Microsoft (NASDAQ: MSFT) wants to expand the reach of its vital Office suite of products. The software giant wants to utilize a subscription model for the collection of programs. The initiative will commence later this month at Circuit City (NYSE: CC) and it will eventually reach other retail stores. People will also eventually have the option of accessing the subscription product via computers such as ones made by Dell (NASDAQ: DELL). The cost is reported to be $70 for twelve months of Office access.
This is an interesting scheme. As the article points out, businesses might not bat an eye at subscribing to software applications, but for consumers, this is a different ballgame. Many of us, myself included, are so used to going down to a Best Buy (NYSE: BBY) to purchase a software package for a flat fee that paying yearly dues just seems like an alien concept. And I'd say this goes double for something as large and complex as the Office program. Microsoft believes that $70 on an annual basis will be perceived as cheap and will expose consumers who might normally either seek upgrades on a pirated basis or who would simply continue using older versions to regular approved updates. It is a large investment, after all, to upgrade to a new iteration of Office.
Microsoft would be wise to market the heck out of the subscription model for Office, taking full advantage of the inflationary environment we are currently in. If potential users can be convinced of the value proposition, then they could eventually become hooked on the promise of upgrades over time for the relatively economical price indicated. Checking around on the net, I notice that a lot of the negative comments about this idea center on the fact that there are already free alternatives out there to Office, such as applications offered by Google (NASDAQ: GOOG).
According to people familiar with the discussions, the Wall Street Journal reported that Microsoft Corporation (NASDAQ: MSFT) has held discussions with Time Warner Inc (NYSE: TWX) and News Corporation (NYSE: NWS), among others, about joining it in a deal that could lead to the breakup of Yahoo! Inc (NASDAQ: YHOO). Some of the sources said the preliminary talks are unlikely to result in a deal with Yahoo!
Johnson & Johnson (NYSE: JNJ) is reportedly in exclusive talks to sell its wound-care business Ethicon to the private-equity arm of JP Morgan Chase & Co (NYSE: JPM), according to the Wall Street Journal. Terms of the potential deal were not disclosed.
OTHER PAPERS:
Sources familiar with the inquiry said that the Justice Department has opened a formal antitrust investigation into a deal that would allow Google Inc (NASDAQ: GOOG) to provide some search advertising for Yahoo!. The Washington Post reported that investigators will demand documents from Google and Yahoo!, as well as other large companies in the media and Internet industries.
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Reuters reported that regulators in the European Union are looking at the long-term effects of BHP Billiton Limited's (NYSE: BHP) $170B bid for Rio Tinto Group (NYSE: RTP). Sources familiar with the EU questionnaire said regulators have asked competitors and customers about effects of the deal on their businesses through 2015.
Seth MacFarlane is the genius behind News Corp.'s (NYSE: NWS) Family Guy animated television series. But why should News Corp. have all the fun programming cool content? That's apparently what Google Inc. (NASDAQ: GOOG) was thinking when it signed up Seth MacFarlane to produce a series of short animated clips for the Google Content Network.
According to The New York Times, MacFarlane has created something called Seth MacFarlane's Cavalcade of Cartoon Comedy. Little two-minute clips will be distributed to various websites that key in on the youthful male demographic which loves Family Guy. When users click on the clips, they will perhaps see an ad before the thing starts or some sort of banner attached to it. They might also simply see the name of the presenting sponsor before watching. Google will split monies generated by the ads with MacFarlane, the website that features the clip, and Media Rights Capital, the entity which sells the inventory.
I love the idea of the Google Content Network and I think that, over time, it should be a great success, but as with any novel platform, it all comes down to the word in the middle -- content. Google will live and die by the quality of the content because, although lesser-quality stuff might still find an audience in other mediums, the web has such intense competition for eyeballs that have minuscule attention spans. If the clips don't grab the viewer right away, then the ad inventory won't be as valuable to the buyers.
Time Warner Inc. (NYSE: TWX) reaches an interesting milestone this morning. The terms of its paid search advertising deal with Google Inc. (NASDAQ: GOOG), give the search giant the right to require AOL to register Google's 5% equity interest for sale in an initial public offering as of July 1, 2008.
It isn't a forced IPO of the unit -- or at least it doesn't have to be. Time Warner has the right to purchase Google's equity interest for cash or shares of Time Warner common stock based on the appraised fair market value of the equity interest in lieu of conducting an initial public offering.
FULL DETAILS can be seen in this filing for the terms and exceptions.
It is hard to know what Google will do, but I think Google will likely want to keep the AOL stake. If not, it is pretty hard to imagine Time Warner chief Jeff Bewkes allowing 5% of AOL to go public (in this lousy market) or be sold to someone that the company wasn't fully on board with. It seems he'd have little choice but to buy back the equity interest.
Yahoo's (NASDAQ: YHOO) embattled management and board have one month left to prove to shareholders that they made the right call in rejecting Microsoft's (NASDAQ:MSFT) bid. With shares trading at about $20, they are going to have to do some fancy footwork to show why rejecting a $31to $33 per share offer was actually good for shareholders.
Yahoo is trying to convince investors that a proposed 'search' deal with Google (NASDAQ:GOOG) will provide the growth needed to restore Yahoo to previous glory. According to an AP report: " By relying on Google's superior technology to show some of the ads alongside its search results, Yahoo believes it can increase its annual revenue by about $800 million and generate another $250 million to $450 million in annual cash flow."
Keep in mind that since the Microsoft deal fell apart, Yahoo has lost more than $16 billion in market cap. It is going to have to generate a lot more in revenues to show that they made the right choice.
My other problem is that I have many friends who over the last week have told me they can't access their Yahoo mail or open up their saved stock portfolio's on Yahoo Finance. I, personally, have been locked out for two days.
Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit www.minyanville.com.
Lot's going on today as I juggle the end of June. With time constraints on both sides of this screen in mind, I humbly offer the following thoughts:
I covered the incremental "fade" exposure in Google (NASDAQ: GOOG) (put out near the opening) and I'm now in watch mode.
It's tough to tell how much of the big beta action is quarter-end proppage and how much is legitimate demand. As I covered my American Express (NYSE: AXP) earlier--and continue to have exposure in Wachovia (NYSE: WB)--I'm leaving it on for the time being (and yes, subject to change).
And yeah, I'm trading around that ugly duckling--nibbling under $15 and trading the swings. There's no putting lipstick on that pig--using it as my vehicle of choice has thus far been wrong. It ain't over till our interns sing, however, so I'm fighting the good fight.
That sorta brings up the question du jour: Are we gonna see quarterly inflows... or quarterly outflows?
The upside seems begrudging. Of course, after the decline we've seen, you'd be grudging too if you were Hoofy.
Somebody call Armond Goldman! l I'm starting the South Beach Diet on Monday, lest anyone wonders what is happening to my sense of humor.
The scariest thing on my screen? The VXO is down 6% today. I repeat, the VXO is down 6% today. Ruh roh...
I read an article over the weekend about Yahoo! Inc. (NASDAQ: YHOO) and its reorganization attempts. Make no mistake about it, this company needs to alter its DNA if it intends to survive in a world without a Microsoft Corp. (NASDAQ: MSFT) taking it over.
In a nutshell, it looks like Yahoo! wants to retool its divisions so that it can more efficiently react to changes in the online marketplace. Yahoo! apparently feels that its current organizational structure inhibits growth and is looking to create new teams dedicated to developing products that will capture eyeballs and advertising opportunities as quickly as possible. The company also wants to focus on cloud computing, a technology that is important to the business sector.
Well, from the point of view of an investor looking at Yahoo!, I don't see anything here that persuades me to buy the stock. Synthesizing a new plan of corporate attack is pretty much par for the course for any company that is doing terribly and is looking to get back on the good side of Wall Street. But is there anything really exciting in the plan? No. It's just Yahoo! doing something. There's nothing too revolutionary going on. Centralizing this and that might add value. It also might not. It's all in the execution, and I'm not sure I want to trust a company that rebuffed Microsoft's reasonable buyout offer to execute anything at this point.
The news couldn't get much worse. Commodity prices keep soaring, consumer confidence is in the gutter, inflation has reared its ugly head, the US dollar loses value by the day and each day we read of more company layoffs. With all this seemingly endless stream of negativity the question is if now is the time to start buying stocks?
There is an old investing adage that says that you should invest when there is "blood in the streets." There is no doubt that it takes some serious courage to buy stocks at this point, but if you are a long term investor, you have to think that the tide will turn at some point in the not too distant future. I know many of you will say that we haven't even gotten close to hearing the worst of the news. That we are in store for consumer bankruptcies, and maybe a large bank or two to fail. My point is that the market is already pricing that in. Or at least most of that has been priced in. Even stocks like Google Inc. (NASDAQ: GOOG) have fallen to levels that they could be considered value stocks as opposed to growth stories. Stocks just seem cheap.
No one can predict if the market will drop another 15% from our current levels. What is indisputable is that the market is selling at a large discount to where we were eight months ago. While some of the sell-off is justified, keep in mind that the market generally overshoots both when it rises and when it falls.Then it finds a middle ground.
With all of today's bad news, maybe it's time to back up the truck and start buying stocks.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 6/29/08.
Google, Inc. (NASDAQ: GOOG), after months of searching for a new Chief Financial Officer, has just named a new one as of this week. Bell Canada (NYSE: BCE)'s Patrick Pichette will take over for the retiring George Reyes. Reyes, who presided over Google's IPO back in 2004 and was very adept at telling the investor community only what Google wanted the world to know, will be an interesting person to replace indeed.
Pichette will begin with Google on August 1. His recent positions as president of global operations and CFO of Bell Canada no doubt was a large mark on his resume. Google did the right thing here -- searched for, and found, a seasoned global exec to represent the financial communications of the world's hottest internet company.
One area that will be interesting to see develop involves Google's stubborn approach to not laying it all out on the table. As in, giving all the inside guidance and other details analysts crave so that they can push GOOG shares up or down if those targets are hit or missed every quarter. Google has always been a financial communication maverick and has told the market to stick it many times by not coming forward with a bunch of granular detail about future quarters. What will Pichette do? We'll see on Google's Q3 quarterly results call later this year.
Google, Inc. (NASDAQ: GOOG) continues to make transparency about all people and businesses its top priority. In releasing Trends for Websites this week, the world's largest search information company made it impossible for websites to hide their numbers from all eyes, including consumers and advertisers. Are you a media buyer who wants to know the reach of a prospective website before you even contact them to negotiate? Visit Google's Trend for Websites site and find out instantly.
Google then one-upped itself by announcing the Ad Planner product for advertisers. This new product will allow media buyers and advertisers to get an immense amount of help on the best web properties in which to spend ad money. In other words, Google is making life easier for its advertisers to find the largest-impact website in which to advertise -- without trial and error. Of course, the new Ad Planner service is free.
Google's unabated quest to become the world's largest advertising company continues to move forward. Although these two products may not get much attention from the media after this week, these are huge impacts in terms of the business model that keeps Google's entire money chest afloat: advertising revenue. When Google said that "we want to help you figure out where your target audience is" in announcing Ad Manager, it wasn't kidding. The more it makes its ad customers successful, the more business it will bring in. Everyone's happy, and Google remains solidly on top of the new media advertising world.
Minyanville's Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. Here he discusses some players in the tech sector. For more original thought, visit www.minyanville.com.
SuccessFactors (NASDAQ: SFSF): The stock prices secondary at $11.80 and is holding pretty tough. I'm watching this one pretty closely and was hoping for some post-secondary weakness to possibly add a starter here. A pretty good balance sheet just got better, but I guess the question is, "What is it going to do with that cash?"
Digital TV Holding (NYSE: STV): This company may have made a bottom recently and the deal announced today is exactly what the company talked about in its last quarterly call. I've commented on the possibility of it securing more revenue streams (partnering for recurring advertising revenue) in the past. It looks to be developing the conduits to deliver on that.
comScore (NASDAQ: SCOR): Google (NASDAQ: GOOG) news is hurting the stock badly. I sold my mine some time back after that series of paid click reports ahead of Google's last quarter that proved to be quite inaccurate. All that aside, I don't think comScore's core business is going to disappear within a compressed time frame and may be worth a long side trade if it moves near or under $20. I'll leave it be and see what develops, as the knife could cut further.
The Wall Street Journal's "The Game" column speculates that one of the results of the Bear Stearns crash could be the push of investment banks and commercial ones closer together, which could result in better handling of volatility with more stability. Some observers think Merrill Lynch & Co (NYSE: MER), Morgan Stanley (NYSE: MS) or The Goldman Sachs Group Inc (NYSE: GS) could go that route by buying a commercial bank. Any move would force them to adhere to better reserve ratios, affect short term bank funding, and shrink balance sheets.
The Wall Street Journal reported that Google Inc (NASDAQ: GOOG) will soon make available a new service that measure hits on the Internet with the intent of helping advertisers decide where to buy ads online and would directly compete with comScore Inc (NASDAQ: SCOR) and Nielsen Online. Ad executives said Google's method could make targeting markets more efficient.
A Manhattan judge dismissed four claims made by American International Group Inc (NYSE: AIG) in its fight to regain control of a block of its shares held by Starr International, a company that once founded a lucrative compensation plan for AIG executives. AIG believes the shares held by Starr should continue to be used to fund employee compensation, the Financial Times reported.
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According to Scorpio Partnership, Bloomberg reported that UBS AG (NYSE: UBS) and Merrill Lynch had slower growth in assets under management last year due to losses connected to the U.S. subprime crisis.
Last November, Google Inc (NASDAQ: GOOG) and 30 partners were said be developing a new type of handset using Android that was expected to revolutionize the industry. The first new phones were expected to be available in this year's second half but are now slated for the fourth quarter the Wall Street Journal reported.
According to people familiar with the situation, the Wall Street Journal reported that Citigroup Incorporated (NYSE: C) will make sharp cuts in its investment banking division this week.
The Wall Street Journal reported that Live Nation Inc's (NYSE: LYV) Chairman, Michael Cohl, stepped down down as a director and executive to end the strategy feud with CEO Michael Rapino. over how to pursue the "360 deals" with music superstars.
The Financial Times reported that there are worries that investment banks will accelerate the pace of their layoffs this summer, after it became known that The Goldman Sachs Group Inc (NYSE: GS) gave pink slips to workers in its investment banking division last week. Goldman is now expected to lay off up to 10% of the workers at the division.
OTHER PAPERS:
New Jersey put its $150M center for stem cell research on hold, the Star Ledger reported, eight months after ground was broken on the project.
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Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit 
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The news couldn't get much worse. Commodity prices keep soaring, consumer confidence is in the gutter, inflation has reared its ugly head, the US dollar loses value by the day and each day we read of more company layoffs. With all this seemingly endless stream of negativity the question is if now is the time to start buying stocks? 
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