Showing posts with label Yahoo. Show all posts
Showing posts with label Yahoo. Show all posts

Tuesday, May 29, 2018

Informational Wars in the 21st Century: the Collapse of Creativity

I should be packing for my upcoming Singaporean trip but instead, I re-watched the finale of Star Trek: Next Generation, and the material still captivates. As any Netflix subscriber will tell you, one good show often leads to another, and the 1987 premiere didn't seem dated, either. It got me thinking: why do I enjoy older movies and older dialogue, whether Hitchcock or Hepburn (Audrey, not Katherine)? Why do I often find the old superior to the new? And how is it possible the American intellect has declined so precipitously over the past 30 years? 

Growing up, I loved libraries and bookstores. Any random selection would do, and within minutes, I'd settle into an incredible story. Later, I discovered college bookstores, and within them were even more incredible stories that challenged my brain and entertained my soul. I knew I would never find myself being bored

In 2001, a few years after graduating college, I visited Singapore and experienced an anomaly in the world-literature continuum. A few books displayed never-before-seen admonitions: "For Sale Only in Singapore/Malaysia." Standard operating procedure assumed all governments control their reputations through "information boosting," i.e., ensuring their version of events is placed at the top of the shelf, but I didn't know about trade agreements or intelligence tactics and couldn't have told you the difference between MI5 or MI6. Although SEO wasn't yet a priority for private and state actors, its concept was present in that tiny bookstore, revealing the possibility of artifice. 

It was also in Singapore, a former British colony, where I first learned the power of international designations. An NUS professor revealed Singapore had been designated as a "developed," not "developing," country, excluding it from numerous international grants, even though most of its land mass could be called rural in 2001. After two years in one of the West Coast's most expensive and most diverse law schools, tiny Singapore is where I received my first international perspective. Singapore couldn't help itself; as a port-focused city-state, it had to embrace globalization before the term became fashionable in Western academic circles. 

I returned to the United States for my final year of law school wiser but not warier. 9/11 would happen shortly afterwards, and my next seven years would be spent eliminating over 75,000 USD of student loans during a severe recession. Only later would the issues of globalization and informational warfare return to my mental purview. They arose not willingly, but when I finally noticed no bookstore challenged me, no magazine captivated me, and the new could not compare with the old. I was starting to become bored. 

Today, I googled an unfavorable but famous event in a foreign country that should have been easily found. Instead, my search results contained fake news links designed to capture exactly the search terms I'd used, but in ways that concealed the actual event--and therefore the truth. The links included most of the event's general details, but the female protagonist had been replaced by a fake male one, and none of the names were real. During various hacking episodes, I'd suspected we'd progressed from geographical content restrictions to online bleaching, but de facto censorship of legal activities in America was new to me. Only Yahoo--allegedly one of the worst search engines in America, saved from obsolescence by its investments in Alibaba and Yahoo Japan--had the "right" result in the middle of the first page, a single link surrounded by deliberately engineered fake news. Incredibly, SEO manipulation had, in this instance, made my limited analog brain more powerful than one of America's most valuable technology companies. 

"Everything you see is propaganda," I once told a middle school class, and my opinion hasn't changed. Information wars and actions in furtherance of those wars are more obvious when a book's cover discloses geographical limits or when the most prevalent story about another country involves chewing gum, but unbiased information has always been an endangered species. I am young enough to remember Silicon Valley's battle cry, "Information wants to be free," but they never promised accuracy or context. 

In Star Wars, the engineer's revelation of a design flaw in the Death Star gives the rebels hope. Similarly, once we become aware of the informational flaws we receive daily from public and private news sources, perhaps we, too, can recognize "hidden" manipulation not just in search engine algorithms, but in social and mainstream media and even in the very people elevated into positions of power. If we achieve this higher level of understanding, humanity's hope wouldn't be founded on false optimism but upon the realization our species has evolved in the past and can continue to evolve beyond its self-defeating patterns of scapegoating, wishful thinking, and hyperbole. 

Gene Roddenberry, a military veteran and the creator of Star Trek, built his entire life around the inevitability of human progress. He declared, "The strength of a civilization is not measured by its ability to fight wars but by its ability to prevent them." Sadly, by this metric, the United States has failed its citizens, children, and veterans continuously since Vietnam. Having fought one unjust war after another--losing almost every one of them while economic competitors China and Japan focused on domestic infrastructure--America's current Establishment has little choice but to glorify militarism. Such propaganda requires economic support and job preferences to maintain momentum and, most of all, to bury past mistakes. Once activated, the machinery of militarism rarely sets its own boundaries; an enemy always exists just over the horizon, and more measures may always be taken to promote the appearance of safety. 

Few people in America see the connection between the TSA's expansion, its privatized body scanning machines, and the military's concern with employing returning veterans; even fewer realize the trillions of borrowed taxpayer dollars involved reduce not only America's economic potential but its future flexibility; and perhaps fewer still can conjure an alternative result for those same taxpayer dollars (hint: think Tokyo). Dr. Martin Luther King, Jr.'s prescience is worth remembering: "If America’s soul becomes totally poisoned, part of the autopsy must read 'Vietnam' ... A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death." (From 1967 in, of all places, New York City.) 

Let us now return to the original question: why does the old look, feel, and read better than the new in America when the opposite should be true? Consider that in normal societies, the younger generation is apt to forgo established customs as the older generation's knowledge degrades, diminishing claims to authority. Consider too that in abnormal societies, the old maintain their grips on the future by suffocating change through laws and punishment. And finally, note that diseased societies send their young to die for meaningless purposes, removing opposition as well as potential change agents. I say to you today, if the old appears shinier than the new, it is a sure sign of authoritarianism, evidence the youth are being suppressed or their imaginations stifled. Dr. King answered correctly in 1967, but I will go further: a military/police culture of following orders is incompatible with art, philosophy, nuance--and therefore creativity. 

When little boys and girls are deluged with images linking violence and war to heroism regardless of whether such wars are just, America's adults have replaced responsibility with desensitization and irrationality. 

When the table of brotherhood can only be set if every man reserves his right to a shotgun or a rifle, the spirit of the law has perished. 

When the sweltering heat in which our troops are stationed generates no lasting regional peace but instead parched national pocketbooks, America's vision has been a desert mirage all along. 

When our soldiers claim the ethos of courage while administering death by drones, we are living in a Greek tragedy of our own making. 

When our police officers consider themselves above the law, order becomes subservient to its half-witted cousin, obedience. 

If our judges refuse to read the papers presented to them and instead rely upon secondhand memorandums, the book of justice will remain unused. 

Now is the time to reform our sacred institutions by removing the sacrilegious from their temples and pulpits in Congress, courthouses, police departments, corporate boardrooms, and war rooms. There will be neither cohesion nor stability until each citizen is assured corruption has been driven out and the exorcists given their due. 

To that end, it may surprise you to learn the Muslims had wisdom we lack. They separated civilians, merchants, and the military by placing them in physically distinct areas. The medina was the place of business and barter, and the forts and minarets stationed fighters at a distance. The mosques provided sanitation five times daily in the required act of wudu
before prayer, mixing practicality with spirituality. Such arrangements required respect for logistics and infrastructure, not just weaponry. The distance between the two spheres of influence created built-in advantages beyond the freer development of calligraphy, science, algebra, and art; for instance, complaints arising in the medina (aka city) would need time and effort to reach the forts (aka military outposts), increasing the likelihood of legitimacy and thus an appropriate remedy. 
Oman
It may not be easy for an American historian to admit, but the aforementioned separation might have been the only truly "separate but equal" arrangement in modern history. 
Ultimately, if we do not understand some of humanity's problems have already been solved, we will neglect the task of modifying pre-existing solutions to current times and invite a cycle of arrogance. If we compound our error by ignoring history and amplifying propaganda, we will pollute the intellectual waters our children require to swim. Above all, if we are to have a dream worth mentioning, it must be one that facilitates a peaceful transition from old to young as well as a transfer of timeless knowledge. If each successive generation must start the Great Global Novel from scratch, our progress will be needlessly haphazard with no guarantee of reaching the final page. 

Today, the American Dream appears to have been a lie to all but the most talented, the most lucky, and the most likely to inherit. As I seek a better life in Singapore, I hope one day, America rediscovers the generosity of spirit that made it a beacon for honest men and women of a certain character. In the meantime, I'll be in Singapore, taking my chances and charting the unknown possibilities of my existence. May we all live long and prosper. 

© Matthew Mehdi Rafat (2018) 

Monday, March 14, 2011

Yahoo's Shareholder Meeting (2012)

[Editor's note: this post was originally published on July 12, 2012.]

Yahoo’s shareholder meeting was bland.  No slides, no video, no new trinkets—just the basic CEO pep talk plus business jargon.  Apparently, Yahoo’s new catchphrase is “technology-powered media company,” which is short for, “Please stop asking us if we’re a tech company or a media company.”  At this point, the only job with more turnover than Yahoo’s CEO might be your local fast food joint, but interim CEO Ross Levinsohn seems nice enough, so that’s a plus.  Of course, he spewed the same pablum as every other CEO from Yahoo, but what do you expect?  It must be difficult getting respect from the troops when the company won’t remove the "interim" label before the annual meeting.  Still, it’s not about the CEO or whether Yahoo wants to become a media or tech company—it’s about execution.  As another person wrote, “[I]t’s increasingly hard to see what Yahoo uniquely offers to its audience.”  Combine a failure to execute with a failure to produce unique content or services, and you have a recipe for extinction. 

Levinsohn’s short speech highlighted Yahoo’s many partners, including NBC, ABC, and Spotify.  I may have misheard him, but Levinsohn said that more than half of the videos viewed online came from Yahoo, which prompted a surprised look from one employee.  Yahoo believes its election and Olympics coverage will attract traffic.  Levinsohn also mentioned the consumer several times, stating, “Consumers want interesting and informative online experiences,” and “It [all] has to start with the consumer experience.”  In other words, he said nothing new or unique.  Of course a public company that seeks consumers and viewers has to satisfy them.  Which is why Yahoo’s conduct over the last five years has been so comically tragic: Yahoo bungled its transition to a new email format (also botching its calendar feature); entered and promptly left the social media space via Yahoo Pulse; couldn’t provide a consistent selection of online media content, ceding that audience to Hulu and YouTube; couldn’t properly manage copyright infringement claims to prevent viewers from clicking on unplayable videos; and made the term “quality assurance” MIA.  In addition, Yahoo’s videos lack captions, whereas both YouTube and Hulu have some form of online captioning.  It could be worse—just two years ago, Yahoo’s homepage seemed to resemble the National Enquirer or TMZ, prompting some viewers to wonder whether Yahoo’s latest strategy relied on Kim Kardashian, Octomom, Justin Bieber, and hordes of lobotomized or low-IQ viewers.  Thankfully, Yahoo has reversed its descent into becoming the world’s largest online tabloid.  However, it now seems to be aiming for the “World’s Largest Linkfest of Content Already Seen by Everyone under 40 on YouTube and Facebook,” but as I said, things could be worse.   

Today, the CEO focused on Yahoo’s various partnerships with other media companies as well as its access to “700 million viewers,” but Yahoo doesn’t seem to understand that a) it doesn’t matter how many viewers you have if none of them are particularly loyal; and b) relying on content and partnerships from other companies with their own websites isn't a viable long-term strategy.  As I told the CEO during the meeting, “Think about it.”  If Company A--which has a vested interest in promoting its own websites and content--decides to partner with Company B, which is a mere portal for Company A’s content, what will happen?  Company A won’t license its best content to Company B and will use its leverage as a content provider to take as many users from Company B as possible and make them loyal to their own website(s).  It’s as if CNBC decided to partner with Bloomberg by linking to Bloomberg articles, thinking, “Well, if I got Bloomberg, Fox Business and a bunch of other business content, then people are sure to come here instead of going to those websites instead.” But of course, CNBC focuses on creating its own unique content and attracting its own viewers.  To the extent CNBC thinks Bloomberg, Fox Business, or the Motley Fool has an interesting idea, they do a story themselves instead of just linking or deferring to their competitors’ websites or channels.  In essence, Yahoo’s business strategy seems to be “As many eyeballs as possible, regardless of user time spent on the page or the quality of content displayed” (see Kardashian/Octomom reference above).  It’s a sad state to be in for a company that was once a top Silicon Valley innovator  (Speaking of which, am I the only one who remembers Yahoo’s funny commercials for its personal ad service?)  

Yahoo’s latest mis-step?  Hackers from “d33ds” disclosed about 400,000 user passwords, including many from Yahoo.  I downloaded the file to see if my emails were hacked, too.  They weren’t.  It looks like almost all the passwords taken are from deactivated accounts, so Yahoo got lucky this time.  And it wasn’t just Yahoo emails on the list—I saw hotmail and even gmail accounts apparently compromised. Besides, few of the exposed passwords had any capitalized letters, which violates Online User Security 101.  The hackers are definitely cheeky, though—they ended their email/password list with the following quote: “Growth begins when we begin to accept our own weakness.” -- Jean Vanier 

The Q&A session was short.  One shareholder asked about Yahoo’s role: was it a TV station, TV studio, or ad agency?  The CEO said Yahoo wanted to create a good overall consumer experience.  A CalPERS representative said the state’s pension fund supported the Board but not the way Yahoo was awarding compensation to its executives.  Another shareholder rightfully criticized former Yahoo CEO Terry Semel’s compensation of $ 600 million, which seems grossly high given Yahoo’s current stock price.  

Some final notes: Julia Boorstin from CNBC was there.  I didn’t like her, but her cameraman was nice.  Cory Johnson from Bloomberg was also there and looked like his usual professional self (did you know he founded the hip hop basketball magazine SLAM?).  I prefer Bloomberg, which has a more serious outlook than CNBC.  Maybe the “eyeballs at any cost” strategy works on TV, which is more visual and less interactive.  It might explain the mismanagement of Yahoo all these years by big-media executives. Boorstin asked me about the interim CEO issue (yawn) and the Facebook/Yahoo deal.  According to TechCrunch, the deal occurred “without money changing hands,” so I responded to her question with another question she should have been asking: “How much money is involved?”  She didn't seem to catch my point.  So much for television media as an enlightening Fourth Estate.  

Disclosure: I own shares of Yahoo, but my positions may change at any time.  My hunch is that a private equity fund will buy Yahoo at some point or the company will increase shareholder value by splitting up or selling off its various parts.  

Tuesday, August 17, 2010

Red Pill Edition: Is Yahoo's Carol Bartz the One?

Dear CEO Carol Bartz:

I'm going to give you the blue pill first. You've done a wonderful job fixing many of Yahoo's dysfunctions. Before you arrived, Yahoo users were bombarded with "new-old" ideas, like "Yahoo 360" (a second-tier version of Facebook); constant recycling of entertainment news; and technical glitches too numerous to recount here.

Lest anyone of us forget, you run a fine, trail-blazing company. As I remember, Yahoo was the first major company to offer free lifetime email accounts and to make it easier for laypeople to use internet resources. Yahoo's actions a decade ago helped expand the internet and set the stage for billions of people worldwide to communicate with each other.

And don't think I haven't noticed your take-charge business style. After I complained publicly about all the entertainment news on your home page, you fixed it within a few weeks. Yahoo's home page no longer seems to constantly feature stories involving the Kardashians and Paris Hilton. (From the bottom of my heart, thank you. And thank you for finally fixing many of the glitches in Yahoo's calendar.) Also, just when I thought Yahoo's fantasy sports couldn't get any better, you outdid yourself yet again (the new linear stat graphs are wonderful).

Yet, as you know, Yahoo still has problems. I want to make sure these problems are on your radar screen, so it's time to take the red pill.

Problem 1: Yahoo Tailors its Content to Maximize Eyeballs, another Way of Saying it Emphasizes the Lowest Common Denominator, i.e., Superficial Content over Substance

At this year's annual meeting, I told you Yahoo's front page had gotten so asinine, I had switched to your main competitor's home page. I'm still not back, because for the most part, your front page features stories I've seen before or items I don't care about. In the future, content will be king, and right now, you mostly recycle other people's content based on popularity. Well, it turns out the popular kids on the internet love asinine, superficial stories, and when you move with that crowd, you lose credibility with the nerds, geeks, jocks, goths, rebels, and recluses--i.e., everyone but the cheerleaders and their admiring followers. Is that really the direction you want to go? Headfirst into the land of the average and the Simpsons' Ralph Wiggum?

And do you really think advertisers want to display ads on a website that has no focus? Wouldn't it make more sense to break up Yahoo into multiple sites, where you could tailor content (and ads) to more specific groups of people? Google uses AdWords to tailor its advertising to specific users--what do you have that can compete with AdWords?

Problem 2: Hateful Comments

Your desire for mass appeal extends to the comments section of your articles, which you do not actively monitor. As a result, Yahoo's comments sections are filled with the backwards side of America. Few other reputable websites would allow the comments I saw on August 17, 2010 on Yahoo:

"DON'T BE GAY!!" on an article discussing a Mississippi school district's policy forbidding women from wearing tuxedos for senior yearbook portraits.

"Something needs to be done about the black problem. Why can,t [sic] the scientfic [sic] community get together and figure out a way to stop the pieces of scum from reproducing?" From Bill in Sacramento, on an article where an African-American mother killed her children ("SC mom killed kids, dumped car in river"). [Note: the person who wrote the comment should have looked up 1994's Susan Smith case before associating race with child murder.]

Re: article titled, "World Bank pledges $900 million in flood aid to Pakistan": "Helping any Muslim controlled country, is like a U.S. soldier who sees a wounded enemy soldier on the ground and (being compassionant) [sic] decides to reach down and lift him up for medical treatment. Then, as soon as the person is lifted, the booby trapped bomb underneath him goes off killing him and many fellow soldiers as a result of his (compassion)and stupidity. Only a fool will be compassionate to his enemy. Kill them where they stand, or lay for that matter. The Pakistanie's [sic] harbor the taliban, fellow muslims. Muslims supply money to the Taliban, fellow muslims. Do we owe them any donations? Yes. a quick bullet to the head." This comment received 5 "thumbs up" and 0 "thumbs down." At the same time, another more intelligent comment--"Taliban terrorists? It's innocent people who are dieing [sic] from this flood, such as farmers, women and children"--received 3 "thumbs down" and only 1 "thumbs up."

"He [President Obama] will never reform them [Fannie and Freddie Mac] as it disperses too much money to the black race." Comment in article titled, "Obama seeks new design for housing, Fannie/Freddie." 8 "thumbs up" and 5 "thumbs down."

"My son bought his 1st home last summer and still has yet to receive his $8,000.00 credit, in fact it was denied. So a 25 yr old man hurried to buy a house for this extension and government decided he didn't qualify, Maybe because he was white?" Same article, 6 "thumbs up" and 1 "thumbs down."

I will stop there, but I hope you see the problem. As you expand, you should be careful that your quality control doesn't deteriorate. I once saw a baiting, anti-Muslim post you featured prominently on your website. I've come to expect that kind of sensationalism from Rep. Rick Lazio, Rep. Peter T. King, and their ilk, but I expect Yahoo not to lend its imprimatur to such content. And I don't want to see overtly hate-filled messages of any kind when I go to your website. Is that so much to ask? How hard can it be to hire several hundred part-timers to monitor and screen the comments pages to ensure your website becomes a more civilized place? I know you won't get as many "page hits" and you'll be accused of being elitist, but several other media websites already monitor comments, and I bet their users actually spend time reading the comments.

And yes, I know you have a dilemma, because many people like reading the comments sections precisely because of all the idiots who post. Even so, for those of us who aren't as easily amused, there must be a way for us to read comments without being subjected to idiots. (See idea above, about breaking up Yahoo into different sections tailored to different sets of people.)

If you really want to think outside the box, try this: administer a worldwide, voluntary multiple-choice test to Yahoo users. Make it a big event, where you either have people take the test at physical sites, or you give users passwords and allow everyone to take the test at the exact same time online. Include content from many different disciplines, such as economics (What is a positive externality?);sports (Which team did Barry Sanders play for?); entertainment (Who is married to Jennifer Lopez?); and so on. Based on the number of correct answers, you can then offer users an option of joining exclusive pages tailored to their knowledge and interests. If you handle this right, someone's Yahoo test score could become part of America's rite of passage, just like someone's SAT score. Besides, wouldn't advertisers love gaining access to more specific groups of users?

Problem 3: Videos that manage to play the commercials perfectly fine, but when it comes to the actual content, the video freezes. Also, videos that lack captioning, which excludes millions of people worldwide.

Before dealing with the comments problem, you can fix an easier issue--namely, your video streaming (especially in the sports section). In order for advertisers to trust your site, they need to know that users will click on Yahoo videos and watch their commercials. When users click on Yahoo videos, they expect to see something fun, unique, and relevant.

Yahoo's responsibility isn't just to offer interesting videos and clips, but to ensure that both the ad and the content play properly. You're doing well when it comes to streaming the commercials, but not when it comes to the actual content. I can't tell you how many times I've sat through a commercial, hoping to see a fun sports moment, only to have the video freeze on me. If my computer can play your commercials perfectly, why does it have a problem playing the actual content? If you don't fix this problem, I won't click on any of your videos. After all, fool me once, shame on me. Fool me twice...

Also, why doesn't Yahoo offer closed captioning for its videos? Hulu, Youtube, TED, and Google all manage to caption their online videos. Why can't you do the same thing?

Problem 4: Lack of Focus. Who are you?

Right now, you're the John Dewey of the Internet. You've dumbed it down so everyone can play. That was great ten years ago, but it's no longer sufficient to be a mere content aggregator. To be fair, one of the best sites on the internet today is Rivals.com, your college sports page. Unfortunately, Rivals.com seems to be your only example of consistently interesting Yahoo-generated content.

When you do have excellent content, we notice. A long time ago, you had an article following up with the players on George Mason's 2006 "Cinderella" basketball team. Josh Peter's article was one of the best articles I've ever read, and you owned the content. So what did you do with Mr. Peter? I have no idea. He's still listed as one of your reporters, but he hasn't written anything since November 2009. Instead of giving Mr. Peter (or Michael Silver) major publicity, someone decided to give Dan Wetzel valuable virtual estate on Yahoo Sports--even though the quality of his "reporting" and writing has been steadily declining (perhaps because he was busy writing a book or two).

Listen, when you find quality, you need to keep it. With a little more placement and internal advertising, you could have the next Bill Simmons. I mean, you're the 800 lb gorilla when it comes to online eyeballs. If you have a great writer, you can take him or her to the next level. And if you hire good journalists and writers, at some point, Rivals.com could be the next ESPN.com. You just need to dream big and aim high, and unfortunately, I don't see that visionary attitude right now at Yahoo.

I happen to be available part-time if you want someone to help you with quality control or editing, but journalism majors nationwide will work for peanuts and resume filler. Why aren't you cherry-picking the best ones and using them? Bring back journalism so Americans don't have to rely exclusively on Bloomberg, the BBC, the Christian Science Monitor, and Al-Jazeera for real news. And yes, I know you're ahead of me in this regard. You're already using articles from Seeking Alpha and the Christian Science Monitor to bolster your content, but you could be doing so much more. You don't even need to focus on journalism to expand your content. Why not have a site similar to The Onion? The writers from that website probably aren't making tons of money, so why can't Yahoo create unique content if The Onion can do it?

That's all I have for now, Ms. Bartz. I used to have a small crush on former President/CFO Susan Decker, but it turns out, she wasn't the One. If Yahoo is the Matrix, then shareholders are hoping you are Neo. Please don't fail us. The internet needs you, journalism needs you, and America's readers need you. I know it's in you. And I know that some people will be afraid of change, even though being a generalized content aggregator does not confer a competitive advantage in today's online marketplace.

I don't know the future. I'm not here to tell you how the internet revolution is going to end. I'm just hoping you're going to show me a world without the old Yahoo. A world without rules and controls, without borders or boundaries. A world where anything is possible. How we get there is a choice we leave to you.

Sincerely,

Matthew Rafat

Disclosure: at the time of publication, I had an insignificant number of Yahoo (YHOO) shares.

Thursday, January 14, 2010

Yahoo's Shareholder Meeting (2009)

I was going through some old pictures, and I found the picture above. It's one of my favorite pics from 2009. I still think Jerry Yang got a bad rap. If you want to blame someone for Yahoo's problems, blame Roy Bostock, not Jerry Yang. That's just my humble opinion.

My review of Yahoo's 2008 meeting is HERE.

Update: My review of Yahoo's 2010 meeting is HERE.

Thursday, January 15, 2009

Yahoo: Decker Out, Bartz In

As most of you already know, Carol Bartz is Yahoo's new CEO. Unfortunately, Susan Decker is no longer with Yahoo. I don't know anything about Carol Bartz, but I am happy to see at least one female CEO at a major Silicon Valley company.

Monday, December 29, 2008

2008 in Review

At the end of each year, I like to re-visit my hits and misses. Let's start with the misses.

My biggest mistake was thinking we didn't need any capitulation (July 25, 2008). The market hit the skids shortly thereafter. At the time I made the call, the S&P 500 was 1,257--now it's 869. That's a loss of around 30%. (Not as bad as Hilary Kramer, but too close for comfort.)

Of course, the market did capitulate later on, and on September 18, 2008, I said it was a good time to slowly re-enter the market. Unfortunately, the S&P 500 was 1206 on September 18, 2008--now it's 869. That's a loss of around 28%.

I also had a near-miss. On July 30, 2008, I praised Garmin when it was selling around $36/share. Fortunately, less than a week later, on August 5, 2008, I sold my shares, writing, "I sold Garmin (GRMN), taking a [small] loss. I violated the rule of never catching a falling knife." Garmin is now around $19/share.

My top hits in 2008?

1. Not only did I predict Longs Drugs would be bought out, I also identified the eventual buyer:

Longs is going to be a good company and attractive takeover target...CVS is going to be knocking one of these days.

I made the call on May 29, 2008. On August 12, 2008, CVS announced it was buying Longs Drugs.

2. On September 19, 2008, I correctly said that Transmeta (TMTA) was trying to conserve cash to become more attractive as a buy-out candidate.

TMTA looks like a company trying to conserve cash to survive. If you're looking for a growth story, this isn't it; however, as long as its patent portfolio remains viable, TMTA may be a potential takeover target or value play at the right price.

On November 17, 2008, Novafora bought Transmeta.

3. I correctly called a short-term bottom in banking stocks and Colonial Bancgroup (CNB) shares. My joyful reaction at making the correct call is here.

4. I called MGM overpriced and told the CEO at MGM's shareholder meeting he was propagating unrealistic expectations:

[Despite your rosy outlook] you're basically telegraphing that you're going to lose money because you're expanding and spending money while entering a recession...

In the same post, I wrote,

Overall, I believe MGM will not be able to replicate its record in 2007 and will make less money in the short term.


At the time, MGM was selling for around $52/share. Now it's at $12.74/share.

If you read the full post, you will see that I disliked the CEO at the time, Terrence Lanni. Mr. Lanni recently resigned after the WSJ reported that he had falsified his resume.

(By the way, the only other CEO who rubbed me the wrong way was Trimble Navigation's (TRMB) Steven W. Berglund. Let's see what happens with him and his company in 2009 and beyond.)

5. Recently, I called the drop in the Canadian dollar overdone. So far, it appears I accurately called the bottom.

6. I called GE a good buy when it was around $14.66 a share. It closed today at $15.66. GE's current dividend yield of 7+% shows it is willing to pay investors to wait until better times.

My favorite "hit," however, had nothing to do with a prediction. At the Yahoo shareholder meeting, I told Chairman Bostock to stop talking about Microsoft, comparing his repeated and unnecessary public proclamations to words from a jilted ex-girlfriend. I also politely suggested Mr. Yang go on a sabbatical. We haven't heard a peep out of Bostock for months now, and Mr. Yang has gracefully exited. Meanwhile, Yahoo stock has quietly made a comeback from around $9/share to around $12/share.

Aside from hits and misses, what was my biggest lament? That this article wasn't more popular among my regular readers. I don't think we're going to see the end of "OCM," so perhaps the article will gain more popularity with time.

As for my thoughts on 2009, I am looking forward to it. I think the S&P 500 will hit 1012 in 2009, but whether it stays there is anyone's guess. Here's the annual Barron's challenge if you're into forecasting.

My riskiest 2009 stock is Maxim (MXIM). I am hoping it will go to $14.90/share by early 2010. I started buying Maxim shares at around $12/share and have been averaging down. Maxim closed today at $10.98/share. If I'm right, my Maxim shares will appreciate 30+% in around one year.

The market's gyrations notwithstanding, it's important to remember that most Americans enjoy one of the highest standards of living in the world. If you disagree, may the new year bring you knowledge and a much-needed passport.

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

Monday, November 17, 2008

Yahoo (YHOO) Update

Here is the latest on Yahoo (YHOO):

http://finance.yahoo.com/news/Yahoo-to-replace-Yang-as-CEO-apf-13601499.html

Mr. Yang is going to step down. Bostock has the easiest decision ever--Susan Decker is right there. She takes over Mr. Yang's spot, and using her position on Berkshire's board, talks to Warren Buffett about a partial sale to Microsoft. Mr. Buffett, of course, knows Bill Gates very well. Mr. Bostock can't possibly screw this up...or can he?

Wednesday, November 12, 2008

Techcrunch on Yahoo

Yahoo's share price is almost in the single digits:

Techcrunch

It's like watching a train wreck. Susan Decker needs to call Warren Buffett and get some advice.

Friday, November 7, 2008

Yahoo and Microsoft Saga Continues

Jerry Yang reached out to Microsoft and was met with partial rejection. Yahoo had increased around 7% this week on rumors of a Microsoft buyout. Today, Steve Ballmer shut down any hope of a buyout, causing Yahoo shares to decline by around 14%.

Continuing the romantic analogy I've used to describe this situation (Yahoo Shareholder Meeting (2008)), Ballmer basically said he is willing to sleep with Yahoo but not marry it--in other words, he will partner with Yahoo but not buy it. Yahoo must feel terrible knowing that Wall Street values its stock more by Microsoft's intent than on its individual growth prospects. Can't a woman just be independent and attractive? The market is treating Yahoo like an old woman with no other prospects, no job, and no education, who needs to find a man quick or be cast into a dungeon. It would be funny if it wasn't so wrong.

Yahoo can do fine on its own. Its home page continues to rank in the top two for visitors. It is doing very well in Japan. Also, the recession will help Yahoo keep more of its American talent. Yahoo's salesforce might be its biggest problem--it needs to focus on getting major ad accounts to boost its revenue, and it has lost some key sales personnel. At least now, Jerry Yang can't be completely blamed for Yahoo's stock price--he reached out to Microsoft and was rejected. It's time for Susan Decker to talk to Time Warner and buy its AOL property. After all, the best revenge in romance is finding another desirable partner.

Tuesday, October 21, 2008

AllThingsD on Yahoo and Yang

AllThingsD has a good post on Yahoo:

http://kara.allthingsd.com/20081021/yahoo-earnings-what-to-expect-when-youre-not-expecting-much/

I am surprised no one is mentioning Bostock anymore. He is more unpopular than Mr. Yang. I like Mr. Yang--don't forget, without him, there's no Yahoo at all.

Update:

Yahoo stock up around 5% in after-hours trading on 10/21/08. Here's why--Yahoo met expectations and earned 9 cents a share, excluding special items.

From
http://sanjose.bizjournals.com/sanjose/stories/2008/10/20/daily40.html:

Marketing services revenue was $1.56 billion, 1 percent increase from the same period of 2007.

Excluding items, the company's income would have been $123 million, or 9 cents a share, compared to non-GAAP income of $153 million or 11 cents a share for the same period of 2007.

Analysts, on average, expected earnings of 9 cents a share on $1.37 billion in revenue.

Some more encouraging words from the earnings call itself. Susan Decker speaking:

We have no debt. We ended the third quarter with $3.3 billion of cash and marketable debt securities. As of the end of the quarter the value of our direct and indirect interests in the publicly traded securities of Yahoo Japan, alibaba.com and Gmarket were valued at approximately $7.9 billion in the public markets or over $5.50 a share.

Friday, August 1, 2008

Yahoo! Shareholder Meeting, August 1, 2008 (YHOO)

(Susan Decker and me)


Yahoo held its 2008 shareholder meeting at the posh Fairmont Hotel in downtown San Jose. Security at the meeting was tight--proxy statements were checked prior to providing a wristband required for entry.

Yahoo did not skimp this year on the food--we had coffee, juices, and pastries galore (the croissants were especially tasty). In fact, the hotel put out so much food, most of it was untouched.

Outside of the meeting hall were several kiosks highlighting Yahoo's different areas, such as search, mobile, green (environment) and advertising. The "green" area hasn't received much attention, but it's interesting. Go to http://green.yahoo.com for more information--the Yahoo employee referred to the "gift guide" tab as one convenient way to shop for eco-friendly gifts.

The formal part of the meeting was more interesting than usual, because some ballots had to be re-done after the Yahoo-Icahn agreement invalidated Icahn's slate and gold card proxies. The presenter indicated votes for Icahn "will not be cast."

Several pension funds talked about their proposals. The first proposal--pay for superior performance--fell flat because the delivery was stunted and overly prepared.

The second presenter did better--he was from a NY Pension fund and chastised Yahoo for its political censorship. He said "Yahoo actively participated in these human rights abuses," and should "not engage in proactive censorship." His proposal also appeared to demand more public transparency when Yahoo complies with foreign subpoenas for information.

The third presenter, from Harrington Investments, dealt with human rights also. The presenter said that Yahoo "lacked true morality, which is the morality of obligation," and failed in its fiduciary duties.

Voting results were released after the meeting, and Yahoo prevailed on the shareholder proposals it asked shareholders to reject. Shareholders also elected all of Yahoo board members by overwhelmingly wide margins, except for Roy Bostock and Arthur Kern, both of whom had about 20% of shares withheld in opposition. Mr. Bostock earlier had 34% of the vote withheld in protest, and many shareholders continue to revile him for his involvement in outsized compensation despite Yahoo's lagging share price.

As a result of placating Carl Icahn, Yahoo was able to dissolve shareholder frustration; make its annual meeting into just another regular meeting (much to the chagrin of most media, who appeared from numerous outlets); and focus on remaining independent. My perception was Mr. Bostock is now responsible for the negotiating with Microsoft, while Sue Decker and Jerry Yang are focusing on how to maximize ad and search revenue.

Mr. Roy Bostock, Chairman of Yahoo's Board, gave a presentation after the formal meeting had concluded. I'm sure he intended his speech to be a fiery "Sinners in the Hands of an Angry God" type, but it fell flat. The more Yahoo talks about Microsoft, the more it sounds like a jilted but still optimistic ex-girlfriend. Bostock said Yahoo was a "victim of misunderstanding." He indicated they had entered into an agreement with Google as part of a strategic plan, but never elaborated on the details of the deal. Bostock indicated, "At no point did this board or management in any way ever resist Microsoft's proposal," making Yahoo sound more and more like a hopeful ex-girlfriend.

The rest of Bostock's speech seemed to focus on blunting a minority shareholder lawsuit by blaming Microsoft for the failed deal. Bostock said Yahoo "proactively" evaluated Microsoft's original and later hybrid proposal and then seemed to get unnecessarily aggressive when he said, "We called the shots." Not exactly the kind of comments that would make Microsoft too happy about a partnership or a deal.

Bostock said the 31 dollar bid was the only express bid, and the express offer "substantially undervalued Yahoo." Bostock then made the typical comments about maximizing shareholder value and then characterized the 33 dollars a share offer as an implicit Microsoft offer rather than a Yahoo counteroffer. Yahoo had a "long-term strategic vision," he said, and it was a "burden to deal with all these offers." It was a stunning statement by a company that basically cost its shareholders a 50%+ premium.

Jerry Yang made the next presentation. His public speaking skills have dramatically improved. He was prepared and polished. He talked about internet opportunity, referring to the projected growth in "incremental internet users" (335 million). 76% of these users would come from Asia, Pacific and emerging markets. Mr. Yang said Yahoo was investing in mobile and emerging markets and had an enviable "collection of assets."

Yahoo receives 3.6 billion visits per month. 3.6 billion visits a month is incredible. An advertiser can hardly ignore Yahoo if it wants broad and international placement of its product or content. Mr. Yang ended by talking about opening up the advertising platform, i.e. making it easier for advertisers to buy ads.

Susan Decker spoke next. She has a firm grasp of Yahoo's diverse businesses. She indicated Yahoo's top 200 advertisers bought 90% of display ads (e.g., the very large ads, especially for movies, on Yahoo's home page). Yahoo was also improving its "sponsored search" advertising process, where advertisers could big for a term like "plasma tv" in an auction.

Ms. Decker then talked about "Buzz," and other social networking tools. She referred specifically to search innovation, "Search Monkey," and other tools to make search engines more user-friendly and integrated. It appears Yahoo is trying to make its platform similar to Facebook so it can continue to be a one-stop shop for users. Sue Decker ended by reading some positive reviews of Yahoo published by various media outlets. Her skill and presence are such that she could pull this off without appearing arrogant.

The CFO was the final speaker. His slides showed "operating cash flow" has been stagnant since 2006, but he indicated the reasons were acquisitions and other growth-driven items. Yahoo has 3.2 billion dollars in cash. Let me repeat that--3.2 billion dollars in cash.

Yahoo also owns stakes in alibaba.com (China), Yahoo Japan, Gmarket (Korea), and TaoBao.com (China). Yahoo estimates these stakes being worth $7.01 per share, not including Alipay.com and TaoBao.com. One source of disconnect: Yahoo kept talking about emerging markets, but its partners are all in developed economies like Japan and Korea, except for possibly China. I don't see any partnerships in India, Eastern Europe, or Turkey, for example.

Paidcontent.org did a good job summarizing the meeting itself and the Q&A session:

http://www.paidcontent.org/entry/419-live-yahoo-annual-meeting-the-meeting-starts/

http://www.paidcontent.org/entry/419-yahoo-annual-meeting-qa-compensation-concerns-china/

The comments under "Fantasy Sports" and "A New Metaphor" referred to my comments at the meeting. I basically said Yahoo--more specifically Roy Bostock--needed to stop talking about the failed Microsoft deal. We get it--it failed. Using more polite language ("bad breakup"), I suggested Bostock stop acting like a spurned ex-girlfriend, and perhaps Microsoft might come back and be more reasonable. No one wants to deal with a bitter ex who keeps ripping you in the press. It's just common sense. I also recommended Bostock stop using the term, "long term strategic plan"--it sounds hollow right now, and if he wants to use it, he should use it when Yahoo's stock price goes above $30 per share.

I praised Jerry Yang for being the founder of the company, reminding everyone that without him, Yahoo would not exist. I said the criticism relating to the Chinese blogger controversy was unfair, because Mr. Yang never intended for the end result to occur. At worst, I said, you could argue he and the company were naive, but not malicious (even though it was Semel who released the information, Yang apologized publicly for it, associating himself with the incident). I continued, saying perhaps a temporary sabbatical would be best for the company, because Mr. Yang is now associated so deeply with the blogger controversy, it's hard to focus on Yahoo's actual business. Unfair or not, he has become a lightning rod for criticism (two of the shareholder proposals dealt with human rights violations), and with Decker already at the helm, perhaps she could take over temporarily as CEO and President. I also praised Yahoo's fantasy sports platform/franchise.

Jerry Yang seemed pleased with my comments, chuckling at the ex-girlfriend analogy, and pointed out he was not the CEO at the time of the blogger incident. He said he had "condemned the Chinese government" for its actions, something I had not read or heard before. Yang's comment against the Chinese government surprisingly did not lead to major publicity.

Decker said the fantasy sports franchise fit with Yahoo's desire to move more into social networking and demonstrated Yahoo's early adoption of social networking.

Bostock made a remark about how he wouldn't compare the Microsoft situation to a "romantic relationship." Despite his attempt to appear strong, Bostock ended up looking clueless every time he strayed from prepared comments. Bostock isn't a natural when it comes to dealing with the public. If he keeps opening his mouth about Microsoft, he'll start to look like Glenn Close in Fatal Attraction soon ("We called the shots" begins to look eerily similar to "Don't you ever pity me, you smug bastard."). If he's trying to play hard to get, he's not doing a good job--and he's certainly not endearing himself to Microsoft or anyone else with his rehashing of the offers and counteroffers. Obviously, there was some miscommunication. A two dollar difference ($31 or $33) doesn't ordinarily derail a deal. Either play nice so everyone can sit together again, or walk away--it's so simple, even a Harvard MBA should be able to get it.

Other questions involved an accusation Yahoo had not sold Yahoo Japan for the highest value. Yang said he recused himself on the Yahoo Japan board at the time of the transaction and sold a stake at the particular price because of tax implications, preferring to get a continuing revenue stream over ten years.

The same shareholder complained about Sue Decker's other board memberships, such as Berkshire Hathaway, Costco, and Intel. Other board members leapt to Sue's defense, saying she was a hard worker and answered emails at 3AM and had a great grasp of the company. Ms. Decker responded politely and added she specifically rejected several invites to join other companies' audit committees to save time for Yahoo.

Bostock rejected a request for him to step down and said director compensation was not high, disputing the numbers the shareholder provided. The shareholder responded that his numbers came from the proxy.

Other shareholders complained not all the directors had shown up and some did not even own stock in the company. Another shareholder complained about the lack of female board members.

Stephen Shankland and Wendy Tanaka wrote accurate summaries of the meeting:

http://news.cnet.com/8301-1023_3-10004577-93.html

http://www.forbes.com/technology/2008/08/01/yahoo-icahn-microsoft-tech-cx_wt_0801yahoo.html

Here is the BBC's take:

http://news.bbc.co.uk/1/hi/technology/7538469.stm/

All in all, Yahoo had a successful day and pulled off a professional event after settling with Carl Icahn earlier. What was projected to be a media circus was just another shareholder meeting. Jerry Yang's image went up dramatically--he looked poised, prepared, and fresh. Meanwhile, Roy Bostock looked tired, bitter, and combative. I added 50 shares of Yahoo, a nominal amount, when I returned to my office. I like the company, but with Bostock around, I'm not sure a deal with Microsoft will get done anytime soon. I was hoping Decker could pull some strings with her colleague Warren Buffett, who would talk to Bill Gates, but now it all seems too complicated. Almost like a messy, bad breakup.

Thursday, July 17, 2008

Icahn's Board has Mark Cuban!

Carl Icahn's proposed Directors slate includes none other than Mr. Cuban. I am excited! I previously wrote about how Mr. Cuban had his eye on the ball:

http://willworkforjustice.blogspot.com/2008/05/mark-cuban-on-ceo-pay.html

What will happen if Mr. Cuban gets elected? Will he subject Jerry Yang to public criticism on a daily basis? Will he make Susan Decker work in a Dairy Queen for a day? With no commissioner to rein him in, this could be the beginning of a fun period at Yahoo...

I just realized Cuban might be at this year's shareholder meeting. I might wear my old Mav's Michael Finley jersey. "Fin" seems like one of the league's classiest players. He also majored in business management at University of Wisconsin.