'Trends' Archive
The Mojave Desert is a barren and desolate place. Encompassing the iconic Death Valley in California and adjacent states, the High Desert has inspired generations of artists with its arid, unforgiving beauty, as expressed in U2’s classic 1987 album, The Joshua Tree, and many other works.
The word “Mojave” has lately come to be associated with a barren and desolate corporation from the rainy Pacific Northwest, however. Microsoft hired the advertising and branding firm Bradley and Montgomery to conduct consumer testing of a “new” computer operating system. The subjects were told the demonstration they witnessed was of an OS code-named “Mojave.” At the end of the demo, the subjects were told that “Mojave” actually is — wait for it — Windows Vista! Yes, Vista, the much-slagged iteration of Windows that first shipped 18 months ago and has underwhelmed PC users around the world.
Videos of the demos and reactions are posted at MojaveExperiment.com. All over the blogosphere, this attempt at redeeming the reputation of Vista has drawn widespread derision and scorn.
I’ve been using Windows Vista Home Basic on my personal notebook computer since early last year, and I’ll say I’m still generally happy with the operating system. Sometimes it seems like an overbearing spinster aunt, asking me if I really, truly want to visit that unfamiliar Web site, but you can disable such hurdles. My computing requirements are quite simple, however, and I haven’t had the unpleasant experience of trying to connect an old printer with my Vista-based PC or other horror stories.
At Hoover’s, we’re still using Windows XP Professional (and Internet Explorer 6!), and we don’t seem to have any immediate plans for big changes in our company IT infrastructure when it comes to operating systems and browsers. (A lot of people here use Firefox to take advantage of tabbed browsing and other useful features, things that are incorporated into IE7.)
Whether you think Vista is a blessing, a curse, or something in between, you’ve got to admit this is a curious way for a big corporation to market a controversial product.
We all know that 2008 has been a tough year for banks. But forget the heavy real estate- and mortgage-related losses endured by the big boys; entire institutions are going under. Eight have failed so far this year, and four have been taken over by the FDIC in the last month alone. By comparison, only three banks failed in all of 2007, and none did in 2005 or 2006.
The latest was small Florida-based First Priority Bank, which fell into receivership on Friday. Superregional SunTrust Banks assumed control of First Priority’s six branches and some $200 million in customer deposits. The week before, California’s First Heritage Bank and First National Bank of Nevada were closed by the Office of the Comptroller of the Currency, and Mutual of Omaha took over the banks’ deposits. The most spectacular collapse this year, of course, was IndyMac Bancorp, which was seized by the FDIC on July 11 and filed for Chapter 7 bankruptcy on Friday. It is the third-largest bank failure in US history.
So what happens when the FDIC steps in? It usually does so on a Friday, so it can take care of business over the weekend, and gives no advance notice, as to not incite panic and a run on the bank. Customers with FDIC-insured deposits (up to $100,000) usually can access their accounts as normal (by check, ATM or debit card, or online), or at a branch when the bank reopens on the following Monday, either under FDIC supervision or by an acquiring bank.
We surely have not seen the last of the bank failures. Indeed, the man who some think shoulders some of the blame for the current mess says there are more to come. The FDIC maintains a watch list of around 90 banks that it deems “troubled”. It doesn’t share its list with the public, for obvious reasons, though some analysts have their own opinions about which banks may be included. Most are small institutions, similar in scale to First Priority.
Of course, with everyone so skittish, naming names can get one in trouble too. Ladenburg Thalmann financial services analyst Richard X. “Dick” Bove was sued by BankAtlantic for suggesting that the bank and its parent company BFC Financial could be next to go under.
The world of monoclonal antibodies and genetic testing may seem far removed from the realm of mortgage-backed securities and the other bogeymen of the current credit crisis, but the biotech industry is still feeling the fear. Despite an increasing number of profitable biotech companies, like Genentech and Applied Biosystems, the industry is still dominated by unprofitable start-ups that rely heavily on venture funding and capital from the public markets. And the economic environment being what it is, companies are having a hard time going public or getting attractive acquisition offers from larger life sciences companies.
That leaves the venture capitalists in a bind. Venture capital firms like to cash out their investments – either through IPOs or sales of a company – in about five to seven years. But with “exit opportunities” limited right now, they are having to put more of their money into bankrolling later-stage biotech companies while they wait for a better IPO environment or a juicy acquisition deal to come along.
The good news is, venture firms are still ponying up lots of cash. The MoneyTree report for the second quarter of 2008 (produced by PriceWaterhouseCoopers and the National Venture Capital Association) shows that overall funding from venture capital firms has held steady so far this year. But there is a difference in where all that money is going and what it’s being used for.
According to the report, investment in life sciences companies (which includes both biotech and medical device firms) went down 14% in the quarter. Perhaps more importantly, the amount of money going into later-stage companies – the ones that at another time would probably be going public – has gone up, potentially leaving the next crop of new, innovative start-ups without the money to, well, start up.
So what’s the solution to the capital quandary? Some analysts think that, with the IPO option not available, the life sciences sector will see more mergers and acquisitions in the vein of Thermo Fisher Scientific’s acquisition of Open Biosystems (a maker of RNA research tools) and Invitrogen’s proposed merger with Applied Biosystems Group. Experts are also optimistic about the growth of emerging markets like India and China and the likely increase in funding from government sources like the NIH. But even with those bright spots, early-stage biotechnology companies may have to get creative when it comes to finding the money to fund their innovations.
Friday’s annual meeting of Yahoo! shareholders will be anticlimactic, thanks to a deal worked out last week between the company and activist investor Carl Icahn, who owns about 5% of Yahoo!’s shares.
Icahn called off his proxy challenge, striking a settlement agreement with Yahoo!’s board and management. Basically, one incumbent director will leave the board, the board will expand from nine to 11 seats, and two of the three vacant seats will be filled by Icahn and former AOL CEO Jon Miller, with Icahn to name a third director. (Please let it be Mark Cuban!)
Icahn briefly blogged on the settlement, which is so 21st century, of this aborted proxy battle.
What brought about this rapprochement? As others have noted, one event that may have tipped the balance and caused Icahn to seek a deal was the declaration by Legg Mason the week before that it planned to vote its shares in favor of the management nominees at the Yahoo! annual meeting. Bill Miller, the manager of Legg Mason’s flagship Value Trust fund, loudly criticized Yahoo!’s board and management for scaring off Microsoft, yet decided in the end to go with the devil he knew. Icahn reportedly saw Yahoo!’s institutional investors circling the wagons around the incumbent board and management and apparently decided against suffering a public defeat.
For their part, the Yahoos in Sunnyvale, California, knew they were about to report mediocre results from their second quarter, so they also had an impetus to come to an arrangement with the barbarians at their gate.
This sally by Icahn is looking like his crusade against Motorola — he buys a small but significant stake in the target company, blusters about the sins of the board and management, pulls together a proxy bid, and then calls it off in exchange for seats on the board for him and some cronies. It remains to be seen whether the Yahoo! episode will play out like Motorola did, with the CEO banished and the company broken up.
Meanwhile, the Evil Empire in Redmond, Washington — excuse me, I mean Microsoft — is officially washing its hands of any interest in all or part of Yahoo!, and turning to its own knitting to defeat Google. Knit one, Perl two? (A little coding humor.)
Yahoo!’s not out of the woods, with Congress scrutinizing its search advertising deal with Google and some shareholders still mad about losing out on $33 a share in cold, hard cash from Microsoft. (The stock closed Monday at $20 and change.) Not much yodeling going on at Yahoo! HQ these days.
The Arctic is “hot” again. No, really.
In previous centuries, the expeditions of James Cook, John Franklin, William Parry and others held out an (unfulfilled) commercial promise — an ice-free and relatively short sea route through the Arctic (the Northwest Passage) linking the riches of Asia with the markets of Europe.
Today, melting ice caps and rising oil prices have combined to create a new commercial opportunity in the Arctic. A major geological survey has found that the region might hold as much as a fifth of the world’s yet to-be-discovered oil and natural gas reserves. In a major assessment, the U.S. Geological Survey reported last week that the Arctic might have up to 90 billion barrels of undiscovered oil reserves, and 1,670 trillion cubic feet of natural gas. On its face, this is equivalent to 13% of the world’s total undiscovered oil and 30% of its undiscovered natural gas.
Good news for the governments of the US, Canada, Russia, Norway, and Denmark (through its Greenland dependency) and the numerous oil and gas companies that do business with them. According to Donald Gautier, the chief geologist for this U.S. Geological Survey project (despite a history of contentious territorial disputes) “most of the resources are on the continental shelf in areas already under territorial claims.”
Big Oil already has experience in the Arctic — the development of Alaska’s North Slope in the 1970s brought in such giants as BP, Shell, and ConocoPhillips, all of which currently jointly own and operate the 800-mile long Alyeska Pipeline, which links the oil fields of Prudhoe Bay to the port of Valdez. Russian and Canadian companies have had similar success in exploiting onshore Arctic oil and gas assets in their countries.
The prospect of drilling on the continental shelf in the Arctic raises serious environmental and conservation concerns. Environmentalists fear the addition of industrial activity might help speed the already accelerating melting of sea ice, reinforcing global warming. Conservationists are concerned about the threat of massive drilling to the Arctic’s unique natural systems and wildlife, and the dispruption to the way of life of indigenous peoples.
But the drive for new hydrocarbon sources is strong, and the Arctic has already proven its potential. In the past several decades, more than 400 fields have been discovered in the Arctic, with reserves of more than 1,100 trillion cubic feet of natural gas and 40 billion barrels of oil (or about 10% of the planet’s conventional oil and gas resources).
However, the Arctic is a long way from civilization and new fields may take a decade or more of expensive infrastructure creation to get the oil to market. Ditto the Northwest Passage. Captain Cook’s dream may now actually be a reality. (Last year, the ice-free Northwest Passage across the top of Canada was navigable by large ships for the first time). But with no nearby infrastructure (communications networks, power grids, ports, etc) the viability of a new shipping route, like the commercial availablity of new Arctic oil, is still many years away.