Stern Agee analyst Arvind Bhatia initiated coverage on Facebook shares on Monday morning with a “buy” rating, setting a price target at $46 for the next 12 months. Bhatia’s take comes on the heels of a similar, though informal, coverage note issued to media last Friday from Wedbush Securities, where the firm targeted Facebook’s share price at $44.

Both targets are set squarely above Facebook’s estimated share price range of $28 to $35, and would value the company at close to $100 billion.

Bhatia’s report cites Facebook’s upheaval of the online ad industry, a harbinger of change similar to the likes of Google almost eight years previous. Taking into account Facebook’s massive 900 million user reach, steadily growing average revenue per user numbers and the company’s high — though as yet untested — hopes for mobile monetization, Bhatia’s outlook on the company is bullish.

Though some say it’s not just about ads. “If you look further into the future, I believe they want to compete directly with the likes of Google, Amazon, Apple, companies with diverse product portfolios,” Gartner Research VP Brian Blau told AllThingsD in an interview. “They have the users, and they’re doing well with advertising, but they just don’t have all the products that its other competitors do. At least, not yet.”

The fervor for Facebook’s stock is at an all-time high in light of the company kicking off its roadshow to potential investors this week, with Zuckerberg and CFO David Ebersman making pitches in person.

Though it doesn’t seem like investors need much convincing; the roadshow festivities began midday on Monday at the Sheraton Hotel in Manhattan, with more than 500 investors and analysts flooding in to get a peek at Zuck’s performance. An onlooker said the CEO looked “likeable and affable,” according to an article in The Wall Street Journal.

And no, there was no half-windsor around Zuck’s neck — he made the pitch in his trademark hoodie.

Since the company’s last earnings release in February, the videogame publisher’s stock has fallen 20 percent, and on Friday, it tumbled another 3.5 percent, or 55 cents, to trade at $15.12 a share.

In general, the market for game stocks are teeter-tottering, as the industry works through a massive transition from packaged goods sold at retail to digital games that are given away for free and distributed through Apple and Facebook.

Even pure plays like Zynga — which are focusing exclusively on mobile and social — aren’t immune, as investors question the free-to-play model and the dependence on third-party platforms. Zynga’s stock is off almost 20 percent since its IPO in December.

This afternoon, analysts are expecting EA to exceed the company’s internal guidance by earning 16 cents a share on revenues of $960 million. EA’s own estimates are calling for non-GAAP earnings of 10 to 20 cents a share on revenues of $925 to $975 million.

As a sign of the times, Wedbush analyst Michael Pachter revised his expectations down by $5 million due to U.K. games retailer Game Group going bankrupt during the quarter.

Otherwise, Pachter said that he’s expecting the company to report at the high end of the guidance, thanks to strong sales of Mass Effect 3, which went on sale during the quarter, and to a solid performance by the company’s online game, Star Wars: The Old Republic.

Other console titles shipped during the quarter include FIFA Street and Tiger Woods PGA Tour 13.

According to sources close to the situation, Facebook is anticipating getting approval from government regulators to officially distribute its S-1 public offering prospectus to investors within days, which would mean its road show could begin as early as next week.

As I reported back in January, the social networking giant is expected to go public in the second or third week of May, a timeline (get it?) which currently appears to be on track.

In addition — although some have speculated that its famous CEO and co-founder Mark Zuckerberg might not take a “hands-on” role in the high-profile process, having missed one pre-IPO meeting with Wall Street analysts and bankers (can you blame him?) — sources said he would be appearing before potential shareholders, and would be present at key meetings to help sell the company to them.

Of course, he will — although there was much speculation that the Silicon Valley superstar would bow out of any of the hubbub around the huge IPO, and that bankers were practically begging him to appear, sources said Zuckerberg is too key to all aspects of its business not to appear.

(No word as yet on whether he will don a tie, as he sometimes does, or if his usual hoodie will be Zuckerberg’s outfit of choice — although his sartorial choices on the road show are sure to get excessive media scrutiny.)

“Facebook is Mark Zuckerberg and Mark Zuckerberg is Facebook,” said one person with knowledge of the situation. “He’ll do his job as CEO, as he always does.”

Indeed, although he is often portrayed as shy and not a fan of the limelight, Zuckerberg has always stepped up — and rather enthusiastically — when a public appearance is needed, whether in times of trouble or touting for the eight-year-old company.

This is a touting-Facebook moment, of course, as it seeks to raise up to $10 billion in a blockbuster offering that could value the company at $75 billion or more. Filed in February, that will make it the biggest Internet IPO ever.

Also expected to play key roles in the road show are CFO David Ebersman and COO Sheryl Sandberg, as well as other top Facebook execs.

Whether they all can rev up the jets and get going on the road show depends on the Securities and Exchange Commission finally declaring Facebook’s preliminary prospectus of its business and finances “effective” or in legal compliance.

Facebook has updated the initial filing several times, with new financials as well as information about its purchase of photo-sharing site Instagram and its ever-nasty patent battle with Yahoo.

But, overall, the SEC process has been rather smooth for the company, and sources said it appears it will continue that way.

After the road show: A sales process in which investors ask their questions of management and then officially begin to place orders for Facebook stock.

Among the areas of likely concern are that Yahoo patent lawsuit and, most importantly, how Zuckerberg and others characterize the slowing of its explosive revenue growth in its most recent filing update.

Last week, Facebook said its revenue was $1.058 billion, up 46 percent for the year, but down 6 percent from the previous quarter. In the first quarter of 2012, its net income was $205 million, which was down from $233 million a year ago. The company attributed the decline to rising costs, including in marketing and in research.

After the road show, Facebook’s bankers will price the offering — which is widely expected to be massively oversubscribed — and then it will go public on the Nasdaq market, under the “FB” ticker.

The rest, as they say, will presumably be history — or, in fact, the future for Facebook in the public eye.

Yahoo beat Wall Street estimates in its first-quarter earnings report today, with revenue of $1.08 billion and earnings of 23 cents. That’s a gain of 28 percent from a year ago in net earnings and 38 percent per diluted share.

Analysts had been expecting Yahoo to report revenue of $1.06 billion and earnings of 17 cents a share. But, as I reported earlier today, sources had indicated that the results would be on the upside.

Still, revenue was only up year over year by 1 percent — not exactly a great achievement, given exploding growth across the Internet industry. The real drag was the Europe, Middle East and Africa regions, whose revenue was down 9 percent — which Yahoo attributed to the weak economy there — with its “contribution” down 27 percent. That region has been run by Rich Riley, who is now Yahoo’s sales lead in the U.S.

One interesting note: While display revenue was down, search revenue was up. And unique visitors to Yahoo were up 7 percent, which was lower growth than in previous quarters. The reason was declines in search and communications, with media up strongly.

Now, investors are hoping to get more clarity from new CEO Scott Thompson in a call at 2 pm PT about the overall strategy for the troubled Silicon Valley Internet giant, which just restructured its management again and also had layoffs of 2,000 employees.

Thompson has yet to articulate a specific plan beyond the broad strokes of media, commerce and data/platforms as Yahoo’s aim.

But there is a lot more to deal with and in detail, including figuring out its troubled advertising search partnership with Microsoft, the talks around selling off parts of the company’s lucrative Asian assets, Yahoo’s patent lawsuit against Facebook, how Yahoo is going to deal with activist shareholder Third Point’s possible proxy challenge and whether more layoffs beyond recent firings will be needed.

“In the first quarter, Yahoo!’s results came in at the high end of our guidance range and beat consensus on revenue and profits,” Thompson said in a statement. “We also made changes to resize the organization and establish a new leadership structure to quickly deliver the best user and advertiser experiences at scale.”

Until Thompson gives more deets on the earnings call, which I will be liveblogging, here’s Yahoo’s official press release and cool charts on the subject:

YHOO News 2012-4-17 General

YHOO_Q112EarningsPresentation

A month ago, I posted an initial list of speakers for the 10th D: All Things Digital conference.

After a decade, the event — which is held in Rancho Palos Verdes, Calif., just south of Los Angeles, at the end of May — has attracted another amazing group of speakers, including: New York City Mayor Michael Bloomberg; serial entrepreneur Sean Parker, who will appear with Spotify co-founder and CEO Daniel Ek; Zynga founder and CEO Mark Pincus; Federal Trade Commission Chairman Jon Leibowitz; LinkedIn Chairman and VC Reid Hoffman, who will appear with the social business site’s CEO Jeff Weiner; and Skype CEO Tony Bates.

Now, here’s another group of stellar speakers we’ve added to the programming lineup (and there are still even more big names to come in the weeks ahead): Oracle CEO Larry Ellison; former tech analyst superstar and now VC Mary Meeker of Kleiner Perkins; Intellectual Ventures’ Nathan Myhrvold; Pixar co-founder and Disney animation head Dr. Ed Catmull; and Visa President John Partridge.

Larry Ellison, CEO and founder of the enterprise giant Oracle, needs little introduction, as one of tech’s highest profile figures and a true Silicon Valley icon. Frankly, I think the short bio that’s on Oracle’s Web site says it all: “Larry Ellison has been CEO of Oracle Corporation since he founded the company in 1977. He also races sailboats, flies planes, and plays tennis and guitar.” There will be a lot to talk about with the voluble and always entertaining exec — who appeared at the D conference once before many years ago — from the current state of the tech industry to insights to where it’s all going. (In addition, Ellison has agreed to appear on a panel we are doing as a tribute to his close friend, Apple’s former CEO Steve Jobs.)

Another well-known tech figure is Meeker, who is now a partner at Kleiner Perkins Caufield & Byers, having joined the storied venture capital firm in early 2011. She focuses there on investments in its digital practice and via KP’s Digital Growth Fund, working with companies such as Spotify, Jawbone and One King’s Lane. But Meeker is perhaps best known for her long stint — 1991 to 2010 — as a star Internet research analyst at Morgan Stanley, where she brought many of the Internet’s great companies to the attention of Wall Street and beyond. She also wrote a series of groundbreaking reports on the landscape. That includes her annual “State of the Internet,” which Meeker will debut this year at the conference in an extended demo of her always riveting Internet trends presentation.

Nathan Myhrvold is also a tech legend, having worked for 14 years as chief strategist and CTO of Microsoft. But, instead of retiring, the avid inventor decided to focus on patents, founding and leading a controversial company called Intellectual Ventures, which buys them up and licenses them out (or sues if it doesn’t sell). With all the mishegas around patents right now, it’s a good time to have Myhrvold back to explain it all and perhaps to take some of the blame for the explosion in intellectual property lawsuits. (Myhrvold also co-authored a cookbook, “Modernist Cuisine,” so we hope we will also get some sort of futuristic cooking demo. Perhaps, Patently Delicious Flan?)

Speaking of tasty, the animation from Pixar over the years has been just that and it’s been one of Disney’s greatest acquisitions. Given how much Pixar has contributed to animation technology, we are glad to finally get Dr. Ed Catmull onstage. As co-founder of Pixar Animation Studios and president of Walt Disney and Pixar Animation Studios, he will discuss where entertainment and technology are intersecting and where they are not. Catmull is a geek’s geek in the industry — having also founded the computer graphics laboratory at the New York Institute of Technology, the computer division of Lucasfilm, as well as Pixar, which he did with chief creative officer John Lasseter. Get ready to talk about image compositing, motion blur, subdivision surfaces, cloth simulation and rendering techniques, texture mapping and the z-buffer. Also, Catmull’s five Academy Awards.

Lastly, it is perfect timing for bringing on John Partridge, president of Visa. With swirling issues around online identity theft, digital privacy, the future of money and the rise of upstart competitors such as Square, Partridge has his hands full at the credit card giant. One of the most neglected arenas in tech, the way we manage payments is perhaps the biggest story of the next era, especially as it relates to mobile and the rise of smartphones as all-purpose devices.

Demand Media, which has suffered from stock weakness and worries about its traffic and costs, beat Wall Street expectations in its fourth quarter earnings report, which was released after the market closed today.

The Santa Monica, Calif., online media company said it earned eight cents per share, up one cent on analysts’ estimates of seven cents. Revenue came in slightly higher too, at $84.4 million compared to an expected $81.95 million.

Still, Demand shares were down almost five percent in after-hours trading on the news, to $5.94.

Demand said that about $50 million of that came from its content businesses, while just over $31 million was due to its registrar business.

Free cash flow was up five-fold from $3.3 million to $18.3 million, which Demand said was due to cost controls and decreased spend on its flagship eHow site, which has seen changes in its content and distribution platform.

Demand also said it is going to buy back more of its stock, upping a $25 million plan to $50 million.

Said the company:

“During the fourth quarter of 2011, Demand Media repurchased 1.9 million shares of common stock for $13.3 million under its Board-authorized $25.0 million share repurchase program. To date, the Company has repurchased 2.8 million shares of common stock for $20.1 million. On February 8, 2012, Demand Media’s Board authorized an increase of $25.0 million to the program, taking its total authorized repurchases to $50.0 million.”

In a conference call with analysts after the reports, CEO Richard Rosenblatt acknowledged it was a “turbulent year,” but noted that Demand would be enhancing its properties for higher page views and more direct traffic.

He also addressed the departure of some of Demand’s founders. “All three were very important members of our team,” he said. “But it’s the natural evolution of a young company.”

If you want more deets, read all about it here in the company’s official press release:

4Q11 Results Release FINAL02.16.12

In one of the odder things to happen in my journalism career, I was forwarded a flash analyst report by Wall Street’s Macquarie Capital on the news that AllThingsD.com broke yesterday (and foreshadowed before) about the shakeup of Yahoo’s board.

I cover the Silicon Valley Internet giant closely, obviously, and have had a lot of scoops on its machinations over the years. This was simply the latest, and turned out to be on on target (Phew!).

While that is presumably my job as a reporter, it was apparently of “concern” to Macquarie’s analyst.

Said the report:

One final note: it continues to concern us that one particular journalist, Kara Swisher, frequently seems to be privy to such precise information regarding YHOO. On January 9, almost a month prior to the actual release from the company, Kara wrote, “While some departures seem most obvious — longtime board members Vyomesh Joshi, Arthur Kern and Gary Wilson — the really interesting part will be the possible exit of Chairman Roy Bostock.” Yesterday she wrote, “expect a change in the Yahoo board composition, too, as early as this week.” And today at 3:38pm EST, she posted a story that “Yahoo will announce the impending departure of four of its longtime board members, including chairman Roy Bostock. The others headed out the door are Hewlett-Packard exec Vyomesh Joshi, Gary Wilson and Arthur Kern.” While we give much credit to Kara for her ability to obtain this information, we believe it reflects very poorly on YHOO’s ability to maneuver effectively outside the public spotlight.

While I appreciate the fist-bump, it’s unclear why it’s concerning for shareholders — whom these reports are created for — to know this information before Yahoo deigned to release the news or spoonfeeds any other information at investor events. After all, fair, complete and accurate information from anywhere in the tech news media could help them make better investment decisions.

And Yahoo also always operates in the public spotlight, even when it is outside it, as does every tech company. That’s especially true these days, in the vastly changed media environment, in which news moves faster and with more immediate impact.

In fact, I’m concerned that worrywart Wall Street doesn’t grok this — but I’m definitely not surprised, either.

AOL said it earned 23 cents a share for the fourth quarter on revenue of $576.8 million, compared to 60 cents per share on $596 million in the same quarter a year ago.

Wall Street analysts had expected the New York-based Internet company to earn 16 to 17 cents on revenue of $572 million.

While the results are still down significantly from a year ago, AOL’s stock has been rising — gaining more than 25 percent in the quarter — since CEO Tim Armstrong has improved advertising revenue.

That was up 10 percent in the quarter, the third consecutive quarterly increase.

Subscription revenue from its access business continued to fall — down 18 percent — although that was the lowest rate of decline in five years.

AOL also noted that it had encouraging improvements in certain areas of its business:

Video: AOL grew its videos, video views, video ad impressions and revenue at double-digit rates.

Brand Advertising: Project Devil advertisers, impressions and revenue grew at double-digit rates.

Local: Patch grew traffic, advertisers and ad impressions more than 100% year over year.

Traffic: Consumer usage was flat to Q3 2011, as growth in the Huffington Post Media Group sites offset declines at MapQuest and AIM.

But read for yourself — here are all kinds of charts and graphs from AOL:

AOL_Q4_2011_Earnings Release

AOL_Q4_2011_Earnings_Presentation

AOL_Q4_2011_Trending_Schedules

The Barclays analyst has bumped up his sales estimates for the low-end tablet: He now thinks Jeff Bezos sold 5.5 million units last quarter, up from his earlier guess of 4.5 million.

DiClemente figures Amazon will now sell 18.4 million Kindle Fires this year, which would give it nearly half of the non-iPad tablet market.

It’s always important to remember that, unlike Apple, which sells media and apps via iTunes to help support its devices sales, Amazon is approaching this from the opposite direction: It wants people to buy its devices so they’ll be more likely to buy other stuff.

DiClemente takes a stab at this one, too: He figures that by 2014, the Kindle Fire and its descendants will be generating an additional $3.9 billion a year from incremental e-commerce spending, driven by customers who pick up the company’s Prime shipping program along with their tablet.

And he thinks that, during that same year, revenue from tablet content will eclipse tablet revenue, period: He figures devices will generate $3.9 billion, and content will be worth some $5.2 billion.

Back to present tense: Has anyone seen a Kindle Fire in the wild? I haven’t, and my thoroughly unscientific spot check of my pals and peers hasn’t turned one up, either. Of course, I also recall when seeing a Kindle e-reader on the subway — many months after the e-reader’s launch — was enough to warrant a blog post.

A main attraction: the bank’s top-ranked Internet analyst, Mark Mahaney.

Read the rest of this post on the original site »

This morning, Yahoo said it had hired PayPal President Scott Thompson as its newest victim, oops, CEO.

(You can read my interview with him too, here.)

AllThingsD.com had reported the pending development last night — which is how we roll here.

Now we will roll into the conference call on the matter, and are hoping that the head of the lucrative eBay payments unit will make an appearance, given that he does not start until next week.

One piece of advice I will extend Thompson: I would refrain from cursing, as previous Yahoo CEO Carol Bartz did on her first outing. (She was fired in September, although not precisely for the cussing she so enjoyed partaking in.)

Here we go!

7:02 am: It’s on, with Thompson present.

Yahoo Chairman Roy Bostock begins, and he is “very excited, very excited.”

I’d be very excited if Thompson talked and not Roy, who has been to this particular Yahoo CEO rodeo a few too many times before.

Bostock is making promises that this time it’s going to be different. Really!

He also notes that the company will continue its “strategic review” — but who knows what that means now.

And he thanks Tim Morse, the interim CEO who is moving back to the CFO job. (Agreed — nice work, Tim!)

7:06 am: Scott Thompson is on and is “just thrilled” to be the new Yahoo CEO.

I like his accent, which seems like he might be from Boston. He does look and sound like Cliff Clavin, the mailman guy at the Beantown bar from the television classic “Cheers.”

Except, given he has been the darkest of dark horses in this CEO race, nobody knew Thompson’s name.

Thompson is saying all the right stuff, about wanting to increase shareholder value and such.

He sounds so hopeful! Urgency! Thoughtfulness! A bright new morning at Yahoo!

I have been to this rodeo before too, but I am still hoping this time it’ll work.

Scott, if you let me down, I might cry, because you sound so nice.

7:09 am Q&A time already.

Congrats from the Wall Street analyst peanut gallery.

Then, it’s right into a question for Bostock, about the progress of the Asian assets deal.

Also, is Thompson too much of a technologist and not a media dude?

Bostock wants to talk about only Scott, but notes that there will be “no slowdown and no delay” in the Asian process. And Thompson will be all onboard when he comes on board, folks.

Bostock sounds tired, but starts to talk about how a “great customer experience” is the key to the advertising business. He notes that Thompson knows how to do this, hence he’ll be fantastic.

“I have every expectation he’ll be out there calling on advertisers,” says Bostock. I would hope so, given that is where Yahoo makes most of its lettuce.

Bostock is saying Yahoo has been “treading water” and now needs to swim fast. Treading water? I wonder who the top honcho at Yahoo has been while the company has been listlessly dangling its legs in the drink?

Roy — that’s who!

7:15 am: Another analyst asks about margins.

Thompson is not having any of it! He is polite when asking for time to get on the job to make proper statements.

But he does focus on the need to build “great, innovative” products. True, but Yahoo has been incredibly unable to do this of late.

Thompson gives no specifics, though. My big idea: I would steal the self-driving car from Google.

7:17 am: A question about what the core of Yahoo is, and about what lessons Thompson is bringing from his experience at PayPal.

Well, he has not met the team — literally. Yahoo’s board consulted almost no one in the top ranks of execs on this appointment.

But Thompson “suspects” there is talent there. Given the recent attrition, he’ll need a big Inspector Clouseau magnifying glass to find it!

From eBay’s PayPal, he says that the key was balancing the customer experience with network effect and, well, blah, blah, blah Internet-speak.

I am still thinking shoplifting the self-driving car is the bestest idea.

7:20 am: A question about Yahoo’s display business versus Google.

Thompson notes it is too early for him to say — though he had better say soon! — but notes that data is key. He is a well-known by-the-numbers guy, and that is clearly where we are going at Yahoo, now that he is the big dog.

Thus:

“The data these Internet businesses create, the ability to use analytical technology to build a better businesses for your customers … I feel certain that wealth of data is going to be exploitable for next generation products, next generation experiences … My instinct says down in that data we’re going to be able to find ways to compete and innovate that the world hasn’t seen yet.”

I am really liking this accent, which is almost lulling. And so polite! Sources tell me that being “collaborative” was a big goal in this hiring.

7:22 am: A question about the identity of Yahoo, and whether it should be public or private.

Thompson harps on the need for innovation, and hopes it will be the future.

“I would not be here if I didn’t think it was possible,” says Thompson.

Bostock takes the public/private question. Yahoo will be public, he declares! Mostly, because it would be too pricey to take private.

“It’s a moot point,” he says.

7:25 am: More questions about what Yahoo is.

Thompson declines to run off the rails on this dicey one, but he says he believes that Yahoo has great assets.

It does. It’s just that it has been crashed many times — by the people who just hired him — right into a wall.

Just sayin’ — a self-driving car would have done a better job.

7:27 am: A brain-drain question, and more on Asia and on mobile.

Bostock butts in again. He said that Thompson will not be distracted by that, and will concentrate on the core business. Hush up, Roy.

Thompson says that he looks forward to meeting the peeps of Yahoo. (’Cuz he has not, as yet!)

He also loves mobile — which Yahoo has largely borked.

7:32 am: A content strategy question. Early days, so Thompson is still keeping his yap shut.

In this, he’s like the anti-Bartz. Is this good? It’s certainly different.

He says again that, “I can’t wait to meet” everyone at Yahoo. Vice versa, because this dude came from left field.

Thompson promises that he will be a “sponge.”

He closes by noting that he is “genuinely excited,” and says he believes in Yahoo.

Indeed, when it comes to Yahoo, you definitely gotta have faith.

We still view GOOG’s acquisition of the football coaching headphone equipment company as highly risky, but given signs that Amazon & Facebook may also enter the Smartphone market, GOOG’s move isn’t unprecedented.

– Citigroup analyst Mark Mahaney, who is upgrading his Google rating to “buy” from “neutral,” despite his lack of enthusiasm for the $12.5 billion Motorola deal. On the bright side, he adds, if regulators approve the purchase next year, it will “still provide GOOG with patent support, & it’s an accretive deal.”

Just last week, it seemed as if the dangerous riptide had finally turned for Demand Media, the social content company whose stock for the quarter bottomed out in mid-October, in the $5-a-share range.

It has now rebounded to close Friday at $7.76, with a market valuation of just over $651 million — still a far cry from a high of over $27 a share in the last year, but well below the target price of upward of $14 from Wall Street analysts.

That’s why there will be plenty of questions for CEO Richard Rosenblatt in a conference call scheduled for after the Santa Monica, Calif.-based Demand reports its third-quarter earnings, following the close of markets this afternoon.

Analysts are expecting Demand to lose four to six cents a share. Revenue is expected to be up.

One issue sure to be on the docket will be the traffic problems at its flagship eHow site, which stymied Demand in the quarter. The situation caused it to release a statement about the issue, “which the Company believes is temporary and was the result of an internal technical issue. The technical issue has recently been remediated.”

Assume you will hear more on that and other topics, including updates on the cost of its content and the continued impact on Demand of search-algorithm changes at Google, as well as how it is faring in attracting more lucrative advertising.

I will be covering the earnings and the analyst call, so tune in later today for answers.

But now we’ll get Reed Hastings’s own report card, when Netflix announces its quarterly earnings this afternoon.

As Citigroup’s Mark Mahaney notes, the key numbers to look for aren’t the Q3 metrics — the company has already preannounced that its subscriber numbers are going to be lower than it initially thought — but its guidance for the rest of the year.

That’s where we’ll be able to see the impact of its many stumbles — the price hike, the broken Starz deal, Qwikster’s New Coke moment — or at least what Netflix thinks the impact will be. If Netflix subscribers are really bailing out — and not just threatening to do so on Hastings’s Facebook page — you should be able to see that reflected in its expectations for the next three months.

Remember that shortly after Netflix dropped its first bomb this summer — a 60 percent price hike for many of its customers — management predicted that it would suffer a subscriber blip in Q3, but would recover by Q4. Let’s see if they’ve hung on to that confidence.

Here are Mahaney’s best guesses for Netflix’s Q3 results and Q4 guidance, along with Wall Street’s estimates (click image to enlarge). I’ll be covering the results live at 4 pm ET.

Tomorrow, after the markets close, Yahoo will announce its third-quarter earnings, perhaps one of its more important reports in recent years.

Wall Street analysts are expecting the Silicon Valley Internet giant to report earnings of 17 cents per share on $1.07 billion in revenues.

But whether or not Yahoo has beat expectations will be less scrutinized than information about the state of Yahoo’s key search and display advertising businesses, as well as other user metrics.

It is at those numbers that a range of players — including major shareholders, possible bidders and media — will be looking to see just how badly the company’s business has fared with all the turmoil of late.

That has included the firing of its CEO Carol Bartz, a massive strategic review that includes the possibility of a sale to a range of mostly private equity buyers, a persistent attrition problem and a worry that the company continues to drift in its product innovation, even as others have surged.

Last week, I reported that Yahoo had finally selected an executive search firm to help it find a new CEO, which many think is a difficult task given the uncertain situation.

A series of worrisome trends across its ad businesses over several recent quarters has some looking at the company for possible purchase with some skepticism.

“What if it is too broken to fix, what if trends to Google’s and Facebook’s premium offerings is too overwhelming?” said one potential bidder for Yahoo. “There are a lot of what-ifs at Yahoo.”

By comparison, Google posted impressive earnings last week.

Yahoo stock closed at $15.70 today, down 1.3 percent.

Note that Mahaney isn’t changing his estimates for these companies’ financial performance — just the way he thinks the market will value them, “primarily to global Macro conditions.”

Still, it’s worth noting some of his specific concerns for some companies that go beyond “the world economy has the circle-the-drain-quality to it.”

AOL: Citi drops its target from $18 to $15 (it’s now trading around $12). “In Q2, we witnessed YHOO, WBMD and AOL report lower Display revenue, which could be signs of increased competition from ad networks and social media for premium ad dollars.”

Demand: Target dropped from $10 to $8, which is about where the stock is trading now. “We view the company’s reliance on Google traffic as still a bit of an overhang. And we believe DMD’s quality content strategy is still something of a work-in-progress.”

Google: Target dropped from $690 to $575, currently trading around $504. “The return on GOOG’s prior investments (Mobile, Display) have been very good, but the return on GOOG’s new investments (Social, Commerce, Local, and now, in a BIG way, Mobile) are still uncertain — and the social investments ARE catch-up defensive; 2) cost structure still not ‘under control’; and 3) increasing regulatory risk.”

But the day — or more accurately, the quarter — has arrived, when consumers spend more on digital games, such as mobile, social and console downloads, than they do on more traditional formats, like console games, according to the NPD Group.

UPDATE: I need to clarify that the category, which includes digital sales, also includes used sales and rentals, so it’s not purely digital sales that are exceeding retail sales, analyst Anita Frazier says. So while digital is absolutely growing, it’s not quite bigger than physical purely on its own.

In the second quarter, NPD estimates that digital revenues totaled $1.74 billion, exceeding the $1.44 billion spent on physical sales. That compares to the first quarter when the split favored physical sales of $2 billion, which topped digital sales of $1.85 billion.

While physical distribution in retail stores and packaged goods may be shifting to digital distribution over broadband connections and wireless airwaves, overall spending seems to be level.

In the second quarter, total videogame sales, including hardware, content and accessories, was estimated at $4.5 billion, which represents an increase of one percent compared to the same period a year earlier.

The NPD Group has not been tracking digital versus retail sales for very long, so it is unclear if this is the first time this has happened, or if the split will be permanent, but generally the trend is that digital revenues are growing while traditional retail sales are falling.

The shift for some incumbent videogame makers has been difficult to stomach.

Many debate the value of shifting from producing a $60 game sold at retail to producing mobile and social games, which frequently rely on a free-to-play model, where users have the option of playing without paying anything.

Others have embraced the concept, believing that the transformation will take place no matter what, or that it will grow the pie of people playing games.

To be sure, the market is just as confused about this period of disruption, leading values to be all over the map.

For example, privately held Zynga, which has filed to raise $1 billion in an IPO, was valued at $14.05 billion in August by a third party, according to a recent filing.

That makes the social games leader more than double the value of publicly held Electronic Arts, which has a market capitalization of $6.8 billion.

Meanwhile, Electronic Arts has been investing heavily in both mobile and social gaming, and, for instance, currently has the second-most popular game on Facebook.

“It is critical that we speak with one voice,” wrote Whitman in an internal email I obtained (below).

Thus, she has appointed longtime HP exec Lynn Anderson (pictured here) to “take on the role of acting Chief Communications Officer reporting directly to me,” according to the memo she sent to senior leaders at the company.

Not sure what “acting” means yet, but Anderson has gotten the job that was once that of former SAP exec Bill Wohl. He was put on “special assignment” late this summer, whatever that means, with his duties being taken up by Global Marketing EVP Marty Homlish.

Now Anderson is taking over, having helped during the Wohl transition. She previously headed up influencer relations for HP’s enterprise business.

And before that, she worked on a variety of marketing jobs for HP Canada. Anderson’s background is wonky, according to her company bio: “Before joining HP in 1983 as a systems engineer, Anderson was a programmer, analyst and operations manager for several IT departments.”

During the initial announcement of her new job running HP, Whitman relied on longtime comms adviser Henry Gomez. Gomez, who worked closely with her when Whitman was CEO of eBay and later on her unsuccessful run for California governor, has a consulting business and presumably did not want to work full time for HP.

Here’s the memo:

To: Senior Leaders
Subject: Acting Chief Communications Officer

As we continue to execute our strategy for HP, communications will be an extremely important function and it is critical that we speak with one voice.

I want to thank Marty Homlish, EVP Global Marketing who stepped in and provided leadership during a critical junction. Going forward, I have asked Lynn Anderson to take on the role of acting Chief Communications Officer reporting directly to me.

Please ensure that Lynn is brought into all communications activities.

Regards,

Meg

While for tax reasons it’s probably more likely that HP will spin the unit out as an independent company — there are no taxes when assets are distributed to shareholders — Sterne Agee analyst Shaw Wu, in a note to clients issued this morning, breaks down the possible suitors should HP opt instead for a sale.

Topping the list is Samsung, which you might have guessed already. Samsung would make sense, Wu argues, given its “large size and global ambitions.” Samsung has been trying to build a PC business since 1997, when it acquired AST Research, but hasn’t gotten anywhere. But it is the world’s biggest manufacturer of DRAM memory chips, used in PCs; and the largest supplier of NAND flash memory, which forms the basis of solid-state drives that are increasingly built into notebook PCs. It’s also a big maker of LCD displays and notebook batteries. All that vertical integration, combined with HP’s consumer PC footprint — it’s the biggest supplier to Best Buy — would make Samsung the worldwide player it has always aspired to be.

Don’t ignore the other players, though. Acer, Lenovo, Sony and even Dell could all conceivably show up with a bid, Wu writes. But it will all come down to HP’s asking price, and what parts of the business are included. Wu pegs HP’s PC business as being worth $8 billion, or about $3.66 per HP share. To calculate that valuation, he assumes a premium of five times profit of $1.6 billion on $40 billion in revenue; a five percent operating margin and a 22 percent tax rate.

One potential issue to watch in a possible Samsung bid: Whether the South Korean giant asks HP to include its webOS software. Samsung is also a huge supplier of smartphones around the world, and would probably like to rely less on Google’s Android than it does now — and would want to own its own operating system. Having decided to kill the webOS hardware business, HP has indicated that it has plans to keep the software alive in some form, though enough cash from Samsung might change HP’s mind.

Wu also argues that the market has gotten too negative on the PC business in general. While it’s true that Apple’s iPad has left a historically significant mark on the PC universe, PCs aren’t dead yet — just ask Intel. Give them iPad-like touchscreens and flash drives for instant-on capability, and the market might rebound, he says. “We believe longer-term tablets and PCs are the same market. Ironically, we view Apple’s MacBook Air as the first generation of these future hybrid PCs.”

Update at 9:38 AM PDT / 12:38 PM EDT: Samsung just issued a brief statement saying it’s not interested in HP’s PC business. Such rumors are “not true,” the company says. Well it’s really not a rumor exactly, but speculation really. Somehow I don’t believe it’s the last word on the subject.

(Image, obviously, is from the sheet music of the number “Who Will Buy?” from the musical “Oliver!” Hear it below.)

After the markets close tomorrow, Demand Media will report its second-quarter earnings.

Wall Street is expecting a solid performance from the Santa Monica, Calif.-based online content maker compared to last year.

The consensus of estimates by analysts is for Demand to lose one cent a share, which is much smaller than the 55 cents a share loss from the same period a year ago. It is also an improvement on a previous loss of five cents a share for this quarter that investors had been predicting.

Nonetheless, the company’s stock hit its all-time low yesterday, after a strong IPO in January. Since the summer, it’s been all downhill, with Demand shares off 50.4 percent since early May.

Since it went public, the stock is off 63.1 percent.

The online restaurant reservations company said today it has appointed Duncan Robertson to the position of CFO. Robertson previously co-founded and served as CFO of SnapStick, a mobile app company. Prior to that, he was CFO of Aricent, a technology services company.

Three months ago, the company surprised Wall Street when its CFO Matthew Roberts was promoted to president and CEO and said Jeff Jordan, the president and CEO, would transition to executive chairman.

Jordan has since taken a job at Andreessen Horowitz, the large Silicon Valley VC firm.

When Jordan’s departure was announced, OpenTable’s stock fell $17 to $96. Today, the company’s stock continued spiraling downward, slipping another 9.5 percent, or $6.51 a share, to stop at $68.90 a share in after-hours trading.

OpenTable reported second-quarter revenues of $34.3 million, a 53 percent increase over the same period a year earlier. It was that figure that narrowly missed analyst expectations of $35.3 million, according to Thomson Reuters.

The company’s quarterly profits totaled $6.3 million, or 26 cents a share, up from $2.6 million or 11 cents a share in the second quarter 2010.

Despite executives playing musical chairs, Citi’s Internet Research Managing Director Mark Mahaney wrote in a note to investors that the company reported an “intrinsically robust” second quarter, and that revenues were only modestly below his estimates, whereas adjusted earnings per share of 33 cents beat expectations.

Other positive results:

• Its base of restaurants increased 27 percent to 15,560 year over year and diners seated totaled 22.2 million, a 47 percent increase in North America.
• Internationally, it saw even stronger growth, with its installed base of restaurants growing by 276 percent and seated diners up 249 percent year over year.

You would think the settlement of a major dispute would goose the stock of a company, but Yahoo’s deal with its Chinese partner Alibaba Group on Friday did exactly the opposite.

Despite the clearing of an obvious overhang to its shares, the stock of the Silicon Valley Internet giant dropped almost three percent Friday to close at $13.10. While the ongoing federal budget wrangling was partly to blame, it was only a very small part with an overall market decline of under one percent.

A tepid reaction to the deal — in which Yahoo, Alibaba and Japan’s SoftBank came to terms over the spinoff of Alibaba’s Alipay payments unit after much wrangling over the move — came quickly from Wall Street analysts.

A report titled “Yahoo Inc: Alipay Agreement: Better than Nothing, But Not That Great,” by J.P. Morgan’s Doug Anmuth, was typical. Pointing to no clarity on an IPO of the Chinese assets of Alibaba and that “prior to the divestiture, Alibaba Group owned 100% of Alipay and all of its income, which is now reduced to 37.5% ownership of Alipay and 49.9% share of the pre-tax income,” he noted that Wall Street “has recently assigned no value to Yahoo!’s share of the asset.”

Well, less than zero, if the stock decline is taken into account, which means Yahoo’s market cap is now just over $17 billion.

According to sources close to the situation, especially since Yahoo’s Asian assets make up more than $9 billion of that valuation, private equity investors and others are pulling out their spreadsheets once again about a possible takeover or privatizing of Yahoo.

Several months ago, for example, former News Corp. exec Peter Chernin had been contemplating a friendly bid with partners such as Providence Equity Partners and others. While there have been rumors recently that he has reengaged in that effort, that is unclear.

Sources also note that Yahoo’s top execs, especially CEO Carol Bartz, and also members of its board, are perplexed that the settlement in China — a positive development — had the opposite effect on the stock.

It’s part of a continuing decline. Yahoo shares are down almost 26 percent in the past three months. Most Web stocks — such as Google, Amazon and Microsoft — are strongly up in that period. The only other obvious laggard is AOL, which is down almost 16 percent in the past three months.

As these companies are wont to do in the middle of the night, Yahoo, SoftBank and the Alibaba Group have reached an agreement in their nasty dispute around the Alipay payments unit, and they are ready to talk about it.

Well, not Alibaba’s CEO Jack Ma (pictured here), Yahoo’s CEO Carol Bartz or SoftBank’s Masa Son, but their functionaries are all set to discuss the deal.

The issue has revolved around the spinning out of Alipay by the Chinese Internet giant Alibaba, without the approval of large stakeholders Yahoo and Japan’s SoftBank, which the pair felt was a big no-no.

Much mishegas followed, but the trio has been hard at work on a settlement, which is here now.

Of course, had the three companies cooperated in the first place as joint owners and board members of Alibaba, this all would have been unnecessary.

5:48 am PT: The call starts without all kinds of regulatory info about what can and cannot be said, before being thrown to Yahoo CFO Tim Morse.

One interesting wrinkle is that SoftBank’s Ron Fisher cannot speak at all, due to some Japanese laws, which are unexplained. But, said Morse, he’s there to show his support.

Go, Ron!

Alibaba’s CFO Joe Tsai is up first to talk about the deal over Alipay, which he stresses does not really make much money now. As he says, it is “marginally profitable.”

Tsai walks through the facts that they have already outlined earlier today, including a variety of payments from Alipay to Alibaba, since — let’s be clear — it used to be part of Alibaba.

But Alibaba said it had to spin it out in order to get critical regulatory approvals from the Chinese government, which caused this mess.

Morse now comes on, noting the whole squabble really had “no direct impact” from a financial point of view on Yahoo or SoftBank at this time related to its Alibaba assets.

Well, shareholders of Yahoo might beg to differ, considering the huge hit the stock has taken due to the fight. Wall Street has long considered Yahoo’s Asian assets its most valuable part.

But Morse is pleased the complex agreement has finally been reached — I am guessing it was not easy to negotiate among three different countries with so much pressure.

5:59 am: Time for Q&A!

The first question is about more deets and also about the possibility of a liquidity event for Alibaba or its various units.

Tsai underscores that there might not be one or there might be one. In other words, the Chinese assets of Yahoo may or may not ever pay off.

The next question is about why Yahoo and SoftBank should have a cap on an asset they used to own 100 percent of. Good point!

Neither Morse or Tsai really answers the question, except for Tsai talking about how certain rules over foreign ownership of payment companies in China means it had to be like this.

“If you own 100 percent of the business that cannot operate, you own 100 percent of zero,” said Tsai.

Translation: That’s China, folks, so suck it up!

The next question is a promissory note, which Tsai says has value, even though it actually does not have value right now. China!

The analysts still are stuck on this fact that, under terms of the agreement, Yahoo will only get 37.5 percent of an IPO or other liquidity event, when it used to be owner of 100 percent of Alipay.

Good point: Will this happen to other Alibaba units, such as its Taobao commerce unit?

China is a good place to be, assures Tsai, which is cold comfort right now.

A lot of swirl around preferential terms in the deal for Alipay with Alibaba’s units, which seem to be the same as before. In other words, nothing has changed, except a lot of stock loss for Yahoo and less technical ownership of Alipay.

The Wall Street analysts on the line continue to be riveted to the idea of a liquidity event for Alipay and other Alibaba units, especially Taobao, and keep asking different versions of this question.

The last question is about more deets of the deal and new business ideas for Alibaba.

Tsai talks about a cloud-based system rolling out, for example.

The questioner moves to, you guessed it, a liquidity event.

“I don’t think we want to get into it at this point,” says Tsai.

Well, we do, but apparently Yahoo shareholders are not going to.

That said, the deal is finally settled, which has already given Yahoo shares a small bump today. And that’s not nothing.

Microsoft had a solid fourth quarter, which is why the conference call with Wall Street analysts should be relatively short and sweet.

Or sweet, at least.

Microsoft reported beat expectations on profits that rose 30 percent, as well as on revenue. Of particular note were its Office, Entertainment and Devices and Servers and Tools units. Even the revenue at its perpetually money-sucking Online Services division was up 17 percent.

(You can see Microsoft’s charts and other data here, if you really want more.)

Here’s a liveblog of the call:

2:31 pm PT: Well, Microsoft investor relations dude-in-chief Bill Koefoed sounds unusually jaunty in his greeting.

And why not? The results are good for Microsoft, even a little giddy, with a lot of impressive numbers and solid launches of several products, from Xbox Kinect to Office 365 to Bing, the very pricey but pretty search service.

Next up is CFO Peter Klein, who also sounds like this particular call is a relief.

He talks about the results a bit, most of which are up.

“In summary, we are pleased,” says Klein about the quarter and the year. He also notes that he is “excited.”

It’s party time in Redmond!

2:38 pm: Peppy Bill is back, going through the numbers. Solid!

Klein then moves onto the future and he remains “excited.”

Now, it is onto Q&A from the analysts.

This is where I zone out a little and start to wonder if a doughnut is a wise choice for an afternoon tasty treat.

That would make me “excited.”

Lots of congrats, which only makes me hungrier. One analyst asks why it was so much stronger than expected.

Klein: The economy has improved, businesses are expanding, peeps love them some cloud.

There is a question about how the troubled Yahoo search partnership is going. Klein promises some improvement by the end of the year.

Still, bummer!

But it is quickly back to happy, with a question about the strength of Xbox and its subscribers.

“It’s fantastic,” says Klein.

Like I said, sweeeeeeet.

Here are the slides Yahoo released about its second quarter earnings, in which revenue was down due to an unexpected drop in growth in its display advertising business, especially in the critical U.S. market.

As you can see on Page 8 of the deck, year-over-year display sales rose only five percent in the quarter, compared to much more significant increases in previous quarters. With declines in all other revenue sectors, this was not a good thing.

The 10 percent decline in the Americas region, which you can see on Page 9, is the culprit, as Yahoo CEO Carol Bartz underlined in the conference call with Wall Street analysts today.

Paging Ross Levinsohn — leader of Yahoo’s Americas region and its ad efforts — stat!

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