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Showing posts with label Mark Zuckerberg. Show all posts
Showing posts with label Mark Zuckerberg. Show all posts

Saturday, August 4, 2012

Zuckerberg Falls From Tech’s Wealthiest as Facebook Falters

Facebook Inc. (FB) co-founder Mark Zuckerberg is no longer among the world’s 10 richest technology billionaires.

The 28-year-old’s fortune dropped by $423 million yesterday as shares of the world’s largest social media company fell 4 percent to $20.04 in New York, a record low. Zuckerberg is now worth $10.2 billion. He is about $400 million behind James Goodnight, the co-founder of Cary, North Carolina-based software maker SAS Institute Inc., who now ranks as technology’s 10th- richest person, according to the Bloomberg Billionaires Index.

Mark Zuckerberg, chief executive officer and founder of Facebook Inc. Photographer: David Paul Morris/Bloomberg 

“From an emotional standpoint, he might care,” said Ron Florance, managing director of investment strategy for Wells Fargo Private Bank, in a telephone interview from Winston-Salem, North Carolina. “He’s much more worried about maintaining Facebook’s market share in the social media space than the day- to-day valuation swings of his company stock. He’s not worried about going broke.”

Facebook shares have fallen 47 percent from their initial public offering price of $38. The Menlo Park, California-based company last week reported earnings that showed slowing revenue growth.

Larry Yu, a company spokesman, didn’t respond to a phone call requesting comment.

Country Club

Zuckerberg’s fortune is based on his ownership of 503.6 million shares of Facebook, including 60 million options that have an exercise price of 6 cents a share. He also has about $150 million in cash and other liquid assets.

Goodnight, 69, co-founded SAS in 1976, and is worth $10.6 billion. The company is the world’s largest closely held software maker and generated revenue of $2.7 billion in 2011, up 12 percent in a year.

SAS is valued at $15.8 billion, according to data compiled by Bloomberg. The valuation is based on the average enterprise value-to-earnings before interest, tax, depreciation and amortization multiple of five publicly traded peers. A premium has been applied, based on recent transactions in the software industry.

Goodnight, who holds two-thirds of SAS, also co-owns the Prestonwood Country Club in Cary, North Carolina, and has collected dividend payments over more than three decades.

Microsoft Corp. (MSFT) co-founder Bill Gates is the richest technology billionaire in the world with a net worth of $61.6 billion, according to the index.

Bloomberg

Tuesday, July 3, 2012

Underage and on Facebook

Facebook is mulling over letting children below the age of 13 join its network, but with so many signed up already, what difference would it make? 

FACEBOOK'S minimum age should be 21. This argument mooted by CNN blogger John D. Sutter will no doubt get the support of many parents who worry about safety and privacy issues on the social media network. That is, those parents who have not secretly signed up, or helped to sign up, their children on Facebook.

Facebook (FB) already has an age limit 13 years old but the reality is that many “underaged” children already have their own profiles on the site, parents' consent notwithstanding.

In fact, it is estimated that some 7.5 million children below the age of 13 are currently on FB, out of its total 900 million plus users worldwide.

This shows that the minimum age requirement on FB is just a number. Facebook does little, if anything, to enforce it, and one can simply lie about their birth date to circumvent the rule.

So why the charade?

As suggested by the Wall Street Journal, which first broke the news of the social media giant's plans to open up to tweens and even younger kids, Facebook was feeling the heat from the American authorities in relation to the Children's Online Privacy Protection Act (COPPA).

The Act stipulates that online services catering to children below 13 would need to obtain the consent of their parents before collecting data from them. COPPA also requires that parents be given the ability to review, revise and delete their children's data.

Hence, with the number of pre-teen children registering on the site growing by day, Facebook knows it can no longer turn a blind eye to its minefield. Coming clean is perhaps its only option in defending itself from any potential legal action.

As it acknowledged in a statement: “Enforcing age restriction on the Internet is a difficult issue, especially when many reports have shown that parents want their children to access online content and services.”

Facebook founder Mark Zuckerberg himself had earlier said he would like to see kids under 13 use FB “more honestly and in compliance with the law”.

“My philosophy is that for education you need to start at a really, really young age... Because of the restrictions, we haven't even begun this learning process... If they're lifted then we'd start to learn what works. We'd take a lot of precautions to make sure that they (younger kids) are safe...,” he was quoted.

The conspiracy theorists of course say freeing the shackles is one way for Facebook to recoup its losses after a disappointing debut at the share market. Widening its user base will certainly broaden its revenue-raising opportunities, especially in the mobile apps and ad sector, and add to its market value.

Then there is the brand loyalty factor getting them young is the best way to get users hooked for the future, and guard against any possible defection to “cooler” social media networks to come.

Whatever the motive, the reality remains stark there is a high number of active FB tweens and they can no longer be ignored.

Choy: Many parents of children who are being bullied online feel they can’t do anything about it.

Time to Like

As he sees it, officially opening up to the under-13s can be a positive move, says CyberSecurity Malaysia chief executive officer Lt Col (R) Prof Datuk Husin Jazri.

“By officially allowing children to sign up, Facebook can keep tabs on how many Facebookers below 13 there are,” he opines.

In Malaysia, for instance, it is no secret that many tweens have their own FB accounts, with most having signed up either with the consent and help from their parents, siblings or close relatives; or by “cheating” Facebook, that is, changing their birth date to make the computer system accept them as above 13.

It is not clear how many Malaysian children are now online but with some 12.5 million Malaysian FB users recorded this year, it is safe to say that there are many.

In fact, global social media and digital analytics company Socialbakers estimated that some 2.2% of Malaysian Facebookers were aged 13 and below last August (around 248, 528). That is a rough estimate at best; with our below-18 population totalling up to 11.2 million (approximately 2.87 million children are in primary school), it is difficult to pinpoint how many FB minors are signed up on a fake age.

Malaysian Communications and Multimedia Commission (MCMC) chairman Datuk Mohamed Sharil Tarmizi agrees that removing the token age restriction is perhaps the most effective way to protect our children on Facebook.

This will create openness among the tweens and their parents, says Sharil.

“Children will not need to hide that they have FB accounts any more and would be encouraged to share their online experiences with their parents. If they do not bypass the protection measures (as kids nowadays are very IT savvy), the children should get the age appropriate online protection they need against the adult world' of Facebook,” he adds.

However, both agree that this will only be effective if Facebook fulfils its commitment to introduce a new suite of tools for parents to keep their children safe when they register a FB account and interact on the social networking site.

Sharil, who is also vice-chairman of the International Telecommunications Union (ITU) Council Working Group on Child Online Protection (COP), a specialised organ of the United Nations based in Geneva, Switzerland, reminds parents that children are minors first and foremost.

“Children under 13 are typically in the primary school group and need extra supervision, guidance and care,” he stresses.

Husin proposes that specific accounts for those below 13 be created with suitable contents and safeguards to enable parents and guardians to continually provide assistance as well as monitor the online activities of these young Facebookers.

Sharil: ‘Children need guidance and supervision. Online tools and technologies can never replace the care and guidance that parents can give’
“Facebook for those below 13 should be categorised as a special account, different from the adult Facebook accounts. They should introduce some kind of system to ensure that the children obtain parental consent before they get accepted to sign up, and whenever a child requests for or accepts a new Facebook friend, parents should be alerted,” he adds.

Dangerous playground

Still, as many parents would be deigned to admit, no matter how vigilant you are, it is still a big bad Web out there.

“Parents can only guide and monitor their children, they cannot really change the environment,” says a father-of-three who only wants to be known as Arshavin.

You will still need the help of the policy makers and service providers, among others, to make the Internet, and specifically Facebook, safe for children, he adds.

“No matter how well-trained or educated your children are, some places are just off limits, even if you go there with them.

“I read this one comment that I think captures it well will you let your elementary school child attend a college or adult party?'. You won't, right?” he poses, warning that some parents might be lulled by a false sense of security for their children on Facebook if the new ruling is implemented.

Social media specialist Jasmin Choy agrees, highlighting cyber-bullying as one danger for young children on FB. The problem is intensified as many parents are not equipped to deal with it, she says.

“Many parents of children who are being bullied online feel they can't do anything about it. Then there are those who just don't know what is happening to their kids in cyberspace, or those who are not giving enough guidance to their kids and are becoming bullies online,” she says.

Opposing the social media network's plans to open up their membership for children under 13, the mother of two relates a recent cyber-bullying case close to her heart.

“It happened to a friend's child who is sensitive and fragile. She was already being subtly bullied online when the girls ganged up on her and made her feel like she was stupid. The problem was, the mother didn't know what to do about it. If she intervened, the daughter would be very embarrassed. On the other hand, if the mum didn't intervene, these girls would go on bullying her daughter.”

Another red flag for children, she warns, is online porn and sexual predators.

“Many parents have no idea how much porn is being served up to the kids online. They think they have some idea but are often shocked when they discover how accessible porn is to their six- to13-year-olds.”

As Choy highlights, one only needs to go to some of the game apps on FB to receive porn advertisements.

“Many pop up even on innocent-looking Facebook games. Besides, curious kids are going to share images and if there's FB and Twitter they will see it,” she says, advising parents to “prepare” their children by educating them about the birds and the bees at an early age.

“We can't be prudish about it. They are going to see it anyway, so why not explain to them before trouble brews.”

The main danger she foresees, however, is the breach of privacy.

“Think about all the times we chatted with a young kid on FB. We must have at least mentioned the child's name, asked them how their day was... things like that. We tend to forget the dangers when we are having fun online. Bad people can easily glean information from the chats the adults have with young kids on FB posts,” she says.

Choy also strongly believes that pre-teens are particularly vulnerable because most do not have the maturity to handle problems related to FB or be aware of the dangers.

“Even if they are aware of the dangers, they can't often see the danger in front of them. Even adults don't react fast enough to FB risks, what more children of that age,” she says.

Along with the threat of paedophiles, there is also worry that young children will be subjected to unscrupulous advertisers and marketers on Facebook, or have their personal data sold to advertisers.

Not surprisingly, Zuckerberg has already been lobbied by a coalition of consumer, privacy and child advocacy groups to keep children's data confidential and the site ad-free for the below-13s in the United States.

For bank officer Aslina, addiction is her big worry.

“Just like adults, kids tend to spend way too much time on Facebook and can get addicted to it. Instead of studying or socialising with friends and playing games or sports, they will be logged on FB.”

And, cautions teacher Mary K, parents might not be able to withstand another pressure should FB open its doors to pre-teens peer pressure.

“Now they will be pressured to join because all their friends are on it. It will be a difficult time for parents, “ she says.

Arshavin agrees.

“I asked my 16-year-old daughter why she is on FB, and she said it was to watch what her friends are up to. But when I asked her to log off, she just whined about what she would be missing,” he says.

Calling FB a “different beast altogether”, Choy who is a proponent of the Internet as a study tool vows to keep her children away from it as long as she can.

“I really believe all young kids should have access to the Internet. My six-year-old can Google search for any information related to his hobbies or studies at any time with the tablet. YouTube has given him access to various documentaries he can watch and learn from. And why not? Technology and the Internet have made learning exciting. It has allowed my children to think out of the box. I just don't think they should have an FB account at an early age,” she says.

If parents do decide to let the child open a FB account, she adds, they would need to constantly talk to them about the hazards and teach them good cyber habits.

“Explain over and over again why they should not reveal sensitive information like their names, location of the moment and place of residence. And check, check, check their FB settings,” she stresses.

And constantly but silently read their children's postings to check for trouble, she adds.

This is something Alina does diligently with her two pre-teen children who are registered on FB.

“In the beginning, I was worried that I was making the wrong decision to let them get their own profiles on FB. But I read up on it and made sure that I know what is in store for them. Then I went through all the safety and security features available on FB with them before we registered.”

Most importantly, she adds, she always reminds them to be as cautious online as they would be in the real world.

Sharil agrees children should be taught as early as possible that rules and regulations exist online just as they do offline, and that there are dangerous areas online just as there are dangerous areas or things in the real world.

It is parents' responsibility to cultivate security awareness in their children and educate them on safe Internet usage, says Husin.

“Parents must be alert of any unusual activities of their children on the Net and take the appropriate action to rectify if their child gets caught in any undesirable activities online.”

Sharil, however, reiterates that parents are the best judge of whether their child is ready for Facebook themselves.

“It all goes back to the basic skills of parenting and instilling good moral values in their children. Children need guidance and supervision. Only parents can do this effectively. Teachers, NGOs and the broader community can help but they can never replace the parent,” he notes.

Crucially, parents are at the frontlines of their children's defence, says Sharil.

“Parents should continue to monitor their children's online activities while encouraging appropriate online behaviour. They should not totally depend on Facebook's parenting' facilities. Online tools and technologies can never replace the care and guidance that parents can give.”

Ultimately, he adds, it is extremely important for parents and guardians to become good role models for their children when they are online.

By HARIATI AZIZAN sunday@thestar.com.my

Tuesday, June 5, 2012

Facebook comments, ads don't sway most users: poll

(Reuters) - Four out of five Facebook Inc users have never bought a product or service as a result of advertising or comments on the social network site, a Reuters/Ipsos poll shows, in the latest sign that much more needs to be done to turn its 900 million customer base into advertising dollars.

The online poll also found that 34 percent of Facebook users surveyed were spending less time on the website than six months ago, whereas only 20 percent were spending more.

The findings underscore investors' worries about Facebook's money-making abilities that have pushed the stock down 29 percent since its initial public offering last month, reducing its market value by $30 billion to roughly $74 billion.

About 44 percent of respondents said the botched market debut has made them less favorable toward Facebook, according to the survey conducted from May 31 to June 4. The poll included 1,032 Americans, 21 percent of whom had no Facebook account.

Facebook's 900 million users make it among the most popular online destinations, challenging entrenched Internet players such as Google Inc and Yahoo Inc. But not everyone is convinced that the company has figured out how to translate that popularity into a business that can justify its lofty valuation.

Shares of Facebook closed Monday's regular trading session down 3 percent at $26.90. Facebook did not have an immediate comment on the survey.

While the survey did not ask how other forms of advertising affected purchasing behavior, a February study by research firm eMarketer suggests that Facebook fared worse than email or direct-mail marketing in terms of influencing consumers' purchasing decisions.

"It shows that Facebook has work to do in terms of making its advertising more effective and more relevant to people," eMarketer analyst Debra Williamson said.

Those concerns were exacerbated last month when General Motors Co, the third largest advertiser in the United States, said it would stop paid-advertising on Facebook.

Measuring the effectiveness of advertising can be tricky, particularly for brand marketing in which the goal is to influence future purchases rather than generate immediate sales.

And the success of an ad campaign must be considered in relation to the product, said Steve Hasker, president of Global Media Products and Advertiser Solutions at Nielsen.

"If you are advertising Porsche motor cars and you can get 20 percent of people to make a purchase that's an astonishingly high conversion rate," said Hasker.

"If you are selling instant noodles, maybe it's not," he

WANING ENGAGEMENT

About two out of five people polled by Reuters and Ipsos Public Affairs said they used Facebook every day. Nearly half of the Facebook users polled spent about the same amount of time on the social network as six months ago.

The survey provides a look at the trends considered vital to Facebook's future at a time when the company has faced a harsh reception on Wall Street.

Facebook's $16 billion IPO, one the world's largest, made the U.S. company founded by Mark Zuckerberg the first to debut on markets with a capitalization of more than $100 billion.

It's coming out-party, which culminated years of breakneck growth for the social and business phenomenon, was marred by trading glitches on the Nasdaq exchange. A decision to call certain financial analysts ahead of the IPO and caution them about weakness in its business during the second quarter has triggered several lawsuits against Facebook and its underwriters.

Forty-six percent of survey respondents said the Facebook IPO had made them less favorable towards investing in the stock market in general.

While Facebook generated $3.7 billion in revenue last year, mostly from ads on its website, sales growth is slowing.

Consumers' increasing use of smartphones to access Facebook has been a drag on the company's revenue. It offers only limited advertising on the mobile version of its site, and analysts say the company has yet to figure out the ideal way to make money from mobile users.

Facebook competes for online ads with Google, the world's No. 1 Web search engine, which generated roughly $38 billion in revenue last year. Google's search ads, which appear alongside the company's search results, are considered among the most effective means of marketing.

The most frequent Facebook users are aged 18 to 34, according to the Reuters/Ipsos survey, with 60 percent of that group being daily users. Among people aged 55 years and above, 29 percent said they were daily users.

Of the 34 percent spending less time on the social network, their chief reason was that the site was "boring," "not relevant" or "not useful," while privacy concerns ranked third.

The survey has a "credibility interval" of plus or minus 3.5 percentage points.


By Alexei Oreskovic SAN FRANCISCO  Newscribe : get free news in real time 

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Wednesday, May 30, 2012

Facebook share price drops to $28, shaves $40bn off

Facebook shares fall below $30 as US authorities begin investigation into IPO

Shares continue to slump on Wall Street as lawsuits against founder Mark Zuckerberg allege company misled investors

Facebook
Electronic screens show the price of Facebook shares after they began trading in New York earlier this month. Photograph: Richard Drew/AP

Facebook's shares dipped below $30 Tuesday as the company's shares hit new lows and continued to struggle in the wake of its massive initial public offering (IPO).

Even as US stock markets bounced back from falls last week, Facebook's shares slumped 9.62% to end the day at $28.84 – almost $10 below the $38 price set at their IPO earlier this month. Stock markets in the US, which had been closed on Monday for Memorial Day, ended up for the day.
During the Trading Day
28.84 -3.07 / -9.62%
Data as of 4:00pm ET
Day’s Change During After-Hours   Switch to standard view »
28.78 -0.06 / -0.21%
Volume: 1,246,000  


The share slide means Facebook is now valued at $61.98bn, a sharp fall from the $104bn it was valued at when the company went public on 18 May.

The IPO has proved a disaster for Facebook and its bankers. US authorities are investigating allegations that the company gave critical information to some investors and not others. Shareholders have launched class action lawsuits against founder Mark Zuckerberg, the company and its bankers, including lead bank Morgan Stanley.

Walter Zimmermann, senior technical analyst at United-ICAP, said there was plenty of evidence that the stock could fall further. He said the share sale had represented "a mania of historic proportions".

"This was an IPO that was going to save California and uplift the western world. It was so overhyped and overvalued that it could only fall," he said.

Some traders pointed to technical reasons for the stock's continuing woes. Trading in Facebook options – contracts that allow investors to make bets on the direction of a company's shares – started Tuesday. Traders can now also "short" Facebook shares, betting that the price will fall.

Sam Hamadeh, founder of analyst PrivCo, said most of the options were "bearish" meaning traders were betting on price falls and that popular contracts were putting Facebook's share price in the mid $20s for June and July. PrivCo estimated Facebook's shares were worth $25 ahead of the IPO.

"The shares would have probably fallen anyway but this probably sped the process up a little bit," he said.

Zimmerman said discussions of technical issues missed a wider point. He said Facebook had sold so many shares – 96m – that there was little appetite from investors who had not bought shares. "Who is left to buy?" he said.

News that the company is considering building its own mobile device, an area where it has struggled to make money, seems to have been shrugged off by investors.

Last week law firm Robbins Geller launched a class action lawsuit on behalf of Facebook investors against the company and its bankers. Massachusetts' secretary of commonwealth William Galvin has sent a subpoena to Morgan Stanley demanding more details of what the bank and Facebook executives told select investors ahead of the IPO.

By Dominic Rushe in New York  guardian.co.uk

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Monday, May 28, 2012

The Facebook Illusion

THERE were two grand illusions about the American economy in the first decade of the 21st century. One was the idea that housing prices were no longer tethered to normal economic trends, and instead would just keep going up and up. The second was the idea that in the age of Web 2.0, we were well on our way to figuring out how to make lots and lots of money on the Internet.

Josh Haner/The New York Times Ross Doutha

The first idea collapsed along with housing prices and the stock market in 2007 and 2008. But the Web 2.0 illusion survived long enough to cost credulous investors a small fortune last week, in Facebook’s disaster of an initial public offering.

I will confess to taking a certain amount of dyspeptic pleasure from Facebook’s hard landing, which had Bloomberg Businessweek declaring the I.P.O. “the biggest flop of the decade” after five days of trading. Of all the major hubs of Internet-era excitement, Mark Zuckerberg’s social networking site has always struck me as one of the most noxious, dependent for its success on the darker aspects of online life: the zeal for constant self-fashioning and self-promotion, the pursuit of virtual forms of “community” and “friendship” that bear only a passing resemblance to the genuine article, and the relentless diminution of the private sphere in the quest for advertising dollars.

But even readers who love Facebook, or at least cannot imagine life without it, should see its stock market failure as a sign of the commercial limits of the Internet.

As The New Yorker’s John Cassidy pointed out in one of the more perceptive prelaunch pieces, the problem is not that Facebook doesn’t make money. It’s that it doesn’t make that much money, and doesn’t have an obvious way to make that much more of it, because (like so many online concerns) it hasn’t figured out how to effectively monetize its million upon millions of users. The result is a company that’s successful, certainly, but whose balance sheet is much less impressive than its ubiquitous online presence would suggest.

This “huge reach, limited profitability” problem is characteristic of the digital economy as a whole. As the George Mason University economist Tyler Cowen wrote in his 2011 e-book, “The Great Stagnation,” the Internet is a wonder when it comes to generating “cheap fun.” But because “so many of its products are free,” and because so much of a typical Web company’s work is “performed more or less automatically by the software and the servers,” the online world is rather less impressive when it comes to generating job growth.

It’s telling, in this regard, that the companies most often cited as digital-era successes, Apple and Amazon, both have business models that are firmly rooted in the production and delivery of nonvirtual goods. Apple’s core competency is building better and more beautiful appliances; Amazon’s is delivering everything from appliances to DVDs to diapers more swiftly and cheaply to your door.By contrast, the more purely digital a company’s product, the fewer jobs it tends to create and the fewer dollars it can earn per user — a reality that journalists have become all too familiar with these last 10 years, and that Facebook’s investors collided with last week. There are exceptions to this rule, but not all that many: even pornography, long one of the Internet’s biggest moneymakers, has become steadily less profitable as amateur sites and videos have proliferated and the “professionals” have lost their monopoly on smut.The German philosopher Josef Pieper wrote a book in 1952 entitled “Leisure: The Basis of Culture.” Pieper would no doubt be underwhelmed by the kind of culture that flourishes online, but leisure is clearly the basis of the Internet. From the lowbrow to the highbrow, LOLcats to Wikipedia, vast amounts of Internet content are created by people with no expectation of remuneration. The “new economy,” in this sense, isn’t always even a commercial economy at all. Instead, as Slate’s Matthew Yglesias has suggested, it’s a kind of hobbyist’s paradise, one that’s subsidized by surpluses from the old economy it was supposed to gradually replace.
A glance at the Bureau of Labor Statistics’ most recent unemployment numbers bears this reality out. Despite nearly two decades of dot-com enthusiasm, the information sector is still quite small relative to other sectors of the economy; it currently has one of the nation’s higher unemployment rates; and it’s one of the few sectors where unemployment has actually risen over the last year.None of this makes the Internet any less revolutionary. But it’s created a cultural revolution more than an economic one. Twitter is not the Ford Motor Company; Google is not General Electric. And except when he sells our eyeballs to advertisers for a pittance, we won’t all be working for Mark Zuckerberg someday.- IHT

Facebook Inc (NASDAQ) 

 

Thursday, May 24, 2012

Facebook, Zuckerberg & banks sued over IPO

The lawsuit charges the defendants with failing to disclose "a severe and pronounced reduction" in forecasts for Facebook's revenue growth in the run-up to Friday's IPO.
The lawsuit names Mark Zuckerberg, Facebook's founder, as a defendant, as well as top Silicon Valley investors Peter Thiel and Marc Andreessen. Photograph: AFP/Getty Images

Facebook, Morgan Stanley and some of the biggest names in Silicon Valley are being pursued over the social network's disastrous share sale by the law firm that won a $7bn settlement for Enron's shareholders.

Robbins Geller is co-ordinating a class action lawsuit alleging that Facebook and its bankers misled investors about the true state of their business while informing a handful of privileged clients about the company's true prospects.

The lawsuit, filed in New York, names Mark Zuckerberg, Facebook's founder, as a defendant, as well as top Silicon Valley investors Peter Thiel and Marc Andreessen, and Goldman Sachs, JP Morgan and Barclays Capital.

Facebook shareholders have sued the social network, CEO Mark Zuckerberg, and a number of banks, alleging that crucial information was concealed ahead of Facebook's IPO.

The lawsuit, filed in the U.S. District Court in Manhattan this morning, charges the defendants with failing to disclose in the critical days leading up to Friday's initial public offering "a severe and pronounced reduction" in forecasts for Facebook's revenue growth, as users more and more access Facebook through mobile devices, according to Reuters, which cited a law firm for the plaintiffs. (The case is Brian Roffe Profit Sharing Plan v. Facebook, 12-04081.)

Earlier this month, Facebook updated its filings with the Securities and Exchange Commission to say that the shift to smartphones and other mobile gadgets is cutting into the prices it can set for advertisers, which would in turn hurt the company's revenue. In March, the social network had 488 million monthly average unique users of its mobile products, out of a total of just over 900 million registered users.

The plaintiffs charge that the changes to the forecast by several underwriters of the IPO were only "selectively disclosed" to a small group of preferred investors and not to the investment community at large. "The value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result," the complaint says, per the Reuters report.

Facebook's stock opened Friday priced at $38 and, aside from a slight uptick right at the start, has been trading lower since then. It closed at $31 last night. In early trading today, shares are up better than three percent to around $32.
A report from well-known Wall Street watcher Henry Blodget, citing an unnamed source, posits that a Facebook executive was responsible for telling institutional investors, but not smaller investors, about the reduction in revenue estimates.

Speaking on CBS This Morning today, Blodget described the sequence of events regarding the estimates and the failure to fully share material information. "The fact that it was only distributed verbally to a handful of institutions as opposed to all investors is a problem," he said.

This isn't the only lawsuit related to Facebook's IPO. A Maryland investor, for instance, is suing the Nasdaq stock exchange over glitches in how it handled the offering.

We're reaching out to Facebook for comment and will update this story when we hear back.

Jonathan E. Skillingsby Jonathan E. Skillings 

Facebook, banks sued over pre-IPO analyst calls

In this photo illustration, a Facebook logo on a computer screen is seen through glasses held by a woman in Bern May 19, 2012. Picture taken May 19, 2012. REUTERS/Thomas Hodel

Wed May 23, 2012 11:02am EDT
 
(Reuters) - Facebook Inc and banks including Morgan Stanley were sued by the social networking leader's shareholders, who claimed the defendants hid Facebook's weakened growth forecasts ahead of its $16 billion initial public offering.

The defendants, who also include Facebook Chief Executive Officer Mark Zuckerberg, were accused of concealing from investors during the IPO marketing process "a severe and pronounced reduction" in revenue growth forecasts, resulting from increased use of its app or website through mobile devices. Facebook went public last week.

The lawsuit was filed in U.S. District Court in Manhattan on Wednesday, according to a law firm for the plaintiffs. A day earlier, a similar lawsuit by a different investor was filed in a California state court, according to a law firm involved in that case.

In the New York case, shareholders said research analysts at several underwriters had lowered their business forecasts for Facebook during the IPO process, but that these changes were "selectively disclosed by defendants to certain preferred investors" rather than to the public generally.

"The value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result," the complaint said.

Representatives of Facebook and Morgan Stanley did not immediately respond to requests for comment.


Facebook shares fell 18.4 percent from their $38 IPO price in the first three days of trading, reducing the value of stock sold in the IPO by more than $2.9 billion.

(Reporting by Dan Levine in San Francisco and Jonathan Stempel in New York; Editing by Gerald E. McCormick and Lisa Von Ahn)


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Sunday, May 20, 2012

Facebook Seeks Political Ad Dollars


There’s certainly money in politics, and Facebook knows it. The company, now under pressure to to justify its enormous $104 billion IPO, is trying to hire someone to maximize political advertising sales during the 2012 election season in the U.S.
“The Client Partner will establish and strengthen key relationships with national political campaigns and organizations with a focus on driving revenue, platform adoption, advertiser education, and advertiser satisfaction,” the posting on Facebook's website says.
How much money is in politics for Facebook? That's hard to say. But with the rise of the Super PAC, campaign spending on advertising will likely reach record-breaking levels this year. A growing percentage of that is moving online, in part because fewer people are watching live TV than during previous election years, according to the global ad agency WPP. The Hill reports that the Obama campaign alone is on track to spend $35 million on total online advertising this year, up from $16 million in 2008.

Unlike other advertisers that have questioned the value of Facebook this week, both the Romney and Obama presidential campaigns are likely to appreciate Facebook's importance. It had 40 million U.S. users in 2008 compared with 160 million today—almost the entire American voting public, according to The Guardian.

So, yes, we’ll be seeing a lot more politics in and next to our News Feeds over the next few months, targeted based on our activity and our friends' activity on the network. Whether the lifting of corporate spending limits on political campaigns, a result of a Supreme Court decision in 2010, will actually be a meaningful boost Facebook’s bottom line this year is unknown. The company’s total advertising revenue worldwide was about $3 billion in 2011.

 Jessica Leber Newscribe : get free news in real time

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Saturday, February 4, 2012

Make money from Facebook IPO!

Image representing Facebook as depicted in Cru...

Tan: How I made money from Facebook

By JAGDEV SINGH SIDHU jagdev@thestar.com.my

PETALING JAYA: For a man who does not have a Facebook account, Tan Sri Vincent Tan surely knows the value of the Internet giant.

“I may have one later,” quips Tan on opening an account but he will be counting the windfall from the 3.5 million shares his company, MOL Global Bhd, owns in Facebook once the company is listed on either the New York Stock Exchange or Nasdaq.

Based on an assumption that Facebook shares start trading at US$40 post-initial public offering, Tan’s MOL Global stands to pocket RM420mil for its shares.

Speaking to StarBizWeek, Tan recollects how he came about getting his hands on a tiny but valuable stake in Facebook.

Tan: ‘We don’t want to hold them for too long.’
 
Friendster was among the first social networking websites. It preceded MySpace and Facebook. Starting operations in 2003, Friendster found the going tough and lost money for years.

The company continued to raise but spent money aggressively. In running up losses, Friendster had, nonetheless, built up a base of 140 million registered users, of which 40 million were active.

Tan said the losses then stemmed from Friendster not monetising its user base. Finding it hard to make money from its users, it was losing an average of US$10mil a year.

Eventually, the patience of the owners and investors in Friendster wore thin and they wanted to exit the business. Friendster then called for a process to sell the business and now Friendster CEO, Ganesh Kumar Bangah, who was then working with Tan, informed him that Friendster was for sale.

“I asked for the numbers and found that 140 million registered users and 40 million active users was interesting. If we could make them spend some money, maybe Friendster would be a good investment. Of course, the downside was the business will continue to lose US$10mil a year,” he said.

Tan said the owners of Friendster initially wanted US$100mil for the business but with losses mounting, he knew no one would pay that much for the company. “At that time, Facebook wanted to buy Friendster’s patents but Facebook was willing to pay US$10mil cash and later increased it to US$20mil cash.”

Tan was made to understand then that the owners felt that taking US$20mil only to lose US$10mil a year will soon see that cash vanish and then decided to accept US$40mil for Friendster but wanted a quick sale. “They gave the potential buyers about a week to decide. Many people were looking, including large firms from China and Japan, at Friendster.



“They were much larger than MOL but with the owners of Friendster needing a fast sale, I told Ganesh to do a quick due diligence on Friendster.

“We took two days for the due diligence and made a bid. We said since Friendster owed people US$2mil, we offered US$38mil.

“With other potential buyers doing their due diligence, I told them that if they accepted US$38mil, we will do the deal right away. They accepted our proposal,” said Tan.

After buying Friendster in 2008, Tan then turned his attention to Facebook, which remained interested in Friendster’s patents and whose offer of US$20mil cash for the technology rights was still on the table. “We had a conference call with the people at Facebook. I accepted their price but I wanted shares.”

Facebook officials told him that Mark Zuckerberg, the boss of Facebook, did not want to dilute the shares in the company but Tan stood firm and said “if there was no shares, forget it”.

Tan insisted on getting shares in Facebook because he felt the company will be big in the future. Finally, Zuckerberg agreed to a share exchange for the patents and Tan got his 700,000 shares. His shares have grown to 3.5 million following a 5-for-1 split in Facebook’s shares before the IPO process.

Tan did not leave Friendster to languish but devised a plan to get the social networking website to breakeven point. He closed the US, Singapore and Australia offices to cut cost and began rebuilding the company.

This year, Friendster has stopped the bleeding and Tan felt the company has become “quite valuable”.

“The number of active users on Friendster has fallen from 40 million to four million but these four million spend money with us. We put games and all kind of things on the website and they spend money. If they didn’t, we cannot monetise the business,” he said.

Potentially, Tan values his Internet business at around RM1bil. It does business in Malaysia, Singapore, Thailand, the Philippines, Indonesia and India and is trying to get into Vietnam and many other countries.

MOL makes money from points people buy to play online games. It is also a payments gateway and is a payment partner for Facebook and Zynga, which is the creator of the hugely popular Farmville.

Tan said business models employed by companies such as Zynga, instead of relying on advertising revenue, was how large sums of money can be made from the Internet.

“People play and buy cows and tractors for their game. It’s amazing why people pay so much for that and I cannot imagine it.

“I tell my kids ‘you don’t play Farmville. If you want to farm, you can go to Bukit Tinggi. I will give you a real farm’,” he laughs.

Will he hold or sell his Facebook shares?

“We will see where it goes,” said Tan. “We will probably sell them for our business. We don’t want to hold them for too long but will see where the shares go after the IPO.”

At any price, the Facebook shares Tan owns has been hugely rewarding and the profit from the shares means the Friendster acquisition was paid for plus a lot extra profit on the side. “We were lucky,” he said.

So where does this investment rank among the many that Tan has executed in his corporate life?

“It’s one of the good ones but none can beat DiGi,” he said. “DiGi was my best investment and I should have stayed with it. I sold when DiGi had a market capitalisation of RM5bil to RM6bil. Today, the company is worth some RM31bil.

“That’s the big one that got away,” he lamented.



Vincent Tan awaits Facebook IPO windfall

By CHOONG EN HAN han@thestar.com.my

 His stake in the social networking service company may be worth RM420m

PETALING JAYA: Tan Sri Vincent Tan is definitely going to “like” the much anticipated Facebook Inc initial public offering (IPO) as his stake in the world's largest social networking service company could be worth as much as RM420mil.

MOL Global Bhd, which is controlled by Tan, is said to have 3.5 million shares in Facebook and assuming the IPO price is set at US$40 a piece, this would translate to US$140mil (RM420mil), and even more after the listing. sources said.

However, the amount is still an estimated value as Facebook has yet to reveal its share price information and its valuation is still speculative.

Facebook has been discussing raising as much as US$10bil, making the IPO the biggest Internet or technology IPO the market has ever seen.

With the outstanding shares of Facebook of about 1.88 billion, the stake of MOL does not even come close to 1%,” said the source.

Given the share base of Facebook, MOL Global's stake represents about 0.19% of the social networking service.

MOL Global is currently the payment partner for Facebook, as well as with game developer Zynga, which made its name through popular social games such as Farmville.

MOL Global first got its hands on the stake in Facebook in 2010 when it sold off the patents of Friendster, the world's first social networking site, to Facebook.

As part of the deal, it received 700,000 shares in Facebook which subsequently increased to 3.5 million shares last year after Facebook initiated a 5-for-1 split of the company's shares.

MOL Global made global headlines when it acquired Friendster for US$39mil in 2008, after winning the bid in an open tender against Chinese game and instant messaging company Tencent and other bidders.

According to regulatory filings for the US IPO, Facebook founder Mark Zuckerberg currently has a 28.4% stake in his company, with about 533.8 million shares.

The company said it conducted its own valuation of its stock at the end of each quarter, and as of Dec 31, it had determined its shares to be worth US$29.73 a piece.

In 2011, Facebook pocketed about US$1bil on a revenue of US$3.7bil with over 845 million monthly active users. In 2010, it made US$606mil.

The company's main revenue are derived from advertising, while another US$557mil came from payments, with most of the non-advertising funds coming from social-gaming partner Zynga.

M'sians to benefit from facebook IPO windfall



A FEW weeks ago, the fortunes of 70 households in an isolated farming village in Spain changed forever.
Initially the residents of Sodeto wanted to give Spain's huge Christmas lottery, known as El Gordo, a miss, because they were facing tough times due to the economic downturn and a severe drought.

But they bought tickets anyway out of loyalty to the homemakers' association and they hit the jackpot. Some of the farmers and unemployed people became instant millionaires.

Everyone in town had a share except for one man, who was apparently overlooked. Sadly, he will never find out what it takes to make a bet.

That brings me to the topic of Facebook.

Facebook is a social networking company that has changed the lives of many, and perhaps, destroyed some too. But who would have thought that Mark Zuckerberg and his college roommates could have created such a company way back in 2004 that could be raking revenues of more than US$3.7bil today.

Facebook started as a site that allowed students to interact via the Web, but later made accessible to everyone, thereby intensifying competition with sites such as MySpace and Friendster, founded two years before.

Going public: A ‘like’ sign is seen at the main entrance of Facebook’s headquarters in Menlo Park, California. Zuckerberg (inset) says the scale of the technology and infrastructure that must be built is unprecedented — AFP

Eight years later, it is going for a listing on the New York Stock Exchange or Nasdaq. The company is considering a valuation of US$75bil to US$100bil. Going forward, its biggest challenge is about keeping the advertising momentum because advertising is its key source of revenue.

Today, Facebook has over 800 million users and the numbers are growing every day because Facebook has created enough buzz that even a seven-year-old or a 60-year-old wants to get connected on Facebook.

Out of all this buzz, who would have thought that a Malaysian company MOL Global Ltd would have something to cheer about as Facebook goes for listing.

This smallish company is making headlines like never before.

MOL Global is majority owned by billionaire Tan Sri Vincent Tan and MOL group CEO Ganesh Kumar Bangah holds just over 10% in the company.

Tan is a well-known billionaire who has made a lot of bets, some have made him richer, others just fizzled out. Today, his empire spans across several sectors and several countries and he continues to make more bets to expand it further.

The story of MOL Global began in 2000, during the dot.com era.

He bought over his brother Tan Sri Danny Tan's company, Dijaya Corp, and renamed it MOL.Com Bhd. Like a venture capitalist, he invested in over 30 Internet companies, including Bangah's MOL Access. Of the 30, perhaps two or three grew.

MOL Access is involved in online games and was subsequently listed on the Mesdaq board in 2003, but privatised in 2008.

In late 2009, MOL.Com bought over Friendster for US$39mil and, in the same year, MOL Global was set up in Singapore. Today MOL Global owns Friendster and the MOL Access Portal.

In July 2010, Facebook forged a partnership with MOL Global for the patents of Friendster. For that, MOL Global received 700,000 shares in Facebook stock and that explains why it has a stake in Facebook.

Today, MOL Global's stake could be potentially worth US$140mil on assumption that Facebook may be valued at US$40 a share but any gain can only be realised if the shares are sold and there is a capital repayment or dividend payout.

Analysts are comparing Google's valuation with that of Facebook. The world's favourite search engine went public in 2004 and Google's shares were priced at US$85 at issue but are now at US$583. Can Facebook reach that level?

That aside, a question to ponder is, had Tan pushed the growth of Friendster, would Friendster's position be like Facebook today?

Whatever, only Tan knows if this was his best bet ever. Who will ever know?
Deputy news editor B.K. Sidhu hopes Zuckerberg will know how to reward the 845 million Facebook users who have helped him get his biggest break in his life and if he needs lessons on goodwill, then he should read up how Maxis Bhd rewarded some of its users when the company was listed and re-listed.

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Saturday, December 24, 2011

Tech CEOs 2011: The best and the worst



by Charles Cooper, CNET

Armchair critics of the world rejoice. It's time to select the year's best and worst tech CEOs. It's a judgment that some no doubt will lambaste as arbitrary, even biased. On both counts we plead guilty. So if you have candidates for either category, or take issue with our choices, add your voice in the talkback section below. 

THE HEROES
Steve Jobs and Tim Cook 

Skip to the next section if you're thoroughly sick of reading about how Apple keeps hitting the ball out of the park. Truth be told, it was more fun in the mid-1990s when Apple was Silicon Valley's running soap opera. Nowadays the company operates with the sort of steamroller efficiency epitomized by the 1927 New York Yankees led by Babe Ruth and Lou Gehrig. And for that, you have to credit the CEO tandem of the late Steve Jobs and his successor -- and alter ego -- Tim Cook.

Tim Cook sitting at Steve Jobs' right at an event in 2007.
(Credit: James Martin/CNET)
 
Jobs may be gone but his influence at Apple remains in the management team and product design philosophy that he left behind. Even though illness forced Apple's legendary co-founder to relinquish the reins to Cook in late August, his half-year as CEO was still better than full-year performances turned in by most of his peers. This wasn't an overnight handover. Whenever Jobs needed to take a step back, Cook was in the unique position of receiving extended on-the-job training, and whatever rough patches he might have encountered were well hidden behind Apple's carefully constructed PR screen. All the while, Cook got to learn first-hand from the tech industry's master marketer how it's done.



What a shame Jobs wasn't healthy enough to introduce the iPhone 4S. How the fan boys would have swooned when he offered them the first look at Siri. Cook's not a matinee idol and he doesn't try to be. Maybe that explains the relatively muted reaction to what was otherwise a very successful product debut. Some quibbled that the lines in front of Apple stores were smaller than for previous releases. But the bloggers and reporters who get hung up by the different style are making a big deal out of the trivial. Like Jobs, Cook has offered the leadership that you'd expect from a strong CEO. He more than justified Jobs' confidence as Apple's iPhones, iPads and iMacs continued to sell at a torrid clip in the second half of 2011, sending the company's shares are up more than 17 percent year-to-date, beating both the Nasdaq index and S&P 500.

The question everyone is asking is whether Cook can muster the magic on his own now that he's flying solo. Maybe we'll find out the answer in 2012. But so far, this rates as one of the most seamless managerial handovers in corporate history. And one of the most successful.

President Obama chats with Facebook CEO Mark Zuckerberg.
President Obama chats with Facebook CEO Mark Zuckerberg in February. (Credit: The White House)

Mark Zuckerberg

Here's one way to think about how entrenched Facebook has become in the cultural lexicon: When someone decides they actually want to leave everyone's favorite social network grid, this now qualifies as "news." That is no small accomplishment. Even though Google now offers its own rival service, Facebook remains by a wide margin the preferred social network for revelers, revolutionaries, and just plain folk posting their musings, pictures, and videos uploads.

Wall Street has apparently decided that Facebook is not of this world, according it a pre-IPO valuation now north of $80 billion. But somehow the peanut gallery remains reluctant to give Mark Zuckerberg his full due for building a magnificent platform. Yes, he's profiled in business magazines and gets sought out for interviews by everyone from Charlie Rose to "60 Minutes." But when you listen to discussions of the great CEOs of Silicon Valley, you're more likely to hear mention of John Chambers, who had Cisco buy the company that makes the Flip video camera for $590 million and then shut the division less than two years later. The worst Zuckerberg ever did is get sloppy with privacy controls, a faux pas that some within the blogosphere may never forgive.

But as 2011 closes, it's time to give it up for the Z-man. Through the years he has remained true to his vision and resisted sundry offers to sell out. Back in 2006, when he was approached with a $750 million offer, more than a few people thought he should take the money and run. Who was Zuckerberg and what was Facebook to think they could outrun then-juggernaut MySpace? But five years later, MySpace is irrelevant, while Facebook has over 750 million active users and earned $500 million on $1.6 billion of revenue during the first half of 2011.

Like Bill Gates, an entrepreneur who managed very well as CEO at a young age, Zuckerberg is growing into the role (helped in no small part by his able No. 2, Sheryl Sandberg.). The best example came this fall when he put a potentially distracting privacy fight with the government in the rear view mirror instead of venting publicly about government persecution. He's familiar with Microsoft's less than happy experience battling Uncle Sam and wisely ordered Facebook to strike a deal with the Federal Trade Commission that should put this issue to bed.

Zuckerberg can't go on auto-pilot. His biggest immediate challenge, of course, comes from Google, which launched its Google+ service in July and passed the 40 million user mark in October. Facebook has to keep pushing. It did a nice job with Timeline, the new profile design that finally went live last week. And with an eye toward avoiding further complaints about user privacy, Facebook also rolled out a useful tool called Activity Log which may go down as one of the site's most important additions since the inclusion of the News Feed.

The coming IPO, presumably sometime in 2012, will be a barometer of Zuckerberg's success, as well as the event of the year's tech calendar. And who knows what the future holds? Is it altogether nutso to imagine Facebook bringing out its own search technology, one that could sort through a gold mind of data about social interactions? Zuckerberg is aiming high, and Facebook is already a good part of the way there. This is how legacies get created. If it all works as Zuckerberg hopes, then maybe that $80 billion valuation will turn out to be on the low side. Scary but true.

Eric Schmidt, Larry Page, and Sergey Brin
From left, Google's Eric Schmidt, Larry Page, and Sergey Brin.(Credit: Google)

Larry Page

In Google's 2004 pre-IPO filing with the SEC, co-founder Larry Page sent prospective shareholders a Monty Python-like message that he wasn't interested in conducting business as usual.

"Google is not a conventional company. We do not intend to become one."

A bit full of himself, sure, but now that the proverbial buck stops at his desk -- he became CEO in April -- Page has had an opportunity to back up his words. Though his brief reign, this much is clear: While he may not be an unconventional CEO, Page has ably handled the awesome responsibility that he sought out. He set the company on a new course with the blockbuster announcement of a $12.5 billion deal for Motorola Mobility (a deal that gives Google more than 17,000 patents and will prove useful now that Apple is trying to nuke Android in a court case). Meanwhile, Android continues to grow by leaps -- according to Nielsen, it now powers about 40 percent of smartphones -- while Google's search dominance remains unquestioned. The company also made a successful entry into social networking with Google+, which finally offers Facebook its first serious competition for advertising dollars and user attention. Wall Street likes what it's seen. On the day Page took over, Google's shares closed at $587.68; with less than a couple of weeks left in the year, they're hovering around the $630 level.

By all accounts, Page's accession to the top job -- technically this is his second turn as CEO, though his first as the head of Google as a public company -- has been annotated by drive and energy. He wants to accelerate Google's corporate DNA, and in the near term, that may be his biggest challenge. The flip side of being big and successful is the spread of corporate sloth (as both Microsoft and IBM veterans can attest). With around 25,000 employees at Google, this is no longer a scrappy startup and it's become tougher than ever for good ideas to bubble up from the ranks and get proper consideration. That's why Page has winnowed the number of projects Google's engineers are working on, focusing their efforts on the areas where he thinks there's the best chance for the biggest returns.

OK, how difficult can it be to sit at the top of the mountain, take in your immense kingdom, and bloviate in SEC docs about being unconventional? In fairness, it's not as easy as it looks, so give Page deserving kudos for not screwing up what continues to be one of the most vibrant tech companies around. We're often reminded of the spectacular success stories registered by the likes of Bill Gates and Steve Jobs (his second time at the helm more so than his first go around) but any fair recording of CEO-founders includes no shortage of flameouts. Remember George Shaheen at Webvan.com, Philippe Kahn at Borland, and Ted Waitt at Gateway, to name a few? All were smart guys and their companies were once the toast of the town. Then the good times ended and they couldn't reverse the slide. If Page turns out to be as good as we think, Google's CEO won't ever find himself facing that sort of predicament.


THE GOATS Reed Hastings

Yesterday's hero can turn into today's goat in the amount of time it takes to launch a press release. Just ask Netflix CEO and founder Reed Hastings, who must still be wondering if it was all a nightmare.

Reed Hastings
Netflix founder Reed Hastings at one of the company's warehouses in Silicon Valley.(Credit: CBS)
 
Up until this year, Hastings was an Internet rock star, lauded for having changed the way we consume movies and television shows. Netflix was an easy-to-use service priced at the sweet spot. Consumers flocked to it. Wall Street sang its praises. But it all came a cropper in September when Hastings executed the sort of maneuver that one might have expected from F-Troop.

It wasn't just the 60 percent price hike on one of Netflix's most popular plans that got peoples' dander up. Netflix also planned to split into two parts: One unit named "Qwikster" would mail DVDs to subscribers, while the other would continue to focus on streaming movies over the Internet.

This turned out to be a public relations disaster. Even though the price increase would impact only subscribers who used both the streaming and mail-order sides of the business, the announcement left Netflix loyalists steamed. Two separate websites with two billing systems and two names? If there was a higher logic at play, it escaped most people. The reviews were uniformly lousy and Netflix became the butt of late-night TV hosts' jokes. Wedbush Securities analyst Michael Pachter summed up the general reaction with this icy observation to a reporter from USA Today: "They raised prices. They offered lower-quality content, and they made it more complicated." Within three weeks Hastings reversed the Qwikster decision and publicly apologized for having "slipped into arrogance" (though Netflix kept the price increase in place.) But the apology was too late to repair the damage. During the third quarter, 800,000 subscribers responded to the Qwikster fiasco by dumping the service. Shares of Netflix, which earlier in the year poked above $300, have since fallen to the $70 range.

People have short memories and this isn't necessarily the end of the world for Netflix. Fans do return. Think Bob Dylan and his move to electric guitar. After the initial freak-out, most of the faithful got over it. Nothing here rules out that kind of rebound for Hastings -- as long as he avoids hitting another sour chord. At that point, Neflix really could be left blowing in the wind.


Leo Apotheker and Meg Whitman
Leo Apotheker and Meg Whitman (Credit: Graphic by James Martin/CNET)

Leo Apotheker

In our quiet moments, it's reasonable to wonder whether some mischievous warlock left the curse of the cat people on Hewlett-Packard.

Carly Fiorina's years were marked by corporate drift and tumult. Her replacement, Mark Hurd, was ousted in an expense-fudging scandal involving a former soft-porn actress. In between, there was a bizarre novella in which corporate officers trying to plug a leak ordered investigators to spy on journalists.

But nothing -- and I mean nothing -- compares with the brief and utterly feckless tenure of one Leo Apotheker, hired in November 2010 to replace Hurd.

Apotheker was a highly regarded software executive who had been chief executive of SAP AG. Although he had little experience as a hardware executive, the company hoped he could take the management skills he had picked up over the course of his long career and apply them to the job at hand. It was only much later on that we learned most members of HP's board of directors had never even met Apotheker before voting to hire him. That's what you get when the company is overseen by what a former board member has described as the "worst" board of directors in the history of business. But I digress.

After 11 months as CEO, Apotheker got the boot and HP, once one of Silicon Valley's storied company, was reduced to a laughingstock. The chronology played out over the summer, when Apotheker announced that HP would kill off the TouchPad tablet computer, which had only recently debuted. He also canceled a crop of phones and products based on Palm's WebOS operating system. He was also convinced HP would be better off selling the PC business, a $30 billion division which at the time still enjoyed big market presence.

His plan now is easy to mock. But Apotheker had a strategy to remake HP into something resembling his former company and specialize in catering to enterprise-sized companies. On the surface, at least, it was intriguing. After all, the idea of jettisoning low-margin businesses to focus on software and service worked wonders at IBM under Lou Gerstner and Sam Palmisano. But it took time for those two to get all the pieces in place and plan IBM's exit from the commodity stuff.

In contrast, the clock was ticking for Apotheker right from the start. And with HP missing its financial targets, Apotheker quickly lost credibility with the financial community, making investors even antsier as HP's stock lost 40 percent of its value. He also lost credibility with another key constituency as the board grumbled at his poor communications skills (starting with the decision to kill the TouchPad) as well as the company's product direction. Rightly or not, Apotheker was labeled a zig-zagger with little feel for HP's hardware business. The board executed a mercy killing in September, replacing Apotheker with Meg Whitman. The former eBay CEO has since announced that HP would keep the PC business.

You can't make this stuff up.


James Martin/CNET
RIM co-CEO Mike Lazaridis shows off the BlackBerry PlayBook.(Credit: BlackBerry PlayBook, Mike Lazaridis)
 
Jim Balsillie and Mike Lazaridis
 
After their company's latest earnings debacle, Research In Motion's co-CEOs James Balsillie and Mike Lazaridis announced they would take just $1 in salary. Given the collapse of this one-time tech darling, some shareholders may grumble these two are still being overpaid.

It's hard to believe how quickly RIM has collapsed. The company's stock has lost more than three-quarters of its market value in the last year while a myriad of app-hip mobile handset rivals have prospered. That's all the more remarkable given how we're talking about what once was the premier mobile device maker for businesses. Now RIM is a company that can't seem to keep up. With every new Android and Apple update, RIM promises a next-generation BlackBerry phone -- sometime in the second half of next year. Meanwhile, its PlayBook tablet has been turned into a bargain-bin product with RIM offering massive discounts.

Cue up Clayton Christensen and the perils of the innovator's dilemma, where one-time market leaders fail to capitalize on new waves of innovation. In the meantime, here's Lazaridis trying to explain why the on BlackBerry 10, the upcoming product RIM has touted as the basis for its superphone, is going to be delayed:
We need a highly integrated dual-core LTE platform.The processor we selected offers industry-leading power and efficiency, and also allows us to deliver the industrial design, that we believe is critical to the success in this market segment. This chipset will not be available until mid 2012. And as a result of this and certain other factors, we now expect our first BlackBerry 10 smartphones to reach markets in the latter part of calendar 2012. In the meantime, we believe that our strong BlackBerry 7 portfolio will continue to drive adoption of BlackBerry around the world.
One problem: In July, Lazaridis told shareholders that the BlackBerry 7 handsets were just "messaging" handsets compared to the "mobile computing" handsets slated to come out with the BlackBerry 10 software. Now the company's stuck with these same "messaging" handsets while the market keeps moving along. Sanford Bernstein responded to that performance by calling management "in complete denial of the situation" while another brokerage, Robert W. Baird, said RIM's U.S. business was "in a freefall."

There's a growing feeling that Balsillie and Lazardis, who share responsibilities for leading RIM, are congenitally conventional managers ill-equipped to handle an unconventional challenge. The situation has reached the point that some are even floating suggestions that RIM may need to consider dumping the BlackBerry if it's to survive. That sounds like a stretch but at this rate the situation is impossibly grim, with investors and customers holding onto faint promises of better times ahead. The fact that RIM has even reached this point constitutes Exhibits A, B, and C for the chorus of critics demanding new leadership.


Tim Armstrong

As an early user of AOL's dial-up service, I have to confess to a twinge of nostalgia each time I watch "You've Got Mail." That's about the only warm and fuzzy feeling AOL gives off these days as CEO Tim Armstrong seeks to find on a formula that will save the company from media also-ran status.

AOL CEO Tim Armstrong.
AOL CEO Tim Armstrong.(Credit: Google)

Give the man credit for believing in a strategy. But after two years making the same pitch, the question is whether he's got the right strategy. Armstrong is an online ad sales guy -- he was Google's president of the Americas operations -- and has gone shopping for new content that AOL's ad sales team can sell against. Like Yahoo, AOL has a legacy business in the form of its dial-up operations which, remarkably, still throws off a lot of cash each quarter. That's allowed Armstrong to fund his bet that that content will create scale when he acquired the Huffington Post for $315 million as well as TechCrunch for a reported $30 million. It's still too early to say how those deals are going to work out for AOL though they were grand slams for the two blogs' creators, Arianna Huffington and Michael Arrington, who sold at the peak. The other big hope is Patch, the company's network of hyperlocal Web sites. AOL this year has sunk $40 million into Patch on top of the $75 million that it spent on the project last year. Good money after bad? Not according to Armstrong, who has predicted that Patch will start generating a profit by the end of 2011.

But despite adding a collection of works in progress, AOL has failed to distinguish itself from the pack. AOL may argue that its content Web site pickups will help boost traffic and revenues in a meaningful way but it is unclear whether traditional remedies for a traditional media company will provide the needed fix. Wall Street has not bought the story. With Armstrong scheduled to take home a total annual compensation package of $1 million, AOL's stock plummeted from nearly 25 earlier in the year to the mid-teens.

On top of that, Armstrong's reputation as a leader suffered when he was unable to effectively resolve the summer soap opera involving Arrington and Huffington. After losing a turf war, Arrington very publicly left AOL; he was soon followed out the door by several key staffers - including, most recently, TechCrunch CEO Heather Harde. But that was just a circus sideshow to the central question about whether Armstrong has what it takes to turn AOL into a money maker. Already calls are coming to split the company into pieces and jettison the units that aren't adding to growth. How long before some of those same voices begin asking why Armstrong should escape paying the same penalty exacted from Carol Bartz when she failed to revive Yahoo? After all, you can only be in turnaround mode for so long.


Charles Cooper has covered technology and business for more than 25 years. Before joining CNET News, he worked at the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie.

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