Lance Wiggs

Well done Stuffies - winning again at the Netguide awards. Best Home PAge, Best Media site and Supreme Winner - a fantastic haul. Meanwhile Trade Me captured Best Trading Site (shock, horror) and best Real Estate Site.

Interestingly Facebook went over the top of Bebo for best social netwokring site. Are Bebo’s days numbered, or do teenage girls not vote in the Net guide awards - the second I’d say.

Funny how I can’t find any other reference to the awards - NZHerald? Netguide??

Bugger - Microsoft has withdrawn from the Yahoo takeover offer. Microsoft upped the price to $33 per share (from $29 odd), which was a $5 billion increase. Yahoo said “no thanks - we want $37 per share” and so Mirosfot walked away.

On Monday, US time, expect:

Yahoo’s shares to fall - and pretty far

Microsoft’s shares to rise, if not immediately, then over time..

In the next weeks we can expect some aggressive lawsuits from lawyers representing Yahoo shareholders, and some  relieved Yahoo employees and executives.

After that it would not be surprising to see round 2.0 - with Microsoft coming back with another offer.

It was always a bad combination in business terms, but in financial terms the Yahoo board has just committed a cardinal sin - walking away from an offer that valued the company at substantially more than it is worth. They really have opened them and their insurers up for a mammoth lawsuit from shareholders, and it is hard to see a plausible defense.

Why “bugger” when the deal made no sense to customers? Because I’m short Microsoft shares - betting that they will fall. I thought that Ballmer would stick it out. However we should remember that Ballmer is a pretty good game theory practitioner, and so much more could happen.

Michael has seemingly abandoned the Trade Me success Secrets blog, which was looking to be a really promising place to discuss and see all things Trade Me.

He also seems to have left the Grey Group - where he was also writing an interesting blog. If you want to see what an untended blog looks like, check out the comments to this post.

Meanwhile Michael’s Linked-in profile is still showing the G2/Grey Group connection.

So - what gives? Where are you now Michael? If you are out there we’d love to keep hearing your views..

A brilliant move for Blockbuster - Blockbuster’s business is dying, while Circuit city is in retail - which always has some sort of future. If Blockbuster can raise the money from markets that do not realise their business model is dead, then good on them for exiting a bad situation early.

Ignore the rhetoric.

The combination of Blockbuster and Circuit City will result in an $18 billion retail enterprise uniquely positioned for the convergence of media content and electronic devices

It reminds me of the AOL-TimeWarner deal. AOL cashed out by buying old media, which had lasting rather than AOL’s ethereal  value.

Fairfax Digital Australia and youth publisher LifeLounge have launched a new site: Thevine.com.au, “aimed at 18-29 year olds”.

Now like everyone I’d hate to be in a “target market” and I suspect, like “young adult literature”, the real target is somewhat younger, although the design of the site is pretty placid:

The surefire killer sign of a young audience is the Top Stories section, which I take to be auto-selected by popularity. I’d go on, but, well - just look at the titles to the top articles:

Nice, Tight, revealing, Miranda Kerr, Sex Marathon, hedgehog. Yup - that sounds like teenage minds hard at work - and teenage boys at that. Let’s take a sneak peak at that second story ” new revealing figures“

case closed….

now - did Fairfax and LifeLounge really mean to do that? Well - I’ll leave that to FD MD Pippa Leary:

Asked if Fairfax’s editorial staff was too old for the target market, Ms Leary said “yes”.

Check out this fascinating series of maps which show how various on and ofline newspapers and the blogosphere cover the world. Interestingly NZ is pretty well covered regardless of the source.

more here, and flash version with high res links here

It’s pretty obvious that a better offer for Yahoo is not out there, as Microsoft has the wonderful combination of being cash-rich and desperate - and can outbid anyone else out there.

But Yahoo directors do not want to lay with the lumbering giant.

So this week Microsoft first whispered that the offer may be lowered, then had an eventless meeting with Yahoo, and finally then gave an ultimatum to Yahoo directors to play nice or they will start a proxy fight, and at a lower price:

The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal.

A proxy fight is an expensive and bruising messy endeavour - which has its own set of strange rules. Basically Microsoft gets to send documents and market to every Yahoo shareholder, aiming to usurp the Yahoo board and put in their own candidates that will recommend the deal goes ahead. Each shareholder gets to choose between taking the money and rejecting the suitor, and Yahoo’s board also markets to the shareholders.

The fiduciary duty of a board of directors is to maximize value of a company to it’s shareholders. Microsoft’s approach is clever - if they win the proxy battle, which they will as it is a simple financial decison for investors, then the Directors can be blamed for the loss in value between the current offer and the reduced offer that Microsoft is threatening would occur in that hostile takeover. If Microsoft lose the proxy battle, then the directors are even more exposed.

The Directors could go to jail for that, but more realistically they are exposing themselves and Yahoo to a class action suit from angry shareholders - there are plenty of lawyers out there that will want to do this.

Last word to Steve Ballmer:

It is unfortunate that by choosing not to enter into substantive negotiations with us, you have failed to give due consideration to a transaction that has tremendous benefits for Yahoo!’s shareholders and employees. We think it is critically important not to let this window of opportunity pass.

After last year’s terrible system that required you to register for some dubious website. Netguide have thankfully chosen to use a simple one page form. You do need to enter an email address and name, and a tech savvy person could game the entries, but overall this is a major improvement.

Trade Me is still mysteriously excluded from best shopping site, despite the fact that about 40% of the stuff they sell is not via auction and new.

Aside from that -well done. Here’s the link. (Don’t vote for me - I’m too small)

I voted for Stuff - last year they cleaned up!, interest.co.nz (financial services - it’s all about Bernard’s blog) and Xero (best new website).

My US Share portfolio (green) in 2007 was up 63.5% versus the S&P500 index return of 3.53%. A great year, and I did sell down a bit around the peak, which hit 77%.

Can I do it again?

This year to Friday the 28th of March - I’m up just 12.6%, but the index is down 10.4%. so you could say I’m 23% ahead, but that’s today. I’m publishing this after a good run - things can turn quickly, as I found in late Feb.

For the story of last year, check my previous missives - the last one when the portfolio was up 72%, and I also talk about getting out of eBay (at $39 - they are now $30, visited $25) and Apple (at $163, now $143 after visiting the $115 range).

While the Apple shares initially went up, they then went way down, while the eBay shares just went down. In retrospect it was great timing - and based on some news that had come out for each company, and a shaky market based on the cheap debt crisis.

However I screwed up by buying more Apple shares last year when they were still really high, but made up for it by buying a bunch of eBay shares this year when they were very low and some Apple shares and options when they were low as well. I got a little too levered in February this year - so the green line shows a lot of volatility. I’ve since lowered my leverage.

I’m still, as always, very short Microsoft - both with short selling the stock and with options. I’m hoping the merger with Yahoo! goes through as the combination is not good and should see more value destroyed. MSFT has dropped from $34 in the last post to $28 now - a healthy return for those put options especially.

I’m still short Equity Residential - a rental property owner, but I did sell out of them completely earlier this year, and am getting back in as (over) confidence is returning to the markets after the Fed movements. I’m believe there is a good chance that the recent interventions are band-aids, and there are plenty more bad stories to come.

Being long and short means I’m less exposed to the violent market fluctuations, but I am exposed to days when things are rosy for Microsoft and bad for eBay and Apple. I’m betting the reverse is more common.

Finally, in a down market it pays to go to companies that sell basic stuff - so I’m following my own advice and I’ve invested for the first time in Berkshire Hathaway. I expect to build up my holdings in Warren Buffet’s company - it is a long term buy and hold in a down market.

All this is in USD of course, and the currency has subsided a bit. The amounts are nothing special, but I’m having lots of fun.

PresentationZen guy Garr Reynolds just linked to a video of himself presenting at Google. As Rowan mentioned he’ll be in Wellington and Auckland for the Webstock Autumn series.

Worth a look to see his style - which is very very casual.

Rod just pointed us to Sharesight - a downunder focused portfolio manager website. The website looks to be yummy goodness - simple to use and so forth.

I was initially pretty skeptical though - what use is another portfolio manager when you can do things pretty simply yourself, or with the likes of Yahoo?

Yahoo

So first let’s look at Yahoo. They let you construct a portfolio (or as many as you like) using share data from a whole bunch of exchanges - not just Australia and NZ. Here they are:

I set up a fake portfolio for Australia/NZ  in about 3 minutes. It lets you enter in the date that you acquired the shares, and will calculate the total return for you. You do need to remember how much you paid for it though.

You can create your own view of your portfolio, and, of course, plonk it on your myYahoo home page - handy if you use Yahoo mail. Pretty nice - and free, but old school.

Google’s offering is stunning.  Not only is coverage of NZ (and Au) shares now there, but it is a much more web 2.0 application - dead simple to use.

From an investor point of view - i.e. “how are the companies that I invest in doing?” the tools are excellent - with fantastic news sitting beneath flexible and comprehensive portfolios.

Google

you can switch the portfolio view very easily - here a fundamentals view:

(fake data)

You can add in transactions (with dates) and track overall performance on you iGoogle homepage - which, unlike Yahoo!, I actually use.

It doesn’t seem to bring in historical dividends, and doesn’t track options, but watch this space - Google moves fast. Overall I’m gushing - but really this is a lot better than ladt time I saw it, and perhaps even better than my own etrade account.

Best thing - Google tracks when earnings releases arrive, and you can add them to your google calendar. How simple!

eTrade

eTrade (US version) lets me track stocks across 5 different countries -  NZ (or even Australia) is not one of them. eTrade shows me my portfolio, including options, with market values and different views.  Additionally they have plenty of tools to track performance, though they could be better as I don’t get credit for timing my moves in and out of the market. It’s also a US-centric website, and as such everything is based on the US tax year - which is the calendar year. Running my NZ tax this year is going to be entertaining - though I can easily export my eTrade Transactions to excel and go from there.

Sharesight

And that’s where Sharesight has a market. It’s a great way to handle working out your NZ capital gains tax on your investments in Australia and NZ.

Overall the website looks entertainingly useful and fun. Plomk in your purhcase dates and amounts, and Sharesight calculates all the splits, dividends, tax credits and the like to give you an overall portfolio return.

Check out the Sharesight tour and video.

However - it is not all that useful yet for investors that invest in other lands - and we all should be doing so to have a diversified portfolio. There is space of course for sharesight to expand to accept transactions and calculate tax liability from other markets. So when Sharesight brings in foreign (US) stocks I’d be keen to give it a go.

But not at the current fees.

At the current fees I’d simply sign up for a month at the ned of each tax year, work out the tax and then get out straight after. There seems to be no benefit (and certainly a cost) from using Sharesight for day to day management versus either Google or your own online share broker.

Moreover the fees are tiered, and those top tiers are brutal, and kick in at very low usefulness Who owns less than 5 shares? who doesn’t want a tax report?

I’d chop them up and make a single tier, give an annual fee option along with the monthly one and forget about charging $39 for stuff that is “coming soon”. I also believe that the appetite for fees is much lower than portrayed. I’d be going along the lines of $10 or $20 per year, $50 at a stretch.

That’s the other pain - I wish that Google and eTrade could play together so that my transactions could be imorted from eTrade to Google. Similarly Sharesight is hopefully working on one click importing of whatever the local online share trading houses export. I have only a few stocks, but for someone with s portfolio of 20-30 stocks, purchased at differnt times, it would be a real pain to enter them all in. Of course it would be even more pain to work out the tax without Sharesight.

The business case

So  overall if I had an NZ portfolio of stocks I’d probably use Sharelight next month on the 30 day free trial to calculate my tax liability - and then not sign up. I believe that the pricing structure is all wrong - a yearly fee is better, and it should be around $20.

However the market is pretty small. The number of people in New Zealand that want to manage a portfolio would be a percentage of the  number of people that go to financial sites. There were about 31000 UB’s at directbroking, 22,500 at interest.co,nz and a paltry 15,000 odd at sharechat.co.nzduring February. I’m assuming naively that The directbroking customers have some sort of tracking tool, but that it isn’t great and so a percentage of people will come over. Let’s be wildly generous and say 10% come over. That’s 3,000 people.

The sharesight blog implies there are 730,000 shareholders in NZ. That’s a bunch, but most of those would be passive, suing someone else to manage their portfolio, or dead (literally). The Sharesight service is aimed at more active and engaged traders.  So let’s say they can get 5% of the overall shareholders in NZ - that’s about 35,000 people.

ok - so from 3,000 to 30,000 people at, for me, a fair price of $20 per year - that’s $60,000 to $600,000 per year.

If you believe in the $20 per month model, then multiply that by twelve to transform that $20 per year to $20 per month, and we get $720,000 to $7.2m in annual revenue. That upside would be much much lower at that sort of pricing - so my range would be more like $60,000 to $1m per year in the first years.

That has to support 4 owners/directors/principals and an outsourced interaction/ development firm. That’s means not a lot of custard to start. Launching into a massive bear market isn’t going to help - people trade a lot less when the market is falling.

What’s the upside?

Firstly, and obviously, it’s around getting more customers - either Kiwis with overseas portfolios, or overseas folk. The second one is tough, as Google is tough to compete against. More customers means more subscription income, and this is an easily scaled business.

Secondly, with their great usability I’d sign up very quickly if they extended into being an online broker - allowing me to trade shares. that’s a different busines model, but they’d take a chunk of the market pretty quickly.

Thirdly - there’s an obvious exit to a broker or to an internet business media player.

Finally - there is something about Sharesight being a custodial system. National bank are about to start changing a staggering 1% of portfolio value for “Custody fees”. That’s a significant amount, and if Sharesight can bring people over  then it is game over. They seem to think they can, but they need to really spell it out for people in single syllable words.

Well done guys - lovely execution, a business model with potential and some good PR to kick things along.  Fix the pricing though.

Telecom is launching something - I’m not really sure what it is, but apparently it will be some sort of Business Oriented Internet plan/ISP - where you get bundled internet access, hosting and things like Xero.

Business broadband plans will be “slightly differently priced” …

I read that as “more expensive”, but gee I’d pay anything for half decent NZ internet access - maybe even set up a business specifically to get it to my home.

and the services they encompass will also be different, she says. “There will be some guarantees about helpdesk and support.” 

Good. Indeed I do not know why more businesses don’t follow Trade Me’s example and set up 0900 (paid) customer service lines. When I want help, I want a really competent human to immediately answer the phone 24/7.

The business Internet service will register domain names for customers and offer to develop and host their websites. It will also provide managed e-mail services suitable for businesses and online backup.

Hang on -  why on earth would we want to get Telecom to provide those services?

Domain names, well maybe. But develop websites? Telecom outsourced their own unmitigated disaster of a website, so why would we not use any number of the excellent NZ design and development shops?

As for hosting, well let’s see what Xero themselves do…

Currently Xero is being hosted at Rackspace, in Houston Texas. (Follow that first link for all sorts of other fun stuff about Xero.com’s presence.)

Now - and this is really important for any Telecom employees involved in this effort - go to that Rackspace site. When you get there for the first time a popup appears - a real live person is actually offering to chat with you.

Close that down and browse the site - it is all about “fanatical support”. View the video testomonials, check out the offers and go ahead - order up a server and try them for real (or maybe just call some of their customers)

That’s the standard to aim for - fanatical customer service, 24/7. That’s what you’d need to offer for this service in order to make a difference, and sadly you’d need to do it at prices that are competitive with getting services straight from the USA.  (and that’s not a lot).

So - overall - it is good that Telecom is targeting small businesses, and I hope that they’ll stick to investing in providing reliable, speedy access to the internet and not get diverted into competing away from their core.

Close. But not close enough to be the 10,000th and thus the first Burkina Faso Mason Training deciding  clicker - at DecisiveFlow designed  DoSomeGoodNow.

I did try on another browser. And another computer. But DoSomeGoodNow was too smart for that - I guess looking at my router’s IP address.

I also caught up with a few folk - including Bernard, who is now blogging and vblogging at Interest.co.nz.

Here’s a sneak behind the curtain… literally.

Bernard writes the scripts himself, then records them in front of a green curtain screen.

He can even do this from home if he wants, but this was from interest.co.nz’s small and humming office in Auckland.

Not that I have it yet, but Xobni is a very cool add-on to Outlook that gives you handy things like threaded conversations and stats for everyone you communicate with. What a great idea!

Their premise is that we have all created far more MB of information through our email than through our web presence. Google does a great job of sorting through the Web stuff, but until now nobody has done much with those email files.

Also - do check out their blog, which is a great way to track for first few months of a company developing and launching what is going to be a blockbuster product.

Sadly you have to join the queue - sign up and wait, with waits ranging from months to Mauricio’s 2 days.

(this will move me up the beta list)

Promo video