50 ways Microsoft’s (MSFT) new CEO can revolutionize the company and take down Apple (AAPL)

Here are 50 paths Microsoft could take to build revenue, delight customers and begin telling itself (and the world) a fresher, more fascinating story.

The best corporations tell themselves stories that are persistent and unyielding. They’re filled with twists and turns, but they move inexorably ahead toward a faraway goal.

I believe that Microsoft’s (MSFT) story has morphed into a tale of incremental improvements. Yes, the giant still marches the face of the earth slaying foes, but his steps have gotten heavy. His shoulders are sore and his eyes have drooped.

We must hoist up to him a 5-Hour Energy the size of an oil drum. We must drink with him to some spectacular new future where Microsoft takes a moonshot and succeeds; one where the company is rechristened as the greatest technology company on the face of the planet.

Here are 50 paths I’d love to see the company explore; 50 ways Microsoft might build revenue, delight customers and begin telling itself (and the world) a fresher, more fascinating story. Particularly radical ideas are in bold:

  1. Invest in lip-reading technology that could rival Siri and be used to compose emails and other text in a corporate setting.
  2. Build a spherical (omni-screen) gaming system; a ball-shaped 360-degree, ceiling-mounted pull-down screen that works in conjunction with two projectors and immerses the player in his or her gaming environment.
  3. Build the world’s first high-powered mobile IDE for developers with a cloud-based subscription model running on virtual machines.
  4. Build a flying Bluetooth-controlled camera that can take photos of it’s owner based on the location of his or her phone. The device could constantly record (similar to a head-mounted camera), and it would follow or travel in front of the owner in the air.
  5. Buy spotify to take on Apple (AAPL) as the king in mobile music. Partner with radio news apps (i.e. Stitcher) to cut into Apple’s stranglehold on the podcast market.
  6. Develop smart glasses, or, at the very least be aggressively developing apps for Google’s hardware.
  7. Develop apps for the iWatch with an emphasis on integration with Outlook.
  8. Make Outlook web-based, and expand its social networking, content delivery and calendar functionality.
  9. Integrate voice commands into all desktop applications. There’s the potential to use a freemium model for this service (10 free minutes a month, for example).
  10. Explore how to integrate gaming with live television. For example, Jeopardy viewers could be competing directly with the contestants on TV. Or Madden fans could be competing nationwide as they attempt to call plays in live games before they’re run. The most accurate play-callers would win.
  11. Embed Kinect in laptops and monitors to integrate gestures with core Microsoft software.
  12. Aggressively pursue Bloomberg’s audience in the financial data space. It’s time that world-class financial data get pumped out over the web — not on proprietary terminals. Investors have deep pockets (just check out Michael Bloomberg’s net worth).
  13. Push all of Microsoft’s flagship applications onto the cloud. If you don’t catch up with Google Docs and Google Spreadsheets, you’re going to lose serious revenue.
  14. Consider buying Adobe to deepen your stranglehold on development software. Adobe also has a nice cloud-based software-delivery system (though, eventually, programs like Photoshop will be running in the cloud, not on local machines).
  15. Re-imagine Excel as a web tool that can publish beautiful embeddable reports on the web with the click of a button. Currently you can make nice charts, but users should be able to make online, interactive data tables and charts just as easily. Excel’s data should be beautiful and highly interactive, even if you’re not a programmer.
  16. Buy Basecamp, Trello or another up-and-coming software collaboration site, then port that usability into TFS. Or at least give TFS a serious re-design that makes it faster to roll-out and test software.
  17. Expand virtual box services for software testing. Testing is extremely difficult now that developers have to support so many devices (tablets, desktops, phones, TVs, watches, glasses, etc.). The only – ONLY – way this is going to be doable is with virtual test environments. Developers will pay serious cash for serious emulators.
  18. Build a “business marketplace” where corporations can easily outsource things like testing, and integrate it with TFS (or the next iteration of TFS).
  19. Integrate Kinect and voice-to-text with smart glasses to destroy the smartphone.
  20. Build a Roku competitor that ships free with Microsoft computers. Make a deal to deliver premium sports content over the network. Any Roku competitor should be extremely easy to control with a laptop, tablet or phone, and it should allow users to run apps on the screen (especially social apps) while also watching TV.
  21. Make Word, PowerPoint and SharePoint themes much easier to install, and then create an online marketplace for buying/selling them.
  22. Build a theme marketplace for Microsoft’s OS, phones, tablets and Xbox.
  23. Buy Fitbit and integrate it into Microsoft’s cross-platform operating systems.
  24. Invest more in help documentation and tutorials to make coding on Microsoft’s platforms easier. Common functionality in Surface apps, for instance, should have drag-and-drop interfaces and very extensive code libraries.
  25. Stop being afraid to make a true Surface/laptop combo that ingrates touch screen with standard inputs.
  26. Create a simple interface for controlling drones. Allow consumers and small businesses to purchase and schedule drone usage time through a national network of Microsoft-branded drones.
  27. Capture and store user data across devices (phone, mobile and tablet), then feed that data back to users so they can see their activities over time and look for ways to increase their productivity.
  28. Release free, ad-supported mobile phones.
  29. Rollout Stackoverflow-style forums that are integrated with Microsoft’s core apps.
  30. Rollout an aggressive venture capital program to fund start-ups (and grab an equity stake in the process).
  31. Create a marketplace for resume templates in Word.
  32. Create a marketplace for code plugins.
  33. Develop easy-to-install circuits for home electrical appliances, and release apps to control them.
  34. Build a social network into windows 9, something that provides optionally shareable data on a user’s computer activity. This would be great for social and professional purposes (i.e. Microsoft-certified “Time in Application”). There’s so much activity that we do on our computers that’s never quantified or analyzed.
  35. Build a freemium-model API for voice-to-text services so programmers can integrate Siri-style services into Surface and xBox apps (and maybe some of them will even pursue programming conversational robots).
  36. Develop a holographic TV that works using Pepper’s Ghost. Theoretically, this could be done if video broadcasts shot two layers of film: background and foreground. For example, if a station were broadcasting a football game, the field would be sent as one layer (the background for Pepper’s Ghost), and the foreground layer would contain the 3D players.
  37. Improve Windows Phones so they can guess what you’re doing all day. It would work by asking you what you’re doing when it’s not sure. Each activity would leave a signature based on time of day, geo-location and movements. Then, this information could be sent back to users for analysis.
  38. Award grants for app development. The apps would then be exclusively developed for Windows for a predetermined amount of time.
  39. Build the worlds first mainstream 3D printer.
  40. Integrate face-time messages/recordings in Outlook.
  41. Create a premium newsletter feature (ala ConstantContact) that’s integrated in Outlook and allows users to broadcast messages to thousands.
  42. Rethink email. Static text emails should be a thing of the past. We need embedded polls, to-do lists, videos, text-to-voice readers that let you listen to emails on the go, etc. The messages would automatically downgrade for text devices (similar to responsive web design).
  43. Buy Dropbox to take SkyDrive mainstream.
  44. Integrate second screens in laptops or Surface keyboards that show metadata on open apps, alerts and/or give you the ability to quickly switch between open applications.
  45. Use SkyDrive to make publishing to the web easy for anyone. A Word doc that’s on SkyDrive should be elegant on any device (think of Amazon’s Reader, which can be used across platforms).
  46. Make an easy way for users to do repetitive tasks on a computer. In essence, the OS should have a “record button” I could use to teach my computer how to do a task or series of tasks.
  47. Build “Application Analytics” that run on the OS level and allow corporations to identify where employees are spending their time and how they can improve efficiency.
  48. Develop a smart-screen or smart-glass augmented reality gaming system that attaches to the wearer’s head and can integrate with the real world by overlaying opponents in your actual environment.
  49. Add NFC to future Microsoft phones.
  50. Create a secure payment-processing platform for Bitcoin.

Got any additional ideas for Microsoft?

Please add them to the comment section below, and I’ll repost them.

Eleven reasons to AVOID investing in Dow Jones Industrial Average stocks

Of the 30 stocks in the Dow Jones Industrial Average, 11 of them would actually be worth less or just about the same as they were 10 years ago (including dividends!).

When I first started writing this blog post, I was going to call it “How to Invest Safely in Stocks.” My second recommendation was that beginners should start with a handful of the 30 stocks that make up the Dow Jones Industrial Average. Once I started digging through the numbers, though, I was a startled at what I found. Apparently, the blue-chip stocks aren’t the no-brainers most investors like to think they are.

Need proof? Check out this chart I put together of the 10-year returns for each of the 30 Dow Jones stocks:

Company 10-Year Stock Return 10-Year Dividend Return on $1,000 investment $1,000 is now worth
3M Company +46.6% $590.94 $3,458 (aided by a stock split)
Alcoa Inc. -68.1% $134.46 $449.82
American Express Company +41.47% $122.40 $1,514
AT&T Inc. -31.8% $357.12 $1,024
Bank of America Corp. -51.8% $718.58 $1,109
The Boeing Company +12.54% $218.16 $1,311
Caterpillar Inc. +208.7% $787.17 $7,093 (aided by a stock split)
Chevron Corporation +113.9% $794.85 $4,791
Cisco Systems, Inc. -7% $7.20 $933
The Coca-Cola Company +45.2% $284.76 $1,734
du Pont +11.1% $372.72 $1,462
Exxon Mobil Corporation +82% $319.44 $2,086
General Electric Company -61.9% $200.4 $572
Hewlett-Packard Company +2% $123 $1,129
The Home Depot, Inc. -32.7% $117.58 $780
Intel Corporation -29.7% $136.54 $825
International Business Machines Corp. +57.1% $127.26 $1,605
Johnson & Johnson +20.8% $257.22 $1,426
JPMorgan Chase & Co. -16.1% $273.12 $1,107
Kraft Foods Inc. +8.7% $283.34 $1,339
McDonald’s Corporation +198.4% $387.25 $3,351
Merck & Co., Inc. -51.2% $218.70 $698
Microsoft Corporation -20.1% $416.64 $1,998
Pfizer Inc. -56.3% $196.56 $634
The Procter & Gamble Company +68.6% $607.79 $3,884 (aided by a stock split)
The Travelers Companies, Inc. +11.8% $120.34 $1,206
United Technologies Corporation +94.9% $529.54 $4,305
Verizon Communications Inc. -31.5% $305.33 $988
Wal-Mart Stores, Inc. +4.7% $130.29 $1,141
The Walt Disney Company +25.1% $110.20 $1,330

What’s startling is this: of the 30 stocks in the Dow Jones Industrial Average, 11 of them would actually be worth less or just about the same as they were 10 years ago (including dividends!). That’s remarkable considering I didn’t factor in inflation, which have averaged 2.4 percent over the past decade (per FinTrend.com).

That means your odds of throwing a dart at a list of the Dow stocks and hitting a winner are only around 63 percent. That’s not much better than going to the casino and counting a few cards at the blackjack table.

Before you toss your hands up and cash in your IRA for guns and ammo, though, I’d be remiss if I didn’t point out that the average return on $1,000 for the 30 Dow component stocks was $1,842 over the past 10 years. Indeed, a $1,000 investment in Caterpillar Inc. (NYSE:CAT) would be worth $7,093 today. That’s not bad, but seeing the returns from a company like GE, which has crumpled more than 60 percent over the past 10 years is scary. And this year hasn’t been kind to the Dow, either. Take a peek at the YTD returns on each of the component stocks:

Company Ticker YTD Return Dividend Yield
3M Company NYSE:MMM -10.8% 2.86%
Alcoa Inc. NYSE:AA -27% 1.07%
American Express Company NYSE:AXP +3.9% 1.61%
AT&T Inc. NYSE:T -3.17% 6.05%
Bank of America Corp. NYSE:BAC -51.8% 0.62%
The Boeing Company NYSE:BA -10.5% 2.88%
Caterpillar Inc. NYSE:CAT -14.7% 2.3%
Chevron Corporation NYSE:CVX +2.25% 3.34%
Cisco Systems, Inc. NYSE:CSCO -25.8% 1.6%
The Coca-Cola Company NYSE:KO +2.28% 2.79%
du Pont NYSE:DD -12.1% 3.74%
Exxon Mobil Corporation NYSE:XOM -4.02% 2.68%
General Electric Company NYSE:GE -17.3% 3.97%
Hewlett-Packard Company NYSE:HPQ -41.9% 1.96%
The Home Depot, Inc. NYSE:HD -7.9% 3.1%
Intel Corporation NYSE:INTC -7.85% 4.33%
International Business Machines Corp. NYSE:IBM +8.33% 1.89%
Johnson & Johnson NYSE:JNJ -1.51% 3.6%
JPMorgan Chase & Co. NYSE:JPM -21.2% 2.99%
Kraft Foods Inc. NYSE:KFT +6.47% 3.46%
McDonald’s Corporation NYSE:MCD +14.3% 2.78%
Merck & Co., Inc. NYSE:MRK -13.1% 4.85%
Microsoft Corporation NYSE:MSFT -14% 2.67%
Pfizer Inc. NYSE:PFE +0.9% 4.52%
The Procter & Gamble Company NYSE:PG -4.07% 3.40%
The Travelers Companies, Inc. NYSE:TRV -11.8% 3.34%
United Technologies Corporation NYSE:UTX -14.02% 2.84%
Verizon Communications Inc. NYSE:VZ -2.6% 5.6%
Wal-Mart Stores, Inc. NYSE:WMT -3.23% 2.80%
The Walt Disney Company NYSE:DIS -14.6% 1.25%

Just seven out of the 30 Dow component stocks have actually appreciated in value this year. That should give you pause before you invest in a high-profile company solely on the strength of its name and brand.

The Takeaway

Here are three key things I take away from the charts above:

1) Energy is the name of the game. One sector in the Dow has strongly out-performed others in recent years. Namely, oil (ala Chevron and Exxon). And I wouldn’t expect that to change – particularly as fears over inflation mount.

2) Banking stocks have a lot of ground to make up. The fact that JPMorgan Chase is down 16.1 percent over the past 10 years, and Bank of America’s down a whopping 51.8 percent could get you thinking banking stocks have to turn the corner soon. I’d argue there’s a lot of pain for them on the horizon, particularly with the imminent threat of inflation. Banks thrive and dive on interest rates, and all those fixed mortgages BAC’s underwriting at 3 percent could come back to bite them in a high-inflation environment. That’s a big part of why banking stocks have fallen in recent months, and it’s a trend I expect to continue.

3) Follow the macro-trends. If you would have invested $1,000 in gold at the start of 2001, you’d now be holding onto $6,797 in bullion. Energy and inflation are the stories du jour, and your portfolio should reflect that reality. No one can say the next 10 years will play out the same as the past 10, but we can say the demand for oil isn’t going away anytime soon, and neither is our government’s debt problem. You can’t afford to ignore the macro picture anymore, unless, of course, you’re happy rolling the dice in your IRA.



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Millennial Media IPO: The future of mobile advertising?

If Millennial does indeed have an IPO, here are three reasons to consider buying in.

The rumors have been confirmed. Kind of. A fresh report from Bloomberg cites two un-named sources that claim Baltimore-based Millennial Media, Inc. is in talks with several banks regarding a possible IPO. Millennial’s managed to carve out its own niche in the face of intense competition with heavyweights, Google Inc. (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL), and they’ve had quite a bit of success.

Despite owning just 6.8 percent of the market, Millennial’s ranked as the third-largest mobile ad company in the country. If Millennial does indeed go public, here are three reasons to consider buying in:

1) Phenomenal growth. The mobile advertising market is one of the latest and greatest gold rushes in Tech Bubble 2.0. IDC estimates that the U.S. mobile ad market was worth $877 million last year, and it expects revenue to exceed $1 billion in 2011. The market’s dominated by Google and Apple, but there’s plenty of pie to go around. Millennial’s revenue tripled in 2010, and the company grew its market share by 1.4 percent to capture 6.8 percent of all mobile-ad revenue in the U.S. They’re not doing it with lightweight, fly-by-night advertisers, either. They’ve inked ad deals with some of the most recognizable brands in the world including Lexus, McDonald’s and Ikea. All told, Millennial’s network reaches more than 91 million unique U.S. mobile users every month. That’s roughly 30 percent of the entire population in the U.S.

2) Partnerships. Google and Apple dominate the mobile advertising space thanks to some prescient acquisitions. In Google’s case, the company dropped $700 million to buy AdMob last year. Apple also ponied up an undisclosed sum for the Quattro Wireless ad network last year. That leaves Millennial as the last indie standing, and the company’s already been in talks with potential suitors (Microsoft, anyone?). Indeed, the biggest threat to a Millennial IPO is the possibility that a Microsoft, Yahoo! or AOL might swoop in and make an offer for the company that’s just too good to refuse.

3) Local campaigns. The most intriguing facet of mobile advertising is the ability to target Web surfers based on where they’re accessing the Web from. Indeed, 42 percent of the ads Millennial served last quarter were targeted locally. That was a jump of 24 percent in a single quarter! The appeal is obvious: serve someone an ad for a burger when they’re driving or walking by your restaurant, and you’re a lot more likely to get them through your front door.

All told, Millennial’s ad network reaches consumers on more than 5,500 mobile devices in over 250 countries and territories. Advertisers are taking notice, and they’re doing it most specifically in a handful of industries: restaurants, automotive and finance. Here’s where Millennial showed the biggest year-over-year growth in revenue between Q1 2010 and Q1 2011:

That’s the sort of growth that’s given Millennial valuation estimates near $1 billion. Expect that valuation to keep growing, too, as smart phones cannibalize traditional cellphones. Millennial’s in a sweet spot, and I suspect investors wouldn’t mind buying shares in the company and going along for the ride.



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LinkedIn IPO date and stock price set: Is it a buy?

No one’s quite sure how investors will react to the debut of an U.S.-based social networking site, and that might be what scares me the most.

LinkedIn is set to IPO on the NYSE on Thursday, May 19, 2011, under ticker symbol “LNKD.” It will be the second social networking site to start trading on the Big Board this month after the so-called “Facebook of China,” RenRen.com (NYSE:RENN), went public on May 5.

It appears LinkedIn has piqued investor interest. The company raised its offer price $10 yesterday from a range of $32-$35 per share to $42-$45 per share. LinkedIn, which targets white-collar professionals, has displayed some impressive growth. Revenue doubled last year to $243 million and membership ballooned around the world to more than 90 million.

Nonetheless, some investors are worried we’re in the midst of Tech Bubble 2.0, and I’m inclined to agree. Here are three reasons to consider holding out before you buy shares in LinkedIn:

1) LinkedIn’s peers. There aren’t many social networking sites that are public, so we don’t have much to go on. In fact, there’s really just one other social networking Web site that trades on U.S. stock exchanges, and that’s China’s RenRen.com. RenRen IPO’d on May 5, and shot up 29 percent in its first day of trading. Not even two weeks later, investors have pushed the stock down 30 percent to $12.73 – a figure that’s below RenRen’s IPO price. If we’re looking for track records in the social networking space, here’s one that says “stay the hell away” (in the short-term, anyway).

2) Steep valuation. Consider this: LinkedIn’s latest valuation puts it at 17 times last year’s revenue. That’s a rather staggering figure when we compare it against other more established tech titans:

  • AOL, Inc. (NYSE:AOL): 1x 2010 revenue
  • Apple Inc. (NASDAQ:AAPL): 12.5x 2010 revenue
  • Google, Inc. (NASDAQ:GOOG): 6x 2010 revenue
  • Microsoft Corporation (NASDAQ:MSFT): 3.5x 2010 revenue
  • Netflix, Inc. (NASDAQ:NFLX): 6x 2010 revenue
  • Yahoo! Inc. (NASDAQ:YHOO): 17x 2010 revenue

Yahoo’s rich valuation is thanks in no small part to it’s rather cunning investments in Chinese tech companies (see my post Three reasons to buy Yahoo! Inc. (YHOO) in 2011).

3) Bad timing? Earlier this week I penned a piece titled Stock market crash looming on horizon? The gist? Darkening clouds seem to be gathering on the horizon for the broader stock market. Commodities have crumbled in recent weeks, defensive stocks including healthcare and blue chips are on the rise and inflation’s starting to cut into the pocketbooks of consumers. Shares in speculative companies like LinkedIn could get hit the hardest in the event of a major downturn in the markets.

Not buying my arguments? Convinced LinkedIn stock is going to start strong and shoot for the moon? Check out my post 3 reasons to buy LinkedIn shares during IPO, which outlines the bullish case for the company. If you’re looking for more reasons to stay away, I can indulge you there as well with my post: 3 reasons NOT to invest in LinkedIn IPO.

The fact of the matter is, we’re in uncharted waters. No one’s quite sure how investors will react to the debut of an U.S.-based social networking site. That might be what scares me the most. Investing isn’t about having a “hunch” a stock will do well; it’s about picking companies with strong profits and even better prospects for the future. LinkedIn’s got great prospects, but it’s clear we won’t be seeing profits anytime soon. That makes buying shares a gamble – particularly on LinkedIn’s first day of trading.



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Is China’s Qihoo IPO a buy? (Ticker:QIHU)

Qihoo 360 has its fingers in a lot of pots and that adds up to a steady income stream. Here are some key facts and figures you need to consider before investing in Qihoo 360 (NYSE:QIHU).

The Chinese anti-virus software-maker Qihoo 360 Technology Co. Ltd. is expected to begin trading on Wednesday under the ticker QIHU on the NYSE. The Web security company makes an assorted suite of anti-virus software, the most popular of which is “360 Safe Guard,” which had 301 million monthly active users as of January, according to the company’s F-1 Filing.

Why buy Qihoo 360 shares? Anti-virus + browsers + online games = Big Business.

Qihoo 360 has its fingers in a lot of pots and that adds up to a steady income stream. In 2010, the company booked net income of $8.5 million on $57.7 million in sales. Qihoo pulls in that cash from a number of sources. Chief among them? Paid anti-virus software. In addition to “360 Safe Guard,” the company offers “360 Anti-Virus,” “360 Mobile Safe,” “360 Online Shopping Bodyguard” and more.

There’s a lot more to Qihoo 360, though. The company also makes China’s second most popular Web browser: 360 Safe Browser, which claims 172 million monthly active users and a user penetration rate of 44.1 percent. Safe Browser’s biggest competition is Microsoft Corporation’s (NASDAQ:MSFT) Internet Explorer.

Some 98 million of those 172 million monthly active users of Safe Browser access Qihoo 360’s “Personal Start-up Page,” which acts as a content portal and gives Qihoo a platform to promote its other services, including an open gaming and e-commerce platform that’s set up to let developers build and distribute online games and shopping services. Game developers are among Qihoo’s heaviest advertisers, often paying the company to promote new games or inking rev-share agreements with the company.

All this adds up to Qihoo claiming to be China’s third-largest Internet company with more than 300 million monthly active users. That’s a great base to promote products and it lead to year-over-year revenue growth of 79 percent in 2010, according to the Wall Street Journal.

Bigger and better things. Qihoo 360 plans to use funds from its IPO to research and develop new products. The company will also consider strategic acquisitions that could boost its marketshare in China. One of the most appealing aspects of Qihoo 360, though, is its aggressive expansion into the mobile realm. If mobile anti-virus software becomes a standard paid download for Web users in China, Qihoo could accumulate piles of yuan as the mobile market in China is set to explode.

“Users are also increasingly conducting Internet activities through mobile devices, including mobile-banking, mobile-commerce, mobile-gaming and mobile social networking, among others,” Qihoo 360 writes in the company’s F-1 Filing. “According to iResearch, the number of mobile Internet users in China increased from 17 million in 2006 to 303 million in 2010, representing a CAGR of 105.3%, and is expected to grow further to reach 658 million by the end of 2013.”

658 million mobile users. Think about that number. It’s more than twice the population of the United States.

Bumps in the road: Still, for all the positives, there’s a big unknown in Qihoo 360’s future as the company’s embroiled in a legal dispute with Tencent Holdings Ltd. (HKG:0700). Tencent, which develops China’s leading instant messaging software QQ, started bundling its own anti-virus software, QQ Doctor, with downloads of its instant messaging platform. To run QQ Doctor, users have to uninstall Qihoo 360 software. Both companies have since launched smear campaigns targeting one another as they struggle to maintain market share, according to a Wikipedia page (360 v. Tencent) that details the dispute.

No matter what the ultimate outcome of the case, Qihoo 360 is forging ahead with its IPO. The company plans to sell 12.1 million American depositary shares at $10.50-$12.50 a pop. Every two ADSs will represent three Class A ordinary shares. It’ll be interesting to see how investors respond. I, for one, wouldn’t want to take on Tencent head-to-head, but in China’s cut-throat online market, competition is the name of the game. To the victor go the advertising dollars.



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3 reasons to buy Baidu stock (BIDU) even at record levels

Baidu’s (BIDU) hard at work redefining itself not just as a search engine company, but as a full-fledged Internet conglomerate. That could lead to brand new revenue streams that might justify the company’s valuation.

Late last week, Chinese search engine company Baidu.com Inc. (NASDAQ:BIDU) overtook Web conglomerate Tencent Holdings Ltd. (HKG:0700) as China’s largest Internet company. Baidu’s market value surged to $46.06 billion compared to Tencent’s $44.6 billion, according to Business China. A lot of investors may be questioning just how big Baidu can get, but there are still compelling reasons to consider adding the stock to your portfolio. Here are three of them:

1) A monopoly on search. After Google Inc. (NASDAQ:GOOG) pulled out of China last March, Baidu’s share of the Chinese search market has steadily risen to 83.6 percent (per ResonanceChina). That’s led to a big bulge in Baidu’s wallet. During Q4 of 2010, Baidu’s revenue was up 94 percent year-on-year to RMB 2.45 billion with most of that cash coming from online advertising services.

2) A new way to browse. Baidu looks to be aggressively expanding its offerings. Now that it dominates search in China, the company’s announced that it’s hard at work on a Web browser that will compete head-to-head with Google Chrome and Microsoft Corporation’s (NASDAQ:MSFT) Internet Explorer. Baidu should be able to leverage its high-visibility search results pages as a platform to advertise the browser and encourage surfers to download it; much like Google did with its Chrome browser. A browser that’s optimized for the Chinese language and surfing habits could make consumers more comfortable (or even dependent) on Baidu’s services.

3) Mobile OS. Rumors surfaced last week that Baidu’s also working on its own “light operating system” for mobile devices to be launched in three to five years. It’ll be interesting to see if Baidu opts for an open-source OS that would compete directly with Google’s Android OS, or if they elect for a closed OS along the lines of Apple’s (NASDAQ:AAPL) iOS, which runs the iPhone and iPod Touch. Either approach could open up valuable revenue streams for Baidu in the mobile app realm.



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Yandex IPO date drawing near

It finally looks like Yandex’s IPO is drawing near. I’ve long maintained the company will have a powerful IPO, and I ranked it as my second-favorite IPO on my ‘Unofficial Tech IPO Calendar for 2011.’

Yandex may file for an IPO with the U.S. Securities and Exchange Commission in weeks, and the company could go public as soon as June, according to a report from Bloomberg

UPDATE: Yandex’s IPO date is set for May 24, 2011 on the NASDAQ under ticker “YNDX.”

Yandex operates the most popular search engine in Russia. Yandex.ru is also the most-visited Web site in the country and the 24th most-visited Web site in the world (per Alexa).

The site’s managed to resist aggressive competition from Google, Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) with Yandex’s search market share in Russia rising from 52.4 percent in December 2009 to 55.5 percent in December 2010. Those gains could get a further boost after the company inked a deal late last year to integrate Facebook into its pages.

Revenue at Yandex surged 43 percent last year to $410 million, Bloomberg reports, with the total number of advertisers on the site growing by more than 40 percent to 180,000+. I’ve long maintained that Yandex will have a powerful IPO, and I ranked it as my second-favorite IPO on my Unofficial Tech IPO Calendar for 2011. First place? That goes to Chinese social networking site RenRen.com.



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Google (GOOG) sucker punches Microsoft (MSFT) with Chrome OS

Google’s (GOOG) doing the things we wish Microsoft (MSFT) would have been doing with its operating systems five years ago. And it’ll reward them handsomely in the future.

The war between Google Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) is finally warming up now that Google’s mailed out some beta versions of its Cr-48 laptop to hand-picked volunteers. The laptops are a move toward a future where users will do just about everything on the Internet: from creating spreadsheets to editing photographs, playing games and attending meetings.

Google’s basically taking what it did for search and email and pushing that model onto computing itself. In the case of search, Google provided an efficient way for users to find Web sites. Then, they took a look at the keywords you used to search for Web sites and sold ads to companies that have products related to those keywords. With Gmail, Google gave you a simple Web-based email inbox that’s nearly as powerful as Microsoft Outlook. Then, it started scanning your emails so it could tailor keyword-based ads to your email content.

Now, the company will give you free document creation software that’s just as good as Microsoft Word, and let you create documents in your Web browser. Soon, Google’s all-seeing eye will scan your Word-like documents (spreadsheets, powerpoints, videos, conferences, etc.) for keywords and, well, I think you know what’s coming next.

It’s something every steampunk saw coming, but the public still doesn’t seem to understand: the Internet is the computer now. They call it cloud computing, but it’s something that goes a lot deeper. It’s a wholesale shift from doing things independent of the Internet to doing EVERYTHING on the Internet. That gives you the ability to untie yourself from a specific computer and access your data the way you want, when you want – no matter what device you want to do it on.

Marketing materials for Google’s Cr-48 laptop takes pot-shots at Microsoft products: “The web evolves rapidly. Your Chrome notebook evolves with it. Every time you turn it on, it upgrades itself with the latest features and fixes. Annoying update prompts not included.”

Google understands one of the most important facets of the cultural tsunami that’s coming to computing: it has to be entirely web-based, but it has to be fast and efficient, too. The first thing the company stresses about their shiny new OS is its fast start-up times: 10 seconds from power off to ready-to-browse-the-web. Google’s laptops come with built-in 3G, too, so that you can access the Web even when you’re out of WiFi range.

Google’s doing the things we wish Microsoft would have been doing with its operating systems five years ago. And it’ll reward them handsomely in the future.


A savior for Microsoft (MSFT)?

If Windows Phone 7 pays off, it could do wonders for investors’ perceptions of Microsoft, especially if the company can create a thriving app marketplace similar to the iPhone’s AppStore (NASDAQ:AAPL). That could add a whole new revenue stream to the giant’s bank account, and that would make investor’s swoon.

It seems Microsoft (NASDAQ:MSFT) is the company everyone loves to hate. And the sad fact is, it’s because just about every human in the United States has benefited from their products at one point or another. Now, one gets the sense that the giant’s against the ropes.

Barclays (NYSE:BCS) cut their earnings estimates for Microsoft on slowing PC shipments, a leading gaming exec jumped ship for Amazon (NASDAQ:AMZN), and the company’s COO, B. Kevin Turner, just sold 141,407 shares. The Kin was a failure, the Wii’s cutting into their gaming market and their search deal with Yahoo! (NASDAQ:YHOO) hasn’t done much yet.

Can Bill Gates and Steve Ballmer re-invigorate the giant? Or is it time to turn the company into a dividend-paying value stock like General Electric Company (NYSE:GE)?

Perhaps not yet. Microsoft has just released the first ad for their Windows Phone 7, a device that they’re pinning much of their hope for the future on.

“This is make-or-break for them. They need to do whatever it takes to stay in the game,” Jonathan Goldberg, an analyst with Deutsche Bank, told TechCrunch. They don’t need Windows Phone 7 to crush the iPhone, but they need it to stop people from switching to the iPhone, and they’re spending the cash to make that happen. Marketing efforts for the new mobile OS are estimated to be near half a billion dollars (and that excludes the phone’s substantial development costs).

If it pays off, it could do wonders for investors’ perceptions of Microsoft – especially if they can create a thriving app marketplace similar to the iPhone’s AppStore (NASDAQ:AAPL). That could add a whole new revenue stream to the giant’s bank account, and that would make investor’s swoon. Thankfully, too, the phone’s on tap for an October release; well ahead of the holiday season.

Here’s their first ad for Microsoft’s Windows Phone 7. Does it make you want to buy it?

Why Microsoft (MSFT) is poised for a major pop

Here are five reasons we expect Microsoft (NASDAQ:MSFT) to enjoy a big move upward, despite the shaky investment environment.

Here are five reasons we expect Microsoft (NASDAQ:MSFT) to enjoy a big move upward, despite the shaky investment environment:

1) Microsoft is trading at a P/E ratio of 11. That’s preposterously low when you look at its peers like Google (NASDAQ:GOOG) with a P/E of 20 and Apple, Inc. (NASDAQ:AAPL) with a P/E of 19. Even Yahoo’s (NASDAQ:YHOO) trading at a P/E of 22, and we won’t even talk about AOL, Inc. (NYSE:AOL).

2) Hedge funds are betting big on Microsoft. According to GulfNews, there are a handful of big fish moving into the stock, including Singh’s TPG Axon, Einhorn’s Greenlight Capital, John Griffin’s Blue Ridge and Thomas Claugus’s GMT Capital. They slowly accumulate millions of dollars in shares. They don’t move in and out on a whim.

3) Microsoft appears poised to raise their dividend (currently at $0.13). The stock’s maturing and moving into value mode. That means you get something out of owning them for the long haul. Many expect a dividend rise in November.

4) The company’s new mobile OS (Windows Phone 7) is due out in the next few months. Users won’t be able to upgrade their old phones to the new OS, so that means you can expect a whole lot more functionality. After the death of the Kin, expect them to fully go after the market they should have been going after in the first place: business class users. If I were Research In Motion Limited (NASDAQ:RIMM), I’d be nervous.

5) Microsoft’s “value momentum” is pointed in the right direction. In fact, it “is now greater than 83 per cent of US companies.” Stocks eventually return to their equilibrium, and Microsoft appears artificially cheap right now.

Now, they just need to unveil a tablet at CES.