The Buzz – 25

CSC: For sale … again?

Those investors sure can be optimistic. Computer Sciences Corp. shares have been bid up on acquisition speculation—again.

Fool me once, shame on you. Fool me twice, shame on me. So, what happens when you are fooled the third time around?

In October, CSC was reportedly going to be bought by private equity firm Blackstone Group and Lockheed Martin. It never happened. Then, in January, Hewlett-Packard and Blackstone were in the running. That deal never happened, either.

Both stories were initially reported in The Wall Street Journal and followed by every other news outlet.

Now the rumor mill is picking up steam again. UBS analyst Adam Frisch opined in a research note March 15 that “CSCs story is getting more interesting.”

“Calls from investors have increased recently about CSC being acquired, and we believe merger talks may resume at some point,” wrote Frisch in New York.

So, what would make this time any different? Frisch argued that bookings and internal growth are slowing for CSC, making a merger a nice exit strategy. Lets see if CSC merger talk can fool everyone again.

Gates MIT Envy

According to press reports, Microsoft Chairman and Chief Software Architect Bill Gates panned the Massachusetts Institute of Technologys $100 laptop for the developing-world effort, and there could be a good reason for that: Microsofts Origami device, also known as a UMPC (Ultra Mobile PC), is already under fire.

Market researcher Gartner called the Microsoft device a “tweener” and said hardware capabilities arent advanced enough to make the Origami dream happen. In a report, Gartner said that technology advances such as 8-hour battery life and a sub-$400 price are at least two years away. Meanwhile, UMPCs will cost you anywhere from $500 to $1,000, a range thats too pricey for wide adoption, Gartner said.

According to a Gartner white paper titled “UMPC Has Promise but Is Far From Mature,” the UMPC concept has potential as a lifestyle device, long term, in the consumer and “prosumer” (professional consumer) markets and may also have potential “in semi-vertical segments such as field sales and education, but todays hardware cannot deliver on it.”

So, its no wonder that Gates isnt pleased about a $100 laptop that runs Linux. This cheapo laptop, created under MITs One Laptop per Child program (laptop.org), will have a 500MHz processor and 128MB of DRAM, with 500MB of flash memory. MITs laptop will not have a hard disk, but it will have four USB ports.

MITs laptops will have wireless broadband that will allow them to work as a mesh network so that the devices can talk to one another to create on each an ad hoc LAN. The laptops will use innovative power techniques (including windup) and will be able to do most everything except store huge amounts of data.

The big question: Why does Gates have MIT envy? MIT notes that its innovative laptops will be distributed only through governments, since they arent commercial products.

Google on Click Fraud

Paul Kedrosky, a former Wall Street analyst and current venture capitalist, did a comparison of Googles risk factors in its annual report on his Infectious Greed blog (paul. kedrosky.com). The conclusion: Google is a lot more worried about click fraud now than it was in 2004.

“Ive just finished an automated doc diff (using Araxis) to compare the Risk discussion in Googles 2004 and (just-issued) 2005 annual reports. Lots of interesting stuff pops up, some of the most intriguing of which centers on click fraud.

“The discussion is expanded and heavily revised in the 2005 report, including more discussion of the likely future legal actions, as well as a not-so-subtle emphasis shift. Google is demonstrably trying hard to turn the discussion into one of invalid clicks, rather than click fraud. Clever strategy,” Kedrosky wrote.