Top Talent Sought: Buddy Media

My pal Mike Lazerow, CEO and Founder of Buddy Media, is looking to fill two important positions with super-talented, ambitious people ready to join his nimble, high-performance team:

Director of Business Development

Buddy Media, Inc., a NYC-based start-up that is building the AceBucks underground currency on Facebook, is currently seeking a Director of Business Development. The position is based in Buddy Media’s Columbus Circle office and reports to the CEO of Buddy Media, serial entrepreneur Michael Lazerow (U-Wire, GOLF.com, Lazerow Consulting).

We are looking for a motivated, self-starter who is comfortable working in a fast-paced start-up atmosphere. The ideal candidate is sick of making money for others and wants to create value for him or herself as an owner of Buddy Media.

Primary Responsibilities:

* Create partnerships with media companies, marketers, advertisers, sponsors and other organizations that want to reach the Facebook crowd.
* Form relationships with other Facebook application developers to use AceBucks as their currency or loyalty marketing program.
* Lock down distribution with large media companies and start ups for the AceBucks currency.
* Lead all aspects of deal development, prospecting, sourcing, negotiating and closing. This will include strategic partnerships, distribution deals, and corporate development.

Requirements:

* Minimum five years experience in the internet business or technology company focusing on digital business development.
* Background in loyalty marketing and membership marketing is a plus.
* Excellent negotiating and people skills.
* Must be able to develop Powerpoint presentations that convey complex issues clearly and concisely.
* Strong analytical and financial skills.
* Ability to work independently and as part of a team in a fast paced environment.
* Strong personal interest in and knowledge of social networking and Facebook.

Compensation & Benefits:

Salary based on experience. Equity in Buddy Media is a major part of the compensation package. Full benefits provided

Software Engineer

General Description:

We are looking for a candidate who has experience working with large amounts of data. The position calls for a candidate who is skilled with algorithms, optimization, and efficiency.

Requirements:

• Core competencies are Linux, Apache, MySQL, PHP, and HTML, CSS (emphasis on PHP & MySQL)
• Working knowledge of AJAX
• Strong quantitative and analytical skills
• Must have an interest in excellence
• Enthusiasm for learning our system and for working as part of our team is important
• Excellent written and verbal communication skills, ability to communicate effectively
• Looking for a self starter with the “general get it factor”
• Must have a “whatever it takes” attitude
• Meticulous thinker who can develop effectively by our coding standards
• Must be a quick study and enjoy learning new technique daily
• Must check your ego at the door and be able to work well in a tight group of enthusiastic engineers. Must be able to work collaboratively, listen, and incorporate new ideas into your designs

The Ideal Candidate will have:

• 3+ years of SQL and PHP experience
• familiarity with Linux as a user
• experience with Memcache
• experience with Javascript
• an easy-going attitude, yet are ambitious, tenacious and enjoy solving problems

Preferred Qualifications:

• familiarity with Facebook development API
• linux and mysql system administration experience
• ability to pass

Apply for this position by sending us the following:

• Your resume and cover letter.
• Examples of any projects you’ve worked on.
• Recommend a good book or two you’ve read.
• Work References

So if you've got the goods, run, don't walk, and get your information into jobs@buddymedia.com.

Hedge Funds as Software Companies? Nah. And You Don't Need a Ph.D to Rock It

My Infectiously Greedy friend Paul Kedrosky, major domo of the upcoming Money:Tech conference, ripped out a little ditty where he implied that developers were becoming even more important and prevalent at hedge funds than at software companies. Now Paul knows that I agree with him much of the time, but this does not happen to be one of those times. I think Mr. Greed is mixing up two separate and distinct concepts: models and data. Sure, one can benefit from multi-lettered, Ph.D-laden development teams to design new statistical arbitrage models supported by ultra-low latency execution platforms. This is the province of Renaissance, the quant part of DE Shaw (which is now a multi-strategy mega-firm), AQR and other like-minded nerdos. But this is not - repeat NOT - what makes Web 2.0/3.0 so exciting. It's the data, stupid.

And you don't need an army of topologists or theoretical physicists to either get the data or extract value from it. Depending upon how wide one wants to cast the net or how specialized one's needs might be, there are lots of free tools out there to harvest and aggregate Internet data that can add real value to an investment process. Tools that didn't exist even 12 months ago. Sure, if you want a customized, tickerized feed of alternative data, stitching together memes across multiple data types, neat, tidy, spam-free and delivered exactly how you want it, that's different. But plenty of folks are just scratching the surface of all the data that's out there on the Internet and don't need this level of customization and service level to extract value and meaning.

I think the other big thing besides the data itself is how to extract meaning from the data given your perspective on trading and investment. Long-term investor looking to fill in the investment mosaic around a specific idea or theme? Trader looking for indications of when it is best to exit a position in light of volatile market conditions? Quant seeking to develop an analytical framework for a data type around which they've got a theory for extracting statistically-significant levels of alpha? The potential uses of data and related analytics are virtually limitless. And it's not about hard-core coding, it really isn't. It is about the way to incorporate alternative data into one's investment process. Broadening one's horizons, and being forced to use new tools and techniques for tapping into this new river of data and meaning is hard. But ultimately, the payoff will be new perspectives, tools and approaches for making money that didn't exist before. And this, my friends, is what investing is all about.

A Prescriptive for Today's Turbulent Markets? Cool Heads Prevail.

Every day brings some other piece of bad news. This lender is in trouble, this economic statistic looks bad, sentiment is poor, etc. These are times when it is best to adopt the Warren Buffet posture - avoid CNBC, Wall Street chatter and all forms of PR-driven hysteria. If we could move to Omaha, we'd all be better off at times like these. Because at the end of the day, all the current news cycle does is play on our human weaknesses and tempt us to make perverse decisions. Like selling out of fear. Like bailing out of perfectly good equities and fixed-income securities because of generalizing problems across individual securities and asset classes. And this is why most investors are poor at being active managers while a precious few take advantage of this phenomenon to feast on the rest of us.

It is what it is, I guess. But I am here to suggest that you not give into fear and uncertainty, but to keep a level head and to evaluate your portfolio and your prospects using data and facts, not suspicion and conjecture. I know this is hard, believe me. It is "gut check" time when you see the DJIA drop 300, Asia crater shortly thereafter and you can't pick up a newspaper anywhere around the globe without hearing of the subprime meltdown, hedge fund redemptions and a scared and jittery Fed. But like I wrote previously, it is the contra-instinct that is likely your best guide right now. George Costanza had it right. Do the opposite.

My best guess is that things will be pretty ugly for the next 12-18 months. I don't anticipate that the market will crater, but I do think the ripple effects of troubles with mortgage securities and the real estate sector will have far-reaching effects, and cause an economic adjustment that will be painful and time consuming. If bad credits default and good credits can't get mortgage loans, and there is a glut of real property flooding the market that will be liquidated for cents on the dollar in distress, and all those consumer durables filling those homes won't be filling them any more, and Home Depot and the like won't be selling as many building supplies, and consumer confidence weakens, etc., this is not a pretty picture. But I believe that there will be two constituencies that will flourish in the near- and medium-term in the wake of today's markets - those with the intestinal fortitude to hold on to good assets that the market is discounting now but will reward later, and value-oriented long/short hedge fund managers.

I think we'll be entering a stock-pickers market, one where those with a deep-value orientation and stock-picking skill will shine. The cream rises to the top in uncertain times, where margins of safety are large and actual performance and returns on invested capital carry the day. My hypothesis is that the top long/short managers that have been running 100/40 long/short books will become much flatter, much less net-long, and revert to 80/60-type positions where conviction and analysis rule. I may be wrong, but it feels like a time similar to the early 2000s when top long/short managers just ripped it while the tech bubble was deflating. Time will tell, but this is my "blink" visceral reaction to the goings on. To the extent you can, act like one of these hedge fund managers. Keep a cool head. Really get a grip on your portfolio. And don't do anything rash. Because there are a group of smart, opportunistic, dispassionate people out there ready to take the other side of the trade and eat your lunch.

Retail vs. Institutional Investors: Compare and Contrast

My recent post concerning the challenges of being a retail investor, especially when using strategies and approaches generally the province of Institutional Investors, caused quite an (unintended) stir. My piece was designed to highlight the risks associated with being a retail investor and wading into complex territory, and to make a recommendation for keeping the core of one's strategy brutually simple (and cost-efficient) while leaving some room to stretch for outperformance. A common thread running through the more critical comments I received were of the nature "Well, how can you write this when Institutional investors (read: hedge funds) have been doing incredibly stupid things and losing boatloads of money? Isn't it arrogant of you to say that retail has problems when institutions have plenty of problems of their own?" Answer: yes I can write this and and no it's not arrogant - they are two different issues entirely. But since I clearly left some ambiguity on the table, let me clarify and be more precise about a few things:

1. When I say "retail investor," I mean an individual for whom investing is not a full-time vocation; it is a necessity and/or a hobby;

2. Institutional investors are those for whom investing is a full-time vocation, enabling them to spend more time doing research then even the most talented of retail investors. Further, most Institutional investors make a goodly living off their vocation;

3. When I discuss the frailties of humans as investors, they apply to both retail and Institutional investors; it is only that a small subset of investors. be they retail or Institutional, have the ability to overcome these frailties; and

4. When I talk about discipline, the challenges of remaining consistent and sound in one's strategy applies equally to both retail and Institutional investors.

Ergo, carrying a card that reads "Institutional Investor" does not somehow imbue you with skills and abilities that automatically make you successful, just as being labeled "retail" does not, by definition, correspond to the word "idiot." My belief is that almost all investors, be they retail or Institutional by stripe, are not good. Those who can generate true, sustained, statistically-significant outperformance over long periods of time are rare. No, more than rare. But I care less about the failures of Institutional investors as people because they, quite frankly, make a lot of money as a group, while retail investors span the economic strata. This is why I choose to write about retail and my wish for them, as a group, to think smart, be humble, and take a rational and serious (read: "This is not fun - this is business") approach to investing. If this is arrogant, so be it. Excuse me. But I think someone without a vested interest needs to write this stuff because it is a perspective too often lost amidst the hype.

Retail Investors + Complex Investments = Failure

I feel like Will Ferrell in The Wedding Crashers uttering his signature line, "What is she doing back there?" The only difference is that he is wondering when his meat loaf is coming while I am pondering when retail investors are going to wake up and adopt a realistic view of their investment abilities. I'm sure Will's ma brought that meat loaf a hell of a lot faster than most retail investors will say, "You know what, I'm not as smart as I think I am. Smart investing is pretty complicated and is a serious business." As IA readers know, idiot retail investment ideas and approaches are a pet peeve of mine and drive me absolutely bonkers, and my ire was raised to a fever pitch when reading a thoroughly disgusting article in Tuesday's Wall Street Journal titled Small Investors, Too, Get Nailed by Arcane Trades. I have only one simple question upon hearing this news: WHY???

So glad you asked. Here are my theories (in no particular order):

1. Hubris
2. Greed
3. Stupidity
4. Fear
5. Lack of knowledge
6. Because most humans are wired to make dumb investment decisions

When I hear of retail investors engaging in multi-legged option strategies, trading foreign exchange and commodities and shorting stocks, I cringe. How many lumps are people going to require to wake up and grow a little humility? I get it - the psychological phenomenon, that is - but I DON'T GET IT. There have been countless stories documenting the sheer idiocy of so many retail investors, being in way over their head and getting killed. So why do people continue making the same mistakes? For the exact opposite reason of why Warren Buffett really is a once-in-a-generation type investor: discipline.

Discipline, especially when it goes against one's native instincts, is hard. When your friend brags about a particular stock or strategy on the golf course, you are jealous, right? And when you hear stories of people making tons in _____ (choose your era - tech stocks, commodities, currencies, gold, etc.), regardless of a lack of documentation (self-reporting is notoriously poor as people tend to remember wins and forget losses), you want in, right? It is very hard to be the tortoise when you are seemingly surrounded by hares. But you know what, you can try your hand a bit if you adhere to a few simple guidelines:

1. Set an asset allocation mix that makes sense for your age, stage, family circumstance, etc. If you can't do this with confidence get some help;
2. Establish the majority of your allocation using low-cost, liquid instruments like index funds and ETFs;
3. Figure out if you want to try and dicker with investing at all, and if the answer is yes;
4. Limit your "play money" to 5-10% of your total portfolio.

By all means have some fun. Do some research. Collaborate with others. Try and generate some real alpha. But don't, DON'T have this be the core of your investment strategy. Please. Don't. Do. It. If you follow my advice you can get the high of investing without running the risk of an overdose. Because an overdose can kill you.

Selling Stock When Bad News is Coming? Bad, Bad Form

Microsoft's Xbox 360 extended warranty announcement, which carried a $1.15 billion charge to earnings along with it, was certainly not good news for the company or the H&E Division. One might even call a charge of this magnitude material, even for a company of Microsoft's heft. This means, as a matter of both prudence and law, that one shouldn't be selling in advance of such news if someone is in possession of material non-public information. Then what on earth is going on when the a person intimately tied to such an announcement, say, the President of the H&E Division, sells a goodly chunk of stock shortly before such an announcement is made public? From today's GameDaily BIZ:

Last month, we reported that President of Microsoft's Entertainment & Devices Division, Robbie Bach, sold off roughly $6.2 million in company stock prior to the Xbox 360 warranty extension, which cost Microsoft $1.15 billion.

As it turns out, however, according to a report from MarketWatch, Bach actually sold $3 million more in stock than was previously reported. Bach sold just over $3 million worth of company stock on May 1, but Microsoft spokesman Eric Hollreiser said the additional $3 million in sales were not registered in a timely manner with the SEC "as the result of an administrative error."

Just as before with Bach previous stock sale, Hollreiser said that the additional $3 million was completely unrelated to Microsoft's Xbox 360 repair announcement.

Now given the legal and compliance controls and infrastructure in place at Microsoft, I am virtually certain Mr. Bach's actions were within the letter of the law. It appears that there was around a two month time lag between the stock sales and the warranty announcement. That said, legal implications aside, this smells bad. Were I a MSFT investor (which I am not), how would it make me feel. Two words: pissed off.  Now the announcement only dropped the stock around 1.5%, but is that the point? You've got to believe that such a big decision on the part of Microsoft (the warranty charge decision) had to have percolated over several weeks, and had to have included Mr. Bach at the table. If this is the case, then isn't it better to be overly prudent and cautious and to black out such an executive from trading company shares? I'd think so. But hey, that's just me.

Xbox 360: $50 Bucks Less in the US Won't Fix a Broken Strategy

One month ago I came up with a list of things Microsoft needs to do to get the Xbox 360 strategy on track:

1. Cut the price;
2. Deal with the product defect issue head-on and move forward;
3. Make the development of E games and changes to its platform core to its messaging; and
4. Continue to develop leading-edge T and A games for the core gaming audience.

Well, Microsoft just dropped the price of its Xbox 360 line by $50 dollars in the US (yet no word yet about Europe).  Ok, they've taken the first step, although it is a pretty wimpy effort given where the price needs to be to appeal to a broader array of gamers. But price is only a small piece of the puzzle. They need to listen to their current customers and the broader market they purport to be targeting if they have any chance of achieving a decent return on their multi-billion dollar investment. The handling of the product defect issue? Too little, too late. The price cut? Too little, too late.  Getting the non-hard core gaming market excited about their upcoming offerings, as well as convinced about their commitment to both  leading-edge games and innovative hardware enhancements beyond the current controller? Hasn't happened yet. And this also means getting the developer community behind the console as something other than a hard-core product dependent upon Halo 3, Gears of War and games of this ilk. I haven't seen evidence of this strategic shift and messaging, and am personally quite cynical that without a pronounced change in Microsoft H&E leadership that this will happen any time soon.

And as cynical as I am about Microsoft's Xbox 360 strategy, consider these words from the guys over at GigaOM:

If you glance at game industry news every now and again, you might have noticed that Microsoft (MSFT) is lowering the price of its Xbox 360 line by $50, starting today. But unless you’re a hardcore gamer who’s already planning to buy a 360, it’s too little, too late. It won’t significantly extend the 360’s waning lead in the market, or bolster Microsoft’s dreams of owning the PC living room space, let alone stop the juggernaut that is the Nintendo Wii. Why? Neither the original Xbox or its follow-up have built up much of an install base outside of the hardcore gamer demographic, which typically buys next-generation consoles in the first few years of their cycle. By one estimate, these “power gamers” comprise just 6 million U.S. households; the remaining 47 million who play games but aren’t so eager to pay $350-plus for a new gaming system are likely to remain unmoved by such a paltry price cut. With 10.3 million units sold worldwide, this market is pretty much tapped out, leaving Microsoft to struggle against 360’s branding as a hardcore gamer system (which the company itself fostered) while competing with a console that entirely owns the “game system for everybody” niche.

********************

And regardless the 360’s price, the industry is moving away from the system in the area that matters most: exclusive titles and development budgets. Here the Wii has already claimed victory; it has the most exclusives currently in production, while top publishers like Electronic Arts and Activision are shifting their budgets in Nintendo’s direction. (It’s doubtful that the sequel to the 360’s upcoming lead exclusive, Halo 3, will bring in any new customers.)

So in the end, it doesn’t matter if the 360 is $50 or even $100 less. Ultimately, the price cut will just reveal how niche the system has become.

Exactly. Come on, guys. The blogosphere, be it the guys at GigaOM, Chris Kohler at Wired Game I Life or myself, have come up with some pretty rational approaches for how you can get it together. Unfortunately, however, our protestations seem to fall on deaf ears. Best of luck with your "winning strategy." I guess you know best.

Lead Developer Wanted: Mytrade.com

My pals Andy and Landon Swan, founders of the hot Netvibes-meets-investing-and-more start-up Mytrade.com are looking for top Lead Developer to join their high-performance team:

Candidate Requirements

• "Entrepreneurial" in vision, dedication and work ethic—this is not a “punch the clock 9 to 5” type of position. We’re looking for someone DEDICATED and PASSIONATE about creating something BIG and EXCITING.
• Experienced in developing web 2.0 (social, mobile and extensible) concepts and technologies
• Intelligent and creative
• Experienced in project development, resourcing, testing and deployment
• Able to maintain and meet many development deadlines simultaneously (organized multi-tasker)
• Highly proficient in .net, html, javascript, & SQL
• Experienced managing both in-house and outsourced development teams
• Willing to relocate to Louisville, KY

Additional Desirable Attributes

• Previous work within a start-up a bonus
• General stock market understanding a bonus
• Flash & linux a plus, but not required

Job Description

Lead Developer will be responsible for:

• Creative input into vision of mytrade network/website
• Managing projects using in-house and outsourced development teams effectively and efficiently
• Lead the development efforts with both coding and management skills
• Making sure things work like they are supposed to!

Location

Based in Louisville, KY with some domestic travel (primarily to NYC and Silicon Valley)

These guys rocked the house with DayTradeTeam, and they are doing it again, only bigger, with Mytrade.com. Squarely at the intersection of social media, digital media and investing, Andy and Landon have put together a powerful business model, a set of top backers and possess a valuable network across
both online and offline worlds. They will win. If you've got the goods, drop them a note at careers@mytrade.com.

If I Was the CEO of Sony...

...I'd do things very differently. That said, what would I do, and how and why would I do it? How would I deal with the pummeling my premier gaming product, the PS3, is taking from the low-cost yet commercially successful likes of the Nintendo Wii? In less than a year the gaming industry has been turned upside down, leaving Sony with a big bump on its head. One of the great thinkers around issues of innovation, Clay Christensen, took a crack at answering this question in a recent story carried on Forbes.com. He took a clinical look at Sony's plight, the impact of massive and rapid disruption of the gaming industry on its prospects and evaluated different ways the company could respond to the competitive onslaught:

So, assuming Sony is able to fully internalize the importance of Nintendo’s disruption, what should the company do now? One option would be to not respond at all. One pundit noted that any response by Sony would only validate Nintendo’s approach, which could end up helping Nintendo. While the risk of validation is real, our belief is that ignoring Nintendo’s approach would be a mistake.

********************

Assuming Sony chooses to respond, it has three options. The seemingly simplest option is to just come up with a copy-cat version of Nintendo’s controller that works with one of Sony’s existing consoles.

********************

The second option is to repurpose Sony’s “legacy” product (PlayStation 2) into a me-too version of the Wii. To do this, Sony would develop a new controller, lower the price of the PlayStation 2, and try to get game developers to create motion-based games for the platform.

********************

The final option is for Sony to try to “disrupt the disruptor.” Instead of following a me-too strategy, Sony could seek to truly develop a category-changing project. While this approach would take more time and require greater investment, it has the most long-term potential—if Sony can figure out a different measure of performance on which to compete in the video game market. For example, perhaps the company could take another run at the handheld market, where there still seems to be substantial room for growth.

So what will Sony do? Rumors indicate that it is planning on following the first approach, sticking a new, motion-sensitive controller onto an existing console. Our perspective is that this is the worst of the three options. Instead, we’d recommend that Sony follow the second option to buy time while simultaneously undertaking efforts to develop an entirely new way to play in the video-game market. The key to success is realizing that the market is still replete with nonconsumption. Nintendo has shown one way to appeal to the non-gamers, but Sony could find others.

It isn’t easy for a company that has been thumped by a disruptor to respond. Trying to force-fit the disruptor’s new approach onto an existing business runs the risk of creating a disappointing product that further illustrates the novelty of the disruptor’s solution. Companies in the middle of a disruptive wave need to think about how they can disrupt the disruptor and find a new way to redefine the space. While this approach seems to carry the most risk, if done correctly, it actually has the greatest chance of real success.

Taken in a vacuum, I tend to agree with Mr. Christensen's recommendations. The problem I have with them, however, is that they require a healthy and functional corporate culture and a modicum of strategic vision, neither of which Sony had demonstrated in recent years. I don't see how you can answer the question Mr. Christensen so deftly answered without asking the following question: if my prescription is correct strategically, can they really execute upon it organizationally? Because for all the common sense inherent in Mr. Christensen's story, I think it is pretty much a red herring since I can't see a way current Sony management and the existing Sony organization can pull it off.

Let's say for the moment that Sony decides to take Mr. Christensen's advice (despite indications to the contrary). In order to execute it will need to have hardware and software working closely together, and doing so in a way it has never done before. In fact, I'd posit that software development and usability should drive hardware design, not the other way around, which is traditionally the way it is done at Sony. Given that there are really no new players (meaning fresh blood from the outside, bringing new ideas, new energy and new ways of getting stuff done) in key roles since the debacle called PS3 occurred, why should anyone have confidence that Sony can magically transform itself into a flexible, customer-focused, software-driven organization? Answer: they shouldn't.

So before I would begin even thinking about answering the question "What should Sony do next with respect to its gaming strategy?", I'd want to answer the question "How can Sony re-shape its organization, culture and product development approach in order to be more flexible, customer-centric and innovative in a rapidly-shifting market?" Because without a good answer to the latter, you might as well take the former, write it on a piece of paper, crumple it into a ball and toss it in the garbage can. Because that is all the value good strategy is worth in the absence of good culture.

 

EA: Building Up by Being Broken Down

My friend Chris Kohler at Wired Game/Life wrote a little blurb in the wake of EA's recent investor meeting:

In another statement that reconfirms his commitment to getting Electronic Arts back on the right track, new CEO John Riccitiello says to an investors' meeting that they messed up at the beginning of this console cycle:

“Our stock hasn’t moved as much as we’d like,” Riccitello told one investor during a Q&A. He admitted that EA was on the “wrong horse” by concentrating mainly on the PS3 and Xbox 360 while throwing less resources towards the Wii during the console transition.

Yyyyep. To be fair, they've got their bets spread around a little more evenly now.

You said it, John, and right on, Chris. The only point of clarification I'd make is that EA's stock has moved plenty since I first critiqued their strategy in mid-November of last year. Problem is, it has been a great investment for the shorts, having fallen around 14% over the past eight months. Come on, 20%+ annualized, that is a pretty good return! But seriously, Mr. Riccitiello has done a very good job acknowledging EA's problems and taking concrete steps to remedy them. Their strategy which is, as Chris notes, far more diversified, is also less reliant on the core gamer and the legacy platforms that are having serious user-adoption issues. This is most definitely NOT the same EA I wrote about last fall, when their shares were riding high but a reading of the Internet tea leaves indicated trouble on the horizon:

Make no mistake: EA is a game-creating machine. A techno-behemoth making big-headline games for the Big Three: Microsoft, Sony and Nintendo. But at $58 per share and 43x earnings I would be afraid - very afraid. What was once a company able to focus on harvesting its category-leading franchise is now under siege: high development costs, uncertain platform plays and lofty equity valuation. While EA has deftly navigated the vagaries of the fickle gaming marketplace, it is now facing a competitive landscape unlike any other it has seen in the recent past. Ergo, this is one complex business encountering an array of complex market and business risks. This is not a scenario that makes me terribly comfortable as an equity investor.

********************
So if EA continues its emphasis on Sony it is clearly exposed to the degree of adoption (and supply) of new PS3 consoles. If PS3 flops then what? EA will need to identify and milk another future cash cow. They could look to Microsoft’s Xbox 360, with a current installed base approaching 10 million by Dec 31. Not exactly the 100 million installed user base of PS2, but not too shabby nonetheless. However, if the situation evolves such that the Nintendo Wii becomes the rising star, EA may be in trouble.

********************
EA has some real problems. Historic market dominance, rising development costs, backing high-end platforms with limited user bases - none of these factors point to an explosion in valuation in the near term. And these issues are compounded by EA’s gold rush resulting from the run-away success of PS2, which does not look to be replicated by PS3 in light of both production delays and fierce competition from the lower-priced and highly innovative Wii. As noted by the ‘Net, all ain’t well. In short, all I can say is: Buyer Beware.

Now that EA has their strategy right it boils down to execution. And executing in this increasingly complex marketplace is no easy task, but I think John has the goods and has built depth in EA's senior management ranks that gives it a fighting chance to come out on top.