Case Blog

Normally January and February are not my favorite months, with cold and snow on the east coast and significant Pacific storms on the west, but I must admit that this year these months are packed with plenty of fascinating and significant events in business, politics and sports.

In my “Fall Innovation” column in early September, I wrote about familiarizing myself with my new iPhone and how many new early stage venture investments would be in mobile applications. Since that time, Apple has opened up the iPhone as a development platform and we are starting to get a glimpse at where the new mobile applications can take us. At Macworld Steve Jobs introduced an application that is very much in the GPS genre, My Location for Google Maps. It employs a different approach than GPS, but by taking advantage of cellular technology it is surprisingly good. I love that I was able to effortlessly get this new program by updating the software on my iPhone during a recent sync with my PC. I for one agree with Eric Schmidt, CEO of Google, who has been quoted from Davos that we have reached a “tipping point” and that the mobile entry point to the web will result in a very large advertising opportunity.

Unfortunately, I do not see or hear of many traditional B2B content providers preparing applications to take advantage of this opportunity. Are the financial information providers once again prepared to let Yahoo Finance and Google Finance own this new, fast developing opportunity? While I am mentioning Yahoo — which has been bashed repeatedly in the press for Jerry Yang’s 100 days turning into 200 days without any significant improvements in focus — I would like to recommend that Blackberry users download Yahoo! Go, a mobile phone Internet service. It works surprisingly well as a mobile portal into the Internet, particularly if you leave it running in the background and do not reboot it each time you want to use it. Interestingly, Yahoo does not support the iPhone with this application. Perhaps they have not seen Apple and AT&T’s 4th quarter sales figures?

The Fed finally acted this past week with a significant 3/4 of a point rate cut. We still do not know if the rogue trader from Societe Generale or the economic data from around the country brought the Fed to make this inter-meeting move, but it is clearly a step in the right direction. At the same time, I am skeptical of the bipartisan stimulus program that will put $150B into consumers hands between April and June of this year. The European Central Bank continues to fight inflation and is resisting the Keynesian call for stimulating Europe’s economy. Over time, we will learn which was the right approach. January has been a difficult month, but I sense that many of the pundits have been too negative. While the economy has cooled down, it has not stalled entirely.

South Carolina has given us a very clear view of Super Tuesday on the Democratic ticket. It has become Clinton vs. Obama, with John Edwards and his campaign manager Joe Trippi hanging on, hoping for some influence at the convention, which is not going to happen. Edwards and his retooled populist message should move to the sidelines. I trust that this advice will become louder and louder from the leadership of the Democratic Party. And I must confess that I am confused as to why the Democratic and Republican primaries were one week apart in South Carolina. I guess it extended South Carolina’s time as kingmaker! The Republicans moved on to Florida with McCain still having momentum, Thompson dropping out and four candidates seriously competing: McCain, Romney, Giuliani and Huckabee. As the campaigns move on after Florida’s primary on the 29th, I believe we will exit Super Tuesday with a clear front-runner and at least two of the other candidates joining Thompson on the sidelines.

Super Bowl Sunday, which precedes Super Tuesday, is going to provide us with great theater! Tom Coughlin has certainly taught Eli Manning and the New York Giants how to win. It has been one of the great transformations of a team that was not chosen by anyone in the preseason to contend for the title. With their very competitive loss to the Patriots in the last game of the regular season, the Giants entered the playoffs with nothing to lose and have emerged as a very good and competitive team, reminiscent of the Parcells’ coached Super Bowl teams that used ball control and a sterling defense. As a close friend and longtime Patriots’ fan, Ted Bloom, CFO of IDG, wrote to me, “It is going to be a hell of a game!”

As we start the new year, the word that keeps coming up in politics and business is “momentum.” Hillary lost it in Iowa but regained it in New Hampshire. McCain lost it six months ago when his campaign started to run out of money before he had run any ads, but he regained it in New Hampshire and hopes to keep it in Michigan and South Carolina. Rudy believes he will gain it in Florida, but it could be too late in the game going into Super Tuesday, February 5th. Mitt claims he has won two silvers, but silvers do not give you momentum. Edwards clearly does not have it and pressure will mount on him to get out of the race after South Carolina and make it a two-person race for the Democratic nomination. Huckabee claims he had it for a moment in Iowa, but he lost it in New Hampshire. Obama clearly has it, but it slowed down a bit in New Hampshire. One of the candidates in each party will certainly grab the momentum ring on Super Tuesday and ride it to the White House in November.

It is clear that winning or coming close against great odds can establish momentum. The Giants lost to the Patriots in late December, but by playing his first team and coming close, Tom Coughlin gave the Giants the momentum they needed to beat the Bucs on the road in the wild card NFC playoff game and beat the Cowboys this past Sunday to get into the NFC Championship game. The Packers seemed to lose it towards the end of the season, but they regained it in the snow at Lambeau Field against the Seahawks. It brought back memories of Lombardi’s Packers, with Hornung, Taylor and Bart Starr in their glory years. Brett Favre keeps getting better with age! The Patriots continue to have it as they move closer to running the table. Can they be denied before Super Sunday, February 3rd?

min’s b2b keeps us informed every week on which publications and categories are hot and have momentum and which continue to be under pressure. Up until this past year, Hanley-Wood clearly had momentum, particularly with its residential titles. Its focused approach was a winning hand, just as enterprise computing was from ‘92-’01 when CMP, IDG and Ziff-Davis rode the momentum wave. Google has it while Yahoo has clearly lost it. Will Google be able to maintain it during this cooling-down period if it cannot introduce an innovative new product to complement search?

The media business is very similar to politics and sports. When you are winning and on top, it feels like it will last forever. But as Andy Grove, the former CEO of Intel, and others have stated, “only the paranoid survive.” Those of us who grew up on the advertising side of the business know how quickly fortunes can change and how difficult it can be to represent a property that is not #1 or #2 in its category.

As managers, we need to make certain that our businesses are constantly innovating to insure that we are not in the position of losing momentum for our core brands. Media brands with significant goodwill and brand equity will allow for tarnished brands to be rebuilt, but it is very challenging. Does anyone recall brands like Atari and Sega, which were once the leading video game platforms and seemed invincible? Keep checking those scorecards and doing research to insure that your leading properties will deliver strong results in ‘08 and beyond.

At this time of the year, all pundits try to provide insight into the New Year. I will join them with my own forecast for 2008.

• The risk managers at the major financial institutions will have greater status and their counsel will be adhered to. Therefore, the leverage of the recent buyout spree will be a distant memory.

• The worst of the credit/liquidity crisis is behind us, but we will still see certain over-leveraged deals collapse and some more top management changes at our major financial institutions.

• With the 2008 presidential election in full swing and Super Tuesday, February 5th, we will avoid a recession.

• In both parties, invincible candidates from this past fall will struggle in the early primary states. However, they could still emerge from February 5th battered, but as their party’s nominee. Will we see an all New York election of Clinton vs. Giuliani?

• Confidence has been restored by the actions that the Federal Reserve and its European counterparts took starting this past August. They will continue to provide liquidity when necessary in 2008.

• Stocks will continue their rally led by the tech sector, Apple (AAPL) and Google (GOOG). Apple’s results for the current holiday season should be outstanding! The latest Nano iPod is a star and the iPhone continues to expand around the globe. Google’s share of the search market will continue to widen over its competitors, Yahoo and Microsoft.

• Diversified financials, with the exception of Goldman Sachs (GS), will continue to be out of favor in the first quarter of 2008, but by year-end will show significant gains from their current lows. I particularly like JPMorgan Chase (JPM), Morgan Stanley (MS) and Bank of America (BAC).

• On Super Sunday the Patriots will add to their folklore as a dynasty and Bill Belichick will have gone from Spygate this past fall to the second coming of Vince Lombardi.

• Bill Parcells, Belichick’s mentor, will turn around the Miami Dolphins, but only serve two years of his four-year contract.

• Spring training will arrive in late March and the Mitchell Report on steroid use in Major League Baseball will become part of the past winter. Unfortunately, this sad saga seemed to end with no one caring about the players who were named in the report and their right to procedural due process, which is based on the concept of fundamental fairness.

• Governor Schwarzenegger will solve the current budget crisis in California with some more long-term bonds and will turn his attention to running for the Senate if Senator Feinstein decides to retire.

• Mayor Bloomberg will decide not to run as an independent candidate for president, but he will decide to sell his controlling interest in Bloomberg LP and this will be the largest media transaction of 2008. He will then turn his attention to unseating the unpopular Governor Spitzer.

Around Thanksgiving I wrote about my favorite wineries and promised to include some more at a later date. Based on the strong response to that column, the start of 2008 seems like an appropriate time to deliver on that promise.

Arietta: Fritz Hatton and his wife, Caren, are now managing this winery without their early partner John Kongsgaard. They have brought on Andy Erickson as their winemaker. Their wines are truly outstanding and produced in very small quantities. While their red wines will become legends, particularly, the Arietta Red Wine H Block Hudson Vineyards, they produced their first white wine last year, On the White Keys. Mary Claire and I opened a bottle several weeks ago and marveled at its refinement and elegance! www.arietta-wine.com

Blankiet Estate-Paradise Hills: This small winery produces consistently outstanding Cabernet Sauvignon and Merlot wines. Blankiet is owned by Claude Blankiet and his wife Katherine, and it was developed for them by David Abreu. Helen Turley was the initial winemaker, but the most recent releases have been from a rising star, Martha McClellan-Levy, also the winemaker for Sloan. She and her husband, Bob Levy, will have their own first release for Levy & McClellan this spring. www.blankiet.com

Failla: Failla wines represent outstanding value. Ehren Jordan is the winemaker for Turley’s fabulous Zinfandels, which are recognized as the gold standard by zin lovers. Several years ago he and his wife, Anne-Marie Failla launched Failla Jordan, but became ensnared in a trademark suit with Jordan Vineyards. Today the brand is Failla, although I still have several of their early Failla Jordan releases in my cellar. They consistently produce charming Chardonnay with wonderful flavors, exquisite Pinot Noir and complex syrah. www.faillawines.com

Hafner Vineyard: This winery represents another producer of wines that exhibit excellent quality and value. This was the first winery mailing list that I got on when we moved to the Bay Area in 1992. After all these years, Mary Claire and I visited the winery this past April and met Scott Hafner, who manages the business side of the winery and his brother Parke, who trained at UC Davis and is the winemaker. They barrel age their Cabernet Sauvignon releases for longer than most wineries and create them in a very approachable French style. I particularly enjoyed their 2002 release, which they describe as elegant & velvety. www.hafnervineyard.com

Kistler Vineyards: This is a benchmark vineyard for those of who love Chardonnay and Pinot Noir. Their production is large enough that your allocations, twice a year, can be significant. The Cuvee Cathleen Chardonnay and the Cuvee Catheriene Sonoma Coast Pinot Noir are two of my personal favorites. Steve Kistler and Mark Bixler pay great attention to detail and these wines are made in a French style. This is a mailing list that you should be able to get on. www.kistlerwine.com

Vineyard 29: I have been on the mailing list of this winery since the early ’90s. Several years ago it was purchased by Chuck and Anne McMinn. They retained the winery’s talented winemaker, Philippe Melka. Under his direction, they have expanded beyond their Cabernet releases and today they also release wines under the Aida label. The Aida Zinfandel is a personal favorite. www.vineyard29.com

Here’s to a Happy, Healthy & Prosperous New Year!