Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Monday, October 8, 2007, Columbus Day:
A great opportunity today to buy things you don't
want at prices that may be less expensive than yesterday, but more expensive
than tomorrow. Good shopping. Markets are open. And your friendly money manager
is at his desk figuring if it's time to sell his pricey new apartment or his
art. (See below.)
good news for Australian stocks: China's $200
billion sovereign wealth fund is nine days old and acording to my down-under
contacts, Australian companies (especially big miners like BHP Billiton
and Rio Tinto) look especially juicy to the Chinese. Australians also
like the Chinese, so they'll welcome their money. Last week Sydney University's
US Studies Centre showed 56% of Australians held a favourable opinion
A recent Lowy Institute poll in Australia showed an almost identical result.
to China are very warm," says Allan Gyngell, executive director of the
Lowy Institute. "To Australians, China represents an opportunity, not
a threat." Such attitudes are inconceivable in almost any other Western
country. Reaction to Chinese investment has been most hostile in the US and
Europe is headed down the same dumb path.
Nice work if you want it:
Blackwater USA bills the State Department $1,222 a day -- $445,891
a year -- for each "protective security specialist (guard) that it assigns
to protect an American civilian in Iraq.
market. But we missed it. Contemporary art rose by 55% and
modern art by 44% over the past 12 months, an acceleration of the trend
over the past five years which has seen prices soar. Much of that price inflation
has been fuelled by workers in the financial services industry such as hedge
fund managers. This from Hiscox, which insures art.
is bad. The faster your computer works, the
hotter it gets. An old Intel chip 486DX2-66 gave off between 3 and 6 watts,
while a modern Intel dual core running at 3.8 GHz gives off 115 watts. Heat
is the reason laptops don't run as fast as desktops. Heat is also the reason
computers (and other things, like refigerators) often work intermittendly. They
stop working, then start again, then stop. My main laptop has been locking up.
I suspect it's heat. I've checked everything else. The manufacturer suggests
that I get a service rep to open the machine and clean out the dust/ debris
from the fan and the heat sinks and also apply new thermal grease on the main
grease? Really neat stuff. Read all about it.
Hit the Save button regularly, like time you make a change.
2. Lift your laptop off your desk with any number of gadgets, including the
Chill Pad or the Antec
3. Open your machine and vacuum it (gently).
4. Buy a small external fan, e.g. this
5. Don't leave your computer running all the time. Try "Stand By"
on your laptop. Works well.
Skype hyper: Telecom companies achieve irrational
heights higher and more stupid than any other variety. I don't know why. I remember
commenting that Meg Whitman of eBay had flipped her lid when in 2005 she bought
Skype for a ridiculous $2.6 billion. Hence, I was fascinated with this
piece from the weekend's Economist:
AMONG the many
lessons that Margaret (Meg) Whitman has picked up during her three
decades as a businesswoman, three stand out, she told an audience at Stanford's
business school last year. And those three lessons, she implied, explain why
she, as boss of eBay, the world's largest online auctioneer, was right to
buy an internet-telephone company called Skype for an astonishingly high price
The first lesson,
which she learned in 1979, was that attention to detail is all important.
At the time, she was fresh out of Harvard Business School and just starting
her first job at Procter & Gamble. She was charged with figuring out whether
the nozzle on shampoo bottles should be half or three-eighths of an inch wide.
Despite the tediousness of the task, I decided I was going to do the
very best job that had ever been done at the Procter & Gamble company,
on whose board she now sits. Bring that sort of execution to a
firm with as much potential as Skype, she suggested, and the sky would be
The second lesson
occurred in 2002. As boss of eBay, she had noticed that a lot of the sellers
and buyers on its site were using an online-payment service called PayPal
as a sort of virtual wallet, so she decided to buy it. She negotiated for
a year, during which the price kept rising. She concluded that in the internet
industry one bids early, boldly and pre-emptively high. That is what she did
The third lesson
was that in such a fast-moving realm the price of inaction is far greater
than the cost of a mistake. In any case, mistakes can always be corrected.
In other words, it did not matter that the synergies between a
telephone service and an online flea-market seemed few and far between. In
her view, eBay was right to buy first and look for the answers to such concerns
these three lessons have led to disaster. On October 1st eBay conceded, in
the language of book-keepers, that the purchase of Skype was just that. It
had paid $2.6 billion up front, and agreed to cough up yet more if Skype met
certain targets. It did not. This week eBay said that it would take a $1.4
billion charge in relation to the purchase. A portion of the payment is a
settlement that absolves eBay of any further obligations to Skype's original
owners. But the bigger part, a so-called impairment write-down,
represents eBay's loss on its ill-fated investment.
Ms Whitman does
not even seem to have remembered her own lessons. In terms of the first, eBay's
execution in integrating Skype with its main business has been
poor. Skype's service has deteriorated: it collapsed completely for two days
in August. The second lessonbid early and highwas observed to
a fault. As for the third lesson, the mistake has now been admitted, but not
Ms Whitman should
have known better, because Skype became and continues to be a revolutionary
technology precisely because it does not extract much revenue from its customers.
We want to make as little money as possible per user, Niklas Zennstrom,
Skype's co-founder, has said. Skype's breakthrough, in his view, was to point
the way towards a time when all voice communication would cost the consumer
nothing at all. This week Mr Zennstrom stepped down as Skype's boss; he plans
to spend more time on his next disruptive technology, called Joost, which
brings television to computer screens.
The rest of
Silicon Valley has greeted Ms Whitman's misfortunes with Schadenfreude. But
the gloating may be short-lived. By buying Skype, the internet phenomenon
of 2005, eBay started a bubble. Google, with its purchase of YouTube, the
cyber-star of 2006, inflated it further. And Microsoft and Google now appear
tempted to add more froth by investing a silly sum in Facebook, the latest
big thing. All threethe internet telephone firm, the video site and
the social networkmake almost no money. EBay's disappointment with Skype
is a timely reminder of where this fad might lead.
Until now, Ms
Whitman has not faced serious public criticism. The press, The Economist included,
has churned out many an unquestioning paean to her. In part, that is thanks
to her sensible, down-to-earth demeanour, an endearing contrast to the self-aggrandising
swagger of other Silicon Valley bosses. Ms Whitman loves to go fly-fishing
with her sons; she also enjoys recounting how embarrassed they were when she
was voted onto a list of worst-dressed billionaires. People want
to love her, one analyst argues, which might explain why eBay's shareholders
allowed her to throw a desperate Hail Mary pass at Skype, in the
words of another.
at eBay, at any rate, will surely now start asking what on earth Ms Whitman,
a seasoned executive, was thinking. Certainly, she felt pressure from Wall
Street to come up with a big idea to maintain the firm's breakneck growth.
Its main business, brokering auctions, has been slowing. In the year to June,
product listings on its site fell for the first time ever, by 6%. Like Yahoo!,
its neighbour in Silicon Valley, eBay may be gored by Google, the ubiquitous
search engine. Increasingly, people with goods to sell set up their own websites
and find buyers by advertising on Google's search pages. Google has also begun
offering online payment and telephone services that compete directly with
PayPal and with Skype.
Ms Whitman also
mentioned a fourth lesson during her talk at Stanford. Her main job as boss,
she said, is to put the right person in the right job at the right time.
She emphasised the word time, since a manager who was right a
few years ago may no longer be today. It is a lesson her own bosses, on eBay's
board, will doutbless soon be reviewing.
supermarket sign. Gets the message across.
Farmer: "I had to shoot my dog."
Neighbor: "Was he mad?"
Farmer: "He wasn't pleased."
This column is about my personal search
for the perfect investment. I don't give investment advice. For that you have
to be registered with regulatory authorities, which I am not. I am a reporter
and an investor. I make my daily column -- Monday through Friday -- freely available
for three reasons: Writing is good for sorting things out in my brain. Second,
the column is research for a book I'm writing called "In Search of the
Perfect Investment." Third, I encourage my readers to send me their
ideas, concerns and experiences. That way we can all learn together. My email
address is .
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