The “Quiet Period” is the time right before a company “goes public,” during which it is legally prohibited from saying anything to the press that may make the company look “good,” “successful,” or “not currently on fire.”
Not that I get great joy pointing this out but Mr. Cat is wrong. During the quiet period a company is indeed not allowed to publicly say anything that might be considered as pumping the offering. However quiet periods are not restricted to the time before a company "goes public". They generally apply anytime a company issues a new public offering regardless of if that offering is the initial public offering or a subsequent offering.
In 2005 the Security and Exchange Commission modifed the quite period rules so that they did not fully apply to "well-known seasoned issuers". Well-known seasoned issuers must either have a publicly traded market capitalization of at least $700 million or have issued at least $1 billion in securites other than common equity over the past three years. These well-known issuers represent approximately 30% of listed issuers and accounted for about 95% of U.S. equity market capitalization.
So regardless if it is your first public offering or your tenth, if you are in your registration period you are required to be quiet. Even if you pretending to be a cat.
So I was standing next to this friend of mine the other night when he casually mentioned that he might be joining the board of Barnes & Noble. My first reaction. Dude, the Nook has no chance. No one talks about the Nook. No one uses the Nook. I sit in a Barnes & Noble Starbucks quite a few days a week and I have never ever seen anyone even pause to look at the huge Nook display at the front of the store. You have to give that thing away to get anyone to use it. It's the only hope. Quite possibly Barnes & Nobles only hope not just in the eReader market but for their survival. In ten years there are not going to be any bookstores to walk into.
Well I get up the next day find out that Barnes has broken off talks with a gentleman named Ron Burkle to expand the B&N board by three seats, and that a judge had ruled against Burkle in his attempt to increase his ownership position at B&N. Ron Burkle is seriously rich. He is in the Forbes 100. He owns an investment company called Yucaipa.
So quicker than you can say kindle Yucaipa started a proxy fight. Mike McQuary, whom I worked with for a number of years, is on Yucaipa's slate of nominees for Barnes & Noble's board of directors.
If you are ever going to read SEC filings proxy statements are the best. Proxy statements filed by a party other than the registrant are the very best. They are full of intrigue. Buried with the proxy statement is this little gem:
In Yucaipa’s view, the B&N College acquisition (Barnes and Noble purchased B&N College for $514 million. B&N College just happened to be owned by the Barnes & Noble CEO and his wife) benefitted the Riggio family but does not make strategic sense for the Company. It gave Barnes & Noble over 600 retail textbook locations and essentially doubled the Company’s exposure to a “brick and mortar” market segment most at risk to technological changes, including increasing online textbook sales and digital textbook downloads. Yucaipa believes this capital could have been better and more timely utilized to support the Company’s digital media and e-books strategy.
Yucaipa understands the need to aggressively go after the e-books market. And my bet is that McQuary is thinking the same way I am about what to do. Amazon wants to view Kindle as a business that will stand on its own. Apple is proud of the iPad.
Barnes & Noble has got to get price/promotionally aggressive on the Nook. Is anybody asking for a Nook this Christmas? No. Change that by giving the things away on Black Friday with the purchase of x number of books. Treat the Nook cost as a marketing customer acquisition expense. With a small and shrinking market share a razor and blades strategy is B&N's only chance in the digital media and e-book world.
If they don't use it Barnes and Noble becomes Tower Records.
As is often the case PG has an excellent essay up on "What Happened to Yahoo" (no exclamation point from him).
While the entire is a must read the money quote for me is:
Yahoo treated programming as a commodity. At Yahoo, user-facing software was controlled by product managers and designers. The job of programmers was just to take the work of the product managers and designers the final step, by translating it into code.
One obvious result of this practice was that when Yahoo built things, they often weren't very good. But that wasn't the worst problem. The worst problem was that they hired bad programmers.
In technology, once you have bad programmers, you're doomed. I can't think of an instance where a company has sunk into technical mediocrity and recovered. Good programmers want to work with other good programmers. So once the quality of programmers at your company starts to drop, you enter a death spiral from which there is no recovery.
Good stuff. The question is how do you build a hacker-centric culture. PG has some thoughts. I saw a good example this morning.
We are sitting around the kitchen counter eating breakfast when the Kokomo Kid asks "You know anything about SQL?" "A little, why" was my cautious reply.
While it just so happens one of the companies where she works as a controller, QuantiSense, sent out a throw down challenge. Who is the best SQL expert? They distributed one of the tests that they give to developers when they are being interviewed. The test went to the entire staff. The entire staff was expected to complete it, including writing a little code snippet at the end. So my wife, who is the part time controller, is reading SQL code and trying to determine the output of a command string. It just so happens that the sample table had a few null values. She could not determine how to treat them as different versions of SQL treat null values in different ways.
So my wife, the controller, who before this morning had never ever looked at a line of code in her life sent this note:
What variant of SQL are you using? Don't I need to know this in order to understand how Null values are treated?
When you get your controller to ask what version of SQL you are using to figure out the output of a query I would say that you might be on your way to building a hacker-centric culture.
So yesterday, according to The New York Times, Apple took about 600k in new iPhone orders. Rock on. At about $200 a pop that is about $120 million in revenue plus whatever the AT&T sub happens to be. Most likely three x that or $360 mill in total. Not bad for a day when you are unable to complete customer orders.
A big yippee ki-yay for Steve and his dedicated team from Cupertino. Atlanta based Gerry Purdy chimed in “It shows the Apple magic is still present, it’s impressive.”
As a heavy Apple user and someone that intends to get a new iPhone my response is "perhaps." The money quote from the NYT article:
Still, analysts said, Apple is struggling to maintain the same clear-cut lead over rivals that it had in the past. In particular, the growing portfolio of Android-powered phones, which number in the dozens this year and are offered by many companies, is a significant threat.“The reality is that in the long term, the Android market share is going to catch up to Apple,” said Charles Golvin, a wireless analyst at Forrester Research. “When you have one device being sold to a smaller portion of the population, it’s not going to compete as well as many devices from many vendors on multiple carriers.”
We've seen this movie before. Apple. Microsoft. The personal computer early market share war. We all know how that ended. Apple niche. Microsoft dominance.
The end game for the mobile OS wars has been foreshadowed.
Last week, in advance of the unveiling of the new iPhone 4G and the iPhone OS4 operating system a little bit later today by Steve Jobs at Apple's World Wide Developer Conference, AT&T announced that it is dropping it's unlimited data plans for iPhones. Of course they did not spin it this way but instead of its current $30 unlimited plan, AT&T is moving to a $15 200MB plan and a $25 2GB plan. The unlimited plan is going away. Buh bye.
Oh the irony. This is AT&T, the company that made $19.95 unlimited Internet pricing the market standard. That $19.95 all you can eat pricing exploded the use of the Internet and was the first shot to the body of AOL which at the time had metered pricing.
I have conducted a good deal of research on this subject. Consumers will pay significantly more per month for a flat rate plan in lieu of having to monitor their usage or getting the big bill one month. Most will pay a 25% premium for a flat rate plan and many will pay a 50% premium. And if you are a smart access provider, you price your services so that the flat rate non use breakage of the lighter users makes up for the heavier user behavior. This enables you to make money by rapidly growing your user base. You have to have the flat rate to remove consumer uncertainty which creates purchase hesitation.
AT&T knows this. They are looking to stop data consumption by heavier prospects/users by getting them to move to other networks, and get lighter data consumers to buy the $25 plan to remove billing uncertainty. The former is the quickest path to improve the overall performance of the AT&T network while the latter will help with margins. And once AT&T spends a little time actually building out a more robust network I expect that AT&T will return with an unlimited plan. And the price will be more than $30 a month.
"I think people are willing to pay for content. I believe it for music
and video, and I believe it for the media."
Steve made the comment at D8 on Tuesday. About the same time I was having an interesting conversation with some smart people about the same subject. And here was the most interesting point of the conversation. Music, video, and whatever the heck media is are very different.
People purchase music for the most part because it is provides very repeatable consumption. The number of times I have listened to Damn The Torpedos is countless. But with the exceptions The Lord of the Rings, T2, and whatever your personal favs happen to be, video is generally rented or subscribed to because you really only need to see it once.
Music, as content, is a little bit ahead of video in terms of consumption via new technology distribution methods. The buying model has held serve. I would surmise that as video becomes more Internet oriented that the traditional model of renting or subscribing and not owning will become the predominant purchase method.
People will indeed pay for content if packaged the right way. The big question is who will figure out the right way to package and deliver these next generation video rental/subscription services. It is going to be an interesting game.
Force of Good is licensed under a Creative Commons License. You are free to share, remix, and share alike with attribution.
The opinions expressed here are mine and mine alone (with the exception of comments by others of course). They do not represent the opinion or position of any other person or entity. All postings adhere to my personal values.