Oracle Insults Autonomy's Price Tag and HP Purchase

Hewlett-Packard (HP) thought their troubles were beginning to fade away as the company ousted their CEO and hired Meg Whitman. A public verbal spat between Oracle and Autonomy is bringing to light criticism about HP’s purchase of the latter company. “Oracle-Autonomy battle rages with HP in the wings” by Paul Sandle of Reuters.com reports HP’s decision to buy Autonomy for $12 billion sparked a debate about the price tag.

The Autonomy purchase was one of the last big moves of former CEO Leo Apotheker. The article reports the purchase “has alienated Wall Street because of its steep price tag”.  HP’s new CEO Meg Whitman has stood by the purchase. But last week, CEO of Oracle Larry Ellison announced to investors that “Oracle had been pitched a sale during an April meeting but walked away because the company, with a $6 billion market value at the time, was priced ‘absurdly high’.”

Autonomy CEO Mike Lynch has admitted the two met but it wasn’t a sales pitch. Ellison is claiming he has proof of the sales pitch. The proof: a PowerPoint presentation by Lynch, and Frank Quattrone, a dealmaker who Ellison claims was present at the pitch. Ellison has gone a step further by posting the slides online at Oracle.com/PleaseBuyAutonomy.

While this verbal dispute between Oracle and Autonomy is entertaining, the actual matter is whether HP paid too much money for the latter. The matter has gone from inquisitive to insulting. While Autonomy feels the need to respond (which I believe they shouldn’t have responded), this is HP’s problem. Meg Whitman needs to clarify the purpose of Autonomy’s purchase and the value of the $12 billion price tag. 

Netflix Celebrates Dreamworks Animation Deal

Don’t count Netflix out. The company has some celebrating to do as it announced a deal to stream Dreamworks Animation content. According to “Netflix signs pay TV deal for Dreamworks Animation”, the deal will start in 2013 and Dreamworks passed over HBO in favor of Netflix. HBO is a part of Time Warner Inc. whose CEO previously made it clear that he did not like Netflix and blamed the company for cable “cord-cutting”.

The announcement of the deal gave the company’s stock a 7% boost in Monday’s market. The article reports “Dreamworks CEO Jeffrey Katzenberg told The New York Times that the deal… was ‘game-changing’ and represented a bet that viewers would soon no longer make distinctions between content streamed on the Internet or through cable”.

The deal is “days after Netflix… sealed an agreement to broadcast TV shows from Discovery Communications Inc.” Both deals might be able to reverse some damage done by the price hike, loss of Starz, and spin off the DVD division. 

HP CEO May Be Ousted by Board

Hewlett-Packard’s board will most likely oust current CEO Leo Apotheker. According to James Bandler and Matt Vella of Fortune via CNNMoney.com, “a person familiar with the matter” stated the board would consider Meg Whitman as the permanent replacement.  Meg Whitman is best remembered as former eBay CEO and is currently a HP director.

Apotheker has been CEO for less than a year, but lately investors haven’t been happy with the company’s confusing communication on its future strategy. The company recently announced that it was restructuring. It would discontinue its TouchPad, WebOS, and consider getting out of the PC business. After the announcement, the company released a desktop, continued TouchPad marketing, and announced it would resurrect the TouchPad (although it’s clearly liquidating remaining product).  All of this is a completely different from the WebOS and TouchPad vision supported by the CEO when he first arrived.

News of the potential ouster and replacement by Whitman led HP’s stock up 8%.  This is compared to the 40% decrease in the stock value within the year.

Netflix Lowers Subscription Expectation and Shares Fall 19%

After Netflix has been ridiculed and loathed for raising their DVD subscription fee by 60%, the company has lowered their subscription forecast. According to “Netflix lowers U.S. subscriber forecast; shares fall” by Yinka Adegoke and Lisa Richwine, the company “cut its third-quarter forecast by 1 million U.S. subscribers”. The immediate result was an almost 19% drop in shares Thursday.

In the article, Analyst Barton Crockett states the less-than-expected forecast for the third quarter could be a foreshadowing of a bad fourth quarter. CNBC’s "Fast Money" also had the same feeling. Analysts and anchors of the show felt that Netflix literally shot themselves in the foot by raising their prices 60%. The decrease in shares and forecast is just the obvious result of angry customers, which could lead to the downfall of the company.

Although Netflix claimed that they were not phasing out the DVD division, the article states that Ted Sarandos, chief content officer, “said the pricing decision gave customers a chance to choose whether to keep DVD services or move to a cheaper streaming-only option”. To me, this translates as “we raised the price in order to force you to choose streaming-only option” or even better put, “we are phasing out the DVD division”.  Then the article actually has Sarandos quoted as saying

“Being able to precisely forecast and predict the behavior of that many people on fairly radical change is something we’ll get better at all the time”

TechCrunch Creator/ Blogger to Leave AOL Over Conflict of Interest

Michael Arrington, editor and founder of TechCrunch has parted ways with AOL, owner of the blog. Although AOL and Arrington just joined together last year, the break up seems to stem from a conflict of interest concerning Arrington and his latest business. According to “Tech Blogger Parts With AOL” by Claire Cain Miller of NYtimes.com, Arrington started CrunchFund, “a venture capital fund backed by AOL that invests in start-ups like those that TechCrunch covers”.

The conflict of interest arises from TechCrunch being a very influential tech blog. Arrington would be reviewing companies that he could also choose to invest in or already has invested in. Would he stay impartial in his reviews? This is the kind of question that most journalists seek to avoid but Arrington is a blogger. Some bloggers make it very clear that they are not journalists even if their blog may have more influence than typical media outlets.   As Jeff Jarvis, “director of the interactive journalism program at the City University’s Graduate School of Journalism of New York” is quoted in the article as saying

“There are all sorts of people who don’t call themselves journalists now who traffic in information, as governments put out data, companies put out raw information and people in the course of their business gather and share information… That’s the way Arrington saw TechCrunch”

Caroll Bartz, Former CEO of Yahoo, Fired Over the Phone

Chairman Roy Bostock fired Carol Bartz as CEO of Yahoo yesterday via a phone call. After the firing, she wasted little time revealing its simple details; she sent an email to her employees stating:

“I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of Board. It has been my pleasure to work with all of you and I wish you only the best going forward”

 Yahoo has had a rough couple of years. Their share of ad revenue fell to 11% from more than 16% and other companies, such as Google and Facebook, have increased. Bartz was hired in 2009 with the expectation that she could motivate Yahoo’s comeback. Investors were displeased with Bartz considering Yahoo has continued their downward slope. In June, Investors called for her ousting but Bostock backed the CEO.

The company is said to have done a “strategic review” of ways to move the company forward and the firing was part of the plan. Bartz had one year left on her contract and CFO Tim Morse will be the interim CEO.

The news of the firing sent Yahoo’s stock up 6%. So far, the reason Bartz chose to break news of the firing, especially the part about being fired over the phone, hasn’t been revealed. Usually such detail is saved and not revealed by the fired employee in order to give that person a chance at another position. Nevertheless, Bartz put herself out there and now she has a bigger career crisis management problem as the media is going crazy about the CEO fired over the phone.

The articles read and you should read them also for more information:

"Bartz Fired as Yahoo CEO Amid Plans of Strategic Review" by Douglas Macmillan, Ian King, and Ari Levy of businessweek.com

"Carol Bartz is out as Yahoo CEO" by Jessica Guynn of Los Angeles Times

Netflix and Starz Deal is Dead - Netflix Will Lose Starz Content

The same day that Netflix’s 60% price hike took effect Netflix lost Starz. “Starz to pull content from Netflix as talks fail” reports that the two companies were in talks to renew their current deal. The deal expires February 28.

Starz not only carries content from its channel, but also “exclusive rights to first-run Sony Corp and Walt Disney Co movies”. The bad news sent Netflix shares down in after-hours trading. The article states that a “source familiar with the negotiations” reported that Netflix offered $200 to $300 million and Starz was not pleased with the amount.   

Starz’ statement concerning the breakup:

“…a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging”