Ready, Fire, Aim! - Mihail's Public Blog

Masatoshi Koshiba, one of the three winners of this year's Nobel Prize in Physics, has provided evidence of his earlier claim that he was the worst student in his university class by making public a copy of a transcript issued by Tokyo University in 1951, according to this Yomiuri Daily story:

"I graduated from Tokyo University's science department at the bottom of the class," the 76-year-old professor emeritus of the university said at a press conference at the university Tuesday evening, responding to the news he had won the prize.

He won the award for his pioneering contributions to astrophysics, especially his work detecting neutrinos, which are uncharged elementary particles that seldom interact with other particles.

...He asked the university's administration office for his transcript two years ago to prove he was telling the truth about his academic records.

"Few people around me believed anyone graduating last on the list could become a university professor," he said, adding that this view frustrated him.

...He referred to his poor grades in a congratulatory address he gave at a commencement ceremony in the spring to students graduating from the university's mathematics, science and engineering department.

With the introduction of AOL 8.0 next week which will include several programming initiatives, AOL Time Warner will emulate a strategy that is more like the television industry -- selling advertisers access to audiences based on peak viewing times called "dayparts" according to this News.com story. This is an important part of AOL's effort to attract more advertising in the face of the economic slowdown and slowing new customer signups (just 492,000 in the 2nd quarter compared with the 1.3 million during the same period in 2001):

Web publishers including The New York Times, USAToday.com and Yahoo are already selling advertisements by time of day; and some have even started tailoring content as well.

This summer, five major Web publishers, including CBS MarketWatch, Weather.com and CNET Networks, publisher of News.com, aligned to sell ads that span all of their sites, helping advertisers target at-work audiences. AT&T's mLife campaign was the first to sign on, with the aim of reaching business executives during the workday.

..."It's catching fire," said Michael Zimbalist, president of the industry group Online Publishers Association. "The Internet has evolved from a print model, with units on pages, to more of a broadcast TV model, where the time of day dictates the type of advertising to be displayed rather than the physical location on a page."

..."If you have a defined audience at a defined period of time, you're (able to) say to advertisers that for 15 minutes you're going to reach this many people and this kind of demographic," said Barrett. "This is what advertisers have been asking for." He added that this sales strategy should not undermine the unique interactivity of the Internet, but that it takes the best of the Web and "overlays it with what folks are comfortable buying."

Yahoo has reported a net profit that is higher than expected, $28.9 million, or 5 cents a share, on sales of $248 million, according to this News.com story. The financials from Yahoo's three lines of business are:

• Marketing services: the most closely watched number as it encompasses Yahoo's core online advertising business. Revenue rose 22 percent to $147.4 million. Yahoo attributed the increase to more revenue from small to mid-sized companies through sponsored search services. However, barter revenue decreased.

• Fees and listings: comprises Yahoo's efforts to charge fees for certain "premium" services. Revenue jumped 124 percent from last year to $83.1 million. Excluding its HotJobs acquisition, revenue rose 66 percent from the growth of premium services such as personals and its DSL (digital subscriber line) product with SBC Communications. Yahoo added 500,000 paid customers from last quarter to a total of 1.5 million.

• Transactions: Yahoo's e-commerce business. Revenue grew 118 percent to $18.3 million due to more transactions and changes in pricing for the company's e-commerce site.

From the Wall Street Journal (subscription required):

Despite potential bad debt risks, a financing program is a profitable way for Microsoft to deploy some of its cash, analysts say. More importantly, vendor financing could help Microsoft compete with the likes of International Business Machines Corp., which has used financing extensively to sell a broad range of products and services.

"Financing has proved an important tool for IBM," wrote George Gilbert, software analyst at Credit Suisse First Boston, in an August research report. Mr. Gilbert rates Microsoft stock at "outperform" and doesn't own the shares. "With financing [Microsoft] could offer end-to-end solutions through its partners and pioneer a new channel for small and medium enterprises."

Microsoft is entering the financing business at a time when others are exiting from it or have had to take large charges for bad debt expenses. While Microsoft has an enviable balance sheet, it is assuming risks by lending out its money. It has taken steps to mitigate potential liabilities. It has hired a handful of former bankers to run Microsoft Capital under the direction of Chief Financial Officer John Connors, one analyst said. Microsoft will focus on financing software purchases and avoid unrelated markets. It has collaborated with Household International Inc., a large provider of consumer loans and credit cards, to screen applicants, make credit decisions and handle customer billing.

Analysts aren't overly concerned. In addition to more than $50 billion in its treasury, Microsoft generates about $1 billion in free cash flow every month, says Goldman's Mr. Sherlund. "I would not suspect they would have to dip into their existing cash balance" to fund these programs, he says.

A Dow Jones story in the Wall Street Journal (subscription required) about MoFo (the law firm Morrison & Foerster) having a few dozen folks over for a mock VC-entrepreneur negotiation. This is always the most interesting part of getting funding involving skill, emotion, and drama:

Through arguments over everything from conversion rights to antidilution provisions, the battle lines are clearly drawn. For the entrepreneur, the focus is on the blood, sweat and money he has put into the company, and being duly rewarded and respected for them. But for the venture capitalists, it's all about protecting their investments.

"The split you start to see at this point in the negotiations is real, and I've lived through it," Mr. Smith said. "For me, the hardest part is to tell a co-founder who has been with me since Day One that, 'Look, the world has now changed and you're no longer part of it.' That's what I'd dread most."

That task, Mr. Bartlett quipped, is even tougher when the co-founders are related, which is often the case.

For venture capitalists, the key is not to push so excessively that the founders are reduced to the role of mere employees. "It's bad for morale, and if you want your founders to be like employees, you're really not getting your money's worth," Mr. Bartlett said, playing his part to the hilt. "Entrepreneurs are still underdogs in this economy."

Wall Street Journal story (subscription required) about the largest venture fund of 2002:

At a time when many venture capitalists are returning uncommitted capital to investors, Carlyle Group Wednesday will announce the final close of a $600 million venture-capital fund, Carlyle Venture Partners II LP.

The fund is the largest venture-capital fund raised so far this year, according to VentureWire, an industry tracker. Earlier in the year, Prism Venture Partners of Westwood, Mass., closed a fund at $421 million and Centennial Ventures of Denver closed a $341 million fund.

Wall Street Journal story (subscription required) about the largest venture fund of 2002:

At a time when many venture capitalists are returning uncommitted capital to investors, Carlyle Group Wednesday will announce the final close of a $600 million venture-capital fund, Carlyle Venture Partners II LP.

The fund is the largest venture-capital fund raised so far this year, according to VentureWire, an industry tracker. Earlier in the year, Prism Venture Partners of Westwood, Mass., closed a fund at $421 million and Centennial Ventures of Denver closed a $341 million fund.

According to the Private Equity Analyst-Holt Compensation Study as reported in this Wall Street Journal story (subscription required):

managing general partners -- the people who run the funds that invest in start-up companies and LBO deals -- saw their total median compensation fall to $604,000 in 2002 from $750,000 in 2001.

While the managing general partners in the top quartile will continue to earn an impressive paycheck -- a median of $1.4 million this year -- that is far less than the $3.2 million they earned in 2001. In contrast, managing general partners at firms in the lowest quartile saw their pay drop to $300,000 in 2002 from $364,000. Those figures include salary, bonus and what is known as "carried interest distribution." That refers to the percentage of a fund's annual profits that general partners typically earmark for themselves -- roughly 20% of a fund's profits. This year's low returns negatively affected that distribution.

"Countries with broadband see the most downloads" of music from illegal Web sites, said Harry Hui, president, Southeast Asia, for the Universal Music unit of France's Vivendi Universal. South Korea and Hong Kong, where broadband usage is high, are among the worst offenders, Mr. Hui added.

According to research concern IDC Asia Pacific, 19% of South Koreans and 11.5% of Hong Kong residents have access to broadband.

Microsoft estimates that more than two million Web sites world-wide sell pirated Microsoft products. For the fiscal year ended June 30, the company says it helped shut down 485 auction sites in Asia alone.

Even as technology and entertainment companies grapple with the broadband issue, traditional piracy continues to grow in the region. According to Business Software Alliance, an industry group, 50% of all business software being used in Asia is copied or counterfeit. China, where 92% of all business software is illegal, is the worst offender; Vietnam and Indonesia follow closely, at 94% and 88%, the group says.

Just like Oracle which got its start with a contract from the CIA some 25 years ago, according to this Wall Street Journal story (subscription required),

Companies ranging from Oracle Corp. to Microsoft Corp. to PeopleSoft Inc. are beefing up their Washington sales teams and retooling their marketing aimed at all levels of government. Their goal: a big slice of the spending planned for homeland security and other initiatives.

Federal spending on information technology is expected to rise nearly 10% to almost $53 billion in the fiscal year ending Sept. 30, 2003. Even cash-strapped state and local governments spent $78 billion last year on high-tech products and services.

In fat times, that might not be enough to turn heads among companies feeding the $1.2 trillion global technology marketplace. But total information-technology spending is projected to increase by only 5% a year from 2003 to 2005, down from double-digit increases in the past, says Boston-based market researcher Aberdeen Group.

Already a major revenue stream for eBay, Priceline has announced it is now moving into the used vehicle sales business.

Priceline, which already operates Priceline Autos, enabling people to name their own prices for new cars, said the expansion into used cars will open a new revenue stream. Under the arrangement with Autobytel, Priceline will receive a lead generation fee when it refers car buyers to Autobytel.

The used car service will help shoppers find low-priced cars from one of Autobytel's thousands of member dealers, or shop for a pre-owned vehicle in Autobytel's customer classifieds.

Autobytel, which operates a number of car buying Web sites including Autoweb.com,Carsmart.com and Autosite.com, generates about 4 percent of all new vehicle sales in the United States.

Thanks to Hollywood Reporter via Digital Coast Reporter:

Napster founder Shawn Fanning, whose file-sharing software pitted him as a populist David doing battle with the Goliaths of the music industry, has found a champion in MTV.

The cable network has hired filmmaker Alex Winter ("Fever") to write and direct a small-screen biopic for MTV Original Movies that will dramatize Fanning's life. As a teenager, he created a software program in his college dorm room that led to an online music revolution and his own booming Internet company, only to become the target of the music industry's legal wrath.

The deal with MTV gives the network exclusive rights to Fanning's life story. The Napster founder and former chief technology officer is collaborating with Winter on the screenplay, and he also plans to executive produce the telepic along with its soundtrack, which will be released through his forthcoming, yet-unnamed record label, sources said.

From the New York Times (registration required):

Now, after nearly a year of online tailoring, Lands' End has released results that exceed the expectations of even the most optimistic executives. Bill Bass, who led the Lands' End Custom effort and is senior vice president of e-commerce and international sales, said 40 percent of all chino and jeans sales on the company's Web site were now custom orders.

"When we went into this, we estimated it would be 10 percent," Mr. Bass said. "But our prices are pretty competitive with off-the-rack stuff, and we made it easy for people."

Lands' End, which is owned by Sears, Roebuck, achieved such sales with no advertising, Mr. Bass said, other than some mentions in the Lands' End catalog, which is mailed throughout the year to tens of millions of households. "It's been a lot of word of mouth," he said.

With the custom-made pants service, shoppers go to the company's Web site, www.landsend.com, and type in measurements like weight and height, and characterize the proportions of thighs and hips, among other variables. A computer program analyzes that information, calculates the ideal dimensions of the pants, and sends that information to a manufacturing plant in Mexico.

Motorola plans to announce tonight in Tokyo, according to this New York Times story (registration required),

the most powerful set of microchips yet for such receivers, which convert standard analog AM and FM broadcast signals into a digital format. So far, the radio broadcasting industry in this country has not agreed upon uniform digital technical standards, which has left over-the-air digital radio service to subscription-fee satellite services.

...Analog radio signals use electronic waves analogous to sound waves. Digital signals use electronic pulses that can be translated into the precise 1's and 0's of computer code.

When radio signals are in digital form, they can be filtered, cleaned up and manipulated by software. The result is better sound fidelity and the opportunity to add features like deeper bass tones. Software-driven receivers can compensate for the complex interference patterns caused when signals are bouncing off of buildings or hills, and they can tune into channels more accurately.

...Motorola said its new chips would allow the elimination of so many components in receivers that radios going on sale next year should cost the same or less than today's premium analog systems.

...Allied Business Intelligence, a market research firm, has projected that the number of digital radio receivers in the United States alone will jump from 650,000 units this year to 33 million in 2007.

Another interesting article by Maureen Dowd in the New York Times (registration required) on Hillary Clinton's prospects in 2008:

Watching Robert Torricelli mist and mewl, as he was torn from the bosom of the Senate, gave me new pause over that old question: Are men biologically suited to hold political office and leadership positions?

...We've got a tearful Andrew Cuomo getting the vapors and being led away from the governor's race on the strong arms of Bill Clinton and Charlie Rangel. And Jeb Bush crying whenever his daughter is busted.

...The arena is full of powerful men in touch with their powerless inner women. And yet, surrounded by famous men puddling under pressure, American girls are still doubtful about the prospects of a woman becoming president. According to a poll in yesterday's USA Today, 40 percent said they would not see one within 10 years and a grim 14 percent "not in my lifetime."

Are those 14 percent unaware of the Clintonian relentlessness of the junior senator from New York?

So here I am at the British Airways/United Airlines terminal at JFK. What's cool is that British Airways provides a free Laptop Connection Center overlooking the runways. It is free and comfortable juice and telephone connection so we can all check our email etc. No US airline seems to ever do something like this. No wonder they're in such trouble these days. See you in SF soon!

A Wall Street Journal story (subscription required) on the use of work computers for online shopping:

Internet users favor the office for Web shopping over all other venues: 59% of the $45 billion in U.S. Web purchases last year occurred in the workplace, compared with 37% from home and 4% from schools, according to Internet measurement firm ComScore Networks Inc. of Reston, Va.

Shopping isn't just happening during lunch hour. In one of the most detailed studies of the practice yet, ComScore tracked hour-by-hour spending by U.S. Internet shoppers during the second quarter. The results: Online shopping begins with the average workday, jumps noticeably about 10 a.m. and builds to a steady crescendo through noon, ComScore says. Online buying drops between noon and 1 p.m., the typical lunch break, then rises again between 3 p.m. and 5 p.m. as the workday concludes.

While Web shoppers spend most of their dollars at work, the time they spend on shopping sites is still only a fraction of their workdays. During the second quarter, the average visitor to shopping sites spent a little less than 1.5 hours a month from the office, according to ComScore. Visitors to auction sites invested more time, spending more than 2.5 hours a month from the office.

Initially conceived as a customer-service enhancement, ATMs began to be viewed as a potential profit center with the introduction of surcharges. As transaction volumes stagnate, however, ATMs are again being viewed as customer-service channels.

Reducing the need for tellers and other branch personnel is usually a big plus for the financial institutions, says Wharton marketing professor Barbara Kahn. “People are most expensive to banks. So as far as banks can eliminate that human aspect, it’s a good thing for them.” Stefanovic agrees, explaining that most financial institutions see ATMs as a service channel; some see them as a sales channel; and others see them as a branding opportunity.

 

...The advent of surcharging in 1996 saw a rapid increase in the number of ATMs, as banks sought to take advantage of the new revenue opportunity. But this growth essentially eroded any large opportunity for profits. Due in part to the rapid proliferation of machines, the number of transactions at each ATM has been going down. According to ATM&Debit News, monthly transactions per ATM declined from 6,876 in 1992, when there were 87,330 terminals, to 3,308 in 2002, with 352,000 terminals.

 

The 2002 ATM Deployer Study by Pulse and Dove Consulting reports that on average, the monthly operation cost of an ATM is between $1,000 and $2,000, while monthly revenues are only slightly – if at all – higher. In addition, as debit cards and cashless transactions become more popular, demand for cash withdrawals is expected to decrease.

Trying to conserve cash, AOL Time Warner and the Walt Disney Corporation have revived long-running talks about combining their CNN and ABC News operations into a joint venture in an effort to cut costs, people involved in the talks said yesterday.

Both companies are more motivated to reach an agreement than ever because they are suffering through a prolonged downturn in advertising sales while under pressure from investors and credit-rating agencies to pay down their debts. The discussions also take place at a time when the top executives of both AOL Time Warner and Disney are under particular pressure from shareholders and directors to improve their results.

...The preliminary terms of the deal under discussion call for Disney's ABC News division and AOL Time Warner's CNN division to merge into a joint venture, two-thirds owned by AOL Time Warner and one-third owned by Disney. People involved in the discussions said that CNN had annual revenue of about $1.6 billion and pretax profits of about $200 million, while ABC News had about $600 million in revenue and pretax profits of about $15 million, reflecting high costs and relatively less air time to sell advertisements.

"It's still a very healthy pace but certainly we are winding down from the boom," the group's chief economist, David Lereah, said.

But other analysts said the data showed signs that consumer confidence was beginning to erode in the face of job pressures, tumbling stock markets and the prospect of war with Iraq.

"Even with low interest rates, if jobs and the economy stay weak, and risks to balance sheets from the bad stock market and international risks remain, I think we're going to see hesitation in buying big-ticket items like homes," said Allen Sinai, chief economist for Decision Economics.

Home buying levels surpassed a 5.7 million sales pace in four of the first five months of this year, but have been below the 5.4 million pace for the last three months. Mr. Lereah said he expected home sales to hit more than 5.4 million units for the year, breaking last year's record of 5.3 million.