Daily Archives: December 4, 2007

Facebook’s Problems Congenital, Not Just Bad PR

In his Techland blog, Josh Quittner writes eloquently about Facebook’s increasingly dire troubles. Still, I take issue with his core assertion:

"What’s harming Facebook  — perhaps to a terminal degree  — is enormously bad PR."

It would be insane and irredeemably wrong to argue that Facebook isn’t suffering from terrible public relations. Without a doubt, and certainly with no argument from this quarter, injurious PR is a major problem for the company. The bad PR, however, is a symptom of a bigger disease at Facebook, a fatal malady that derives from defects in its core DNA.

Facebook was congenitally doomed to failure. It’s CEO and much of its callow executive team lacked humility and perspective, though they had no shortage of arrogance and hubris. Vaulting ambition gets a company off the ground, hubris brings its crashing back to earth; there’s a thin line separating the two, but young entrepreneurs, intoxicated with heady success, often fail to draw the distinction.

We not only learn from our failures, we also gain humility from them. Mark Zuckerberg, Facebook’s CEO, hasn’t had many setbacks in his ascent to the Web 2.0 firmament. He’s about to be suffer a big one, though. The question now is whether he will still be the CEO of Facebook when he gets the opportunity to learn from his mistakes and develop the wisdom that comes from experience.

Layoffs at Cisco?

We’re trying to confirm rumors that there have been, or soon will be, layoffs at Cisco Systems.

Uncorroborated and perhaps spurious reports suggest that Cisco is paring some staff in the United States, apparently in response to slowing sales to enterprise customers, especially those in the financial-services industry.

The last time Cisco made news with layoffs was during the dark days after the bursting of the telecommunications bubble. Could the current credit squeeze and subprime debacle be hitting the technology industry in the USA?

JMP Securities Sees Oracle Sailing on Choppy Enterprise Seas

In news that is troubling for Oracle but worse for lesser players, JMP Securities analyst Patrick Walravens says a slowdown in enterprise-software spending is upon us, and that it figures to crimp Oracle’s earnings.

Said Walravens:

While we still believe Oracle will outperform the software industry, our due diligence suggests Oracle’s business is slowing along with enterprise software spending.

Walravens’ opinion isn’t based on a crystal ball or gut feelings. JMP recently conducted a survey of 38 businesses spanning a broad cross section of the economy. Approximately 61 percent of respondents said their enterprise software spending would stay at the same level or decrease in 2008.

Commented Walravens:

This survey result is the worst we have had since 2001 and is similar to the result in May 2003, which marked the beginning of a two- to three-year choppy period for Oracle’s business.

If Oracle is about to sail on stormy seas, so will its rivals and smaller players. Their ships, for the most part, aren’t as big or as sturdy as Oracle’s. If JMP is right, Oracle’s share price might suffer a bit, but the company will be well positioned to pick the scraps of the shipwrecks left behind.