The Sax Angle

Adobe Systems (NSDQ: ADBE): On the Fast Track to Growth

Posted on 09. Apr, 2012 by Investing Daily.

The 2000 technology bust and subsequent collapse of the high-flying Nasdaq left many investors with the perception that technology is a high-risk, volatile sector that’s only appropriate for the most aggressive growth investors.
That sentiment is downright anachronistic. The S&P 500 Information Technology Index has a beta of 0.96 over the past five years; indexes with betas lower than 1.0 are less volatile than the broader market. More important, technology stocks have outperformed the broader market by a sizable margin despite their below-average risk. (See “Tech Sector Shines.”)
Technology is the most cash-rich and least indebted sector in the S&P 500. Some of the bigger tech stocks including Apple (NSDQ: AAPL) and Cisco Systems (NSDQ: CSCO) generate so much idle cash they’re initiating dividends to return value to shareholders. Tech companies now hold 30 percent of all cash among non-financial balance sheets in the S&P 500 ($360 billion out of $1.1 trillion).

Google’s Privacy Policy: Strike One

Posted on 17. Feb, 2012 by Wilensky.

Not nine days after Google releases their new-and-improved privacy policy, we have some first hand results of its intrusiveness.   Jonathan Mayer, a graduate student from Stanford University, discloses some rather disappointing findings.  In his comprehensive article (found here) he identifies four ad-based companies that place trackable cookies in Safari’s browser, and code in two of the four show an intentional circumnavigation of Safari’s privacy feature.  I’ll give you a hint: one starts with a G and ends in oogle.  Now almost every browser has some type of privacy feature in place:

“Every popular web browser, save Opera Mini and the Android built-in browser, includes a “third-party cookie blocking” privacy feature. (The remainder of this post uses the term “cookie blocking” for brevity.) These options share a common high-level purpose: impose limits on cookies from “third-party domains,” that is, domains that differ from the “first-party domain” in the browser’s URL bar. In practice, however, implementations vary substantially; for (slightly out-of-date) specifics, see the Center for Democracy and Technology’s 2010 Browser Privacy Features report and Google’s Browser Security Handbook.”

Now Apple ships all of their web-ready devices with this feature already activated, which differs from all the other browser manufacturers.  But according to the WSJ, Google used special computer code that tricks Safari’s software into allowing the monitoring of many users.  Of course Google has an explanation for the blatant violation:

The spokeswoman acknowledged that Safari blocks third-party cookies by default, but said “Safari enables many Web features for its users that rely on third parties and third-party cookies, such as ‘Like’ buttons.” As a result, Google started using this functionality last year for Safari users who were signed in to Google and had opted to see personalized content – like Google’s +1 button.

“To enable these features, we created a temporary communication link between Safari browsers and Google’s servers, so that we could ascertain whether Safari users were also signed into Google, and had opted for this type of personalization,” the Google spokeswoman continued. “But we designed this so that the information passing between the user’s Safari browser and Google’s servers was anonymous – effectively creating a barrier between their personal information and the web content they browse.”

Safari, however, “contained functionality that then enabled other Google advertising cookies to be set on the browser,” Google said. “We didn’t anticipate that this would happen, and we have now started removing these advertising cookies from Safari browsers.”

While Google’s actual intent is debatable, the company’s timing couldn’t have been more harmful to an already shaky level of public trust.  One thing’s for sure though, this leaves the door wide open for Microsoft’s new version of Internet Explorer with the stinging slogan of  ”the browser that respects your privacy”.

Via: Safari Trackers « Web Policy

and: Google Accused of Tracking Safari Usage Without Permission | News & Opinion | PCMag.com.

Use Google? YouTube? Have a Gmail account? Worried? Maybe You Should Be: Part 3

Posted on 09. Feb, 2012 by Wilensky.

It’s here.  Google’s new simplified privacy policy popped up today when I opened my Reader account, (if you don’t follow, here’s Part 1 and Part 2) and after 30 minutes or so I came to a single profound, concrete conclusion: it’s long.

Now I have to give Google credit, it’s the most user friendly privacy document I’ve seen to date; complete with unsophisticated illustrations that firmly reinforce it’s benign nature.

A caricature of how Google uses the information it gathers to improve the user experience.

Simplicity aside, what does this mean for the user?  Well, as previously stated it’s a matter of perspective.  Interestingly enough, the manner in which Google frames the changes immediately brought to mind a very specific phrase: “The Greater Good”.  While a vast range of connotations are associated with these words, I feel they appropriately illustrate the multitude of grays that comprise the situation.  In an effort to consolidate the experience, I provided excerpts of the policy below with some of the integral changes bolded.  A link to the complete policy is also provided below.

From Google’s New Privacy Policy:

Your data on Google

Knowing a little bit about you can help make Google products better, both for you and for others. By understanding your preferences we can ensure that we give you the search results that you’re looking for, and by analyzing the search logs of millions of users in aggregate, we can continually improve our search algorithm, develop new features, keep our systems secure and even predict the next flu outbreak.

When it comes to the way that we look after your data on Google, our approach is based on transparency, control and security.

We have five privacy principles that describe how we approach privacy and user information across all of our products:

1. Use information to provide our users with valuable products and services.
2. Develop products that reflect strong privacy standards and practices.
3. Make the collection of personal information transparent.
4. Give users meaningful choices to protect their privacy.
5. Be a responsible steward of the information we hold.

Time limits on data retention

We anonymize IP addresses after 9 months and alter the cookie numbers in our logs permanently after 18 months. This breaks the link between the search query and the computer it was entered from and is similar to the way in which credit card receipts replace digits with hash marks to improve customer security.

Here is what an IP address could look like in our logs after 9 months: 123.45.67.XXX. After 18 months, the cookie will be replaced by a newly-generated cookie number.

Why we store search logs

We use search logs for many purposes, for example, to keep our services secure, develop new features that make search faster and more relevant, and even to predict outbreaks of disease.

Search

The ads that appear on Google Search are targeted based on your search queries. If you type “cheap flights”, for example, into Google, you will probably see sponsored links at the top of the page and on the right hand side showing ads from travel companies. To decide which ad to show you, the automated system looks at the search query that you enter, the relevance of the ads to this query and how much the advertiser is prepared to pay in the auction and, in some cases, your very recent query history, amongst other factors. These are examples of contextual ads as they are related to what you are looking for on that page at that time.

Interest-based advertising

In addition to the sponsored links you see on Search, Google places ads across the web by acting as an intermediary between advertisers and website owners. In some cases these are contextual like search ads, i.e. they are based on the content of the web page where they appear. In other cases they are interest-based ads and these are shown because we’ve made a guess at the types of things likely to interest you. We base this on other pages you’ve previously visited. So if you’ve visited many gardening sites, you may see more gardening ads across the web.

This is how it works:

• When you visit websites and watch videos where Google shows ads, we store a number in your browser by using a cookie to remember your visits. That number could be something like114411.
• Because many of the websites you visit are related to gardening, we’ll put your number (114411) in the “gardening enthusiast” interest category.
• So we may show you more ads that are relevant to gardening enthusiasts as you browse websites where Google provides ads.

Throughout this process we don’t store your name or keep any personal information about you. We just recognize the number stored in your browser, and show ads related to the interest categories associated with your cookie (so we’re recognizing your browser, not you). We don’t show ads based on sensitive information or interests, like race, religion, sexual orientation, health, or sensitive financial categories.

You can control which types of ads you see using Ads Preferences Manager. This allows you to change the interest categories associated with your browser (or if you don’t want us to store your interests at all, you can opt-out altogether).

Using Web History also means that you will get more personalized search results:

Signed-in personalization:

When you’re signed in to a Google Account with Web History, Google personalizes your search experience based on what you’ve searched for and which sites you’ve visited in the past.

Signed-out personalization:

When you’re not signed in, Google customizes your search experience based on past search information linked to your browser, using a cookie. Google stores up to 180 days of signed-out search activity linked to your browser’s cookie, including queries and results you click.

Use Google? YouTube? Have a Gmail account? Worried? Maybe You Should Be: Part 2

Posted on 30. Jan, 2012 by Wilensky.

OK, the previous post on this topic generated a LOT of emails.  With excessive use of the caps lock.  All the shouting aside, the responses formed two very distinct camps: those who welcomed the changes with open arms, and those angered to the point that their accounts will be deactivated within the next month.  This apartheid is primarily due to difference in perspective rather than an actual misrepresentation of facts.  Let’s break down the two mindsets so we can understand both sides of the equation.

Now it is clear that purely from a functionality standpoint (ignore the politics for just a moment), the changes introduced by Google are in an effort to consolidate the rules governing a number of their different platforms with the user’s ease in mind.  Google’s business plan is anything but linear; its development process is more akin to the behavior of a hyperactive eight year old who has been hiding his Adderall medication behind the couch.  View this change as if Google is actually growing up a bit and organizing the cluttered, monumental mess of products that resembles their bedroom.  I think you’ll be hard pressed to find a parent who isn’t delighted by this display of proactive behavior.

On the other hand Google is undoubtedly a company built on opportunity, which is illustrated through the behavior mentioned above.  With so many side projects, acquisitions, and experimental programs, anyone would be hard pressed to successfully debate Google’s willingness to pursue a potentially favorable juncture of circumstances.  And Google’s situation is exactly that: they now have the opportunity to try and play catch up in the data mining game pioneered by credit card companies and soon followed by social media sites.

My perspective on the situation lies somewhere in the midst of this rift.  I believe Google’s intentions to first and foremost be benign.  They wanted to consolidate an issue that plagues nearly every company with an overly convoluted privacy agreement.  However, any public company is required to keep the shareholders’ best interests in mind, and this case was no exception.  Google saw an opportunity to become more competitive and took it.  Plain and simple.

A Solution?

An email by one of the readers spurred a bit of an idea which, combined with a dead iPod on the lift at Park City, gave birth to a little experiment that I’m going to try.  In part 1 of this article, I mentioned that sites like Hotmail and Vimeo that have made no changes in how they protect your information will  see a lot more of my traffic.  But rather than ditch my Gmail account entirely I’m going to try and associate everything about my professional life with Google operated sites, while anything personal will stay with Hotmail, Vimeo, etc.  By compartmentalizing the two aspects of life, theoretically the intrusiveness of Google’s new policy should become much clearer.

I’ll keep you posted…

Use Google? YouTube? Have a Gmail account? Worried? Maybe You Should Be: Part 1

Posted on 26. Jan, 2012 by Wilensky.

I admit, I constantly use all three in almost every aspect of my life.  But it looks like my Hotmail account, Yahoo Finance, and Vimeo are about to see a lot more of my traffic, and here’s why.  I received an email from Google just earlier today about their ‘new privacy policy’.  It seemed harmless enough, even like a step in the right direction of reducing these longwinded legal documents into something the average user can understand:

We’re getting rid of over 60 different privacy policies across Google and replacing them with one that’s a lot shorter and easier to read. Our new policy covers multiple products and features, reflecting our desire to create one beautifully simple and intuitive experience across Google.

We believe this stuff matters, so please take a few minutes to read our updated Privacy Policy and Terms of Service at http://www.google.com/policies.

These changes will take effect on March 1, 2012.

Now I prefer a perspective developed from several, unaffiliated angles.. especially when it comes to my privacy.  So after a little digging I found some interesting feedback from some trustworthy sources:

Via: Washington Post:

Google said Tuesday it will follow the activities of users across e-mail, search, YouTube and other services, a shift in strategy that is expected to invite greater scrutiny of its privacy and competitive practices.

The information will enable Google to develop a fuller picture of how people use its growing empire of Web sites. Consumers will have no choice but to accept the changes.

The policy will take effect March 1 and will also impact Android mobile phone users, who are required to log in to Google accounts when they activate their phones.

Via: PCWorld

Google plans on tracking you across almost every one of its products you use including Calendar, Docs, Gmail, search, and YouTube to give you better search results, more precisely targeted ads, and helpful schedule reminders. The new “features” are set to kick in March 1 when Google is condensing more than 70 disparate privacy policies for all its different products into one mega-policy.

As a result of the change, whenever you sign into your Google account, the search giant will treat you as a single user and collect your user information into one database. The end result will be “a simpler, more intuitive Google experience,” according to Google’s blog post announcing the change.

Take it for what it’s worth, but it appears Google is hard on Facebook’s heels when it comes to data mining.  At least from my perspective, the scariest aspect of this new “privacy proposal” is two pronged: both the language and timing of this major change raises all sorts of alarms.  Google waited just a month before the new policy goes into effect to alert users, and their choice of wording is far cry from both PCWorld and the Post’s interpretation of the changes.

Google vs. Apple

Posted on 23. Jan, 2012 by Wilensky.

As I sit here typing out this post on my MacBook, occasionally running a question by Siri on my iPhone just for the heck of it, I can’t help but notice I’ve been blindsided by the Apple lifestyle… and I don’t seem to mind a bit.  An iPod sits in my car, next to the two iPod shuffles that I take on the mountain when I ride, and I’m long Apple stock.  My old HTC Incredible smartphone sits in a box, long forgotten.  And I’m certainly not the only one to completely buy into the way of life that Steve Jobs envisioned; the iPhone 4s broke Apple sales records by 68% which, despite a very limited addition of new features, makes it the most successful product the company has ever released.

So how can anyone expect Google, with their scattered list of product endeavors and seemingly patchworked business model, to compete with this pre-packaged, sleek lifestyle that Jobs infuses into all his products?  By looking at the numbers..

“Android is, quite simply, mind-boggling. 700,000 phones are lit up every day. And I’m pleased to announce 250 million Android devices in total, up 50 million since our last announcement just in November. In just 2 days over the holiday weekend, 3.7 million Androids were activated. And today, we’re announcing over 11 billion downloads from Android markets.”

“Google website revenue was up, in fact just shy of 30% year-over-year to $7.3 billion and 8% quarter-over-quarter with strength across most major geographies and verticals. Our Google Network revenue was up 15% year-over-year to $2.9 billion and 11% quarter-over-quarter.”

“Our other revenue was up 50% year-over-year to $410 million and 6% quarter-over-quarter. Our global aggregate paid click growth was very strong, up 34% year-over-year and 17% quarter-over-quarter. Our aggregate cost of click growth was down 8% year-over-year and quarter-over-quarter.”

For a more in-depth look see Zerohedge’s article here: Once Again, Market Action Group Think Fails To Comprehend Google’s Valuation | ZeroHedge.

The Week Ahead: Apple-HTC Smartphone Suit Moves Toward Ruling in U.S. – WSJ.com

Posted on 11. Dec, 2011 by Harvey Sax.

Judgment Day Looms for Apple, HTC

By IAN SHERR

Apple Inc.’s claims that some smartphones running Google Inc.’s Android software copy its inventions are approaching their first big judgment day in the U.S.

The International Trade Commission in Washington on Wednesday is expected to rule on whether some phones made by HTC Corp. violate Apple’s patents. The ruling could lead to a ban on handsets sold by the Taiwanese company, which uses the Android operating system and is the No. 3 smartphone provider in the U.S. market, according to research firm Nielsen.

via The Week Ahead: Apple-HTC Smartphone Suit Moves Toward Ruling in U.S. – WSJ.com.

DJ UPDATE: US Judge Rejects Apple Request To Ban Samsung Galaxy Sales

Posted on 03. Dec, 2011 by Harvey Sax.

I don’t think this will impact our pairs trade much but it certainly blows apart the thesis.  The bottom line is that Apple’s chart looks more bullish than Google’s this week.  There may be a short reaction Monday but there is still going to be a trial.  I like asymetric trades where if you are right there is potential big upside or in this case downside with Google.  And if you are wrong, there may be no major reaction at all.  Samsung already has 30% market share with its partner, Google and its doing little to hurt Apple as they can’t make their iPhone 4S fast enough.  It should be interesting to see Monday morning.  But the only news that matters next week again is going to be the circus show in Europe.

DJ UPDATE: US Judge Rejects Apple Request To Ban Samsung Galaxy Sales

–A U.S. judge rejects Apple’s request to halt Galaxy Sales
–Samsung Electronics says it welcomes the ruling

(Updates with background in the third paragraph, statements from Samsung in the fourth paragraph)

SEOUL (Dow Jones)–A U.S. judge rejected Apple Inc.’s (AAPL) request to ban sales of some Galaxy smartphones and tablet computers made by Samsung Electronics Co. (005939.SE, SSNHY) in the U.S., Samsung Electronics said Saturday.
The South Korean company said that U.S. District Judge Lucy Koh in San Jose, Calif., Friday denied Apple’s request for a preliminary injunction in a patent lawsuit between the two companies.
Friday’s ruling followed Samsung’s victory Wednesday in its appeal against an injunction on sales of the Galaxy Tab 10.1 in Australia, also requested by Apple.