Filed under: Developer, Web services

Brad Fitzpatrick, the developer responsible for Livejournal and OpenID is up to it again. This time, he let us know on the Google Code blog, that the API for Social Graph is now available.

Social Graph is an API that functions like a Pagerank for social relationships. The idea is that when you join a new social network you don’t have to manually add previous relationships because it can populate your list based on your connections from other networks, your blog, or the web.

Social Graph works by indexing sites that use the XFN (XHTML Friends Network) and FOAF (Friend Of A Friend) open standards in order to gauge relationships between people.

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Stony Stevenson writes “The new Mega-D Botnet has overtaken the notorious Storm worm botnet as the largest single source of the world’s spam according to security vendor Marshal. This botnet currently accounts for 32 percent of all spam, 11 percent more than the Storm botnet which peaked at 21 percent in September 2007. It started about 4 months ago but has been steadily increasing since then. It is also using news headlines to trick victims into opening the spam, a technique synonymous with the Storm worm.”

Read more of this story at Slashdot.

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Stony Stevenson writes “The new Mega-D Botnet has overtaken the notorious Storm worm botnet as the largest single source of the world’s spam according to security vendor Marshal. This botnet currently accounts for 32 percent of all spam, 11 percent more than the Storm botnet which peaked at 21 percent in September 2007. It started about 4 months ago but has been steadily increasing since then. It is also using news headlines to trick victims into opening the spam, a technique synonymous with the Storm worm.”

Read more of this story at Slashdot.

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Filed under: Bad news, Industry, Rants and raves, Competitive strategy, China, Politics, Recession

Someone might want to explain this to me because it defies almost all palatable logic that I can apply to it. I read earlier this week that China carries a massive debt portfolio and that about 70% of it is American debt. Additionally, China is buying up American debt at break-neck speed, while possibly neglecting their own populace in order to do so.

As I was taught, there are two potentially profitable reasons to buy debt obligations. The first (and best) reason is because there’s a reasonable expectation that the debt will be repaid, supported by documentation, collateral security, and research. The second reason is because there is an expectation that the debtor shall default, resulting in the expeditious seizure of pledged security assets that are desired.

I’ve become aware of an unsettling third scenario regarding the value of buying debt. You can easily use it to buy control of the debtor’s assets through their weakness.

We have the ability to probably assume that the Chinese have heard rumors that American banks are writing off billions of dollars in debt-related losses. I’m guessing that it’s no secret around the globe that American debt might currently be a sucker’s bet. So are we to assume that Chinese financiers are ill-informed of the facts or shall we believe that they are just stupid? Is it simply a matter of Chinese bankers having a special talent for choosing safe debts to invest in? Should we think that the Chinese believe in us, or is this simply a matter of China’s cheap purchase of global political power. I’m thinking that the latter explanation is the case.

To take the matter one step further, what happens if there’s wholesale default on the treasury securities China has invested in? You must believe that our government is certainly facing that possibility. If the debts are owed by our government, does that mean China could have the sheriff evict our president from the White House in the event of default? Yeah, laugh now if you want to. Then stop and consider it again.

I fail to grasp the concept well, unless it’s as obvious as it appears to be. In which case it would seem that China is knitting itself a massive catch-22. Why would you buy a position into financial stresses you helped create? Why would you purchase debt obligations as, by default, you thwart the capability to repay? It seems all too obvious to me that China has designs on the very soil you’ll be buried in. The only problem is, in the process of taking control of American assets, they’ll handily destroy the concepts of free enterprise and capitalism that have been essential in their rise toward dominance.

There’s a bit of ironic justice beginning to show through the clouds now, and I’m desperate to see how it’ll all play out. China’s day of reckoning may be closer than you think. In the face of a very limp dollar, which actually makes us more competitive in the world markets, China is experiencing the need to raise the wholesale prices on their goods for export. Suffice it to say, this could play out well for us by breathing a bit of life into American light manufacturing, but only if it creates steady jobs that pay the labor force more than $12 per hour.

The single biggest problem we get when we invite communist governments to play the games of capitalism is that we always have to interrupt the fun to explain to them the probable outcomes. Generally, by the time they figure things out for themselves, it’s already too late for them to put things into good order. Then we spend the next twelve or so years bailing them out of the messes they got themselves into. It’s sort of like cutting our own throat with the knife they intend to sell to us.

The only new angle to the situation this time is that China and several other countries that hold no regard for free democratic society are now holding the mortgage to the farm. How long will it be before Congress no longer has the clout to stop them from calling that note due and payable? Will China then be buying our manufacturing base out from under us, financed by our own debt? My simple advice to you is this: Don’t ever think it can’t happen.

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Ant writes “Here is an interesting world map of various World wide web connections, showing how it took just one vessel to inflict the damage that brought down the web for millions.”

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Filed under: Bad news, Industry, Rants and raves, Competitive strategy, China, Politics, Recession

Someone might want to explain this to me because it defies almost all palatable logic that I have the ability to apply to it. I read earlier this week that China carries a large debt portfolio and that about 70% of it is American debt. Additionally, China is buying up American debt at break-neck speed, while possibly neglecting their own populace in order to do so.

As I was taught, there are two potentially profitable reasons to buy debt obligations. The first (and best) reason is because there’s a reasonable expectation that the debt will be repaid, supported by documentation, collateral security, and research. The second reason is because there’s an expectation that the debtor shall default, resulting in the expeditious seizure of pledged security assets that are desired.

I’ve become aware of an unsettling third scenario regarding the value of buying debt. You can easily use it to buy control of the debtor’s assets through their weakness.

We can probably assume that the Chinese have heard rumors that American banks are writing off billions of dollars in debt-related losses. I’m guessing that it’s no secret around the globe that American debt may currently be a sucker’s bet. So are we to assume that Chinese financiers are ill-informed of the facts or shall we believe that they are just stupid? Is it simply a matter of Chinese bankers having a special talent for choosing safe debts to invest in? Should we think that the Chinese believe in us, or is this simply a matter of China’s cheap purchase of global political power. I’m thinking that the latter explanation is the case.

To take the matter one step further, what happens if there’s wholesale default on the treasury securities China has invested in? You must believe that our government is certainly facing that possibility. If the debts are owed by our government, does that mean China could have the sheriff evict our president from the White Home in the event of default? Yeah, laugh now if you want to. Then stop and think about it again.

I fail to grasp the concept well, unless it’s as obvious as it appears to be. In which case it would seem that China is knitting itself a huge catch-22. Why would you buy a position into financial stresses you helped create? Why would you buy debt obligations as, by default, you thwart the capability to repay? It seems all too obvious to me that China has designs on the very soil you’ll be buried in. The only problem is, in the process of taking control of American assets, they’ll handily destroy the concepts of free enterprise and capitalism that have been essential in their rise toward dominance.

There’s a bit of ironic justice beginning to show through the clouds now, and I’m desperate to see how it’ll all play out. China’s day of reckoning may be closer than you think. In the face of a very limp dollar, which actually makes us more competitive in the world markets, China is experiencing the need to raise the wholesale prices on their goods for export. Suffice it to say, this could play out well for us by breathing a bit of life into American light manufacturing, but only if it creates steady jobs that pay the labor force more than $12 per hour.

The single biggest problem we get when we invite communist governments to play the games of capitalism is that we always have to disturb the fun to explain to them the probable outcomes. Generally, by the time they figure things out for themselves, it’s already too late for them to put things into good order. Then we spend the next twelve or so years bailing them out of the messes they got themselves into. It’s sort of like cutting our own throat with the knife they intend to sell to us.

The only new angle to the situation this time is that China and several other countries that hold no regard for free democratic society are now holding the mortgage to the farm. How long will it be before Congress no longer has the clout to halt them from calling that note due and payable? Will China then be buying our manufacturing base out from under us, financed by our own debt? My easy advice to you is this: Don’t ever think it can’t happen.

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Filed under: Deals, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Employees

With the announcement of Microsoft (NASDAQ: MSFT)’s $44.6 billion bid for Yahoo! (NASDAQ: YHOO), the real courting process is about to start.

As I predicted back in July 2007, this “affair” had to happen if Microsoft was ever going to be serious in challenging Google (NASDAQ: GOOG)’s reign in the lucrative search engine world. Looking at October 2007 data from comScore — the independent scorekeeper in the search world — Google was actually widening its dominance. Explain please!

There were 55.3 billion search queries worldwide during the month of October. Google handled 42.4 billion of these queries, while 2.1 billion were directed to Microsoft and Yahoo! handled 10.8 billion — or a total of one-quarter of Google searches. Worldwide growth was 56% year-over-year for the industry, while Google’s annual growth alone was 81%. The message: Google was taking market share at the expense of Microsoft and Yahoo!. Coupled with its recent disappointing guidance for 2008, Yahoo! had no choice but to hook up with Microsoft, and the opportunity for Microsoft was now. That’s all well and good, but now what happens?

Yahoo! is headquartered in Sunnyvale, Calif., just south of San Francisco, while Microsoft is 1,000 miles north in the Seattle area. The 1,000 miles is also the gap in their respective corporate cultures. Microsoft will do almost anything now to retain the key, strategic Yahoo! employees. Culturally, Microsoft versus Yahoo! is like the stiff-upper-lipped British “gentleman” meeting a reformed 1960s hippie. Microsoft I know would disagree, but visit both campuses and the differences are rather pronounced.

Yahoo! already announced the head-count reduction of 1,000 people from its 11,000-person workforce, and Microsoft mentioned a $1 billion worth of “synergies” once the transaction closes. “Synergies” in Silicon Valley means more head-count reductions. But more importantly, key Yahoo personnel not scheduled for layoffs will begin to feel suspicious. Will key positions be in Sunnyvale or in Redmond, Washington? Will my new boss wear a Microsoft hat rather than a Yahoo! hat? Will I be able to park my bike here on campus for free? Will the coffee remain free? Can I still create to my heart’s content?

These are the types of questions that run through the brilliant minds of technology geeks. Microsoft will not close the Yahoo! transaction for about six months. The ensuing six to nine months will tell the tale if Microsoft is capable of absorbing such a large acquisition. The Microsoft acquisition of aQuantive went smoothly — so far — as aQuantive is only five miles away and key senior managers were kept in place. This Yahoo! purchase is about eight times larger, but Yahoo! was also a direct competitor to Microsoft. aQuantive was a completely new technology for Microsoft, so they had to retain the key players.

Microsoft has yet to detail what “synergies” really means. Who stays and who goes? What about Yahoo! CEO and co-founder Jerry Yang — what’s his REAL new role going to entail? Right now, Jerry must be kept happy.

Large acquisitions rarely go without major disruptions and surprises. The biggest surprise here might be Yahoo! employees “taking it easy” these next three to six months. The attitude of “we now have a deep pocketed parent” might permeate, and Yahoo!’s senior management will be more focused on the acquisition process than the business building process.

The real opportunity here might be for Google. Google might prove to be the biggest winner of all in this proposed deal. More on why this move is to Google’s advantage in my next article … stay tuned.

Georges Yared writes about finding great growth stocks today in GameOn Investing.

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I Don’t Believe in Imaginary Property writes “The US Court of Appeals for the Federal Circuit upheld a ruling by a lower court that Dish Network DVRs infringe upon TiVO’s patent on a ‘multimedia time warping system’. According to some analysts, this couldn’t only make Dish liable for damages, it could force them to close down their DVR service, harming their customers. The patent in question has already been reexamined once and the ruling on appeal (PDF) was unanimous.”

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Filed under: Forecasts, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Stocks to Purchase

With Microsoft Corporation (NASDAQ: MSFT) bidding $44.5 billion for Yahoo, Inc. (NASDAQ: YHOO) one would instantly think that Microsoft is the winner — and they could be — in about a year or so… maybe. In the meantime, Google Inc. (NASDAQ: GOOG) will benefit immediately. The deck chairs are being re-arranged and there will be one less player. But before everyone thinks Microsoft is going to walk away the huge winner, think again.

The game changer right now is Google. With 76% search engine market share, it will still be 4X the size of Microsoft after the Yahoo transaction is closed. Google has been successfully expanding its presence globally, and not in just the usual countries, but in the Brazils, the Portugals, the Argentina’s, the Australias, etc. Seeding these remote, but lucrative locations is done and Google is now reaping the rewards.

Google can now capitalize domestically with its customers and Yahoo’s/ Microsoft’s customers as well by playing the disruption card. Basically, when a technology company is about to be acquired a lot of potentially negative things can and do happen: employees and customer relationships are disrupted. Google can unequivocally claim to customers that they’re indeed “the” priority right now and that smooth media/advertising projects are awaiting their approval. Yahoo/Microsoft aren’t sure which players are staying or leaving yet. Customers don’t like that!!

Google can also emphasize that a disjointed headquarters status of Seattle or Sunnyvale can also lead to confusion and levels of customer service declining. Google has to take its game up a notch in the next 12 months and capture even more share.

Google’s quarter was viewed by many as a disappointment. It’s a buying opportunity the same as we witnessed from last July. Google reported a “disappointing” June 30th, 2007 quarter, saw its stock fall from $550 to $500, to only rebound and soar up to $747. That same opportunity is staring us in the face again. Remember, this company does not give earnings or revenue guidance to the Street. The so-called disappointment was solely in the eyes of analysts. I estimate Google will earn $20 per share in 2008, up from $15.58 in 2007.

Has the industry growth rate slowed down? Perhaps, but only temporarily in the United States. The analogy I would use is the Boston Red Sox won 96 games to win the Major League Baseball Eastern Division in 2007. It may only take 94 wins in 2008, but still win the division. In 2009, it make take 98 games, but still, they’re the winner. Google dominates its sector without question and it will grow faster than the industry or any major competitor. Bottom line is whatever slowdown there may be…it’s in the price!! Google should double in the next two years in value.

Google’s overseas revenues are still under 50% of total revenues, yet international growth is 80%+. Also, Google may expand its incredible market dominance as it bids for the “airspace” from the FTC. This new line for Google would be complimentary to its core search engine and advertising business.

So yes, Microhoo or Yasoft will be the clear number 2 player, but Google has a 12 month window to accelerate its position and its terrific profitability. Google has a game changing situation right here, right now.

Georges Yared writes about finding great growth stocks today in GameOn Investing.

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Filed under: Deals, Rants and raves, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Headline news

The BIG news this morning about Microsofts (NASDAQ: MSFT) offer to purchase Yahoo Inc. (NASDAQ: YHOO) for $44.6 billion has been thoroughly covered all over the media including numerous posts on our site, so I will not pile on or repeat what you can find elsewhere.

Short and sweet: My view is the perfect timing of the offer, not the offer itself, is the news. Microsoft has been rumored to be chasing Yahoo for quite some time and apparently from the substantial offer it made this day (60% over yesterdays closing price) money has not been the issue. Obviously Steve Balmer and friends are willing to pay up — way up!

The timing of the offer hits Google Inc. (NASDAQ: GOOG) when they are down - way down! Google has lost a third of its value over the last month and it has lost its momentum going forward. The stock is down substantially this day although the company reported solid growth. That is a significant change in the playing field. Balmer, a very aggressive businessman has decided to make his move now, potentially stealing the momentum on Wall Street.

Two points:

1) MSFT has to do this deal now because there’s an outside chance that Google’s market share might go down just enough to make the combined MSFT / YHOO market share equal or bigger to them. If that were to happen the anti-trust machine might swing into action again, so the time is now while the combined company could claim to be the good guys still lagging GOOG by 5% to 6% in market share, improving competition and not thwarting it.

2) MSFT, by making a bold move against Google, now is a real threat because Google has been spending billions to build other revenue streams — so far unsuccessfully. Revenue streams that are substantial and running on all cylinders at MSFT. Think about that GOOG has been adding free software to dilute MSFT unsuccessfully. GOOG can’t make a dent in Vista but MSFT can weaken GOOG search and advertising plenty by adding Yahoo.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm. He owns shares of ISRG. To find potential opportunities and verify my track record read Chasing Value or Serious Money. Disclosure: I do not own shares of GOOG or MSFT.

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