Thank you Nathan Myhrvold!

I’ve detailed some of my misadventures at Real, the sometimes insightful but usually activism-masquerading-as science water cooler for folks who buy the notion that human-caused global warming (aka “AGW”) is on a rampage that is increasingly likely to end with the destruction of global civilization as we know it.

My greatest frustration at RealClimate is the bizarre  comment moderation policy, which effectively squelches most informed dissent in favor of “supportive” comments from the regulars.    My reasonable comments have so often been zapped out that I don’t post there anymore – it’s a waste of my time (and theirs!) to compose a thoughtful reply only to have it reviewed by a climate scientist who takes some offense by people less interested in parroting the party line than questioning some of the nuanced, globally warmed interpretations of proxy data.

But I digress…

Enter Nathan Myhrvold and the fun new book “SuperFreakonomics”, which was  the subject of RealClimate’s spurious attack piece of the week by Raypierre:

The problem wasn’t necessarily that you talked to the wrong experts or talked to too few of them. The problem was that you failed to do the most elementary thinking needed to see if what they were saying (or what you thought they were saying) in fact made any sense.  If you were stupid, it wouldn’t be so bad to have messed up such elementary reasoning, but I don’t by any means think you are stupid.

Levitt’s reply

Now, it’s one thing to make a case that a bunch of whacky bloggers or frothing-at-the-mouth fools like Glenn Beck don’t understand the issues surrounding Global Warming, but it is ridiculous to make this case against a guy like Myhrvold who has both the business credentials and academic ones to suggest he’s very well informed.  He was Microsoft’s Chief Tech Officer and he is the founder of the globally respected “Intellectual Ventures” think tank.   He’s also got the academic chops to debate these issues thoughfully:  Master’s degrees in Geophysics/Space Physics and in Mathematical Economics and a Ph.D. in  Mathematical Physics.

Here’s Myhrvold’s reply which includes this real nugget of wisdom:

One of the saddest things for me about climate science is how political it has become. Science works by having an open dialog that ultimately converges on the truth, for the common benefit of everyone. Most scientific fields enjoy this free flow of ideas.

The good news is that some good scientists who do NOT have a political agenda are (finally) starting to speak out forcefully when attacked by those who do.   The end game is already obvious because reason tends to prevail over ranting.  We should soon soon see the alarmist rhetoric die down in favor of real discussion of real issues, and as we do let’s tip our hats to Nathan and others who are willing to simply state the obvious, regardless of the political implications of doing that.

Microsoft’s Vision of 2019

Thanks to Long Zheng for this post at his blog “” about a couple of Microsoft Videos showcasing the MS vision of gadgets and interactions in the future.   The shorter video is neat but it was a sequence in the long one that really, REALLY got my attention.    Using surface computing (which is already a robust application), on a transparent wall, two kids in classrooms thousands of miles away from each other were reacting in real time and in *different languages* as their voices were translated instantly for the other student.    The technology driving this application is pretty much here now although I think there’d be some challenges making it work as fast as in the video, but  this is the kind of stuff that is so provocative, powerful, and cool that it brings a technology teardrop to my eye.

In a world challenged so dramatically by a combination of ignorance and misunderstanding, how much progress could we make with technologies like this that cross connect people and cultures almost seamlessly?      Obviously we have a long way to go and this is technology for the rich folks among those in our global family, but as these technologies penetrate into affluent or lucky schools the appeal and testing will continue until we can have much wider distribution.

Microsoft to Aquire Yahoo Search for 20 Billion… or not?

While the Times of London is reporting that Microsoft is close to announcing a Yahoo search aquisition at 20 billion with a slew of details suggesting they have a lot of inside information, Venture Beat is suggesting this might be a bogus report as they’ve been told by a key player in the deal, Ross Levinsohn, that he knows nothing of this.   Although it’s possible Levinsohn is … covering for the deal it seems odd he’d issue a flat denial if there was something to the rumors.

My wild guess is that the Times had a hot tip about one of the dozens of potential deals that are surely percolating around Yahoo as the stock (and thus buyout value) dips to very low levels, and that they ran with it rather than spend much time researching.   This has become a major pitfall of “real time” media, where there is increasing pressure to shoot first and hope your story is correct later.   Another possibility is that this is a carefully contrived rumor to pump and dump the stock on Monday – without more denials this is likely to spike Yahoo a few bucks or even more Monday morning.

Disclosure:  Long on Yahoo

Yahoo Shareholder non-meeting

Today Yahoo Shareholders are meeting in San Jose.   Or maybe we should say non-meeting since there are apparentely mostly empty chairs and uneaten pastry in a venue that was to hold 1000.

With shares now trading about $19 you’d think shareholders would be out in force with torches and pitchforks, but Yahoo management – at enormous cost to shareholders and the company – has kept the corporate raiders and Microsoft at bay partly by granting a newly sheepish Carl Icahn a seat on the board and two more seats.     Icahn noted last week that enough large shareholders were sticking with the current board, making it impossible for him to take over the company.     His plan was fairly simple – buy a lot of Yahoo and then sell the company to Microsoft at a huge profit.    As a shareholder I remain  *totally* confused as to why large shareholders were unwilling to support this move – the obvious choice in terms of maximizing shareholder value with minimum risk.

However with challenges come opportunities.  Yahoo at $19 is looking pretty ripe right now given that Microsoft offered $31 just months ago when Yahoo’s prospects were not significantly different than they are right now.    Either MS is horribly miscalculating Yahoo’s value, or the Market is underestimating that value.     Clearly the current board is convinced there is a lot more value, and in this at least I would agree with them.

It’ll be interesting to see how the rank and file Yahoo folks are feeling at SES San Jose in a few weeks.   SES is the biggest search conference of the year in the heart of Silicon Valley, and hundreds of Yahoo folks will be there.  It will be interesting to get a feel for the current morale challenges at the company.

Disclosure:   Long on YHOO.  Considering buying more.

Microsoft BrowseRank to compete with Google PageRank

CNET profiles a new paper showcasing a Microsoft effort to enhance search by looking at *user behavior* as well as the old standby standards that all the major search engines use such as links in to the page, the content of the page, titles of the page, and several others.

Google’s initial brilliance was recognizing that the link relationships on the web gave you great insight into the best websites. Google correctly noted that sites with many links to them, especially for a particular keyword, were more likely to match a users interest for that keyword. Although many factors have been included in Google ranking for years, pagerank was arguably the most important breakthrough. Initially the system tried to be an online analogy to academic citation. Google’s Larry Page reasoned that websites with more incoming links would tend to be better, and that those incoming links themselves should also be weighted according to the importance of the site from which they came.

The system started to show severe signs of wear as search marketeers as well as mom and pop businesses began to “game” the pagerank system, creating spurious incoming links from bogus sites and buying links from high rank websites.

Enter Microsoft “BrowseRank”, which will arguably be harder to game because it will monitor the behavior of millions of users, looking for relationships between sites, pages, length of time on page, and more. It’s a good idea of course but arguably it is Google that has *by far* the best data set to manage this type of approach. So even if Microsoft’s system starts to deliver results superior to Google’s one can expect Google to kick their own efforts into gear.

As with all search innovation the users shoud be the big winners. Search remains good but not great, and competition in this space will only serve to make everybody better….right?

Ballmer: Yahoo a tactic, not a strategy

Microsoft Chief Steve Ballmer spoke to the Microsofties today about the companies plans.   For Yahoo merger followers there was nothign much new as he simply reiterated this point:

Related to Google and our search strategy are the discussions we had with Yahoo. I want to emphasize the point I’ve been making all along—Yahoo was a tactic, not a strategy. We want to accelerate our share of search queries and create a bigger pool of advertisers, and Yahoo would have helped us get there faster. But we will get there with or without Yahoo. We have the right people, we’ve made incredible progress in our technology, and we’ll continue to make smart investments that will enable us to build an industry-leading business.

Some would argue that the reason Microsoft needs Yahoo is that their online strategy has so far failed to do very much.   My take is that they have not moved the online market as they’d hoped, but that they also have not worked nearly as hard in this area as they could have because Microsoft (correctly) sees that their huge presence in the software market is where the big money remains, at least for the next few years.    They have chosen in large part to protect their huge revenue ship rather than act more aggressively and nimbly (and expensively) to find online revenues or pull market share from Google.    I think many analysts – especially those in blogging – fail to recognize that Google’s revenues simply pale in comparison to Microsoft’s.   Google has the lion’s share of online money but Microsoft still has the lion’s share of the lion’s share money, which is in software, gaming, and entertainment.      I agree that the power curve is shifting from MS to Google, but MS remains the 800 pound revenue Gorilla.    Money beats buzz to the bank every time, and this point is not lost on Microsoft or Google.

Disclosure:  Long on YHOO

Yahoo Microsoft Boxing Match

Yahoo and Microsoft haven’t been able to agree on very much over the last few months so it now appears fairly likely the battle will head into the shareholder meeting on August 1st.

Microsoft hasn’t lost many of these matches and the smart money remains on them to “win” this battle and take over Yahoo.   My take is that there is now enough ego investment on all sides that you can expect Microsoft to be pretty ruthless in their efforts to replace the board and overhaul the company.  Of course with with management leaving Yahoo at a record pace anyway, Microsoft is likely to inherit more of a management skeleton than a burden, and they are probably fine with this.

How poison will Yahoo make the pill?     As a shareholder I’m concerned about this but comforted that the current board and Jerry Yang have a huge financial stake in this outcome.    To Bostock and Yang’s huge credit they has been playing this game with their own money, though I’d argue they have not been playing it very well or with anybody’s best interests in mind (including their own).    My take is that Yahoo simply could not readjust their expectations from the dramatic success story they enjoyed early on and the belief they could see that kind of success again.     This gave them a perception of the current value of Yahoo that was completely out of line with the market perception, which by definition is the real value of a company.    The $33 sale price has come from the desparate realization by Yahoo that they are going to lose the battle and possibly be forced to sell well below this price, though I think it’ll be in Microsoft’s interest to keep the tensions to a minimum and keep their new “post Yahoo merger” shareholders marginally happy with an offer above $30.

That said, Ballmer is clearly smelling the blood in the water and could probably force an eventual sale of Yahoo in mid to high twenties by jerking the strings for a few more months to soften up Icahn and other major shareholders who are clearly looking for something above the $31 offer Yahoo rejected a short time ago.  Without Microsoft Yahoo’s share price would be well under $20 and this is now clear to everybody.

So the boxing match moves into the final rounds.   It’s pretty much a corporate death match between Jerry “the Yahoo” Yang and Steve “the Basher” Ballmer.    Although my money is invested with Jerry right now, I’d be betting on Ballmer to win this fight.

Disclosure:  Long on YHOO

Microsoft Yahoo: Is $32 now the magic number?

Microsoft’s very well played game to win Yahoo at a bargain price is wrapping up even more favorably than Microsoft planned. Yahoo refused the Icahn MS offer today to buy just pieces of the company, though in typical fashion Yahoo did not outline many details of their decision making process, rather they simply asserted it was a bad idea.

Obviously this was a strategic rather than serious move by MS as noted by Henry Blodget, though he’s wrong to think this is just a small play to soften up the Yahoo board before the proxy fight in August.

In fact this is the end game of a very smart plan by Ballmer / MS to aquire everything for less than they have been planning to pay for over a year. Yahoo’s intransigence has simply delayed the process by a few months and saved MS a few dollars per share on what they would have paid.

Over at Silicon Valley Insider we have Henry basically begging for an offer over $31 and indicating support for less.

Yahoo board is now *begging* MS for the $33 they could have had easily a few months ago but may not see again. MS can get it all for less so I’m now guessing the meeting offer will be $31 or $32. That will make MS look generous for keeping to the original plan in the face of a weakening Yahoo, and it will be acceptable to shareholders fearful of YHOO at $18 or lower if this all collapses.

Although this is likely to be resolved at or soon after the upcoming Yahoo board meeting it doesn’t have to resolve to work in MS’s favor. Yahoo’s pretty much exhausted all their options to the extent that it’s either Yahoo in the 30 range with Microsoft or Yahoo under 20 without MS.

Disclosure: Long on YHOO

Yahoo’s Don Quixote

The Yahoo Microsoft fiasco saga continues as Jerry Yang, in today’s interview with Kara Swisher, seemed to suggest he’d basically go down with the ship.   Or perhaps more accurately he’s willing to take the ship down with him in what appears closer and closer to a Quixotic vision of what to do about Microsoft.   Yang seems to suggest two incompatible things – first that Microsoft has not given a clear offer to Yahoo and second that:

“Their motivations are suspect and there is simply no good reason to think they will actually show up at the end of the day.”

Huh?   MS is clearly prepared to buy Yahoo.   This is obvious to everybody including Jerry.   He could argue that they are going to screw up Yahoo after buying it, but that rings a bit hollow given the sad conditions of the company right now.     In fact it’s hard to imagine how Yahoo, a key brand in the key global sector, can be doing so poorly right now.   How in the world could Microsoft screw the company up more than Yahoo is screwed up right now?

Even if Microsoft *is* going to bring devastating changes to Yahoo, there is a shareholder obligation here that probably is not met without a sale to Microsoft.     It is simply no longer viable to suggest that an independent Yahoo is likely to show the revenues required to bring the stock to 33+ within a year.    Without any Microsoft interest  YHOO would be trading at about $18, so the likely Icahnesque MS offer can arguably be viewed as a premium of close to 100% on what shareholders can expect if this deal *really* crumbles, which is what Yang clearly wants to happen.

I agree with Swisher:

… even with all the noise, it should be entirely clear by now that Microsoft and Yahoo need each other.

Disclosure:  Long on YHOO

Showdown at the Yahoo Corral Coming August 1

Carl Icahn and Microsoft appear to be coordinating an attack on the current Yahoo board with today’s joint announcements by Icahn and a Microsoft stating they are ready to do a major deal with Yahoo.    The animosity towards Microsoft is conspicuous given that one can reasonably argue (I would) that Microsoft remains pretty generous all things considered.   They appear to comfortable with a share price in the same neighborhood of the $33 that Yahoo rejected months ago, despite the fact that shareholder discontent with Yahoo’s price and board combined with continued US economic concerns would arguably support a somewhat lower valuation.

In this corporate showdown at the Yahoo Corral  I think Jerry Yang and David Filo have drawn the unfortunate roles of Billy Clanton and Frank McLaury

I got a huge kick out of Kara Swisher’s disturbing picture of the corporate death match:

… another boost today with a classic wrestling double-body slam that Icahn and Microsoft CEO Steve Ballmer perpetrated on Yang today by unveiling their own dysfunctional love match–united in hatred of current Yahoo leadership.

I think however that Kara is very wrong to suggest that Icahn toppling the Yahoo board is “unlikely”.   Most of the small shareholders do not have the vested interest in the company of a Yang or Filo and are likely to support Icahn.   More importantly, I think that Yang has lost what appeared to be a sort of hypnotic impact  on some of the existing board members and large shareholders and even if they are not stating this publicly I’m fairly confident they’ll be voting for Icahn in August.    For small investors it is painful to turn away a 50%+ boost in share value – for big investors it could spell their eventual ruin.     With billions at stake I think the predictive model here is fairly simple:   Yahoo will be sold either in part or whole to Microsoft at a share price of about $34.     I’ve been saying this for some time and see nothing to suggest it’s not going to happen in August- just a bit later than a rational market model would have suggested because egos and exaggerations, and the legendary Silicon Valley v. Microsoft animosity got in the way.

Disclosure: I’m Long on Yahoo