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Four Dying Silicon Valley Companies
Seeking Alpha ^ | Dec 22, 2008 | Joel West

Posted on 12/22/2008 5:36:36 PM PST by SeekAndFind

On Sunday, Chris O’Brien of the Silicon Valley Mercury News wrote about four dying Silicon Valley icons. For some reason, it wasn’t posted to the website Sunday or Monday, but it’s there now. He aptly summarizes the problems of three of these companies, and I recommend anyone interested in innovation (or the Valley) to read the analysis.

In my reading, two of the companies are (effectively) single-product companies where their product is no longer compelling and increasingly no longer competitive. Advanced Micro Devices (AMD) once was threatening Intel (INTC) on the performance front, and now they are asset stripping in hopes of raising enough cash to stay alive. Palm (PALM) created the pen-based PDA and for a while was a leader in smartphones, but their Treo remakes have long since run out of steam and their last Hail Mary wasted precious time and money.

The other two companies are diversified systems companies which were built around the idea of integration and economies of scope. Their stories diverge somewhat, in that Sun Microsystems (JAVA) was the dominant firm in a category that’s been dying since the end of the dot-com era, while Yahoo (YHOO) is #2 in a category that’s still very much alive.

Still, there are important parallels. Sun has been cutting its way to greatness for years, and is still floundering in search of a strategy that will somehow make up for its loss of a raison d’être in a world of commodity Linux boxes. (Thank you, Intel).

Yahoo has only recently begun to emulate Sun by cutting its way to greatness — with cuts of 7% in February (announced in January) and 10% earlier this month announced back in October. Even their cutting is not being done well: pre-announcing them makes it like a water torture, and they are also cutting staff from its winners and not just deadweight.

However, Yahoo has been floundering for as long as Sun — ever since it hired Terry Semel back in 2001. Semel was cast off in 2007, but his successor hasn’t done any better.

O’Brien puts Yahoo in a separate category, because he thinks they will do a deal with Microsoft (MSFT) in 2009 that will pull them out of a tailspin. But I think Yahoo’s problems are systemic, and even if they make nice with Microsoft, that won’t substitute for a lack of a winning strategy.

So will Yahoo die in 2009? No, but neither will Sun: it has enough inertia (through enterprise sales contracts) to keep limping along for another decade or more, as did DEC and Unisys (UIS) and Cray (CRAY) and SGI and all the other computer systems also-rans.

Still, if Yahoo doesn’t get a better CEO and better strategy, all its point successes (like Flickr and mobile) will be for naught.


TOPICS: Business/Economy; Editorial; News/Current Events
KEYWORDS: dying; siliconvalley; technology

1 posted on 12/22/2008 5:36:36 PM PST by SeekAndFind
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To: ShadowAce

.


2 posted on 12/22/2008 5:39:40 PM PST by rabscuttle385 ("If this be treason, then make the most of it!" —Patrick Henry)
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To: SeekAndFind
Silicone Valley supports the Democrats. Let the DNC bail them out.
3 posted on 12/22/2008 5:40:05 PM PST by Cowboy Bob (Barack Obama: The Bernie Madoff of Politics)
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To: Cowboy Bob

AMEN.


4 posted on 12/22/2008 5:44:58 PM PST by LeonardFMason
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To: martin_fierro

for the silicon valley ping list

I would have added IBM a generation ago, and they rebounded. Also, so has Apple. I think National Semiconductor is in a death spiral since they hired Halla. And Lockheed seems to be moving out of the area.


5 posted on 12/22/2008 5:53:32 PM PST by Kevmo ( It's all over for this Country as a Constitutional Republic. ~Leo Donofrio, 12/14/08)
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To: SeekAndFind

Things are so bad here that I’m scared to death my retirement fund will be tapped by the dems!

Did I mention that my retirement fund consists of aluminum cans?


6 posted on 12/22/2008 5:54:39 PM PST by Randy Larsen ( BTW, If I offend you! Please let me know, I may want to offend you again!)
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To: Kevmo

Darn, posted too soon. HP. Hard to tell if it’s a death spiral or just a flat spin. But like Intel, they will not be building any infrastructure here nor adding jobs.


7 posted on 12/22/2008 5:54:48 PM PST by Kevmo ( It's all over for this Country as a Constitutional Republic. ~Leo Donofrio, 12/14/08)
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To: Kevmo

IBM as so much more depth that Sun. IBM had the OS, developers and a huge install base just for them. IBM was DOG backwards.


8 posted on 12/22/2008 6:06:04 PM PST by ImJustAnotherOkie
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To: SeekAndFind

I have 4 pcs in my house, all of them have AMD processors. I never hear many complaints about them, what puts them in the death spiral category?


9 posted on 12/22/2008 6:06:12 PM PST by Oshkalaboomboom
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To: SeekAndFind

Computers, hard and soft are an aging technology.

Perhaps clean domestic energy is an attractive market.


10 posted on 12/22/2008 6:07:29 PM PST by truth_seeker
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To: truth_seeker
We have clean domestic energy, we just won't develop or implement it.

I think you mean politically-correct domestic energy.

11 posted on 12/22/2008 6:42:16 PM PST by elkfersupper
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To: SeekAndFind

Palm’s product space has been taken over by BlackBerry and Apple. They were a lousy company even back when they had a good product. The company has managed to destroy over 99% of shareholder equity since their IPO. They are loosing $6 plus a share. I feel sorry for their employees but frankly, they deserve to die.

AMD could well be taken over by someone Chinese (like the PLA) who want their microprocessor technology and global footprint. Not sure that this is (as in ‘sure that this is not’) a good thing.

Sun will probably go out of the server business and try to reorganize as a much smaller software company selling Open Office and supporting some flavor of Unix. Not sure this will work.

Yahoo will flounder along and probably get taken over by someone.


12 posted on 12/22/2008 7:17:06 PM PST by InABunkerUnderSF (Illegal Immigration is not about the immigration. Gun control is not about the guns.)
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To: Oshkalaboomboom
“I have 4 pcs in my house, all of them have AMD processors”

Me too. I have built probably near 100 AMD computers too. The price to performance is usually excellent. All mine are stable and have run cooler than comparable Intel products.

Guess I will need to stock up on AMD processors before they pull the plug. What a shame, now Intel will have not competition and will be able to charge what they want (within the market).

13 posted on 12/22/2008 7:38:54 PM PST by JSteff (It was ALL about SCOTUS. Most forget about that and may have doomed us for a generation or more.)
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To: SeekAndFind

Sun needs to wise up a bit but they do have consulting contracts, some decent server hardware, Java, government contracts, and Solaris has some pretty neat features. The ZFS filesystem is wonderful, truly a breakthrough as it gives commodity hardware and some disks the ability to become a pretty good fileserver, replacing a $50K dedicated hardware box.


14 posted on 12/22/2008 8:04:17 PM PST by ikka (Brother, you asked for it!)
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To: SeekAndFind

Mr. West is mistaken. Though AMD has major problems on the processor front, it is hardly a “single product” company. AMD purchased ATI and is a major player in the graphics market.


15 posted on 12/22/2008 11:16:02 PM PST by rmlew (The loyal opposition to a regime dedicated to overthrowing the Constitution are accomplices.)
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To: SeekAndFind

Wasn’t it Yahoo that turned down a gazillion dollars from Microsoft?


16 posted on 12/22/2008 11:25:43 PM PST by Lancey Howard
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To: Oshkalaboomboom

Currently Intel processors are much faster and use less power. AMD hasn’t kept pace.


17 posted on 12/22/2008 11:30:59 PM PST by DB
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To: SeekAndFind; rdb3; Calvinist_Dark_Lord; GodGunsandGuts; CyberCowboy777; Salo; Bobsat; JosephW; ...

18 posted on 12/23/2008 4:56:00 AM PST by ShadowAce (Linux -- The Ultimate Windows Service Pack)
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To: Cowboy Bob
Silicone Valley supports the Democrats. Let the DNC bail them out.

The only problem is they probably will.

19 posted on 12/23/2008 5:16:42 AM PST by Still Thinking (Quis custodiet ipsos custodes?)
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To: SeekAndFind
Advanced Micro Devices (AMD) once was threatening Intel (INTC) on the performance front, and now they are asset stripping in hopes of raising enough cash to stay alive.

Oh, crap. Now well all get stuck with that goofy ass Socket 775.

20 posted on 12/23/2008 5:23:00 AM PST by Still Thinking (Quis custodiet ipsos custodes?)
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To: SeekAndFind

one more:

Mercury News


21 posted on 12/23/2008 6:19:32 AM PST by sasquatch
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To: 2Fro; all_mighty_dollar; Arkat Kingtroll; Battle Hymn of the Republic; Betis70; billycat95130; ...


and oh, yeah:

Click for San Jose, California Forecast
Send FReepmail if you want on/off SVP list
The List of Ping Lists

22 posted on 12/23/2008 7:31:40 AM PST by martin_fierro (< |:)~)
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To: Oshkalaboomboom
I have 4 pcs in my house, all of them have AMD processors.

I was a long-time AMD fan for personal use, from the 486-100 through later Athlons. This was especially true in the days of the Pentium 4 architecture where Intel's chips truly sucked.

But for the last couple years Intel has been on the Core architecture, more powerful and efficient than any of AMD's offerings. AMD simply hasn't been able to keep up, and they're hurting because of it.

23 posted on 12/23/2008 11:38:27 AM PST by antiRepublicrat
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To: Lancey Howard
Wasn’t it Yahoo that turned down a gazillion dollars from Microsoft?

IIRC, the yahoo who was running Yahoo at the time no longer works for Yahoo.

24 posted on 12/23/2008 12:50:14 PM PST by antiRepublicrat
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