cameronm

Red Hat's Latest Acquisition Brings Multiples Back to Earth

I think the JBoss multiple was far lower. I think it was more like 20. I think the Qumranet multiple is a lot higher than 5.

Adding Wood to Your Portolio: A Worthwhile Investment

Timber companies do not deforest the land they own. They typically harvest 1-2%/year, and as mentioned above when prices are low they might harvest less. It takes 75 years for a douglas fir tree to reach optimal maturity and as little as 8-10 years for cottonwoods and cypress trees (in the southeast). Timber is valuable so it is a well managed resource. The Boy Scouts of America for instance harvests 1-2% of the timber on the land they own each year. Timber is such a good business that we have seen a net re-forestation of North America. There is as much or more timber growing today as there was in 1870. That is precisely because it is managed and the economic value helps ensure that land that can support timber, does.

BTW, Science magazine has run a couple articles about North America being a net carbon sink because of the vast amount of trees and timber -- that is that North American forests actually absorb more carbon than is produced.

Microsoft Buys Israeli Virtualization Startup Kidaro: VMware, Look Out

I don't think this acquisition is really about competing with vmware. For MSFT it is a way of helping customers migrate to vista which is obviously super important to MSFT but pretty tangential to their battle with VMware. Virtualization is a horribly abused word and just because something is virtual does not mean it is relevant or competitive with vmware and xensource/citrix.

Why Microsoft Should Drop the Yahoo Bid and Buy ValueClick

It makes no sense for MSFT to buy valueclick. They got most of the things VCLK has when they bought AQNT. YHOO gives them the scale and platform to finally attack Google directly, which MSFT has never really been able to do on their own. Neither AQNT or VCLK lets them do.

Is Yahoo Gaining on Google?

I suspect Yahoo results are "improving" only because everyone is gaming Google results so heavily that it degrades them. it is not clear how Yahoo results would hold up to the same degree of SEO manipulation.

In terms of Yahoo catching Google you are completely dreaming. There is no way that will happen because of the huge monetization advantage Google has. Maybe Yahoo today converts more searches into click throughs but Google makes DOUBLE per page view what Yahoo does. Double. That is a near impossible hill to climb. Imagine competing in a business where your competitor which is much bigger than you are can charge double what you can for the same product/service. Note they don't charge advertisers double what Yahoo does, they just make double what Yahoo does per user page view....

Google may implode, but no one is going to take them down in core search anytime soon.

Is Yahoo Gaining on Google?

I suspect Yahoo results are "improving" only because everyone is gaming Google results so heavily that it degrades them. it is not clear how Yahoo results would hold up to the same degree of SEO manipulation.

In terms of Yahoo catching Google you are completely dreaming. There is no way that will happen because of the huge monetization advantage Google has. Maybe Yahoo today converts more searches into click throughs but Google makes DOUBLE per page view what Yahoo does. Double. That is a near impossible hill to climb. Imagine competing in a business where your competitor which is much bigger than you are can charge double what you can for the same product/service. Note they don't charge advertisers double what Yahoo does, they just make double what Yahoo does per user page view....

Google may implode, but no one is going to take them down in core search anytime soon.

OS Survey Results: Microsoft Can Breathe Easy As Linux Levels Off

I think your headline is quite misleading. That Windows servers grew 10.4% and Linux at 10% in a single quarter is hardly time for popping champagne corks in Redmond. The Linux beast is not dead, it "continues" (this being the operative word) to grow at double digit rates according to IDC. This was not a typical quarter for Windows servers - it was an excellent quarter for Windows servers being compared to a typical quarter for Linux. The growth leader continues to be Linux, it's just that this one quarter, Windows tied them....

Second, far more surprising to me is that volume server shipments, which constitute both the Windows server and Linux server market grew at approx. 1/2 the rate of hi-end servers (4.7% vs. 8.5%). This is the key to understanding your Windows and Linux comparison. This was a highly unusual quarter. it is according to IDC only the second time in the time they have tracked server shipments that high-end servers out grew volume servers. This is out of what 40-60 quarters they have tracked??? In short there is no real signal here.

Why aQuantive Was Worth Twice As Much As DoubleClick

On the valuation the real question is not the multiple of AQNT revenue and earnings that they paid, but what is the impact on value and uplift of Microsoft's ad inventory that AQNT will give them. If AQNT can take $500M of Microsoft ad inventory and double it's value in the first year (and I have no idea if they can do this -- it is a what-if) that would represent tremedous value, and of course value that is not at all reflected in examining AQNT's P&L as an independent company.

That said, of course it is an insanely expensive deal by normal metrics. Why? Two reasons, I bet Google was bidding if only to drive up Microsoft's cost and I bet there was seething anger and downright blood-lust over losing the Doubleclick deal.

Why aQuantive Was Worth Twice As Much As DoubleClick

Some of this is right and some is deeply flawed. Microsoft is a software company not a website consultancy. The Ex-razorfish business is low margin and not the kind of services business Microsoft will have any interest in. It was a bold move by aqnt (then Avenue A) to buy them and it worked out (though it depressed margins for a long time) because it gave aqnt needed scale to compete with Doubleclick.

Likewise why in th hell does MSFT want to be in the agency business competing with other agencies around the world. Oh great a new piece of the value chain that will hate MSFT... Do you think the guys that work for Ballmer want to walk into his office explaining why they lost the XYZ account to wpp or whomever???? What the fuck do they care? I bet they sell this piece off and if they are smart they can forge a new alliance in doing this.

So what's the jewel? What AQNT offers MS or Yahoo or anyone with loads of traffic is deep wizardry for slicing and dicing their ad inventory to package it up at much higher rates. Bulk undifferentiated ad inventory that might go fo $0.50 CPMs can now be repackaged with deeper insights about who visits those pages and resold for $5, 6, or even $10+ CPMs and that is just hugely valuable if you have lots of inventory like Microsoft or Yahoo. What MSFT offers aqnt beyond mega $ is a much better chance to get their widgetry distrbuted really widely so that they can continue to by the magicians at repackaging ad inventory for top dollar. AQNT alone would face a tougher and tougher job of doing that in the face of a world consolidating around the big guys. Microsoft bought unique valuable ad technology not a boatload of HTML programmers or agancy hacks.

The Soul of Google, The Cruelty of Microsoft

Microsoft has actually purchased between 77 and 80 companies in the past 5 years. Now many of these were small private companies in the $25-75M range, but actually the company has become one of the more active acquirers. Certainly more than companies like Symantec which nontheless are seen as serial acquirers. Even so, ironically, Microsoft is still not seen as an active acquirer.

I'm not sure VCs love Google more than MSFT. I think they understand Google better, but Google has also pissed many VCs off. Google has bought companies even smaller than Microsoft. They are disliked by VCs because they have bought a dozen or so young companies before they have reaised venture capital which has cut VCs out of any returns on those companies. Obviously, the model that you build a small team and go pitch Goggle with your ideas and prototype instead of VCs is a terrible one for the venture community. Google is no friend of VCs....

EMC/VMware Spin-Out: New Shareholders Get Virtually Nothing

Virtualizing the server is about CPU utilization - saving money and gaining service flexibility in your data center. Desktop virtualization is about security and privacy. In the fullness of time virtualization of desktops could be a far larger business than on the server.

There are two scenarios for virtualizing the desktop. The first is for software developers and testers and this was of course the first segment VMware addressed and how they made their first $100M of revenue. This however is a market niche of limited size and well penetrated today. The second reason is security and this is a huge potential market. Today of course there are billions of dollars spent to secure personal computers from viruses, spyware, malware and phishing by the likes of Symantec and McAfee and many others, and many would argue they do a fairly miserable job of it. Virtual machines offer a very powerful solution to this problem by isolating different activities (like say browsing the web, or playing that multi-user video game,r even leaving the corprate firewall) in a separate virtual machine that is destroyed at the end of the users session. In effect, who cares if you pick up viruses and spyware when at the end of your session you just destroy the virtual machine taking the viruses and spyware with it. It is a super powerful and elegant solution to one of the most persistent problems plaguing PCs today. In this sense you could imagine why almost 100% of all PCs in the future could come with virtual machine technology. There is a private company called Green Border that is trying to do this today and Microsoft is rumored to be taking steps towards this approach with IE.

Cam