Tag Archives: merger & acquisitions

Yahoo’s Only Chance: A Merger With Twitter

Posted on March 27, 2012 by | 1 comment

William A. Foster, IV

Enemy of my enemy is my friend. – Proverb

Yahoo recently filed a lawsuit against Facebook to the dismay of pretty much everyone in the tech industry. It reeked of a desperate attempt by Yahoo to take attention off the reality that they have yet to figure out how to remain a relevant company since Google came on the search scene, why it can not seem to figure out its own management issue, and is in the midst of major shareholder revolt. Again.

Then, there is the loveable new but not so new kid on the block Twitter who launched in 2006 and caught fire with well over 100 million users that pump out over 340 million tweets a day. The company produced $140 million in revenue and had a valuation of approximately $8.4 billion toward the end of 2011. However, even with such a strong valuation the business model at Twitter still leaves much to be desired from an investor’s standpoint to believe the company could grow sizable revenues over time. The company has had its own share of musical chairs in management primarily because of its inability to figure out its business model but there is no denying its management has been with the platform and its growth. While things seem settled with co-founder Jack Dorsey taking the helm (again) there is still an air of uncertainty if this company can produce sizable revenue growth expected out of a young company based simply off its ad revenue. I believed then and I believe now that the boat Twitter truly missed was charging its business and non-profit organization users for accounts.

All that leads up to why these two companies need each other. Yahoo is completely absent as it were in the social media space and could use a more visionary management team which I believe Twitter has. Twitter on the other hand needs a stable source of revenue and a way to monetize users toward products it can actually sale with growth. Something Yahoo has with the likes of Yahoo Travel and other products. Offering specials to its users that could easily spread like wildfire given Twitter’s application of the ‘Retweet’  which is a unique feature that neither Facebook or Google has found a way to mimic. This would allow the new company to have a diverse mix of ad and product revenue. Both companies weaknesses would be offset with the others strengths which is exactly what a merger is suppose to create. The company indeed would put Facebook & Google on notice. Finally, the tables would be turned and the move could potentially spark off a much needed consolidation arms race of the tech social media space. Pinterest anyone?

Disclaimer: There is no ownership of any of the companies mentioned in this article by myself, my business, or my family as of this article’s publishing.

Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & President of AK, Inc. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.

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Dell Buys Research In Motion – In My Dreams

Posted on March 19, 2012 by | Leave a comment

William A. Foster, IV

All is for the best in the best of possible worlds.  — Voltaire

On Friday we watched the Apple (AAPL) insanity behind the IPad 3 consume the world. In New York it was reported a man flew from Brazil and waited 30 hours in line to buy his IPad 3 because they would not be released in Brazil for another 2 months. I would love for someone to name me the last time any sense of this type of excitement or euphoria surrounded a Dell (DELL) product or Research In Motion’s (RIMM) release of a Blackberry. I dare say waiting on that answer might require me to as the Snickers commercial says “Not going anywhere for awhile?”

There are so many issues for both of these companies that its honestly scary to even try and begin to name them. The people at Dell can’t possibly tell me that they have not observed how a company like Apple, once on the brink of collapse, has not only surpassed them but is now worth —- wait for it —- a market cap 18 times Dell and is now the world’s most valuable company at over half a trillion dollars. I can’t even remember the last time anyone told me they were considering buying a Dell. To say Michael Dell is no Steve Jobs is like saying Evander Holyfield is no Muhammad Ali. On the other side the Research In Motion leadership does not want to accept that its strategy and course of action simply isn’t working, flawed, misguided, and a number of other adjectives that all lead to the same place. Research In Motion made the fatal mistake believing it needed to get into the consumer/retail to compete with Apple and other smart phone makers instead of securing its place in the small business and enterprise (SBE) sector. It also failed to invest in a processor that provides a much faster interaction with the Blackberry device.

Both Dell and Research In Motion missed a great opportunity to create the cult and vertical integration in the small business and enterprise sector that Apple has created on the consumer side. A merger would really allow an exciting and global opportunity to vertically integrate the SBE sector onto the Research In Motion platform for its mobile device and Playbook tablet which could be transferred onto the Dell desktop and laptop systems.  This in turn would allow Dell to get out of the consumer and retail business itself and have both companies focus on serving the SBE sector solely and be a leader in emerging markets like China, India, and Africa who are experiencing booms in business creation. Dell could break itself of the Windows platform and the new company could then focus its R&D on the Blackberry processor which greatly needs improvement and marketing in which it could sell itself as the most secure SBE hardware company on the planet based on the Blackberry platform which could be implemented into Dell’s hardware.

These two companies could create the SBE sector version of Apple. Fully integrated with customers who want the complete ecosystem of products within it and pander for release of the next product that makes their lives easier as business people. Unfortunately, I’m not sure that the leadership at either company would be creative enough to create exciting new business products anymore than I believe they’d have enough imagination to see why they need each other and are destined to become relics in their industries. They’ll continue to try and be jack of all trades companies attempting to appease both consumer and SBE customers and masters of neither.

Disclaimer: There is no ownership of Apple, Dell, or Research In Motion by myself, my business, or my family as of this article’s publishing.

Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & President of AK, Inc. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.

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