Business

There’s been speculative discussion for a while about whether Time Warner would sell AOL to Google or Microsoft or someone else. I think a spinoff would make more sense for Time Warner.

Whatever AOL’s value as a business, if TWX wants to unload it to a single bidder it may be difficult to get full value. If you were Microsoft or Google and had a pile of cash, and AOL were worth $X billion by your calculation, would you bid X? I don’t think so. The rational thing, if you are one of a few bidders and everyone knows that the seller is eager to sell, is to bid low, perhaps at a level where you can’t go wrong if your bid is accepted. I suspect that that amount is significantly less than the total value TWX shareholders would gain via a well managed public offering.

After all, Time Warner is the company that bought AOL near the top. Wouldn’t you also expect them to puke it out near the bottom? That’s the course that this kind of corporate acquisition tends to take. Microsoft and Google know that too, and I doubt that they will be willing to do the deal without getting a big enough edge to make this trade an instant winner. TWX is fighting the tides if it thinks it will get a good price by selling AOL to a cash-rich corporate savior.

EGG-ON-FACE UPDATE: A commenter reminds me that it was AOL that bought Time Warner, a transaction that reflected very well on AOL’s Steve Case, who used inflated AOL stock to pay for it, and not so well on Time Warner’s then-management (but not its current management).

This is a big deal. Guess what happens to newspapers if they can’t compete for local classified-ad revenue.

BTW, what happens to the supposed eBay monopoly if Google makes it free to list — and to search for — sales listings, including auctions?

We live in interesting times.

UPDATE: See also this column (requires WSJ subscription).

Check out the Marketing IQ Test.

I scored 120 despite not knowing anything about marketing. I only answered 10 out of 20 questions (the others, “don’t know”) but got all 10 right. I suspect that the low CEO score, if it’s representative, represents mainly overconfidence — the CEOs thought that they knew more than they actually know, and attempted to answer questions that they should have passed up. This to me is the most interesting implication of the test, though as it validates my biases about corporate executives it too should not be accepted uncritically.

(via Davis Freeberg, Business Pundit.com and Marketing Headhunter.com)

This is very well done. My feelings are similar, based on similar experience, and I’m sure I’m not alone. It really isn’t a good idea to abuse your customers. People remember.

Not to mention that this is the company that gave us Maria Cantwell. I wish they would take her back.

An old A&L link reports on French start-ups.

It’s not exactly haute culture, but these days this is a vital topic here in France, where the unemployment rate has been stuck between 9 and 10 percent for a quarter of a century and where not a single enterprise founded here in the past 40 years has managed to break into the ranks of the 25 biggest French companies. By comparison, 19 of today’s 25 largest U.S. companies didn’t exist four decades ago.

Small business people tend to want different legislation (and less of it) than do big companies who are more likely to effectively lobby. Small business people tend to be independent; I think I started one because it had not been my experience that I would enjoy being part of an institution or to work at a 9-5 government job. I never really thought I’d get rich but I did think I’d get independent. That probably isn’t that unusual. Some of my staff were not so happy with the lack of firm and separated job descriptions but many liked learning a variety of skills and making decisions on their own.

Of course many small business owners are more competent and more ambitious. That 19/25 reinforces my earlier post about the churning among quintiles of net worth–obviously, such size is rare but movement upward through small business is common. Little outside the most intensely personal is as exhilerating and requires as much creativity as small business start-ups. That energy comes from the challenge of responsibility; France recognizes the need but will need to work against their inclinations to foster these. The role of such businesses in introducing new workers to the marketplace, in fostering independence and creativity should always lie somewhere in the back of legislators’ minds.