Tag Archive: Dell


“Sometimes the most obvious question is the question. In Enron’s case: How do you make money?” — Fortune Magazine Reporter Bethany McLean.

bethany-mcleanx140

The simple answer was Enron wasn’t making money; the company was losing money hand-over-fist.

Enron was hiding these massive losses from regulators, investors, suppliers, partners and most of all, its own massively investing-in-Enron-stock employees.

Still investors poured billions into Enron simply because the stock was going up big time. The majority had no idea about how Enron made money in its energy, bandwidth and weather (go figure) trading schemes and didn’t seem to care because the stock was skyrocketing. As Martha would say: “It (was) a good thing.” Yep, a good thing until the house of cards came tumbling down in a 2001 bankruptcy filing, crashing and burning.

What was that about how does a company makes money?

As we head into the next round of hysteria as yet a third social media provider goes IPO (Initial Public Offering), this one, Twitter, under the ticker, TWTR, one needs to contemplate Bethany McLean’s most obvious of all questions.

twitterjackdorsey

How does Twitter make money?

How does LinkedIn make money?

How does Facebook make money?

How does J.C. Penne’ make money? Hint: It doesn’t.

This simple question needs to be posed to and answered by all publicly traded companies, whether they play in the new economy or the old economy.

The need to quickly, credibility and confidently answer this question, preferably in a brief elevator pitch, solidifies the need for well-trained and highly skilled corporate public relations, investor relations, crisis communications, brand and reputation management practitioners.

Teaching upper-division public relations courses, I would flash images of corporate logos up on the screen and ask students how Company A or Company B makes money.

In our quick media world — whether by conventional or digital means — the millennial digital native generation, more than any other that preceded it, has been bombarded incessantly on all sides by brands.

After initial hesitations, the students were quickly and enthusiastically recalling what the brand means in term of how a company makes money, and even “positioning” companies in their respective market spaces (e.g., BMW vs. VW: Nordstrom vs. Macy’s; Southwest vs. United). Starbucks and McDonald’s both sell upscale coffee. They now both offer drive-through windows. They are the same. Right? Wrong.

As mentioned before in Almost DailyBrett, LinkedIn and Facebook are both social media outlets. To Wall Street they couldn’t be more different.

LinkedIn debuted at $45 in 2011 and now trades at $245.13.linkedin_logo_11

Facebook went public at $38 in 2012 and now trades at $51.01.

zuckerberg

LinkedIn has been able to easily answer the how it makes money question (e.g., monetizes social media) by pointing to “connections,” premium services, advertising and the fact that LinkedIn is the choice for recruiters, job hunters, network builders and those seeking business leads.

Facebook is finally starting to gain traction in the market after its disastrous NASDAQ IPO. The company has been plagued by how do “friends” correlate with the legal tender?

Will 140-character per tweet Twitter be the next LinkedIn, the next Facebook or just maybe the first Twitter in the eyes of Wall Street investors?

A CNBC report this week pointed to Twitter’s relationship with the hard-to-get National Football League and CBS in which video supplied by both will be available for tweets. Wall Street may very well see a ka-ching correlation with this deal.

The deal and others, plus the recently announced Twitter S-1 (e.g., company prospectus) may have a direct bearing on what will be the pricing and Wall Street response to the much-anticipated IPO.

As more companies pursue the IPO route, minus the ones that opt to rebuild in privacy (e.g., Dell), that means even more opportunities for skilled-and-trained corporate public relations, investor relations, crisis communications, brand-and-management protection pros.

Conservatively, there are more than 5,100 publicly traded companies on the two major exchanges, the NYSE Euronext and NASDAQ. There are thousands more on overseas exchange, such as Japan’s Nikkei, Hong Kong’s Hang Sang, Britain’s “Footsie” or FTSE, France’s CAC-40 and Germany’s DAX.

Each of these companies, most definitely those in America, has reporting requirements on an annualized and quarterly basis. The Securities Exchange Commission (SEC) mandates 10-Q quarterly earnings reports; 10-K annual reports to shareholders; 8-K unscheduled “material” information disclosure announcements; S-4 additional share purchases, an annual meeting with shareholders, and of course, an S-1 filing of a privately held company prospectus prior to an IPO.

All of these filings require on-target prose, delivered conventionally and digitally, employing text, audio and video. Who are these message builders? Who will train them? And where can they be found?

As long as a publicly traded company is in business, it must report. It must communicate. It has absolutely no choice.

Quite clearly, the demand for these highly skilled corporate PR and investor relations practitioners outstrips the supply. Maybe that’s why they are compensated at a PR segment high average of $117,233 annually.

Sounds like an upwards-to-the-right market for qualitative-and-quantitative PR/IR types.

Full-Disclosure Note: The editor of Almost DailyBrett at various times owned shares of both LinkedIn and Facebook, only to subsequently sell the stocks. He fully anticipates as a mere retail investor being a late arrival to the upcoming Twitter IPO, if only to follow TWTR on a daily basis…Thank God he never bought into Enron.

http://www.linkedin.com/today/post/article/20131003191330-270738-with-twitter-s-ipo-5-key-things-you-need-to-understand-about-the-social-ad-revolution

http://www.forbes.com/sites/tomiogeron/2013/10/03/twitter-reveals-long-awaited-ipo-plans-253m-revenue-in-first-half-of-2013/

http://dealbook.nytimes.com/2013/10/03/twitter-discloses-its-i-p-o-plans/?_r=0

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“I stand ready to lead us down a different path, where we are lifted up by our desire to succeed, not dragged down by a resentment of success.” Former Massachusetts Governor Mitt Romney

Is Suite H33, Kirkland House at Harvard University the most famous dorm room in the nation?

Or maybe it is located in Dobie House at the University of Texas in Austin?

Or should we focus instead on a garage, maybe one located in Palo Alto, California?

As we struggle to escape the clutches of an increasingly stubborn economic downturn, perhaps we should be looking for a new kind a “stimulus” in the form of more dreamers, achievers, inventors, innovators and entrepreneurs.

Mark Zuckerberg wrote the algorithms as seen in the film, The Social Network, that would eventually turn into Facebook on a whiteboard in a cluttered Harvard dorm room in 2003. Today, Facebook has more than 800 million subscribers, making this social media community the third largest “country” in the world. More than 3,000 people work for Facebook and a potential second quarter IPO is in the offing. If so, it will be the ultimate ka-ching.

kirkland

Michael Dell started building and selling his own brand of computers for fellow UT classmates for under $1,000 each in 1983. There was no need for a middle man, and thus a business strategy was born. Today, Dell has $61.7 billion in annual revenues, a market cap (share price x number of shares) of $28.5 billion and employs 100,300 worldwide.

Bill Hewlett and David Packard started in 1937 what would eventually become Hewlett Packard in a tiny one car garage at 367 Addison Street in Palo Alto, CA.  To many this little garage is considered to be the birthplace of Silicon Valley. Today, HP is one of the largest technology companies on the planet with $127 billion in revenues, a market cap of $52.5 billion and employing almost 350,000 souls worldwide.

Certainly these are not the only entrepreneurs that have been successful as there are many more, some of them coming to America without the ability to speak English, but they all had the capacity to dream.

For more than a decade, I worked for one of those entrepreneurs, Wilfred J. Corrigan. He is now the fifth most famous person to hail from Liverpool, UK. No one knew him when he came to America with no income, flying his bride from the fjords of her native Norway to the Sonoran Deserts of Arizona. He worked on the assembly line for Motorola in Phoenix. Eventually, Wilf became the CEO of Fairchild; later losing the company in a hostile takeover attempt. He spent a year under a no-compete contract. And then started LSI Logic in 1981.

Wilf Corrigan, CEO of LSI Logic

The company eventually grew to $2.7 billion in revenues with 7,700 employees and made the essential processor for the two generations of the Sony Play Station. It all started with a dream. And as a result of Wilf’s dream, thousands were working directly (employees) or indirectly (e.g. distributors, partners, suppliers) and thousands of B2B customers and their customers were being served (e.g. video game players among others). Wilf succeeded, failed and succeeded again. He is part of the 1 percent that you may have read about.

As we survey the economic landscape looking for answers, there are some who believe the key lies in leveling the playing field, particularly those who achieve. As they say, no good deed goes unpunished.

According to the independent Tax Policy Center, 46 percent or about 76 million will not be liable for federal income taxes in 2011. That’s a whole lot of people for whatever reason, who are not achieving, some of which could be achieving a whole lot more. Granted, the ones who are employed are paying payroll taxes and contributing to Social Security.

What would happen if this 55-45 percent taxpaying to no taxpaying ratio was shifted to a 65-35 percent taxpaying to no taxpaying ratio under existing tax rates? What would happen if for example, 20 million more Americans were liable for federal income taxes without raising or lowering rates? What would be positive net income to the federal Treasury? If these 20 million would earn enough to pay taxes, would they also increase their own economic activity? What impact would that increased activity have on the federal Treasury, but also the account statements for states and municipalities?

After 15 years working in the Silicon Valley, I learned to believe in innovation and entrepreneurship. The net results are good products, good paying direct and indirect jobs. The ideas are out there. There are also risks. As a result, some will succeed and some will fail. That is the tyranny of the marketplace, but it is also the opportunity. We need to start listening to the conversations and ideas germinating from dorm rooms and garages. Who knows, the next Facebook, Dell or Hewlett Packard may be taking form.

And with these new ideas turned into new companies comes more job opportunities for the 46 percent that are not liable for federal income taxes.

Sure beats throwing money at a Bridge to Nowhere.

http://www.youtube.com/watch?v=lB95KLmpLR4

http://www.guardian.co.uk/technology/2010/sep/12/social-network-facebook-mark-zuckerberg

http://www.kirkland.harvard.edu/icb/icb.do

http://content.dell.com/us/en/corp/brand-entrepreneurship

http://www.cs.utexas.edu/news-events/news/2011/michael-dell-speaks-during-return-campus

http://www.biography.com/people/michael-dell-9542199

http://en.wikipedia.org/wiki/HP_Garage

http://money.cnn.com/2011/04/14/pf/taxes/who_pays_income_taxes/index.htm

http://www.huffingtonpost.com/2011/06/28/46-percent-of-americans-e_n_886293.html

http://www.taxpolicycenter.org/

http://www.heritage.org/research/reports/2005/10/the-bridge-to-nowhere-a-national-embarrassment

“Yeah, just sitting back trying to recapture a little of the glory of, well time slips away and leaves you with nothing mister but boring stories of glory days.” Bruce Springsteen, Glory Days.

glorydays

Remember the PC/Internet connectivity era?

The one that ended about a decade ago?

Remember when investing in Intel (NASDAQ: INTC); Microsoft (NASDAQ: MSFT); Cisco (NASDAQ: CSCO) and Dell (NASDAQ: DELL) was close to automatic profits on Wall Street?

Of course, you wanted to invest in these stocks and so did everyone else…but over time the world changed: Pentium processors became a commodity, just like all other semiconductors. Microsoft operating system announcements became less-anticipated and the results less than stellar…most of all they were being used for ubiquitous PCs. Cisco makes switches and routers. They work. The Internet works. Thank you very much…and just this week the company laid off 6,500 workers. And Dell? Well, Dell produced a great model for inventory…How about big-time results?

If you are engaged in public relations, marketing, employee communications and social media for these four companies, you are probably singing Bruce Springsteen’s “Glory Days,” if you are singing anything at all.

So what is the connection between music and technology public relations?

Two days ago CNBC after-market anchors were hyperventilating about another blow-out quarter for Apple (NASDAQ: AAPL), they really had nothing negative that they could say about the company as the stock reached $400 a share for the first time. Reportedly, the company sold every iPad that it made.

And then one of the talking heads asked the rhetorical question: “What happens when the music stops?”

For companies such as Apple, search engine Google (NASDAQ: GOOG), social media Facebook, cloud computing Salesforce.com (NYSE: CRM) and social media LinkedIn (NYSE: LNKD), it is downright heresy to suggest that the music will stop someday…but based upon history it will because in virtually all cases it has to.

Ten years ago, Apple was trading at $9.07 per share. Today, Apple is listed at $387.90. Anybody remember Gil Amelio? Hint, he was the guy running the show before the resurrection of Steve Jobs. Remember all the hoopla about Blackberry’s and Research in Motion (NASDAQ: RIMM)? The music stopped.

Ten years ago, Google didn’t exist. All the search discussion focused on Yahoo (NASDAQ: YHOO)…but the music stopped for Yahoo as Google went public in 2004 at $101 per share. Today the Google is trading at $606.78: Yahoo at $13.61. And just this month, the company introduced Google+, taking dead aim at its chief competitor, Facebook.

Facebook didn’t exist 10 years ago. Its eventual founder Mark Zuckerberg was a secondary school student attending Phillips Exeter Academy in New Hampshire. He was still a couple of years away from that famous dorm room at Harvard University.

Ten years ago, Salesforce.com was privately held and still going through the growing pains of a two-year old company. The company went public in 2004 at $15 per share. Today Salesforce.com trades on the big board at $149.16.

LinkedIn.com was the first social media company to go public, debuting two months ago at $45 per share and today trading at $101.02 per share. The biggest question is whether the shadow of Facebook will stomp on little ole LinkedIn, if Zuckerberg et al decide to take Facebook public.

The music is playing fast and furious for Apple, Google, Facebook, Salesforce.com and LinkedIn. Times are good. Reporters/editors/analysts/investors can’t get enough of Jobs, Zuckerberg, Larry Page and Sergey Brin of Google and to a lesser extent Marc Benioff of Salesforce.com and Reid Hoffman of LinkedIn.

Now imagine for comparison reasons if you were managing public relations/marketing/employee communications/social media for Intel, Microsoft, Cisco and Dell. These used to be hot jobs; not as much today…Keep in mind that a job is a job in this economy.

Ten years ago, Intel traded at $29.97; today, $22.69.

Microsoft was priced at $33.60; today $27.10.

Cisco was a $20.61 stock 10 years ago; today $16.39.

Dell traded at $27.61 a decade ago; today, $17.46.

dell

Anyone want to hear another story about Moore’s Law? How about the genius of Bill Gates and Paul Allen? Bet ya it’s a whole lot easier to get an interview with John Chambers of Cisco, but does he really want to talk about layoffs? And how many Silicon Valley-based reporters are accumulating frequent flyer miles to spend time with Michael Dell in Austin?

The point of this Almost DailyBrett exercise is to remind PR types that nothing lasts forever. If things are going great, don’t get giddy. If things are heading south, keep your wits about you. And if you have stock options in a high-flying company, start selling in increments as the stock moves upward. There are two kinds of remorse when it comes to options; the one that you sold too early…and then there is the other one.

And never lose hope. Apple was a dead company before Steve Jobs came back. But also don’t be guilty of drinking your own bath water. In most cases as Don McLean once wrote in “American Pie” there comes a day “when the music died.”

DISCLOSURE TIME: The author of Almost DailyBrett presently owns shares of Salesforce.com and LinkedIn. Decisions regarding the impartiality of my rhetorical ramblings are left to the discretion of the reader.

http://www.apple.com/pr/library/2011/07/19Apple-Reports-Third-Quarter-Results.html

http://en.wikipedia.org/wiki/Facebook

http://en.wikipedia.org/wiki/Google

http://en.wikipedia.org/wiki/Salesforce.com

http://en.wikipedia.org/wiki/Linkedin

http://en.wikipedia.org/wiki/Phillips_Exeter_Academy

http://en.wikipedia.org/wiki/Gil_Amelio

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