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Some say the world will end in fire. Some say in ice. But if you're pressed for time and want to end all intelligent life quickly, nothing beats a task force.
In New York last week, a task force chosen by Governor Andrew Cuomo issued its report on Common Core. In a model of stunning governmental efficiency, the group managed to "listen" to 2,100 New York students, teachers, parents, and various other stakeholders. They then retreated to their chambers to write, edit, and publish a fifty-one-page report a mere ten weeks after they were impaneled. But clearly that was time enough for these solons to learn and thoughtfully consider what the Empire State needs: to adopt "new, locally driven New York State standards in a transparent and open process." The report has twenty recommendations on how to bring this about.
It should be noted (speaking of governmental efficiency) that God himself was content with a mere ten modest suggestions to govern all known human activity. Cuomo's task force has double that number—just for Common Core in a single state. But God acted alone. On a task force, every voice must be heard, every grievance aired. And they were, in all their...
On Wednesday, I had the pleasure of visiting Success Academy Harlem 1 and hearing from Eva Moskowitz and the SA staff about their model. I'm not going to venture into the thorny stuff about SA here. What I will say is that their results on state tests are clearly impressive, and I doubt that they're fully (or even largely) explained by the practices that cause controversy. (Luckily, we'll soon have excellent empirical evidence to answer that question.)
Instead, what I'm going to talk about are the fascinating details I saw and heard about curriculum and instruction in SA schools. Right now, of course, it is impossible to know what's driving their performance, but these are some of the things that I think are likely to contribute. (I'd initially forgotten that Charles Sahm wrote many of these same things in a post this summer. His is more detailed and based on more visits than mine. Read it!)
Here's what I saw in my tour of about a half-dozen classrooms at SA 1:
The Ohio Coalition for Quality Education (OCQE) has hit the airwaves in an effort to change the state's accountability policies. The group claims that Ohio doesn't take into account differences in student demographics across schools—and is thus unfair to schools educating at-risk pupils. Along with the Electronic Classroom of Tomorrow (ECOT), they are promoting the adoption of a new accountability measure that they believe will solve the problem.
The trouble with their argument is that Ohio policymakers have already implemented a robust measure—value added—that takes into account student demographics. Given what these groups are lobbying for, it is important to review the basics of student achievement, demographics, and school accountability, including value-added measures.
Let's first keep in mind that the concerns about student demographics and educational outcomes are hardly new. For decades, analysts have recognized the link between demographics and achievement. The famous "Coleman report" from 1966 was among the first studies to show empirically the massive achievement gap between minority and white students. Gaps by race or income status remain clearly evident in today's NAEP and state-level test data.
These stark results, of course, call into question the use of pure achievement measures (e.g.,...
Our friend and colleague Mike Petrilli is right about many things, but he's wrong to dismiss solid interstate comparisons of academic performance as a "nice to have," not a "must-have." He acknowledges that the Common Core standards have largely failed to usher in an era of timely, valid, and informative comparisons, but then he says, in effect, never mind, we still have NAEP, PISA, and other measures by which to know how one state is doing academically versus another and in comparison with the country as a whole.
It is indeed a good thing that we have those other measures because it's true that the Common Core era has failed to deliver on what many of us saw as one of its most valuable and important features: a platinum meter stick to be used to measure, monitor, and compare student achievement, not just between states but also among districts, individual schools, even individual classrooms and children. That's how the superintendent in Springfield, Illinois, could determine how his schools—even just his fifth-graders—compare with their counterparts in Springfield, Oregon, Springfield, Ohio, and Springfield, Massachusetts, both in absolute achievement and in academic growth trajectories in math and English. That's how a principal...
As states have implemented college and career readiness standards, it has sometimes been assumed that most of the work and attention has occurred at the elementary grades. In truth, many states have been working for some time to ensure that grade twelve prepares all students for post-secondary success. Programs like AP, IB, and dual enrollment are the most touted offerings for well-prepared students. But there has also been a great effort to create courses for students who are not yet college-ready and who can use senior year to close academic gaps and avoid the remedial instruction that so often acts as a drain on the time, finances, and morale of ascending college students. Just last month, the Fordham Institute held an event called "Pre-medial Education" that discussed ways to bring high school-based college readiness programs to scale.
For colleges and universities, "fixing" remediation is a major priority. According to Complete College America, three out of five students entering community colleges and one out of five students entering four-year institutions require remediation. The vast majority of these students (78 percent at community colleges and 63 percent at four-year institutions) do not go on to successfully complete gateway credit-bearing courses....
This study examines whether information supplied about a student's ability helps inform that student's decision to enroll in Advanced Placement classes. Specifically, the information "signal" is the "AP Potential" message on the student's PSAT Results Report, as written by the College Board. Students who score at a certain cut point on the PSAT get a message that says, "Congratulations! Your score shows you have potential for success in an at least one AP course!" or else a message that says, "Be sure to talk to your counselor about how to increase your preparedness."
Students in Oakland Technical High School who took the PSAT in 2013 made up the sample of roughly five hundred sophomores. The intervention was as follows: Right before and after they received their PSAT results that included one of the AP Potential messages above, they were given a survey that asked them (1) how they perceived their academic abilities and their plans relative to attending college; (2) the number of AP courses they plan to take; (3) whether they would take the SAT; (4) the probability that they'd pass the exit exam; and (5) the probability that they'd graduate high school.
Analysts found that the AP signal...
Like many, I'm convinced that what happens inside the classroom—curriculum and instruction—has as much of an impact (if not more) on student outcomes than structural reforms. For those who believe as I do, the revamped Elementary and Secondary Education Act has the potential to help states figure out how to hold schools accountable for student learning and what, if anything, to do about teacher evaluations. Let me throw out a few ideas.
"If you want more of something, subsidize it," Ronald Reagan famously quipped. "If you want less of something, tax it." During the No Child Left Behind era, test-driven accountability has too often stood Reagan's maxim on its ear. Annual reading tests have practically required schools and teachers to forsake the patient, long-term investment in knowledge and vocabulary that builds strong readers, critical thinkers, and problem solvers. High-stakes accountability with annual tests that are not tied to course content (which reading tests are not) amounted to a tax on good things and a subsidy for bad practice: curriculum narrowing, test preparation, and more time spent on a "skills and strategies" approach to learning that doesn't serve children well. Under the new ESEA, states will still have to test students...
The MCAS/PARCC hybrid assessment, Governor Baker's new workforce skills initiative, Harvard's new teacher training program, and the state of K-12 computer science education.
SOURCE: "Images of Computer Science: Perceptions Among Students, Parents and Educators in the U.S.," Gallup (November 2015).
Mike: Hello, this is your host Mike Petrilli of the Thomas B. Fordham Institute here at the Education Gadfly show and online at edexcellence.net! Now, please join me in welcoming my co-host, the Adele of education policy, Robert Pondiscio.
Robert: Hello.
Mike: Wow! Amazing, Robert. That was so good. We didn't even rehearse that in advance. You didn't know it was coming. Man, you have a teenager daughter, don't you?
Robert: I do. Actually, my wife is a bigger Adele fan than my teenage daughter.
Mike: She, supposedly, has fans all across the generational spectrum and other lines.
Robert: She's a pretty talented young lady.
Mike: 25? Does that refer to her age?
Robert: I believe, see this shows you of my ... I don't know how I know these things. Pop culture is like second hand smoke. You just get exposed to it. She names her albums after her age when she records them. 21 was all about her bad breakup. Now, she's 25, still singing about that bad break up, sounds like. Now, she's just 4 years older.
Mike: This seems to be a thing. Was it Taylor Swift who's album was after the year she was born?
Robert: 1989?
Mike: All these people are just trying to make me feel old.
Robert: Most of these people are younger than us, Michael. Don't fight it.
Mike: That is the bottom line. If you were Adele, you would not be giving this podcast away for free, would you?
Robert: No. I'd have it on iTunes and you'd be paying at least $10.
Mike: Exactly, which we're thinking about doing at some point. Hey, Robert! Good to be on the show with you again. Lots of excitement happening in the world of education reform, including ESEA. We're not even going to talk about ESEA today.
Robert: ESEA.
Mike: We've been talking about it. We like ESEA. We'll talk about it some more next week. Looks like the House may vote on it this week. Looks like it's going to happen.
Robert: Who'd've thunk?
Mike: Who'd've thunk? But what we are going to talk about-
Robert: Adele was 9 the last time ESEA was authorized.
Mike: Yes. Is that right?
Robert: Well, she's 25 now, minus 15. She was 9 or 10.
Mike: 14 years, rather. Doing some common core math there, Robert. The reason we're not doing ESEA is because it is not central to Massachusetts, and this is a special Massachusetts edition of the Education Gadfly show.
Robert: What are we thinking?
Mike: We like themes around here. Let's get started. Clara, let's play Pardon the Gadfly.
Claire: Earlier this month, the Massachusetts Board of Education voted to continue to use their own assessment with questions from PARK rather than go whole-hog with PARK itself. Does this mean that Common Core is on the ropes?
Mike: Audrey, producer Audrey, can could we clip in some things into this segment here from the internet? I have a blog post up on this right now claiming that Common Core is not dead yet. I can try and do the British accent, pretend to be Monty Python-
Robert: Bring out your dead!
Mike: I'm not dead yet! It'd be better if we could do the clip. Insert clip here, Audrey.
Monty Python: I'm not dead!
Mike: Okay, there you go.
Robert: We need a cow bell.
Mike: Or, another way to say it is have the Bee Gees in there. Staying alive, staying alive. Ooh, Ooh, Ooh. Staying alive. The point is-
Robert: Mike.
Mike: Some friends of ours, including our good friend Rick Hess, who once upon a time a long time ago used to host the podcast with me, speaking of not giving stuff away for free anymore, Rick Hess. He used to host the podcast with me. He has been writing that this Massachusetts decision is just yet another blow. "A devastating blow" I think he had in the National Review for Common Core. Neil McCleskie says it's getting crushed.
Robert: Crushed in 40 some odd states!
Mike: Still getting crushed in 40 odd states. Look, number one, the standards are still here. Outside of Oklahoma, maybe South Carolina, they're still there. They might not be called Common Core, a few places have added some standards, there's some review processes, so far they're still there. Even places where they've made tweaks, in most places they've become better. They've made improvements. Fine, no problem. The whole goal was better standards. Another goal, better tests. What we've seen so far looks pretty good. We'll know more in January when Fordham releases a big study on these tests.
What about cut scores? Cut scores are through the roof, Robert! At Fordham, we're riled up about, more than anything else, what we call the proficiency illusion where states had these ridiculous low cut scores, telling parents that their kids are doing fine. Every state that has released tests from last Spring, except for our home state of Ohio, has been quite honest, really putting their cut scores pretty much at the same level as [nape 00:04:46] or close to it. In the ball park of saying we know about 35-40% of kids in this country are college ready. Guess what? According to these state tests, especially in math, about 35-40% of kids are on track. That matches. On a lot of these different ways, Common Core is alive and well. The one area where it is not alive and well, though, is around comparability.
Robert: Right. This is where you and I disagree, I think. [inaudible 00:05:12] I'm always going to be just a little bit more focused on the instructional side of things, and you are I think, so I want that data. I want to be able to look at, not just a state level or even district level, I want to be able to look at school level data and say, "Who's doing this good, better, and best?"
Mike: You want to be able to do that nationally.
Robert: Absolutely.
Mike: The issue here is, of course, that PARCC is down to now seven states, that Massachusetts isn't going to use PARCC whole-hog, although it does look like they're going to use a lot of test items from PARCC. Maybe that the next version, what they do in Massachusetts, is they call it MCAS 2.0. They look exactly the same as PARCC. Louisiana, other states are now saying they're going to use questions from PARCC. It does cut against the argument that you're going to be able to directly compare the results from these state tests. Of course, we lost that right off the bat, Robert, because there was always going to be Smarter Balance plus PARCC, plus we always knew that some states were going to do their own thing.
What we maybe didn't know was that it was going to be half the states still doing their own thing on tests which is what we have coming up this Spring. I think we're at about 22, 23 states doing PARCC or Smarter Balance, the rest are not. I still don't get it. So what, Robert? You want to be able to compare a school in New York state to a school in Illinois. Why?
Robert: That's how the field advances. That's how we get better.
Mike: It is? How?
Robert: Sure!
Mike: Play that out. Continue. I don't understand.
Robert: If you use-
Mike: By being what?
Robert: If I have two different populations and one is doing better than the other, I want to know what A is doing better than B.
Mike: Does it actually happen? You're saying-
Robert: Because the conditions don't exist-
Mike: This would enable national studies to be able to use the same data sets and to be able to-
Robert: Yeah. Of course.
Mike: All right. Maybe.
Robert: Look, I'm not saying it's a deal breaker. I'm saying it's important. To me, it was one of the appeals of Common Core. You're absolutely right. We did lose this one out of the box, but I remember saying years ago I would rather have fifty different sets of standards and one test than one set of standards and fifty different tests.
Mike: The tests would be the real standard. We will continue to disagree on this. By the way, this whole notion that Massachusetts is backing away from the Common Core is preposterous. Hey, that's all right. We're still friends. We still love you, Rick, and Neil, and the rest of you people. Again, not dead yet!
Robert: If you say it long enough, eventually the sun will go out and we'll all be dead.
Mike: Yes, that's true. Topic number two. That's depressing, Robert. The fatalism ... Yes.
Claire: Governor Charlie Baker announced new workforce skills initiative this week with a heavy focus on career and technical education, are there lessons here for other states?
Mike: Yes. Here we are. Massachusetts governor Charlie Baker-
Robert: Massachusetts?
Mike: I told you. This is an all Massachusetts edition. Give him a hard time on Common Core, because he is the guy who really forced them to not just use PARCC because he's got issues with it. He used to run the Pioneer Institute, blah, blah, blah.
Robert: I think I've heard of him.
Mike: On career and technical education, he is doing some great stuff. Massachusetts already, as in so many other areas, is a leader in career and technical education. They have the regional CTE scores that were, by the way, partly improved by people like Sandra Stotsky, another person from the Common Core fight ... These fantastic CTE schools that are now some of the highest performing schools in Massachusetts that are getting great results, not just on technical education, but also on the core academics, sending kids into pathways and higher education to do all kinds of cool stuff. Charlie Baker is right, though. There's not enough of it.
When I look out there, Robert, and you say in a typical metro area, what percentage of the seats are in CTE? How many high schoolers are concentrating on CTE? It is diminishingly small.
Robert: I was going to say, I should know the answer to that. I don't.
Mike: I think it's in the probably in the neighborhood, depending on how you count it, of 5% or 10% of the kids. This is ridiculous at a time where at least 30% or 40% of the jobs out there are these middle skill jobs that need some post-secondary but not a 4 year degree, they need the technical oriented skills, and we have 5% or 10% of the kids going through them? Supposedly, the rest are going through "traditional college prep." As we know, a huge percentage of those kids are not graduating actually ready for college.
Robert: They're graduating. We just don't know what they're graduating to.
Mike: We do, though. They graduate to the community college where they end up in remedial education-
Robert: Not taking a degree.
Mike: -and drop out with debt and regret. Instead of majoring in debt and regret, they could be doing CTE instead.
Robert: There you go. Look, you have been at the forefront of banging on this drum with those of us in Ed Reform, so keep on banging.
Mike: Let me try this on you, Robert. What if I said then, let's go to a given city. Let's say your wonderful city there, New York City, and say, "You know what? In New York City, based on the economy, based on all kinds of factors, 80% of the kids in New York City in high school should be doing CTE." What kind of reaction would I get then?
Robert: I'll tell you what reaction I would give you. I like the idea of setting a quota, especially, if I'm taking you literally. When you want to base it on current economic conditions? You lose me right away on that. I think the traditional resistance to this, obviously, has been tracking. Whenever you say CTE people hear tracking. Still don't think it's a bad idea. The bad idea is when we decide what track kids go on.
Mike: That's fine. Here's a proposal, though. I think you should either have really high quality CTE programs, or really high quality true college prep programs, and nothing else. None of these general, big, comprehensive schools that are not one or the other. Okay. Topic number three.
Robert: Let me guess, Massachusetts.
Mike: It is a university in Massachusetts. In fact, a very famous one.
Robert: Holy Oak!
Mike: Robert!
Claire: Harvard University recently launched a new teacher training program. Don't we already have enough teacher prep programs? Why is this one significant?
Mike: I wrote this one in, Robert. Don't we have enough? We've got 1,200 teacher prep programs out there. 1,199 of them suck. That's a bit of an exaggeration, but not by much. Really? We need one more? Huh? You know the whole Daniel Patrick Moynihan line, was it him? No, no, no. It was-
Robert: I'd rather be ... It was Bill Buckley.
Mike: It was Bill Buckley. You're right.
Robert: I'd rather be governed by the first 1,000 names in the Boston phone book.
Mike: You really think the people at Harvard know anything about teaching?
Robert: I love this. There was a piece in the Washington Post, Lyndsey Layton, who we love, noted that ... Let me ask you. How much is this program costing? Did you notice this?
Mike: I did not. Tell us a little bit about it. This is for undergrads, or graduate students? Of course, Harvard has a graduate school of education, always has. Never has had a big focus on teaching, per se, but on research and other things.
Robert: I just can't get past this one data point. I swear it's just going to make my head explode. They're going to train twenty-four teachers with private donations. How much money in private donations?
Mike: How much?
Robert: $18 million! $750,000 per teacher!
Mike: Are you serious?
Robert: Look, it's right here in the Washington Post. "Thanks to $18 million from private donors, who wish to remain anonymous ..." I would too if I was that dumb spending that money-
Mike: Maybe, maybe, that's for multiple years. Maybe that's several cohorts?
Robert: "About two dozen Harvard seniors will begin a three year fellowship designed to combine pedagogy, blah, blah, blah." $18 million for two dozen teachers!
Mike: I need to find that fundraiser. Wow. That is impressive.
Robert: Oh my lord. Can you imagine?
Mike: In all seriousness, it is Harvard, and a well-respected graduate school of education with a very well-respected dean-
Robert: A little bit less well-respected today, Mike.
Mike: -that we like, Jim Ryan. What do you think, though? If they were to do this right, what would be different about this Ed. School program than the other ones?
Robert: You're asking the wrong guy. I have unorthodox views about this. My long-held belief is that we have to make teaching a job that can be done at a competent level by mere mortals. Why? Because that's who's in our classroom. You could spend, Harvard, $18 million to create two dozen superstars, that's great. Now, let's talk about the 3.7 million other non-superstars. We have to make this a profession that ordinary people can do well.
Mike: That's interesting. Even if Harvard comes up with a great program, you're saying it is not at all scalable or replicable, right?
Robert: Are you kidding me?
Mike: First of all you've got all this money, which other people don't have. Second of all, you have Harvard seniors, which are not exactly a representative sample.
Robert: They are not. Look, it shouldn't take $18 million to turn two dozen Harvard seniors into competent teachers. Say what you will about Teach for America, they do that in six weeks at considerably less cost. I literally could not get past that figure. I don't care what you're doing. If it takes that amount of money, this is not a serious model.
Mike: Let me issue a challenge to Marty West, our friend at Harvard, or anybody else there at Harvard Graduate School of Education, you're welcome to come on the podcast and make the case for why this is a good investment of $18 million to come up with the Harvard super powered teacher. That is all the time we have for this week's edition of the special Massachusetts Edition of the Education Gadfly show Pardon the Gadfly segment. (laughter)
Robert: What?
Mike: You're right. We should stop doing these themes. It's too complicated. Here's the good news, Robert and Claire, it is now time for everyone's favorite, Amber's Research Minute. Amber, welcome back to the show.
Amber: Thank you, Mike!
Mike: Amber, you are the one non-Massachusetts part of the show today. Everything else has been a Massachusetts focus. Amber is from North Carolina, is that right?
Amber: I taught in North Carolina.
Mike: I always get it wrong.
Amber: It's okay. I lived in Virginia Beach.
Mike: That's right. You were on the Virginia Beach side and then you taught in North Carolina. By the way Amber, Adele was a big focus of conversation earlier. Did you buy the album?
Amber: I have not yet. I have heard such great things. I just think she can really sing. Somebody with a real voice, finally, that doesn't get out there in some little slinky outfit and just parade around. She has a voice.
Robert: No auto-tune there.
Amber: It is so refreshing. I just really, really like her.
Mike: Excellent. I love it. See, Robert? You should feel good about being the Adele of education policy.
Robert: Am I complaining?
Amber: It's the real deal.
Robert: I hope this podcast gets downloaded just as much.
Mike: All right. Amber, what you got for us?
Amber: I'm going to give you guys a quiz because I got one of these studies as a survey. It's got a bunch of little factoids. Put your little student hat on.
Robert: I'm ready.
Amber: We got a new report out that examines whether computer literacy is getting short-shrift in America's schools.
Robert: Oh, no. My favorite topic.
Amber: It's a Gallup Poll commissioned by Google.
Robert: Can I go now?
Amber: They've got a little skin invested in the-
Mike: Is it funny that Google has to do a poll? They know everything about us already. You'd think they could just mine it.
Amber: All right. We're going to play along. The Bureau of Labor Statistics apparently estimates that jobs in computer and mathematical occupations will increase by 18% between 2012 and 2022, creating, what they say, will amount to 1.3 million job openings in the computer science field. Obviously, Google says, "Look, this is coming. We need kids that have strong computer science literacy skills." They surveyed nationally representative samples of over 1,600 7th to 12th grade students, 1,600 parents of 7th to 12th grade students, 1,000 teachers, so on and so forth, principals, superintendents, you name it. They had the money to survey these populations. Key findings: Number one, how-
Mike: Where's our quiz?
Amber: What? This is the quiz right now!
Mike: Oh, okay. All right.
Amber: How many students report using computers every day at school?
Robert: What percentage?
Amber: Out of ten.
Mike: What grade are we talking about?
Amber: 7th through 12th.
Mike: Sorry. 7th through 12th. Using computers every day?
Amber: Everyday. Are you all going to do this with every single one of these?
Robert: 80%.
Mike: I'm going to say 60%. If you'd said "three times a week" I'd say darn near 100%.
Amber: Four in ten. 40%.
Mike: That's it?
Amber: Everyday. That percentage obviously increases as students move up the grade levels. About 31% say everyday in grades 7 and 8. By the time they get to high school, it's about 50%. Hispanic students are less likely than white or black students to use computers at school daily. Next one coming up. 75% of Hispanic students have a computer at home that can be used to access the internet, compared with 85% of Black students, and how many white students?
Robert: It's got to be higher.
Mike: 95%
Robert: 97%.
Amber: 98%. God, that's high isn't it? Yet nearly how many have a cell phone? This is all students. No subgroups. How many, all students overall, have a cell phone or a tablet they can use for internet access?
Robert: I'm going to say 110% because some of them have two.
Mike: That's a pretty good one (laughter). 90%.
Amber: 91%. Very good. That's high, right?
Mike: Which, by the way, does mean that they have a computer at school.
Amber: Well, that's right.
Robert: As you know, I teach at a charter school in Harlem, fairly low-income students. There's not one single one of them students who I cannot assign online work. Not one. The digital divide practically does not exist.
Mike: You could use their phones for instructional purposes in the classroom potentially.
Robert: I prefer not to, but we'll talk about that another time.
Amber: More than a third of students in 7th through 12th grade say their school does not offer a dedicated computer science class. Now we're getting away from access and talking about what the school offers.
Robert: That's a victory.
Mike: Robert.
Amber: What percentage of principals surveyed from schools that offer computer science classes say that AP computer science courses are available at their school? How many principals have an AP computer science course available at the school. Obviously, we're talking about high school here.
Robert: 25%.
Mike: Yeah, that sounds about right. It's going to be a low number.
Amber: You guys are really good. 25%. That was a very educated guess. However-
Mike: Amber, we are supposed to be experts here. Come on! (laughter)
Amber: Well, I'm just saying. Gallup reports a 50% increase, by the way, in the number of students who took the AP computer science exam.
Mike: I remember ... Isn't there a stat that there's still no African American males passed the AP computer science exam. Not a single one.
Robert: Are you serious?
Mike: Not in the whole country.
Amber: Is it really that bad?
Robert: Wow.
Mike: I should check that.
Amber: What percentage of parents ... This is a bias question, whatever. What percent of parents say computer science is just as important to a student's future success as math, science, history, and English?
Mike: What percentage of parents?
Robert: 70%.
Mike: No, I'm going to say it's 45%.
Amber: 64%. If we're playing Price is Right [inaudible 00:20:21]. What percentage of superintendents say the main reason their school doesn't offer computer science is that no teachers are available within their district with the necessary skills to teach it?
Robert: That's going to be high.
Mike: 75%.
Robert: 82%.
Amber: 73%.
Robert: Why even ask me? Just ask Mike. (laughter)
Amber: Just a couple more.
Mike: I am good at this, aren't I?
Amber: [inaudible 00:20:46] Low income parents are more likely than high income parents to say that students should be required to learn computer science. That's just a factoid. Your last one: What is the main reason that school principals and superintendents say that they do not offer computer science? It's not the teacher skills thing.
Mike: It's not that? I was going to say.
Amber: It's another main reason. I'll give you a hint. Think about what's going on right now.
Robert: Because of the demands of testing and whatnot.
Amber: Bingo. Focusing on testing is the main reason they don't spend more time on it.
Robert: Hey, I got one that Mike didn't get.
Amber: That was a little bit more intricate of a quiz, right?
Mike: Interesting. It was. Well done.
Amber: I just wonder whether parents ... People just think, "Oh, the kids just pick it up by osmosis because they're online all the time."
Mike: Using a computer ...
Amber: But this is programming. They went to pains to describe what a computer science course is.
Robert: I'm more worried about how much of what we have in the schools right now. Look, I'm completely out of my depth on this. I couldn't code at gunpoint. I do worry that we're doing this as a parlor trick more than a serious course of study. Just because schools are "offering coding or computer science," how serious is it?
Mike: You're coming from New York where de Blasio says, "Everybody's going to do this coding." In the younger grades, I think that probably is true, but aiming to get a lot more kids ready for AP computer science in high school, I think, is a legitimate goal.
Mike: Here's the thing. This intersects with what we've been saying on high achieving kids, especially on high achieving low income kids. What you need to do is start as early as possible, making sure that those kids have access to rigorous math programs, to gifted and talented, to ability grouping, to tracking. What keeps tripping us up is that in many cities, you talk about that and people go bananas. The low income kids who show some promise on mathematics don't get access to that stuff. Out in the suburbs, the white kids still do, and they're still getting started in a pipeline that will result in them being ready for AP computer science by the 12th grade.
Robert: My only question to the folks at Google who came up with the survey, is to what degree is this a problem in search of a solution, so to speak? In other words, if we have a robust STEM program, is that not all the preparation an average to above average student would need to prepare for a career in computer sciences?
Amber: Yeah. I think it's a legitimate question.
Mike: But we don't have that (laughs).
Amber: We don't have that either, right. I'm just thinking ... Honestly, what do we do around here? How long have we looked for a really good web designer? That's a hugely good skill, right? These people make a ton of money. Remember last time we put an external contract out for our website? We were like, "Holy cow!"
Mike: I want that job.
Amber: What are these people doing in an hour? Because we don't know what they're doing in an hour, we're paying them (laughter).
Mike: I did just learn how to embed a GIF in a Tweet, though.
Robert: But you don't know how to say "GIF" which is the proper pronunciation.
Mike: There's a debate about that.
Amber: Anyway, it's a black box, I think, to a lot of us.
Robert: It sure is.
Amber: Wow, we really should know more about it.
Mike: We should indeed. All right! Thank you, Amber. That was fun and enlightening. Always a pleasure, Robert. Until next week-
Robert: I'm Robert Pondiscio.
Mike: And I'm Mike Petrilli of the Thomas B. Fordham Institute's Education Gadfly Show signing off.
The ESEA reauthorization conferees delivered some good news for America's high-achieving students last week. Absent further amending, the Every Student Succeeds Act (ESSA) will include a necessary and long-overdue section provision that allows states to use computer-adaptive tests to assess students on content above their current grade level. That's truly excellent news for kids who are "above grade level"—and for their parents, teachers, and schools.
Here's the language, with emphasis added:
The quality of state assessments matters enormously to children of all ability levels, but today's tests do a grave disservice to high-achievers. Most current assessments do a lousy job of measuring academic growth by pupils who are well above grade level because they don't contain enough "hard" questions to allow reliable measurement of achievement growth at the high end.
Doing that with paper-and-pencil tests would mean really long testing periods. But a major culprit is an NCLB provision requiring all students to take the "same tests" and (at least as interpreted during both the George W. Bush and Barack Obama presidencies) barring material from those tests that's significantly above or below the students' formal grade levels. Though the intentions behind this decision were honorable—to...
The Massachusetts Board of Elementary and Secondary Education wisely decided this week to tack between the Scylla of MCAS and the Charybdis of PARCC. Following Commissioner Mitchell Chester's recommendation, they chose to adopt MCAS 2.0, a yet-to-be-developed hybrid of the two options. Their adroit navigation calms the troubled waters for the time being. But choosing a test is only the beginning of the voyage. Strong and sustained tailwinds will be needed to swell the sails of student achievement.
A test is a measuring instrument. It shows where a student needs to improve, but it doesn't provide instructional strategies and tools to achieve that improvement. Even without a new test, current state, local, and national assessments already generate more data than anyone can digest.
Assessment data should directly drive instruction, and the instruction should be individualized to the student. This is the intent. But data-driven, individualized instruction can only take place online. Teachers can't cut and paste textbooks—but software can be customized with a keystroke. Still, very few schools have the computers and software to support individualized online instruction.
MCAS 2.0 can be an effective driver of instruction if the state invests in a computer for every student (along with the...


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Alchemist Theatre gives voice to victims in 'Jack the Ripper'
A bus in New Delhi. The streets of Ciudad Juárez. A spa in Brookfield.
Those were the places running through my head Thursday night while watching "The Canonical Five of Jack the Ripper" - written, directed and designed by Aaron Kopec - at Alchemist Theatre. »Read Full Article
Yo La Tengo swings from calm to full-on rocking
Yo La Tengo's show at Turner Hall on Saturday showed that in music, there are different types of Zen.
The Hoboken, N.J.-based indie rock darling began a nine-song opening acoustic set with a meditative variation of "Ohm," the first track off "Fade," its lovely and relaxed 13th full-length studio album released in January. Georgia Hubley gently tapped the drums with brushes, her husband Ira Kaplan glided the song toward a subdued Middle Eastern-influenced guitar jam, and the couple along with primary bassist James McNew sang sweetly, quietly, together. »Read Full Article
MSO captures excitement of rarely performed Beethoven works
In the culinary world it's quite the event to plan a meal around a single delicacy, for instance a white truffle meal.
In the music world, it's a similar treat to plan a meal around a musical delicacy, for instance some of the infrequently performed symphonies of Beethoven. »Read Full Article
Milwaukee Rep's 'Clybourne Park' an electrifying production
Because "Clybourne Park" is so good and because it explores issues that aren't going away, it's easy to agree with Mark Clements' prediction - made in his director's notes for the new Milwaukee Repertory Theater production - that Bruce Norris' play is built to last.
It's much harder to imagine watching the inevitable revival, 10 or 20 years from now, without hearkening back to the electrifying performance I saw Friday night, in which Clements' all-star cast gave "Clybourne" the treatment it deserves. »Read Full Article(1)
Winter Jam tour brings full range of Christian music to U.S. Cellular Arena
The Christian music industry has long been a bit of an enigma.
Mostly, the genre has remained separate from its pop brethren. There it has thrived, in record sales, at festivals and on Christian radio. »Read Full Article(3)

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Tucows Inc. (NYSEMKT:TCX)
Q3 2007 Earnings Call
November 6, 2007 5:00 pm ET
Leona Hobbs - Director, Communications
Elliot Noss - President, Chief Executive Officer, Director
Michael Cooperman - Chief Financial Officer
Thanos Moschopoulos - BMO Capital Markets
Steven Wolfe - Platinum Partners
Good afternoon, ladies and gentlemen. Welcome to Tucows Inc.'sthird quarter fiscal 2007 results conference call. (Operator Instructions) Iwould now like to turn the call over to Leona Hobbs, Director of Communicationsfor Tucows Inc. Please go ahead, Ms. Hobbs.
Leona Hobbs
Thank you, Operator. Good afternoon, everyone and thank youfor joining us for today's call. With me is Elliot Noss, our President and ChiefExecutive Officer; and Michael Cooperman, our Chief Financial Officer.
Earlier this afternoon, Tucows issued a news releasereporting the company's results for the third quarter of fiscal 2007 endedSeptember 30, 2007. The news release and other information for investors isavailable by going to about.tucows.com and clicking on investors.
Before we begin today, I would like to point out that thematters we will be discussing include forward-looking statements and as such,are subject to risks and uncertainties that would cause actual results todiffer materially. These risk factors are described in detail in our documentsfiled with the SEC; specifically, the most recent reports on Form 10-K and10-Q.
We urge you to read our securities filings for a fulldescription of the risk factors applicable to our business.
I would now like to turn the call over to Elliot.
Elliot Noss
Thank you, Leona. Good afternoon and thanks for joining ustoday. For today's call, I'll begin with an overview of our performance andsome of the highlights from the third quarter. Mike will then provide adetailed review of our financial results, and I'll close the call with adiscussion of the significant growth opportunities in front of us beforeopening the call up to questions.
Let me begin with the financial highlights for the quarter.Cash flow from operations remains solid at $2.3 million, marking our 24thconsecutive quarter in positive territory, subject to the caveats I've discussedon previous calls.
At the bottom line, adjusted net income was $1.1 million andwe incurred a net loss of $300,000. However, this does not include roughly$250,000 of integration costs following the IYD transaction.
Revenue for the quarter grew 6% to $17.8 million compared tothe third quarter of last year. Despite the price decrease in traditionaldomain names and challenges around advertising revenue, which I will discusslater.
Now, let me dig into the quarter in a little more detail.I'll begin with our traditional domain registration business. As we discussedlast quarter, we made a strategic decision to implement a significant pricereduction on wholesale domain names, which we believe was the right thing to dofor the business over the long term and that we expect will bring backincreased growth, certainly in terms of units, but also likely in terms ofdollars.
We knew when we did this that it was something that would bevery expensive in the short term but that the return over the long term wouldbe worth it. Early returns on that decision have been positive.
We have seen an increased level of new customer sign-ups.They are up 15% compared to the third quarter of last year and up 55% comparedto the second quarter of this year. In addition, our renewal rate was up from alittle over 69% to nearly 72%.
Before the price cut, when we would speak to potentialcustomers -- in other words, those doing business with our competitors, theywould tell us that they would prefer to be doing business with Tucows becauseof our focus on service providers and because of the way we handle our customerrelationships, but that we simply weren't competitive enough around price.
We are now much more price competitive and the feedback wehave received since we announced the price cut has reinforced our belief thatwe made the right decision. It is worth noting that even with the price cut,gross margin dollar contribution from domain registrations for the thirdquarter was still flat year over year.
While it's tough to identify with precision, we believe thatbut for the price cut, gross margin would have actually been up in the 10%range year over year and that would land inside our traditional view of 8% to12%.
We again have started to market our traditional domainsoffering. We are talking to current and prospective customers about the pricecut, the benefits of our cost plus pricing model, and other benefits weprovide. Frankly, our position in the market is unique and we've got more workto do to educate our existing and prospective customers about these otherbenefits, and are in the process of doing so. We have undertaken to do a muchbetter job of messaging around this.
All in, we are excited about our ability to re-energize thisbusiness and drive growth in the traditional domain registration revenue.
In our non-traditional, or emerging domain names businesses,we are continuing to execute on our plan with three revenue streams from whichto drive growth. With respect to direct navigation revenue, our results for thethird quarter were somewhat disappointing primarily, as I have lamented in thepast, because our Google yields remained depressed.
As many of you know, in August of this year, we brought in asenior resource to head up that line of business and one of his first tasks wasto look at our existing suppliers to look at what was available across theindustry and to engage in a process to find a much healthier supplierrelationship. That process has concluded and we are very pleased with the choiceswe have made.
We believe these changes can have an immediate short-termimpact on our parking revenue, not only through the last month or two of thisyear but more importantly through the course of 2008 and beyond.
We have chosen to proceed with multiple suppliers and tohave more flexibility in our supplier relationships. This is a very dynamicindustry and changes are both rapid and difficult to predict, and we felt thatthis flexibility was critical to allow us to be in a position to take advantageof the best opportunities at the right times.
With respect to agency fees derived from premium names, thethird quarter was our first full quarter with this service in the marketplace.We now fully expect that this line of revenue would be growing.
We have said in the past that the important work for thesecond half of 2007 and through 2008 is that of driving adoption through ourchannel. We spent the quarter communicating the opportunity to our largercustomers and the feedback has been extremely positive.
We now have to work closely with our customers to help themroll out integration with premium names and to look for ways to make it easierfor them to integrate.
In our e-mail business, our new e-mail service is nowcomfortably in the market and we now have what I believe to be the best salesteam we have ever had in the history of Tucows. They are aggressively workingat building a pipeline and are starting to experience the first benefits ofthat work.
We always knew and have talked about that selling hostede-mail was a 120 to 180-day sales cycle and we are just now starting to comeout the back end of that cycle. We are making real progress in migrations fromour older e-mail and anti-spam systems to the new systems. This migrationserves two purposes that are of importance to investors.
First, of course, the new service provides a much betterexperience for all of our existing customers, and second, the migrations willallow us to significantly reduce our data center footprint.
For all of this year, we have had to carry the cost burdenof multiple systems. Moreover, the largest of these systems reside on oldhardware, which is extremely inefficient in its use of power and, as anyonefollowing Google and Microsoft knows, power has become the most importantoperating variable with respect to data centers.
We expect these migrations to be completed early in 2008 andwe then expect to experience benefits at the expense level.
Turning to our retail business, there are two things that Iwould like to note for the third quarter. First, we successfully integrated theoperating assets and customer base from the IYD transaction that closed inJuly. While we experienced the typical transaction costs that one wouldencounter in any transaction of this size, the integration went well and wassuccessful.
We believe the integration has set the stage for us to offeraffiliate and co-branding offerings, not only to our existing customer base butmore importantly, to an additional segment of the market that we have beenunable to reach previously.
Second, important progress has been made toward unifying aservice offering that right now is split across three separate brands due toour acquisitions. That unified brand will serve as a valuable learning ground.
In addition, the retail business will provide us with animmediate opportunity to both learn from and take advantage of our surnames andpremium name offerings.
The one significant disappointment in the quarter was thedecline in advertising revenues from the Tucows software libraries. Ourredesign has been well received by users. Customer engagement is up, and churnis down. However, the one place that has materially affected revenue is in themoney we earn from Google.
We believe that the yield problems that are beingexperienced industry-wide are part of that, but the majority of the decline isdue to the increased usability and navigability of the site, such that nowusers are not giving up in frustration and clicking on the Google links, eitherin content or search, but are instead finding what they are looking for.
That being said, these numbers are of concern to us and wehave decided to take a hard look at this business to determine the best way toproceed.
I would now like to turn the call over to Mike to review ourfinancial results in more detail. Mike.
Michael Cooperman
Thanks, Elliot. As Elliot discussed earlier, the thirdquarter was another in which we achieved positive cash flow from operations. Itwas also one in which our results were dampened by a number of factors,including the impact of the price reduction on wholesale domain names and thedeclining yields from our Google ad feeds, which as we indicated last quarter,has had a short-term impact on both our top and bottom lines.
Net revenue for the third quarter was $17.8 million, anincrease of 6% from $16.9 million for the corresponding quarter of last year.Net revenue from domain names and other Internet services increased by $1.2million, or 7% to $16.7 million from $15.6 million for the same quarter in2006.
Revenue from domain registrations increased 9% to $12.3million, from $11.3 million and accounted for 69% of total revenue compared to67% for the third quarter of last year.
While growth has been impacted by the price reduction in theshort-term, we do believe that we have better positioned this business forlonger term growth.
Revenue from other Internet services increased by 3% to $4.4million from $4.3 million for the third quarter of last year, and represented25% of total revenue, down marginally from 26% for the third quarter of lastyear.
Revenue from advertising and other content service sourcesfor the third quarter was $1.1 million compared to $1.3 million for the samequarter last year. As Elliot commented earlier, these results weredisappointing and were impacted by the declining yields from our Google adfeeds and, to a lesser extent, the decline in advertising revenue from theTucows software libraries.
Advertising and other revenue as a proportion of total revenueincreased to 6% from 8% for the same quarter last year.
Cost of revenues, including network cost for the thirdquarter, increased by 19% to $13.4 million from $11.2 million for the thirdquarter of last year, primarily as a result of higher costs associated with thelarge volume of domain name registrations and other Internet services of $1million.
As we have discussed in the past, we have also been steadilybuilding our own portfolio of names and I would like to point out to you thatcost of sales for the third quarter of this year also included 144,000 ofrecognized renewal costs for these names. From an accounting standpoint, wedeferred the renewal cost at the time of purchase and amortize it ratably overthe term of the renewal.
Cost of revenues also included an increase in network costsof $1 million. As Elliot mentioned, the bulk of the increase in network costsrelated to the additional cost burden we have had to carry with multiplesystems on our data centers. As we continue the process of migrating ourcustomers to our new e-mail platform, we will be able to reduce our overallfootprint at our data centers and the associated costs should decline fromcurrent levels.
Cost of domain names as a proportion of total cost ofrevenues, including network costs, were 69% compared to 72% for the samequarter of last year, while the cost of other Internet services as a proportionof costs of revenues was 8% compared to 10%.
Gross margin for the third quarter was 25% compared to 33%for the third quarter of last year and 36% for the second quarter of this year.The decrease in gross margin was the result of a combination of factors, themost important being the effect on network costs that carrying multipleplatforms have on our data center costs, the change in sales mix, increasedcosts associated with our portfolio of domain names, and the impact of theprice reduction on wholesale domain names.
Total operating expenses for the third quarter decreased by9% or $518,000 to $5.1 million, or 29% of net revenue, from $5.6 million, or33% of net revenue for the same quarter of last year.
Core operating expenses, which we define as those costsrelating to ongoing sales, marketing, development, and administrative costs,decreased by $497,000 to $4.7 million from $5.2 million for the third quarterof last year. The decrease was primarily the result of lower people costs as wecontinued to actively manage our cost structure.
Core operating expenses as a percentage of net revenuedecreased to 27% from 31% for the third quarter of last year.
Other operating expenses remained essentially flat comparedto the third quarter of last year at roughly $350,000. The result of increasesin other operating expenses being offset by a decrease of $398,000 in foreignexchange movements.
The decrease was essentially offset by three factors. First,as a result of our acquisition of IYD, we incurred transitional costs of$244,000 during the quarter, primarily related to transitioning portions oftheir platform to our systems.
Second, depreciation and amortization increased by $118,000,primarily as a result of the higher depreciation related to our new computerequipment and higher amortization, resulting from the IYD acquisition, as wellas the acquisitions we have made in prior years.
And third, our stock-based compensation charge increased by$15,000 when compared to the third quarter of last year.
Adjusted net income for the third quarter was $1.1 million,compared to $1.5 million for the third quarter of last year and included adividend of $531,000 that we received from Afilias, a company in which we holda 7% interest. I will note that we do not expect to
receive any additional dividends from Afilias this year.
Net loss for the quarter was $300,000, or less than $0.01 ashare, compared to net income of $1.9 million, or $0.03 a share for thecorresponding quarter of last year. When comparing profitability between thetwo periods, it should be noted that the third quarter of this year includedthe $244,000 transitional costs related to IYD that I mentioned earlier, andthe third quarter of last year included other income of $1.9 million related tothe contingent consideration associated with the sale in 2002 of patentsacquired through the reverse takeover of Infonautics in 2001 that were notrepeated.
Turning to the balance sheet, cash, short-term investments,and restricted cash at the end of the third quarter compared to the end of thethird quarter last year, increased by $2.4 million to $6.2 million from $3.8million.
Compared to the second quarter of this year, our cashposition was relatively unchanged. This result was due to our investing the$2.3 million of cash flow that we generated from operations, a partial paymentof the IYD acquisition. Of this amount, $1.1 million was placed in an escrowaccount to be held against certain performance contingencies being met by IYDby August 2008.
I would also like to note for you that during the quarter,we entered into a non-revolving reducing credit facility with the Bank ofMontreal for $9.6 million that is repayable over five years to partially fundthe acquisition of IYD.
Preferred revenue at the end of the third quarter grew to arecord $49.8 million, up 11% from $44.7 million at the end of the third quarterof fiscal 2006 and up 2% from $49 million at the end of the second quarter ofthis year.
Please note that going forward, the negative impact ondeferred revenue that we will experience from the price reduction on wholesaledomain names will be partially offset by the additional contribution todeferred revenue from the IYD acquisition.
In closing, as I have mentioned in the past, I would like toreiterate that our overriding goal for Tucows is to generate long-term growthfor the company. It is with this goal in mind that we have taken a number ofsteps in recent months that, while having an impact on our financial results inthe short-term, we believe strongly position us for future long-term growth.
I would now like to turn the call back to Elliot.
Elliot Noss
Thanks, Mike. While we experienced some challenges that havesoftened our growth in the short-term, when looking at the evolution of ourbusiness throughout 2007 and where we are right now, I can't help but be veryoptimistic about our future. We have a historical domain registration businessthat provides us with a good base of revenue, margin, and customerrelationships, and we have significant growth opportunities before us in ournon-traditional domain names and our hosted e-mail businesses.
As noted in today's press release, we now expect to generatebetween $8.5 million and $9 million this year in cash flow from operations.This is due to the softness in traditional domain names in the second quarter,the depressed advertising revenue I mentioned earlier, and the additional costsassociated with a more cautious approach to system migrations.
This is not what we had hoped. This business is, the Tucowsbusiness is and has historically been very predictable and very reliable. Webelieve this is still the case and that the future holds great promise.
With traditional domain names, we talked about some of thepositive indications we are seeing from our recent actions. I truly believethat this is the best that I have felt about the traditional domain namebusiness and our ability to make gains going forward since 2002 or 2003. It isthe case that we are starting to play offense again and doing so with a veryclear understanding as to how the traditional domain name business feeds thetwo high growth areas in the company.
With respect to non-traditional domains, we have onlyrecently been provided with the opportunity to start to engage additionalpotential sources of supply. Some of you may have noticed that one of ourpartners, NameMedia, filed for an IPO last year. Their filing providesinvestors with a better look and a deeper understanding of the business ofselling premium domain names. Investors will now be able to appreciate theopportunity and to think about how to get involved.
It is very important to note that while estimates are thatanywhere for one quarter to one-half of the dot-com name space, the mostlucrative name space in premium names, is held for resale but only a tinyfraction of those names are actually priced in a way that would allow them tobe sold as one would expect in an efficient market.
In fact, even in our current [permutation] of premium names,it effectively only deals with names in the $1,000 to $5,000 price range, thusmassive segments of this market are still to evolve and be developed.
And I repeat something that I have said before -- what theInternet is most effective at is bringing efficiency to inefficient markets.With this efficiency, every small business looking for a domain name, whichmeans every small business starting out, becomes a much more lucrativeopportunity for us and our resellers.
In terms of selling names from our portfolio, we are makingprogress with respect to pricing more and more of our portfolio so that it canbe sold through the premium name service.
Obviously we would rather get 100% of the sale from a namein our own portfolio than 10% or 20% of the sale from selling a third party'sname and we are getting a much better handle on the contents of our inventory.Where that distinction is especially important is in thinking about next year.
Through the course of 2008, as was the case in 2007, on amonthly basis we will be increasing our inventory of premium names in the rangeof thousands per month. What we will be formalizing through 2008 is a veryclear view and process around the rate at which we turn our inventory.
In summary there, we are very excited about theopportunities for non-traditional domain name revenues in 2008 and if 12 monthsago I could have seen where we are today, I would have been extremely pleased.In fact, I am very comfortable in saying where we are today has exceeded myexpectations for the year.
It's important to note here that the strategic decisions wemade to build our own inventory as opposed to monetizing on a monthly basisthrough auctions has proven to be the right choice.
With hosted e-mail, we believe the competitive landscape isfavorable and our view, which is that our hosted e-mail offering is the onethat best allows service providers to compete effectively with Google, Yahoo!,and Microsoft, while providing e-mail without advertising and with a high levelof customer service, is properly placed in the market.
This view is strongly validated by Yahoo!'s acquisition ofZimbra for $350 million. Anyone paying attention to what is being talked aboutin terms of Internet business these days would see so much about Facebook,about Google, and about the battle between those two that has clearly shaped upin just the last couple of weeks with Google's announcement of it's open socialstandards. What these companies are observing and responding to is asignificant validation of the way we view the world as it relates to theimportance of hosted e-mail to service providers.
The Internet continues to provide greater and greaterutility to its users and, at the same time, it continues to be more and morecomplex, meaning users have a great need for someone to help them.
It is still the case that the center of people's Internetworld is e-mail and that service providers are in the best position to deliverit integrated with the rest of users' Internet existence. All of this feedsdirectly into the potential for our hosted e-mail service and our surnameoffering to be big winners. We think that our place in the market and theassets at our disposal make us uniquely positioned to take advantage of it.
In closing, we have had to deal with some short-termoperational challenges. We believe we have identified them, have dealt with orare in the process of dealing with them, and we feel extremely confident in ourlong-term growth prospects. The momentum we are experiencing in premium namesis clear and we expect to start experiencing similar momentum in hosted e-mail.
We believe that both premium names and hosted e-mail are fantasticopportunities that we fully expect will reward investors in 2008.
With that, I would like to open the call to questions.Operator.
(Operator Instructions) Your first question comes from ThanosMoschopoulos of BMO Capital Markets. Please go ahead.
ThanosMoschopoulos - BMO Capital Markets
Good afternoon. You talked about how customer sign-ups wereup 15% year over year following the price reduction. What would it look like ona transaction basis?
Elliot Noss
You wouldn't see it there because customers would sign upand we wouldn't have parsed that for, you know, what other transactions thatthose new customers have done. That would just be a slice of the data wewouldn't have this early in terms of the results.
Thanos Moschopoulos -BMO Capital Markets
And the reduced pricing wouldn't necessarily drive -- itwouldn't change end customer transaction volumes because your partners wouldkeep pricing the same, [you would just get] the benefit, presumably?
Elliot Noss
Well, we do think that this may have been one of the thingsthat positively impacted on renewal rates. So in other words, the -- ourworking model is that some of our customers did choose to get a little moreaggressive on price and hopefully there lose less customers to some of thecompetition.
Thanos Moschopoulos -BMO Capital Markets
Okay, but in terms of actual transaction volumes, what didthat do year over year?
Elliot Noss
We'll dig that up for you.
Thanos Moschopoulos -BMO Capital Markets
Okay. I guess while you're digging that up, can youelaborate a bit further about the strategic changes you've made on the adbusiness as far as bringing on new suppliers? I mean, is it a situation wherebasically we can expect the yields to keep declining and you've managed toreduce the slope at which that occurs? Or do you think they might stabilizenow? Might there be actually some upside now that you've got some new partnerson board?
Elliot Noss
I want to make sure that I separate two things there. One isthe ad revenue around direct navigation and the other is the ad revenue aroundthe traditional Tucows.com software libraries.
When we're talking about new suppliers, that's as it relatesto direct navigation. So there, one of the things that we were not able to takeadvantage of fully in our previous relationship was the ability to optimize.And we will immediately -- and we have very, very early returns and they arequite positive. So we are now seeing click-throughs increase materially andthat drives revenue.
We'll convert that into yield data again probably atmonth-end. The new relationship started in November, but when I'm talking aboutthose depressed Google yields, those are something we are seeing across theindustry with smart pricing and quality scores, and you may have heard thatdiscussed in some other forums.
For us, as it relates to the direct navigation business, Iwant to make sure that I separate these two things, we think that the newsupplier relationships will lead to a near-immediate turnaround and a return togrowth.
With respect to the historical Tucows.com business, wereally need to take a step back and figure out what next steps to take.
Again, I'm very encouraged on the direct navigation side.
Thanos Moschopoulos -BMO Capital Markets
Okay, and presumably -- so as far as the existing Tucowsbusiness, that the yields wouldn't go up there under new suppliers, just as afunction of how that operates?
Elliot Noss
No, because when we're looking for new suppliers, that's inthe direct navigation business. Remember that what those people are experts atis at optimizing a parked page, a direct navigation page. When you are dealingwith something on the content side, that's the straight AdSense for search orAdSense for content feed. It's just a typical, kind of ads by Google box yousee on a page.
Thanos Moschopoulos -BMO Capital Markets
I guess it's kind of early to say, given that it happenedfairly recently, but what impacts if any are you seeing from the recent increasein ICANN fees?
Elliot Noss
Sorry, could you repeat it?
Thanos Moschopoulos -BMO Capital Markets
The recent increase in the registrar fees, what impact ifany are you seeing as far as the transaction volumes and so forth? Has that hadan impact on the industry?
Elliot Noss
You know, I'll be very interested. I'll be with a bunch ofpeople in the industry next week at an event. We got out -- from ourperspective, we got out in front of that. We insulated ourselves with both thechange -- with both the drop in price and the change in pricing methodology, sofor us, thankfully that was business as usual. Now, you know that we did kindof pay the price for that and we've talked lots about that, but we do thinkthat we are now insulated from that going forward.
I'll be very interested to hear next week what others in theindustry are saying.
Transactions, Q306 about 1.2 million; Q307, up to 1.4million.
Thanos Moschopoulos -BMO Capital Markets
Okay. And I guess turning to something topical, the Canadiandollar, can you talk about -- remind us of your current forward position andthen I guess heading into '08, how are you going to deal with the big increasewe've had in the currency?
Elliot Noss
We were hedged -- we are hedged through the end of '07.That's a hedge we put in place in November of '06, and so it was veryfortuitous. I think us, like a lot of Canadian exporters, are going naked into'07. I think that what that's led us to do -- you know, this isn't news andwe've seen this coming, obviously, for the last number of months, and so we'vehad to be a lot smarter in the way we think about op-ex. We think that it's ledto a lot of really good thinking and we don't think it's going to stand in theway of achieving real growth next year. We're naked.
Thanos Moschopoulos -BMO Capital Markets
Okay. But I guess -- does that mean that heading into nextyear, are you going to have to do some cost rationalization or just kind offocus on growing while maintaining a very tight leash on your existing costs?
Elliot Noss
Well, I think that we -- we have already thought throughthose issues and I think that if you look at our op-ex lines, they are prettyimpressive in terms of cost control. We think that that is not only going tocontinue but get better through next year.
Thanos Moschopoulos -BMO Capital Markets
Okay. Now, Google a few months back entered your space asfar as providing services to service providers. Have you been seeing them atall or are they not really pursuing it in a big way from your perspective?
Elliot Noss
We have been seeing little tiny bits around the margins. Sowe have seen them in one or two customers poking at it, but frankly in the lastthree or four months, we haven't seen much. We really think that their big pushthere will be at enterprise. Believe me, we are keeping our ear to the groundand our eyes peeled, but at the end of the day, they would be much moreeffective working through somebody like us than against us.
Thanos Moschopoulos -BMO Capital Markets
Okay, and can you dig a bit more deeply on the e-mailbusiness? You talked about how there are long sales cycles there, you are nowgetting towards the tail end of it. As you start to close business there, is itgoing to be a slow and steady ramp or is it a situation where you have somelarge deals in the pipe and it might be sort of lumpy growth, a step functionas you sign some of these?
Elliot Noss
There's always a couple of large opportunities in the pipe,but we certainly are planning around slow and steady growth. We've started towrite some business now. We've started to deal with incoming new customers.There's a new spring in the step around the sales group.
I think that they have been, as I've talked in the past, toa great extent parked in the garage for a long period of time and they arequite happy to be out there hitting it again. And it shows.
It is just -- I mean, it's a pleasure to see and so I thinkwe will get back to growth and we fully expect '08 to be a very good year forgrowth in hosted e-mail.
Thanos Moschopoulos -BMO Capital Markets
Okay. All right. Thank you. I'll pass the line.
Your next question comes from Steven Wolfe of PlatinumPartners. Please go ahead.
Steven Wolfe -Platinum Partners
I wanted to get your thoughts on some of the new businessopportunities, certainly e-mail and premium names being the first real quarterthat you've seen some of that business now. Can you give us a little bit ofinsight as to qualitatively, what you saw in the quarter and what your thoughtsare for the next couple of quarters in that business?
Elliot Noss
Sure, and again, I think e-mail, I'd repeat what I just saidwhere the guys are out pitching again. They have started to write business,bringing home some meat back to the cave and I think that's what sales guyslove to do, especially good ones. And you know, they are much happier becauseof it and of course, we are too, so we are feeling like we are on our waythere.
In terms of premium names, it's really -- it's exceeding expectations.We are seeing all phases of this market evolve and evolve rapidly. Steven, Iknow you would like to dig into detail. I'd really encourage you to go checkout the NameMedia filing. There's a lot of juicy information in there and it'sreally the first time publicly that people have been able to see some of thatinformation.
There's just great little stories on a weekly basis.Additions to our inventory, this quarter we for the first time sold some of ourown names through the premium marketplace. We are working with customers aroundtheir integrations there and around driving look-ups. There's just a ton oflearning going on there. It's become a very real part of this business and onethat's really sprung from whole cloth if you go back to 2006.
Steven Wolfe -Platinum Partners
Certainly asset wise, I mean, you have 8 million domainnames under management. How does that compare with some of the other folks inthe industry?
Elliot Noss
There we're -- I think we're still slightly in fourth, maybestarting to chase third there, but what's important is that the folks that arebigger than us there generally, and I think it's true for most of the top sixor eight registrars, they have chosen to monetize their expiry stream throughauctions.
Now, that choice will always make you more money in theshort run because what you have is essentially wholesalers, people likeNameMedia, looking through those options for buying opportunities that they canthen sell at retail. In other words, sell to a small business who is looking tostart up and get a domain name.
We are now seeing the opportunities around selling to someof those business start-ups directly and it's -- the difference between sellingat wholesale and selling at retail is three and four and sometimes 10 times. Sowe think that the asset that we have, as far as registrars go, is unique, atleast in terms of the way that people talk about their policies.
Some people may have been doing some things surreptitiouslythat we wouldn't know about and maybe their customers don't know about, but tothe best of our knowledge, we're the only ones who have built up this asset.
Steven Wolfe -Platinum Partners
All right, well, great.
Elliot Noss
I should note, remember that's on top of the asset containedin our surname portfolio and in the premium names that we picked up in theNetIdentity transaction.
Steven Wolfe -Platinum Partners
Understood. Well, great. Thanks for the call.
(Operator Instructions) Mr. Noss, there are no furtherquestions at this time. Please continue.
Elliot Noss
Thank you, Operator and I look forward to speaking with allof you again on our next call.
Ladies and gentlemen, this concludes the conference call fortoday. Thank you for participating. Please disconnect your lines.
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After UFC Vegas, UFC welterweight Alberto Mina spoke about defeating Mike Pyle at UFC Fight Night 90, how his camps have improved, why he rejects any label as a legend killer and more. Subscribe: ht watch video >>
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Arrest made in Grand Hotel theftsFebruary 20,2013Woman charged
in hotel burglaries
KILLINGTON A Bridgewater woman has been charged with stealing from rooms at the Killington Grand Hotel.
Vermont State Police were called to the hotel, located at the base of the Killington ski resort, Monday night for a reported theft.
An investigation led to Hazel L. Guetti, 24, who police said was found in possession of items taken from several rooms.
Guetti was cited to appear in Rutland criminal court in May to face charges of burglary and petty larceny.MORE IN This Just InLUDLOW Black River took an early 1-0 lead on a long skipping shot from Drew Kubisek. Full StoryJAY A federal judge in Florida has approved a $13. Full StoryDunkin Donuts worker charged
MANCHESTER A Pawlet man is facing a felony charge of... Full Story
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On Monday night, the Lehigh Mountain Hawks men's basketball team beat the Fairfield University Stags in the consolation round of the NIT Season Tipoff at Stabler Arena in their home opener.
Seniors CJ McCollum and Gabe Knutson proved to be the powerhouses of the night as pre-season All American, McCollum, racked up 35 points and Knutson took home 17 points.
Keeping the score nearly head to head the entire first period, the first key play of the game included a three pointer made by McCollum and assisted by sophomore Corey Schaefer, which propelled the Hawks to a 28-20 lead at the 6:51 mark of the first period.
Knutson hit an impressive three-pointer with less than a minute left in the first half to bring the score to 40-30 at halftime. Colin Nickerson made an important layup for Fairfield, assisted by Desmond Wade, as it allowed the Stags to nearly catch up to the Hawks with a 54-44 score at the 13:31 mark in the second period.
A layup by Sidibie Amadou of Fairfield secured a mere 9 point difference of 66-57 between the teams with 7:14 left in the game. However, it was a three-pointer by Schaefer at the 1:51 mark that propelled the Hawks toward a likely win.
Freshman Justin Goldsborough's layup, assisted by senior Cory Goodman, with only thirty seconds left in the game secured the Hawks an 82-67 win over Fairfield.
The Hawks reproved themselves Monday after an impressive 89-60 win against Robert Morris last Monday night and then suffering a heartbreaking 78-53 loss to Pittsburgh last Tuesday. Lehigh and Fairfield hadn't matched up since the 1987-88 season where Lehigh prevailed with a 100-77 win.
Men's basketball will compete at Sacred Heart University against the Pioneers on Nov. 25 at 2 p.m.
Story by Brown and White sports writer Jane Mousseau, '16.


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The 2012 draft class doesn't possess nearly as much elite talent as its predecessor. The high school crop, specifically, pales in comparison to previous classes that produced such talents as RHP Jameson Taillon, SS Manny Machado, OF Bubba Starling and RHP Dylan Bundy.
What the class lacks in superstars, it more than makes up for in depth. Trying to find the top 15 players available from the high school class is always tough, especially this early, but despite that excuse, there are potentially 50 players who could be argued for (or against) as top 10 players.
The strength of the high school crop is no doubt the pitching. RHP Lucas Giolito has as high a ceiling as Taillon, and has actually been compared favorably to the former No. 2 overall pick. Two California lefties, Hunter Virant and Max Fried, both offer as much potential as any lefty to come along in the past few years.
The position player depth, while short on elite talent, still offers a few gems, including OF Byron Buxton, who has been frequently compared to the Upton brothers, both of whom were drafted inside the top three. OF David Dahl will challenge him as the top overall position player drafted.
These rankings will no doubt shift, or even change drastically over the next six months, but as of right now, these are the top 15 players to keep an eye on heading into the 2012 season.


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(WBNG Binghamton) Here's a look back at our top 5 plays of the week.
Top Stories in Top Plays
Top Plays of the Week
June 24, 2013 Updated Jan 8, 2014 at 12:20 PM EDT
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Wet, but not anywhere as windy (gales) as yesterday, thank goodness. No damage done. About 10C outside at the mo.
The garden looks very 'lush' now, still the odd late Narcissus out, but after the dry spell lots of my spring bulbs went over very quickly. My Tulip pots have perked up & the 'rogue' ones in various borders are all up & out as usual. I dont ever try to comp[ost old tulip bulbs now!!
I have made a note of what should be starting as it's so late this yr. So easy to forget. J.