Category Archives: Social Media

Denver and the progressive knee jerk point-scoring…

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I rarely write about serious stuff like mass murders here on this blog.  It’s not that I don’t care, it’s just that I regard it as pompous and pretentious for me to pontificate on the bleedin’ obvious disasters that befall this world unless I’m somehow involved.

The Aurora cinema shooting is just another tragedy in America’s long and difficult relationship with firearms and the Second Amendment of the US Constitution (for those who don’t have a copy : “A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.“)  It’s a combination of multiple personal tragedies, cultural and governmental failures to legislate and one person’s evil or psychosis. I guess that we may get some idea of why this young man did what he did – whether it will make any sense is another matter.

I’ll come straight out – I love a lot of Americans.  Their governments may make me weep on occasion, and they have some religious leaders that make we wonder whether we read the same Bible, and they also produce the Khardssians.  But – on the whole, I like ‘em.  I like to think of myself as a left-wing libertarian in political terms, so I sometimes find myself dealing with a lot of people from the left who disagree with my views of the American people, and a lot of people from the US who think I’m a particularly weird type of Libertarian.

What I have found is that hatred of the US is one of the last remaining acceptable bigotries.  So I wasn’t desperately surprised to see this little gem pop up in my Twitter stream – still not sure whether it’s serious or a ‘joke’:

“What American’s don’t understand is that they’re insane.”

Now….let’s pretend I tweeted…”What Greeks don’t understand is that they’re insane.”  I wouldn’t do such a thing – they’re exhibiting some of the sanest behaviour in the world right now – but listen carefully….hear that low rumbling, that sound of wailing and gnashing of teeth, the sharpening of disembowelling cutlasses?  Good.  Because that’s the sound of ten thousand people who’d support that sentiment about the Americans on Twitter getting ready to turn around to me and yell ‘racist’.

I can’t see the difference in comments, but one would be acceptable to a lot of people who consider themselves to be liberal, free-thinking, non-bigoted progressives and one wouldn’t.

To my friends on the left – this isn’t the time for cheap political point scoring based on the actions of one lunatic, no matter how often this particularly American tragedy is played out. The shadow of the man with the gun is long in US culture – it will not easily go away and I’m sure that we’ll see this sort of thing happen again.  But I’d like to think that we could all have the decency to get through these dark times without point scoring and cheap jokes.

 

And Facebook carries on downwards….

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In my last post I questioned the value given to Facebook in their IPO.  It became clear at the close of first day trading that things hadn’t gone according to plan; the usual ‘Day One Spike’ associated with high profile technology IPOs just didn’t happen, and I have a feeling that the only reason that Facebook didn’t end the day lower than it did was because the underwriters of the IPO bought up stock to shore up the price.

Of course, that what the under-writers of IPOs are partially there for; they pick up the spare stock and keep the price up, but given that the slump has continued for two days trading now, I am beginning to wonder whether the initial price was artificially inflated for the egos / benefit of those involved.  If so, that is totally unacceptable beccause it means that the ‘civilian’ buyers of the stock – those not in on the game – paid over the value of the company from day one, and it is increasingly possible (and indeed likely) that everyone involved in the launch KNEW that.

There is an interesting article here, by Michael Wolff, that states what quite a few of us have wondered for a while.  Given that, beneath the hype, branding and bells and whistles, Facebook is an advert supported site, how on earth do they expect to make such money as a 100 billion dollar price tag suggests?  And Wolff should know; he wrote the book ‘Burn Rate’, which documented the crash and burn of the first dot-com boom a decade ago.

The problem is that it’s not just Facebook at risk here; a bad IPO in a sector colours the views of those preparing other stock market launches.  Out there are lots of technology start ups, all wondering about financing.  A solid Facebook IPO would have possibly led to a market place that was more willing to put money in to smaller companies that needed much less money and that might even have been producing goods and services of greater value than the ability to play Farmville or post statuses.  And by ‘solid’ I mean exactly that – a sound valuation – if the fall continues then it may well be that a valuation of 40 to 50 billion dollars was MUCH more realistic – that didn’t require urgent under-writer support, that showed healthy secondary trading over the days after launch and that also showed a steady growth as people realised that Facebook had some value that could be exploited – given availability of money.  After all, that’s what an IPO was ORIGINALLY supposed to do – give some money to the founders but mainly give the company money to develop.

As it is, Facebook was clearly over-valued – whether by intention or accident we don’t know – and analysts are finally asking the questions that should have been asked months ago.  Facebook’s last minute purchase of Instagram to try and grab mobile traction looks increasingly like panic.  The company may settle down to around $50 billion dollars – still, IMO, overvalued but the markets could probably live with it.

But back to those other comanies in the wings.  Based on previous technology trading cycles, a bad high profile IPO:

  • Makes the companies queuing up to do an IPO pause in their tracks.
  • Reduces the value of such IPOs and dents market confidence
  • Causes investors in any technology companies to remember that there might be a downside risk and so be more careful about investing – which isn’t always a bad thing, but sucks if you’re a ‘real value’ company.

Historically this tends to lead to a deflation of the tech market place – the last thing we need now.

As is said in the Pythian Scrolls in Battlestar Galactica : “All this has happened before, and all this will happen again.”

The obligatory Facebook IPO post….or…Hey! Zuckerberg! You’re my bitch!

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Well, despite the state of the world economy, Facebook finally managed it’s IPO today and ended the day at roughly the same level as it launched at, having had a high point of about $42 and a start point of $38.  Now, when I were a lad we did IPOs differently – take the VA Linux IPO in the 1990s – a first day increase of nearly 700% on the starting price…..

But the world is different today, and the markets are older – although given recent behaviours not any wiser.   The Facebook IPO was never going to be a show-stopper of the type we saw in the first dot-com boom, no matter how people hyped it up.  But, even Linked In, that had it’s IPO more recently, opened at $45 and closed at around $90 on the first day. So what happened to facebook, and why should we care?

To start with, the opening price was, in my opinion, incredibly high for a company that simply peddles user generated content, games access, in game currencies, personal data access and adverts.  And that’s why we should care, because ultimately the value of Facebook will depend upon how advertisers and data crunchers value that content and the 900 million users of Facebook, and whether those users will keep playing the Facebook game.

Why did Facebook go public?  Traditionally, companies go public when they need a market in which to sell shares in the company to investors in order to raise money, typically for expansion, moving new products to market, etc.  In recent years – especially in tech industries – the IPO has been seen as a means by which the people involved with the startup can flog their shares and get rich quick, and I’m afraid that’s what I see happening here.

The big question is – how is Facebook worth $100 billion dollars?  That’s more than Ford and more than Macdonalds.  Last year Facebook returned a profit of a billion dollars on revenue of 3.7 billion dollars, which isn’t bad going.  Ford had revenues of over $100 billion, and profits of over $6 billion in 2010, having reduced it’s debt by $12 billion in the same year.  Not bad either. But Ford only has a market capitalisation of $38 billion.  So, that market capitalisation of Ford of 38 billions is related to a profit of $6 billions.  Now, whilst you can’t compare Internet and non-Internet stocks, if I were to apply the same rules I’d start thinking that Facebook should, on those proportions, be floated at no more than $6 or $7 billion.

Let’s be fairer and take Google as our reference point.  It’s Internet stock, after all.  Current Market Capitalisation of $197 billion, revenue of $40 billion and income of $10 billion.  Applying some ratios again, Google seem to have a profit of about 25% of revenues, and a Market Cap. of around 5* revenue.  Now, Facebook has profits which are not that far off of the same ratio as Google – 1/3.7*100 = 27%, so if we apply the 5* rule we get 5*3.7 billion – let’s be generous and say $20 billions.

So, Joe’s rough and ready calculations say that Facebook should have sold at $20 billions.  Now, I’m not a stockbroker – in fact, I’m not brilliant with money at all, but this seems….logical.  The difference between Google and Facebook, of course,  is the magic words ‘Social Media’.  After all, Social is the future, according to the pundits, so it must be logical that the Facebook valuation reflects something of the massive profits that people expect to make from Social Media in future.  Yes?

Right…let’s look at Linked IN.  Recentish float, social media company, not so many users, blah, blah.  Market capitalisation of $10 billion dollars (no missing zero), Revenue about $670 million, profits about $17 million.  Oooer.  So Social isn’t necessarily the magic word.

So what could that magic ingredient be?  What do analysts think makes Facebook worth so much?  Do me a favour.  If, like me, you’re a Facebook user, walk to the bathroom, look in the mirror.  Say Hi.  You’re looking at 1/900 millionth of Facebook’s secret sauce. Those investors are putting a lot of money in to the hope that we will continue spending money that can, in some way, be associated with our use of Facebook.  Now, I’ve not spent a dime through any Facebook related advert, game or doohickey in the 4 or so years I’ve been on there.  I rate every advert that pops up in my Timeline (except for the ones from Charities and non-profits) as offensive.  How we use facebook from here on in will make or break a lot of fortunes.

If you want something to put a smile on your face today, remember that 1/900 millionth of Mark Zuckerberg’s arse is yours.  Collectively, Zuckerberg is our bitch.

 

Good Lord…it’s Easter!

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Or, as a Christian, I should really say “Good, Lord…it’s Easter!”

I have to say that I didn’t expect to find myself writing a blog post today – it happened by accident after I’d approved a few comments on this blog and thrown out some spam.  For the last 2 months I’ve been on something of an Internet diet.  I’ve used the Net for work, kept an eye on Facebook and Twitter for personal messages and for photographs of my lovely Godchildren, but that’s been it.  I’ve made the odd post, but have tried to stay away.  Along with avoiding the demon drink, my Social Media retreat was part of my Lent Observance.

So, did I miss anything?

Well, actually….er…..no.  Without going too much in to details, I’m debating whether to keep the diet going for a while longer, and put the time that I would have spent on facebook and Twitter in to my Blog and the ignoble art of making money. I’ve actually been less stressed and worried and irritable than usual, and I do believe that at least part of it is because I’m ignoring all those folks on Facebook and Twitter that don’t just wash their dirty laundry in public but also dry it, iron it and then point out how they’re carefully putting it all in the drawers for future use, complete with lavender scented sachets.

It brought me up sharp when I realised how much this bugs me; to be honest, if some folks I knew carried on in real life in the way they do on Social Media I would have dropped them from my Christmas Card list years ago!  Which is the real them?  Which leads me on to the next question – which is the real me? Social Media Joe, Blogger Joe or day to day real world Joe?

I hope that they’re all the same – or at least similar enough to not cause too much dismay to people around me.

I want to be…WYSIWYG!