Here’s Bezos, four paragraphs into his annual letter to shareholders, released this morning:

We build automated systems that look for occasions when we’ve provided a customer experience that isn’t up to our standards, and those systems then proactively refund customers. One industry observer recently received an automated email from us that said, “We noticed that you experienced poor video playback while watching the following rental on Amazon Video On Demand: Casablanca. We’re sorry for the inconvenience and have issued you a refund for the following amount: $2.99. We hope to see you again soon.” Surprised by the proactive refund, he ended up writing about the experience: “Amazon ‘noticed that I experienced poor video playback …’ And they decided to give me a refund because of that? Wow … Talk about putting customers first.”

I don’t know why Bezos didn’t want to identify Blodget as “the industry observer” by name. But you can’t accuse him of quoting Blodget out of context.

Here’s the title of the post Bezos is citing: “Just The Latest Example Of Why Amazon Is One Of The Most Successful Companies In The World,” which Blodget posted on Dec. 9, 2012, presumably as he was finishing up his negotiations with Bezos (and researching another post).

If he wanted to, Bezos could have kept quoting Blodget. Here’s the “nut graph” of Blodget’s post: “Amazon is obsessed with making its customers happy. Unlike many other companies, Amazon will instantly trade off short-term profits for the chance to engender long-term customer loyalty.”

You also can’t accuse Blodget of praising Bezos solely to help secure an investment in his website (where I am also an investor, but much, much farther down the cap table). Blodget has famously been an Amazon bull for a long, long time.

And I’m reasonably sure that Bezos didn’t consult Blodget before he wrote today’s letter: Via IM, I just asked Blodget if he’d seen Bezos’s letter.

His response: “WHOA!”

For our readers who are not inclined to constantly hit the refresh button, here’s a quick look back at the Top 10 stories that drove AllThingsD this week:

1. Disney Shuts Down LucasArts
2. Here’s Why You Hate Your Cable Company
3. AT&T: Oh, Wait … About That Samsung Galaxy S4 Pricing
4. Samsung Says Apple’s Patent Damages Could Still Exceed $1 Billion
5. HD Voice Will Start Coming to AT&T Later This Year
6. You Still Can’t Resell Your iTunes Songs, Court Rules
7. Elissa Murphy, One of Yahoo’s High-Profile Tech Execs, Heads to Go Daddy as CTO
8. Henry Blodget Is Quietly Planning a Stunning Return to Wall Street
9. What’s Dell’s Bidding Process Really About? (Clue: It’s Not About Fixing Dell)
10. Windows Phone Gaining a Toehold in Some Markets

For more of the week in review, you should follow us on Facebook and Twitter.

As Blodget explains on his own site, the Amazon CEO is personally leading a $5 million investment round in Blodget’s six-year-old Web publishing business.

By my count, that brings total investment in Business Insider to more than $18 million; via IM, Blodget tells me that the new deal values the company above the $50 million valuation it earned during its last round in 2011. (Because of my conflict of interest, this makes me happy.)

So there’s the nuts and bolts of the deal (for more background on Henry and TBI, see Ken Auletta’s well-timed piece).

The only other thing to spell out here is that this deal reminds you that life is long, and relationships last.

In 1998, Blodget and Bezos helped boost each others’ careers, when Blodget correctly predicted that Amazon’s stock would pass $400 a share (thanks to Patrick LaForge for catching my bone-headed typo). Blodget has remained an Amazon bull since then, and it looks like Bezos has stayed in the Blodget fan club, too.

Business Insider’s co-founder and editor is the subject of a Ken Auletta profile in this week’s New Yorker, which means Henry Blodget is now in some rarefied media mogul air (see: Rupert Murdoch, Bill Gates, Sheryl Sandberg, etc.)

And at the end of Auletta’s piece, which you should be able to read here soon, Blodget tells Auletta he would like to come back to Wall Street, where he has been barred from working since his 2003 SEC settlement. Or at least he’d like the option:

“Ten years ago, I got what amounted to a dishonorable discharge from the industry, and I’ve always been ashamed of that. At some point, if it seems appropriate, I would like to explore the possibility of being reinstated.”

So there you go.

Is this an attempt at an attention-grabbing way of summarizing an extensively reported story someone else produced? Yep! And am I going to (respectfully) aggregate the rest of this piece? Of course!

• Henry Blodget says he was a “loner” when he went to Yale in the mid-80s. His extra-curricular activities included tennis, chess, frisbee, rock-climbing, a capella singing and studying for a pilot’s license.
• Business Insider, which claimed revenue of $5 million in 2011, lost $3 million in 2012.
• TBI chairman Kevin Ryan says the company will do $11 million this year (last summer someone told the WSJ the company would do $12 million in 2012); he says the site has only spent $7 million of the $13 million it has raised.
• Though Comscore pegs the site’s traffic at 9 million, Blodget tells Auletta that his Google Analytics numbers are at 24 million unique monthly users, many of whom come from outside the U.S.
• If you’ve spent a lot of time thinking and reading about Henry Blodget, you won’t find a lot that is new here. But Auletta is thorough, and does a particularly good job of explaining Blodget’s Wall Street past, and its context. So the time you put in on the 7-page piece is most definitely worth it.
• I’m quoted in the piece a couple of times, accurately. I still own a few shares of Business Insider. So I hope if it is acquired by a big media company, as a board member predicts will happen one day, it’s for a lot of money.

AllThingsD has learned that Peluso, who is currently the Global Consumer Chief Marketing and Internet Officer at Citigroup — and a Gilt director since 2009 — will be taking over in February. Ryan will become chairman and Susan Lyne will become vice chairman.

Over the past year, Ryan has focused on the company’s financial performance, trying to ready the fast-growing flash sales site for an initial public offering. In doing so, the company has gone through a number of restructurings, including a round of layoffs and the closure of some divisions, such as the men’s apparel business Park & Bond. Most recently, the company has decided to sell-off Jetsetter, its luxury travel division.

The appointment of Peluso will provide some stability to the organization since, as a board member, she is familiar with the business. At the same time, she will provide a fresh perspective to the executive team. Ryan, who became CEO two years ago, has been aggressive about moving into new areas, including the full-priced men’s apparel business, Park & Bond, and a grocery business, called Gilt Taste, which has also faced cutbacks.

“I’m biased because I’ve been working with her for three years, I think she’s great,” Ryan said. “She’s fantastic. I approached her a year and a half ago to persuade her to be here permanently. When I told the board five months ago that I wanted to start the search, I went to her first.”

Peluso has been with Citigroup since 2009, and prior to that, she was the CEO of Travelocity for six years. She joined Travelocity following the company’s 2002 acquisition of Site59, a travel site she created. Site59 was focused on last-minute travel deals, similarly to Gilt, which sells heavily discounted merchandise. “I’ll be getting back to my roots of running an e-commerce company,” she said in an interview. “I’ve gotten to know the team really well over the past three years on the board, and when the board approached and asked if I would consider doing it, I felt like it would be a great fit.”

The five-year-old site has grown quickly, selling high-end apparel at a discount online from brands that are looking to sell off overstock. Gilt was valued at $1 billion last May when it raised $138 million. Ryan, who made his name as CEO of DoubleClick, which was acquired by Google, said he will now be turning his attention to other start-ups that he has co-founded with his business partner, Dwight Merriman, including news site Business Insider and 10gen, a database software company.

“Both of them were quite small two years ago, and today they are getting pretty big and interesting. 10gen now has 200 people, and by summer 300. I’m not planning on being the day-to-day CEO anywhere, but I do plan to spend more time at the companies. I’m a very active board member.”

He said starting this quarter, Gilt has reached profitability, excluding some expenses, and that the business is starting to generate cash — a huge turnaround since losing $50 million last year. For now, the emphasis on going public seems to be on the back burner. Ryan said its a goal that “will happen at some point in one to two years.” Previously, the timeline had been the fourth quarter this year or early 2013. “It’s not something I want to rush into. You look at Zynga and Groupon, and it doesn’t excite me.”

Of course, that’s now also a decision that Peluso will be weighing in on, but so far it doesn’t seem to be her first priority. “My most important job is to build a foundation, and make sure we have an extraordinary business,” she said.

Will she be making big changes at the company, which has already gone through a lot? “It’s too soon to say,” said Peluso, which is the safe answer for now. “I have an inside perspective. I’ve been able to spend lots of time with the team, but I’m not going to presume to know everything. I’ll be starting in [February], and when I do, I’ll be eager to dive in and learn a lot.”

The full press release:

GILT APPOINTS MICHELLE PELUSO AS CHIEF EXECUTIVE OFFICER

NEW YORK, December 6, 2012 – Gilt, www.gilt.com, today announced it has appointed Michelle Peluso as Chief Executive Officer effective February 2013. Ms. Peluso is currently the Global Consumer Chief Marketing and Internet Officer at Citigroup and has served on the Board of Directors of Gilt since October 2009. Kevin Ryan, Gilt’s Founder and current CEO will become Chairman and Susan Lyne will become Vice-Chairman.

“I’m tremendously excited to be leading a company with a brand I love and a team I’ve come to greatly admire,” said Peluso. “Gilt has done a terrific job establishing itself as one of the most innovative online shopping destinations and I am looking forward to continuing to build on Gilt’s growth and success.”

Every day at noon EST, Gilt launches new, limited-time sales of the most sought-after products and most desirable brands in fashion, home décor and leisure. Launched in December 2007, the company is the leader in the flash-sale space and has attracted millions of loyalists by offering them special access to coveted merchandise and experiences at insider prices.

Ms. Peluso has been with Citigroup since 2009. Prior to that she was the Chief Executive Officer of Travelocity from 2003 to 2009 after serving as the company’s Chief Operating Officer and Senior Vice President of Product Strategy and Distribution. Under her leadership, Travelocity experienced a significant upturn in both revenue growth and profitability. Ms. Peluso joined Travelocity following the company’s acquisition of Site59, a travel site she created and launched in 2000. Site59 was the leader in the US “last minute deals” arena and won numerous honors for innovation before it was acquired by Travelocity in March 2002. Prior to leading Site59, Ms. Peluso served as a White House Fellow and Senior Advisor to Labor Secretary Alexis Herman and worked as a case leader for The Boston Consulting Group in New York and London.

“Michelle’s deep Internet experience, coupled with her operating and marketing background, made her my ideal choice to be Gilt’s CEO going forward,” said Kevin Ryan, Founder and CEO, Gilt. “We have worked together for three years as fellow Board members and I am thrilled she will be leading Gilt to its next level of growth and market leadership.”

“We have had the opportunity to get to know Michelle as a Board member and her insight and strategic advice have been invaluable,” said Susan Lyne, Chairman, Gilt. “She has a clear vision for Gilt and the Board and I are confident in her leadership and excited about the many opportunities ahead.”

Ms. Peluso has received the Stevie Award for Lifetime Achievement in Business; she has been recognized by the National Italian American Foundation with the Special Achievement Award in Business, and Fast Company Magazine named her a “customer-centered leader.” Most recently she was named as one of the world’s most influential CMO’s according to a Forbes study conducted by Appinions. She received her master’s degree in economics, philosophy and politics from Pembroke College at Oxford University where she was a Thoroun Scholar, and her bachelor’s degree from the University of Pennsylvania’s Wharton School of Business.

As AllThingsD had previously reported and Groupon CEO Andrew Mason confirmed in an onstage interview, there’s a bit of mishegas going on at the top echelons of the daily deals company over performance issues.

Today, the board is meeting in Chicago, a gathering that should be tense, given the rift between Mason and his co-founders, Groupon Executive Chairman Eric Lefkofsky and Brad Keywell, as well as worries from other directors about how the company has fared over the last year under Mason’s leadership.

Badly, if stock price is the judge (and it is), with shares down more than 80 percent since its IPO. Only recently did the shares move up on news of an investment by Tiger Global Management and then, ironically, on news this week of Mason’s possible ouster as top exec.

Tricia Duryee has outlined the many other issues the board faces, with the key issue being whether Mason is the man to fix them.

Until we know what conclusion the board comes to on this question, here are the four likeliest outcomes:

Mason quits: The fall-on-the-sword option is simple — Mason might decide that, for the good of the company and to end questions about him, he moves aside and hands over the reins. Mason himself cleverly addressed this in that interview at the Business Insider Ignition conference by noting that he would fire himself if he thought that was the best choice.

While a clever turn of phrase. Mason cannot actually fire himself — that is the board’s job. And while he, too, is on the board, he would have to recuse himself from any firing of himself.

So, his only real option in this scenario would be to quit. But will he? No one knows but him.

On one hand, in my experience, Mason is thoughtful enough to want to do so if he thought it was the right thing; on the other, after numerous discussions with him over the years, I think he does believe he is the right leader for Groupon.

Mason is fired: By the board, of course. This would be a drastic action and, to my mind, very unlikely. It would require a majority of the board and a very aggressive effort on the part of Mason’s critics. It would also damage the company by tossing out one of its key founders, who is arguably Groupon’s heart and soul and very much its creative spirit.

Firing founders and co-founder squabbles are always problematic (see Twitter) and usually never a good thing.

Mason moves to a new job and a new CEO is named: This seems like one reasonable course of action if cool heads prevail. That’s because if you talk to any significant Groupon investor — and I have talked to a lot — there is serious doubt about the company’s business model already and very little support for Mason himself.

But that does not mean he is not very valuable as a figure at the company, especially around product and culture. Could Mason take a key role in that area as did Larry Page and Sergey Brin of Google or Pierre Omidyar of eBay? Most definitely.

Mason keeps his job but gets lots of support: Another very viable option, by adding even more executive heft to the novice CEO. Groupon has already done that with the elevation of Kal Raman as COO, but it is still not enough. Mason needs a lot more help if he is to succeed, including from independent board members. Good candidates there are former AOL exec Ted Leonsis (and he knows from crisis), investment exec Mellody Hobson and American Express CFO Daniel Henry.

The problem for this option is that it puts an enormous amount of pressure on Mason to perform and does not remove the rancor between him and Lefkofsky and Keywell. If he bests his board detractors, he is going to have to succeed. Call it the put-up-or-shut-up option, but the onus will be squarely on Mason in this scenario. Which is just where it should be.

There is one final option, of course: Nothing will happen and Groupon will continue to stumble forward with a lot of questions lingering about its clearly wounded CEO and disgruntled board dynamics.

And, oh yes, they all have to work together to fix the business and restore investor confidence. There’s that.

More to come soon, obvi.

Until then and speaking of Illinois, here is the “Wayne’s World” version of the classic “Ballroom Blitz”:

That’s totally normal, he says, for a company whose stock is down 80 percent.

That said, he think he’s the right guy to fix it. “If I ever felt that I wasn’t the right person to do the job, I’d fire myself,” he told Henry Blodget during an interview at Business Insider’s Ignition conference today.

If you want to hear a longer version of Mason’s keep-me-in-place argument, read on below.

———

Earlier

Groupon CEO Andrew Mason is under fire on many fronts, and now some of his own board members are talking about replacing him.

This morning, he’s appearing at Business Insider’s Ignition conference in New York, so we should have a pretty good idea of the first few questions coming to him from Henry Blodget.

Live coverage follows:

Hello there! Henry starts off with the obvious question: “What’s the deal — is the board going to fire you tomorrow?”

Mason: Newsflash — our stock is down 80 percent. “It would be weird if the board wasn’t discussing whether I was the right guy for the job.”

No question we’ve had “bumps in the road,” but we’re creating a new category. $5 billion in bookings in fourth year. Fending off thousands of competitors, etc. “I feel really good about the execution of the team.” “If I ever felt that I wasn’t the right person to do the job, I’d fire myself.”

Blodget: You’ve built this great business. “Heroic achievement.”

However, you’ve gone from growth phase, now in a different place. “Are you the right guy for this job?”

Mason: Yes. “What Groupon needs from the CEO role” is consistency, among other things. “I’m flattered that people think that removing me would flatten these bumps.”

Blodget: Aren’t you freaked out that these board discussions are in the press? Anyway, the complaint, as reported, is that you’re not being a good public advocate for the company, and that has allowed Wall Street and press to pile on to you guys.

Mason: We’ve always said transparency and candor are crucial. Performance determines long-term price. “I don’t think you can talk the stock back up to $20.” Getting there will be a function of how we execute.

We grew very fast in Europe and other territories, didn’t build enough tech infrastructure, now paying the price for that. But “we know the playbook,” and next year we can show the world that we can deliver.

Blodget: How do you deal with the hype cycle, and now the scorn cycle?

Mason: “You learn a lot.” The hardest part was during the quiet period after the S-1. But the company builds up a resiliency into the culture. “They look inward for signs of progress.” I imagine that you guys are thinking that “this guy has to be crying.” But that’s not what it’s like. “We’ve built up a resilency to the external noise.” We can’t minimize pain now at the expense of pain in three to five years.

Blodget: But, seriously …

Mason: People who joined Groupon to be part of the latest fad haven’t survived. “What you’re left with are the true believers … they realize the pain they’re going to undertake for the next few months. It’s part of the journey.”

Blodget: All this sounds very wise. You know, I used to be hot stuff. Then I had a “tremendous fall … I felt the weight of that …when you go home, do you sort of feel that?”

Mason: “I don’t know what you’re looking for me to say, exactly … that it’s the best thing in the world? … I don’t read the stuff that you guys write. It’s a distraction.” [Laughs from crowd]

“People write stories about us going bankrupt.” When they started, I used to talk to our CFO about how that could actually happen, and it’s basically an “end of days” scenario.

You have to get comfortable with those kind of stories. “But they see enough examples of those kind of stories that aren’t true, that they build up a resiliency.”

One version of the story was that the business model was so great that competitors would crush us. Another was that the business model was so bad that we would be crushed.

Blodget: [Softball]

Mason: You need to separate out our U.S. and international businesses. Two different businesses.

Now talking about pivot to goods business, explaining that infrastructure built to deliver deals also works to deliver goods.

Mason: “Goods has taken us by surprise.” We’ve been giving them more real estate. They are lower margins, still good margins, but that has hurt our numbers. But we are a growth company, and we can optimize numbers over long term.

Goods are good for us because they compliment deals.

Blodget: What does this business look like in five, 10 years?

Mason: When we started, I was a recluse, and I wanted a reason to leave my house. Deals were about discovery, for explorers. As we grew that business, we realized that we were the first company that had built a platform that connected online sellers and buyers. We’ve built retail relationships with thousands of people from “brute force.”

Mobile will be a big enabler for us. Trendline is “staggering.” A third of transactions are mobile. Over the past weekend, half of transactions were on mobile. Mobile is an enabler of local e-commerce in the same way that broadband has been for online video.

So how does Goods fit into it all? Core daily deal business is about “shocking people into buying something they didn’t want to buy when they woke up,” by big, interesting offers. By not being boring. Goods strengthens that proposition. “This is a sustaining innnovation, and this is a disruptive innovation.”

Blodget: So are you going to morph into Amazon?

Mason: No. Silly for us to try to “out-Amazon Amazon.” We’re not going to show people 1,000 TVs, we’re going to show them one TV. We think that’s a unique proposition.

Blodget: More on deals, please. Lots of local merchants complain about experience. But you’re still growing. How do we reconcile that?”

Mason: Plane crashes are more interesting than safe landings. “When Groupon fails to deliver ROI, it fails in a much more dramatic way than putting an ad in a newspaper and not getting ROI.” We track this heavily from third parties. We use ForeSee (for surveys), and we have “off-the-chart scores for satisfaction.”

Blodget: But the other constraint is that you have 100 million email addresses. Most people have tried you. How do you get growth, and combat deal fatigue?

Mason: Don’t look at it by solely looking at local daily deal business. Now we’re adding searchable indexes for deals in Chicago and New York. Will increase selection, grow by increasing site traffic, grow via Google search results.

Blodget: Back to the board meetings. Some big investors have been buying your stock. Let’s say there is a serious discussion that you should be replaced. What do you say?

Mason: “If I thought I wasn’t the guy … I care far more about the success of the business than I do about my role as a CEO.”

Blodget: And you should! You’re awesome!

Mason: “Thank you. But if I thought I wasn’t the right guy, I’d be the first person to stand up and take myself out of the job.”

Blodget: So you want the job?

Mason: “I want what’s best for Groupon.” Again, stock is down 80 percent, so this discussion is normal.

Blodget: Thanks again for showing up. “Groupon has accomplished a tremendous amount. I am hoping that you are on the Amazon and AOL trajectory going forward.”

(Photo courtesy of Michael Seto/Business Insider)

According to sources close to the situation, several Groupon board members have been seriously discussing making major leadership changes at the Chicago-based daily deals company, including bringing in a more experienced CEO to take over for co-founder Andrew Mason.

The board of Groupon has a regularly scheduled meeting later this week; sources said such management issues are likely to be discussed there, due to increasing frustration by some directors about the novice CEO’s performance so far.

To be clear, a move to replace Mason is not likely to happen immediately, if at all. And, in any case, any changes are likely to be done with his involvement. In addition, Mason also has support on the eight-member board — director and former AOL exec Ted Leonsis has always been a key mentor to him, for example.

But it has become obvious over the last months that a substantive rift has been developing between Groupon’s key players.

That has centered on Mason’s co-founder and Groupon executive chairman, Eric Lefkofsky, and board member and co-founder Brad Keywell. They, as well as several other directors, have been urging Mason to be more aggressive and public about the company’s turnaround efforts, sources said.

“The question is not whether Andrew is a good guy, but whether Groupon needs an Eric Schmidt,” said one person close to the situation, referring to the former Google CEO who was brought in to work closely with the company’s two founders. “And there’s been a lot more pressure now on the board to consider this seriously.”

The thoughtful and affable Mason — who has been the heart and soul of Groupon’s quirky culture and innovative product strategy — has indeed sometimes seemed to be in over his head in terms of leadership once the stakes got higher and the pressure increased after its IPO was announced last June.

While the company’s struggles have been well known for a while now, discussions about Mason’s tenure as CEO have increased as its stock has dropped precipitously. That has prompted its directors and management to seek to find a way to get the company on more stable footing as a business and, perhaps more importantly, with investors.

That has included the promotion of former Amazon exec Kal Raman to COO recently to give Mason more support. Raman is now, in effect, in charge of many operational aspects of the company, although not product, marketing or technology.

Another bright light recently has been a major investment by Tiger Global Management, a well-regarded hedge fund and private equity firm, which bought up close to 10 percent of Groupon. The move sent its shares up 24 percent in the last week, to $3.88, with a $2.5 billion valuation.

But that’s still 85 percent below its public offering price a year ago, and a far cry from the hype around the company when it exploded on the scene several years ago. Once the darling of the start-up space, with its innovative new social e-commerce model and lightning-fast growth, Groupon attracted huge funding from a panoply of top-tier Silicon Valley investors.

With that came a stunning $6 billion acquisition offer from Google and, later, an even huger valuation of more than $10 billion.

All that goodwill changed immediately after the company announced its IPO last June, with continued controversy around everything from Groupon’s accounting to management turmoil to its business model to rocky relations with merchants.

And while Mason has labored to affect a more professional tone in his own style, and seemed to have created a more stable management team, continued issues in Europe and getting enough traction for a number of new promising product initiatives has been tougher to solve.

Therefore, Mason’s performance is naturally under increased scrutiny, said sources. He will surely get questions on his record tomorrow, when he is scheduled to appear onstage at Business Insider’s Ignition conference in New York.

Charles Sipkins, a spokesman for the board, declined to comment, as did Groupon spokesman Paul Taaffe.

That doesn’t seem like the end game: If they make a go of it, they’ll be the first digital-only tablet magazine to succeed. For a convincing argument against that happening, see Felix Salmon.

Which leads you inevitably to a place where Newsweek exists only as a subsection of The Daily Beast, Diller and Tina Brown’s free Web site.

That one does have audience. In September, it attracted five million unique visitors in the U.S., per comScore.* But it’s a modest audience by Web standards. Time Inc.’s Time.com, for instance, drew 9.7 million in September. AOL’s Huffington Post had 38.6 million.

And if you want to compare Daily Beast to another newish site that mixes reported news, aggregation and irresistible click-bait, try this one: Henry Blodget’s Business Insider attracted 7.6 million uniques last month.**

But Blodget’s site has about 100 employees. Newsweek has 270, for now. That can’t last.

*IAC, citing internal stats from Omniture, says it has 15 million unique visitors. But that number includes international visitors, and the wide gap between the publisher’s numbers and comScore’s are fairly standard.

** I still own some shares in Silicon Alley Media, Business Insider’s predecessor company.

Yahoo could announce in the coming week what it plans to do with the billions of dollars it recently garnered after closing the sale of a portion of its stake in China’s Alibaba, according to sources close to the situation.

As AllThingsD has previously reported, the company is most likely to do a share buyback with the $3.65 billion, a move that could boost its still-lackluster stock.

That’s what happened when AOL did one in late June after it got a pile of cash from hawking its patent assets. Its shares are up more than 25 percent for those last three months, while Yahoo’s have gone up less than one percent in the same time frame.

When it announced the completion of the deal in mid-September, Yahoo said that it would hand over 85 percent of the after-tax proceeds to shareholders. (The Silicon Valley Internet giant will keep about $650 million for its own use.)

At the time of the transaction, a Yahoo spokeswoman said that the company declined to give any specifics around the form of return. The company could also, for example, decide to give investors a dividend, too, although Yahoo has long explicitly favored stock buybacks.

“The form and timing of returning proceeds will be determined by the board and management, taking into consideration the best interests of the company and its shareholders,” said the Yahoo flack.

Speaking of flak, new CEO Marissa Mayer tried to give some to tech journalists, some of whom have been giving her a bit of a hard time of late for showing signs of potentially being too spendy.

In a memo to staff announcing the date of its employee holiday party — it’ll be on December 1 on Pier 48 in San Francisco — Mayer took issue with a particular report from Business Insider about how she tussled over costs with departing CFO Tim Morse, whom she ousted last week.

Business Insider claimed that included her taking the price of the holiday shindig from $100,000 to $3 million, due in part to a change in venue location.

Mayer begged to differ, noting in the internal memo that the event would not bust the bank and still be tons of fun:

“Building on the theme of tech reporters not being great with math or numbers, rumors of this year’s party budget have been greatly exaggerated.”

(Is there actual time for tech reporters being math-impaired to become a theme that’s being built upon at Yahoo? I thought Mayer said the company would be building innovative products.)

But since we in the media are apparently dunces, I suppose we’ll just have to rely on Yahoo’s own numbers from its last quarter — which I embedded below — to tell the tale of continuous troubling declines in search queries and page views, declines in minutes spent on its media properties, declines in growth of unique visitors and flat-as-a-sugar-cookie growth in revenue.

Or, as Mae West famously said in the most delightful math quote ever: “A man has one hundred dollars and you leave him with two dollars. That’s subtraction.”

So is this Q2 financial performance at Yahoo — which is certainly not Mayer’s fault since she just arrived, but will be her responsibility to fix going forward:

YHOO_Q212EarningsPresentation

As everyone with a pulse knows, Facebook shares took another dive Friday to reach the lowest level yet since its ignominious public offering in May.

Shares closed at $18.06, down 5.4 percent, which is half of its happier $38 IPO price. Actually, more than half, with a 52.3 percent decline overall since then.

Investors are not pleased. Facebook employees are not pleased. Even the New York Times Dealbook’s Andrew Ross Sorkin finally got unpleased, and unloaded on Facebook’s CFO David Ebersman (who has been under attack, by the way, for a while now).

“When Facebook’s I.P.O. first started to appear troubled back in May, I purposely avoided weighing in. Frankly, I thought it was too soon to judge,” wrote Sorkin. “But we have passed the pivotal three-month mark.”

Pivotal! Ruh-roh.

Actually, the Silicon Valley social networking giant will have to pivot for quite a while going forward, for a myriad of reasons.

Most of all, as John Paczkowski noted on Friday, and is also well known:

“The expiration of Facebook’s first lockup on 271 million shares earlier this month tanked the stock. And with four more yet to go, there is clearly further volatility ahead. On Oct. 15, 249 million shares will become eligible for sale. On Nov. 14, the lockup will expire on 1.32 billion shares. On Dec. 14, another 49 million shares. And on May 13, 2013, the final 47 million shares.”

In other words, that’s a lotta lockups to be unlocked.

And, as you can see from these two helpful lockup-expiration-focused charts for a range of other tech IPOs of late from SNL Kagan, that means a lot of downside for Facebook’s stock:

But, as I noted, this is already known by all, as Business Insider’s Henry Blodget — who has done some of the sharpest analysis on the troubled stock story at Facebook — correctly noted in a post titled, “It’s Becoming Clear That No One Actually Read Facebook’s IPO Prospectus Or Mark Zuckerberg’s Letter To Shareholders” on Friday.

“As Facebook’s stock continues to collapse, the volume of whining is increasing,” wrote Blodget. “As I listen to all this whining, I have a simple question: Didn’t anyone even read Facebook’s IPO prospectus? The answer, I can only assume, is ‘no.’”

No, they did not, or they might have read about everything from the company’s slowing growth rate to its mobile issues to, yes, all those billions of lockups to come.

Also, he noted, a bit of math would have yielded the high price-to-earnings ratio, which remains high at Facebook’s current low stock price, especially compared to Google and Apple.

That does not mean everyone is gnashing teeth. One of Facebook’s key Wall Street underwriters, J.P. Morgan, gave a stronger thumbs-up to the company in a note released yesterday for the future, even as it cut back on its target price by 33 percent.

The worst news: J.P. Morgan’s Doug Anmuth gave Facebook shares a $30 target, which is still far below his $45 target in late June.

Still, he also struck a sunnier note, saying he expects advertising revenue at Facebook to rise in the next year, even as payments revenue and overall profitability will be less.

Anmuth also said he expects Facebook to repurchase some of its now-cheaper shares to settle its tax bill related to restricted stock units via the credit or cash, rather than stock sales.

“This would essentially amount to a buyback of ~120M shares totaling $2.2B at current prices, and it would reduce the outstanding share count,” he wrote.

That’s probably cold comfort to shareholders, especially given most Wall Street analysts have urged buying, even as the stock has dropped.

Then again, since it’s not yet clear where the bottom truly is for Facebook shares, it is at least one less thing to worry about.

Now the conventional wisdom has shifted again: No TV set, and maybe very little else from Apple on the TV front, in the near future.

The newest version of this thought comes from Pacific Crest analyst Andy Hargreaves, who met with Apple CFO Peter Oppenheimer and media boss Eddy Cue on Wednesday. Here’s his takeaway on Apple TV, published in a note yesterday, and first flagged by Fortune’s Philip Elmer-DeWitt:

An Apple Television Appears Extremely Unlikely in the Near-term
Relative to the television market, Eddy Cue, Apple SVP of Internet Software and Services, reiterated the company’s mantra that it will enter markets where it feels it can create great customer experiences and address key problems. The key problems in the television market are the poor quality of the user interface and the forced bundling of pay TV content, in our view. While Apple could almost certainly create a better user interface, Mr. Cue’s commentary suggested that this would be an incomplete solution from Apple’s perspective unless it could deliver content in a way that is different from the current multichannel pay TV model.

Unfortunately for Apple and for consumers, acquiring rights for traditional broadcast and cable network content outside of the current bundled model is virtually impossible because the content is owned by a relatively small group of companies that have little interest in alternative models for their most valuable content. The differences in regional broadcast content and the lack of scale internationally also create significant hurdles that do not seem possible to cross at this point.

Bear in mind that the above is a mashup of Hargreaves’s analysis and guidance from Apple executives. So you’ll have to do some guesswork to figure out exactly what Apple is saying and not saying.

But it makes perfect sense, because it’s what Apple has been saying consistently when asked about Apple TV or any other new product. And it also reflects the truth that anyone who has tried to tackle a TV Of The Future has figured out: Making the tech work better is (relatively) easy. Making the content work better is really hard.

As Business Insider’s Jay Yarow notes, Hargreaves’s takeaway is a bit different from the newest round of Apple TV prognostication, kicked off by reporting in The Wall Street Journal, which posits that Apple is no longer trying to “disrupt” TV, but wants to work with the existing TV Industrial Complex, by making slight tweaks to the model.

But even that reporting suggests that Apple isn’t anywhere close to getting buy-in from cable programmers or providers. And so it can’t bring out new hardware — box, screen or otherwise — until it makes progress there.

That still doesn’t rule out any advances with Apple TV. It would seem totally reasonable for Apple to open its existing Apple TV box to outside developers, which would increase the utility of that hardware significantly without requiring any buy-in from TV Land. Just as Apple TV competitor Roku has already done.

One of Yahoo’s biggest long-term investors, Capital Research and Management, which owns more than 10 percent of the company in two different funds, is leaning toward voting for the slate proposed by activist shareholder Daniel Loeb of Third Point, in the wake of the controversy around the botched bio of its new CEO Scott Thompson.

“Having a CEO with that hanging over his head is really a problem going forward,” said one person with knowledge of the situation. “It’s hard to pretend this is not a problem.”

While sources said Yahoo’s longtime institutional investor — which currently holds large stakes via its Capital Research Global Investors and Capital World Investors funds — is not likely to go public with their voting choice until close to the annual meeting, which will take place sometime this summer.

But its fund managers have told key Yahoo board members of their grave concerns over the situation.

Ironically, in the last proxy fight showdown with Carl Icahn, Capital removed its support of Yahoo’s slate too and was an important influence to many major changes at the company.

Such a move is problematic for Thompson, since the rejection of another big shareholder at its upcoming annual meeting will keep the unusual issue and right in the middle of a noisy proxy fight.

A special committee of the Yahoo board is investigating the situation — in which a fake computer science degree somehow got on the resume of the former president of eBay’s PayPal payments unit and later into official Yahoo regulatory filings.

The problem was uncovered last week — unfortunately for the Silicon Valley Internet giant — by Loeb, who has been banging away on Yahoo since.

A trio of independent Yahoo directors is looking into the mess, with a focus on how that happened, whether anyone at Yahoo knew of the inaccurate bio and how it got there in the first place.

Also of great concern, is how Thompson could have not seen the error in the many years it was on the Web site of eBay and also how he approved a bio that had the inaccuracy in it when he was hired by Yahoo in January.

Worse still, in a 2009 interview, he clearly did not say he did not have such a degree in with a radio show host when directly asked about it.

“It’s a little hard believe an executive of this level would have missed such a thing, when he had so many opportunities to fix it,” said one source. “And, if he did overlook it that many times, that’s a problem too.”

In fact, according to a report earlier today by Business Insider that I also confirmed, Thompson told employees today in two separate meetings that he did miss the error since it was placed there — inexplicably — in 2004. In the meeting, he blamed a low-level headhunting staffer who added it incorrectly, an error that then proliferated.

Thompson also said he did not provide a resume to the company in his hiring process — say whaaaat, but true — although this still does not absolve him from the original error.

As to the interview: Thompson said he did not want to be rude and correct the host of TechNation, Moira Gunn, after she clearly asserted to him he had a computer science degree as part of a question on his qualifications. Others present at the meetings said he said he did not hear the question.

But, in an video interview with me yesterday, though, Gunn said she and Thompson discussed a computer science education in a way that left the clear impression that he had obtained one.

While Thompson’s excuse may beggar the imagination of some, it’s his story and he’s sticking to it. In all seriousness, his complete lack of willingness to take responsibility for the error — even if it was not his fault — itself is a little startling.

Because what’s not clear is how the bio was miraculously correct in eBay’s official filings and also if it is plausible that he never saw the mistake.

Numerous communications execs at Internet companies told me that it was unusual for a high-level exec not to pay close attention to information that went out about them, especially in legal filings. In addition, just as many execs are made to check and swear on their bios that go into such documents.

In fact, it was Thompson’s job to make sure the things written about him were correct at all times. As CEO, as a major Silicon Valley player pointed out, he is required by federal law to personally certify Yahoo’s Securities and Exchange Commission filings. Violations of these rules carry financial and also potential criminal penalties.

Sources said the board is worried about that credibility issue too and it puts Thompson in an ever-dicier position. Noticeably, the board has yet to make a public statement of support for him on the issue.

Also a major worry for the directors is the mostly negative response to the situation from Yahoo employees, who are deeply upset that Thompson’s error was not caught and that he might not be treated in the same way as anyone else who turned in a false resume, whether it was by accident or not.

A Yahoo spokeswoman told me last week that there was also support internally for Thompson, but in many dozens of interviews I have done with Yahoo employees and a continued monitoring of internal bulletin board, the tone is not in his favor by any means.

Like I said, it’s a dicey time to be Scott Thompson right now.

RELATED POSTS:

• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
• Yahoo Officially Confirms ATD Report on CEO Changes and Proxy Settlement
• Meet the Man I Call “The Hair”: The Video Stylings of Yahoo’s Newest CEO Ross Levinsohn
• Will Thompson’s Ouster Mean a Yahoo-Facebook Patent Settlement Too?
• Exclusive: Yahoo’s Thompson Out; Levinsohn In; Board Settlement With Loeb Nears Completion
• Heidrick & Struggles Slaps Back at Thompson’s Yahoo in Blame Game Over ResuMess
• Is He In or Is He Out? Crunchtime for Scott Thompson at Yahoo.
• Not So Scott Free? Yahoo’s Other Big Shareholder — Cap Re — Leaning Toward Supporting Loeb Over Thompson ResuMess.
• Tech Nation’s Gunn Says She and Yahoo CEO Discussed Their CS Degrees Before 2009 Show (Video and Audio)
• Loeb Calls Again for Thompson Firing From Yahoo, as Former eBay Boss Supports Him
• Place Your Bets: Will Loeb Drop Another Bomb on Yahoo at Vegas Confab Later Today?
• Exclusive: Yahoo Director in Charge of Botched CEO Vetting to Step Down From Board
• CEO Says Sorry to Yahoos for Borked Bio “Distraction” — But Will Mea Culpa Work Without an Apology for Error? (Memo)
• Buffett Comments on Trust Issue in Yahoo CEO BioGate: “You’ve Got a Problem”
• Loeb Lobs Lawsuit, as Expected, at Yahoo’s Borked Bio Mess
• As Yahoo CEO Reaches Out to Top Staff, Board Meets to Weigh “Options” (I.E., Deciding Who Gets to Take the Borked Bio Blame)
• Yahoo Should Expect Incoming Lawsuit Lobbed by Loeb Tomorrow on CEO Hiring
• They Shoot Yahoo CEOs, Don’t They? But Not Without a Really Smoking Gun and a Much Stronger Board.
• Yahoo’s Thompson Asks Employees to “Stay Focused” — Except Not on Him
• In 2009 Interview, Yahoo CEO Does Not Deny He Has a CS Degree, and Calls Himself an “Engineer” (Audio)
• Yahoo’s Board Will “Review” Resume Discrepancy of CEO
• How Did a Phantom CS Degree Get on CEO’s Bio in SEC Filings? Yahoo’s Not Saying.
• Yahoo’s Response on CEO’s Computer Science ResumeGate: “Inadvertent Error”
• Dan Loeb Alleges “Discrepancies” on Yahoo CEO Scott Thompson’s Resume Related to Computer Science Degree

Apple and I’m not sure why.

– Ben Horowitz, co-founder and GP of Andreessen Horowitz, at Business Insider’s Ignition West conference Wednesday, when asked what he would do if he could take all of his firm’s money and invest it in either Google or Apple

Now K2 has attracted its own investors, who have put a total of $7.5 million into the company. Many of the boldfaced names will be familiar to media folks, including Bob Pittman, Strauss Zelnick, Casey Wasserman and Jon Miller, who heads up digital at News Corp. (which also owns this Web site).

That money is supposed to help K2 build up to three companies a year, making investments of $250,000 to $1 million to get them going. They’ll be primarily focused on media, mobile, or both — the two had previously raised an AppFund that took a different approach to wooing iOS developers.

Klaus likens K2’s approach to the one former DoubleClick executive Kevin Ryan took a few years ago, when he seeded a handful of companies including Music Nation, which Klaus co-founded (another one was the publication that’s now called  Business Insider, where I used to work).

Ryan eventually ended up focusing almost all of his attention on Gilt Groupe, his “flash sale” site, and perhaps if  Klaus and Wendle end up with the same kind of breakout success story in their lineup, they may end up making a similar choice.

But for now, the pitch is that they’re going to focus all of their attention on building up a small portfolio, investing lots of time and energy into each company — and getting a decent chunk of equity in return. “We’re not giving people $25,000 and space to hang out at. We’re really building businesses,” Klaus says. “We’ve very engaged operationally.”

So far, K2’s list includes Fingerprint, a mobile education play; Tracks, a mobile photo sharing app; and Sonar, a mobile “friend-finding” app. All of those companies have plenty of competition — “social discovery” apps like Sonar are the trend of the month, for instance. And perhaps you’ve heard of Instagram. But if no one else was interested in that stuff, it wouldn’t be any fun.

It’s still just in test mode, and only open to a handful of advertisers. But those who can use it can now buy ads directly via Twitter, using a credit card and a Web browser, without ever having to talk to a human being. Right now buyers can only purchase some of Twitter’s ad products — specifically “promoted accounts” and “promoted tweets” — but Twitter says that will expand over time, as it rolls out self-serve to more buyers.

This is a step that Twitter has been talking about for a long time — so long that it has had to argue with reporters who swear they saw one nearly a year ago — so it’s not earth-shaking stuff. Yesterday, for instance, when Twitter ad sales head Adam Bain disclosed it onstage during an interview at Business Insider’s Ignition conference, it didn’t seem to register.

Still, it’s a significant milestone, because if Twitter is ever going to grow into that $8 billion valuation and beyond, it’s going to have to be able to handle a huge volume of ad transactions — just like Google and Facebook. And that can only happen if small and medium-sized buyers can do it on their own.

At the other end of the spectrum, though, Bain and company are now pre-selling big dollar ad campaigns, to big brands, that will run in 2012. That kind of pre-sale is also the mark of a grown-up ad business, and while Twitter is a long way from getting there, it’s a start.

Here’s Twitter PR rep Matt Graves’s comments on self-serve, via email:

Last month, Twitter began testing self-service advertising with a handful of existing advertisers. These advertisers can now set up and run their own Promoted Products campaigns and pay via a credit card.

This is an important step in continuing to grow Twitter’s business. Our Promoted Products can help small and medium-sized businesses build their audience on Twitter and better engage with the people they want to reach.

As with all of our advertising efforts, we’re starting small, testing carefully and making improvements as we learn what works. We will slowly roll this capability out to more advertisers in the coming weeks and months.

[Shutterstock/Master3D]

You’d think there would be a party in Redmond, Wash., today, as software giant Microsoft soundly beat Wall Street expectations in its third-quarter earnings released earlier today.

Microsoft said it had revenue of $16.43 billion for the quarter ended March 31, 2011, which was up 13 percent from a year ago. Net income was $5.23 billion, or 61 cents per share, a rise of 31 percent and 36 percent, respectively.

The surge was led by sales of Office, Kinect and Xbox and a stronger economy.

But there are shadows, too, as results were dragged down by weaker revenues for its flagship Windows unit.

The report comes as Microsoft’s stock continues to lag, declining 14 percent for the year.

Buzz kill!

BoomTown livedblogged the call for Wall Street analysts:

2:30 pm PT: Peter Klein, Microsoft’s CFO, who sounds super peppy, outlined the strong quarter, especially for its Office products.

He also mentioned some glitches, such as Microsoft’s still-struggling efforts to increase revenue per search (RPS) in its longtime search and online advertising partnership with Yahoo and the slower growth of the PC sector upon which the software giant’s Windows relies.

PC should stand for “possibly crappy,” but good-boy Klein did not say so.

Investor relations dude Bill Koefoed also read through the news, sounding at times like a sports announcer on a cable television network.

“Quuuuaaadrupled…,” he intoned about one part of Microsoft’s business.

This all went on for a while, since Microsoft has a lot of divisions. Servers & Tools. Online Services. Entertainment and Devices. Fashion & Cute Tops.

Okay, not that one, but a girl can dream.

It was all fun and games until Koefoed got to the Yahoo problem, which Yahoo CEO Carol Bartz had used as a cudgel in her earnings report recently.

Yes, it is a bummer. But soon it was back to the happy land of Xbox!

Klein said he was pleased with the results in a jaunty manner, which made me desperately wish Microsoft CEO Steve Ballmer led the call.

Because he’s always one obnoxious query away from a volcanic popping off.

Which is why I love those Yahoo calls and Bartz.

Buzz kill!

2:54 pm PT: That was fast–the call was quickly into questions.

The first is about COGS–cost of goods sold–and how it impacts gross margins.

Klein said the expenses were volume driven. I’d explain, but then I would fall asleep.

The next question was about stock buybacks.

That might get the stock up. Yeah, said Klein, they’ll keep doing that–not that it has helped much on the share price front.

More and more questions, about the PC market, the issues at Yahoo (let’s get that RPS up!), the Windows Phone 7 business.

I’ll be honest, I was a bit bored and started reading a riveting Business Insider interview with TechCrunch’s Michael Arrington on his myriad conflicts of interest related to his tech investing while also blogging as a news guy.

Whatever you think about him, that dude is good copy.

Wait, back to growth rates for Office!

It’s going great, said Klein (hey, maybe Arrington will invest!).

The call wraps up on news of an upcoming investor conference, being held near Disney World.

Oooh, party time!

Now it looks as if News.me is just about ready for public consumption. I’m basing that observation on a new Web site that spells out, in great detail, how the app is supposed to work, and which instructs users to head to iTunes to download the app.

As I’m typing this, News.me still isn’t available in the app store. So it’s possible that the new web page is simply a new web page. Perhaps it’s just an exercise in positive thinking–maybe this will force Apple into approving our app!

[UPDATE: "Our understanding is that News.me is launching tomorrow", says New York Times spokesperson Eileen Murphy; the Times is aware of News.me's plans because it helped develop the project in its early stages (see below). I've asked Bit.ly for comment but haven't heard back yet.]

At a minimum, though, we can learn a lot about what Bit.ly has planned when News.me does launch.

The basics:

• News.me will cost $0.99 a week, or $34.99 a year. It will be available as an iPad app, using Apple’s subscription service, or as an e-mail newsletter.
• News.me will provide users with curated Twitter streams that highlight “the most popular or interesting news stories” that appear in their own Twitter feeds, and from the feeds of other Twitter users they select. The notion is that users can “read over the shoulder” of people they find interesting.
• Bit.ly does the curating, using the data it culls as it shortens billions of shared links on the Web. Since News.me relies on Bit.ly data, it has a natural bias toward publishers that use the service.
• News.me lets users read those stories in a “streamlined reading view,” which will be familiar to anyone who has used apps like Instapaper: easy-to-read black text on a white background–without the ads users see when they read the same stuff on a publisher’s Web page.
• News.me will share some of its revenue with publishers who license their content to the service. But publishers who don’t have News.me deals but do appear on the Web will still see their stuff show up on the service. It just won’t look as nice, and they won’t get paid. And they won’t get the chance to run “additional promotion for publisher products that might be of special interest to News.me users (such as iPad applications).”

You can get a pretty good sense of how the app works by reading TechCrunch’s “exclusive” from February. Or you could just ask many of the people whose work often appears on Techmeme. A whole lot of writers and bloggers–including me–have had a chance to play with News.me for a while.

When News.me finally does go live, potential users will have to debate whether they want to pay a fee to read stuff they can get for free on the Web.

But to me, the most interesting thing about News.me is that it’s an aggregator blessed by some publishers that haven’t always been hospitable to aggregators.

There’s the New York Times, for starters, which handed over the beginnings of the service to Bit.ly in exchange for cash and equity. And the Associated Press, which often butts heads with the Web, has signed on, too.

So have Forbes, and AOL and many of its sub-brands, and a good chunk of the blogosphere–Gawker Media, Business Insider, Gigaom, Mashable, VentureBeat, etc. (I believe–but haven’t confirmed–that neither All Things Digital nor News Corp., which owns the site, have a deal with News.me.)

The Times and the Associated Press also work with Ongo, another aggregation subscription service. But Ongo only uses content from publishers it has deals with.

News.me, though, charges money for a service built using other people’s work–even if those people haven’t signed on.

Which is what the Times has complained about in the past–like last summer, when it forced Apple to pull the Pulse newsreader out of its app store. The AP has engaged in similar fist-shaking aimed at Google and the Internet at large.

Here’s News.me’s defense of its model:

Because News.me generally provides a small subset of a publisher’s content, filtered by user actions and News.me algorithms, it is not a substitute for publishers’ own web sites or iPad applications. And, since it exposes users to content they likely wouldn’t otherwise see, it can broaden the audience and, through related-content links, drive new unique users to publisher web sites.

Which is reasonable enough. Everything on the Web gets shared and sampled; if you’re a publisher trying to build or keep an audience, trying to prevent that is counterproductive.

And News.me’s curated browsing conceit–there’s no search function, and you can’t subscribe to a publication-specific feed–makes it worthless for anyone trying to use it to game publishers. This won’t work as a permanent ad-blocker, or a paywall-jumping aid.

I still won’t be surprised to see some publishers who haven’t signed on rattling their sabers when News.me launches–just like the Times and the AP have in the past. Glad to see they’ve come around.

On some level of journalism, I guess anything could happen.

At least that’s according to a recent article by Business Insider’s Henry Blodget about an alleged “mole” at Twitter who was allegedly spying for Google, specifically about an exec the microblogging service was trying to poach from the Silicon Valley search giant.

In a decidedly splashy, hello-traffic, ALL-CAPs headline–THE SEARCH FOR THE “TWITTER MOLE”: All Eyes On John Doerr“–Blodget pointed his J’accuse finger at the legendary venture capitalist as the culprit.

Based on…

Well, based on nothing, it appears, except rank speculation and what appears to be no attempt to get Doerr to comment.

And, while it’s not my cup of tea, whatev, I suppose.

Except when I read down to the bottom and landed on this gem:

We have talked to several sources familiar with aspects of the situation. Thus far, we have not been able to confirm either assertion.

First, no one has even confirmed that Google was tipped off in advance of Twitter’s poaching effort, much less by a Twitter mole.

This doesn’t mean it didn’t happen.

And later still:

So we haven’t been able to confirm the “high-level mole at Twitter” story. And we think there’s a good explanation for why there might not be a mole at all.

Secondly, we have talked to no one who has any evidence other than the logic above that, even if there is a Google mole at Twitter, the mole is John Doerr. One insider we spoke to, in fact, dismissed the idea out of hand.

Say what?

It’s kind of like thinking that a sparkly Civil War-era vampire falling in love with a moody chick in the Pacific Northwest and flying through the pines all day and mooning over their cruel fate was real.

Okay, that was a Hollywood movie called “Twilight,” but that doesn’t mean it didn’t happen!

Thus, Doerr–a tough customer to be sure, capable of all kinds of sharp-elbowed behavior–is guilty until proven innocent?

Or just not guilty at all, but let’s just say he might be anyway, without a shred of evidence, because it could have happened!

(Courtroom confession: It was All Things Digital‘s Liz Gannes, who did it on the blog with scoop on the Twitter talent raid effort of Sundar Pichai!)

Speaking of evidence, less than a week later, Javert–oops, I mean, Blodget–was back in another kangaroo court performance with another terrifically loud headline:

“The Guy Who Says He Owns 50% Of Facebook Just Filed A Boatload Of New Evidence–And It’s Breathtaking.”

Breathtaking, I guess, if you are in that fantasy teenaged girl mode, but deeply suspect if you are anyone with a modicum of journalistic responsibility.

It is perfectly fine for Blodget to dredge up the copious emails from a man named Paul Ceglia–who alleges he possesses a contract that he struck with Facebook co-founder Mark Zuckerberg at the time of its creation–and analyze them.

And it is certainly notable that a credible law firm, DLA Piper, has taken on the case for Ceglia and it does seems unlikely that it would have done so without doing some level of due diligence.

In fact, in an interview with Am Law Daily, DLA partner Robert Brownlie, international co-chair of the firm’s securities litigation, said: “At first I shrugged it off as incredible. I would not have gotten involved and DLA would not have gotten involved if we had any doubts about the facts or evidence in the case.”

That was, of course, countered by Facebook’s lawyer Orin Snyder at Gibson, Dunn & Crutcher, who said in a statement that the Ceglia allegations were part of “a fraudulent lawsuit brought by a convicted felon.”

By the way, in fancy-lawyer parlance, that translates to a liar-liar-pants-on-fire defense.

So, microwave the popcorn and get ready for the drama, because no question, it is clearly going to be juicy all around with a whole lot of social networking poking!

In fact, such a case is tailor-made for Blodget, who has always been a very gifted writer with a nose for sharp-edged analysis.

It’s too bad, then, that he did not hone his knife to such an edge when it comes to Ceglia, giving him much too much credibility based on what could be fake emails, especially since they come from a man with a history of fraud.

History, in fact, that Ceglia is depending on in this case, since Zuckerberg most definitely has one in regards to partnerships gone bad.

Thus, Zuckerberg has been sneaky before, ergo he’s sneaky here.

That’s no surprise as a legal tactic, of course, and I threw in the “ergo,” since I too want to play Perry Mason in a blog.

But. More to the point, while Facebook was certainly hard-nosed in dealing with both protracted and high-profile legal challenges from the Winklevoss twins and also Eduardo Severin, I don’t think I have ever seen the company explicitly say evidence was completely fabricated, as it is alleging Ceglia’s emails are.

As I said, I have no idea if they are or they’re not, but I do know this: While those emails are certainly bombshell in nature, they are designed to be so precisely because it is a lawsuit in which the principal is trying to shame Facebook into settling.

None of that seems to concern Blodget, who concludes at the end of the post:

“In short, to us at least, the emails don’t read ‘fake.’”

In short, to me at least, that’s for fake-email experts and the courts to decide.

The real fact of the matter is, who knows? I certainly don’t, although I do know it’s terrifically easy to file a lawsuit and claim just about anything you like.

And the same seems to be true–more and more these days and not for the good–for blogs too.

As for me, I need to get back to my goal of proving that sparkly vampires do exist.

But some of you are actually sort of interested in looking at ads. And lots of you like things that Apple makes. So: Here’s iAd Gallery, from Steve Jobs and company.

The free app is just what it sounds like–a highlight reel of ads created using Apple’s own in-app advertising system. That is, it’s an ad itself, for iAds.

You could choose to interpret the fact that Apple is rolling this out nearly a year after introducing iAds as an indicator that they haven’t taken off like a rocket. Or you could just take it at face value and acknowledge that lots of advertisers advertise advertising. Google, for one, runs banner ads promising free AdWords credits. I saw one today.

Dan Frommer at Business Insider has constructed a slideshow that explains, in detail, how the thing works. If you want to save yourself a couple of clicks, you can see it all on one page.

The company’s “social modules” dynamically populate with fresh content on any topic.

So, for instance, a news organization could automatically input the tags associated with its articles into a module, and on each page it would show relevant tweets about similar topics (and not just lame redundant retweets of the article itself, like you often see).

Or a site could show a live-updating widget that displays its most tweeted articles that day. Publisher IDG is already using the modules on some of its sites.

Anyone can create a self-service module, and Topsy will offer premium features such as analytics and revenue-shared advertising. Content within the modules is automatically filtered for profanity and language preference.

You might ask why Topsy and its random blog widgets are important. For one thing, Topsy is among the few independent players remaining in real-time search, with OneRiot pivoting to focus on ads, and Ellerdale acquired by Flipboard. Twitter does have its own search service, but it stores only a week of tweets at a time.

Topsy organizes its index of eight billion tweets using social signals, such as figuring out which accounts on Twitter are influential and which tweeted links are important, something Google and Bing are only starting to do. That’s a change from the dominant PageRank mindset, where a parent domain carries a certain weight without differentiation for all the different people who have accounts on it, from influential authorities to spammers.

And while it’s true that few Web pages need any more widgets than they already have, prominent tech publishers like Business Insider and TechCrunch use Twitter sidebar widgets from PostUp (formerly TweetUp) that show a rotation of promoted accounts. A more timely and dynamic alternative like Topsy Social Modules might be more useful.

However, we’re starting to get more information about how the McDonald’s incident appears connected to hacking incidents at other sites. Chicago Business is reporting that the company responsible for McDonald’s email marketing is Silverpop Systems, and that it had been operating under a subcontract from Chicago-based Arc Worldwide.

So who else is a customer of Silverpop? Yesterday I received an email from someone who’s a customer of deviantArt, a social network where artists share their creations. DeviantArt has a base of 13 million users. Got an account there? You’d better change any passwords that overlap with other sites. The site advised customers that their accounts were compromised, and blamed Silverpop.

It could extend much further yet. Silverpop has more than 100 clients, and not all of them are publicly disclosed, though here are a few, found on its client quotes page and its case studies page: Stamps.com, Pitney Bowes/Mapinfo, Encyclopedia Britannica, Santander Consumer Finance and watchmaker Fossil. There’s no word how any of those other companies are affected, if at all.

Silverpop CEO Bill Nussey said in a blog message to customers that the FBI is investigating the incident, and that only a small percentage of Silverpop customers have been affected. He also said that Silverpop was “among several technology providers targeted as part of a broader cyber attack.” Stacy Kirk, a Silverpop spokeswoman, wouldn’t say anything beyond what’s in Nussey’s message.

I’m beginning to wonder if there’s some indirect connection between what happened to Silverpop and what happened to Gawker. I’m speculating here, but it’s no stretch of the imagination that numbering among deviantArt’s 13 million users are some of the 1.5 million people whose accounts were compromised in the Gawkergate affair. And the FBI is investigating both. Thomas Plunkett, Gawker’s technology chief, told me by email that there’s no evidence of a connection. Then again, as Business Insider tells it, he hasn’t yet had his meeting with the FBI.

Maybe I’m looking for connections that aren’t really there, but it’s really not hard to see how the breach at Gawker could turn out be the start of a domino effect that’s much larger than anyone has yet realized. There certainly is a lot of grumbling about changing passwords today.

If you know more more about any of this, get in touch!

Below is the email to deviantArt users.

From: deviantART.com (address deleted)
Date: Mon, Dec 13, 2010 at 5:54 AM
Subject: RE: Email Notice

Silverpop Systems, Inc., a leading marketing company that sends email messages for its clients, told us that information was taken from its servers. This was probably part of a sweep by spammers. As a result, email addresses belonging to deviantART members were copied. Corresponding usernames and birth date may also have been removed.

We can assure you that nothing occurred on our systems with respect to this incident and no access was gained to private information on deviantART’s servers.

As a member of deviantART, you certainly have a right to know when an incident of this kind occurs. Unfortunately spammers are an unavoidable part of living on the Web.

The likely result of this event might be an increase in spam to your email. Experts have told us that there is an increase in email scams out there on the Internet and you should be cautious. Only click links or download attachments from people you know, particularly if they ask for personal information, and be sure that your email service provider has adequate spam filters.

Because we value the information that members give us, we have decided not to rely on the services of Silverpop in the future and their servers will no longer hold any data from us.