The Quarter Massacre

Investors can be an unforgiving lot – that makes the stock market a fickle, frustrating space. Last August, VMware, maker of virtualization software, went public in the most anticipated tech IPO in years, immediately climbed from an opening price of $ 29 a share past $50, going up to $80-100 by the year end. Yesterday, it came out with excellent set of numbers with Q4 revenues up 80% and projected 50% growth in coming years. Not too shabby at all.

But the same crowd of nervous investors that pummeled Apple – for flattening iPod sales - after its great quarter thought 50 percent growth sounded like too quick a drop-off from 70-80 percent rate VMware had been posting. The reasoning that the growth rate is slowing because the company is much larger now went unheeded, and by the time the last knife was put away, the share was down 35% to $28, its debut price - investors had lost close to $10b in market cap.

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Now you see the power – or is it a curse – of quarterly numbers. Time for Private Equity funds to move in for the kill and take it private?

Ah, that brings me to the Forbes Midas list of VCs that got released. Here you go. John Doerr, Michael Moritz, Ram Shriram… and so it reads.

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IBM reveals its ugly underbelly

Back in 2006, IBM had responded to a lawsuit accusing it of withholding overtime (OT) of its employees by agreeing to pay them $65 million. Now it wants to make that up by shaving off 15% base pay of those employees.

It’s a constant outcry from clients that Indian IT outsourcing vendors charge very high margins even as IBM and others make do with far less. If this is how they do it, it’s pretty ugly.

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Virtualization roadblocks

Increased adoption of virtualization means better business for system security vendors. Larry Dignan elaborates.

But I just wonder. Why would virtualization majors don’t take up the task on their own? When you release a product, you can fix a bug in it better than any external security vendor. You know where you’d gone wrong and what needs to be patched up. Why would you leave a lifeline to someone else?

I agree with Larry as he says “If anything, virtualization will be in place before anyone notices the security issues. There’s something about saving so much on hardware, easy server provisioning and more IT flexibility that overshadows any security worries.”

It’s a bit like parenting, I suppose. You can sire kids. You just can’t mend them :)

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Prince's poison is Pandit's meat

And you thought Vikram Pandit, CEO of Citigroup is in the hot seat because of this. I say the man is in an enviable position of sorts. By taking over the mantle of Citigroup after the former CEO Chuck Prince quit over subprime excesses, he enjoys a free rein. He wields enormous power now and can do whatever he pleases to fix the mess; and if the outcome isn’t as expected, none would point a finger at him given the depth of the hole. He literally has a carte blanche – to write down billions of $$ of marked down assets, power to re-price risks, restate income sheets, declare massive layoffs, cut down dividends or what have you. On top of that, even a dollar in profit next year by the group could come to his credit. You know why, things can’t get any worse.

Outsourcing vendors in India should see opportunity here. There will be no backlash if Citigroup outsources even the basic functions to off-shore vendors like the SWITCH conclave or even to IBM, Accenture or EDS outfits in India – despite this being an election year in the US.

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I'd rather be offline inside the Dreamliner

"Man cannot discover new oceans unless he has the courage to lose sight of the shore" goes French historian and novelist Andre Malraux – motivating people to take risks, innovate and grow. But it seems designers at Boeing took that *oceanic discovery* bit a trifle too seriously while working on its 787 Dreamliner. In their eagerness to go one up on competitor Airbus industrie, they chose to let nerdy passengers hook up to the Net while airborne. Nothing wrong with that feature addition, had they not been so very generous to let cyber crawlers mess with the aircraft's control and navigation systems compromising flight safety. Excerpts from the Wired article -

"An FAA document published in the Federal Register (mirrored at Cryptome.org) says, the vulnerability exists because the plane's computer systems connect the passenger network with the flight-safety, control and navigation network...."

"....Boeing spokeswoman Lori Gunter said the wording of the FAA document is misleading, and that the plane's networks don't completely connect. Gunter wouldn't go into detail about how Boeing is tackling the issue but says it is employing a combination of solutions that involves some physical separation of the networks, known as "air gaps," and software firewalls."

Buckle up, log in and crash? Enough to give nightmares... I picture Bin Laden and Al Zawahiri smiling at each other in their caves. Could they have asked for more....?

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This is one innovation I'd rather Jim McNerney, CEO of Boeing not push too hard. Jim should know that the ultimate in customer service in his line of business is to deliver fail proof equipment systems that allow pilots to guide the airplane to a safe, smooth touch down on the tarmac, on all its wheels. Giving online comforts to nerdy creeps can wait. I am certainly not a fan of belly landing U-boat style adventures..... Scares the shit outta' me...!

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