Business Development Diary

Stock is down 25% today due to a bad revenue report: "Online wireless retailer and mobile virtual network operator InPhonic Inc. reported that its MVNO activities, which currently include its Liberty Wireless and Viva Liberty offerings, generated $9.6 million in service revenues during the first quarter of this year. The result was a significant drop from the $12.5 million in revenues the MVNO services delivered during the first quarter of 2004."

InPhonic is a reseller/fulfilment house for 3rd party wireless programs. They cleverly repackaged themselves as an MVNO to cash in on the MVNO craze, and went public on that.

asks my friend Daniel? Although Heller & Friedman on the face of itpaid a hefty valuation to acquire DoubleClick for $1.1 billion (about 40x profits and 3.5x revenue), the deal looks reasonable:

1. H&F basically bought at market value, without paying an acqusition premium (DCLK had put itself up for sale six months ago).
2. DCLK's valuation is comparable to FSTC's (see FastClick's IPO)
3. DCLK's seems poorly managed making scant margins of 9% on what should be a very scalable business.

The guys at H&F are probably thinking that with a one-two punch of cleaning out the old .com management and coming up with some text-based ad serving they can get a valuation similar to GOOG. GOOG is trading today at 90x on profits (OK 40x on a forward basis) and 16x revenue. What this really tells us that GOOG is profitable as a conventional business - so if the H&F team can lift the DCLK margins from their current anemic 9% to even halfway close to GOOG's 19%, they will be laughing all the way to the bank.

Bonus question - are GOOG's margins too low?

Just like a reality show! Every entrant into local search has to come up with a special twist. A9's local search attempt is based on showing images of the storefront. They did a phenomenal job of automated video capture. According to their marketing blurb they now havemore than 14 million business listings and over 26 million pictures of storefronts and businesses.

Another gem from Om Malik's blog:

"I don’t care about that lipstick and rouge you paint that bitch up with, she’s still just dead meat lying on the sofa, threatening to steal the show,” Monaco quoted the worker, Bill Collins, as writing in an e-mail to Yeager and others."

Monaco is the DA prosecuting the Enron snake-oilmen. Om has a very good book out on the telecom bubble (what a nice word for fraud).

Om Malik wonders whether Tetris is really worth $137 million? That's what Jamdat paid for a 15 year license to the venerable game, the Pong of PC gaming. I wonder what the value of Lotus was when they first came up with 1-2-3.

From Om Malik's blog:
"Now I love Tetris as much as the next guy, but I won’t pay $137 million for it. But Jamdat would, and did! MobilePlaya points out that “Tetris could be the perfect mobile game,” and lauds the Jamdats’s $137 million purchase of Blue Lava Wireless. The deal gives Jamdat a 15-year worldwide license for all Tetris properties. Jamdat is flush with cash these days it seems."

And don't forget that Tetris rulez! The top selling app in the UK for the last 12 months.

Om Malik reports that Jamdat just bought the rights to Tetrisfor $137 Million.

His comments:
"Now I love Tetris as much as the next guy, but I won’t pay $137 million for it. But Jamdat would, and did! MobilePlaya points out that “Tetris could be the perfect mobile game,” and lauds the Jamdats’s $137 million purchase of Blue Lava Wireless. The deal gives Jamdat a 15-year worldwide license for all Tetris properties. Jamdat is flush with cash these days it seems."

"The downloadable games market is going to be about a billion dollars in 2005. According to M:Metrics, nearly 33 percent of US wireless subscribers play a game on their handset at least once a month, nearly 10 percent play at least once a week. Jamdat has an estimated 25 percent of the US market, owning the pole position. Arcade puzzle games represent 33 percent of all the wireless games played–hence everyone’s sudden interest in titles like Tetris."

Over lunch recently Michael J. told me to bone up on IMS - IP Multimedia Subsystem. He thinks it's going to be the next big thing for telcos - speak the language or they'll dismiss you as not getting it. Here's a handy dandy guide from Light Reading: Light Reading - Networking the Telecom Industry. As they say, not only it's important, "but also very, very complicated and pretty abstract."

TimesTen Real-Time Review: Telecom Insider: IP Multimedia Subsystem: "IP Multimedia Subsystem (IMS):
The Hottest Acronym in Telecom for 2005?"

The US places 17th (in a twelve way tie - they could have been 29th!) in the International Collegiate Programaing Contest. Anyone who is surprised should go spend some time in an American high school. Ought to check out the problem set - WARNING - this is a big PDF.

To the carpers who say, "who cares about computation programming, UI is the only thing that matters" - just look at the cars produced by Detroit and you know Johnny can't design either.

We're in trouble here ...

In the UK they are now compiling charts of top selling mobile games. Would you believe, Tetris has ruled mobiles for the last 12 months, claiming the monthly top seller spot no less than eight times!

Source: Mobile Games Analyst

"Most of the companies making games for mobile phones have got it wrong, says Trip Hawkins, founder of games behemoth Electronic Arts."

Trip's point is another of default thinking, we're trying to make games on the cellphone do something that other gaming platforms are doing. So in the end we have a "gimpy Gameboy" (I like that quote) or an underpowered e-mail client. He's right. Mobile games need to be based around the core differentiators of a phone - so voice and messaging. And no, phone tag is not a game that people will pay for ...

You thought those T-Mobile ads of people fainting when they saw their cell bills were funny. This $9,000 cell phone bill is for real. This poor dude's phone was synchronizing his Outlook every 15 minutes! Nice move AT&T Wireless!

Scott Jenson claims that the poor performance of mobile data services (e.g. WAP) is due to default thinking. I agree with him.

Jenson knows design, having led the design team for Symbian's UI, and the Apple Newton before that. So he also has a first person understanding of failed/ahead of their time technologies. Scott's view is that

"with WAP and MMS today we are at the same stage as at the birth of motion pictures. The first moviemakers nailed cameras to stages. Cinema didn't blossom until D.W. Griffith used close-ups and sophisticated editing to invent the language of film. The same kind of thinking has prevented WAP and MMS from replicating the accidental success of texting."

Computerworld | Sprint sees advertising-supported mobile services: "Sprint sees advertising-supported mobile services

Stephen Lawson, IDG News Service

20/04/2005 09:53:47

Sprint sees many new opportunities emerging in mobile data services in the coming years, among them the chance to sell advertising on its mobile entertainment offerings, a company executive told a wireless conference on Tuesday.

'It's inescapable that that's a great opportunity over the long term,' said Paul Reddick, vice president of business development, strategy and planning at Sprint PCS, the carrier's mobile division.

Sprint offers games, TV and other mobile content today that is fully supported by customer fees. It's not clear yet what form advertising might take, whether commercials inserted into shows and games or some other delivery method, Reddick said. He spoke on a panel discussion at the Wireless Ventures conference in Redwood Shores, California.

The carrier, which agreed late last year to acquire mobile operator Nextel Communications, also sees strong potential for location-based services and the use of handsets as electronic wallets, Reddick said. However, new data services aren't yet a big magnet for subscribers, he said.

The ability to locate a subscriber's handset clears the way for practical applications such as finding friends, tracking family members or a fleet of company vehicles or locating a misplaced device, Reddick said. Nextel, an early provider of location-based services, excels in this area, he said."

Interesting but single sample size comparison of local search engines. The results:

1. Yahoo
2. Google
3. Ask Jeeves
4. AOL
5. A9
DNF: MSN

That's Om Malik's term this wonderful melange of the Google Maps UI and the surreal Bay Area housing market. Click here to see more $1 million shacks than you would have thought possible.

Yahoo!/FindWhat Patent Dispute Headed for Trial: "The patent-infringement suit filed by Yahoo!'s Overture against FindWhat.com is heading for trial later this month, after surviving the latter firm's efforts to have the case dismissed. A decision in the case could settle once and for all the issue of who owns the bid-for-placement technology that has fueled the paid search advertising boom."

With MVNOs all the rage, now people are talking about MVNEs. For the unitiated, a MVNO is a wireless carrier without a network (but still a carrier with all their crap like shipping, activation, billing and worse of all Network/IT people). An MVNEs is a light-weight version, something that years ago we would have called a branded reseller ...

Want to know more - read this

These investment bank analysts are at it again. Goldman Sachs now has "predicted" that the price of crude could spike to $105/bbl. Actually read the report, though, and see how confident they are:
"'Our new $50-$105 per (barrel) super spike range perhaps conservatively corresponds to gasoline spending in the United States that reaches 3.6 percent of forecasted GDP, 5.3 percent of consumer expenditures, and 5.0 percent of personal disposable income."

Bloomberg then quoted the analyst (not the report), saying that
"assuming gasoline spending needs to reach 1970s levels to destroy demand, its upside super-spike estimate would be $135 per barrel for New York crude."

Perfect. So the price of oil could stay the same, or double, or triple, and it's all within their forecast. My read, by the time the analysts are predicting a price run-up, it's time to short.

So I bet a friend that the price of NYMEX crude will be less than $100/bbl this day in 2010. If I win I get paid today's price of an ounce of gold in currency, if I lose I have to deliver an ounce of gold.