ZDNet Must Read:
HP vs. Dell: Showdown at the Windows 7 upgrade corral
Here's a tale of two PC titans: HP and Dell. One executes well every quarter. The other doesn't. Both see big PC upgrade cycles ahead. Both are looking to ride... Continued »
Archive for: December, 2008
December 31st, 2008
Zune problems? All should be fine by Midnight
Owners of Microsoft’s 30GB Zune player will be counting down to midnight tonight - not to ring in a new year but to see if their Zunes will miraculously start working again. Apparently, some sort of glitch prompted the internal clocks in the 30GB (only) Zunes to freak out and lock up the machine because they couldn’t handle the extra day in the leap year. (Techmeme)
Microsoft’s quick solution to the problem: Wait until tomorrow and all will be well again. (Or at least until 2012). Microsoft attempts to answer customer questions in a Q&A but I’ve got to highlight my favorite answer:
Q: What is Zune doing to fix this issue?
The issue should resolve itself.
Translation: We’re not doing anything to fix it, which is probably OK because - knowing Microsoft - it would probably just issue a patch sometime in the second quarter of next year anyway. And why fix it? Hopefully all of the Zune owners out there will upgrade to a different music player by the next leap year in 2012 - like an iPod. I haven’t heard of any leap year issues with those.
December 31st, 2008
Sweet 16: Yes, There Were Tech Stock Winners in 2008
It was like picking through piles of hay for just a few needles.
With the major indices down 35% or more for the year, Between The Lines this afternoon hunted for tech stocks that actually went up in 2008.
Only found were 16. No big names. But, hey, there is … Transmeta, the company that was to revolutionize the microprocessor. Will it try to rehire Linus Torvalds, now that it is kind of riding high?
Here are the Sweet 16, culled from the 514 companies included in the Business Week Information Technology stock indices.
Here are their symbols, if you want to set up a Yahoo! Finance portfolio and see if they can repeat their success, in 2009:
TSYS QSII PEGA UTEK TMTA NCIT MANT ISYS CSGS ACS SONE COGT TKLC IDCC BBND AIRV
And thanks to Stockcharts.com, for making the performance charts easy.
December 31st, 2008
Happy New Year? Wait one second
I think we could all agree that 2008 was one of those years that… well, let’s just say there are plenty of us who are ready to put this year in the history books. But wait just one second - literally, one more second. Every few years or so, the keepers of the world’s clocks have to add an extra second to balance out the clocks with the earth’s rotation - or something like that. It’s just our luck that 2008 is one of those years.
Just in case you were worried about your computer and its internal clock (just like the panic around Y2K), there’s no need to fret. If you’re connected to the Internet, Microsoft and Apple won’t miss a beat when it comes to keeping those clocks in synchronization. If you’re not connected, the machines will sync up the next time you log-on.
With that said, now you can really celebrate the end of 2008. Good riddance!
December 31st, 2008
Could a Time Warner-Viacom game of chicken boost online video?
The content push from television to Internet could get a boost tonight if Viacom follows through with a threat to pull Nickelodeon, MTV, Comedy Central and others from the Time Warner Cable lineup at Midnight. It’s coming down to an 11th hour game of chicken but Viacom has shown in the past that it doesn’t blink. (Techmeme)
Of course, it comes down to money - Viacom is looking for more of it from Time Warner to carry popular programming like The Daily Show with Jon Stewart and Dora the Explorer. Time Warner, in response, says the fee hike is outrageous and that the programming isn’t more valuable on January 1, especially since some of the top-rated shows are available on the Internet for free.
That’s what’s different today, compared to a similar game of chicken that Viacom played - and followed through with - against Dish Network back in 2004. If viewers can’t tune into these programs on their television sets, they can certainly watch them on the Internet and Time Warner has said it plans to inform viewers on where to find these shows on the Web and how to connect their PCs to their television sets.
What’s also different this time around is CBS. In 2004, Viacom owned some of the nation’s large-market CBS stations - including San Francisco’s KPIX. At that time, the dispute came just as millions of viewers were about to tune in to March Madness basketball games. This time around, with the first round of NFL playoff games slated for this weekend, that’s no longer an issue. Viacom and CBS split in 2006. (Disclosure: CBS is the parent company of CNET and ZDNet.)
Sanford C. Bernstein analyst Michael
The renewal we are seeking is reasonable and modest relative to the profits TWC enjoys from our networks. We have asked for an increase of less than 25 cents per month, per subscriber, which adds up to less than a penny per day for all 19 of MTV Networks’ channels. We make this request because TWC has so greatly undervalued our channels for so long. Americans spend more than 20% of their TV viewing time watching our networks, yet our fees amount to less than 2.5% of what Time Warner generates from their average customer.
December 31st, 2008
Outsourcing Predictions for 2009
It’s going to be a pivotal year in the global IT and BPO services business as companies seek to get more for less with their budgets. How will this impact the world of global services delivery and outsourcing?
Low-hanging fruit outsourcing with immediate cost-savings will be strong. As we discussed and surveyed here, it’s areas where enterprises can streamline initial costs over a contract and get an immediate impact on the bottom-line. That’s bread-and-butter application outsourcing, high-arbitrage BPO areas such as Finance & Accounting and vertical-specific analytics (that KPO stuff). I am also expecting increased adoption of procurement BPO models as increased procurement and supply management work is moved offshore, and buyers can benefit from labor arbitrage to underpin the transformation costs that have held back adoption in the past.
Many initiatives which require incremental upfront investment that cannot be tied directly to revenue-metrics will suffer. The back-end of Q1, Q2 and Q3 2009 will be busy times for outsourcing deal activity.
The onshore/offshore decision-process is reversed to “why should this stay onshore?” The traditional evaluation methodology for companies’ outsourcing and offshoring opportunities is fast-changing. Rather than companies determining which processes can be carried out from a remote location, most will be determining why processes need to be carried out onshore.
Services firms will be forced to consolidate. With deals getting smaller and more plentiful, combined with renewed pressure on services firms to hold-back on hiring, the need for added global scale and staff resources, process and technology expertise, are going to drive consolidation at a much more aggressive pace than we saw in 2008. Most outsourcing service providers are currently waiting out the year to get a firm picture on how to address their go-to-market strategies after the New year. I predict these to take several forms:
- Large service vendors going for a pure scale-play. Like HP/EDS, we will see more mega-mergers to ramp up into that “mega IT-BPO” provider bracket. The “big 3″ could pull away from the rest of the market for some mega-deals and we will likely see other service providers combine to challenge.
- Offshore captive cherry-picking. There are some high-quality captives that are ripe for acquisition, that can give providers immediate entry into new industries, or consolidation in existing ones. In many cases, it is more appealing for service providers to invest in buying up clients than each other, but further devaluations in the stock prices of many service providers will create tough investment decisions for ambitious providers.
- Increased blending of IT-BPO offerings will drive vendor acquisitions. In many situations today, BPO is becoming a natural extension of an ITO relationship. This is especially the case where the service provider is willing to take on industry-specific processes that augment the IT services, for example supply chain merchandising with retailers, or check-and-lockbox services in financial services. There are simply not going to be “world-class” captives for sale to fulfill every industry need, which is going to force many providers to seek mergers. I anticipate some strategic acquisitionsbetween BPO-centric and IT-centric vendors. Those that choose to remain as pure-IT, or pure-BPO will get forced into the middle-market to scrap for smaller engagements.
Global HR strategies are moving to the top of the agenda. As we have discussed-to-death on this blog, one of the most redeeming facets of outsourcing is to become more competitive globally, to use a service provider’s skills and resources to enter new markets, or divest from others. One area of note has been the increase in firms moving onto global HR models where they have a much more integrated view of their global organization and can make much faster, more informed, decisions about their business and their workforce. The recent revival in global payroll and HR-IT outsourced services is testament to this growing need for firms to globalize their workforce data.
Survival of the fittest. Let’s not beat around the bush here… we’re in for a very tough economy, budgets are being cut across the board and companies won’t be increasing their spending on IT and business operations. They are going to use outsourcing as a vehicle to save money, and - hopefully - increase their competitiveness. So, while we can expect to see increased spending on lower-cost services with a strong offshore element, we are already seeing many areas of planned spending put on hold - for example, costly software upgrades, or business transformation initiatives. Hence, the competition for the outsourcing dollars is going to be increasingly intense as revenue opportunities for services firms are already drying up in other services markets. Many of the smaller service providers, which are more focused on staff-augmentation delivery and discretionary projects, are going to struggle.
At the same time, it’s a great opportunity for the well-resourced providers to edge out smaller low-cost competitors and increase market share as they use this tough market to their advantage. Shaving small portions of cost isn’t going to make a huge difference to many firms - they will have to make bold and radical decisions to survive.
December 31st, 2008
Dell shuffles management deck; Focuses on global units
Dell ended 2008 with a management shakeup.
The company said Wednesday that it has realigned its business to focus on four global groups: Large enterprise, public, small and medium sized business and consumer, which is already set up as a global unit.
Here’s a look at the shakeup (statement, Techmeme):
- Mike Cannon, president of Dell’s global operations will retire on Jan. 31. Cannon was Dell’s supply chain guru. CEO Michael Dell hired Cannon from Solectron when he returned as chief executive. In many respects, Cannon has given Dell what it needed–insight into contract equipment manufacturing vendors, which are used more by Dell. Cannon will be replaced by Jeff Clarke, who leads the company’s business client product group. Clarke will become a vice chairman, global operations.
- Mark Jarvis, Dell’s marketing chief, will leave at the end of Dell’s fiscal year and become a consultant. Jarvis came from Oracle and his move out may indicate that Dell is comfortable with its messaging today–previously the PC maker’s marketing was muddy at best. Jarvis’ job was to restore lust for Dell’s products and overall there is some yearning, but it’s far from unanimous. Erin Nelson, vice president of marketing, will become the chief marketing officer.
Along with those departures, Dell rejiggered its global units. Here’s a look at the executives that have consolidated power.
- Steve Schuckenbrock, currently president of global services and chief information officer, will lead Dell’s large enterprise unit. It wasn’t immediately clear how Schuckenbrock will juggle those roles.
- Paul Bell, president of Dell Americas, will lead the unit focused on the public sector.
- Steve Felice, president of Dell’s Asia-Pacific and Japan business will become leader of an SMB group.
December 30th, 2008
January 5th: time to shake off the gloom
It’s time for people to stop panicking about next year.
On January 5th it’s business as usual, companies will be selling and delivering their services, looking for new avenues that will provide them with competitive bite, operational excellence and new ways of surviving in a tough business environment. We are part of that.
Yes, some of us will get laid off - several people I know already have, but we’ll find new jobs, or new career opportunities - we always do. We may get a little poorer, but so will everyone else and the cost of living will get cheaper.
End of the day, we function in a world where we have much better technology and communications than we had 6 years’ ago, much more mature global delivery models, and a truly global marketplace in which we operate. The future opportunity for our careers and our businesses has never had so much potential in the long-term, once we get over these short-term hurdles and adjust to a more challenging business environment. Challenges and change breed new opportunities - and the world won’t stop while we try to embrace them.
We have exciting new technologies being developed and a fledgling new industry for developing alternative energy sources. And we have a new President arriving with fresh ideas and a fresh energy… in just 3 weeks.
It’s time to shake off the gloom. 2009 here we come.
December 30th, 2008
Apple shares drop on blog rumor about Jobs' health
Shares of Apple took a quick nosedive today but mostly recovered after a blog posted a rumor that the real reason for Apple’s pull-out from MacWorld was related to the declining health of Steve Jobs.
Rumors. Rumors. Rumors. That’s all Gizmodo had to report this morning, citing a “previously reliable source.” But that wasn’t enough. Let’s really fuel the fire by adding that “it may be even worse than we imagined.” Apple has said all along that it’s reasons for pulling out of Macworld were partly because there are new, better ways of showcasing products than trade shows.
The company has consistently said that the health of Jobs, who is considered to be the face of Apple, is a private matter. I don’t necessarily agree 100 percent with that. Investors have a right to know if the company’s chief executive is ill and no longer able to perform his duties. But I haven’t seen any evidence that points to such a conclusion.
I almost resisted posting this news at all but when the stock takes a sudden nosedive over a rumor, that says something - even if it only says that investors are quick to panic when someone says “Boo.”
Previous coverage:
What does Apple’s MacWorld departure say about future of trade shows?
Apple says report of Steve Jobs heart attack is false
Will Tim Cook be the next Steve Jobs?
VIDEO: Is Steve Jobs slowly passing the baton?
Bloomberg publishes Jobs obit but why?
December 30th, 2008
No bailout for you? Online finance tools help you ride the economic storm
If there were any financial lessons learned in 2008, one of the big ones was understanding that your financial standing tomorrow might be very different than your financial standing today. And seeing how a government bailout to pay off your Visa bill likely isn’t on the way, it’s up to you - Joe and Jane Taxpayer - to take matters into your own hands.
For the past few weeks, I’ve been playing with a few online personal finance products. While I never came across the ultimate product for my own personal needs, I’m encouraged by the offerings out there and the tools they’re offering, including the use of widgets and mobile services to stay up-to-date on changes.
Managing money is a very personal thing - every person’s situation is different. With that said, there are some things that each of us has in common - money comes in and money goes out. You may have little control over the amount of money coming in but you certainly can manage what’s going out. The following is a list of products I have been tinkering with and what I liked and didn’t like about them:
- TheExpenseTracker: It does just what it says - tracks expenses - but not much more. If you’re serious about setting up and staying on a budget, this is a good tool. It not only allows users to customize the spending amounts for specific categories - such as gas, groceries and dining out. It also comes with a mobile feature that uses voice recognition to call-in expenses as you incur them. That way you can record the $79.22 you spent on groceries right from the checkout stand - without having to remember to input it later - and you’ll get a voice prompt back, telling you how much you have left to spend on groceries for the month. I would have liked to have seen an SMS feature instead of, or in addition to, the voice input feature. The service is not free - there is a set-up charge and $10 monthly service fee. Be sure to add that to your monthly expenses.
- Rudder: The thing I liked most about Rudder was its peek into the future, instead of the past. By telling Rudder about your recurring income (paychecks and other sources) and your recurring bills, it does the math to look ahead at the bills that will come due between now and your next payday. Used in conjunction with a service like ExpenseTracker, you can incorporate the “left-over” money to establish a budget for discretionary spending, such as dining out, movie dates and days at the spa. You can also add-in a one-time income (maybe you get a year-end bonus). Because you also give Rudder the access to import your banking transactions via the bank’s Web site, you can track which bills have been paid and cleared. Rudder is a free service.
- Quicken Online: This Web program is close to being my holy grail of personal finance - but just misses. Yes, it looks back at spending and allows me to customize the dates for review (Maybe I want to look specifically at June 21-Aug.17, for whatever reason). It also looks ahead at what you have left, based on the transactions that are spotted when it accesses your online banking transactions. My beef though is that it “learns” what my bills are instead of allowing me to just tell it about by monthly expenses. And, if it hasn’t factored in that my property taxes are due next month (because it hasn’t learned about that bill yet), then it can’t give me a true picture of what I have left for the month. Quicken Online is also a free service.
- Mint: Mint is a good online service that really digs deep into your finances - bank accounts, credit card accounts, investment accounts - to look at your spending habits, trends and so on in real-time. But unlike Rudder and Quicken Online, Mint looks at your past. For some people, that’s probably a good way to see how your spending was on- or off-track and how you can adjust your habits in the future. But telling me that I blew my entertainment budget after the fact does me little good once it’s done. I would rather know when I’m getting close to blowing my budget.
- ClearCheckbook: The one thing that was missing in all of these services was a basic checkbook register. I need a place where I can track everything - the check I wrote to the neighborhood kid selling magazine subscriptions as part of a school fundraiser, the $40 I withdrew from the ATM or the $50 I dropped into my gas tank. ClearCheckbook has been evolving and, just this month, added new features, as well as some premium services (hey, is that like a revenue plan? What a concept.) What I like about ClearCheckbook is that it hasn’t compromised the long-standing basics to deliver the best of what the others are offering, including things like look-ahead balances and mobile. The company offers long-term subscription to its premium services or month-to-month (at a nicely-affordable $4 per month). There’s also a free version.
- Moneydance: Initially, I liked Moneydance as a personal finance software alternative to Quicken and MS Money but was seeking something that lives on the cloud, instead of something that’s downloaded and installed on a single computer. If you’re still leery about banking “on the cloud,” Moneycloud is a good alternative and works with Windows, Mac and Linux systems.
Overall, it’s good to know that personal finance software is coming of age, recognizing that a growing number of people are banking online, paying bills online and using mobile phones to keep tabs on their money. Setting up has been a time-consuming challenge for me but now that it’s all there, I’m finally ready to take back control of my finances in 2009 - at least until the government hands over a bailout check to erase my personal debt.
December 30th, 2008
Carbon neutrality murkier than you'd think
Dell has declared itself carbon neutral but good luck defining and auditing what that means exactly.
The Wall Street Journal has an interesting story on Dell and its carbon neutral efforts. In a nutshell:
- There is no standard definition of carbon neutral;
- Purchasing carbon credits is vital;
- But the markets for carbon credits isn’t regulated and is also in flux;
- And finally there’s debate over whether a vendor should count emissions from suppliers in its footprint.
Those points are notable for companies well beyond Dell. While Dell is certainly early with its carbon neutral claim other companies will soon follow. For now, green tech looks recession proof. Get ready for the carbon neutral audits.
A few key excerpts:
The amount of emissions Dell has committed to neutralize is known in the environmental industry as the company’s “carbon footprint.” But there is no universally accepted standard for what a footprint should include, and so every company calculates its differently. Dell counts the emissions produced by its boilers and company-owned cars, its buildings’ electricity use, and its employees’ business air travel. In fact, that’s only a small fraction of all the emissions associated with Dell. The footprint doesn’t include the oil used by Dell’s suppliers to make its computer parts, the diesel and jet fuel used to ship those computers around the world, or the coal-fired electricity used to run them.
And.
Dell’s drive offers an early road map of the thorny questions companies will face as they attempt the massive emission reductions scientists say are needed to curb global warming. In a global economy with so many interconnected players, figuring out who should be responsible for cutting which emissions — and how to ensure those cuts happen — is dizzyingly complicated.
Toss in nascent markets for buying carbon credits and you see a lot of confusion ahead. To make matters worse, companies don’t have to file carbon neutrality reports that are under generally accepted principles. In other words, you won’t find the details of carbon neutrality in an annual report filed with the Securities and Exchange Commission.
In reality, none of this is surprising. Companies like Dell are ahead of the curve and in many respects make this carbon neutrality stuff up as they go along. As more companies start issuing carbon neutrality press releases, however, there will be a need to seriously vet these claims.
December 26th, 2008
Holiday recap: Amazon bucks trend of worst retail season in decades
On this, the other Black Friday, here are a few bits of retail news worth sharing:
- Amazon said today that the 2008 holiday shopping season was its “best ever,” even though a report released on Christmas Day called the season one of the worst in decades.
Amazon says very little about its success, choosing instead to release only one tidbit of data: more than 6.3 million items were ordered worldwide on the peak day,
What we do know is that Amazon’s top-selling consumer electronics included
- Back to that report, SpendingPulse - the the retail data service of MasterCard Advisors - found that retail sales were down four percent.
The decline would have been much steeper if the report had not included grocery, restaurant and specialty food sales. It did not include auto and gas sales. On the tech front, sales at specialty electronics and appliance chains like Best Buy were down 26.7 percent and online sales, despite being down 2.3 percent for the season, saw a 1.8 percent jump in the final two weeks of the season - the same time that bad weather slammed much of the country.
- Finally, Wal-Mart - eager to keep those shoppers coming in for the entire month of December - says it plans to start selling the iPhone this Sunday.
Don’t go running out expecting that widely-rumored lower-capacity $99 iPhone that the blogosphere rumor mill was buzzing about earlier this month. is true. Wal-Mart’s prices will be $197 and $297 for the 8-gig and 16-gig models, respectively - basically, a $2 savings on each. That’s the same way Wal-Mart prices iPods, a few bucks under Apple’s own retail price and positioned right next to all of those great accessories that you’ll be tempted to buy, as well.A Reuters story notes that Wal-Mart normally attracts a lower-income bracket of shoppers but that it’s also lured in new, recession-weary shoppers looking for a bargain. I wonder if Wal-Mart or AT&T will have someone on-site to explain the fine print of the pricey two-year contract that goes with the iPhone.
December 24th, 2008
Laptop Power Out of Thin Air And Other Christmas Wishes
Santa and his reindeer will be flying around, dropping down your chimney with a 3G iPhone, Amazon Kindle, GPS device or other techno gee-gaw you’ve been lusting after.
But if you’re looking for something really cool, you may want to start putting together your wish list for Christmas 2009 or 2010. Start with power that comes out of thin air for your laptop or your cell phone.
Behind the doors of a suite at The Venetian hotel, electricity will be pulled out of the air for manufacturers of all sorts of electronics gear as the 2009 International Consumer Electronics Show starts on January 8.
This is “the next big thing” promised by the WiTriCity startup whose founders hail from MIT and first demonstrated the ability to power a 60-watt lightbulb through the air in June 2007.
The outfit has been developing commercial versions of its technology in stealth mode since, its engineers and scientists using about $5 million from Stata Venture Partners and Argonaut Private Equity.
As its CEO, it’s hired Eric Giler, who was the founder of telecommunications network gear supplier Brooktrout Technology and later CEO of Groove Mobile, a wireless music service.
In its suite at CES, Giler and crew will be putting on demonstrations for computer, phone and other manufacturers of its ability to charge devices which consume less than 100 watts of power at a time, through the air.
The two main demos will be recharging of a conventional laptop, with approximately a 15-inch screen, and a combination TV and DVD player.
But don’t think that you’ll just be able to walk around, anywhere, and get a charge.
This will work much like the wireless communications network in your home. You’ll need a power source (think: base station) that will send out the electricity over the air and a “power capture” module in your device that will suck it in (think: witri card).
In some cases, the mobile warrior might not be able to tell much difference from carrying out extra batteries. One power source, for instance, might be a mat that sits on a chair that transmits the power.
The technology will add “minimal cost” to a laptop, phone or other device, according to David Schatz, WiTriCity’s Director of Business Development & Marketing. But he declines to define what that translates to.
WiTriCity will be talking to “virtually every manufacturer of laptops” at CES and sees a market for all kinds of mobile devices, including PDAs, cell phones, music players, and medical devices, such as battery-powered pacemakers, defibrillators and pumps.
In effect, “hot spots” will have to be set up for WiTriCity. But avid users of mobile devices will be happy to walk around their homes and maybe offices at first, charging up their machines wherever they sit, without plugging in.
Which leads to other items to put on the wish list for Christmas in the near future:
• Universal wifi: Here’s hoping Barack Obama, in his infrastructure modernization campaign, figures out a way to create a national network of always available Internet access. We could build an interstate highway system in the ‘50s. Fifty years later, we should be able to figure out how to place wifi connections along all paved roads and in all public places. And create a single sign-on, even if there’s a low-cost subscription fee.
• Digital library storage and services: Sure, you get gigabytes of free storage from Google, Yahoo or other commercial sites. But you will never know how your email, activity and contents are mined for marketing of products, services and messages. Local libraries would be a logical place to set up storage centers, where you could store your personal data “in the cloud” and without commercial intrusion. Print books won’t go away, but this would also set up libraries to play an ongoing role in supplying content in the digital age. Want to borrow a particular digital book, music file or movie, your librarian will transfer it into your data locker for a specified period of time.
Probably won’t happen. Google is setting itself up to be the global library, with Google Books and organizing of all the world’s information it can put its hands on.
But, if smart entrepreneurs can pull power out of thin air, universal wifi and localized digital library services can at least make the wish list.
December 24th, 2008
FriendFinder isn't likely to find any pals on Wall Street; Needs IPO to pay debt
FriendFinder Networks, the company formerly known as Penthouse Media Group, is filing to go public to pay off almost a half a billion in debt in an equity market that stinks. Simply put, FriendFinder is launching an IPO Hail Mary to stay alive. At least FriendFinder’s initial public offering filing turned up a bunch of interesting nuggets.
FriendFinder is best known for its Adult FriendFinder site, which is a social network for folks looking for services that probably shouldn’t be mentioned on a family friendly site on Christmas Eve. But I’m a sucker for an entertaining regulatory filing as are a few other bloggers (Techmeme).
The IPO, which is underwritten by a firm called Renaissance Capital Renaissance Securities (Cyprus) Limited (we’re not talking Goldman Sachs and Morgan Stanley folks), details a bevy of interesting stats such as churn rates on Adult FriendFinder as well as nuggets on how Penthouse magazine is trying to cover sports and games. FriendFinder also operates sites such as AdultFriendFinder.com, Amigos.com, AsiaFriendFinder.com, Cams.com, FriendFinder.com, BigChurch.com and SeniorFriendFinder.com.
As background, Penthouse bought Various, which is the parent of FriendFinder, a year ago for $400 million. The $460 million in potential IPO proceeds will go to paying off FriendFinder’s almost $450 million in debt. For the nine months ending Sept. 30, FriendFinder had revenue of $243 million, operating income of $17.6 million and a net loss of $32.3 million. Prior year comparables are largely irrelevant since you’re comparing a social network to Penthouse magazine.
Here’s all you really need to know: This IPO is a Hail Mary pass for survival. The company says it all in its prospectus:
Our ability to continue as a going concern is dependent on our ability to raise additional capital, including from this offering. As of September 30, 2008, our balance sheet had approximately $43.3 million in cash and restricted cash and $420.1 million in short-term debt, net of unamortized discount, $411.0 million of which had been reclassified from long-term debt, due to our failure to comply with certain covenants and restrictions in the agreements governing our 2005 Notes and 2006 Notes and our subsidiary’s First Lien Senior Secured Notes, Second Lien Subordinated Secured Notes and Subordinated Convertible Notes and for which waivers had not been obtained…If we are unable to cure such defaults and/or obtain waivers, we could trigger the acceleration of payment provisions in such agreements which would require us to immediately repay up to approximately $466.0 million to our noteholders. We do not currently have sufficient cash to repay this indebtedness if our debt is accelerated and if the noteholders instituted foreclosure proceedings against our assets, the proceeds of the assets could be insufficient to repay such indebtedness in full. Under these circumstances, we may be unable to continue operating as a going concern.
Comforting eh?
At least there are some really interesting stats from FriendFinder (since we don’t get much color from private social networks like Facebook). Here’s a look:
- FriendFinder averaged 1 million paying subscribers a month for the first nine months of Sept. 30. That’s good for 77.2 percent of Internet revenue. Net revenue per subscriber was $19.06 a month.
- Paid users, people who pay by usage, averaged 1.7 million minutes a month–good for 19.6 percent of revenue.
- The monthly churn rate is 18 percent for the nine months ending Sept. 30, down from 19.6 percent at the end of 2007. Here’s the breakdown by product category (click to enlarge):
- Ad revenue of $152,356 a month for the nine months ending Sept. 30 is skimpy. The company is hoping to change that, but acknowledges: “We have never generated significant revenue from internet advertising and may not be able to in the future.”
- A nice history lesson on Various, which operates other social networks beyond Adult FriendFinder (click to enlarge).
- American Express won’t process credit card transactions for adult material.
- Various neglected to collect taxes in the EU. The company says:
After our acquisition of Various, we became aware that Various and its subsidiaries had not collected VAT from subscribers in the European Union nor had Various remitted VAT to the tax jurisdictions requiring it. We have since registered with the tax authorities of the applicable jurisdictions and have begun collecting VAT from our subscribers in the European Union and remitting it as required. We have initiated discussions with most tax authorities in the European Union jurisdictions to attempt to resolve liabilities related to Various’ past failure to collect and remit VAT, and have now resolved such prior liabilities in several jurisdictions on favorable terms, but there can be no assurance that we will resolve or reach a favorable resolution in every jurisdiction. If we are unable to reach a favorable resolution with a jurisdiction, the terms of such resolution could adversely affect our financial condition or results of operations.
Overall, I’d file this IPO filing in the “you must be kidding” department.
December 24th, 2008
5 security precautions to take for the holiday break
Guest post: Chad Perrin is an IT consultant and developer. He can be found on TechRepublic’s Security blog.
What do you think about when Christmas approaches? Some of us think about how vulnerable our networks might be while we’re away on vacation.
In recent years, the holidays have seen drop-offs in the volume of spam and virus traffic on the Internet. The reasons aren’t proven, but I suspect it’s mostly because a lot of poorly secured home computers that have been infected by malware without their owners’ knowledge are turned off while they leave town. As a result, legions of MS Windows systems absorbed into botnets and otherwise turned into platforms for automated security cracking drop off the Internet.
On the other hand, enterprise networks and other high-value targets may be more at risk than usual. Not only do many of them let most of their network administration staff members take vacation time, often letting all the most senior IT employees go incommunicado for a week or two. This leaves a network more vulnerable than usual, and malicious security crackers who target such organizations probably know it.
The following last-minute precautions should probably be on your To Do list for just before leaving the office this holiday:
- Make sure your backups — both on-site and off-site — are current, and test them to make sure you can actually restore from them. Remember: if it hasn’t been tested, it’s not a good backup.
- Intrusion detection and alerts (sent to someone with the ability and authority to do something about it who will monitor alerts during the holidays) should be automated as much as reasonably possible.
- Ensure that disaster recovery procedures are thoroughly documented for whoever will be around during the holiday break.
- Go over the automated security measures you have in place to determine whether they can be improved, such as firewall rulesets, VPN authentication procedures, and protection for your integrity auditing snapshots. What time is better for a review and improvement plan than the weeks before (almost) everyone will be gone for a while, and your automated security measures will have to mostly fend for themselves?
- Last but not least, treat your employees well. If possible, give everyone some time off (without being on-call) that fits his or her needs — and if not, give whoever doesn’t get the time off some extra compensation to make up for it. It’s not just about being a friendly boss; a frustrated employee may not do as good a job of ensuring the security and reliability of your IT resources.
December 24th, 2008
2008: The year in tech [video]
It’s almost time to close the books on 2008. But before we start singing “Auld Lang Syne,” ZDNet correspondent Sumi Das and I talk about the tech industry highlights from the past 12 months.
December 23rd, 2008
Transition Time II: Getting Cable TV To Your Computer
Even if your cable service won’t tell you how to do it, there is a way to get its TV channels to your computer. And you won’t be stealing a thing.
Here’s the rundown, with an assist from Lars Felber, a product marketing manager for Elgato Systems GmbH in Munich.
• Rent an additional set-top box from your cable (or satellite) company. In my local cable company’s case, that’s $6.50 a month. And gives you the spigot for the shows.
• Attach it to your computer, using a capturing device such as this high-definition personal video recorder from Hauppage Computer Works. Online price this Christmas: $250.
• You’ll need some component cables like these, to connect the video output from the set-top box to the HD PVR. The Video 1 cables are $40.
• You finally connect the HD PVR to your Windows PC, with a USB 2.0 cable.
Now, if you have standard-quality RCA component cables, they’ll probably get the job done, Felber says. And, if you’re a Mac user, an EyeTV version of the PVR is on its way, as long as your Mac is recent enough to use an Intel processor.
All of which means, if Felber’s prescription works, that you’re talking around $300 upfront to make the connection to your system and a monthly box fee of $6.50 or so to turn that computer in your office or other spot in your home into a digital TV.
December 23rd, 2008
Helping The Blind And Deaf: Buy From Us ...
Are we supposed now to spend more with retailers who show empathy for the deaf and blind?
Christmas certainly is a time for charity and good will toward fellow man and woman. But now it’s getting mixed into commercial messages that are supposed to make you feel better about buying from one corporation than another.
In a single commercial break this morning on “Good Morning America,” Best Buy told the story of how one of its store associates helped a blind man set up a large TV in his home and figure out the buttons needed to control it. Here’s the text, as pulled together on TallJim.com:
“It was right before Christmas I did a consultation for a guy he was legally blind. He’s been living in the house so long he knows the house in and out. So he had memorized the wall where he wanted the TV. He also had a three year old son who would run around the house and liked to play hide-and-go seek. Finding him sometimes was really hard because he was really short and he was quick. When we were done we had to teach him how to use four different remotes by touch. We had to count the buttons from the bottom. We got it done for him. He was really happy though, he couldn’t stop thanking us. His name was Charles actually. Charles I want to wish you a merry Christmas. “
Now, Jim (and others) wondered why a blind man would want a TV at all. But “legally blind” doesn’t mean you are without sight (note Jim’s addendum). And, besides, there are concerts, sports and lots of events on TV where audio can carry the show.
With nary an ad in between, the Kay Jeweler ad followed on ABC’s morning show. Here a young man uses sign language (and a Bulova watch) to win the heart of a young lady who, it appears, can’t hear.
Guess I’m supposed to feel better if I buy my next large-screen TV or piece of electronics from Best Buy or timepiece from Kay.
But, somehow, it would feel purer, less mercenary and more in keeping with the spirit of giving if Best Buy or Kay would just spend the 30 seconds disclosing how much they’ve contributed to charities, without tying it to pitches for goods or services they sell.
December 23rd, 2008
The year in review: ZDNet's top 5 topics
Welcome to ZDNet’s year in review and our most popular blog posts based on traffic for 2008. Let’s start our countdown.
5. Blu-ray.
At the turn of 2008, it appeared that Blu-ray was the clear victor in the DVD format wars. I barely remember HD-DVD after just a few months. HD DVD was the standard the PC crowd such as Toshiba, Microsoft and Intel backed. Sony had Blu-ray and wasn’t going to be betamaxed this time. Robin Harris our resident storage guru begged to differ. He predicts that Blu-ray is in a death sprial and even $150 Blu-ray players won’t save it. Harris effectively argues that Blu-ray still doesn’t have the mass volume that you’d expect from a format war winner. Seems shocking, but I guess it’s not that surprising. I don’t have a Blu-ray player either.
4. Bill O’Reilly’s web site gets hacked.
Instead of the No Spin Zone perhaps O’Reilly’s motto should be the no security zone. In September, Dancho Danchev detailed how Bill O’Reilly’s Web site had been hacked. The attackers–who prefer to call themselves hacktivists–disseminated personal details and passwords of members of O’Reilly’s site. In the end, O’Reilly’s Web crew left the password and other data unencrypted. In other words, O’Reilly left the back door open–not a good move when you’re such a visible target.
3. Multiple takes on Microsoft’s Windows Vista.
Depending on your point of view Vista is either not so bad, a complete disaster or something in between. I put it in the in between category. Vista was a train wreck in the beginning, has gotten better, but now the name is tainted. Add it up and XP is still very popular and folks are hanging out for Windows 7. Adrian Kingsley-Hughes’ Vista service pack 1 vs XP service pack 2 benchmarks was a popular post as was Ed Bott’s series on fixing Windows Vista one machine at a time (see gallery right). Jason Hiner chipped in his top five reasons why Vista failed. My favorite: Vista just broke too much stuff. Is it any wonder that Mary Jo Foley’s play by play of Windows 7–most likely coming in 2009–are popular.
2. Ubuntu.
Adrian Kingsley-Hughes look at Ubuntu’s Hardy Heron beta was our second most popular item on ZDNet (gallery). Initially I put this open source operating systems like Ubuntu in the early-adopter/supergeek category, but it works just swell for the rest of us too. I have it on one of my laptops and have no complaints. We’re still very far away from 
mass adoption.
1. Ed Bott’s 10 favorite Windows programs of all time.
Ed’s post was our most popular blog post of the year as judged by traffic (gallery right). Why was this interesting? Ed has been fiddling with Windows for nearly two decades. When he finds a program and sticks with it that’s saying something. What’s truly comical is that most of his picks you probably haven’t heard of. How many of us have said: “Phew I can’t wait to get Process Explorer or Fine Print Dispatcher.” Ed does have one of my go-to programs on his list though–SnagIt 8.
December 23rd, 2008
IT Dojo: Bloopers 2008 [video]
We’ve aired over 30 episodes, since launching IT Dojo. And, we’ve filmed a lot of bloopers. This holiday season, we’re celebrating with an episode that’s dedicated entirely to our host screwing up. Watch as Bill Detwiler flubs his lines, growls at the camera, and even does a few bad impressions. Enjoy.
December 22nd, 2008
Red Hat beats for Q3
Red Hat, a maker of open source software, reported an adjusted third-quarter profit of $48.4 million, or 24 cents per share, on revenue of $165.3 million, which was up 22 percent over the same quarter a year ago. (statement) Analysts had been expecting earnings of 18 cents on revenue of $166.4 million.
Shares of Red Hat, which were down slightly in regular trading, recovered and edged ahead in after hours trading. The company, known for its Red Hat Enterprise Linux OS, said the rocky economic conditions have helped Red Hat. In a statement, Red Hat President and CEO Jim Whitehurst said, “Purchasing decisions for IT have changed dramatically for CIOs. In this budget-constrained environment, IT professionals are adopting open source and more specifically Red Hat to save money and enhance their competitiveness.”
The earnings per share, which was up over the same quarter last year, was due, in part, to the repurchasing of common stock and convertible bonds, the company said. CFO Charlie Peters also noted: “While significant devaluations in most foreign currencies depressed our reported revenue, a combination of focused cost management and natural currency hedging enabled the company to deliver better-than-expected operating margin.”
The company also noted other highlights from the quarter, including:
- an agreement with Fujitsu to provide new Linux support service
- chairman Matthew Szulik being named Ernst & Young’s Overall National Winner for Entrepreneur of the Year 2008 Award.
- expanded developments in virtualization with an acquisition of Qumranet Inc.
Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
Subscribe to Between the Lines via Email alerts or RSS.
SponsoredWhite Papers, Webcasts, and Downloads
- Email Security and Archiving - Clearer in the Cloud Google The time is NOW for businesses and organizations of all sizes to implement ... Download Now
- Building the Virtualized Enterprise with VMware Iinfrastructure VMware VMware virtualization software has been adopted by over 120,000 enterprise ... Download Now
- Three Steps You Need to Know to Stop Data Loss Varonis Sensitive data exposed to misuse or loss... it is the stuff of nightmares ... Download Now
Essential Topics 
Recent Entries
- Microsoft CFO Liddell to leave; Klein named new finance chief
- Facebook creates dual class structure; No plans for IPO yet
- Amazon bolsters battery life for Kindle; Adds native PDF reader
- Barnes & Noble: Ramping production of the nook isn’t cheap
- HP vs. Dell: Showdown at the Windows 7 upgrade corral
Blogs From Our Sponsors
Most Popular Posts
- Verizon to AT&T: "Our ads are true and the truth hurts"
- My scareware night and how McAfee lost a customer
- Netbooks dead? Not when sales are up 264 percent
- Intel to pay AMD $1.25 billion as companies end litigation war; Is it a new chip era?
- Live from Googleplex: Chrome OS details revealed
- Memo to AT&T: When you're in a hole, stop digging
Top Rated
- Verizon to AT&T: "Our ads are true and the truth hurts"+44 votes
- Yes, Ubuntu can absolutely be the default Windows alternative+42 votes
- L.A. votes to "Go Google"; pressure shifts to Google and the cloud+31 votes
- Intel to pay AMD $1.25 billion as companies end litigation war; Is it a new chip era?+27 votes
- My scareware night and how McAfee lost a customer+25 votes
- New York AG files antitrust charges against Intel; alleges bribery, coercion+24 votes
- Netbooks dead? Not when sales are up 264 percent+21 votes
- AT&T launches Verizon counter-punch ad, keeps digging that hole+14 votes
Premier Vendor Content Whitepapers, webcasts & resources from our Power Center Sponsors
- Microsoft Dynamics CRM Online - Free Six-Month Trial for Eligible Organizations
-
Microsoft Dynamics CRM Online provides fast online access, simple contact management and better sales performance for a low monthly cost - the best value on the market today.
- Learn more about the free, six-month trial offer>>
- The best support in the Linux business
-
If Linux is going to power your mission-critical applications, you'd better have the best support known to business. Novell was rated the top provider of Linux technical support.
- Learn more >>
- The best support in the Linux business
-
If Linux is going to power your mission-critical applications, you'd better have the best support known to business. Novell was rated the top provider of Linux technical support.
- Learn more >>
- The more you simplify, the more you save
-
When you transition from your existing Red Hat environment to SUSE Linux Enterprise from Novell, you can recognize dramatic cost savings, perhaps as much 50%
- Learn more >>
Archives
Favorite Links
Favorite Sites
- Ars Technica
- Deal Journal
- Engadget
- Enterprise Irregulars
- GigaOm
- Google Blogoscoped
- Horses for Sources
- Mac Rumors
- Mashable
- Official Google Blog
- Read/WriteWeb
- Scobleizer
- Seeking Alpha
- TechCrunch
- Techdirt
- Techmeme
- The Ponderings of Woodrow
- The Unofficial Apple Weblog (TUAW)
- Valleywag
- ZDNet: Latest blogs and news
ZDNet Blogs
- All About Microsoft
- The Apple Core
- Between the Lines
- BriefingsDirect
- Collaboration 2.0
- Dev Connection
- Digital Cameras & Camcorders
- Ed Bott's Microsoft Report
- Emerging Tech
- Enterprise Web 2.0
- Forrester Research
- Googling Google
- GreenTech Pastures
- Hardware 2.0
- Home Theater
- iGeneration
- Irregular Enterprise
- IT Project Failures
- Laptops & Desktops
- Lawgarithms
- Linux and Open Source
- Managing L'unix
- The Mobile Gadgeteer
- On Sustainability
- Rational Rants
- The Semantic Web
- Service Oriented
- Smartphones and Cell Phones
- Social Business
- Social CRM: The Conversation
- Software & Services Safari
- Software as Services
- Storage Bits
- Team Think
- Tech Broiler
- Technology and the Global Supply Chain
- Tom Foremski: IMHO
- The ToyBox
- Virtually Speaking
- The Web Life
- ZDNet Education
- ZDNet Government
- ZDNet Healthcare
- Zero Day
White Papers, Webcasts, and Downloads
- IBM Smart Business Time Savings Test IBM If time is money - is your organization in need of a way to save both? ... Download Now
- CDW Services Overview: Unified Communications CDW Businesses that utilize unified communications solutions empower employees ... Download Now
- Dell IT Cuts Energy Costs by Up to 40 Percent With a New Power Management Plan Dell Energy conservation is an increasingly important issue for organizations ... Download Now
Meet Doc
-
-
Here to help you with your Document Management Needs
- Check out Doc’s Blog on ZDNet
- Help your company, help the earth I want to share with you the Environmental Defense Fund Paper Calculator, which allows you to gauge your organization's environmental impact.
- Which is Greener: Paper or Digital? The Answer May Surprise You Anything we can do to reduce paper consumption is good. But what about the impact of digital waste?
-
Produced by
ZDNet and -
