We touched on this story in Opening Bell so we won’t spill too many pixels on it now. Suffice to say, we’d all heard that General Electric was looking for a partner to buy Dow Jones and defend its CNBC property against the challenge of a Fox Business Network-Wall Street Journal combination. But we didn’t think much of it.
Sure, Microsoft was a natural partner, having built MSNBC with GE. And while Microsoft isn’t eager to become a newspaper publisher, maybe they’d want to get in on Dow Jones strong web presence. They used to have a taste for this sort thing, right? Until very recently, CNBC’s entire web presence was tucked away in a little corner of Microsoft’s MSN.
But that was then. This is web 2.0. The big players in the internet space aren’t so enthusiastic about creating content these days. And certainly not for paying people to create content. It’s all “user-generated” and “social networking” all the time—think MySpace, YouTube, and even Last.fm. Even CBS’s purchase of WallStrip might morph into something more sophisticated if they let a million WallStrips bloom and do for finance user-videos what FunnyOrDie is doing for comedy. Microsoft has the cash but not the desire to own Dow Jones.
The implausibility of all the “competing” deals that are currently “on the table”—none of which have actually gone through the trouble of being competitive with News Corp’s $5 billion bid and which are not actually on any tables—actually make Murdoch’s bid more likely to succeed. The Bancrofts, having very publicly declared a willingness to sell, must now look around and wonder: is that it? And, yes, it seems that it is. Last week we had Murdoch at 80%. At the start of this week, post-Microbalk, he’s reach 85%.
Microsoft
- Posted in:
Bancroft
Murdoch Meter Reaches 85%: Microsoft Balks At Bidding For Dow Jones
By John Carney
Google, the company that’s trying to catalog every word that’s ever been bound, reads your email to provide advertisements and doesn’t have a problem with displaying the street-level view picture of 44th and 8th just as you were walking into Peep World to ask directions (what are the odds!) on its site, draws the line at an operating system’s ability to scan your hard drive.
Google wrote a 50-page antitrust love letter to the Justice Department outlining how Windows Vista looks at all the porn on your computer through its desktop search feature. Google also has some problems with Vista’s destroy Google “integrated search” customization and the indexing of desktop files. Google’s specific complaints, from the Wall Street Journal:
In its April white paper, Google alleged that Microsoft didn’t allow search bars in Vista that consumers can use to initiate searches to work with desktop-search software other than Microsoft’s, said lawyers familiar with the matter. In addition, Google argued it was practically impossible for consumers to turn off the indexing feature of Microsoft desktop-search software that catalogs users’ files, which meant a computer’s performance was slowed down if it used a second desktop-search application.
Google has a long history of getting bored enough to try and cause some legal troubles for Microsoft, usually by taking the antitrust angle. Last year Google claimed that Microsoft was pushing its web search feature by using its influence in the over the browser software market to the detriment of competitors. Microsoft doesn’t plan to do anything about any of this, as Google continues to plan “the invasion” phase of its business plan.
Google Intensifies Microsoft Fight [Wall Street Journal]
Officially it’s being called an 85% premium from where the stock traded yesterday. But since aQuantive’s shares were trading below $30 a few short months ago—before Google’s acquisition of DoubleClick started a frenzy of speculation about who Microsoft might acquire to get into the internet advertising business—it might be fair to say that the premium is closer to 105%.
Any way you look at the numbers is mind boggling. It’s ten times sales. It’s 45 times cash flow. It’s $6 billion.
It’s hard to make sense of this deal except to look at it through the eyes of Don Lapre.
That’s right. That Don Lapre. The man who brought us the Money making System and taught us all how we were going to get rich. Three words: Tiny classified ads.
His earnest enthusiasm provided a lot of laughs around the dorm room but the campaign also brought him a lot of criticism from those who thought his multi-level marketing plans were pyramid schemes or scams designed to separate the gullible from their money.
As it turns out, Don Lapre was just ahead of his time.
Microsoft snaps up aQuantive for $6 billion [MarketWatch]
Take the fairly simple premise that you aren’t allowed to put pictures of canines in your workplace because Bill Gates had nights terrors after watching Cujo, add Valleywag, and you get CONTROVERSY. Valleywag heard from a friend who heard from another friend that you aren’t allowed to put pictures of dogs in your workstation at Microsoft. The justification from Microsoft, according to the source, was that “some people just hate dogs, yo” without any explicit allusion to the Muslim belief that dogs are inherently unclean. Does anyone have any more dirt on this (tips at dealbreaker dot com)? Is this a first in the American workplace – in terms of banning something so innocuous and fundamental to the general aesthetic of your assistant’s cubicle? Is Microsoft instead controlled by ancient Egyptians (i.e. – aliens) and is anti-dog out of reverence to cats, or an aversion to the death cult of Anubis? Is this just Valleywag pulling a “Calcanis wants Imus to start a new media network” on us?
Dogs at work – [Valleywag]
Apparently this is a very old story but it’s one that’s news to us: Warren Buffett and Bill Gates eat free at Hooters for life. Last October, the story goes, Warren and Bill had the excellent adventure of hanging out with Berkshire Hathaway’s board of directors at Hooters.
As far as we can tell, this story and the photograph are for real.* Strangely, Warren Buffett does not return our phone calls.**
We’re sorry we didn’t bring this story to you earlier. We’re totally firing the intern we have assigned to monitor the Hooters website.
Oh, and Warren is totally working on the railroads these days, too.
* Editor’s Note: But who knows? It’s amazing what the kids can do with photoshop these days.
**Note to Liz Claman: Put a good word in with Warren for us. We’re not exactly sorry we asked whether he was going to Hell but we don’t think a good inquiry into the damnation of his soul should really get between us. After all, we were good enough to print his response!
World’s Two Richest Men Can Eat for Free at Hooters [Hooters]
- Posted in:
Amaranth
How Bill Gates Made Long Term Capital Management’s Meltdown Worse
By John Carney
We can’t believe that this is the first time we’ve ever heard this story. The basics are known to everyone. Long Term Capital Management, the now infamous hedge fund started by the real-life characters from Michael Lewis’s Liar’s Poker, collapsed dramatically in a very short period of time when bond spreads moved in an unlikely way against their positions. LTCM was so levered up that its collapse provoked fears that it might “bring down the financial system.” Then-Fed chief Alan Greenspan stepped in to organize a Wall Street bailout of LTCM. It was a scary spectacle for those involved and those merely watching.
Now comes the story that all of this might have been unnecessary. Or at least the meltdown might not have been quite as scary as it was because apparently Warren Buffett was ready to ride to the rescue, scoop up LTCM’s bond positions and save them from the margin call squeeze. Except that Bill Gates had invited him to go on vacation, so the whole thing never got done.
Here’s Jeremy Siegel telling the story:
The LTCM crisis was a ready-made example of Warren’s philosophy of buying firms when the economics was right, yet fear ruled the markets. He noted that “off-the-run” (non-benchmark) government bonds were selling to yield 30 basis points more than the “on-the-run” (benchmark) bonds that were maturing just six months later. He rightly claimed that this made no sense economically.
LTCM had taken a huge leveraged position in these bonds when the spreads were much smaller, but didn’t have the collateral to hold on to it when the spread widened. Buffett quoted John Maynard Keynes, who wrote in 1931 that “The market can stay irrational longer than you can stay solvent.” As the spread widened, Keynes’ dictum became devastatingly relevant for LTCM. But Berkshire, with its huge cash hoard, could withstand the pressure of even more market irrationality before the spread eventually returned to normal.
Unfortunately, Warren was never able to consummate the deal. He had been invited by Bill Gates to vacation in Alaska when the crisis broke and it was hard to negotiate such a deal on a cell phone… “Bill Gates cost me about $3 billion,” he shrugged.
Uhm. Wow. Imagine what would have happened if Citadel’s Ken Griffin had an art museum date when Amaranth faced a similar margin-call, collateral squeeze following Brian Hunter’s misadventures in the natty-gas futures markets. Citadel reportedly lead the charge to buy up Amaranth’s energy trading positions in a move that many credit with helping prevent the “contagion” from the Amaranth meltdown from spreading. I guess we should be glad that gerbils don’t need vacations.
Buffett Wisdom [Yahoo Finance via Marginal Revolution]
Roger Ehrenberg has an exhaustive (and exhausting to read, because we don’t function before 8 am, though job constraints dictate otherwise) analysis on the debut of the Vista and, moreover, the Bill Gates-Steve Jobs celebrity death match ’07. Seems, in spite of questionable business ethics, Mock Turtleneck is beating Four-Eyes by a landslide. Why? Because Steve Jobs is young, fun, and marketable to law abiding and non-abiding citizens alike. Whereas Bill is behind the times, transparently resentful, and cranky (RE likens him to Glenn Close in Fatal Attraction, which we kind of get but don’t think is the part Bill’s playing so much as Jennifer Jason Leigh’s a la SWF). Take, for instance, last week’s interview with NewsWeek:
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