Recently Yahoo announced it had purchased Tumblr for $1.1 billion, which is the most expensive acquisition since it bought online search engine Overture a decade ago for $1.3 billion. Founded in 2007, Tumblr provides a blogging service that makes it easy to share posts, photos, video and other content in an enthralling mosaic of interlocking information and has more than 50 billion posts from 108 million blogs, with some 75 million new posts every day. More than half of Tumblr’s users connect through its mobile app and engage in an average of seven visits per day. Rob Enderle doesn’t believe this is going to end well stating the reason why good turnaround CEO’s are so rare is that it takes a very unique skill set. You have to be willing to take huge risks and high stress over a long period of time. You have to be able to campaign the changes you are making to employees, customers and investors, and you have to be very patient because change is slow and if you try to do too much at once, the complexity will overwhelm you and failure will be the result. Particularly for a young and somewhat inexperienced CEO, it is this last that can catch him or her up and you can see this behavior in both Facebook and Yahoo: a desperation to make things happen fast, which is why things aren’t going very well. Rob goes into detail about the internal and external pressures CEO Marissa Mayer is facing, comparison of the Tumblr and Youtube acquisitions, and gives examples of how two major tech giants (Apple and IBM) were able to perform their turnarounds. To read Rob’s full article please visit http://www.itbusinessedge.com/blogs/unfiltered-opinion/yahoos-tumblr-mistake-how-speed-can-trump-good-judgment.html.

Enderle Group is a forward looking emerging technology advisory firm. Recognized as one of the best general inquiry analysts in the world, Rob specializes in providing rapid perspectives and suggested tactics and strategies to a large number of clients dealing with rapidly changing global events. Before founding the Enderle Group in 2003, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group. While there he ran the eCommerce, Security, and Mobile research practices. Before Giga, Rob was with Dataquest covering client/server software where he became one of the most widely publicized technology analysts in the world. If you are interested in speaking with Rob on a 1 on 1 basis please email info@roulstonresearch.com.

On May 22, 2013, Tesla Motors announced that it had paid back its $465 million loan to the Department of Energy, nine years before its full loan was due. Tesla was awarded the loan, requiring matching private capital obtained through public offerings, in 2010 as part of the Advanced Technology Vehicle Manufacturing program. This program was signed into law by President George W. Bush in 2008, but the awards were made by the Obama administration. While another electric vehicle company under this program is in trouble (e.g. Fisker Automotive), Tesla is not. Tesla Motors is different for a number of reasons that include: a recent increase in the value of its stock along with the sale of new stock and debt securities earning about $1 billion, way more than it needed to repay the loan, an enviable stash of environmental credits from the state of California that is valued at $250 million for this year, and the deep pockets of Elon Musk, Tesla’s co-founder. The company sold 2,650 vehicles in 2012 and expects to sell 21,000 year end, selling 4,900 during the first quarter of 2013 of its newer, lower cost Model S sedans. For the first time in its 10 year history, the company reached profitability, generating a profit of $11.2 million during the first quarter of this year. Electric vehicles still have a long way to go to catch up to sales of traditional gasoline and diesel powered vehicles. During the first four months of 2013, plug-in cars accounted for less than 1 percent of total vehicle sales. And one thing is abundantly clear from Tesla’s financial experience with electric cars: thus far, this is a market created by the government, and without the government’s powers, it would not exist. To read the full article please visit http://www.instituteforenergyresearch.org/2013/05/24/tesla-motors-specious-rise/.

 

Thomas J. Pyle is the president of the Institute for Energy Research (IER). In this capacity, Pyle brings a unique backdrop of public and private sector experience to help manage IER’s Washington, DC-based staff and operations. He also helps to develop the organization’s free market policy positions and implement education efforts with respect to key energy stakeholders, including policymakers, federal agency representatives, industry leaders, consumer entities and the media. To learn more about the Institute for Energy Research and their mission please visit http://instituteforenergyresearch.org/.

While Nokia is a latecomer in next-generation smartphones, subscriber penetration is already beginning to saturate in developed nations. However, with rather short replacement cycles for these rapidly-advancing products and massive untapped potential in developing regions there is still a lot up for grabs by aspirants including Nokia. Most recently, Nokia and Microsoft have made significant progress and impact with the introduction of the Lumia 928 at Verizon Wireless in the United States and the Lumia 925 to follow with many operators around the world, starting next month. These new devices bring superlative photo, video and audio performance among other capabilities such as maps and navigation. The innovative “capture” and editing capabilities, in conjunction with use on social networks and sharing sites, have the potential to seize market leadership among those who want to create and publish the very best multimedia materials. Overall, strategic potential is probably best for Nokia in low-cost smartphones. Developing markets are still largely untapped for smartphones and in many cases the 3G and LTE infrastructure does not yet exist to support mass markets for these devices. On the back of assuring sales growth with some handy innovations, Nokia’s Lumia smartphones with Microsoft’s Windows Phone platform still have a sporting chance of seizing a substantial position among the top three manufacturers behind Samsung with Android and Apple iOS so they cannot afford to change course now despite calls for a plan B by irate shareholders. To read Keith’s full thoughts on Nokia please visit http://www.fiercewireless.com/europe/story/mallinson-nokia-needs-stay-course-windows-phone/2013-05-22.

Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007. WiseHarbor publishes an Extended Mobile Broadband Forecast. This includes network equipment, devices and carrier services to 2025. Further details are available at: http://www.wiseharbor.com/forecast.html. Find WiseHarbor on Twitter @WiseHarbor. Keith will be participating in Roulston Research’s June 21st Wireless and Mobile Devices Conference Call at 11 AM ET. If you are interested in listening in please email info@roulstonresearch.com.

Reports this week were that KKR is considering making a bid on Saks with the intention of seeking a merger with Neiman Marcus. A combined Neiman Marcus and Saks would create a retail operator with $7 billion in annual sales, which would put the combined company only behind only Nordstrom in the luxury department store category. Steven Dennis, founder of retail consulting firm SageBerry and a former Neiman Marcus executive, was recently interviewed by the Huffington Post about the proposed merger. He believes there is an “overcapacity” in the luxury retail space and by merging and controlling two key retail brands, the companies would be able to lower competition, leading to higher margins. A concern he has is brand management. Both Saks and Neiman Marcus are old brands that high-income consumers easily recognize; killing off one of the brands in the event of a merger likely isn’t an option, said Dennis, even though they’re positioned “virtually identically” in terms of merchandise and consumer perception. “Shutting one down seems crazy, so the challenge would be to reposition one to maximize the market opportunity,” he said. “Not an easy task.” To read yesterday’s full Huffington Post article to see Steven’s full interview please visit http://www.huffingtonpost.com/2013/05/22/saks-neiman-merger_n_3322392.html.

Steven Dennis is President and Founder of SageBerry Consulting, LLC since November 2008, a boutique consulting firm specializing in growth and marketing strategy for retail, luxury, and fashion brands. Additionally, Mr. Dennis is Executive in Residence, JC Penney Center for Retail Excellence with SMU Cox School of Business. Prior to SageBerry, Mr. Dennis was Senior Vice President of Strategy and Marketing for The Neiman Marcus Group where he was responsible for strategic business development and corporate marketing (customer insight, enterprise marketing programs, and loyalty program strategy), and led the company’s partnership to operate its credit card business. Prior to joining Neiman’s, he was with Sears in a number of senior leadership roles including, Acting Chief Strategy Officer and Leader of the Lands’ End Integration Team. Mr. Dennis’s expertise spans all major retail and e-commerce product categories and formats. He has extensive experience in leveraging consumer insight to drive growth initiatives through organic growth, new concept development, and acquisitions.

The Xbox One, which is based on AMD’s processor technology, will have a number of enhanced features. Kinect will be able to tell balance, and for those using it for exercise, will be able to measure heart rate. Voice command is improved allowing you to order the product to change modes between gaming/TV/Movies etc. and who want to turn their living room into Skype Jetson’s like video conferencing room. You can also use Windows 7/8 snap and split your screen. The console will also have a Blu-Ray drive, which had to be a difficult choice for Microsoft because it blesses a Sony technology and Sony sells what is likely to be the biggest competitor to the new Xbox One, the PS4. However, Sony has never found a way to turn that into a competitive advantage and it is likely, as a result, Microsoft will gain a stronger Blu-Ray advantage with Xbox than Sony gets with their new station. The Microsoft industrial design is finally consistent with the goal of turning their game console into a living room entertainment system. Sleek black lines, which actually look like updated stereo equipment and will look nice against most any high end system. Microsoft’s hardware design group has certainly improved over the years and if you go back and look at the first Xbox, then the Xbox 360 and finally this latest product the Xbox One you’ll see strong improvement. This is arguably Microsoft’s most attractive product and shows well against current Apple industrial designs but doesn’t borrow from them. To read Rob’s full comments please visit http://sulia.com/enderle/.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward looking emerging technology advisory firm. He specializes in providing rapid perspectives and suggested tactics and strategies to a large number of clients dealing with rapidly changing global events.

Performance through March 2013Names presented at our idea forums since inception have significantly outperformed both S&P and the respective industry indices. There is a reason. We track presenters and performance and provide updates from presenters. This minimizes those without pride in presentation.

Monotype Imaging Holdings (NASDAQ: TYPE, $23.71) was recommended at our recent San Francisco idea forum. TYPE owns the largest font library in the world and gets royalty revenues every time major fonts are used, either in electronic or print formats. Fonts are increasingly crucial as tools to help companies differentiate their brands and message. The company’s major growth opportunities are centered around more screens. Sales of smartphones, tablets and other electronic devices will bring the top-line growth rate to 8-12% with the legacy printer business showing little to no growth. Content creators are increasingly turning to TYPE due to the breadth of its library and the font quality, while the use of the company’s web fonts is accelerating among web and mobile app developers. The recent announcement of a new master subscription service combining various tools in TYPE’s offering in one platform, and the launch of its cloud service are important initiatives designed to strengthen the company’s leading position in the space.

TYPE has a very profitable model with 43% operating margins and high cash flow. The company was bought from AGFA by TA Associates, a private equity firm, in 2004 and was taken public in 2007. Most of the recap debt has been paid down and once it is fully repaid, the company can be positioned for another recap or as a takeover candidate.