SiliconBeat

This morning, Reply.com of San Ramon announced it had filed its prospectus to go public. Just over the weekend, I wrote a column about how Silicon Valley would be better off with fewer IPOs.

This is just a hunch, but after reading through the filing, I can’t help but think the company is really angling for a sale, rather than an IPO. Time will tell, but this looks and feels like a company that needs an exit soon. And given the numbers and history, I’m betting they’re hoping to attract interested buyers. If they get all the way to the IPO, I’ll be a bit surprised.

Here’s why: Read the rest of this entry »

One of the most significant trends I’ve been watching over the past decade is the dramatic drop in public companies in Silicon Valley. Naturally, that number was artificially inflated during the dot-com bubble when it reached 417 in 2000. For our purposes, Silicon Valley includes San Mateo and Santa Clara counties, and the southern half of Alameda County.

But the number of public companies has dropped for nine straight years now. Even when IPOs briefly reappeared in 2006 and 2007, they weren’t enough to overcome the net loss of public companies through acquisitions or bankruptcy.

In 2008, the number had fallen to 261. We just updated our records and the latest figure is 241.

That’s not just less than the dot-com era, that’s well below the 315 public companies the valley had in 1994 when the Mercury News started keeping track.

Here’s why I think this is a big deal.

Read the rest of this entry »

If you missed it, over the weekend we ran my look at Hewlett-Packard’s massive job cuts over the past decade: 75,505.

I have a few other stray thoughts that didn’t make it into the main story. And a few questions I want to follow up on in the coming weeks.

First, the stray thoughts.

Read the rest of this entry »

Google Buzz is here. And the big question is this: Can Google finally get in the social game? After playing around with Google Buzz for a bit today, I’ll say the jury is out for me. But I have a few thoughts, and will have more after I’ve played with it for a few weeks.

The first impulse I have is to fight is the despair over creating and learning a new social networking tool. Facebook and Twitter work well for me, despite some imperfections. I won’t say there isn’t room for improvement. But any new service has to clear a pretty high barrier to become part of my daily routine.

After digging in and following a few friends on Google Buzz, the next thing that strikes me as interesting about Google Buzz is how much it mirrors the approach to social that Yahoo is taking. And there’s something I wouldn’t expect to be writing: How Google is following Yahoo. Read the rest of this entry »

We learned in late December that Yelp turned down an acquisition offer from Google reported to be worth $500 million. Yelp then raised $25 million from Elevation Partners, with another $75 million possibly coming down the road.

It may need that money to ward off Google, which is ramping up its local advertising offerings. The new service places Yelp directly in Google’s scope. And I wonder if it won’t lead Yelp to regret not selling when they had the chance.

Read the rest of this entry »

Noah Wyle as Steve Jobs and Anthony Michael Hall as Bill Gates

A few months back, I noticed a bunch of folks tweeting about the 1999 made-for-TV-movie “Pirates of Silicon Valley.” I remember hearing about the movie just as I was moving to Silicon Valley that year, but never got around to watching it. I had heard mixed things about the movie, and its accuracy, but the tweets seemed pretty positive, so I decided to rent it and see for myself.

It exceeded my tremendously low expectations. Though as far as factual accuracy, it’s hard to say where truth ends and creative license takes over. The movie hits some of the high points of the emerging battle between Microsoft and Apple as told through the stories of Steve Jobs and Bill Gates. And narrated by their wingmen: Steve Wozniak and Steve Ballmer.

There’s an amusing scene, about 20 minutes in when Wozniak and Jobs walk out of the famed Homebrew Club in 1976, having triumphantly demonstrated a version of their personal computer:

Jobs: “IBM is going to be loading in their pants!”

Wozniak: “Steve, I don’t think IBM even knows who we are.”

Jobs: “That’s okay. Because they’re the enemy.”

And later, in a conversation with John Sculley:

Sculley: ”Steve, I’m worried. About what’s happening. All the “them versus us” stuff. Macintosh versus Apple II.”

Jobs: “You don’t understand, John. People need a cause.”

Creative license aside, back in the late 1970s, and the early 1980s, Jobs had enormous power and the ability to impose his will. If you wanted to play with Apple, you did things Jobs’ way. And he wasn’t afraid to define his enemies and go after them (IBM, Microsoft). That is, until he was ousted in 1985 and Apple began its long, slow decline. And even after Jobs’ return in 1996, Apple was just happy to still be around, even striking a deal with Microsoft to invest to keep it going.

Apple’s clout has grown steadily over the past decade, thanks to the success of the iPod and the iPhone. With the iPad announcement a week behind us, it seems the the gadget itself may turn out to be less interesting than some of the things it tells us about the state of Steve Jobs and Apple. With the iPad, it appears that Jobs is confident that he’s once again in a position to dictate terms and define the opposition in a way he hasn’t been able to since the early days depicted in Pirates of Silicon Valley.

You could feel this renewed swagger when Apple announced it recent earnings. Jobs said in a press release:

“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” Jobs said. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”

That was a not-so-subtle reminder of Apple’s financial strength. Consider that Apple has closed the gap in terms of market capitalization with Microsoft. This is from Silicon Valley Insider last November:

“In May 2000, Apple’s market capitalization was $17 billion. Today it’s $182 billion. Meanwhile, Microsoft was around $356 billion in May 2000. Today it’s around $261 billion.”

By the way, Google’s market cap is $171.73 billion as of mid-day Wednesday.

Since the release of the iPad and iTunes, Apple has had the music industry under its thumb. And with the iPhone, Apple was able to change the balance of power between device makers and phone companies. But with the iPad, let’s look at the new ways Jobs is flexing those growing muscles:

Read the rest of this entry »

Over the weekend, my column looked at the remarkable growth in Google’s lobbying operation in Washington, D.C. In just four years, Google has become the valley’s second largest company when it comes to lobbying expenditures.

Naturally, I left out a some details. While the story focused on money, there are other ways Google has been trying to extend its influence. And their adoption of these strategies shows how quickly the company has become savvy in the ways of Washington.

Let’s run through a few of these.

Google’s lobbying team includes the usual requisite of former government officials from agencies that have been having an impact on the company’s business. The lobbying team includes former employees from the Justice Department, Treasury, the FCC, and Congressional staffs, according to the Center for Responsive Politics.

One of the interesting things you can see from that data at CPR’s OpenSecrets.org is the growing range of issues that Google is lobbying on. In 2009, the top issues included advertising, energy, trade, telecom and anti-trust. Of those, only trade was listed among Google’s issues in 2005. And the list of agencies and branches of government that Google lobbies has grown extensively.

Of course, it’s no surprise that anti-trust is near the top of the list of issues. Just in the last couple of years, Google faced this anti-trust inquiries with its acquisition of DoubleClick, saw its search deal with Yahoo scuttled, and now faces a review of its plans to buy AdMob.

Google has also been savvy about hiring former government officials in non-lobbying positions. For instance, in 2008 and 2009, the U.S. Securities and Exchange Commission was concerned about some of the ways Google was accounting for various costs related to traffic acquisition, and also had questions about whether the company was being transparent enough on some issues such as whether or not it was disclosing enough information about letting a large group of contractors go. These questions were all resolved without the SEC taking any formal actions. The Google official reponding to those questions? It was Mark Fuchs, Google’s vice president of finance and chief accountant, who used to work at the SEC.

Going in the other direction, several Google employees have gone to work in the Obama administration:

• Andrew McLauglin, former Google policy chief, serves as Obama’s deputy chief technology officer.
• Katie Stanton, former principal of Google’s New Business Development team, is now Obama’s director of citizen participation.
• Sonal Shah, a Google lobbyist and head of global development issues at Google.org, served as an adivsor on the Obama transition team. She previously worked in the Treasury Department.
• Sumit Agarwal, Google’s head of mobile product management, will become deputy assistant secretary of defense for outreach and social media in the Office of the Assistant Secretary of Defense ,it was announced last week.
• CEO Eric Schmidt is a member of President Obama’s Council of Advisors on Science and Technology.

In addition, Schmidt has become chair of the New America Foundation, a non-partisan Wahshington think tank. That’s a lot of involvement in D.C. for a guy who told the Washington Post last fall he doesn’t care much for the scene:

As for Google’s relationship with Washington’s power structure, Schmidt said the tech industry is still not as strong as others in its lobbying representation on Capitol Hill, but that that’s fine with him. Google, and the tech industry, does better for itself when it focuses on ideas and innovation — and not politics, he said.

“The part of politics in Washington that’s ‘who you know’ and all that kind of stuff, it’s just not very interesting,” he said.

The company has also established a summer policy fellowship where it funds about a dozen or more undergraduate and graduate students to work with various policy organizations. Those include some that have found themselves on the opposite side of issues from Google. For instance, last summer, Google paid for one Wisconsin student to work at the American Library Association, an organization that has been opposing the company’s plans to scan books.

As I noted in the column, none of this is illegal, or unusual. What bears watching is how Google uses this growing influence. There are a lot of issues where I agree with them, and am glad to have them fighting. But there are others where I disagree (i.e., book search)

But when it comes to Washington msucle, you certainly can’t call them the underdog anymore.

Last fall, the Financial Accounting Standards Board (FASB) approved changes to the way many high-tech companies will recognize revenue. We saw the first of what will be many earnings reports affected by this when Apple reported on Monday results of its fiscal first-quarter earnings.

Other companies likely to be affected include such heavy weights as Cisco Systems and Tivo.

Often such changes take months for companies to adopt. And in this case, companies have until 2011 to adopt them. But this one is different because it will give companies a significant bump in short-term revenue. So many are racing ahead. As such, investors need to watch carefully to see if a company adopted the new standard, and if they reconciled old numbers to take the new standard into account.

On Monday, Apple disclosed the accounting change up front for this year, and also adopted it retrospectively for the past two years and reconciled past earnings in an amended annual filing. Companies are not required to do adopt it for past years. So good for Apple. Many companies may only make the change going forward, making comparisons harder.

This change is not trivial. To see the impact on revenue, look at the revised numbers from years past. The change bumped revenue for Q1 2009 (last year) from $10.2 billion (0ld) to $11.9 billion (new). As far as I can tell, the company didn’t disclose what the current quarter revenue would have been under the old standard.

Still, that didn’t stop the company, in a press release, from crowing about the big numbers:

“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” said Steve Jobs, Apple’s CEO. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”

That’s true. But under the old standard, Apple’s annualized revenue wouldn’t be quite as high. It would probably be four or five billion less, though still over $50 billion.

So what’s going on? For the details, read on. Read the rest of this entry »

Boy, is that an understatement.

I have been learning that lesson all week since we published my story Monday on  “Why we didn’t get a Wii for Christmas.” The story, which I figured was a pretty innocent tale of my family’s decision, has sent some members of the gaming community off the deep end. Read the rest of this entry »

Looks like it’s full steam ahead for Google. Revenues rose 17 percent to $6.7 billion. Non-GAAP earnings jumped 35 percent to $2.2 billion.