Monthly Archives: May 2011

Microsoft and Skype

An interesting article on how an analyst thinks Microsoft can make money on Skype.

http://www.forbes.com/feeds/ap/2011/05/24/business-technology-hardware-amp-equipment-us-microsoft-skype-analyst-note_8482543.html

the analyst says it will be possible for Microsoft to make a penny a share off display ads on Skype on 2010  – by my calculation that works out to about 84 million in 2012.  Lets assume Skype breaks even in 2012, which seems reasonable (they lost money in 2010 and forecast to lose/breakeven in 2011).

Microsoft is paying 8.5 billion to get 84 million in 2012, up to 500 million in 5 years according to the analyst.  Most people agree Microsoft didnt buy Skype for the technology or the earnings – they bought it for the eyeballs of Skype users and to keep those eyeballs away from Google or Facebook.

Berkshire Hathaway just paid 9.5 billion for Lubrizol, and Lubrizol is forecast to make 800 million to 1 billion in earnings in 2011 with earnings growth of 8 percent a year.   No strategic reason for Berkshire to buy Lubrizol, other than it makes a bunch of money year after year.

Linked In just went public at at huge premiums to earnings – perhaps making Skype look reasonably priced.  Looking at the price difference between Lubrizol and Skype/Linked in – its apparent we are in an internet bubble.  Unfortunately, Microsoft is in the unenviable position of having to buy technology at these inflated prices.

If I were a kingmaker

So imaging what it would be like to be the head of the Republican party:  its a year and a half to the presidential election, and you have no feasible candidates for the big event.  

So as head of the Republican Party, what are my choices?   For this analysis, lets assume both Palin and Trump are not viable candidates – they are just entertainers.  And Mitt Romney is too flawed to run as a Republican in this political environment.  So here are my guesses as to the 3 most interesting strategies I would evaluate:

  • 1.  Mike Huckabee or Michelle Bachman or other nonelectable conservative – throw party money and support  at the campaign.  Not too much, because I know its a lost cause.  However,  I am building goodwill among my base and reaffirming the appearance of having conservative values.   This base building will keep my base loyal, and that will free me up to put up a less conservative candidate in the next election while still hopefully having an energized base.
  • 2.  Tim Pawlenty – Throw money at the Pawlenty campaign and hope that I can build a buzz and a following.  Seems like a longshot,  as there is nothing that really stands out about him – in the end he will likely flame out in a Dukakis like landslide.
  • 3.  Ron Paul – Maybe I can cut a deal with Ron Paul – promise to throw all my money into his organization, and bring him into the Republican fold.  The deal would have to be he agrees to soften his position on his most outspoken Libertarian ideas, amd move to the right a bit to pick up some of religious conservatives – though the religious conservatives would have no where to go.  The objective  would be to bring in some Tea Partiers, and possibly also attract the moderate Reagan democrats.  Also, get Paul to agree to my choice for Vice Presidential candidate.  Would need someone to do the dirty work in the organization – handle the money inflows and outflows.  Someone like Newt Gingrich or Haley Barbour to run the White House ala Dick Cheney.

Will be interesting to watch what happens – and what other options will unfold.  Any other strategies out there?  Feel free to comment.