the increasing video traffic. The enormous amount of video traffic and the need for higher bandwidth is putting networking equipment players like Cisco in high gear. In my earlier posts on Online Video Beneficiaries, I have covered Polycom, Cisco, and 3Com. In this post, I will look at Extreme’s standing as an online video beneficiary.

Extreme Networks, Inc. (Nasdaq: EXTR) is a leading provider of Ethernet solutions. Its core product lines include Summit, BlackDiamond, and Alpine. Established in 1996, Extreme provides converged network solutions that support voice, video, and data over wired and wireless infrastructures. Its security solution combines secure switches from its Sentriant product line with CLEAR-Flow, a security rules engine. This combination is meant to enable unified wired and wireless network access and IP Telephony in a secure environment.

On the financial front, Extreme reported net revenues of $342.8 million in fiscal year 2007, a decrease of 4.4% over fiscal 2006 with net revenues of $358.6 million. Net loss including share-based compensation expense of $6.2 million was $14.2 million, a decrease from net income of $8.5 million in fiscal 2006. Restructuring charges amounted to $4 million and research and development expenses were $67.1 million in fiscal 2007. >>>

Enterprise 3.0 = (SaaS + EE + SME + TWS)

Posted on Tuesday, Sep 11th 2007

So the variable I talked about adding to the Enterprise 3.0 formula is Small Medium Enterprise (SME).

Why is SME important? You’ve heard me say this before. But let me reiterate.

For one thing, there are 25 Million of them, with an enormous spending power. To give you an example of a software company that successfully penetrated SME, I would point you to Intuit (Nasdaq: INTU). Intuit has a market cap of about $10 Billion, on a 2006 revenue of $2.3 Billion. Microsoft has unsuccessfully attempted to buy this company in the past, with the single objective of entering the SME segment via a killer app (small business accounting software). >>>

Web 3.0 & News Corp (Part 2)

Posted on Tuesday, Sep 11th 2007

Vertical Strategy

News Corp. is present in some of the most promising and rapidly growing verticals in the online arena. The Company delivers a platform of integrated sites spanning social networking, entertainment, lifestyle, games, sports and information. With its recent acquisition of Dow Jones, it will also be present in the key vertical of Business and Finance through WSJ and Dow Jones. I really like News Corp’s verticalization strategy. We will discuss the Company’s offerings in the different verticals in the following paragraphs.

Classified Listings
New Corp. through its various newspaper sites is present in the online classifieds segment. The newspapers have online listing for Jobs, Real Estate, Autos and Dating / Match Making. However, as we discussed before, it is a well-known phenomenon that classified advertising is moving online, and News Corp. fully recognizes that. So what are they doing to move with this trend? >>>