Good morning. The upcoming Facebook IPO is forcing CIOs to consider the unpredictable nature of social networks. Most CIOs of companies in unregulated industries have given in to the use of Facebook on the corporate network, but few have considered the explicit, if sometimes surprising benefits of social networking on business and employee behavior.
It turns out, for instance, that people tend to be more honest about their accomplishments on networks like LinkedIn — which provide the social equivalent of peer review — than they are on resumes they use in employment applications, as CIO Journal’s Rachael King reports. Imagine how much trouble Yahoo would have been spared if the company had used the social network to vet the credentials of its embattled CEO, Scott Thompson.
Or consider an industry like insurance, where complex rules regulate — but don’t prohibit — the use of social media. John Glooch, CIO of the Hartford Financial Insurance Company’s life insurance unit, tells CIO Journal the rules are so complicated he’s sworn off Facebook, even though social networks are an obvious and natural boon to selling in a business that relies so much on relationship-building. Clearly, it’s worth their while for CIOs to work with their peers in legal and marketing to establish clear rules of the road for using these tools — because we can assure you that your competitors are doing exactly that.
In reality, social media are like complex electronic systems with humans as unpredictable components. They can’t be adequately governed by simplistic rules. This brings us neatly to a guest column for CIO Journal from former IBM executive Irving Wladawsky-Berger. He writes that we need to think about how individual components behave together in complex systems, rather than assuming that if each one is built to spec, they will all work together as expected. The simplicity of the industrial age doesn’t work in complex systems like airplanes, electronic trading platforms — not to mention social networks.
Supply chain investments pay off at Limited Brands. Investments in supply chain and inventory management software are “clearly paying off” at Limited Brands, which outperformed the market and analyst expectations in April, retail analyst John Morris of BMO Capital tells CIO Journal. The company, which owns Victoria’s Secret, Bath & Body Works, and other retail brands, is doubling its IT investments to capture and analyze data at the point of sale, enabling it to reorder popular items more quickly.
Android malware could infiltrate corporate networks. Greg Fell, CIO of global manufacturing firm Terex, is concerned that Android represents an increased “risk of picking up some malware,” because apps can be loaded into its app store without the systematic controls inherent in Apple‘s App Store. This hasn’t been a problem thus far, but now for the first time, a virus known as NotCompatible is targeting Android mobile devices, creating a modest risk to corporate networks that allow the use of Android smartphones and tablets, reports CIO Journal’s Clint Boulton.
A pivotal fight over ‘essential patents.’ Microsoft and Motorola Mobility Holdings will get their day in a Seattle court Monday, as a federal judge considers whether they are unfairly wielding patents involving standard technologies, writes the Journal’s Steven Jones. One potential outcome of the Seattle case is that it might go beyond a skirmish about patents to establish terms for licensing standard technologies, said David W. Long, an intellectual property attorney with Dow Lohnes in Washington, D.C. “The final issue, no matter how they frame it, will be: what are the fair, reasonable and nondiscriminatory terms for that license?”
Lenovo reaches beyond PCs. Chinese PC maker Lenovo plans to spend about $800 million on a new facility to where it will develop, produce and sell mobile products as it tries to expand beyond its core business. The investment represents the company’s latest effort to break into new product categories as PC sales lag demand for mobile devices, including smartphones and tablets.
U.S. app maker to expand in China. Evernote plans to install servers in China for its app that allows users to access notes across devices — a move that would improve service in China but could expose user content to government surveillance, reports WSJ’s Loretta Chao.
Carriers chip away at phone subsidies. Wireless carriers are taking their first steps to change the terms of smartphone deals that have mostly benefited phone makers like Apple, in a push that could cost consumers more, or cause them to upgrade their phones more slowly, reports the Journal’s Anton Troianovsky.
Facebook continues to beef up its mobile offerings, announcing Friday that it is buying Glancee, a mobile technology that lets users explore profiles of people nearby. Last month Facebook bought mobile photo-sharing service Instagram for about $1 billion. The company did not share terms of its Glancee deal, reports Brian Womack of Bloomberg.
Another Silicon Valley veteran takes on software giants. Sandra Kurtzig holds the distinction of being the first female Silicon Valley CEO to take a company public. Now, almost 20 years after selling ASK Computer Systems to Computer Associates, Kurtzig is back in the game with a cloud-based start-up, Kenandy, taking on the likes of SAP and Oracle with software used by companies to manage their supply chain and other operations. “Assuming she’s successful…she becomes a target for companies like Oracle and SAP to buy (Kenandy) to modernize their manufacturing systems quicker than they could do themselves,” Gartner analyst Donald Feinberg tells the WSJ’s Deborah Gage. Kurtzig follows in the footsteps of Dave Duffield, another computer industry icon building a cloud-based rival to Oracle and SAP called Workday.
Facebook’s premium ad prices still rising. Pricing for Facebook’s premium “social” advertisements continues to rise, two recent studies have found – a positive indicator that could offset concerns about a dip in advertising growth and help sentiment toward the Internet company’s IPO. A report to be released today by Marin Software found a 26% increase over the last year in the cost per click for “premium” ad formats such as Sponsored Stories, which highlight friends’ “likes,” comments and other endorsements of brands’ activity on the site. Marin’s report follows data published last month by TBG Digital showing a 23% increase in cost per click for the first quarter of 2012 compared with the fourth quarter of 2011, the Financial Times reports.
Yahoo faces deadline to fire CEO Thompson. One of Yahoo‘s largest shareholders is giving the company until noon Monday to fire CEO Scott Thompson or face “further action,” the WSJ reports. Hedge fund Third Point, which owns nearly 6% of Yahoo shares, said last week that Thompson did not earn a degree in computer science as stated on Yahoo’s website and regulatory filing. Yahoo admitted the mistake, citing an “inadvertent error.” Third Point has been a constant critic of the company, waging a proxy fight in order to obtain seats on its board. Thompson, a former eBay executive, was named Yahoo CEO in January after a four month search.
Yahoo is reportedly close to selling some of its stake in Alibaba. People close to the deal cautioned that the two parties have failed to close a deal numerous times before, but the deal now on the table is considered more doable than previous efforts because it isn’t structured to help Yahoo avoid paying capital gains taxes. The deal being discussed has Yahoo selling between 15% and 25% of its stake in Alibaba Group Holding back to the company, getting anywhere between $4.8 billion and $8 billion, report the WSJ’s Anupreeta Das and Gina Chon.
Google is bracing itself for a $10 million fine. The FTC is close to fining Google for creating cookies that bypassed privacy protections in Apple Safari browsers in order to serve targeted advertising on computers and mobile iOS devices. The fine would would be the first by the FTC for a violation of Internet privacy, Bloomberg’s Sara Forden reports. Stanford University researcher Jonathan Mayer first identified the Safari breach in February.
Sprint CEO take a pay cut. Sprint CEO Dan Hesse is slashing his own pay by $3.25 million to placate shareholders upset over Sprint’s plans to buy $15.5 billion worth of iPhones over the next couple of years, reports GigaOM’s Katie Fehrenbacher. The company is not expected to make a profit on the iPhone deal until 2015, but it’s not clear how Sprint could have cut itself a better deal.
Fewer households paying for cable TV. The number of U.S. homes paying for cable declined by 1.5 million, or 1.5%, according to a recent Nielsen “Cross Platform report. Traditional TV viewing time also declined in the fourth quarter by 46 minutes, a trend Nielsen blamed on DVR usage. On-demand video is also starting to factor in, reports Daniel Frankel of paidContent.org.
Groupon has lost half its value since its IPO. Deals site Groupon has lost half its value since a November initial public offering amid concern over its ability to translate growth into profit while rectifying accounting missteps. The company fell 3.3% to $9.97, a record low, at the close Friday in New York. Groupon has slumped 50% since its stock-market debut, reports Bloomberg’s Danielle Kucera.
Anti-austerity push rattles Europe. Overseas markets are tanking. Tokyo fell 2.8% while the FTSE is down 2%, Greece fell 6% and the euro briefly slid to its lowest level since January, as France and Greece put a big question mark over Europe’s economic future. France’s new president promises to soften austerity measures, but the NYT says, “at the end of the day, he is not repudiating a fiscal contract, and is unlikely to push outsize spending increases that would invite financial markets to attack France the way they have recently in Spain.” And Germany isn’t going to back down on austerity as long as Angela Merkel is in charge.
Greece is another story. The election there was basically a rebuke of the two main parties. And their struggle to win a parliamentary majority “raises questions about whether Athens can stay in the euro zone in the long run, and may spark a new wave of contagion to other member states,” Reuters says.
The Washington Post says the pushback in Europe could hold tough lessons for the U.S. “Mitt Romney has vowed to cut the deficit at a faster pace than President Obama. But the mixed results of such policies in Europe … could make the argument for speedy deficit reduction increasingly difficult.”
Earnings season is winding down, but there are a few big names reporting this week: Disney, Cisco, Priceline, and Macy’s.