The Seven Habits of Spectacularly Unsuccessful CEOs Hall of Shame

Which CEOs would be in the Hall of Shame for exhibiting the 7 Habits of Spectacularly Unsuccessful CEOs?


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Why Narcissistic CEOs Kill Their Companies

Whether you're an employee, an investor, or a CEO yourself, you need to read about these 2 recent academic studies of how and why Narcissistic CEOs can kill their companies.

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Will the US Tax Code Be a Boon to Foreign-Based VC-Backed Start-Ups?

Because of the US tax code, expect a bubble in M&A for foreign-based public and private companies in the next 3 years. Yesterday's Skype deal by Microsoft was only the beginning.

Read the full post here on Forbes.

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In Defense of Microsoft’s Deal for Skype

Despite all the nay-sayers, Microsoft's $8.5 billion deal was a win for Microsoft - even if they never make a dime from it.

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Will You Shut Up About This Being Another Internet Bubble Already?

Another Internet Bubble is not about to collapse. We have a few more years still. So party like it's 1996.

Read my full post at Forbes here.

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The Next Great Chinese Stock - And it's Not an IPO

Chinese gaming company Perfect World has had a disappointing last 12 months, but some new games are about to change its luck. Expect a $47 stock by the end of the year.

Read the whole post over at Forbes.

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Don’t Tell Mom, Cisco’s Board is Dead Asleep

John Chambers has got to go as Cisco CEO. For the last 4 years, he's been paid $56 million while the stock has dropped 35%. Here's what shareholders should do.

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Video: What's Next For Cisco?

Contributor Eric Jackson says that stock sad sack Cisco Systems has a tough future. Even buying a bunch of smaller competitors are no guarantee of making this elephant dance.

Tue 02/15/11 14:58 PM EST -- Eric Jackson

Stocks in this video: BCSI | RVBD | APKT | FFIV | MSFT | CSCO

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What Can Save Cisco?

By Eric Jackson02/10/11 - 03:15 PM EST

I participated in TheStreet.com's live blog last night covering Cisco's(CSCO) earnings call. It was a fun event. I particularly enjoyed watching peoples' reactions change as the call got well underway.

When Cisco's earnings report first came out, it looked like a "beat." Consensus called for earnings per share of $0.35 on revenue of $10.3 billion. The company reported earnings of $0.37 per share on revenue of $10.4 billion.

Initial responses from the majority of the live blog's participants -- most of whom appeared to be long the stock -- was positive. Cisco's shares briefly (maybe for about 30 seconds) traded in the green after yesterday's close. However, it didn't take long for the stock to start heading south -- quickly and steadily.

There was no mention of guidance in the initial earnings press release. Earnings season, however, definitely has a "show me" quality to it. The market seems to place even more weight on guidance than it does on whether current-quarter expectations are met (and God help any company that doesn't meet them).

Once revealed, Cisco's guidance was definitely tepid. The company forecasted earnings per share of $0.35 to $0.38 for the coming quarter. Analysts expected the company to guide to $0.40 per share.

Another cause for concern was the continued sag in gross margins, which were down to 62.4%. Wall Street was looking for gross margins of 63.3%.

As I mentioned on the live blog last night: though I have no position in Cisco, I interpreted yesterday's results as a big reason to sell the stock in the afterhours session. Often, if a stock sees a big, earnings-inspired move in afterhours trading, that move (up or down) gets extended further the next day when regular trading resumes. Deserved or not, that's just the way it's gone, whether it's Netflix(NFLX_) on the upside or Cisco here.

Shares of Cisco held above $20 during conference call last night but have been below $20 all day today.

When the call began, I was struck by a couple of things. First, John Chambers wouldn't shut up. He talked for a long time before he passed the ball to the CFO. Then, before taking questions, Chambers came back and talked even longer than he did the first time. The Q&A session didn't start until 50 minutes into the call. I think the endless droning worried analysts. If you keep talking about how everything is fine, it usually means everything's not fine.

.......

[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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Hey Microsoft, Use Debt Sale for M&A

05/11/09 - 12:25 PM EDT

MSFT , CSCO , IBM , ORCL , SHLD , YHOO , GOOG

Eric Jackson

This morning brought news that Microsoft(MSFT Quote) will be selling five, 10-, and 30-year debt as soon as perhaps later today. This makes a lot of sense. Microsoft has been overly conservative in how it's managed its business since its founding, due to the personal biases of Bill Gates.

Investors couldn't complain in the early days, but the last 10 years have been grim from a shareholder-return perspective. Even when you count the dividends you've received as a shareholder Redmond initiated that program in the early part of this decade, you still have seen total shareholder returns of almost -50% from holding Microsoft for 10 years -- far below the Nasdaq and Microsoft's chief competitors like IBM (IBM Quote), Oracle (ORCL Quote) and faster-growing Apple (AAPL Quote) and Google (GOOG Quote). That's depressing for Microsoft investors and employees alike.

From a capital structure perspective, Microsoft's antipathy toward debt has always puzzled investors. Here is a dominant franchise, with perhaps the most pristine balance sheet in the world and a remarkable cash-generating ability, and yet it still keeps an enormous amount of cash on its balance sheet and refuses to use debt.

There are two open questions regards this debt issuance announcement: (1) How much debt will they issue? and (2) How will they use it?

If Microsoft's history holds, the amount of debt issued through this will be modest. They've indicated that the offering will be "benchmark" size, which indicates at least $500 million. If you compare the debt-to-cash ratios of larger peers Oracle and IBM, Microsoft should be looking to issue much more than that. Oracle has an equal amount of cash and debt, implying that Microsoft should look at taking their debt load to $24 billion. IBM uses debt even more aggressively. IBM's debt-to-cash ratio implies that Microsoft could take on $60 billion in debt easily.

If Microsoft does announce that it will raise a lot of debt, that news alone will likely send its shares lower. The market might figure it plans another high-ball offer for Yahoo! (YHOO Quote) or to take over Facebook at the $16 billion valuation Microsoft agreed to at their last round. How the market interprets the amount of debt Microsoft raises very much depends on how they will spend it.

Microsoft has begun buying back stock in the last five years and currently has an open plan to buy back an additional $40 billion in stock between now and 2013. For years, several Microsoft investors have called on the company to buy back stock as a way of reducing the amount of cash inefficiently sitting on its books to its investors.

Microsoft has obliged over the last five years, using about $100 billion in capital to pay shareholders dividends or buy back stock. Yet that strategy has led to total shareholder returns over that period of about -25%. To be fair to Microsoft, the simple strategy of dividending out cash to shareholders and buying back stock hasn't worked out for many companies over the last two years, as companies like Microsoft and Sears Holdings (SHLD Quote) have watched billions of dollars of their capital used to buy back stock at now-inflated prices.

Continuing to just buy back more stock is not the answer for Microsoft's low stock price. The company needs to give its investors a strategy for how it is going to grow. Investors are currently pricing in the likelihood that Microsoft will essentially run itself like a utility for the next 20 years -- as well as spend money in areas like search or the Zune, which will never return the capital spent. They believe Microsoft's top line will stay flat.

Microsoft management has given investors no reason to believe otherwise. We've heard little to excite us about the future growth of this company, more about its obsession with getting a deal done with Yahoo! and catching Google. That's not a corporate strategy.

The status quo isn't working at Microsoft. There needs to be a plan for growth at Microsoft, and it needs to involve acquisitions. The business press is littered with articles about how IBM, Oracle, and Cisco(CSCO Quote) will be using their strong balance sheets to pick off once-in-a-generation priced acquisitions in the next year -- yet Microsoft's name is never mentioned as another suitor. With its cash-generating ability and more capital from a debt offering, it should be in the mix.

To be successful in the long run, Microsoft needs people to green-light the best acquisitions and teams of people with the right skill sets to integrate them. Frankly, Microsoft hasn't shown it has either of those abilities. Microsoft investors don't need another expensive aQuantive deal or Facebook investment that smacks of desperation and has questionable long-term value for the company's shareholders. It needs to take a page out of IBM's and Oracle's playbook, though, and start doing deals to grow its top and bottom lines.

A big debt issuance, with a skilled acquisition team, and evidence of some exciting growth-related deals could suddenly show the market that this elephant can dance again.

TheStreet.com

At the time of publication, Jackson was long Microsoft.

Eric Jackson is founder and president of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd.

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Betting on M&A Skills

We constantly hear about tech companies' strong balance sheets. While some, like Apple (AAPL) and Microsoft (MSFT), seem intent on building the largest pile of cash possible, others will no doubt use their cash to begin making acquisitions in the next year.

One lens to apply to your stock selection then should be judging a company's M&A purchase and integration skills. Some companies -- like Yahoo (YHOO) and EBAY -- have a track record of making lots of unrelated acquisitions at inflated prices (today we read about YHOO shutting down its 1999 GeoCities group because it's not competitive). EBAY is now in the process of unwinding itself from that failed approach and it's likely that things will change in this regard under Carol Bartz at YHOO.

When MSFT has made acquisitions (like aQuantive or its investment in Facebook), it's over-paid, giving the sense it's more desperate than thoughtful. Fears about its lack of M&A integration skills among its management team helped push investors to urge Ballmer to drop the YHOO bid last year.

The three tech companies who have proven themselves adept at making strategic deals at fair prices and then quickly integrating them into the fold are Oracle (ORCL), IBM, and Cisco (CSCO). There are more deals ahead for the sector and these companies have an edge for their shareholders in seeking out the best of what's for sale.

Position: Long MSFT.

Originally published in RealMoney.com on 4/24/2009 9:43 AM EDT

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