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When Is a Tech Company Officially Dead?

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We've heard it all before.

"Yahoo is DEAD."

"Adobe is DEAD."

"Oh, and Apple? Why not? DEAD."

But what does it really mean? Is it mere hyperbole, or is there a logic behind declaring a tech company dead when there's still an inkling of life in it?

GigaOM's Om Malik gave the phrase some thought while discussing the matter with fellow analyst Pip Coburn, author of The Change Function. Malik, firmly entrenched in Silicon Valley and an excellent prognosticator of tech's future, was quick to declare a major company as "dead." Coburn was perplexed. How can a large company, still showing some growth, be considered dead?

Coburn broached the subject in a newsletter to his clients:

"Silicon Valley is all about the New New Thing that certainly no one aspires to gracefully age! A couple weeks ago at lunch my friend Om discussed that this company and that company were 'dead.' I finally said 'Hey, Om, how are you using this West Coast version of a company being "dead" because the companies you just mentioned are large, still growing a touch and seem quite stable? On the East Coast we reserve "dead" for companies like Eastman Kodak or Circuit City. Do tell…' "

Malik had a quick answer:

"We can tell when a company will no longer be involved in generating the next round of real energy in the tech/internet world, and when they hit that point, they never come back to be an energy creator and so they are 'dead' in West Coast minds."

In other words, Silicon Valley is constantly looking toward the future. Innovation and momentum interwoven in a symbiotic relationship. Malik namedrops Microsoft and Yahoo as two companies he's deemed "dead." Not from a revenue standpoint or in judgment of their business acumen, but because their ideas have stalled for far too long that a rebirth seems unlikely.

Even in the face of healthy revenue, they're dead in the eyes of a Silicon Valley insider.

Malik provides two conditions where a company that's long in the tooth can still thrive: a forward-thinking rebirth that attracts new talent, and a tech-savvy leader to push it all forward.

"If there is no market, the money (revenues or venture capital) dries up, which means talent escapes to find new opportunities," Malik writes. "Lack of leadership means lack of ability to make money and attract or retain talent. Lack of money -- well, that means you don't have the oxygen to stay alive."

(See also: Microsoft Prays for Failure and Yahoo to Drop to Single-Digit Ad Market Share)

For an investment angle on these and many more tech stocks, take a FREE trial to the TechStrat Report by Sean Udall.
POSITION:  No positions in stocks mentioned.

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