As few exciting new startups emerge in the web 2.0 landscape, the flaws of a blog like Michael Arrington’s Techcrunch become more and more apparent.
Toward that issue, yesterday Dave Winer wrote:
‘Nelson Minar says he likes TechCrunch, but they’re not journalists so be careful what you say to a TC reporter at a party.’
That’s fine, but I’ll go one further–I don’t like Techcrunch, and furthermore, it’s a reminder that attending one of those insular web 2.0 bashes brings with it the constant danger of some moron coming up to you and talking business. How unrefined.
But my real problem is that their writers are often stupid, the staffers more so than Arrington. Duncan Riley sounds on the blog like a combative idiot and Nick Gonzalez’s work makes me think he’s a lousy writer. It’s too much work to recount all of their dimwitted mistakes of reasoning and logic, and their shameless hype of Microsoft products.
But unfortunately the site’s new writer, a refugee from a collapsed business magazine, is really going to fit in.
For example, today we have this moronic line of thought from Eric Schonfeld, who was writing about CNET:
‘If a stock buyback manages to jack up the market cap, a takeover could be averted.’
I’m not sure how stupid the market is, but here’s my guess–less so than Schonfeld thinks. Spending cash from the corporate treasury to buy up shares should, if proportions hold through the market’s reaction, jack up the price of the shares a bit. But the putting aside of the purchased shares into the company’s treasury stock will lead to reduced number of publicly available shares.
Market cap is, after all, price times number of shares.
Apparently Mr Schonfeld could be gamed this way; but I think the market is rather too smart for that.
In fact, the economic (though not the accounting) effect from stock buybacks is actually closest to the economic effect of issuing dividends. (I had to argue this one out with an accounting professor, but think it through–stock buybacks are the preferred method of dividend-type transactions [i.e. returning capital to investors] for some large traders because the money will be automatically reinvested in the same company instead of run through capital gains because of dividend payments.)
Yes, CNET is trading at what seems like a low total valuation of a little more than a billion, and it could become a target for corporate takeover or private equity. And if Facebook is really worth $15 billion like Microsoft seems to believe, then couldn’t a company with a suite of popular niche sites including Gamespot, Webshots, and Chow.com be worth more than a tenth of that?
But that’s an assumption I’m not ready to make. For now, we’ll have to wait for the news–preferably from a reputable source.
update 11:26 p.m. PT: The announcement is that Webshots is being sold for $45 million. No buybacks have been announced, and the minutia of stock buyback accounting is really peripheral to my denunciation of Techcrunch’s shoddy argument that some (hypothetical) balance sheet maneuvering (that Techcrunch was speculating about but was not subsequently announced) will change the underlying takeover value perceived of CNET. In fact, at its size, CNET.com has long seemed to me to be a very possible target for a larger internet brand–and now that Webshots is being sold to American Greetings, CNET has no Flickr competitor but it does have some targeted sites and a San Francisco location, two things a Yahoo looking to rejuvenate itself might be drawn to.