Latest Idea from Microsoft R&D: Copy Twitter

Henry Blodget at Silicon Alley Insider has a story this morning about Microsoft (MSFT) preparing to launch a Twitter-like service that it believes is superior to Twitter.

This story is maddening to a MSFT investor like me from a number of angles:

1. MSFT seems capable of only building products themselves rather than buying them. Maybe this all dates back to them passing Netscape with Internet Explorer. Maybe they now forever believe that can pass any competitor with their own product -- whether Google in Search, Apple (AAPL) in Ipods, and now Twitter in tweeting.

2. According to the story, this project (called Vine) has meandered around within the bowels of MSFT for several years before ending up in the large Research group and now being finally launched. The lead times for this and other projects which are also working their way through MSFT's system seem to be disconnected from market realities. Vine might have been a good offering 2 years ago - now it appears to have little chance of success. Does the world need another FriendFeed -- even if it's got MSFT's name on it?

3. MSFT's R&D group is pushing an annual budget of $10 billion. They will surpass that level next year at current trends. I know there are very talented engineers in that group working on very interesting projects but who is managing them? How can you spend $10 billion a year in R&D and be seen as light years behind a company like AAPL which spent $1.5 billion on R&D last year? If MSFT's R&D management was as good as AAPL's, then MSFT should be getting 10x the number and quality of new products as AAPL -- instead they're getting 1/10th at 10x the cost. Management like that is something I don't need as a MSFT shareholder.

You can do lots of things when you have MSFT's pristine balance sheet. Wasteful managing of R&D projects shouldn't be one of them.

Position: Long MSFT

Originally published in RealMoney.com on 4/28/2009 10:21 AM EDT

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What Do Yahoo!s Think? What's Right and What's Wrong at Yahoo!?

Throughout these past weeks of the Yahoo! proxy fight, we've heard a lot of opinions about Yahoo! from lots of stakeholders except one group: current Yahoo!s.

We've heard Roy Bostock and the board defend themselves for the handling of the Microsoft deal. We've also heard Microsoft's side of the story.

We've heard from Carl Icahn, through his colorful letters, and other shareholders including me. We've also heard from Jerry and Sue Decker.

We've even heard from the stock analysts and industry analysts -- even though they have no skin in the game (although neither do some members of Yahoo!'s board -- but Mr. Bostock and Mike Callahan assured us on Friday that those board members now follow a rule that they have 3 years in which to get some skin in the game).

But, we have never really heard from the Yahoo! employees through these haggard last few weeks. Some might argue, they have the most skin in the game of any Yahoo! stakeholder.

For investors, we have diversified portfolios. Yahoo! is but one position in many we hold. For employees, Yahoo! is their livelihood. They have the most to gain if the company turns itself around; and the most to lose if it doesn't.

The press always wants to hear from this group to round out the varied points of view they display in their stories. But employees decline, for fear of their jobs.

Occasionally, you see a comment from a Yahoo! employee leaked to Kara Swisher, TechCrunch, or Valleywag. However, there is no place where a community of Yahoo! employee voices can converge to speak (anonymously) in a way which allows thoughtful exchanges of points of view.

For example, Jerry says that Yahoo! has a plan and is executing against it. I have heard from several Yahoo! employees that execution is (and has historically been) a major problem. Who's right? Maybe I spoke to a few people with axes to grind. Maybe the vast majority of the 14,000 Yahoo!s agree with Jerry - or maybe they don't.

As a shareholder, I sure would value reading their opinions in their full text, unedited. Because, here's the thing: pointing out a problem doesn't make it worse, it helps fix it. If there's a problem, shine a light on it. Sunlight is the best disinfectant.

Therefore, I would like to offer this blog "Breakout Performance" for such a purpose -- pointing out what's right and what's wrong with Yahoo! To do so, feel free to comment anonymously to this post. Or, if you prefer, send me an email and I will post several comments (without email addresses) in future posts to this site.

If you like this idea but prefer to share your thoughts on a different site or in a different way, let us know below the means you think would be most effective. I don't really care where the comments go.

Let me strongly state that I think it's important that they be in one spot. When different voices of employees get scattered across Valleywag, Swisher, TechCrunch, Silicon Alley, and other outlets, they lose their power, because most will read only one here or there, not all of them together.

Let's hear from the employees who are the heart and soul of Yahoo! What's right and what's wrong with your company? Feel free to complain if you think it's deserved, but let's also be constructive. What needs to change and how could it change? What specifically should happen to make this company great again?

You tell us. Don't let us tell you.

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