Inaugural "Doh!" Award Goes To...

...Analyst Susan Kalla of Caris & Co., who, according to BusinessWeek, said a hypothetical Microsoft takeover of Time Warner would be a "great move."  Her thinking?  Microsoft could take advantage of Time Warner's low multiple without hurting its stock price.

I don't know Susan and it's certainly possible that she was misquoted.  If not, however, I have some questions: Where was she five years ago, when AOL bought Time Warner?  Would she care to expound on why a proposal frighteningly similar to what has been deemed the most disastrous merger in business history would be a "great move"?  Would she like to explain how the same company will be effective at competing against IBM and Linux on one end and sitcom production companies on the other?  Would she care to hazard a guess as to where the headquarters of this fantastic new $100 billion corporation will be located?  Would she...  Never mind.

Susan, we are proud to present you with the inaugural IO "Doh!" Award.

Full Disclosure: The true inaugural "Doh!" award should go to me: I thought the AOL-Time Warner merger was a good idea.

UPDATE: This award was originally titled a "Genius!" award, but one reader's comment reminded me that even geniuses occasionally have moronic ideas.  So, to focus the award on the idea rather than its progenitor, I've changed the name.

Comments

[John Shiz]

Where's that first guy now.
Dont know anything about Caris and Co but it seems like they come up with some ridiculous ideas maybe to just get some attention.

[Victor]

It isn't surprising that these analysts haven't managed to come within 20cents of predicting google's earnings in any quarter since the company has gone public. Most of them have very little useful insight to provide unless they're spoon-fed it by the companies cover. Occasionally when they do propound a theory it's so patently absurd that one is left wondering why anyone follows what they say. Henry, i think you're one of the few exceptions in this area, but I guess you don't count as an analyst anymore.

Here's an interesting point that Eric Schmidt makes:

http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060510:MTFH04516_2006-05-10_17-38-37_N10453037&symbol=GOOG.O&rpc=44

"There is a surprising, if not bizarre (fact that) more competition in auction can actually produce more revenue, rather than less," Schmidt said in introductory comments at the company's annual press day at its Mountain View, Calif. headquarters."

I'd be interested on your opinion of that Henry.

cheers

[King Troll]

So Henry , your first piece in about a week is about let me guesss, Google. Big shock there. ALso, o you are picking on some mediocre analyst because of her opinion, but disregard the thousand other analyst. I think this woman just broke up with you and you are trying to discredit her.

Sorry dude, hope she didnt hurt you too bad.

Your stock is dropping hard Henry. Really hard bro.

[Henry Blodget]

For all I know, Susan is brilliant. This idea isn't, though. But just to be clear that the award is for the idea, not the person, let's change the name...

[King Troll]

On another note, I need some advice bros. I nknow there's an ad exec here. I will be spendng about $3000 per month with them going forward and increase it to $5000 after I open a few more stores.

Should I negotitate this ads further? What do you think? Is it a good deal or am I getting ripped off?

This is every other week for 5 weeks. Every week is the same as the one shown with the total off all on the bottom:

http://img.photobucket.com/albums/v655/Khalid/ads.jpg

[Gerber]

King Troll reminds me of a Howard Stern hater who keeps tuning in to see what will make them mad next. If you don't like Henry's thought-provoking ruminations, tune out. And stop with the advice-seeking. No one cares.

[King Troll]

Gerber you fucking retard. I like Henry, always have. I am allowed to comment if I think he's screwing up. He thought I had a point also, so he modified his post.

I don't choose to follow him blindly though. That's why there is a comment feature on his blog.

[JimS]

The AOL TIme Warner was a win for AOL. They purchased a real company with overvalued stock.

[Neal Lachman]

Henry,

Several months ago I landed on Internet Outsider, and have visited almost every day. As you may remember, the first comment I made on this site concerned your October post on Microsoft buying AOl.

You still owe me feedback on that!

This post reminded me of that particular one. However, Ms. Kalla may not be so Doh-ish after all. It is far-sought, but it is also not ridiculous that the likes of MSFT would purchase the likes of a TW.

Remember, MSFT is diversifying in numerous ways. It is more and more becoming a content-enabler, simply coming from its growth as content owner (software is content).

MSFT's purchase of TW (if every or whatsoever) would be less far-sought as Comcast's attempts to buy Disney. As a matter of fact, MSFT and Gates on personal level are involved with Comcast in a major fashion.

Content alone, however, should/must not be the prime reason why MSFT would be buying TW. It is the company as a whole, with all its assets, which is basically a larger version of Malone's Liberty Media. The assets could be of major interest and importance for MSFT in order to grow into the new markets they are entering, no matter whether they do so willingly or reluctantly.

Kalla is right in her opinion that this purchase would not affect MSFT in a major negative way. It would mostly be a small dip in Gate's personal wealth since it is linked with MSFT's share value, but I don't think he and the loyal band of shareholders would lose too much sleep over it. The share will rise in value one way or the other if or when it would decline due to some major move like purchasing TW.

MSFT will most likely not purchase any major/behemoth business, because they'd rather invest and partner. Look what they did with AT&T Broadband in 1998. They invested $5B in return for 10% equity and the promise that set-top-boxes would have the Windows CE operating system. The latter deal blew apart for apparent reasons, but it is the deal and the idea behind it that indicates MSFT's willingness to dig deep in its pockets to partner and/invest in strategic companies.

If this is a stupid comment, I am willing to share the Doh Award with Kalla.

[King Troll]

Henry, check out the new Google Co-Op bro. It's like user created content pages! Google mixed with the Wikipedia.

No, I dont sleep.

[Still Inside]

Like GBase, Google Co-op inheriently competes with GOOGs own paid search model by offering advertisers essentially the same service (bringing customers to their wares) for free.

The co-op idea has been around for eons. There's a thing called the Open Directory Project (dmoz.org) which worked great until every spammer in the world became the foxes guarding the chicken coop there.

If GOOG had a long-term plan, I presume it would entail mining the user database generated by these things to solicit the money-making paid search model (spamming the spammers, as it were).

This would be fine if it weren't for the fact that the company's brand is on the line, and that brand is about 80% of the company's value right now. Millions of users are going to try "the new thing the geniuses are Google are cooking up" and find out that its another useless pile of crap that's been overrun by every viagra salesman in the known universe.

Google may have thousand of geniuses working for them, but the top management continues to exhibit incompetence when it comes to pointing their talents in non-destructive directions.

SI

[King Troll]

Check out Google Trends.

Still Inside FRAT to your post. "Fuck reading all that"

[Walter]

"The AOL TIme Warner was a win for AOL. They purchased a real company with overvalued stock."

Exactly what I was thinking, Jim. But MSFT stock isn't remotely overvalued relative to AOL at the time. MSFT is overvalued but so is TWX to about the same degree.
MSFT needs content but paying $85B (minimum) for last century's content is a bet I wouldn't want any part of.

[Neal Lachman]

Walter,

Do your homework, pal. 20% of TW's value is represented in TW Cable.

I agree on one thing tho. The future doesn't seem bright for companies such as TW. We have a major investment in a company I co-founded. It plans to connect homes and offices with fiber optic wires and deliver 1 Gbps speeds. This technology will render Cable and Telcos obsolete. Even Verizon's FiOS service doesn't come close to the abilities of this service. This means that companies such as TW and Comcast will see a huge part of their market cap cut, if not completely waltzed over by the likes of my investee company (www.lbdci.com)

However, if you ask me... I would love to own content such as TW has. Access to this content will be had, e.g., partnering up, revenue sharing (pay per view, on demand library etc.), or by way of buying ourselves into these companies.

Viacom's Redstone is known to say "content is king", Cisco's reps have been heard saying "Infrastructure is God". If MSFT can combine the two, and intertwine it in its bottom-line, it can take full advantage of those industries. My company is also working on it, from an operational perspective.

A marriage or union between content and content-enablers and infrastructure companies is a match made in heaven. I am sure some of you may feel it's a match made in hell.

[Neal Lachman]

Yahoo rebuffs Microsoft offer

Terry Semel, chairman and chief executive of Yahoo, said on Wednesday he had turned down an offer from Microsoft to buy a stake in Yahoo’s search business and that discussions about Bill Gates’ software group acquiring the company had not taken place.

http://news.ft.com/cms/s/94131390-e115-11da-90ad-0000779e2340.html

[P-]

Maybe for analysts, the following applies: You only as good as your last move and not your next or current one... that maybe even an optimistic view in that.

[Walter]

"Walter,
Do your homework, pal. 20% of TW's value is represented in TW Cable."

First off, I'm not your pal. If I need a pal I'll get a dog.
Secondly, I said absolutely nothing about TW cable.
TWX is the ticker symbol for TW/AOL.

[Walter]

Is GOOG cheap enough yet?

Current year P/E projection;

YHOO - 62.5
GOOG - 43.2
SBUX - 50.6 STARBUCKS

2007 P/E PROJECTIONS
YHOO - 43.58
GOOG - 29.79
SBUX - 40.86

[John Shiznit]

Well the bears dont necessarily beleive the analyst projections.

SBUX has the most predictable earnings of the three. Though they have to facing the law of large lattes soon also.