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

Today's Real Time column in the Wall Street Journal covers, among other things, the accidental release of the Microsoft ruling earlier than the judge intended because some web surfer discovered it and then tipped off Slashdot.

The Internet democratized investing, for better or for worse, and every once in a while gives dogged surfers an opportunity to make a quick killing, with perfectly public information.

One such opportunity came up two Fridays ago. The Microsoft Corp. antitrust decision was supposed to be posted online at 4:30 p.m., after the close of regular trading, but inquisitive surfers found the documents posted on the court's Web site around 3 p.m., and the link was then posted on Slashdot (www.slashdot.org), the popular "News for Nerds" site, where 4,000 people viewed it before the regular market session closed at 4 p.m...

A recent Dutch study finds some disturbing news about how even a couple of glasses of wine can impair your judgement and thus may need to have some impact on drinking and driving laws according to this Boston Globe story:

At a blood alcohol level of .04 percent - reached by drinking two glasses of wine in less than an hour - the brain's ''oops'' response stops working properly and people no longer realize they have made a mistake, the researchers said.

...Usually after a person makes an error, he or she slows down and works much more carefully.

''However, after drinking alcohol, this sort of control mode is diminished. It's almost gone,'' Ridderinkhof said.

Yet another reason to make it to the gym according to this Wall Street Journal story (subscription required) on Art Kramer, a University of Illinois researcher, who's led a groundbreaking study on the effect of excercise on the brain to be published in the near future.

Mr. Kramer's study confirms what other research has pointed to: cardiovascular training that pumps more oxygen to the brain, as opposed to anaerobic exercise such as weight training that builds muscle tissue through oxygen depletion, improves brain function.

The damaging effects of age on the brain have long been known -- between 30 and 90 we lose 15% of the cerebral cortex, the area of the brain that controls conscious thought. But Mr. Kramer's new research, sponsored by the U.S. National Institute on Aging, makes a compelling case for the link between mental and physical agility....

So just how does aerobic exercise protect our intellect? The answer lies in oxygen. When people say they getting "rusty" with age, they're not too far from the truth. Just as oxygen exposure causes metal to rust, so it slowly damages the body's tissue through a buildup of particles called "free radicals." But ironically, getting more oxygen to the brain appears to fight the ravages of oxygen on brain tissue by stimulating the production of proteins called "brain-derived neurotropic factor," which reduce free-radical damage. Aerobic exercise increases the efficiency of oxygen intake by the body. Specifically, strong, sustained cardiovascular workouts -- exercise that raises the heart rate -- increases blood circulation through the body, pumping more oxygenated blood to the brain. An added bonus is that aerobic exercise is also believed to stimulate production of new neurons -- the functional units of the nervous system -- increasing the number of brain cells. "[Aerobic exercise] certainly protects our intelligence, and may even improve it," Mr. Kramer says.

Another older Wall Street Journal story (subscription required) that I hadn't posted which details Steve Case's building of AOL and his frustration with the current blame game that puts him squarely in the middle. However, talk of AOL being spun back out are probably overly optimistic since the company is now dealing with over $28 billion in debt that makes any such move complicated since AOL by itself will not be able to deal with much debt.

Mr. Case spent 17 years relentlessly and zealously helping to build America Online from the ground up, and is known for his reserved personality and his deliberate management style. Under his leadership, America Online grew to be the largest Internet service provider in the world, with more than 35 million subscribers world-wide. In the past year, however, the company has had slowing subscriber growth and a steep falloff in online advertising. Online ad sales, the most profitable part of America Online's business, are expected to be as low as $1.6 billion this year, down from $2.7 billion last year.

...On Wall Street, some investors are still in favor of a spinoff. Hedge-fund manager Doug Kass, of Seabreeze Partners LP, says a stand-alone America Online should be able to fetch a hefty valuation. "Why not give it back to Case and spin it off?" Mr. Kass says. "Whoever wants to make that trade would have a huge increase in share price."

Mr. Kass sold his stake in AOL last week after the company's earnings report. Mr. Kass says he was partially motivated to sell by the fact that AOL refuses to consider a spinoff. "I wouldn't have sold all my position if the company was doing" the spinoff, he says. His reasoning is that despite its problems, America Online will likely generate about $1.4 billion in cash next year but is given very little market value. By comparison, he says Yahoo Inc. could generate as much as $300 million in cash next year but has a market capitalization of nearly $9 billion.

I guess I was on the right track when I ordered a Sony Clie (although not this latest model) from Amazon since my Palm V was pretty much dead and I didn't want to spend much more for a combo PDA-phone yet, which is what Handspring is beginning to focus on with its Treo Communicators (competing directly with Danger's T-Mobile Sidekick). According to this recent Wall Street Journal story (subscription required):

According to the IDC numbers, which were obtained by the Wall Street Journal, 2.44 million hand-held computers were sold world-wide in the third quarter, down from 2.59 million a year ago, and down from 2.62 million in the second quarter.

Weili Su, an analyst at IDC, attributed the shipment drops to the poor economy. "The market just isn't picking up," she said. She forecast that fourth-quarter shipments of hand-held gadgets would be flat from a year ago.

Amid the overall slump, some hand-held computer makers gained market share over the past year. Palm Inc. retained its spot as the market leader by shipping 824,000 units in the third quarter, a 33.8% market share. In the same period a year ago, Palm shipped 753,000 units. Sony Corp. also made share gains, becoming the No. 2 vendor by shipping 350,000 units in the third quarter and taking a 14.4% share. It's a major advance for Sony, which a year ago wasn't even in the top five of companies shipping hand-helds.

The challenges of setting up a large story in Manhattan are detailed in this Wall Street Journal story (subscription required) a few days ago. Target's advertising and marketing continues to be stellar -- unlike the Got Milk? town name change request I'd come across a few weeks ago:

Target Corp. has finally figured out how to invade Manhattan: by sea.

Long thwarted in its efforts to open a store in the heart of Manhattan, Target will float one nearby for the holidays. The Target boat will dock at the Chelsea Piers complex on the Hudson River for two weeks beginning Nov. 15, stocked with a limited selection of Target merchandise.

The 220-foot-long vessel -- its deck filled with lighted Christmas trees and its sides painted with the Target red-and-white bull's-eye logo -- will hold 150 shoppers at a time. Others will have to wait their turn in heated tents. "You won't be able to mistake it for anyone else's boat," says John D. Remington, vice president of events marketing for the retailer.

A post-US-election look at Saudi billionaire and the largest foreign investor in the US (currently worth $13 billion, $9 billion of that in Citigroup alone) Prince Alwaleed bin Talal in this Wall Street Journal story (subscription required):

America's slide into what he calls "irrational pessimism" has cost Kingdom Holdings more than $2 billion this year....The prince's political touch also isn't golden at times. After Sept. 11, the prince cut a check for $10 million for the Twin Towers Fund and issued a statement condemning al Qaeda's "criminal act." But he also urged the U.S. to "re-examine its policies in the Middle East and adopt a more balanced stance toward the Palestinian cause." New York Mayor Rudy Giuliani sent back the check. The prince said he regrets the rumpus but that America must, sooner or later, "wake up" to Palestinian suffering and the resentment this causes across the Arab world.

...He not only watches TV channels, he partly owns many of them, through investments in Rupert Murdoch's News Corp. and AOL Time Warner and stakes in various Arabic-language channels. Like many Saudis, he blames much of the post-Sept. 11 rift with Washington on the media. News Corp.'s Fox News, he said, has a habit of being "very nasty." Over the summer he met Mr. Murdoch at the Paris hotel, George V, which the prince also owns. He said he told Mr. Murdoch that he has no problem with Fox having a "strong line" but asked that it "at least give the other side the right to be seen and shown."

The making of a new merchandising hit is detailed in this Wall Street Journal story (subscription required).

The Yu-Gi-Oh line, including home videos and music CDs, is expected to ring up $500 million in retail sales this year, making it one of the hottest tickets for Christmas, analysts say. "I've had to increase my Yu-Gi-Oh estimates several times this year," says John Taylor of Arcadia Investment Inc. "It's turning out to be much bigger than I had originally thought."

...Yu-Gi-Oh, the brainchild of Kazuki Takahashi, a Japanese comic-book illustrator, is the tale of a high-school wimp named Yu-Gi who morphs into a spike-haired hero, with a following of monsters and dragons that battle others of their ilk. Like the Pokemon menagerie, the Yu-Gi-Oh critters' strengths are charted on the back of trading cards that kids collect or use in games.

Since the Yu-Gi-Oh character line is similar to Pokemon, the Journal reports that retailers were initially very sceptical about its potential success, and there were questions whether direct marketing could get thru young boys who prefer to discover cool trends on their own. By deliberately limiting the number of licensees that'll brand products with Yu-Gi-Oh's characters and keeping production below demand there's significant pent-up interest and no oversaturation.

Yu-Gi-Oh's demographic, eight- to 14-year-olds, presented a major problem for some retailers, who said skateboards and sports are more important to these boys than are toys. Plus, "they just don't like to be marketed to," Ms. Nowicki says.

So to avoid the appearance of advertising, Yu-Gi-Oh promoters -- including Konami Corp., which makes Yu-Gi-Oh videogames, and Upper Deck, which makes the trading cards -- flooded the Internet earlier this year with press releases about Yu-Gi-Oh's pending U.S. launch. Hungry for content, many youth-oriented Web sites ran them. "It helped that many of the press releases were rewritten as news stories by Web masters," says Brian Hershey, who pitched the story idea for SSA Public Relations Inc. "The idea behind the Internet push was to let kids think that they were discovering Yu-Gi-Oh themselves while surfing the net."

And we thought Winona Ryder's socks from Saks were expensive at $80 per stolen pair! Another story, this time in the Wall Street Journal (subscription required), about the rise of the custom suit:

Despite the best efforts of the $51-billion-a-year menswear industry, khakis and knit shirts still reign as the business-casual uniform in most U.S. workplaces. Annual sales of suits, blazers and dress slacks actually fell 10% to $4.76 billion in 2001 from $5.3 billion in 1998, according to NPD Group Inc., a market information company.

Now, some high-end retailers are going after the highest end of the market instead, actively cultivating the pockets of sharp-dressing, well-to-do men who are willing to pay top dollar for a customized, made-to-measure suit....Saks Inc.'s Saks Fifth Avenue says it sold a record 150 made-to-measure suits in the spring; on one recent weekend in October, it took orders for 174 suits and 47 shirts. Later this year, Saks will introduce a $900 made-to-measure suit -- $300 less than its current lowest-priced option. In an effort to lure more first-timers to the category, Brooks Brothers has priced a made-to-measure suit as low as $800.

Need to still plan a trip for Thanksgiving? According to this New York Times story (registration required) you still can since last minute travel deals are available on all the leading sites:

Certainly there's a growing need. Last-minute travel plans are a fact of life for Americans, according to the Travel Industry Association of America. Sixty-four percent of the 129.9 million Americans who traveled more than 50 miles from their homes for leisure in the past year planned the trip within two weeks of embarking, according to an association survey of 1,300 Americans who were polled in July. Thirty-nine percent of these last-minute travelers said their trip was to visit relatives or friends.

GE is making the right moves to ensure that its board of directors meets standards according to this New York Times story (registration required).Thus Scott McNealy will step down since Sun Microsystems is a financial partner, customer and supplier of GE.

General Electric had the lowest proportion of independent directors among the 20 largest companies by revenue in 2001, according to a survey by the Investor Responsibility Research Center, which advises fund managers on governance issues.

...General Electric's chief executive, Jeffrey R. Immelt, said he wanted two-thirds of the board to be independent. He pledged to name new members and endorsed rules by the New York Stock Exchange that require companies whose shares it lists to have boards with a majority of members with no personal or business links to management.

...General Electric said that chief executives of other companies on its board could serve on two additional boards. Also, the companies those executives run can have sales to and purchases from General Electric that total less than 1 percent of their revenue.

Amateur CD labels are getting more and more sophisticated and label manufacturers are even sponsoring design contests according to this New York Times story (registration required):

"This wasn't even a business a few years ago," said David Kennough, vice president for sales for the Neato division of Fellowes, which sponsored the competition won by Mr. Smith. This year, Mr. Kennough anticipates that he and his major competitors - Avery/Stomper, Memorex and SureThing - will sell more than 500 million CD labels.

In fact, secondary label markets are already springing up. At least a dozen small developers offer software for designing and printing CD covers and other labels. An entrepreneur who goes by the online name 70's Dude now offers a small selection of generic "indie labels" at cut-rate prices at www .labels-cdrs.com.

The forthrightness of Bush appointees continues to be questioned even as Harvey Pitt (finally) leaves according to this New York Times story (registration required):

A large accounting firm released documents today that it said showed that William H. Webster had fired it as the auditor of U.S. Technologies after the firm warned him about financial problems at the company. The accounting firm said the documents challenged Mr. Webster's description of his role at the company.

Mr. Webster, who has been named by the Securities and Exchange Commission to head a new board overseeing the accounting industry, has said he has no recollection of being told of any significant accounting problems before U.S. Technologies dismissed the accounting firm, BDO Seidman, in August 2001.

U.S. Technologies continued to spiral downward before Mr. Webster left his post as a director in July 2002, nearly a year after Seidman was dismissed. The company is now virtually insolvent. Investors have sued it and its chief executive for fraud, and prosecutors are conducting a criminal investigation.

But George W. continues to remain in his own world and suggested at a press conference that all was fine for now until the investigation into Webster came to a conclusion...since Webster is a wonderful admirable public servant:

"First, let's find out what the facts are, so that everybody knows," Mr. Bush said. "That's why they're doing this investigation."

I think cellphone ringing should be banned from public places and everyone forced to carry a vibrating phone but I doubt if teenagers and the music industry will be very agreeable to this idea. According to this New York Times story (registration required) music industry officials like Jay Samit, a senior vice president at EMI, see big dollar signs in this emerging US market:

Music and wireless executives cite figures like $1.5 billion - the predicted total of ring-tone sales in Europe this year, according to Strand Consult, a Danish firm - the way they once tossed around stratospheric projections of dot-com revenue. At industry events in the United States like the Cellular Telecommunications and Internet Association trade show last month in Las Vegas, the clamor over the ring-tone business, said those who attended, has reached a fever pitch.

"It feels like we rewound to 1995," said Richard Conlon, vice president of BMI, the music licensing concern, which has been working with recording labels, wireless providers and third-party businesses that sell ring tones to negotiate the complex web of publishing rights. "It's almost like a do-over."

...Mr. Samit of EMI offered another reason for the focus on cellphones, saying that since August 2001 there have been more wireless handsets in use in this country than portable CD players.

Ring tones are just the start of a trend that Mr. Conlon and others in the wireless industry said they hoped would result in greater use of the medium for the enjoyment of music. As more advanced phones are introduced that play higher-fidelity sound, and as the mobile network technology improves, they want to condition consumers to download entire songs.

It seems that Hollywood stars and popular singers are doing increasing numbers of US ads after years of ensuring that they only did ads abroad so as to not dilute their name and brand domestically. According to this New York Times story (registration required):

The Chrysler Group on Tuesday will announce a broad-based partnership with Celine Dion, the 34-year-old French Canadian chanteuse, and Sony Music Entertainment that will include appearances in advertisements, cross promotions of her music with the cars and even a special Chrysler song she will croon. The terms of the three-year deal were not disclosed, though it will pay Ms. Dion in the tens of millions of dollars.

...George Murphy, senior vice president of global brand marketing at Chrysler, said "we'll integrate everything about our brand into hers, and she'll integrate her brand into ours."

"Can you imagine putting her with her baby René in the back of one of our minivans and having her sing one of her love ballads?" he added. "We'd have all of America crying. Seriously."

About time there was an article about this problem. I've often gotten weird or outright wrong directions from Yahoo and Mapquest etc. Sites like these were used by some 32.5 million people in September according to Media Metrix in to this Wall Street Journal article (subscription required):

Tom Dorn is no fan of Internet map sites.

Mr. Dorn, owner of the Mar Vista Cottages in Gualala, Calif., says that sites like Yahoo Maps and Mapquest.com have been giving his guests the wrong directions for years. Not only do the sites fail to provide the fastest route to the small town on the Northern California coast, the roads they suggest are downright dangerous, he says.

...Mr. Schafer of Mapquest says that way less than 1% of the service's roughly 20 million users have ever complained to the site about their directions, and that the site isn't aware of any specific complaints about Gualala's directions.

With the potential for business use of instant messaging being as high as 200 million workers AOL is entering the arena with a more secure version of its popular IM service according to this New York Times story (registration required):

In all, about 75 million people were using instant messaging as of August, according to comScore Media Metrix. The vast majority do so at home. America Online's system has been immensely successful in the home market.

But workplace use is growing fast. About 17 million Americans currently use IM at work, up from 13 million a year ago, according to comScore. America Online holds the biggest share of the corporate market, too, with more than 10 million workplace users of AOL Instant Messenger. Microsoft Corp.'s MSN Messenger is No. 2 at the workplace, with 7.1 million users. Yahoo Inc.'s Yahoo Messenger has 5.5 million users. (Many users have more than one account.)

...AOL Instant Messenger will still be free. America Online will charge companies a list price of as much as $30 per user for security services and back-end software, which uses some FaceTime technology. Using the new service, companies can dole out instant-messaging "handles" -- like e-mail addresses -- to users, and archive IM conversations, just as they archive e-mail. Next year, America Online plans to launch a version that lets corporations encrypt instant messages as protection against hackers.

Online music sales have fallen by 25% according to this AP story in the Wall Street Journal (subscription required):

Internet sales of prerecorded music, such as CDs and cassette tapes, reached $545 million through the third quarter, well behind last year's total of $730 million for the same period, according to the study conducted by research firm comScore Networks. The study found former Napster users flocked to alternative file-sharing networks such as Kazaa and Morpheus after Napster went offline in the summer of 2001. Morpheus's user base grew from fewer than one million in June of that year to 7.2 million by March 2002, comScore said.

The winner of an essay contest will be the proud owner of a used bookstore if Karen Tolly has her way according to this New York Times story (registration required). I suppose this falls into the category of growing skill-based contests that are thriving online for both the winners and the companies running them:

Ms. Tolley found plenty of models for her contest on the Web. Mark Samwick, a 53-year-old Web-page designer in Wilmington, N.C., started a Web site five years ago to help along such contests. Since then, his Web site, essaycontests.com, has helped promote about 70 competitions for homes, cars, planes, small businesses and even a golf course. He said he had compiled a mailing list of about 1,500 essay writers, many of whom enter repeatedly.

Ms. Tolley decided she needed a minimum of 2,000 entries to hold the drawing, planning to raise at least $500,000 or return all the fees. She also pledged to give $25,000 in start-up money to the winner, as well as $5,000 each to 20 runners-up. "Succesful contests seem not to be approaching it in a greedy way," she said.

Ms. Tolley expected to make more than $250,000, after about $15,000 in marketing expenses and her legal fees. The winner would get a profitable store with a monthly rent of $1,400 and the equivalent of about four and a half full-time employees.