Archive for May, 2008

Why Microsoft is like GM

May 29th, 2008 No comments

In the last few weeks, Microsoft decided to pursue a new strategy to gain market share in online search advertising.  If you go to their Live Search engine and use it to find and buy certain products, Microsoft will give you a rebate of a certain percentage back to your account.  In essence, they are paying you to use their search web site.

What I don’t think they grasp is the relationship between internet surfers and internet websites.  It’s a symbiotic relationship where both parties benefit.  I go to your website because you can help me find something, and you provide this service because I might click on an ad and earn you money.  In the short term, a temporary incentive might increase traffic, but in the long run, viewers will migrate to the website that provides the best value.  In the short term, a cash payment might make it worth my while to go to your website, but once that goes away, so will I.

This definitely reminds me of GM and Ford giving huge rebates on vehicles, just to keep market share and get them out the door.  That definitely sold some vehicles, but just take a look at their balance sheet and tell me if you think that strategy was good for them.

On a positive note though, GM does seem to have some really nice vehicles coming out.  A realization seems to have sunk in that if they want to continue being successful, they need to innovate and come out with new designs that people find attractive.  Hopefully Microsoft will come to this realization as well.

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May 21st, 2008 No comments

I just made an extra couple thousand of dollars at work by receiving an award, and also by having an idea that is on it’s way to becoming a patent. While it’s an entirely different discussion as to whether I think it’s ethical for companies to pay cash to employees for coming up with patents, I will accept the money and put it towards savings.

Also, with the encouragement from the Father in Law to invest in more stocks, I made another purchase today. I am now a proud co-owner of Johnson and Johnson. In fact, I own .000000005% of the company ($1,000 worth).

Why did I purchase this one? Well, for two reasons really.

First, it has a dividend yield of 2.79%. This is just shy of the 3.15% my savings account is currently paying. While the company can’t guarantee that they will always pay this dividend, historically, they have been pretty solid. In fact, 10 years ago the dividend was around .$13 per share per quarter and now it is up to $.42. This dividend will help cushion any negative news, barring some sort of event which keeps JNJ from paying it.

Second, it has a history of earnings growth that I don’t see going anywhere. In 2005, earnings were $3.39. In 2006, earnings were $3.76. In 2007, earnings were $4.15. And in 2008, earnings are expected to be around $4.45. Since the stock looks like it’s had a average P/E of at least 16 (it’s current P/E), if I keep the stock for a year and the earnings estimates are correct the stock should be worth somewhere around $71, or a gain of around 9% for me.

Here’s my current holdings:

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Lake Tahoe

May 20th, 2008 No comments

Before a couple of weeks ago, I had never been to Lake Tahoe.

On Thursday night we flew into Reno, and drove in the dark to our hotel in South Tahoe. The next morning we woke up and walked outside and just stared in awe at the mountain in front of us. Since it was dark when we drove in, we didn’t get a chance to see the landscape. It really is a site to see.

Click on the image for a larger view.

lake tahoe pic

Before we left, we managed to go out to Lake Tahoe Nevada State Park for a quick hike. We had a nice picnic lunch and enjoyed watching a pair of osprey’s building a nest before a storm blew through.

I definitely want to go back someday and hit up the ski slopes. The one called the “Gun Barrel” was calling my name.

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Why Obama Should Step Down

May 7th, 2008 1 comment

A while ago there was a man who wanted to be a Senator.  He worked with all his might and political clout to be nominated by his party for the job.  He shook hands endlessly and gave wonderful speeches that moved people in a way that made many others jealous.

With all his hard work and dedication he just knew the nominee would be him, and the moment of truth finally arrived.  The representatives from the different parties congregated together and would vote on who they would elect.  This would be a long and hard day, where deals would be struck and commitments would be made in exchange for votes.  Small groups of men would form in the great hall where this was taking place and try to persuade supporters of other candidates to switch over and support their candidate.

After tallying the first vote, it was a split.  This man who I mentioned earlier had a lead, but not enough to secure the win, which required %50.  He had 30% of the votes, one of his fellow party members had 20% of the vote, and his party’s greatest opponent had 40% (with the remaining going to various others).

After this was announced,  most of the people who supported his party member switched over giving him a total of 45%.  The rest of those supporters refused to be disloyal to his party member since he wouldn’t support any candidate but himself.

This left our man very close to a win.  His supporters told him if they worked on their party members long enough they would switch over and support him.  Unless his party’s main opponent with the original 40% could come up with 10% first, he was virtually guaranteed to win.

He took a few minutes to gain his composure and then did something quite unexpected.  He told all of his supporters to switch over and support the other party member with the hold-out supporters.  This would ensure his party would win the nomination, only this time at his expense.

His supporters were dumbfounded.  They were very loyal though, and most of them obeyed his wishes.  His party ended up winning the nomination, but he went home empty handed.

This man was Abraham Lincoln.

(this was a retelling of a history book I read, so actual numbers and position he was running for might be wrong…)

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