Month: June 2004

One of the way-too-smart economists behind the Marginal Revolution blog has posted some very helpful tips on getting through tough books. Number 7 and Number 5, in that order, are my favourites. I highly recommend them to anyone who's having trouble getting through, say, Edmund Spenser's The Faerie Queene.
In fact, for those reading Shakespeare, you simply must apply Tip Number 7 when you are reading through a Shakespeare play you've never read before.
Come to think of it, Tip Number 7 should apply to any poetry and almost any other play you might come across. Poetry, of course, is all about rhythm and physical feeling words make when they leave your mouth so it makes perfect sense that they are written to be spoken not written to be read silently on the subway to work. Let's try it: You probably read Eliot's “The Waste Land” in college or even high school. Take a look at it again and this time, read it out loud. See? Wasn't that fun? It's a completely different work when you're speaking it. Do it again. You'll hear the poem for the first time all over again. (Tip for those reading poetry or Shakespearean verse: The end of a line does not necessarily mean you should pause. Keep on reading, Pause at commas, just as you would when reading prose. Take a breath at periods no matter where they fall in the poem. But don't be put off by the line breaks. Just push right on through.

One of my favourite Canadians to read out loud is the late great Al Purdy. His poem “The Country North of Belleville” cannot be appreciated without speaking it. In fact, it's impossible to really enjoy most of Purdy's poetry without speaking it.
Plays, too, are written to be spoken aloud, albeit by several people. You can have great fun, alone or with others, by grabbing any G.B. Shaw play, for example, and shouting — that's right, shouting — the play from start to finish. (This works best for Shaw and may work as well for Edward Albee's work but shouting is unlikely to work for the work of Beckett or Ibsen.
And while I'm on the topic of plays, here's another fun exercise you can do with a friend for a play that you're having trouble understanding: Try what's called an Italian line run. This is a technique often used by professional actors during rehearsal when a troupe is having trouble breaking out of an interpretation of a particular scene. The cast will get together and go through the play speaking each line as clearly as they can but also as fast as they can. It's speed-reading aloud of a play. Do that and you'll hear new things and hear new meanings. It's tremendously instructive.
OK: Tip Number 7 on Tyler Cowen's list is “Read the book out loud to yourself or to others.”

Reading out loud is a wonderful thing to do for any work. You will immediately understand what really good writing is all about when you read it out loud. Conversely, you will quickly be able to spot really lousy writing when you start speaking it. Pick up any academic journal in the arts or socials sciences and start reading the first article. See? Didn't I tell you? Lousy writing. Makes no sense.
But I digresss —
Here's all of Cowen's terrific tips:

Yes, today is the hundredth anniversary of “Bloomsday,” June 16, 1904, the day on which the adventures of Leopold Bloom (Ulysses) start. The book, long a favorite of mine, is not nearly as difficult as it is sometimes thought to be.

Here are a few tips for reading otherwise difficult works of fiction:

1. Try reading the last chapter first. Don't obsess over the sequential.

—-snipped

You can read the rest over at [Marginal Revolution]

The following note was sent around to my friends and colleagues in the PR world. Maybe you can help too. Read on: For a story I'm doing for CTV National News, I'm interested in talking to parents of teenaged girls and to the teenaged girls, themselves. Ideally, the girls are no younger than 11-years-old and no older than 13-years-old. The story will be looking at the relationship of young female teens to popular culture, such as television, film, magazine, and newspaper content.

Do you have any friends or colleagues that might want to put themselves and their teenaged daughter on national TV? Naturally, I'm happy to supply more information to our candidate family. Family has to be in Toronto, Montreal, Halifax, Calgary or Vancouver.

Let me know by e-mail preferably some time before close-of-business Toronto time on Wednesday.

I was sitting one winter evening a few years ago in the parlour of Bob Metcalfe's townhouse on Boston's Back Bay with a plate of chicken and salad perched on my lap when Tim Berners-Lee, the inventor of the World Wide Web, sat down next to me, a plate also perched on his knees.
We were both there as guests of a party held to promote a conference that Metcalfe was involved with as the keynoter and promoter.
Soon, the discussion Berners-Lee (pictured, left) and I had turned to the issue of getting rich from a technology invention. Metcalfe, after all, had paid for his multi-million-dollar townhouse, a beautiful farm on the coast in Maine, and other doo-dads because he invented Ethernet and then went on to found 3Com. But, as Metcalfe himself is fond of saying, he didn't get rich inventing Ethernet, he got rich working his butt off taking overnight trains to every small town in America trying to sell Ethernet.
Berners-Lee came at things from quite the oppositive view. He was a creator, a thinker, interested in toying with ideas rather than patenting them. In fact, he quite specifically declined to patent the Web after creating it while at CERN in Switzerland.
He feels strongly about those who claim intellectual rights too strongly; that such assertions can hurt a technology's adoption, particularly when it's something new like the Web was.
So Berners-Lee missed out on the fabulous wealth enjoyed by others, like Metcalfe, but he still makes a decent living. (I think most recently he held a chair at M.I.T. that Metcalfe endowed).
So it was great news to hear this week that the Finnish Technology Award Foundation gave Berners-Lee this week its Millennium Technology Prize, which comes with a cash award worth 1 million euros. Congratulations, Tim!

I loved Brazil and I'm pretty sure it was Gilliam's Brazil that I loved. Now I want to go rent a recent DVD collection of the movie. Here's a great bit from Aaron Swartz's blog:

If you like Brazil, you might also find interesting the incredible story on discs 2 and 3 of the Criterion Collection edition of the film. (You might look for it at your local library.)

Gilliam’s final cut of Brazil went five or six minutes over the contract he had signed, which meant the studio was allowed to recut it. Studio exec Sid Sheinberg thought that there was something to the film, and that if only the complexity was shaved off, it make a very successful sci-fi love story.

Sheinberg proceeded to have a team re-edit the movie to make it into this form, under the message “Love Conquers All”. Gilliam was furious at this butchering of his film, and demanded the studio release it unedited.

To pressure Universal, Gilliam purchased a full-page ad in Variety, reading. It was all white except for some text reading: “Dear Sid Sheinberg. When are you going to release my film ‘BRAZIL’? Terry Gilliam.” Gilliam also appeared on the Today show with Robert DeNiro to promote the film. When the host noted “You’re having some trouble getting the studio to release the film,” Gilliam responded. “No, I’m not having any trouble with the studio. My problem is with one man: Sid Sheinberg.” Gilliam resorted to a series of private illegal screenings around Hollywood, and eventually showed the film to the LA Film Critics Association, who promptly voted it Best Picture, Best Screenplay, and Best Director, even though it hadn’t been released.

Universal finally conceded and released the film mostly as Gilliam intended. But the DVD disc three includes Sheinberg’s edit. Watching it, and the associated commentary by a newspaper columnist, film critic and Brazil fan, is an incredible education in the power of editing over the film.

While using almost all the same footage, Sheinberg’s version tells the completely opposite story. Everything is dumbed-down in service to the love story, almost unthinkly. (As the commentary points out, the edit is forced to glorify terrorism to make the hero more heroic!) The result is an absolutely dreadful film, inept in numerous ways. But by examining why it’s so bad — and remember this film is made from the same raw material — the commentary shows us the genius in the details that make good films so good.

It also shows us why Hollywood films are all so dreadful. Every indepdent thought, every weakness of the hero and sympathetic characteristic of the villain, every ambiguous plot point, is simply eliminated and every subtlety is squashed. The result is a true Hollywood film — a lovestory told by a talentless hack.

[Aaron Swartz]

One of the fun things about the publishing platform this blog uses is that it lets you track the most popular blog entries, based on page views. Here are the top ten for May:

1. Where would you eat in Vancouver? (Posted May 4)
2. [CAJ] Panel: The Blog Revolution (Posted May 7)
3. Finally!! Airport Extreme and my LinkSys router are talking! (Posted Dec. 13)
4. Google by the numbers (Posted May 5)
5. Panel: The Blog Revolution (Posted May 3)
6. [CAJ] Kirk Lapointe (Posted May 7)
7. 1 Infinite Loop – The Front Door (Posted Apr. 16)
8. I Infinite Loop — The Icons (Posted Apr. 16)
9. [CAJ] Obligatory hotel shot (Posted May 7)
10. Gas prices; record highs in the U.S., bouncy in Canada (Posted Mar 24)

Xerox CEO Anne Mulcahy was in Toronto yesterday and I talked to her about her business. The Globe has the story I wrote but here's an extended version, with more details about Xerox's work to restore its balance sheet:

Communication by now was supposed to be nothing but electronic beeps and burps, the pundits said.

But in fact, so much old-fashioned ink has never been put on so much out-of-style paper.

“”The greatest source of paper growth is the printing of e-mail. Isn't that amazing?,” said Anne Mulcahy, chief executive officer of Xerox Corp., on track to rack up more than $16-billion (U.S.) in sales this year because of the need to print and copy just about anything.

In fact, experts say that not only are people printing things more than ever before, but people want to print things in colour.

Those two trends, analysts say, have opened up some remarkable opportunities for Stamford, Conn.-based Xerox, which as recently as three years ago had been left for dead.

Now, it's a hot investment, with an improving balance sheet, strong cashflow, and a growing market, analysts say.
“Xerox poised to regain quality growth stock status,” said a headline in a recent report by Steve Weber, analyst at SG Cowen Securities Corp. of Boston.

Indeed, one of the meetings Ms. Mulcahy had during a trip to Toronto that ended yesterday was with a group of growth investors, who, she acknowledged, would hardly have given a Xerox CEO the time of day when she took the job in August, 2001.

At that time, the company had $14.1-billion of debt and just $1.7-billion in cash on hand and U.S. securities regulators had found that the company had misstated financial results.

Many thought Ms. Mulcahy would be the last CEO Xerox would ever have but today, with the company's fortunes turned around, she said the problems she inherited were relatively straightforward to fix, particularly when compared to other companies — she mentions Eastman Kodak Co. as an example — which are still trying to find their footing in a digital world.

“I would take those set of problems [I had] over a strong balance sheet with a bad business strategy and no core competencies. So I feel grateful for the assets that I walked into the job with,” said Ms. Mulcahy yesterday.

After hitting an all-time low of $4.20 in October, the stock is now trading around $14. Merrill Lynch analyst Jay Vleeschhouwer, who rates the stock a 'Buy', has a 12-month price target of $18.
“We believe that investor perception of the operational and financial performance [of Xerox] will continue to improve,” Mr. Vleeschhouwer wrote after Xerox released its first quarter results in April.

One of the factors driving investor interest in Xerox now are some relatively new products that enable high-speed, high-volume colour printing.

“We expect color to provide all of the top-line growth we see for 2004-05 and beyond, as high volume digital color printing, a truly disruptive technology, invades the very big market now dominated by offset printing,” Mr. Weber said. “This is virgin territory for Xerox, which clearly is the number one player; with no major competitive threat in view, Xerox's revenue should grow very rapidly.”

SG Cowen does not rate stocks but Mr. Weber believes Xerox should post a profit of 80 cents a share this year and $1.05 a share in 2005.

The key product for Xerox's revenue now and for the next few years is called the iGen3, which is being targeted at print jobs which once could only be done using relatively expensive and time-consuming four-colour Web offset printing — the kind of printing technology used, for example, to put out the Globe and Mail. In Web offset printing, giant rolls of paper are fed through rollers and four different colour inks — black, cyan, magenta, and yellow — are laid down on the paper one at a time. The combination of those four colours produces a full-colour document.

But now, many offset printers are buying or leasing iGen3 machines, which are essentially, $1-million (CDN) colour laser photocopiers. Analysts say that for print runs of up to about 10,000 copies, the iGen3 matches the quality of Web offset printing and can do that at a fraction of the cost and time.

Ms. Mulcahy, though, says it goes beyond just unit cost. High-volume digital printing is also about personalization. That is: With offset printing, the same content must be printed on the entire print run. But with products like Xerox's iGen3, each copy in a print of, say, 10,000 copies can be printed with a unique impression. For large corporations, the ability to cheaply print presonalized client statements and other customized documents is a boon.

“What it enables is this whole new industry of personalization that you could never do on offset,” said Ms. Mulcahy.
Mr. Weber estimates that Xerox's iGen product line was worth $60-million (U.S.) in sales last year and will be worth $240-million this year and $520-million next year. By 2008, the iGen could add as much as $1.56-billion a year to Xerox's overall sales.

“The number of short-run color pages printed appears to be growing by 6-8%. It seems quite plausible that, in 2008, 25% of the projected 230 billion short-run color impressions will be printed on digital systems; if so, digital print volume will grow at a steep 48-50% rate over the next five years,” Mr. Weber says.

Ms. Mulcahy says Xerox believes there is a market worth $18-billion in sales a year in opportunities where a high-volume digital printer can displace Web offset technology.

“And that's just the tip of the iceberg. It'll just get better and better and better,” she said.

So, while Dell, HP and a host of others fight it out in the low-end market for colour printers, copiers, and multi-function peripherals — machines that can print, scan and fax documents — aimed at the consumer and small-office, home-office (SOHO) market, Xerox will extend its technology portfolio at the high-end corporate market.

“It's a decision we came to three years ago, that focus is usually important on getting a return. Understanding what you do well and aligning your resources behind it and being brutal about ensuring that there all supported by core competencies and capabilities that differentiate you in the marketplace is a big deal. So we exited the SOHO business. That's not us. Would be be number one? The answer was no. But where we participate, we'll be number one.”

Ms. Mulcahy is also paying close attention to Xerox's balance sheet. Debt is being rapidly paid off, one factor which is helping Xerox generate what Mr. Weber describes as “terrific cash flow” of as much as $1.1-billion to $1.2-billion this year and next.

Analysts expect Xerox to use this free cashflow to buy back two to three per cent of its oustanding common shares each year. Mr. Weber also believes that interest Xerox earns on its cash reserves will generate as much as $100-million a year by 2008.
“We intend to continue pay down debt and get in a stronger position,” Ms. Mulcahy said. “And I think, going forward, we'll look at options like investments or technology acquisitions. But there's no question we are looking at options that are available to us now that haven't been for a number of years.”

By the end of this year, the U.S. accounting regulators are likely to require all U.S.-listed companies to account for the expense of their stock option programs on their income statements. Right now, it's up to each individual company to decide how it treats the accounting for stock options. Many tech companies account for them in their footnotes to financial statements and that means that options expense does not show up in the reported bottom line.
Relative to companies in other sectors, tech companies are more frequent users of options as part of employee compensation plans and worry that putting options expense into an income statement will hurt their profit and earnings per share.
Not so, say the tech analysts at Smith Barney, the brokerage of Citigroup. While they single out a couple of companies that they are concerned about — namely JDS Uniphase and Sun Microsystems — they say the market has largely already taken options expense into account when they value a given company's stock.
I reported on this study in today's Globe and Mail.
The analysts said there are six factors that investors ought to consider when looking at stock options and other issues related to employee compensation. Here they are, as listed in the Smith Barney report:

1. Is option expensing increasing faster (or slower) than earnings and thus becoming more (or less) dilutive?
2. Does the company have a limited/strong growth prospects but a disproportionately large/small amount of option expensing?
3. Is there a track of record of activities that alienate investors, such as the re-pricing of options?
4. Is the company likely to reduce options issuance and offset that practice with another one that might actually fare worse/better in the eyes of investors?
5. Are there underlying issues not fully appreciated by the Street, but for which “option expensing” may serve as a trigger to bring the valuation into focus?

Reprinted below is a statement, issued late today, from the Royal Bank.
Canadian readers of this blog will be aware that Canada's biggest bank has been working through an embarrassing and annoying technological problem. [My Globe colleagues have been writing the heck out of this and I put an item up for CTV national news last Friday on this.] All week long, we've been asking the bank what happened. Don't know if this makes it any clearer to me, but it might to you. I'd like to know, for example, what operating system the application was running on that the bank staff were trying to update. Also of some note: IBM Canada is Royal's biggest technology vendor. At first, we wondered if an IBM product or software was to blame. They were quick to point out — on the record and in no uncertain terms — that IBM was not involved at all. In fact, as the brief below indicates, IBM has been hired to be the independent investigator of the problem. Here's what the Royal said:

Transaction Processing Disruption – Technology Issue Summary
What caused the problem?
The root cause of the problem was an error made in a program change on Monday, May 31 that surfaced in the early hours of Tuesday morning, June 1.
Our operating procedures require that all program changes undergo thorough testing before entering our production environment and we continue to investigate all aspects associated with this issue, to determine which, if
any, protocols were broken.
We can assure you that this problem was not a result of any information security breach or malicious act by internal or external parties.
Why didn't you go to back-up facilities?
Back up facilities exist in case our primary facility is disabled. As a matter of policy, therefore, all program changes are implemented simultaneously to both the primary and backup facilities Therefore, our back up facility would not have been useful in this case. One of the issues we will investigate as we complete our learnings from this event is whether this policy should be more robust.
Why did it take so long to recover?
The error manifested itself during the Monday-Tuesday overnight system runs.
Once identified early on Tuesday morning, the error was corrected within two hours. However, our recovery was delayed because we had proceeded to launch into end of day production based on incomplete information. Until we were able to conclude that this error did not pose a pervasive risk to other systems, the decision was made to stop production on Tuesday, June 1st. Once production was restarted later on Tuesday, the verification process took longer than expected because two days of transactions needed to be processed
on the same date. This created additional complexity and the requirement for further manual verification of dates, creating additional backlog. In this situation, rather than running the information through the use of our automated tools, we had to manually override the automated scheduling systems and this significantly slowed processing time.
Through Wednesday, June 2, it was our belief that we could catch up to Tuesday's processes by late that evening. This would have allowed us to process Wednesday's data by early Thursday morning and thus to be up to date for the opening of business.
The manual rescheduling interventions also included the decision to give priority to payroll transactions. As a result of this decision and because of additional time delays resulting from a higher level of manual interventions, we were not able to meet our objective and concluded that we would need the weekend to eliminate the backlog.
Paramount in our efforts was the need to ensure the integrity and security of all the data being processed by the system.
How will you ensure that this will not happen again?
With the recovery process behind us, we are now conducting our own exhaustive, internal review of the specific causes and effects associated with this problem. While we continually review our technology and processes and benchmark against other high performing companies, the events of this past week have caused us to initiate an aggressive assessment of potential procedural gaps. In addition, Gordon Nixon, president and chief executive officer has retained the services of IBM to conduct an independent review of the original cause of the problem, our current processes and the recovery procedures that were employed.
A second phase of our investigation will be to ensure that our policies, procedures and technology comply with best practices — a process that will involve input from other institutions in our industry as well as the sharing of our findings regarding best practices.
Our Commitment to Clients:
We apologize for this disruption and realize that we still have work to do to make things right for those who have been impacted by this situation. We appreciate the cooperation of other financial institutions for accommodating clients who have been affected. We are committed to rebuilding the goodwill of our clients and to taking all necessary steps to accomplish this end.

Attention all Mac OS uber-geeks: I've got a problem that is buggin' the heck out of me.
The other day, I bought a LaCie Porsche CD-RW FireWire external optical drive. Came home and plugged it into my 17″ PowerBook. iTunes saw the drive and within seconds, I was burning discs. The next day, I plug the PowerBook into it again but this time, nothing. No application sees that there is an optical drive on the other end of the FireWire cord.
So I plug the Porsche into my desktop Cube. Same problem. No application sees the drive.
But when I run System Profile on both machines and click on FireWire, System Profiler reports the existence of a “FireWire Device.”
I have visited LaCie's site and have any and all of the latest drivers there. I am running the latest operating system software from Apple.
I installed the apps that you get when you buy a LaCie drive — namely Roxio's Toast — and have the same problem. The apps don't see the drive.
I have tried all sorts of combinations of starting up the machines with the Porsche on; starting up the Porsche when the machines are on. Nothing works.
I've found just one unhelpful article at Apple's online support.
Any ideas about what I'm doing wrong here?

Shares of Apple Computer hit yet another 52-week high in trading this morning. That's the third day in a row it's touched new annual highs. I'd like to think that my story in today's Globe (Apple climbs to 52-week high on product news) helped fuel investor excitement but something tells me investors are likely more excited about some new product news. The company announced that all of its G5 line of Power Mac desktop computers will be equipped with dual 64-bit processors. Most PCs you buy nowadays have just one processor that computes 32 bits of data at a time. Going from 32- to 64-bits of data doesn't just double a processor's power, there's an exponential increase in its ability. In short: The new G5s will be some honking fast machines. Mind you, Apple still needs to get more software vendors to port their apps to run in a 64-bit environment. On the Windows side of the world, Advanced Micro Devices makes 64-bit processors.