One interesting revelation is that both Hewlett-Packard and Acer, the top two vendors by volume in the Gartner survey, saw their shipments decline year-on-year in a period where the rest of the industry was seeing growth, albeit slower than had been previously expected.

Hewlett-Packard maintained its market lead, with a share of about 18 percent worldwide, and 29 percent in the U.S. Acer came in second. Both saw their unit volumes decline. For HP, that translated to a decline of more than 200,000 units in fourth-quarter PC sales, or a little more than 1 percent. For Acer, which had hitched its wagon to the netbook craze a few years ago, it translated to a decline of nearly 2 percent, or more than 222,000 units. Dell, Lenovo and Toshiba all saw their shipments grow, with Lenovo leading the pack, growing a healthy 21 percent.

Gartner says that worldwide shipments totaled 93.5 million units in the fourth quarter, which amounted to growth of only 3 percent over the same period a year earlier, falling short of the 5 percent growth it had previously forecast. Gartner Analyst Mikako Kitagawa blames the iPad and other media tablets for the slackening growth. She says the industry’s one bright spot, oddly enough, is in enterprise, where companies are upgrading the machines they issue their employees. For the full year, the worldwide PC industry recovered from the recession, growing nearly 14 percent to 308 million units.

Apple remained in fifth place in the U.S. with a share of market just shy of 10 percent, and less than a percentage point behind Toshiba. Notably, this figure doesn’t include iPads, which hit a combined 7.5 million units in Apple’s third and fourth fiscal quarters, both of which ended before the holiday season. (Apple will reports earnings for its first fiscal quarter, which includes the holiday season, next week.)

IDC’s survey found the same trend, but it differed from the Gartner survey on a few key points. IDC put Dell in second place, behind HP and ahead of Acer in the worldwide market share race. I’ll attribute this to differences in methodology, since Gartner and IDC differ a little in how they count.

Another interesting note is that IDC paints a more negative picture of Acer, pegging its decline in fourth-quarter sales at 15 percent from 2009 to 2010. I asked IDC analyst Loren Loverde about the difference in IDC’s results versus Gartner’s, and he said part of it comes from differences in methodology, but also from the fact that Acer is closely held and so is a tricky company to track, and the data it does disclose isn’t as detailed as the other companies’.

But Loverde also says decline, whether 2 percent or 15 percent, reflects a stark business reality for Acer. The road to PC growth through mini-notebooks and geographic expansion is closed. It was a good strategy while it lasted.

That’s as close as the Seattle-based e-commerce company has come to revealing its sales numbers–ever.

In the past, it’s spoken in broad strokes, claiming that the device was “the fastest selling ever” or that the “Kindle is far and away our bestselling gift item.”

CEO Jeff Bezos also predicted that sales of electronic books will surpass paperback sales by next summer or fall, and sometime after that they will surpass the combination of paperback and hardcover sales.

Truth be told, that’s likely the more important figure for Amazon, rather than hardware sales. With an app virtually on every portable device, including the iPad and several smartphones, its electronic book distribution reaches way beyond the number of Kindles in the wild.

However, with increasing competition from Apple’s iPad and other devices, like the Barnes & Noble’s Nook, there’s still plenty of competition.

For context, the Kindle team says the number of Kindles sold this holiday season is more than the number sold in all of 2009. The sales figures were first mentioned and reported by Daring Fireball.

In September, Barclays’ Douglas Anmuth guessed that Amazon will sell about five million Kindles this year with the help of the latest redesign and more appealing $139 to $189 price points.

(Of course, Twitter hasn’t revealed the secret formulas that helped it aggregate, tabulate and rank these topics.)

In the Twitterverse, after the BP oil spill and soccer, the next most popular topic of conversation in 2010 was the movie “Inception,” followed by the Haiti earthquake and the vuvuzela. The iPad, Android, Justin Bieber, Harry Potter and Pulpo Paul round out the top 10. It’s an odd list, indeed.

The person most discussed on Twitter in 2010 was obviously he of the dedicated servers, Mr. Bieber. (It’s somewhat shocking that world events and tech gadgets were able to keep the teen phenom out of the overall top spot.) Beating out her royal highness Lady Gaga, the No. 2 person on Twitter was Brazilian president-elect Dilma Rousseff (pictured).

Here’s the full 2010 list, courtesy of Twitter, followed by 2009′s list for comparison.

2010 Twitter Trends

Overall Top Trends:
1. Gulf Oil Spill
2. FIFA World Cup
3. Inception
4. Haiti Earthquake
5. Vuvuzela
6. Apple iPad
7. Google Android
8. Justin Bieber
9. Harry Potter and the Deathly Hallows
10. Pulpo Paul

News Events:
1. Gulf Oil Spill
2. Haiti Earthquake
3. Pakistan Floods
4. Koreas Conflict
5. Chilean Miners Rescue

People:
1. Justin Bieber
2. Dilma Rousseff
3. Lady Gaga
4. Julian Assange
5. Mel Gibson

Movies:
1. Inception
2. Harry Potter and the Deathly Hallows
3. Scott Pilgrim vs. the World
4. Despicable Me
5. Karate Kid

Television:
1. MTV Video Music Awards
2. Pretty Little Liars
3. True Blood
4. Walking Dead
5. Grammy Awards

Technology:
1. Apple iPad
2. Google Android
3. Apple iOS
4. Apple iPhone
5. Call of Duty: Black Ops

World Cup:
1. FIFA World Cup
2. Vuvuzela
3. Pulpo Paul
4. Dunga
5. Diego Maradona

Sports:
1. LeBron James
2. Wimbledon
3. Manchester United
4. Brock Lesnar
5. Celtics

Hash Tags:
1. #rememberwhen
2. #slapyourself
3. #confessiontime (hash tag started by Usher)
4. #thingsimiss
5. #ohjustlikeme

2009 Twitter Trends

News Events:
1. #iranelection
2. Swine Flu
3. Gaza
4. Iran
5. Tehran
6. #swineflu
7. AIG
8. #uksnow
9. Earth Hour
10. #inaug09

People:
1. Michael Jackson
2. Susan Boyle
3. Adam Lambert
4. Kobe (Bryant)
5. Chris Brown
6. Chuck Norris
7. Joe Wilson
8. Tiger Woods
9. Christian Bale
10. A-Rod (Alex Rodriguez)

Movies:
1. Harry Potter
2. New Moon
3. District 9
4. Paranormal Activity
5. Star Trek
6. True Blood
7. Transformers 2
8. Watchmen
9. Slumdog Millionaire
10. G.I. Joe

TV Shows:
1. American Idol
2. Glee
3. Teen Choice Awards
4. SNL (Saturday Night Live)
5. Dollhouse
6. Grey’s Anatomy
7. VMAS (Video Music Awards)
8. #bsg (Battlestar Galatica)
9. BET Awards
10. Lost

Sports (Teams, Events, Leagues):
1. Super Bowl
2. Lakers
3. Wimbledon
4. Cavs (Cleveland Cavaliers)
5. Superbowl
6. Chelsea
7. NFL
8. UFC 100
9. Yankees
10. Liverpool

Technology:
1. Google Wave
2. Snow Leopard
3. Tweetdeck
4. Windows 7
5. CES
6. Palm Pre
7. Google Latitude
8. #E3
9. #amazonfail
10. Macworld

Hash Tags:
1. #musicmonday
2. #iranelection
3. #sxsw
4. #swineflu
5. #nevertrust
6. #mm
7. #rememberwhen
8. #3drunkwords
9. #unacceptable
10. #iwish

Hola Sofia Vergara!

In an interesting brand extension, the popular celebrity and entertainment site Wonderwall has launched a version aimed at the U.S. Hispanic market called Wonderwall Latino.

The main Wonderwall site, which is a partnership between Hollywood production company BermanBraun and Microsoft’s MSN portal that launched in early 2009, now has 11.3 million unique users and 337 million page views a month.

That site is getting a design overhaul, with new features including voting buttons, a dedicated video page and a buzz stream with breaking news and tweets, as well as apps for the Apple iPhone and IPod Touch.

According to an MSN blog on the Wonderwall extension, “BermanBraun will spearhead the design, programming, and operations of the digital brand. MSN will provide unique content and lead the advertising efforts in partnership with Microsoft and BermanBraun.”

BermanBraun also recently debuted a political site called BLTWY with MSNBC.com.

“Apple is effectively building a recurring revenue stream, where iPhone users pay on average $200 year to stay current with the latest phone,” Munster wrote in a note to clients this morning. “While its true that iPhone 4 is a more significant feature upgrade compared to the 3GS, and we expect this upgrade rate to decline next year, Apple has in three years built brand loyalty in the phone market that compels users to upgrade to the latest version and wait in line for one to six hours to pick up their iPhone.”

And Apple (AAPL) is not the sole beneficiary of that loyalty. Its carrier partners, particularly those with iPhone-exclusivity deals, are benefiting as well, though the upside seems to decline with every new launch. Munster says 16 percent of the new U.S. iPhone buyers he surveyed this year were switching carriers to AT&T (T), down significantly from 28 percent last year. This suggests two things:

• Most people willing to leave another carrier specifically to get the iPhone have already done so.
• Apple needs another carrier partner in the U.S. to further maximize iPhone sales.

The latter point is, of course, obvious. As I’ve noted here before, adding a second U.S. carrier, like Verizon (VZ), would essentially double Apple’s addressable consumer base. As recently as last week, analysts were predicting such a move would spike iPhone sales by nine million in 2011. Given this and the new switcher metric Munster cited today, I think it’s pretty clear where we’re headed.

So, how many iPhones is the analyst calling for Apple to sell this weekend?

“While we think Apple will sell between 1.0m to 1.5m iPhones in the first three days (including preorders), the actual number is largely irrelevant,” Munster wrote. “Apple is tapping into the global consumer spending sweet spot, mobile, and as a result iPhone numbers are going higher in the coming years.”

Click on table to enlarge:

Of course, Apple (AAPL) did just that, hitting its 10-million objective by the end of its 2008 September quarter.

And now Microsoft (MSFT) claims it will exceed Apple’s iPhone goal three times over with the launch of Windows Phone 7. According to a Microsoft presentation made at ReMIX France and spotted by MobileTech World, Redmond hopes to sell 30 million Windows Phone 7 devices by the end of 2011. And it cites some IDC data to back that goal.

Now, during his Consumer Electronics Show keynote in 2009, Microsoft CEO Steve Ballmer claimed sales of 20 million Windows Mobile devices. “We have delivered 11 different mobile phones that have each sold a million units each, and in the past year,” Ballmer said. “We’ve brought to market over 30 new Windows Mobile phones, or more than any other mobile platform in the market…and our partners have sold more than 20 million Windows Phones in the past 12 months.”

So perhaps it’s not unreasonable to think the company could sell 30 million devices running Windows Phone 7, which seems a far, far more compelling operating system than its predecessor.

That said, there’s one very important point to make here: The IDC data on which Microsoft bases its claims include all versions of the Windows Mobile OS, not just Windows Phone 7.

In other words, the IDC data do not support Microsoft’s claims. “The figures cited include both Windows Phone 7 and Windows Mobile 6.x,” IDC told me. “To say that they are purely Windows Phone 7 units is a misnomer; it’s not an accurate representation of our data.” The research house added that the slide at issue here wasn’t created or approved by IDC.

That’s unfortunate, because Microsoft’s slide very clearly reads, “30 Million Windows 7 Devices” and the bar graph that’s featured on it reads, “Prévisions IDC”–French for “IDC Forecasts.”

A bit of a cock-up here, then. Though there is one bit of good news: Microsoft got that 30 million number wrong too. According to IDC, the real number is 32 million–and that’s for 2011 sales of devices running all versions of Windows Mobile OS. And, as Mary Jo Foley notes over at ZDnet, “… who in his/her right mind is still going to buy a WM 6.x phone (which is not backward-compatible with WP7) as of this fall?”

UPDATE: Here’s Microsoft’s comment on the matter:

At the reMix conference in Paris, Microsoft presented a slide projecting the number of Windows Phone 7 phones to be sold in 2011. This slide was inaccurate, and intended to represent an analyst’s assessment of the market opportunity. We have not provided any sales forecasts for Windows Phone. Microsoft is introducing a fundamentally new design and experience with Windows Phone 7 in an effort to reposition our mobile business for the long-term.”

[Image Credit: MobileTech World]

$54 billion.

This according to the search sovereign itself in a paper released today quantifying its economic impact on the country, state by state.

In California, the company, which reported $23.7 billion in revenue last year, claims responsibility for more than $14 billion of economic activity, and in New York, $6.3 billion. These figures were calculated by adding the profit generated by businesses that use Google AdWords, the monies Google paid out to AdSense publishers and the in-kind grants the company doles out to nonprofits in each state.

“We conservatively estimate that for every $1 a business spends on AdWords, they receive an average of $8 in profit through Google Search and AdWords,” the company said in its report.

Which is something to think about–particularly for federal regulators concerned that Google’s growing market power is becoming anticompetitive. And that, I imagine, is the whole point of this exercise. What better way to counter perceptions that Google (GOOG) merits antitrust scrutiny than to highlight its positive effect on the national economy?

Pick your data point:

The Interactive Advertising Bureau says U.S. spending on Web ads hit $5.9 billion in the first quarter of 2010. That’s a record for the first quarter of the year, but it’s a relatively modest 7.5 percent increase over a very crummy comparison in 2009.

And bear in mind that the IAB’s data include search spending, which means that the spike is in large part a reflection of Google’s (GOOG) health.

Want a bigger number? Try comScore, which says that the volume of display ads, i.e., the kind you might see on this page, shot up 15 percent in the last year. But while comScore (SCOR) says total spending on display ads hit $2.7 billion for the quarter and that the average CPM (cost per thousand impressions) hit $2.48, it isn’t reporting how those numbers compare to last year’s results.

ComScore spokesman Andrew Lipsman says his company isn’t putting out comparative numbers because it has changed its reporting methodology, so it doesn’t have apple-to-apples data. But he allowed that overall spending, and prices, have at least increased “modestly” in the last year.

So that’s not-bad news for display giants like Yahoo (YHOO) and AOL (AOL). And most definitely not for Facebook, which is now selling more ad impressions than any other Web publisher in the U.S.

And so this morning, the handset maker announced another sweeping overhaul of its management structure, its second reorganization in less than a year. This time around, Nokia (NOK) is dividing its Devices and Services business into three units.

Mobile Solutions (smartphones and services), will be headed by Anssi Vanjoki; Mobile Phones (low-end handsets) by Mary McDowell and Markets (sales, marketing and distribution) by Niklas Savander. Solutions will handle smartphones and services; Mobile will oversee Nokia’s low-end phones and Markets will take care of sales and marketing, supply chains and sourcing. (Click on chart below to expand.)

Another significant rejiggering of Nokia’s management. Interestingly, there appears to be no place in it for former Chief Financial Officer Rick Simonson, who was tapped to run the company’s mobile phone business as part of its last restructuring seven months ago. Remember, it was Simonson who heralded Nokia’s recovery in smartphones.

“Yes, we have lost ground in the smartphone space over the past 18 months, but the decline has stopped and stablised in the second and third quarters of 2009,” he told India’s Economic Times in January.

“The New Year will see [our] recovery in smartphones….By 2011, our efforts will start producing results, as we will be at par with Apple and RIM in smartphones,” Simonson added. “Not only [will] we draw level with them, we will also win the war because, in addition to e-mail, we will be adding content, chat, music, entertainment and several other features, which will soon become very critical for success of any company in this space.”

Pulling that off evidently wasn’t quite so easy as Simonson or Nokia expected.

In any event, Nokia believes it has things dialed in now. “In addition to extending our leadership in mobile phones, we are decisively moving to respond faster to growth opportunities we expect in smartphones and mobile computers,” CEO Olli-Pekka Kallasvuo said in a statement. “Nokia’s new organisational structure is designed to speed up execution and accelerate innovation.”

In theory. But in practice? Well, we’ll have to see how things play out. The company’s last organizational shakeup was intended to do exactly the same thing, and as far as I can tell, didn’t substantially improve Nokia’s position in anything.

A spectacular gain, which far outpaced the 21.7 percent growth of the broader mobile market. And the fact that it follows a 38 percent surge in the fourth quarter, historically the strongest quarter of the year, makes it all the more impressive.

So which smartphone manufacturers benefited most from this spike in growth? None more than Apple (AAPL). The company saw sales of its iPhone rise 131.6 percent year-over-year for a 16.1 percent share of the global smartphone market. Motorola (MOT) and HTC, too, experienced dramatic increases in sales. Motorola’s rose 91.7 percent for a market share of 4.2 percent; HTC’s rose 73.3 percent for a 4.8 percent share (see table below; click to enlarge).

Still, the market leaders remained the same: A 56.9 percent surge in sales gave Nokia (NOK) the top spot in the market with a 39.3 percent share and the 45.2 percent increase Research in Motion (RIMM) enjoyed landed it in the number two spot with a 19.4 percent share.

Nielsen SoundScan says the drop was either one percent or .09 percent, depending on how you count, so this isn’t the bottom falling out. But it does look like a peak, and it has been in the works for some time.

Earlier this year, Warner Music Group (WMG) pointed out that it was seeing its digital sales slow and argued that one reason was because the industry had raised prices on most of its songs at Apple’s (AAPL) iTunes store in 2009.

That thinking is now pervasive across the industry, Billboard notes: “While consumers will still buy hit songs for $1.29, it seems that catalog tracks priced at that level are not selling as well as they were at 99 cents.”

But you could also make the case that digital tracks were going to decline anyway and that the industry is better off squeezing every penny it can.

And if you want to try to find a silver lining here, you could argue that since song sales are slipping, there’s no reason for the industry not to support rental/subscription models like Spotify, Rhapsody and MOG by cutting their licensing fees. But I wouldn’t bet on that happening soon.

Online ads bumped up 2.6 percent in the last quarter of 2009, according to the Interactive Advertising Bureau. That’s much less than anecdotal reports from some publishers would lead you to believe. On the other hand, Q4 was up 14 percent compared with Q3, so that gives you an idea of where things are going.

And this graph is particularly instructive. Note the sickening drops in the last two years, and the hopeful up-slope (click to enlarge):

Bear in mind that the IAB’s numbers are for all Web advertising. Which is to say, they’re in large part a reflection of Google’s (GOOG) performance, since search accounts for nearly half of the IAB total.

You can read the full report below, or check out a press release summary here.

IAB-Ad-Revenue-Full-Year-2009

The joint-venture video site–owned by News Corp.’s (NWS) Fox, GE’s (GE) NBC, Disney’s (DIS) ABC and Providence Equity Partners–hasn’t uttered a peep about its finances until this week. But now Hulu wants the world to know it is making a profit and that ad sales are booming.

Hulu says it generated “over” $100 million in revenue last year and turned a profit in the last quarter of 2009 and the first quarter of 2010. The company says it will pass the $100 million figure by the middle of this year.

That revenue total is a gross number, so you can subtract more than half the amount from the top. That’s because Hulu gives anywhere from 50 percent to 70 percent of all ad sales to its content partners, who supply its programming. And bear in mind that the company is footing the bill for at least a billion video streams a month.

But I double-checked with the company, and when it says “profitable,” it means “profitable,” as in net income after all expenses, taxes, depreciation, etc.

So even if the number isn’t huge, a profit is well worth bragging about, because I can’t think of another Web video company that has claimed one so far. And that includes Google’s (GOOG) YouTube, for the time being.

What put Hulu over the hump? Getting CEO Jason Kilar to say anything of interest about his company is pretty much a futile exercise, but I tried anyway, and got this response: “We’re a distribution business. And a lot of that is a function of how you manage your business, and getting scale, and we’ve been very fortunate to achieve both.”

And that’s about as candid as Kilar gets in public.

The downside for Kilar is that his network owners are still not entirely comfortable with the company’s model, and are worried that all the free programming Hulu offers cuts into existing businesses. Hence, the push for a subscription plan, which, as I reported in February, will include an app for Apple’s (AAPL) iPad. More on that later.

That soft January 2009 growth rate comp helped January 2010 Mac sales grow an astonishing 36 percent year over year, Piper Jaffray analyst Gene Munster observes in a research brief this morning. It’s likely, then, that an even softer February 2009 growth rate comp will do the same for February 2010 (see table below; click to enlarge).

“The month of Feb-09 was -16% y/y, the softest Mac comp we’ve seen since we began tracking the data 5 years ago,” Munster writes. “We expect the strong y/y growth in NPD data that we saw in Jan. to continue in the month of Feb.”

Munster continues to expect Mac sales ranging from 2.6 million to 2.8 million in first quarter of calendar 2010. That’s an 18 percent to 26 percent increase over the same period in 2009, which was down one percent year-over-year.

The resulting demand for NAND flash will be “insatiable,” says iSuppli analyst Michael Yang. And supplies for the year will likely be strained. iSuppli figures that in 2010, iPhone shipments will reach 33 million units, up from 25.1 million in 2009–each with an average of 35.2 gigabytes of NAND.

That’s a hell of a lot of flash. Add to that the memory requirements of Apple’s iPod line and its new iPad slate and, well, you can see where things are going (see chart below; click to enlarge). Says Yang: “With the iPhone already the largest application for NAND, this huge growth is likely to lead to some periods of under-supply for the year.”

That’s not likely to be a problem for Apple (AAPL), which typically inks long-term supply agreements with its flash suppliers to ensure that its needs are met. Recall that the company boasted of a half-billion dollar flash memory deal with Toshiba last July.

“We did a long-term supply agreement with Toshiba,” Apple COO Tim Cook explained at the time. “As a part of that, as part of the terms and conditions, we paid them $500 million as a pre-pay earlier in the quarter. You know, we view Flash as a very key component for us because as you know we use it in so much on so many of our products and also we are a reasonable percentage of the user of Flash on a worldwide basis.”

But an undersupply of flash will almost certainly cause difficulties for other consumer electronics companies, which may be forced to grapple with part shortages and price increases across the entire NAND flash market.

That’s an impressive spike and one that continues a three-month streak of gains that began last November after a worrisome period of stagnation between September and October (click on chart and table below to enlarge).

Hard to believe that comScore’s measurements for January 2009 showed Twitter.com with an estimated six million visitors. With 67.5 million more just a year later, the site’s annual growth rate is a jaw-dropping 1,107 percent.

[Image Credits: comScore, Scarletbits]

Today’s example: Publicis, the giant French ad holding company. Publicis said its organic growth–that’s revenue after factoring out acquisitions like Razorfish, which it picked up in a fire sale from Microsoft (MSFT), etc.–declined by 5.4 percent, which is better than the 7.4 percent drop it posted in Q3. But this still means the company is shrinking, and that’s compared with dismal results from a year ago.

Publicis now says it expects to actually grow this year, so that’s good. But it’s not projecting anything substantial for another year.

“We have not yet come out of the crisis. We are in the process of getting out of it. One can still expect a few hurdles along the way, but the worst is over,” says CEO Maurice Levy.

Let’s see if the paper’s executives can turn that around during their earnings call. We’ll also be looking for any updates the Times can provide on its pay wall plans, and, of course, its role in the launch of the Apple iPad.

UPDATE: As I noted below, though the New York Times (NYT) was a featured partner at the launch of Apple’s (AAPL) iPad, even sending a small team to Cupertino to create an app a few weeks before the event, there was zero discussion about iPads today.

CEO Janet Robinson made a generalized comment about the growth of the Times’s mobile distribution, but that was it. And not a single analyst showed any interest in this stuff–a good reminder that neither the Times nor Wall Street expects the iPad to be material to the company’s business for quite some time.

Liveblog

On the call: CEO Janet Robinson, CFO Jim Follo, Times Media Group boss Scott Heekin-Canedy, and Digital boss Martin Nisenholtz

In a preamble, CEO Robinson highlights cost-cutting, balance sheet repair, and asset sales (radio station, but not the Boston Globe; the company is still looking at selling its stake in the Boston Red Sox–the process is “complicated” and is “taking longer than anticipated”).

Robinson recaps the pay wall plan, metered approach, etc. Nothing new here so far.

The paper is waiting until 2011 to deploy the pay wall, she explains, because it wants to make “subscribing as smooth and easy as possible….It will take some time to build, deploy and test the best systems.”

Robinson offers a few revenue details, primarily a recap of the earnings release.

Ads by category: National ads down 12 percent, retail down 23 percent, classifieds down 27 percent.

News media online grew four percent, primarily from display advertising (the rest of online growth comes from About.com).

Print ad category decreases came from Hollywood, among others. Ad category increases: Print auto, health care, packaged goods.

Circulation revenue is up because of newsstand, price increases. The Times is benefiting from declines at other papers, because as local papers cut back, it is offering more info than ever. Robinson notes expansion by the paper into local news in the Chicago and San Francisco markets, adding that there are plans on going local in “several” other key markets

Time to brag about new mobile products and applications. The paper counted 75 million page views from mobile and apps in December, and the iPhone app has been downloaded three million times since launch.

Back to digital: Display ads are up, classifieds down; they improved “significantly” as Q4 progressed.

About.com is still the Times’s digital cash machine: Revenue is up 22 percent, and operating profit grew from $10 million to $18 million.

Overall, Internet businesses are up 10 percent and accounted for 15 percent of revenue for the quarter. Online advertising revenue accounted for 23 percent of ad revenue of the quarter.

“Limited” visibility for 2010, which is what’s upsetting The Street, supposedly. But the paper is still “realigning” its cost base.

CFO Jim Follo’s comments may not interest all readers except for this part: The Times is continuing to reduce headcount, he notes, which dropped by 18 percent in 2009. The company is also looking at the benefit structure for both employees and retirees. It froze that awesome supplemental retirement plan that pays certain retirees a very lucrative pension.

We’ve been benefiting from a drop in newsprint prices last couple years, Follo notes, though suppliers are trying to raise prices again, but there’s a supply glut, so we think they’ll have a tough time doing that.

No big capital spending projects are planned. [Presumably, the pay wall is not that expensive to build.]

[Aside: Interesting that NYT.com GM Denise Warren, who's normally on these calls, isn't on today's.]

Questions and Answers

Question: More color on advertising, please.

Scott Heekin-Canedy: We have some optimism, but advertisers are “guarded,” and ads are still bought–or retracted–at the last minute, as they were last year.

Tech, media, health care, and auto ad categories all look promising. The mix is “definitely different” from last year “when it seemed like every single category was down.” Now, many categories are showing “flat to significant growth.”

Question: Are you still optimistic that you can reach a deal on the Red Sox?

Robinson: “Yes we are.” Lots of due diligence, lots of different properties (stake in team, stadium, network, etc.).

Q: What are incremental costs of setting up a pay wall?

Robinson: “We feel this is an elegant solution,” but we want to wait the year and make sure we’re well prepared, etc. Again, integrating home delivery and digital is crucial.

Nisenholtz: Regarding cost, there will be a “modest operating cost” to deploy the tech. We’re hiring a “handful” of people to do that and deploying “modest” capital, but it’s not material.

[Apology: I missed a question on ad categories, though it seems to reprise the earlier question.]

Q: Can you give us a sense of additional cost-savings you can extract this year?

Follo: Nope.

Q: Will your headcount go down again in 2010?

Follo: Yes.

[Missed another question here.]

Next a question about the tax rate, which I can’t imagine anyone reading this cares about.

Q: Can you tell us more about January ad trends, i.e., how much is national vs. local?

Robinson: We won’t break that out (anymore).

Q: Was it materially better than Q4?

Robinson: She repeats her earlier comments from the release. “Very good performance” on the digital side of business. December was particularly good, but we’re not going to be more specific about January.

Heekin-Canedy: That said, we don’t think January is much of an indicator about the rest of the year, anyway. Different beast, not much connection between December [when people were dumping leftover dollars].

[There's a giant disconnect between analysts and the chattering classes here. If the latter ran the call, this would be about nothing but iPad, iPad, iPad. But we're 48 minutes in, and zilch so far. Which is a good reminder: No matter what launches with the tablet this year, this stuff isn't going to have a big impact on Big Media for quite some time.]

Q: Where is growth coming from at About.com?

Robinson: Both consumer packaged goods and display ads. We’ve upgraded the sales channel to go after display and that’s helped a lot.

Nisenholtz: Strong categories include CPC, travel, education and financial services. There’s also retail strength.

Q: Are CPGs new to About.com?

Nisenholtz: Yeah. Well, not exactly. It’s a big site, lots of reach. But we’ve updgraded the sales team and the increase there is part of the payoff. We reach a lot of moms. The Web site skews female.

Q: You may end up paying $60 million to $80 million back into the pension plan. When could that come? Q4?

Follo: Could be sooner than that. We’re in a good position regarding liquidity.

[The final question is about joint ventures that you don't care about.]

And that’s it for the call.

Here’s a metric to consider in advance of The Mobile World Congress next week and the likely debut of Microsoft’s Windows Mobile 7 operating system: As widely maligned as it is, Windows Mobile was still running on 18 percent of U.S. smartphones at the end of 2009, according to comScore (SCOR). This despite our continuing fascination with Apple’s (AAPL) iPhone, Palm’s (PALM) Pre and Pixi, and Android phones like Google’s (GOOG) Nexus One and Motorola’s (MOT) Droid.

Windows Mobile has the third largest smartphone market presence in the U.S., after Research in Motion (RIMM), which controls 41.6 percent of the market, and Apple, which controls 25.3 percent. (See table above; click to enlarge.)

Worth remembering because Microsoft’s (MSFT) portion is far larger than Palm’s share, which fell to 6.1 percent in the December quarter, and Google’s share, which though doubled over the year prior, was still just 5.2 percent.

That was way back in October, though, and since then, production delays have slowed the Nook’s entry into the market. The devices were hard to buy online for the 2009 holiday season. And they haven’t been available at all in stores–you could talk to a store rep about one, and if you were lucky, you got to fondle one, but that was it.

Now Barnes & Noble (BKS) says that starting Wednesday, the $259 device will be available in the “majority” of its 775 U.S. stores.

Better late than never. But not a lot better.

Barnes & Noble’s problem, of course, is that in the last couple weeks, the e-reader market has been completely redefined, at least among the chattering classes: It’s now Amazon’s (AMZN) Kindle vs. Apple’s (AAPL) iPad.

It’s still theoretically possible for Barnes & Noble–and Sony (SNE), for that matter, as well as Plastic Logic and the other would-be competitors–to elbow their way in, since the e-book market itself is still pretty young.

But they had better move very, very fast. Even if they offer devices that are as good or better than Apple’s or Amazon’s, they’ll be hard-pressed to combat the other huge advantages those two have over the rest of the pack–established e-commerce relationships with a huge customer base.

As I write, there are some 270 pages of comments and complaints about the issue on Apple’s support forums. Meanwhile, rumors are circulating that Apple has halted production of the 27-inch iMac until it can resolve its display issues.

According to ABI Research, the iPhone’s share of the worldwide smartphone market in Q4 2009 slipped to 16.6 percent from 18.1 percent in the previous quarter.

Now, while it’s certainly ironic to lose market share in a record quarter, it’s important to keep a few things in mind.

First, counting units sold is just one measure of a device’s success at market. Another measure worth considering is profits relative to revenue. And according to some analysis we’ve discussed here before, Apple (AAPL) claims an inordinate share of the handset industry’s profits.

Second, iPhone sales typically spike in the third quarter–the first full quarter after the latest iPhone launch (in this case, the 3G S), and then taper off slightly after that. They did so after the 3G debuted, and they’ll almost certainly do so again when the company launches the device’s next iteration.

Finally, the fact that Apple has managed to claim 16.6 percent of a market in which it had no presence whatsoever three years ago and that it did so with a single device is astonishing.

So, does loss of market share signify the beginning of a decline in the iPhone’s popularity or the profits it generates for Apple? Not likely.

Interesting, considering that the percentage of Netflix (NFLX) subscribers who streamed more than 15 minutes of video in Q4 2009 was 48 percent, compared with 28 percent for the same period in 2008.

Asked about the possibility of making Netflix’s “Watch Instantly” content available on Apple’s (AAPL) mobile devices during the company’s earnings call Wednesday, Netflix CEO Reed Hastings seemed surprisingly indifferent to the idea.

“We haven’t yet done or submitted an iPhone application,” Hastings said. “We are optimistic that post the Google Voice brouhaha it would be approved. There is really no way of knowing in advance what Apple’s stance would be on that. Of course, that application if it works on the iPhone it would work on the iPad.”

Hastings added, “It is not a huge priority for us because we are so focused on the larger screen. Until we get our TV ubiquity and our Blu-ray ubiquity and we are getting close on video game ubiquity we would next turn to the small screen. It is just not a primary movie watching [device]. It is something we will get around to but it is not in the near-term.”

Here are video highlights of Hastings’s conversation with MediaMemo’s Peter Kafka at our interview event in Las Vegas earlier this month:

]]> http://allthingsd.com/20100129/netflix-ceo-ipad-iphone-streaming-not-a-priority/feed/ 0 http://allthingsd.com/20100128/microsoft-reports-record-sales/ http://allthingsd.com/20100128/microsoft-reports-record-sales/#comments Thu, 28 Jan 2010 21:35:04 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=33781 Reporting second-quarter earnings in January 2009, Microsoft–beaten down by the worst PC market in several years–announced the first mass layoffs in the its 35-year history. Five thousand employees, or 5.5 percent of the company’s global workforce, were to be sacked as the company steeled itself against further deterioration in the economy.

Ugly times. But what a difference a year makes.

Microsoft (MSFT) just reported earnings for its second fiscal quarter, posting significant gains in sales and profits. Net income for the period rose to $6.66 billion, or 74 cents a share, from $4.17 billion, or 47 cents a share in the same period last year. Meanwhile, revenue rose 14 percent to $19.02 billion. Analysts had been expecting earnings of 59 cents a share, and $17.9 billion in revenue.

“Exceptional demand for Windows 7 led to the positive top-line growth for the company,” chief financial officer Peter Klein said in a statement. “Our continuing commitment to managing costs allowed us to drive earnings performance ahead of the revenue growth.”

The release below. Kara Swisher will be covering Microsoft’s earnings over at BoomTown later this afternoon.

Microsoft Reports Record Second-Quarter Results

REDMOND, Wash., Jan 28, 2010 — Microsoft Corp. today announced record revenue of $19.02 billion for the second quarter ended Dec. 31, 2009, a 14% increase from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $8.51 billion, $6.66 billion and $0.74 per share, which represented increases of 43%, 60% and 57%, respectively, when compared with the prior year period.

These financial results include the recognition of $1.71 billion of deferred revenue, an impact of $0.14 of diluted earnings per share, relating to the Windows 7 Upgrade Option Program and pre-sales of Windows 7 to OEMs and retailers before general availability. Adjusting for the deferred revenue recognition, second-quarter revenue totaled $17.31 billion, and diluted earnings per share totaled $0.60 per share.

“Exceptional demand for Windows 7 led to the positive top-line growth for the company,” said Peter Klein, chief financial officer at Microsoft. “Our continuing commitment to managing costs allowed us to drive earnings performance ahead of the revenue growth.”

Windows 7 and Windows Server 2008 R2 launched globally on October 22 as anticipated. Through the second quarter, Microsoft has sold over 60 million Windows 7 licenses making it the fastest selling operating system in history.

“This is a record quarter for Windows units,” said Kevin Turner, chief operating officer at Microsoft. “We are thrilled by the consumer reception to Windows 7 and by business enthusiasm to adopt Windows 7.”

Business Outlook

Management will discuss second-quarter results and the company’s business outlook on a conference call and webcast at 2:30 p.m. PST (5:30 p.m. EST) today.

In addition, Microsoft offers operating expense guidance of $26.2 billion to $26.5 billion, for the full year ending June 30, 2010.

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