26
Feb

Online businesses looks to be on course for a negative event of even greater magnitude — stay tuned

2-Color-Design-Hi-Res-100px-widthIt is one thing to lose something of great value while covered by a comprehensive insurance policy, and quite another to be in the same position, albeit without the coverage.

So adding the insurance policy looks to be a no-brainer, right? Not so fast. According to an article titled Cyber attack risk requires $1bn of insurance cover, companies warned (http://www NULL.ft NULL.com/intl/cms/s/0/61880f7a-b3a7-11e4-a6c1-00144feab7de NULL.html?siteedition=intl#axzz3SrQZqbSm), written by Gina Chon and published on Thursday, January 26, 2015 by the Financial Times, businesses are not only finding a lot of obstacles on their way towards securing the extent of insurance coverage they need to cover online commerce, but (and this is even more worrisome) are also exhibiting a lot of reluctance to even make the effort. If we are looking at a wave of complacency, then perhaps we are looking at a major negative event with enormous financial impact all around in the making.

Back in October 13, 2013 we published a post to this blog titled Online Security Problems are too Pressing for the Public to Continue to Ignore. The position I have always taken on topics like the one Chon treats in her article for the FT is as follows:

  • the “mono protocol” data communications world we have, perhaps inadvertently, created by vigorously pushing further expansion of markup language code at the application layer with Ethernet over TCP/IP as the underlying pipe is very very dangerous. The old world of multiple data protocols running across wide area networks made a lot more sense and was, inherently, safer

But my position, at present, is “so be it”. The internet, for better or worse, as it is presently technically constructed is here to stay. The question ought to be how do we get this “genie back in the bottle” and mitigate the risks associated with doing business online.

Apparently businesses are not willing to take the steps required to accomplish this critically important step. Underwriters seem not to want to handle the risk and the insured are not willing to pay the cost for coverage. This is a potentially dangerous condition. One would hope all of the parties involved will see their way through to a mutually satisfactory conclusion. The sooner the better.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

5
Feb

Investors buy up shares of prominent social media ISVs despite slowing user growth

2-Color-Design-Hi-Res-100px-widthPerhaps investors are changing their taste in prominent social media ISVs. Could the search for a telltale sign of promise have shifted from substantial growth in users to what may be a meaningful increase in revenue? From the after hours trading experience of LinkedIn and Twitter on February 5, 2015, it would appear to be the case.

Twitter and LinkedIn both reported solid revenue growth in the quarter ending December 31, 2014. But in the case of Twitter this plus was offset by anemic growth in the number of active users. Tiernan Ray wrote in Barrons (http://blogs NULL.barrons NULL.com/techtraderdaily/2015/02/05/twitter-q4-drops-8-q4-beats-maus-288m/): “[Twitter] said its monthly average users (MAUs) rose 20%, year over year, to 288 million from 284 million in the prior quarter. That was down from a rate of 23% growth in Q3. Of those MAUs, 80% were on mobile devices, about the same as the prior quarter.”

Hannah Kuchler of the Financial Times (http://www NULL.ft NULL.com/intl/cms/s/0/ffe39094-ad7c-11e4-a5c1-00144feab7de NULL.html?siteedition=intl#axzz3QuTkmehy) also remarked on management’s forward-looking guidance, “that was above the average analyst forecasts”.

Investors looked like they liked what they were hearing and reading. Twitter’s share price was up over 10% after hours.

LinkedIn shares were also up substantially, approximately 6% above the close. The quarterly earnings report included very similar highlights: substantial growth in revenue. But I found a different nugget: Maria Armental wrote in the Wall Street Journal: (http://www NULL.wsj NULL.com/articles/linkedin-reports-strong-revenue-gains-1423172761?mod=WSJ_TechWSJD_NeedToKnow)“The professional social network, which this month launched a localized version in simplified Chinese and traditional Chinese that has nearly doubled its Chinese member base to more than 8 million, said nearly 70% of total members come from outside the U.S.” Eight million users is certainly not a very big number for the country with the biggest population in the world. But LinkedIn is succeeding (as Apple is also succeeding, though in a much bigger way) in a market that continues to elude Microsoft and curiously enough Google (Android) (http://www NULL.androidpit NULL.com/billion-android-devices-shipped-in-2014).

As a user I must attest to a much more promising experience from my efforts with Twitter than has been the case for how I have worked on my LinkedIn profile. I make a lot of use of Twitter’s Analytics. As my tweets have magnetized more impressions there has been, over time, a substantial increase in the page views of this blog. But perhaps the best result of all has been a growth in our following on Facebook. But I will write more on this point in a later post.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved