Daily Archives: July 28, 2006

Upgraded Google Talk Irrationally Assailed

Google has upgraded its instant-messaging client, Google Talk, adding features such as file transfer, voicemail, and music status.

The file-transfer feature allows users to send unlimited files and folders to their correspondents, while the voicemail capabilities allow messages to be left for offline parties, who can retrieve them later as email attachments. The music-status capability, the appeal of which utterly escapes me, allows a user to apprise online friends (those on his or buddy list) of the music he or she might be enjoying at any given moment. Hmm, I sense a cross-selling ploy on the horizon.

Still, the file-transfer and voicemail features are solid additions to Google Talk, a standards-based (XMPP) IM client that deserves more success in the market than it has garnered so far. While Microsoft and Yahoo facilitate interoperability between their proprietary IM fiefdoms, Google, perhaps as a result of circumstance as much as choice, has wholeheartedly embraced industry-standard protocols. Regardless of why Google has done so, it should be applauded for that decision.

Instead, however, Google gets bashed, which seems to be the trendy thing to do these days in Silicon Valley. TechCrunch impresario Michael Arrington mocks Google Talk’s minuscule IM market share and lack of a Mac client. Meanwhile, In a surprisingly scathing entry, Charlie White of Gizmodo provides similarly derisive commentary.

There is some balanced coverage of Google Talk’s new features, however, with Garett Rogers of ZDNet noting that the file-transfer feature, in particular, could help draw more users into Google Talk’s orbit. Some thoughtful commentary also is available at Cybernet News, where questions about whether file-transfer capabilities will expose users to viruses and whether the new features will be integrated into the web-based chat functionality of Gmail are explored.

Just to be clear, I, too, would like to see a Google Talk Mac client. Even though third-party XMPP clients such as Adium, Gaim, and Apple’s own iChat work seamlessly with Google Talk and are available today, I think Google should provide its own Mac client as a courtesy to the user community. The cost would not be prohibitive, and the gesture would be appreciated.

That said, how many years (yes, years) pass before Yahoo and Microsoft refresh their Mac IM clients? Yet there was not a peep from Arrington today on that matter, neither in his post regarding Google Talk’s new features nor in an earlier post he made regarding the release of Yahoo Messenger Version 8 for Windows.

Finally, as noted above, Google has espoused and implemented industry-standard IM protocols, open to any and all similarly standards-based services that wish to interoperate with it, whereas Microsoft and Yahoo have retreated behind walled gardens, with a subterranean tunnel used to connect their two fortresses. That, it seems to me, is an issue more deserving of censure and condemnation than the alleged sins of modest market share and lack of a Mac client.

TheStreet’s Cramer, Analysts Speculate on Tech-Takeover Targets

Two news articles have surfaced recently, one from Dow Jones Newswires and another from TheStreet.com’s Jim Cramer, regarding technology companies that are candidates for acquisition.

The articles have different themes and are based on different sets of assumptions, so it’s no surprise the listed companies diverge. 

Dow Jones’ piece, which appeared in the Wall Street Journal (subscription required), examines whether and how HP’s acquisition of Mercury Interactive for $4.5 billion might trigger further takeovers in the software sector.

The writer of the piece correctly posits that the software realm currently is amenable to mergers because it is one of the few high-margin sectors remaining in a technology world that is becoming increasingly commoditized. The author also notes that some of these companies are facing slowing growth in maturing markets, while still others have been weakened by sector- or company-specific problems, such as the recent pandemic of firms whose valuation have been driven down by stock-option backdating irregularities.

Among the companies cited in the article as acquisition candidates are Quest Software, Comverse Technology, Borland Software, BEA Systems Akamai Technologies, McAfee, and Internet Security Systems.

While it appears ISS is a near-term acquisition target, most probably of IBM, some of the others on this list either aren’t for sale or are unlikely to attract buyers at current valuations.

In that regard, McAfee leaps readily to mind. While Microsoft was said to have pondered an acquisition of McAfee two years ago, that was then and this is now.

Who would buy McAfee now? I don’t think IBM wants to get into the antivirus game, definitely not at the price an acquisition of McAfee would entail. Yes, McAfee has other products, but not many of those, with the exception of its IntruShield network-based IPS products, are considered market leaders. I just don’t see McAfee being acquired, at least in the near term, though it will be an active acquirer, in areas such as instant-messaging security and data-leakage prevention (DLP), in the months ahead.

Cisco was rumored to be considering an acquisition of an antivirus company, though it was leaning more toward close partner Trend Micro than toward McAfee, but computer-networking giant is said to have carefully reconsidered that option in light of the increasing obsolescence and decreasing effectiveness of antivirus software as a defensive shield against malware. Also, Cisco was reputed to be dissuaded from making such a move by its reliance on anti-malware vendors as partners in its Network Admission Control (NAC) architecture.

In light of the HP acquisition of Mercury Interactive, Quest Software definitely ranks as a probably takeover candidate, as does Borland, to a lesser extent. Both Sun Microsystems and IBM might take close looks at Quest, and BEA also is a potential target for either company. Oracle also might give BEA more than a passing glance.

Cramer’s list of takeover candidates, as noted above, includes an entirely different roster of names from those mentioned in the Dow Jones article. That’s because Cramer and his staff at TheStreet.com compiled it by looking for companies that are profitable, but whose market capitalizations have been beaten down lately.

Names on his list include Broadcom, Western Digital, Palm, ActiveIdentity, WindRiver Systems, BEA Systems (well, that’s one company on both lists), Tibco, WebSense, FileNet, and Avid Technology.

I don’t see an obvious Daddy Warbucks taking any of these companies home, with the exception of BEA. Sometimes, Cramer, stock prices are down for good reasons, and even acquirers don’t want to try catching falling knives.

YouTube’s Hurley Talks, Says Nothing

Professional athletes aren’t the only ones who deliver interviews crammed with mind-numbing cliches and platitudes. Technology CEOs are equally adept at talking to the media while saying nothing of substance.

In an interview with MarketWatch, YouTube CEO Chad Hurley, who has been thrust into the media spotlight in recent weeks, was a master of the obvious and a betrayer of no secrets.

Hurley refused to say whether his company had been approached by would-be acquirers, said the company "has no plans" to sell itself, earnestly reaffirmed that YouTube’s resolute focus was on "providing the best user experience possible," and, with regard to a potential IPO, said, if the company had an opportunity to go public, the experience would be "very exciting."

It’s like David Beckham saying he’s looking forward to another season with Real Madrid or Bill Belichick saying his New England Patriots take the season one game at a time, never looking beyond their next opponent. It’s verbal anodyne.

In summary, Hurley either said nothing he hasn’t said before, said things that were self-evident, or minced his words so finely that it was impossible to discern meaningful intent. His PR and IR minders must be elated, because he’s following the prescribed script for these situations perfectly.

The only interesting tidbit to emerge is that he dismissed reports that YouTube’s valuation soared from $600 million to $1 billion after his recent star turn at Allen & Co.’s annual media-industry shindig in Sun Valley, Idaho. If you will recall, the New York Post — owned by News Corp., which is run by old-cum-new-media titan Rupert Murdoch — published a gossipy piece last week in which it was alleged that "Hurley and his backers have their sights set on $1 billion for the video-swapping site."

Was that a bit of disinformation injected into the media maelstrom by a mischievous Murdoch, or was it just the columnist’s honest reporting of scuttlebutt he’d heard from others who’d made the rounds at Sun Valley?

Long Shadow of Stock-Option Backdating Looms Over McAfee

McAfee announced last night that earnings in its second quarter declined relative to the same quarter last year, failing to meet analyst expectations, but that its revenue was slightly higher than analyst projections.

Either way, it didn’t matter, because the big news from McAfee last night came when it warned that past profits, extending at least as far back as 2003, probably had been improperly inflated by backdating of stock options for senior executives and other employees at the company.

Since McAfee’s reported profit for the past three years totaled $434 million, the potential for meaningful restatements looms. Even the quarterly earnings it announced last night, which were not up to the expectations of market analysts, could suffer as a result of the company’s restatements.

Additionally, because of its continuing options review and its probable sweeping restatement of earnings, McAfee likely will fail to file its 10-Q for the June quarter on time.

McAfee CEO George Samenuk did his best to convey the message that it was business as usual at the company:

“We will continue to provide visibility into our business and are committed to helping our investors monitor its progress. The company has a strategy in place and will continue to build, buy, partner, and invest to maintain its role as thought leader and preliminary security provider across its target markets.”

I’m not sure what he means when he says the company will maintain its role as a “preliminary security provider across its target markets” — is the main-event security-provider Microsoft, Symantec, or Cisco? — but he is doubtless correct in saying the company will continue to forge ahead in building its business, notwithstanding the stock-option backdating debacle.

Really, what choice does the company have?

Still, it could have done without this mess, and without the hit to its market capitalization that it has occasioned. McAfee has enough trouble, fending off the security advances of Microsoft and combating its traditional rivals, without having to fight those wars with self-inflicted wounds that impair its focus and hinder its flexibility.