Tucows (AMEX:TCX) has lost 50% of its market value since July 2007. Yes it has dropped from $1.26 to $0.63 a share, a 50% drop over the last six months.The Company just released it’s year end financial statement, so now is a good time for a quick review of the basics:-    Annual revenues were $74.6 M vs. $65 M for the previous year – up 14%, nothing wrong there.-    Net Income $2.6 M vs. $2.1 M – up 24% -- direction is good.-    EBITDA $8.7 M vs. $5.8 M – up 50% -- something to write home about.Tucows has a market cap of $46.5 million. The overall value could be stated as:-    5.3X EBITDA-    .62X trailing revenues.-    PE Ratio 18.68So why is Tucows trading so low? Why has it dropped a whopping 50%? As a high tech firm it deserves at least a 40 P/E ratio. It should be trading at a 1X revenue range, frankly more. That would take it back the July stock price.The problem is the Tucows balance sheet. The Company has $80 million in liabilities. How is Tucows going to make it? Given current EBITDA one could take almost 10 years to pay it back, not including interest. The game is over; tank the deal, time to trade out. WRONG WRONG WRONG ---- Tucows needs more liabilities, I think liabilities should go through the roof. They should be the master of liabilities; the street just doesn’t get it. Financially speaking there are not many firms like Tucows. They sell millions of little things, sort of like Coca Cola. However those little things are domain names, selling for lets say $12.  Since they are paid “up front” for a specific period, usually one year, the revenues for these are recognized at $1 per month, not the $12 when the transaction occurred. Sort of like cash vs. accrual accounting.

The bulk of the liabilities time out in one year, when hopefully, they start all over again. Look at it as millions of itsy bitsy revolving loans.

Of the $80 million in liabilities, $50 million (63%) is tied to deferred revenues resulting from domain registration sales. Domain name registrations account for 73% of revenues. Usually I hate deferred revenues (which is a topic for a separate writing). However for Tucows it is the business model.

I might be naive, but I don't think many people drive up to Tucows and say..."I stopped using my domain name...I want my $3 back". I have a hard time rationalizing how GAAP, in the practical world, should apply here.

Tucows – Has a deferred problem. One the street does not understand, and one I think is holding the stock price down.

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Visa and Mastercard say "prove it!"

An increasing number of businesses have been spotted sporting a button on their Web sites asserting their sites to be hack-proof. These buttons are made available to sites that have been scanned for vulnerabilities by independent security auditors, and serve two purposes; they prove compliance if the issuing auditor is certified by Visa/MC to do the appropriate testing procedures, and they may serve to give site visitors a little peace of mind.

Visa and Mastercard have been mandating heightened security for merchants for a while now, but the Visa Cardholder Information Security Program (CISP) has been updated recently, so it's time to check your compliance.

If you store customer credit card information, you need to be aware of Visa CISP and Mastercard Data Security Standard (.pdf). Fines and account termination are possible consequences for noncompliance. A big thanks goes to Corey Bryant of Card Service International for bringing this to my attention.

As a quick aside, I recently participated in an online discussion about a merchant who used a non-secure form to send credit card information as plain text to her email address to be processed manually. Her justification was thieves target sites with secure certificates on them, and by not installing SSL and using proper processing procedures, she was avoiding their detection. If this leaves you in awe, you're not alone!

The new anti-gambling legislation awaiting the President's signature, illustrates the dichotomy between the legislative power of telecommunication companies, and that of the hosting and ISP communities. Under the Unlawful Internet Gambling Enforcement Act, law enforcement agencies can simply inform entities "subject to the jurisdiction of the FCC" that they are providing services to internet gambling operations, and initiate compliance activities that way. For hosts and other entities classified as "interactive computer service" providers, law enforcement entities must go before a judge. Because of the need to go before a judge, law enforcement officials will have a harder time dealing with hosts, and will likely try to find other methods to get results. This may result in less clarity for hosts who will have to figure out whether or not they should comply with these requests. This law shows, in a small way, that what goes on on the Hill can have a direct impact on hosts.

We reported this week that ICANN had taken a second look at a revised proposal for the .xxx domain, submitted by the ICM registry. The domain was struck down in May of 2006 by ICANN, in a 9-5 vote that reversed an earlier endorsement by the governing body.

The ICM Registry's new proposal includes additions to the ICM Registry's efforts to protect children, ensure registrants label content clearly, prohibit spam, prevent certain religious or culturally sensitive names from being registered and donate money to child safety organizations.

The .xxx domain has been in the works for years. And in case you're just getting caught up, we happen to have been paying attention from the start (In 2005, for instance, we published an interview with the VP of the ICM Registry, Jason Hendeles).

I thought perhaps I'd take a shot at summarizing the arguments for, and against, the .xxx domain - a project that has been particularly polarizing.

PRO

The arguments in favor of the .xxx domain generally have to do with its regulatory potential, or the fundamental value of compartmentalizing the Internet along the lines of the .travel or .museum domains.

I've recently involved myself in a series of experiments aimed at getting a better understanding of how search engines function. Our first experiment is complete and published. I hope Web masters find this interesting and useful!

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Approximately four months ago, a small group of Web developers representing the International Web Developers Network (IWDN) devised an interesting search engine experiment. The question had been raised whether the text within a link's title attribute gets picked up by search engines or not. None of us knew the answer, and before long, we discovered we didn't know the answer to a lot of questions regarding how search engines index text in HTML.

The purpose of this experiment was to see which methods of presenting information on a Web site would get picked up by search engines and which methods would be ignored.

Read article test cases and results.

Hello again. It’s been a long while since I've posted here and I apologize for my absence. I'll be posting regularly from now on.

  In my last post I talked a bit about the different strategies - tactics - one could use in an online campaign. Today I'm going to walk you through how to actually decide which strategies to use.

  First, come up with a budget. Pay-per-click, banners, etc. are more expensive than article marketing or even a search engine optimized (SEO) news release campaign. You can allocate your funds across different tactics, both online and off. For example, SEO, pay-per-click, affiliate programs, blogging, some media buying can work very well with some offline stratgies such as trade shows, advertising in industry journals, participating in your local chamber's events, perhaps even some direct mail.

  If you've had success with certain tactics in the past, focus on those; less so the new - at least at first. You do not want to spread your tactics - or your budget - too thinly. In fact, you could find lose focus and thus weakening your results. Few of us have exceptionally deep marketing pockets. Focus is key.

  It’s a sad day when someone spends a good amount of money on marketing but has little budget for the follow through that’s necessary as your tactics bring results. You will need to have systems and processes in place to respond to queries and - happy day! - sales. You’ll also need to track each marketing tactic’s effectiveness. No need to keep paying for pay-per-click if you find most of your results are coming from article marketing - but you need to keep track of each part of your campaign to see which is bringing you the best results and adjust your budget allocation accordingly.

The tactics you use need to be driven by where your target market "hangs out." You'll also need to know how your target market responds to various tactics. I'll cover this - "Targeting" - in my next post.

A very, very long time ago, Dmitri Eroshenko (now CEO of ClickLab) and I added something called the "Guaranteed Web Host Program" to ISPcheck, our web hosting directory. Around the same time, our arch-competitor Jonathan Caputo (now of DevShed) used his Ultimate Web Host List as a launchpad for Web Host Guild. And the folks at TopHosts started VeriHost.

All three projects were intended to help participating web hosts distinguish themselves from competitors by setting industry standards they'd agree to comply with. All three fizzled, because none of us were able to come up with differentiators that made good enough public-relations fodder. You need something that's easy to adopt from web hosts' perspective - and yet creates black and white, us versus them drama in the eyes of consumers. "24/7 support" and "superior connectivity" are important and all, but when it comes to marketing, these are tired cliches rather than attention grabbers.

8 or 9 years later, thanks to Michael Dell, I think I've finally found the right kind of differentiator. Dell was featured in eWeek, CNet, the New York Times (twice!) and Business 2.0 yesterday for his "Plant a Tree For Me" campaign, which allows customers to donate $2 for each laptop and $6 for each desktop they purchase from Dell. Proceeds will be given to the Conservation Fund and the Carbonfund for planting trees that offset each computer's carbon emission over its estimated 3-year lifespan.

Dell points out that his company will also help customers recycle 275 million pounds of old computers by 2009. Greenpeace, he says, put Dell at the top of its ranking of eco-responsible manufacturers.

By the way, a few weeks ago, California utility PG&E introduced an optional program for interested customers to calculate and offset the amount of carbon dioxide their power supply produces. And in a November 2006 interview, eBay infrastructure manager Heather Peck told SearchDataCenter.com that she expects consumers to start demanding environmental responsibility from eBay and other major data center operators.

So anyway, here's a way for ecommerce hosting providers to look good, perhaps. A few of our industry leaders could get together and implement a voluntary carbon offset program similar to PG&E's and Dell's. Much more importantly, they could jointly maintain an online directory of participating customers. At a time when even my most Republican friends are talking about Al Gore's Inconvenient Truth, I'd imagine that a good number of online retailers would be interested in projecting an environmentally conscious image?

Early adopters, I think, would be able to enjoy the black and white, us versus them PR advantage that pre-historic web hosting players failed to create in ancient times. Especially if the weather keeps getting warmer (picture spotted on Paul Kedrosky's blog).

Unless you've been camping out in Acadia National Park (one of my favorite places to rock climb) for the past couple of days, you've undoubtedly heard of the major BlackBerry outage - on radio, television, or online. Hell, you may have even had to seek professional help to cope with your unexpected CrackBerry withdrawal.

Tuesday night, around 8:15 pm EDT, BlackBerry's network went down for about 9 hours. During this outage, all BlackBerry users across all mobile carriers in North America were unable to send/receive email. Yes, this means that government officials (White House, Congress, Homeland Security, etc.), executives in companies of all sizes, system administrators, and everyone else who relies on e-mail enough to spend an extra $40-70 per month for a BlackBerry data plan was down. We're talking about an estimated 5 million people who suffered this outage.

Just think about the possible risks of this outage - what if a major real-world disaster had also occurred that night (i.e., 9/11 or Katrina) and the government officials would not have been able to communicate quickly? What if you use your CrackBerry to receive alerts from your infrastructure and thus didn't know that a server went down?

At groupSPARK - the leader in Private Label Exchange Hosting, we provide BlackBerry Enterprise Server service to thousands of companies. In fact, being able to do two-way wireless synchronization (cradle-free) between a user's Microsoft Outlook data and their BlackBerry handheld - all the time, automatically - is often the acute need that convinces small businesses to adopt Hosted Exchange. Our monitoring system alerted us of backlogged messages to their servers in Canada; within 15 minutes we ascertained what was happening and alerted our support team - before a single partner contacted us about this issue from their customer.

What really bothered me is how BlackBerry handled this outage. They didn't reach out to any of their customers to alert and communicate with them about the issue. They didn't (and still have not) post a single word on their website about the outage; IT administrators had to call the cellular provider or BlackBerry directly, which meant waiting on hold for 1-2 hours, to find out why their BlackBerry Enterprise Server wasn't synchronizing with their CEO's handheld. Worst of all, they still haven't explained what caused the outage and what they're doing to prevent it from happening again. It really seems like they didn't care much about their customers' pain.

This is not the first time that BlackBerry has had a major outage. I'm sure that IT teams around the world have since been meeting to figure out ways to mitigate this risk to their organizations. I think that some of them will think more about moving their BlackBerry users to a Windows Mobile-based device. Unlike the BlackBerry architecture where all data goes through their servers in their datacenter, the data for a Windows Mobile device travels directly (over the cellular network) from the handheld to the Microsoft Exchange Server that houses their mailbox. While a Windows Mobile device isn't quite as proficient for messaging as a BlackBerry yet, risk of downtime may be the deciding factor.

Btw, BlackBerry is having their annual conference, Wireless Enterprise Symposium, in three weeks. Too bad I won't be there to see the fireworks from their customers voicing their frustrations!

So Apple announced the new iPhone yesterday. I got this photo from Engadget; it's one of dozen's they've got.

What does the iPhone have to do with web hosting? Nothing, I thought. Until I read Raju Vegesna's comments: the iPhone runs OSX and Safari. It's got built-in WiFi. Its owners are going to "regularly and practically" use web apps. Raju says this makes Safari support a priority for Zoho.

It matters to you, too. And your customers. Liam built a .mobi site a few weeks ago. It's easily viewable on my Blackberry Pearl - but by this June, there might be a lot more web browsing on the iPhone versus the Pearl.

I read about Sun's newly launched refresh service on CNet. For a monthly subscription fee throughout a 42-month term, Sun will give you at least 3 upgrades to the latest hardware.

On its website, Sun argues that server performance and power efficiency improve at a rate of 40%+ annually. Old machines incur needless expenses in power, cooling and data center space. Instead, why not fight server sprawl and take full advantage of the innovation curve - automatically?

According to the refresh service brochure, the $23,000/month subscription fee is half the price of a traditional hardware lease - if (and this is a *BIG* if) you upgrade your gear three times over 3.5 years. This is such a clever approach. It gives Sun a guaranteed install base for hardware that hasn't even been developed!

So, let's think about whether this concept could work in web hosting. Do you think there's a market for an "early adopters" program where customers pay a month subscription fee for immediate access to the latest and great machine you get from Dell?

If you have not already heard, theWHIR will be sponsoring the Networking Lounge at HostingCon 2007, the largest gathering of hosted service professionals in the world.

By sponsoring the Networking Lounge theWHIR team will strive to do all in our power to facilitate important business connections and provide an environment conducive for networking. The lounge will provide a relaxed and comfortable space where you can meet with potential or existing clients and partners.

If you are planning on attending and have not already created a HostingCon Connect account, we strongly urge you to do so. It will certainly help you make the right connections at the event scheduled for July 23-25th, 2007 at the Historic Navy Pier in Chicago, Illinois.

It's simple to open an account and connect. Just, click here and in the top left of the page click "create an account"; add your login, contact and demographic information. Once your account is created, you can search for other registered members with like interests. You can search by name, company or location.

Be sure to make connections now and schedule meetings at the Networking Lounge #812 located in the far right corner of the show floor.

If there is anyway that you would like us to assist in making the right connect, please do not hesitate to contact us directly.

It's been a few years, now, that AIT has been a Web hosting provider crusading against click fraud. The matter has been a bit of a personal quest for CEO Clarence Briggs, who in 2005 led a class action lawsuit against Google itself, attempting to lay responsibility for fraud in Internet advertising at the search giant's doorstep.

At the time, we ran an interview with Briggs. And, while the lawsuit, the accusations and their target all at least hint at the possibility of some kind of publicity stunt, there's really no mistaking his sincerity.

More importantly, his point is valid. In 2005, he didn't want Google's money. He wanted his money back. And he wanted to know that pay-per-click advertising was a viable vehicle for online marketing.

Without a strict, and transparent, method for vetting clicks, how could advertisers know they were getting what they paid for?

The Google suit was settled almost a year ago, a deal that required Google to refund a part of the money spent by advertisers during the previous four years. However, a CNN article excerpted on AIT's anti click fraud site IGeryon.com (though no longer available on CNN's site), says "independent studies assert that anywhere from $100 to $400 of every $1,000 stems from click fraud." IGeryon is encouraging readers to opt out of the settlement.

This week AIT accused a customer, the Fayetteville Publishing Company, of click fraud. At the same time, the company announced that it had uncovered a new form of click fraud it calls "bang box." AIT described the tactic in a press release:

"A search engine affiliate hosts it web servers in a data center with an ISP. The affiliate then gets fed advertiser ads from the search engines, syndicates and other IAB members to its web site. Then the affiliates hire a third party to rent a web server inside the ISP's data center in order to "Bang" or click on their affiliate site driving impressions or clicking on the ads themselves using an internal IP address without generating suspicious external traffic. They are paid for the clicks by the search engines who in this case, probably don't know what is happening."

In addition to raising concerns about the legitimacy, in general, of some advertising practices, AIT's ongoing interest in click fraud raises some questions, specifically, about the pay-per-click advertising you may be doing, and just what you're actually paying for the legitimate clicks you receive.

If you aren't already, there are apparently quite a few tools designed to defend your advertising dollars against click fraud. There are a few listed here.