THE GILDER FRIDAY LETTER
gilder.com | Issue 258.0/August 4, 2006
HEADLINES:
- The Week / Life After the Telephone?
- Friday Feature / Broadcom?s Anticipated 3Q Slump
- Friday Blogger Bonus / Securing the Net
- Readings /
Gilder/Forbes TELECOSM Conference
October 4 - October 6, 2006
The Resort at Squaw Creek | Lake Tahoe
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- PETER HUBER, Senior Fellow, Manhattan Institute
- ANDY KESSLER, Wall St. Meat, Running Money, The End of Medicine
- MICHAEL MILKEN, Chairman, Milken Institute; Chairman, FasterCures
- ROBERT MUNDELL, Nobel Laureate & International Economist
- JOHN RUTLEDGE, Global Economist, Rutledge Capital
- AND dozens of today?s top high-tech thought and business leaders
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The Week / Life After the Telephone?
George Gilder: Back in 1990, I wrote a book called Life After Television, which declared the television was dead and I must admit that its smoldering carcass has remained, emitting fumes in Americans? living rooms, for decades since and perhaps decades to come ? But, essentially, what is happening is that software in hardening in the center of the network and hardware is softening on the edge of the network, so that hardwired TVs and hardwired telephones are giving way to teleputers, which are software adaptable at the edge. At the center of the network software is hardening into all-optical technology and eventually the center of the network will be world wide webs of glass and light and all of the action will move to the edge of the network, ushering in the life after telephony that we are discussing in this panel.
View the complete Webcast of the George?s ?Life After the Telephone?? panel
at the AlwaysOn Innovation Summit, held last week in Stanford:
webcast.goingon.com
The End of Medicine, by Andy Kessler
Trapped: When Acting Ethically is Against the Law, by John Hasnas
Receive FREE COPIES of The End of Medicine and Trapped and meet Andy Kessler and John Hasnas at the Gilder/Forbes Telecosm 2006 speaker book signing, October 4, at the Resort at Squaw Creek in Lake Tahoe, California. (Learn More)
Purchase these books and other featured favorites in the Gildertech.com bookstore:
gildertech.com
Friday Feature / Broadcom?s Anticipated 3Q Slump
GTR Tech Analyst Charlie Burger (07/25/06): In April, we called Broadcom a dilution demon?shares had been diluting at a brisk 15% per annum. At the time we estimated that continued dilution at that pace would wipe out any possibility of an increase in earnings per share this quarter if, revenue were to rise within bounds of guidance, which it did. Continued flatness on sequential EPS would have set Broadcom on a path toward $1.44 for the year. But that would have required more sales upsides. With next quarter?s forecasted fall back to first quarter?s sales, the company has now slipped below $1.44.
In addition to dilution, holding back earnings growth yet further are falling gross margins and rising operational expenses. Broadcom can?t fill in the financial details until it completes its internal review of options grants policies, but even this sketchy information is enough to warn us that there are operational problems beyond backdating. In addition to margin pressures, those problems include a pending inventory correction.
Specifically, Broadcom blames its anticipated third-quarter slump on inventory builds across up to half of its products and markets. To allay fears of a protracted slowdown, management gave an uncharacteristic two-quarter outlook, forecasting fourth-quarter sales to surpass the second-quarter?s record. But Broadcom has such a potpourri of markets and customers that it may be wise not to rely on such a forecast.
More reliably, we still believe that Broadcom has a good shot at continuing its ascent into the teleputer and life-after-television paradigms if it continues to innovate into mounting markets for VoIP, digital TV, GigE, 10 GigE, and residential broadband gateways. For instance, second quarter growth was led by broadband and wireless, with enterprise networking flat. The company noted particular strength in DSL, cable set-top boxes, digital TV, HD DVD, and wireless LANs?
Can Broadcom transition from a fading 2G wireless business to 3G?
Find out by reading Charlie Burger?s complete post on the GTR subscriber-only message board. Just visit gildertech.com and log in with your GTR subscriber ID.
A N N O U N C I N G : The Gildertech Blog
Logon to blog.gildertech.com to see what?s new.
Friday Blogger Bonus / Securing the Net
[At the AlwaysOn Innovation Summit, last week] George Gilder revisited his trope about all optical networks, with software hardening at the center and trusted platform hardware softening at the edges, during his panel on securing the Intenet at the AlwaysOn Stanford Summit. "Moving security all the way to the edge seems to me to be a better solution than giant routers in the center of the network," Gilder said. Of course, the all optical network hasn't arrived yet, much to Gilder's chagrin.
The discussion among the panelists?John Stewart, vice president and CSO, Corporate Security Programs Organization at Cisco; Greg Pierson, CEO of iovation; Greg Papadopoulos, CTO and EVP of Research and Development at Sun; and Kevin Hassett, Director of Economic Policy Studies at the American Enterprise Institute?was all over the security map, from identity fraud and trusted networks to layered architecutres and routers.
?The biggest threat we have is making the Internet too secure," said Sun's Papadopoulos. "We have the technology and it will evolve, and some startups will make lots of money [solving security problems]. I wish we could do really good digital rights management. It's important that people get to break the law, it's a way of progressing how the law works. If you get absolute control that may stop experimentation in doing derivative works, commenting on other people's content [the Larry Lessig view on digital rights], and that's bad. The other view is that a lot of protocols done in the name of security end up being highly closed, with control in the hands of one company. We see that as a potentially big threat. For example, with the Trusted Platform, who say what is trusted?"
Read Dan Farber?s complete blog:
blogs.zdnet.com
View the archived Webcast of the panel:
stanfordsummit.goingon.com
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Readings /
More Comes From Knowing More
opinionjournal.com
It?s Location, Location, Location In The Sarbox Aftermath
article.nationalreview.com
Supply vs Supply, Part Deux
article.nationalreview.com
Wesbury: Has The Economy Been Taking Steroids?
ftportfolios.com
A Little Eco-Nomics Never Hurt
tcsdaily.com
AMD Adds IBM
forbes.com
Main Stream Media Wrongly Claims There Is No Telco Innovation For Net Neutrality To Chill
disco-tech.org
Microsoft, Ready To Deal
alwayson.goingon.com
Kodak Outsources Digital Camera Production
chron.com
Shifts Coming for Top 15 Semi Supplier Rankings
reed-electronics.com
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Editor: Mary Collins / mcollins@gilder.com
Research: Sandy Fleischmann / sfleischmann@gilder.com
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