Fred’s Mind

http://checkoutblog.com/entries/2008/5/29/the_incredible_shrinking_laundry_deterg.aspx

Ever since finding it, I have absolutely loved the Walmart blog, and find how amazing a transformation in how I feel about the company came about because of it.

Prior to the blog, I always thought of Walmart as the big scary store. It is out to pay low and make profits purely based on size. Yet, reading the blog, you can find all the good things they do too (like this particular post about detergent). It is great to see a company use their power (buying power) both for good and evil. The good probably doesn’t come out nearly as often as it should.

For those in the industry, this graph has been making the rounds today.
You can find Pubmatic’s own view of it here:http://www.pubmatic.com/adpriceindex/index.html

Everyone has their opinions of this; some say this is bad sign for Pubmatic, others say its a sign of the economic times.

So what is my opinion? I think the data just isn’t clear enough. You cannot convince me that the cratering of cpms from .38 to .18 in single month is actually a real drop. Do you really think that the large sites with the dedicated work force could not sell half of what they had been able to sell only the previous month? This just says to me there is something wrong with the data. My suspicion would be some new large users who are low performance sites. A single large publisher with low cpms using the system can easily cause this drop without adverse affects on others in the column.

The interesting piece is the 1.29 number. How is this coming about? Why is it so much higher than large sites? I don’t buy the idea that its because advertisers are buying niche. Quite frankly, 1) advertisers are still quite weary of small sites and more importantly 2) there is just not the capability for an advertiser to target niche sites they are looking for.

So, before people read into this graph too much. Remember, while 3,000 seems like a large number, it is a tiny fraction of the internet. To make anything other than broad judgments on this data is overreacting.

Curiosity piqued, I wanted to go and compare what happened in the Oracle BEA case versus Microsoft and Yahoo.

Oracle offered 25% premium over market price at $17 per share, it was considered low by BEA.
After some public fighting.
The final buyout price was 19.375. Which made the total over premium about 40%.

On the other hand, Microsoft offered $31 per share at a 62% premium. At the $33 they were willing to pay, it would be about 73% premium, at the 37 asked it would be 94% premium. In other words, if they ended up aroudn 34-35, it would be a similar increase in premium price (~15%).

So, in the end, is the problem just that Microsoft’s initial bid was too high?

In alternate reality land,
Microsoft offers at a $29 price for 52% premium. Eventually leading to a $33 deal.

50% is a high premium (see EA’s bid on Take Two), and I don’t think anyone would have blinked an eye at such a number.

Here’s my take:
Balmer wanted to close the deal fast. He figured, instead of going through a protracted and lengthy buyout discussion, he’d just circumvent it by offering essentially what the final price would be. Surprising to Balmer, not surprising to everyone else, Yahoo didn’t want to take the first offer.

From here, you can see why everything played out the way it did. Balmer thinks his offer makes perfect sense and refuses to outbid himself. Yahoo thinks if Microsoft is willing to pay this much, clearly they must be worth even more than that.

So where does that leave things? The big winner is GOOG. YHOO and MSFT are doing enough by themselves to sabotage their chances of winning without GOOG needing to jump in.

YHOO may do well, supposedly Panama is on its way up. The display product (AMP!) isn’t half bad (though not half good either), and hopefully will become a base for all display across the internet (though at the rate they are bleeding talent, I wouldn’t hold out hope here).

MSFT is exactly where it always has been. If they take my advice, they’d just start hiring all that talent that Yahoo is bleeding. Live, Hotmail, MSN aren’t bad brands. They aren’t winning, but they aren’t unknown to the average user. Internet Explorer is still the dominant web browser. If they were buying YHOO for the talent, and the talent is leaving in droves, they could just buy up the talent. Start with one or two good guys and let the good ole networking effect take over from there.

So, at this moment, Yahoo is at 24.08.

It looks like the stock hasn’t plummeted as far as people feared it would. Looks like there is still hope out there for an Oracle-BEA situation.

So, my thoughts as an ex-yahooer.

I feel bad for a lot of my former coworkers. There was a lot of uncertainty recently, and now they won’t even be getting their double-triggers. I am hoping for their sake it is the Oracle-BEA situation.

On the plus side, they no longer have to fear their project (AMP!) is going to get scrapped.

I would love to hear from existing yahoo-ers about their thoughts on all this.