Wednesday, December 06, 2006

Om Malik launches NewTeeVee

Quick update on what Om is up to... as I've mentioned earlier, I love the idea of online content aggregation.

But another idea I like is creating several blogs, covering different but related topics, around a single brand. It's been done before, but I think it is pretty interesting. With that, it is good to hear that Om is up to some new ideas around his winning GigaOm brand.

Tuesday, December 05, 2006

Cooked Books? It's Toast for Firm's Market Value, Says Prof

A main incentive for “cooking the books” is to put out solid numbers for your quarterly analyst call. This call is when analysts pour over (or act like they took the time to pour over) your financial statements and attempt to formulate a reasonable opinion on the financial health of your company.

But the thing is, while analysts may put a company in the hot seat over quarterly earnings, investors have a much longer-term view of a company. Sure, quarterly earnings may send stocks ticking up or ticking down, but the overall investor-perceived value of a stock comes from looking at the firm’s financial and reputational performance over the long term.

I don’t see individual investors having the time, knowledge or energy to make decisions based on what are (for the most part) pretty incomprehensible GAAP financial statements. And insistutional investors? I imagine they are too sophisticated to by drawn into a short-term view of a stock (I could be showing my naiveté here).

Either way, the fallacy of the numbers-by-the-quarter thinking is that investors, by and large, are short term thinkers.

James Surowiecki touches on this issue in far more elegant terms than I can muster.

Hat tip: Paul

A softer landing?

Chalk up a couple more points for those who said the economy may enjoy a softer, than rather have to suffer through a harder, landing. If inflationary pressures are easing at this report points out, then the Fed will be less motivated to increase interest rates.

Also, some signs from the housing market that the worst may be over. To me, this sounds a little optimistic. I wonder if it is more of a signal to the Fed saying if you want the worst to be over, think about dropping those rates.

Monday, December 04, 2006

Acquisitions Happen Quickly, but Integration Is a 'Slow, Steady Process'

So here is part two of the podcast series on Cisco's acquisition strategies. Here we talk about the integration process and I would highlight the word "process" because that is very much how Cisco thinks about acquisitions. Signing the deal is the first step in an acquisition, but the real work begins after the deal has closed.

Cisco has earned its reputation as being a successful acquirer because it puts so much attention on the integration of the new company.

In this podcast, director of integration Graeme Wood talks with Wharton management professor Saikat Chaudhuri about Cisco's integration philosophies and the lessons learned from integrating Scientific Atlanta, Cisco's biggest acquisition to date.

Podcast: Cisco's Graeme Wood: Acquisitions Happen Quickly, but Integration Is a 'Slow, Steady Process'

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Graeme Wood is director of acquisition integration at Cisco, the leading worldwide supplier of networking equipment and network management for the Internet, headquartered in San Jose, Calif. Since joining the company in 1998, Wood has held marketing and business development roles, and in his current position he has overseen the integration of 30 Cisco acquisitions -- the most notable of which is Scientific Atlanta, the Lawrenceville, Ga.-based global provider of set-top boxes, end-to-end video distribution networks and video systems integration. The $7 billion deal, completed earlier this year, allows Cisco to offer an end-to-end data, voice, video and mobility solution for carrier networks and the digital home. During a recent visit to campus, Wood spoke with Wharton management professor Saikat Chaudhuri about how acquiring a global company like Scientific Atlanta fits into Cisco's overall acquisition strategy, and the lessons learned about integrating on a large scale.

Imports Spurring Push to Subsidize Produce - New York Times

“The Chinese garlic totally caught us off-guard and knocked us down,” Mr. Mantelli said recently as he checked on newly planted garlic bulbs. “I think our industry has hit rock bottom. Maybe now we can figure out how to make it a level playing field.”

So Mr. Mantelli has joined the coalition of about 75 growers of specialty crops who have united to grab a much bigger slice of the federal subsidy pie.

I certainly do not want to trivialize the challenges Mr. Mantelli and other farmers face. Farmers, and the goods they provide, are an important part of the past and present fabric of our society. That said, I'm afraid I can't agree with Mr. Mantelli that subsidies will help "level the playing field" verses Chinese agricultural imports. I say this on the basis that subsidies are inherently market-distorting and therefore do the exact opposite of leveling playing fields.

“Things that help farmers band together and compete are not inherently protectionist or harmful,” Professor Morici said. “It is not an unreasonable thing for a fragmented industry to ask the government for assistance to make the virtues of their industry better known.”

Hard to argue with this point, I guess I just don't understand why it has to come in the form of government subsidies. Farmers highlighting the virtues of their industry is a great way to deal with competition, both foreign and domestic, but do they need the input of government to do this?

True, the agricultural industry in China is heavily subsidized and they have an artificially low currency. But subsidies battling subsidies will only distort the market further and prevent real innovation from taking place.

Imports Spurring Push to Subsidize Produce - New York Times