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Tiny Company Called Microsoft Your Best ’11 Tech Play

In Growth and Business Strategy, Microsoft on February 19, 2011 at 4:42 pm

By James Altucher

My top pick for 2011 is a tech stock. That may not surprise you considering the big run by technology companies in the second half of 2010. But what may surprise you is what tech stock I’m throwing my weight behind: A tiny company called Microsoft (NASDAQ: MSFT).

Admittedly, Microsoft hasn’t given investors a lot to be happy about lately. MSFT stock has been kicked to the curb, down about -8% this year while the broader market has gained about +12%. If you’re a momentum investors this may turn you off, but I believe that the time is right for the rotation of capital back into this old standard.

Why? Here are some of the biggest reasons:

Stock Buyback Plan: Microsoft is currently working on a $40 billion stock repurchase, with $10 billion of that happening this year. That’s a lot of shareholder value.

Microsoft Flush With Cash: Though MSFT is often only mentioned derisively in the same sentence with Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG), one thing it shares with the two tech powerhouses is a war chest brimming with cash. Microsoft has $30 billion in the bank – and that’s even after paying a decent dividend of 2.3%, something neither Google or Apple offer right now.

Bargain Valuation: Microsoft trades for less than 8 times next year’s earnings (when you back out cash). Compare that to the S&P 500 which trades for about 13 times next year’s earnings. That would be impressive enough, but the icing on the cake is that MSFT earnings will grow twice as fast as the S&P earnings over the next five years.

Predictable Revenue: Much of MSFT’s revenues have shifted to subscription revenues making their earnings very predictable. The company is no longer as reliant on flashy software launches and one-shot sales.

Kinect for Xbox: The Kinect video game controller is is bigger than people think. And that’s saying something, considering the new gadget topped 2.5 million units sold at the end of November after less than a month on the market! Sales of the motion controller will top $500 million next year and $5 billion over the next five years. What’s more, applications will be created for it with very high margins.

Emerging Market IT Sales: The developing world is opening up its wallet when it comes to corporate IT. Though it may not be flashy, Windows remains the gold standard for computer OS software in the workplace so MSFT stock will be the prime beneficiary of this emerging market boom. Followed closely by fellow corporate IT powerhouses Cisco Systems (NASDAQ: CSCO) and Intel (NASDAQ: INTC), of course.

Twitter Restricts Use Of Its API, Could It Charge Next?

In Social Media, Social Viewing, Twitter on February 11, 2011 at 4:31 pm

Twitter will stop whitelisting applications to its API. What does that mean in English?

Developers can build applications on top of Twitter, like TweetDeck or Klout, by using its API to pull in its data. Some apps take in a lot of data, and up until now Twitter would allow them to be “whitelisted” to use the API more intensively. Now they’ve announced to developers that they will “no longer grant whitelisting requests.” Apps that are already whitelisted will keep their privileges, but if you were waiting until today to apply, tough luck. (Via Regular Geek)

Twitter says if you’re unhappy about it you should try to work harder to make do with the new limitations.

Why could that be? (Bear in mind we’re just speculating here.)

They’re having problems scaling so they want to cool down the API for a while. Most of the activity on Twitter is via the API, since most people use Twitter through apps, whether it’s Twitter’s own apps or third-party apps. Twitter hasn’t said that’s the reason, but Twitter’s scaling difficulties are legendary and this might be the reason. In which case, the move could be temporary.

Twitter has a big enough developer ecosystem now, thank you very much, so it’s going to stop supporting the rest. That’s what Regular Geek thinks, writing they’ve “essentially … decided that they have had enough support from the small developer.” We’re doubtful that’s the explanation — platforms like Twitter are always in competition with other platforms for developer support. And with oodles of cash in its coffers, Twitter can afford to keep supporting developers.

Maybe Twitter plans to charge for its API? That’s always been rumored to be a future business model for Twitter. Right now they’re focused on advertising, but the first time they made money was by charging Google and Microsoft for access to its “firehose”, meaning all of the tweets in real time, and they still do that. As companies like TweetDeck are starting to build a real business, maybe Twitter wants to charge for heavier access to its API.

Read more: http://www.businessinsider.com/twitter-restricts-use-of-its-api-could-it-charge-next-2011-2#ixzz1DfWPE77F

How To: Build a private collaboration site on WP in 5 minutes

In Facebook, Real-Time, Social Media, Social Networking on January 29, 2011 at 10:27 pm

As you have probably gathered by now, I’m a huge fan of WordPress and use it in lots of different kinds of projects. There is one use for WordPress, and WordPress.com especially, and that’s as a collaboration tool. Believe it or not, in about 5 minutes or less you can have a slick, private, WordPress-based collaboration website. I think once you see this, you won’t think of WP in the same way.

I’m going to use WordPress.com as the example for this because making a site private and hidden on WordPress.com is just a couple clicks. I’ll talk about how to do this with a self-installed WP setup at the end of the post.

If you don’t already have a WordPress.com account….

1a. Create your WordPress.com account

Just in case you’re one of the few people who don’t have an account at WordPress.com, head over there and click the big, orange “Sign up now” button to get started:

1b. Pick your blog address, username, and finish the form.

One thing about WordPress.com that people don’t realize that while often you might want your blog address (e.g. tnwteam.wordpress.com) to be the same as your username (e.g. tnwteam), it doesn’t have to be. So you might set the blog address as something for your team, but change the username to something more to your liking.

Create a good password, put in your email address and continue.

You can edit the profile information if you wish, the important thing is looking for the email from WordPress.com confirming your sign up.

When you get the email, click the link (which will send you to your browser). On the page you arrive at, chose the “Login” option, not “View your site”

1c. Make the blog private.

Unlike the folks who already have a WordPress account, if you are creating an account and setting up an blog you aren’t asked if you want to make your private or not when you first set up your site. You’ll have to change the setting once you’re logged in and on your site’s Dashboard.

From the Dashboard, scroll down to Settings, click the triangle to open the menu and click “Privacy”. Choose the third option for making your blog private and click Save Changes.

Jump down to step 3 to continue…

If you already have a WordPress.com account….

2a. If you have a WordPress.com account already, create a new blog

Log into WordPress.com, and from the My Blogs menu, select “Register a new blog.”

Pick a name/address for the blog and give it a title (if you want). Just above the big orange button are three radio buttons, click the one marked “Private” and then “Create Blog”

From there head to the Dashboard of your new blog:

3. Setting P2 as the site’s theme

P2 is the successor to Prologue which is an AJAX-powered WP theme that is like blogging-meets Twitter-meets collaboration tool. Automattic uses P2 internally for the exact purpose I’m telling you about here.

Scroll down until you see the “Appearance” button on the left. Click it and you’ll come to the screen to pick/change your blog’s theme.

In the search box enter “p2″ and click “Search”. You should get only one result. Below the thumbnail for the theme, click “Activate”:

4. Add Users

Right now you’re the only person who has access to the blog. That’s not terribly collaborative, is it?

If you know the email address your team members use on WordPress.com, just click “Users” on the right and enter the email address. In the Role pull-down menu Select Editor or Author (Editors can edit and delete all content, Authors only their own) for most team members, Administrator if someone is going to help you manage the site:

If you have to invite people, click the “Invites” link and check the box to make them a contributor on the site (you can upgrade them to Author or Editor later):

5. Collaborate!

That’s it for the set up. Just click the name of your site in the header and you should see something like this:

Post updates, attach files and images, whatever is needed. The “Tag it” space it supposed to act as an organizational tool. Use project names, phases, project segments, whatever works for you here. When you’re ready just click “Post it.” You don’t need to create posts through the regular “New Post” method through the Dashboard (though you still can if you wish). You team can update and reply as needed all right here. Best of all, items someone hasn’t seen will be highlighted in yellow when someone comes back to the site!

Team members can focus on the areas of the project (that you’ve set up by using tags) that they are interested in or look at the whole area at once.

Best of all not only is the site secure, but you can export the data back out when you’re done in a variety of formats.

Not to shabby for something that took five minutes to set up and is completely free!

For self-hosted WordPress users:

If you have your own hosting space and domain and want to do this yourself, it won’t take much longer, but you will have to do some downloading and installing yourself.

After you have a nice, fresh WordPress install ready, go to Appearance and click the “Install Themes” tab, search for P2, install it, and activate it:

Click “Plugins” then “Add New”. Search for “registered users only” and install the plugin from Viper007Bond:

When the plugin is installed, activate it.

Now you’re essentially where WordPress.com folks are. Just add users to your WordPress site and they will be able to get in and no one else. You can, if you wish, to block search engine spiders under “Privacy”, but they can’t get in anyway. It’s a nice extra step though.

Here’s how the folks at Automattic talked about P2 over a year ago…old, but still the best descriptor/example I’ve found:

Now…

Get Collaborating!

Source: Tris Hussey thenextweb.com

Lloyd Blankfein’s Secret Facebook Feed

In Facebook, Social Media, Social Networking, Web 2.0 on January 12, 2011 at 4:26 am

According to a Bloomberg report, despite their firm’s recent investment in Facebook, many Goldman Sachs employees aren’t familiar with the workings of the social-networking site, since it was until recently banned in the office for productivity reasons (and most Goldman employees are, naturally, so focused on minting money they never managed to create profiles on their own time). Which is why, the news service explains, an executive recently held a special training session to walk them “through the basics” of Friending, Liking, and Making Sure You Save Your Drunk House-Party Photos As Private. That they expect us to believe this shareholder-pleasing nonsense is, frankly, an affront to our intelligence. This is Goldman Sachs. They’ve secretly been on Facebook the whole time, stalking and super-poking and creating complex derivative packages based on everyone’s Likes list. How do we know? We took a screen-grab of Lloyd Blankfein’s news feed right before new security measures were put in place.*

Goldman Facebook

*Many thanks to the fine people at Slate.

What NOT to Do When Advertising on Social Media

In Branding, Business Solutions, Facebook, Social Media, Social Viewing, Twitter, YouTube on January 10, 2011 at 11:38 pm

Note: This article was originally published on Open Forum.

Facebook Deals, Groupon Stores, Foursquare, Gowalla — small business owners can take their pick when it comes to advertising through social media. It takes more than signing up on a few sites to pull in the dough, however.

Savvy retailers know how to use social media tools to their advantage while avoiding the potential pitfalls.

Make sure you’re being smart about how you advertise by not making these errors:

Making Rewards Too Difficult for Customers to Earn

Let’s say you own a hair salon and decide to offer a discount to the person who “checks in” the most often at your shop by a certain date. Word spreads quickly and before you know it, someone has won the coupon and that person continues to be your most frequent customer. The problem is no one else can beat that person for the reward.

If you have a business that requires foot traffic, advertising deals to your most loyal customers can be a useful tool. However, if you make it too difficult for others to earn that reward, they might just go to another salon. A smarter approach would be to offer a variety of ways for customers to win rewards, such as by checking in a certain number of times or by fulfilling other conditions. Here are some suggestions from Foursquare and Facebook Deals:

  • Check-in Specials: when a user checks into your venue a certain number of times, e.g., “Foursquare says you’ve been here 10 times? That’s a free drink for you!”
  • Friend Deal: offering discounts to groups of people when they check in together.
  • Charity Deal: create a Charity Deal to make a donation to the charity of yours or the customer’s choice.
  • Wildcard Specials: requiring your staff to verify some extra conditions, such as customers showing a badge on their smartphone before receiving the special discount.

Failing to Offer the Right Rewards

Perhaps you opened a diner but it’s in a remote location. You decide to reach out to your local community by offering special deals on Foursquare but the response has been minimal. What did you do wrong? Foursquare recently introduced a tool that allows businesses to customize their deals according to a range of real-time data about their venue and their customers. The stats include the number of unique visitors who checked into a place via Foursquare, the time customers arrived, the male-to-female ratio and which times of day are more active for certain patrons. Business owners can also offer instant promotions to try to engage new customers and keep current ones. Not all social media sites offer this feature. For other ideas on how to gauge your customers’ preferences, see the next point.

Not Addressing Customers’ Complaints
Ignore customers’ comments at your own risk. The arrest of Vitaly Borker, owner of DecorMyEyes, is an extreme example of what can go wrong when customers are mistreated. “When people can openly talk with, about, and around you, screwing them is no longer a valid business strategy,” said Jeff Jarvis, author of What Would Google Do? Rather than ignore or attempt to hide your customers’ complaints, engage them through a blog or Twitter account. Dell learned its lesson and now offers IdeaStorm, a site that lets customers discuss and vote on ways for Dell to improve its products and services. Starbucks offers a similar approach called My Starbucks Idea on a website and Twitter.

Figuring out what works best for your company can take some time, but with creativity and research, the benefits can be worthwhile.

Read more: http://www.businessinsider.com/what-not-to-do-when-advertising-on-social-media-2011-1#ixzz1Ag8FQvwd

 

Social Network: Tech Bubble 2.0?

In Business Solutions, eCommerce, Facebook, Growth and Business Strategy, Social Media on January 10, 2011 at 11:27 pm

By: Dian L. Chu, Economic Forecasts & Opinions

Talk about another internet bubble.

New York Times broke the news on Jan. 2 that Facebook, the social network website, was able to get $500 million in funding–$450 million from Goldman Sachs and $50 million from Digital Sky Technologies, a Russian investment firm that has already pumped about half a billion dollars into Facebook.

But the real eye popping fact is that this latest deal values Facebook at $50 billion. That’s right, $50 billion, which is more than the current market cap of Time WarnerBaiduYahoo, and almost twice that of Dell, Inc.

Facebook P/E Multiple = 100+

Even though Facebook is not publicly traded, the company has raise about $850 million to date in total through a secondary market. Facebook’s value reportedly has roughly tripled over the last year–not bad for a company that’s only in business for six years.

Facebook does not disclose its financials, but its 2009 revenue is estimated to be around $800 million. Most recently, analysts figure the company could bring in as much as $2 billion in revenue annually.

So, if we take the $2 billion in revenue, the $50 billion new valuation, and assuming a 25% net margin (which is very generous), Facebook’s P/E multiple is an astonishing 100x..or even more, dwarfing even the high flyer Baidu’s PE ratio of 83. For comparison purpose, Google’s PE is around 24, close to that of Apple’s 22.

Goldman Sachs = Froth

Then, whenever there’s an institution player as big as Goldman Sachs wheeling and dealing, you know something frothy is brewing.

NYT noted Goldman Sachs has taken a 1% stake in Facebook, and most likely is aiming to get the lucrative underwriting and advisory fees in a future IPO. In addition, Goldman also devised an elaborate plan to create a “special purpose vehicle” for its rich clients to invest in Facebook.

The grand purpose is that this vehicle, no matter how many investors are in the “pool”, is to be considered as one investor, so to stay below the threshold of an SEC financial disclosure rule. Although there’s no indication if this would go as planned, but if anyone could make this work, it would be Goldman Sachs.

Suddenly, Coupon Clipping Is In!

Another sign of bubble is that Groupon, a two-year old “social coupon” site that’s yet to hit $500 million dollars in revenue, had recently rejected a $6 billion takeover bid from Google.

However, you can’t fault Groupon for turning Google down. MarketWatch reported that bids for Groupon have risen 254% from $36 a share in August, to as much as $127.50 a share on Dec. 30. And according to TechCrunch, Groupon is in the process of raising as much as $950 million, at a valuation that could be as high as $7.8 billion.

Separately, LivingSocial, a website similar to Groupon, just closed a massive round of financing totaling $183 million, including $175 million from the Amazon. Both Facebook and Groupon are expected to issue IPOs in 2012, while Twitter, Zynga and LinkedIn are three other social sites that investors are anxiously waiting for their IPOs.

China’s Social IPO Rush

The social IPO rush is not limited in the U.S. Reuters noted that China’s largest social networking company–Oak Pacific Interactive– is gearing up for an IPO in the United States next year, among a few other Chinese Facebook clones looking to list in the U.S.

Oak Pacific owns China’s largest online social networking site Renren, which is similar to Facebook, and Nuomi, which is like Groupon.

Cash Out Ahead of The Herd

Meanwhile, companies in the U.S. and Europe have more than $1.5 trillion sitting on their balance sheets, and there’s also an improvement in the market for venture-backed IPOs. For now, it seems many of these companies are willing to throw money at anything related to social networking.

From that perspective, Facebook probably would be wise go to IPO sooner rather than later before the mood turns sour, and ahead of the social IPO herd diverting available capital.  Zuckerburg probably could benefit from consulting Mark Cuban on the art of cashing out using Cuban’s broadcast.com / Yahoo deal as an example.

A Social Tech Bubble?

If history is any indication, it seems most of the elements that shaped the 2000 dot com bubble are present and accounted for in the current environment, including but not limited to, rapidly increasing valuation, market over-confidence and speculation, and excess liquidity.

So, could Facebook et al end up being a fad like Delicious? Only time will tell. Nonetheless, Microsoft probably won’t worry that much, since latest deal just more than tripled the value of its holdings when it paid $240 million for a 1.6% stake in Facebook in 2007.
Read more: http://www.businessinsider.com/social-network-tech-bubble-20-2011-1?utm_source=%23frankguillen&utm_medium=twitter&utm_campaign=FrankGuillen+Buzz#ixzz1Ag5fFKCY