Sneaky Business

Is Murdoch After Your Family Website?

News Corporation is no stranger to social networking. After its acquisition of MySpace it holds a pretty potent position in the social scene. Not content with attracting users to his community Murdoch may now be shifting up a gear and going after individual family websites. According to Vallewag:

"This week News Corp. and NBC Universal announced that their online-video joint venture finally had a name, "Hulu". But before Hulu.com fell into Murdoch's hands, the website featured no videos at all -- just innocent pictures of a couple's 7-year-old daughter.

Copies of the Hulu.com website cached by the Internet Archive indicate that Posen and Lucy Hung previously owned the four-letter domain name, rare and valuable because of its brevity. (A person named Posen Hung works for Symbol Technologies in the Bay Area, according to LinkedIn.)"

Insiders suggest that may be just the start in a broader acquisition strategy. "We're trying to fly under the radar for a while by picking off less common names" indicated a source close to the deal, "We want to move on to the bigger names like Smith and Jones before Yahoo! and Microsoft realize what's going on."

That may be harder now that this week's acquisition became public. Microsoft has apparently set aside up to $5B for domain name acquisitions, while Google is planning to lure owners with "free advertising for life" for their family reunions.

Conrad Black denied trip to Canada; no views of Toronto for web-cam

A US judge barred Conrad Black from visiting his home town of Toronto yesterday, but did allow him to remain on bail while awaiting sentencing. Reuters reported:

"Judge Amy St. Eve of U.S. District in Chicago refused a request by Black's attorneys to allow him to go back to his Toronto home pending sentencing in her court on Nov. 30. However, the judge extended Conrad Black's $21 million bail on Wednesday but maintained restrictions that confine the convicted former newspaper tycoon to an area around Chicago and his Florida estate while he awaits sentencing."

As Sneaky Business reported last month, Black has agreed to wear a head-mounted web-cam for the duration of his sentence. The system, supplied by Mountain View startup CellWeb Services, was fitted and activated on Monday. CellWeb has tracked over two million visits to the Black URL since going live, although initial traffic levels have been waning. "The views of his living room have become rather dull, "admitted CellWeb CTO Alfred Schwartz, "He watches TV an awful lot. We were all hoping for a trip to Canada to add some variety."However, Schwartz remains confident that after Black arrives at prison the site traffic will pick up dramatically. "Once he receives his first tattoo and starts working out in the yard interest will skyrocket".

Proceeds from the ad-sponsored web-cam service are being divided between CellWeb, Hollinger shareholders and the prison governor.

Aquafina comes from a tap; shudder to think about Trump Ice

So when Pepsi states that Aquafina is bottled at the "source P.W.S." they really mean "Public Water Source". In other words, it comes from a tap. The company reluctantly agreed to change its labeling today to clarify the origins of the product.

Pepsi will be hoping to avoid the kind of PR disaster that crippled Coca Cola's launch of Dasani in the UK. After skirting the issue for several few days Coke reluctantly came clean and ended up pulling the product from the shelves. (The British tabloids reveled in headlines such as "The Real Sting" and "Coke sells tap water for 95p").

Sneaky Business has established that the brouhaha around Aquafina is not unique in the frothy world of bottled water. Some of the more notable "sources of misdirection" include:

Brand	True Source
Aquafina	Public water source (PWS)
Dasani UK	PWS – Sidcup, south-east London
Poland Spring	Multiple sources, none in Poland
Highland Spring	Blackford, Perth, Kinross – none in the Highlands
Peckham Spring	PWS – Peckham, London
Trump Ice	Wouldn't like to say

The broader issues here, of course, concerns customer relationship management and brand protection. While Pepsi's actions were legal, they eroded the sacred trust between bottler and customer. Once that trust enters a slippery slope the whole ship can run off the rails.

We wish Pepsi well, and raise a glass (of Diet Sprite on PWS ice) in their direction.

Apple earnings expected to exceed expectations - whatever they are

Apple is set to post earnings for its third quarter Wednesday, and already the web is abuzz with excitement. Indeed industry analysts are positively giddy in anticipation, whipping their clients into a forward looking frenzy.

Expectations are running exceedingly high this quarter. So high in fact that nobody is quite sure what they are. Sneaky Business polled a number of analysts, revealing a surprising degree of latitude in their views.

"We expect they will exceed expectations" claimed Sarah Lopez of Leeward Stochs, an investment bank, "To a degree even we don't expect".

Another analyst, speaking anonymously, concurred, "We think they will be at least 30% over, even 40%." When pushed to name a figure the same analyst was surprisingly vague, "It doesn't really matter. Whatever the figure, we believe they will push past it. They have masses of upside potential. Masses"

Apple's ability to surpass expectations may seem like financial alchemy to some. However, we have identified a number of best practices at work that have broad applicability:

• Start low, and manage expectations down. Initial sales estimates of 250 iPhones in the first month were suspiciously low. These figures were then supported by a national target of "1% of cell phone sales in the Palo Alto area".
• Seed confusion; mix with obfuscation. Early warnings suggested that the iPhone would have a battery life of only 60 seconds. Insiders failed to deny the claims, and then seeded further interest with the anonymous posting of a "hybrid" model due out in the Fall.
• Maintain radio silence until the last minute. Apple insiders have been eerily quiet for the past seven days. In fact no-one in the company has answered a phone of any kind since last Tuesday. In addition, Steve Jobs appears to have gone to ground. He is expected to re-appear from his hidey spot just in time for this week's analyst call.
• Save the best for last. In a twist on usual financial reporting practices, Apple is said to be experimenting with a re-ordered income statement. By starting with operating expenses and taxes, Jobs can move his narrative into the more exciting revenue figure and then conclude, with a theatrical flourish, on the bottom line.

Apple reports at 2pm PDT Wednesday; Sneaky Business will provide additional Apple-related insights later in the week.

Murdoch Closes In On Dow; S&P 500 Next?

With the Bancroft family ready to throw in the towel, Rupert Murdoch looks set to gain control of the Dow media empire. At a family retreat Sunday, the Bancrofts employed a variety of decision making techniques including valuation analysis, games of chance and arm wrestling. "We put up a good fight" stated one family member under condition of anonymity, "But in the end $5B carries some weight".

Critically, the purchase will give Murdoch control not only of the Wall Street Journal and Dow Jones Newswires but also the Dow Jones Industrial Average. Murdoch assured investors that he will not interfere with the independence of the DJIA, but his detractors are not so sure. "The Dow just reached 14,000 – and that was a great news story" stated a Bancroft family member, under condition of anonymity, "Who knows what will happen once Murdoch gets his fingers on it".

"This may just be the first part of his endgame" suggested Jennifer Peterson of Leeward Stochs, an investment bank, "The S&P 500 is the obvious next move". Indeed many in the industry worry that such a move would give Murdoch unprecedented abilities to shape and report business news. "He would literally have the capability to move markets" continued Peterson, "Just imagine the headlines".

Murdoch, currently on retreat somewhere in the South Pacific, was said to be pleased with the outcome but denied any interest in the S&P assets. However, he did agree that it was a good story.

Google misses, stock tumbles; or does it?

Google reported disappointing quarterly earnings Thursday prompting CNN to state that the "stock had tumbled". The Journal said more soberly that the stock merely "fell 5% after hours, while the National Inquirer reported that the stock "had completely disappeared".

This brings to our attention the complete lack of uniformity in describing the inevitable ebb and flow of company stock. The twin pillars of stock volatility reporting are the verbs "soar" and "tumble" Closely followed by the verbs "impress" and "disappoint" And occasionally accompanied by the terms "belly-flop", "lurch", "crater" and "implode"

But just how much a stock has to rise or fall to deserve one of these descriptors is highly uncertain. Uncertainty can breed rumor, and rumor can breed innuendo (perhaps with a little bit of contempt). Creating a vicious circle sitting squarely around the shoulders of the company in question.

Sneaky Business believes a standard taxonomy is needed to deliver "apples to apples" comparisons across companies. We provide just such a table below in the hope that some sanity can return to the hyperbole of quarterly earnings reports.

Stock Movement	Acceptable Descriptive Verbs
>50%	Soar, explode, ejaculate
+ 10% to 50%	Leap, rush, jump, bungee
+ 1% to 10%	Float, rise, gain a leg up, swagger
+ / - 1%	Languish, meander, loiter, nap, snooze
- 1% to 10%	Stagger, slide, stumble, lurch
- 10% to 50%	Tumble, belly-flop, jack-knife, fall arse-over-tit
< 50%	Implode, self-immolate, FUBAR

We encourage you all to begin using this terminology immediately.

Starbucks Inks Deal With Ford; Delivers Caffeine Direct To Drivers

Starbucks confirmed after the bell Friday that it has signed a wide ranging five year strategic relationship with struggling automaker Ford. The deal allows Starbucks to provide in-car caffeine delivery systems to all new Ford cars and trucks through 2012.

Starbucks has suffered recently from the forced closure of its Forbidden City store, while Ford is gushing red from every orifice. Speaking over coffee at a news conference Friday both CEOs were keen to talk up the announcement. "We are keen to deliver a more exciting driving experience," said Alan Mulally, "And we believe a continual-feed in-car espresso machine will do just that".

To date, in-vehicle coffee systems have remained on the fringe of the after-market. Audi went cold on the idea after dabbling with their Roadjet concept system. And the Nespresso in-car coffee machine has failed to find a market. This time, however, Starbucks believes they have it right.

"Our system is factory installed, ergonomically designed, and smells great." Boasted Ray Zecki, Starbucks chief creative officer, "Its drip-feed system delivers coffee directly to the driver's mouth, eliminating the potentially fatal risks associated with other systems." Other features include a GPS store locator for efficient coffee refills, an MP3 soft-rock music playlist to recreate in store atmosphere and fake coffee-brewing sound effects. Recommended price is $695, with the first systems appearing early 2008.

Conrad Black Convicted; Fitted with 24x7 Web Cam

Conrad Black, ex newspaper tycoon and media mogul, was convicted on three counts of mail fraud and one of obstruction of justice yesterday. According to a Journal article, his offences also included "……billing shareholders $42,000 for his wife's birthday party at New York's restaurant La Grenouille, swindling the company in a $3 million Park Avenue apartment sale and taking the corporate jet on a two-week vacation to Bora Bora in French Polynesia." He was acquitted on nine other lesser charges including racketeering, long-term theft of company stationary and misuse of corporate parking spaces.

Shareholders confirmed they have reached agreement to fit Black with a head-mounted web cam for the duration of his incarceration. The camera, from Mountain View startup CellWeb Security, provides unique visibility into the lives of white collar criminals. "Our software integrates with a variety of enterprise software packages and produces a comprehensive, searchable archive of audio and video footage" said CellWeb CTO Alfred Schwarz, "Employees and shareholders love it. It's their way of sticking it to the man." CellWeb is the latest in a string of highly funded security startups appearing in the Valley. "The executive crime market is hot right now" said Anthony Shield of Stovepipe Ventures, "Victims are looking for pay-back, and are willing to fork out good money to get it"