Tuesday, May 10, 2011

Microsoft buys Skype [HOT REPORT]

May 10, 2011
Microsoft buys Skype: A good move for Ballmer?
10:51 AM

Paul Sakuma,


By Tim Mullaney, Special for USA TODAY

Microsoft is buying Skype in a $8.5 billion deal for cash and assumed debt. The world's largest software company is paying a fairly rich price for Skype, at 32 times last year's profit before interest, taxes and non-cash charges, especially considering that Skype's operating cash flow had been almost flat since 2008.

Microsoft hopes to use the Internet calling service to beef up its Windows 7 mobile-phone operating system and its enterprise software business by adding Skype's voice capabilities, tech blogger Om Malik reports. The logic is that Microsoft can cut marketing and overhead costs for Skype, boosting profit enough to make the deal a moneymaker if it can sell Skype's voice-over-the-Web services to corporations. Malik calls the deal "a bet worth taking, especially for a company that has been left in the cold for so long."

Or was Microsoft CEO Steve Ballmer simply left to be the dumb money in Microsoft's biggest-ever deal, a role he played in the 2007 deal to buy aQuantive, the online ad agency and services company for which he paid $6 billion shortly after Google laid out half that much for online ad rival DoubleClick? It's a role he almost played, again, in the failed effort to acquire #2 search engine Yahoo for nearly twice its current market value.

The problem is a combination of Microsoft's storied bureaucracy and its persistent inability to create a money-making Internet division in more than a decade of trying. Last fiscal year, its online services division (including the Bing search engine, aQuantive, and the MSN portal) lost $2.36 billion on sales of $2.2 billion, a performance few companies would tolerate, especially in the relatively high-margin online advertising business. It's not as if these businesses are start-ups, either. Instead, they have limped along unable to thrive, with flat revenue and persistent losses, while entrepreneurial executives leave.

One glaring example is aQuantive, where sales grew 51% the year before Microsoft bought it. Three years later, in fiscal 2010, Microsoft's annual report blandly notes that advertiser and publisher tools revenue, aQuantive's core business, fell from 2009 even as the rest of the industry bounced back from the recession.

aQuantive's Razorfish ad agency was sold for $530 million in 2009 -- less than half what the same buyer, French ad-agency holding company Publicis Groupe, had paid for rival Digitas in 2006. Contrast that with what happened when Microsoft spun off Expedia in the late 1990s, a prelude to the one-time piece of MSN becoming the world's biggest travel agency.

Since Skype is a private equity-owned company packed with hired guns -- as Malik notes -- it's hard to expect them to stick around and build the business for the long term. And Microsoft's track record of replacing online entrepreneurs with top-flight managers is thin.

It's not clear who else would have paid the price Ballmer did for Skype. The private-equity firm that bought control of Skype from online auction leader eBay in 2009 helped boost sales 20% last year, but was just getting started on its strategy of focusing on corporate customers to build a second large business.

Not Facebook, which was reportedly interested but didn't have enough money. Probably not the initial public offering market: Skype had filed to go public last August, and even in a reasonably warm market the deal hadn't yet moved for reasons Skype hasn't publicly explained.

Google sniffed around but has its own Google Voice product. "How could you turn $8.5 billion away?" said Paul

Bard, an IPO market analyst at Renaissance Capital in Greenwich, Conn. "We thought it would come out at a $5 billion or $6 billion valuation."

We'll have more later on who wins and who loses in this deal, but Microsoft shareholders should be worried. Their stock is worth about what it was in late 2001, adjusted for splits, thanks to Microsoft's inability to use dealmaking to adapt to how the Web has remade the tech industry's power grid. Paying up, or maybe overpaying, for Skype isn't much of an answer.

Friday, May 6, 2011

The Bag of Marbles

A man had been particularly down on his luck. The lottery ticket he had bought did not win. The employer he worked for had laid him off. The traffic had slowed him down and made him late for an interview. The get rich quick scheme he had bought into left him broke. He was walking along the beach one evening wallowing in his poor luck when his bare foot struck something. He reached down and picked up a bag of marbles. Just my luck, he thought.

He opened the bag and took one out. He had an idea. He looked at the marble and he said to him self, “Each one of these marbles represents one of the bad things that have happened to me. I am going to state one of my troubles with each marble and through my troubles into the sea. Then, maybe my life will turn around.”

With that, he took the first marble. He said, “Here is for the lottery ticket that did not win.” Then, he threw the marble as far as he could. “That felt good,” he said as he took out the second marble. “Here is for the employer that laid me off. “That felt really good,” he said as he grabbed the next one. This went on for the better part of an hour. In the beginning, the marbles went pretty fast. As he was getting to the bottom of the bag, he really had to think. He had two marbles left. He grabbed one of them and said, “Here is for all of the good choices I am going to make going forward in my life. He threw that marble as hard as he had ever thrown anything in his life. As he heard in plunk in the water, he decided to keep the last marble as a memory of this night. He had not felt so good in a long time. He had thrown all of his troubles into the sea and he was ready for a new beginning. He put the marble in his pocket and went home.

At home, his wife noticed a difference in him right away. She asked what happened. He smiled and took the marble out of his pocket and showed it to her. He was going to tell her how he threw all of his troubles into the sea and he was ready for a fresh start. Before he could say a word, she said, “What a beautiful Pearl. Where did you get it?”

He looked at his hand. He was, in fact, holding an absolutely beautiful pearl. A pearl that would change their lives. He sold the pearl and paid all of their debt and did get that new beginning. From time to time he thought about that walk along the beach. His old self would have been full of self pity for all the pearls he threw away. His new self knew that it was the best walk he had ever taken.

Morals of the story:
Moral 1. What looks like a bag of marbles may be a bag of pearls. Your contact list is your bag of pearls. Each pearl in the bag represents one of the people or businesses that make up that list. If you think they are a marble, you will treat them as a marble and discard them. If you see them as a pearl, they may see it too. Finally, it only takes one pearl to get your dreams rolling. Imagine what will happen when you see each of pearls for what they really are.

Moral 2. When you let go of your troubles good things will happen to you. So often, we get caught up in the negatives of life. And, we let these negatives control our life. 'The economy is so bad I think I will wait to make that call.' Or, 'People really don't have the money, so I don't want to bother them.' Here is the truth.
Until the value is understood, any expense or inconvenience is too much. Once the value is known, no expense nor inconvenience with stop them.

If you have what people need, they will work with you. Focus on the positives and let go of your troubles.
Moral 3. The most important lesson of all is, when you bring home a pearl to mamma, she will be happy. And, when mamma is happy, everybody is happy.
It is not what is in the bag that is important. It is how you view what is in the bag that makes a difference.

Thursday, May 5, 2011

Facebook to Buy Skype? [REPORT]

Now things can get REALLY Interesting in terms of the spread of VIDEO as the #1 communication/collaboration tool.!5798851/rumor-both-facebook-and-google-vying-to-buy-skype

ANSWER TO: "How to stream LIVE video to the internet - Inexpensively"

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Sunday, May 1, 2011

Streaming Media East 2011

Streaming Media East 2011