Microsoft’s Next CEO will be a Lawyer. Here’s how they F it up. $MSFT $GOOG $AAPL $YHOO $FB

Microsoft (Nasdaq:MSFT) is looking for a new CEO. What do they need? A lawyer of course and here’s why. Big Tech is subject to much legal and regulatory scrutiny if not outright interference. Antitrust actions are constant. Law suits against competitors are daily events. If you develop something or buy it the competition immediately attacks it because they were working on something just like it. If  they don’t attack it you will attack them.

This has nothing to do with engineering. There are thousands of engineers. some of them are even good.

What you need is a good war-time consigliere.

Yahoo (Nasdaq: YHOO) stole an attractive engineer from Yahoo who is playing the engineering and development card. Marissa Meyer if you must ask.

Apple (Nasdaq: AAPL) is post Steve Jobs but still very much in the developer super product mode.

Google (Nasdaq: GOOG) is still in the grips of its two founders Larry Page and Sergey Brin. Uber developers in their own right and employers of tens of thousands of brilliant and near brilliant engineers. They came the closest to breaking out of the mould and hiring a grey hair to help lead but they yanked the chain back recently.

Facebook (Nasdaq: FB) is still in the validation stage. Mark Zuckerberg must prove himself and validate his social media concept. But as any casual observer will notice they are spending more time on legal and regulatory issues; like it or not.

So the narrative at Microsoft is we need the next big general to lead us into battle. You can almost see the biblical imagery of an angel wielding a big ass sword slaying dragons and beasts.

The most effective leader for Microsoft would be a lawyer with good infighting instincts. The engineers you can hire and fire.

The market would be very confused because tech expects and evangelical type of CEO. A Steve Jobs who walks onto a stage holding something and fervently saying this is it and you need it now. The next day the law suits start-up.

If Microsoft hires a lawyer as CEO the competition would be very confused. If you hire an engineer you parse his résumé and you can guess what direction he will take. A lawyer well you just don’t know. And a lawyer is just what you need.

This radical idea would confuse investors in the interim but work big time in the long run.

But like the story title says. They will F it up for sure.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti

Surprise Berkshire Hathaway is a Sell. Check out Short Position. $BRK.B Yikes.

The biggest scripted annual meeting starts dancing right about now. Berkshire Hathaway (NYSE:BRK.B) is about to engage in what maybe the worlds largest and best attended annual meeting. As the market starts its annual adulation let us think about why a stock goes up or down.

Answer: Supply and Demand. The more investors want to buy they create demand and the price goes up. The reverse is also true.

So right now we have a media frenzy and love fest. Something similar to what Apple experienced not that long ago. But when everyone seems very positive where is the remaining buying pressure to come from.

In the past twelve months BRK.B has appreciated nicely by about $25 @share. The short position has grown smartly to 1.2% of float. At something just north of $100 @ share the shorts have balls. Money flow is 2.99 which indicates short-term bullishness.

Berkshire Hathaway is not a deep pond for the professional short. The short position has moved as high as 1.5% and bottomed at just north of 7% all in the past five years. In the past year the short position has fluctuated between 0.8% and 1.5%.

Warren Buffett will come with his annual speech that he is looking for acquisitions. Very little will be officially said about succession policy. The age clock will continue ticking.The primary reason for owning Berkshire Hathaway has been Warren Buffett. Soon the unifying narrative will be ripped asunder.

If you are wary enough to believe in the law of unintended consequences? If you believe in long tail risk and Black Swan Events then consider the merits of the short position. The stock will be bequeathed to charity (Buffett’s part that is) No dividend is paid. charities need income and funds to operate.

The shorts smell the opportunity. Uncertainty will prevail until the leadership stabilizes; if it ever does. Just look at Apple and the ongoing Steve Jobs vs Tim Cook conversation.

George Gutowski writes from a caveat emptor perspective.


Google Governance Quandry Where is Larry Page and Why do they not talk about Him $GOOG $FB

Google 貼牌冰箱(Google Refrigerator)

Google 貼牌冰箱(Google Refrigerator) (Photo credit: Aray Chen)

Google (Nasdaq:GOOG) announced OK earnings. No one will become more of a long term bull as a result of the earnings this Q. but where the Hell is Larry Page. About time they say something and stop the stupid rumours and useless stories. Remember Steve Jobs at Apple (Nasdaq:AAPL) with all the health problems.

Back to business. Google did OK in ad revenue but is not showing any competence in mobile. Not a good sign. This is not a good harbinger for Facebook (Nasdaq:FB) which also is anchored in old desk top mentality but has the problem of a 60 PE on forward earnings.

Steady workmanlike progress will not do it here.

George Gutowski writes from a caveat emptor perspective.

Smart Phone Democracy Steve Jobs Laughing $AAPL $T $V #iPhone4

Steve Jobs on the iPad

Image by tonyhall via Flickr

Lots of retrospective on Steve Jobs and why he is the greatest industrialist/innovator of the 20th century. Sure the guy was great. But think of it this way if an average person buys a iPhone 4 and then say Donald Trump buys a new iPhone 4 you both have exactly the same product with the same availability of app’s and features within the same price range.

Steve Jobs is laughing at the 1% because they are actively engaged with the same technology. Average guy buys or sells a few hundred shares. Big rich guy buys or sells a few thousand shares. Well almost the same. You know what I mean.

Disclosure: George Gutowski writes from a caveat emptor perspective. I have not yet upgraded to iPhone 4 but will shortly. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. 

Steve Jobs Tim Cook Machiavellian Thoughts $AAPL #stevejobs #timcook #machiavelli

Image representing Tim Cook as depicted in Cru...

Image via CrunchBase

Steve Jobs of Apple (Nasdaq:AAPL) finally resigned supposedly on his own terms. The Hewlett-Packard (NYSE:HPQ) Touchbook rout just icing on the cake. Everyone cannot say enough great stuff about Steve Jobs and that is the problem for Tim Cook.

Machiavellian thought counsels to not follow popular princes. Their legacy is powerful and you will be constantly compared in an unfavourable light. It is better to follow a bad prince well just like Steve Jobs did about 13 years ago.  every hiccup will be Tim Cook’s fault. Steve Jobs had hiccups and worse but it was OK. He was Steve Jobs.

Tim Cook undoubtedly is an excellent choice in everything except timing which no one can control. The Apple mystique will change and for high-tech that’s a very good thing.

Disclosure: George Gutowski writes from a caveat emptor perspective. I do own iProducts. I do not have positions in any stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

iPhone malfunction what up Apple? Dust Bunnies killed you. $AAPL #iphone

I took this photo of my iPhone and its SIM slot.

Image via Wikipedia

This morning I wake up and my iPhone says I do not have a SIM card. I did not take it out and would not know how. I run down to the service kiosk at the local mall praying that the sunday staff are competent enough. Sure enough they take out the SIM and show me how to do it with a paper clip. Then they apply scotch tape to the SIM card figuring some dirt got in somehow. Three of four pieces of tape later, re-insert the SIM card and I have a functioning iPhone.

Steve Jobs of Apple (Nasdaq:AAPL) I came this close to going Android. I am this close to buying an iPad2 and you almost lost the deal because of a microscopic dust bunny. Steve come on for criss sakes that was a close one. A piece of scotch tape keeps your product going. Who would have thunk that one.

Disclosure: George Gutowski writes from a caveat emptor perspective. I do not hold positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. I get very anal retentive about personal digital devices (that’s almost wrong eh!) and I will probably get an iPad2 very soon.

8 Uses of Apple Cash $AAPL #apple #stevejobs

The brushed aluminum back of the iPad Wi-Fi

Image via Wikipedia

Apple (Nasdaq:AAPL) has some $76 billion in cash and the controversy becomes what do you do with all that cash. Apple needs to deploy it wisely before the left-wing picks it up as a cause and tries to confiscate. Not sure where on this planet the cash resides. But you have to believe a fair chunk of it sits outside the USA avoiding taxes. [Obama you listening]

So here are a few suggested uses.

  1. Start paying a dividend and change the ownership profile from beta loving tech investors to dividend oriented income types.
  2. Make a huge acquisition(s) masked as strategic investments. Looks good short-term but it will be outside of Apple’s expertise.
  3. Cut your margins and squeeze your competition to death. Anti-trust regulators will soon flock over you to protect competition.
  4. Split up Apple just like the old Rockefeller Standard Oil and watch the component parts become wealthier than the original entity.
  5. Donate millions of iPads to the US school system reducing educational costs dramatically. Watch competitors squawk and fight. Get tied up in stupid litigation. 
  6. Donate millions of iPads to a foreign school system helping them bridge the divide to the 21st century. Then watch that country kick our ass with a very well trained generation of knowledge workers.
  7. Donate huge amounts for medical research and maybe organ transplant. Steve Jobs you owe on that one but something tells me you have been personally generous. Maybe its time for a grander gesture.
  8. Just keep your powder dry. Interest rates will increase rapidly as the inflation genie comes out of the jar. Interest on cash balances will increase. Other businesses will find it more difficult to raise money in higher interest rate environments. Opportunities will abound.  This probably the best option. Now how do we keep clamouring shareholders calm in the meantime.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.



Apple’s secret successor hunt $AAPL #apple #stevejobs

Image representing Steve Jobs as depicted in C...

Image via CrunchBase

Apple’s (Nasdaq:AAPL) board is supposedly conducting an informal whatchamacallit to seek out Steve Job’s replacement. Apple seems to be on fire now and everyone will soon have 16 iPhones, 24 iPads and download incessantly from iTunes. So you know you need a good man to mind the store and keep investors and customers happy.

The board is doing the right thing. They have a fiduciary responsibility to the shareholders and they know Steve Jobs will not last forever. Replacement parts get you only so far.

Steve Jobs has not said anything publicly about his health. But when it comes to death most human beings live in denial even when in hospital hooked up to life saving medical technology. Maybe Steve Jobs cannot bring himself to contemplate his own mortality and has a huge blind spot. Great men have great blind spots. In many ways it would be understandable. But you have to believe Steve Jobs is aware of the replacement search buzz in the media.

The problem the board has is who wants to follow a cult leader like Steve Jobs. Oh sure they’ll throw enough money at you but can you endure the constant scrutiny and comparison. Most of which will be unfair and inaccurate. What will happen to the myriad of relationships that Steve Jobs has signed off on. He has his own people in place and their loyalty will be to his way, his vision and his memory. Will the new leader be able to transition and effectively focus the troops on the next objective. Selling more iPads does not seem like the next big thing for Apple.

Apple has tremendous bench strength and Steve Jobs did not do it all on his own. But when the new guy takes over will he have the same touch. Most technology guys may look at the opportunity and pass. How could you blame them?

But the board must ensure orderly succession and maximize shareholder wealth. The replacement search for Steve Jobs will be the case study of case studies for quite some time.

Disclosure: George Gutowski writes from a caveat emptor perspective. I  hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours. I do have an iPhone. I am contemplating a tablet and iPad is up there. But I have not drunk the cool-aide and I like my flash.



Apple expectations conundrum $AAPL #apple #investorrelations

Image representing Apple as depicted in CrunchBase

Image via CrunchBase

Apple (Nasdaq:AAPL) will issue its quarterly earnings around 17:00 ET. Well after market close. The stock spiked yesterday on just pure euphoria. The madness of crowds if you please. The Apple publicity and PR machine is well oiled. Every product nuance is pounced on by the market. The PR dept plays it very well. But you have to wonder what will happen if as and when Apple has a miss. Statistically you know it will happen. No one bats a thousand. Statisticians know that the inevitable will occur. Every piece of good news brings the bad news closer.

Currently the investor relations department acts as an echo chamber. The news which drives the market is product driven. Occasionally someone wants to talk about the vast cash resources or Steve Jobs health but not for long. Investor Relations just points to product info and and smiles.

The investor relations mosaic is heavily reliant on product product and more product. The concept of risk seems strangely subdued to non-existent. The expectations are so stratospheric that when the stumble comes and the lawsuits start it will be very difficult to affix blame on the investor relations effort that Apple puts out.

The question will become when is a product announcement hype. For a small company that’s all they have. For a large company you would expect some diversification. Life on a knife’s edge has too much Beta. Class action lawyers start your engines.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Apple Steve Jobs Resurrection Compliance Issues

Image representing Apple as depicted in CrunchBase

Image via CrunchBase

Apple (NASDAQ:AAPL) resurrected Steve Jobs and delighted the cult. The stock pops the moment he walks on the stage. To me this begs the disclosure responsibilities. Apple and the board now play Steve Jobs health situation to generate PR spin. Will he or wouldn’t he be at this meeting or that conference.

I wish Steve Jobs all the best in the health category. I am disappointed that he and the board work his health to add buzz to product announcements. By extension if as and when Steve Jobs is no longer able to answer the bell what will investors do.

This is a strange case of behavioural finance which may have some very harsh lessons. Steve Jobs needs to wean himself off the adulation addiction. He has a strong bench. He knows he is iconic with products. How many icons have also allowed their bench to flourish.

Shareholders wealth is more important than iconic public relations.

Disclosure: “George Gutowski” writes from a “caveat emptor perspective”. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.