6 Months in the "Valley"

In early 2006, I wrote about my first 90 days in Silicon Valley, after moving to Palo Alto from Boston. I wanted to continue my thoughts after living in the 408 area code for 6+ months.

First, Boston had a mild winter and it rarely snowed. It has been raining in the Valley since January. I officially traded my snow shovel for a canoe. The good news is that my pasty white complexion has yet to be ruined by the sun. The bad news is that no one out here knows how to drive in the rain.

Mountain View Meets Wall Street, Kinda

In my first Valley article, I claimed "Google has resuscitated many dot-comers' hopes of going public and retiring to Tahoe. While Google's stock climbs above $400 a share, many Googly-eyed tech start-ups think they are next. Sorry to burst your bubble (again), Google is closer to being the next Viacom than XYZ.com is to becoming the next Google… Emerging technology vendors should learn from Google rather than try to hide and ride its tailwind."

Is there more notable company that has blatantly ignored corporate governance policies that now rule publicly traded companies? From the start, Google founders were talking to Playboy before they went public during their quiet period. Now, company presentations with emerging products and revenue forecasts are floating around the web. There is no way this can continue. Google, and its management team, need to acknowledge that it has corporate responsibility, shed the Segways, and act like S&P 500 company. It will not lose its mojo if it hires a couple of Investor Relations people or provide some revenue guidance every now and then. Emerging companies should not mimic Google's corporate governance policies until the search giant cleans some things up.

Sun Realizes Zeroes and Ones on the Income Statement Do Matter

In my first Valley article, I paid appropriate respect to HP " ... Mark Hurd has revitalized HP's systems division (storage and servers) and leveraged the printing and personal systems mind-share that the company is known for."

As Mark Hurd continues to improve HP's position in the market, Sun Microsystems has finally paid attention to its ridiculous cost structure. Cost cutting initiatives, aided by several former StorageTek executive departures, has Sun looking a company that wants to generate shareholder value. Hiring a new CFO also revitalize Wall Street's interest in the company. For a while the stock went up over $5 bucks. I guess Wall Street really likes management changes over there. If rumors surface that McNealy may retire, who knows where the stock may go. Double digits?

Additional Compliance-Related Opportunity

In my first Valley article, I recommended "Wall Street is wildly known as leading-edge technology consumers, so start-ups spend countless hours bedazzling the banks trying to get a deal done. While I expect this to continue, many vendors realize that planes do fly the other way (west) and are heading to China and India. Not only can the vendors establish research and development facilities within these countries, they can also find channel partners that will introduce the technology to these emerging markets."

I do believe that additional opportunities, as a result of SEC regulations, can help hardware and software companies here in the Valley, especially those that optimize information access and storage. One SEC regulation that will drive more spending on technology is the National Market System. The NMS, in part, requires sell-side brokers to locate a trading venue that has the best price for a particular transaction. In some cases, there may be 40 prices to evaluate for an order, and the broker must save all of these prices and quotes for compliance purposes. More electronic trading platforms will be integrated and more data will be stored.

Other (Random) Thoughts

I only have one to end with this time. Brocade sponsors the Zamboni used at San Jose Sharks' game. The Sharks are in the playoffs, Brocade is out of the SEC stranglehold. Do you think the Zamboni had anything to do with smoothing over the stock option issues at the switch maker? If there is a coincidence, a few companies that may interested in renting it for various issues:

• Overland with ADIC, hostile takeover bids, poison pills, do I need to say more?
• EMC and its shareholders, 17% revenue growth and a stagnant stock price
• Xyratex and Intel; Intel used Xyratex for some white-box storage solutions, now EMC is the preferred vendor
• Microsoft and Product Managers; Vista's late, someone had to get fired.