Captain's blog: Stardate 10/1/07
We survived September, and come back from the worst of it. What's on deck for October?
(Fortune) -- MARKETS: "Begin the begin," as Michael Stipe would say. Ready for October? As we go from Virgo to Libra -- (It's also Polish American Heritage Month) --I'll remind you that October was the eighth month of the Roman calendar (hence Oct.), but of course it's our tenth, and traditionally a month of market maelstroms.
So we made it through September, what do we expect going forward? Let's address the worst case scenario: It's difficult for me to imagine that we would crash sharply over the next four weeks, (jinx!) even though the averages are back up again at record highs, simply because there is a surplus of fear on Wall Street. Sure we've come back from the worst of it. (I was out to dinner with a senior Wall Street credit derivatives exec on Friday who confirms that.) But folks are still plenty jittery. That's not to say that October can't be a bad month -- of course it often is, though historically September is worse -- it's just that if we fall down here, I think it will be with a whimper, not a bang.
A DIFFERENT KIND OF TENSION FOR TECH: As you doubtless know, much of the recent strength on Wall Street has come from tech stocks. Apple (Charts, Fortune 500) is hitting new highs, ($134 billion market cap -- wild, no?) which is a story unto itself, because lost in the whole iPhone swirl, is the fact that 1) Apple's stores have never been more crowded, and 2) it's little square video Nano is a SMASH HIT! Apple must be selling dozens and dozens every minute!
But beyond that there are other forces at work here. Bottom line is that people are getting increasingly sanguine about the sector. (Have you checked out VMware's (Charts) stock since its IPO? Holy smoke!!!) Google (Charts, Fortune 500) of course is near a new high too ($177 billion market cap -- GM's, by the way is $20 billion), and that gets closer to my point, which was gifted to me by my main man, V! He pointed out that for many a company the big money event isn't an IPO anymore, but instead prettying itself up for sale to one of the big four: Microsoft (Charts, Fortune 500), Google, Yahoo (Charts, Fortune 500), or Time Warner's (Charts, Fortune 500) AOL. (And yes of course there are others too like News Corp., (Charts, Fortune 500) but you get the point.)
Back in the day, as in 1999, the IPO was everything. And to be sure there are a bunch of tech IPOs have been done this year: the aforementioned VMware, Clearwire, Solera, and Limelight etc. And there are a slew of IPOs in the pipeline, like Affinion, SS&C, Netsuite, and ICx to name just a few. But check out some of the names of companies that have been bought out recently by the Fab Four! Here are some of the recently announced and completed deals. Pretty amazing list: Buzztracker, Zimbra, BlueLithium, and Whereonearth by Yahoo. Zenter, DoubleClick, YouTube, Dodgeball (founded by Vince Vaughn and Ben Stiller?), and JotSpot by Google. aQuantive, Alacris, and Apptimum by Microsoft. And Xdrive, Wildseed, MusicNow, and Truveo by AOL. It's not like the tech IPO market is moribund -- in fact look for it to heat up from here, it's just that being bought out by one of the Bigs has most certainly become another (electric) avenue.
MEDIA MIXER: Okay I am making a call which some may find axiomatic, but here goes anyway. Twenty years from now, the media biz will look completely different. "Like, DUH," you are saying right now, but hear me out. Yes of course the big driver is the digital revolution that is destroying and/or revolutionizing the newspaper, music, TV, and movie businesses. But that's just one piece.
There are at least two other equally important seismic events occurring simultaneously. Number one: Succession. This will happen in two ways. First, families looking to cash out, a la the Bancrofts of Dow Jones, and the Mays family of Clear Channel. (Think New York Times here.) But more significantly are the elders. Think Sumner Redstone, S.I. Newhouse, and yes even Rupert Murdoch is not immortal. Obviously, their companies will look very different ten years after they're gone.
Okay, number two is the dismantling of the media giants. What do you think TimeWarner will look like down the road? (Different!) Do you think G.E. will hold on to NBC forever? (No!) Sure, part of this new tendency to disassemble has been brought on by the erosion of digital, but mostly I think it's the realization that if you need a glass of milk, you don't need to buy a cow.
In other words the promise of synergy -- to be generous here -- has been mostly promise. What will the new world of media look like? Diffuse, with some small local (newspapers even) winners! Incredibly fickle too. YouTube gives way to MySpace which gives way to Facebook, which gives way to Bebo??? But of course mass media won't die, in fact it will become more valuable than ever. You create the next "American Idol," you die and go to heaven.
Loose Change: Two dangerous questions: 1) Have you ever Blackberryed in a house of worship? Yes I do mean during the service! GUILTY!!!! As for those of you who don't even go, some of you are still doing it too much (tee hee!) And 2) Have you ever bought drugs from an on-line pharmacy, um, without shall we say a traditional prescription? Email me what happened (all confidential of course).....Hey I missed Freda Payne's birthday (on Sept. 19), Happy 65th to you Freda! All that's left is a "Band of Gold" indeed. (That was a number #3 hit in the U.S. in 1970. I also liked "Bring the Boys Home" the following year.)...Do you know the new dance "Soldier Boy?" Hot!!!!!
Great Football weekend, upset central: The Florida/Auburn game was all that it was billed to be. Who's still high on Bowdoin beating Williams for the first time since '79? Game was at Whittier Field (tee hee again!)Highlights of the social calendar: Thanks to General Casey for having me over to dinner the other night. Loved that entertainment!....And congrats to Myron Kandel for receiving the Monmouth University Award for Excellence. It was a raucous panel. And finally thank you Brooke McMurray for inviting me to the safework event at Safe Horizon. You truly are doing amazing work.