AllThingsD » first quarter

Kayak Hoping to Ride the IPO Wave

Tricia Duryee — Fri, 18 May 2012 14:30:43 +0000

Which will be the next tech company to go public after Facebook?

That’s an easy one: Kayak.com.

The travel search company, which has been putting off its plans to go public for more than a year and a half, is now getting ready to pull the trigger, according to sources.

The Norwalk, Conn.-based company is by default one of the prime candidates to go public because it has already filed its paperwork and has been dutifully updating its financial statements with the Securities and Exchange Commission every quarter.

A Kayak spokesperson declined to comment, but the timing is good for a number of reasons.

Not only has Facebook priced at the high end of its range, which makes investors a bit more hungry for tech stocks, but other travel companies have been warmly received by the markets over the past few months.

In December, TripAdvisor spun off from Expedia to become an independently held public company. Since then, the company’s stock has soared, trading at $41 a share, up from $27 a share. Expedia is also trading higher, up 50 percent to $41.10 a share.

Kayak could begin its roadshow as soon as Monday and may be seeking as much as $150 million at a $1 billion valuation, according to CNBC. In its original documents, it said it would raise a minimum of $50 million, which served more as a placeholder than what it was intending on raising.

As recently as last week, it updated its filing to report its first quarter earnings, announcing that it earned $4.1 million on $73.3 million. In the year-ago period, it recorded a lost of $6.9 million on revenues of $52.7 million.

Zynga's Top-Performing Game? Yep, Still FarmVille.

Tricia Duryee — Wed, 09 May 2012 19:07:36 +0000

Despite launching three long years ago, the Facebook game FarmVille continues to be Zynga’s runaway hit.

In the company’s first-quarter report, filed with the Securities and Exchange Commission yesterday, it disclosed that players who dig planting and harvesting crops accounted for 29 percent of the company’s revenue during the period.

One frequently asked question is whether social games will be played over the long term, or if companies like Zynga will have to continue creating hits to stay afloat.

Since the company went public last year, it has been claiming that the former is true — the older the title, the more revenue it generates. In theory, that’s because long-term players are more committed, and therefore spend more.

Based on the numbers disclosed yesterday, that continues to be the case. In fact, all four of the company’s top titles are at least a year-and-a-half old, and FarmVille continues on the upswing. A year ago, it was contributing 27 percent of the company’s revenue; now it’s contributing 29 percent.

CityVille, which launched in December 2010, accounts for 17 percent of the company’s revenue; Zynga Poker, which is five years old, accounts for 16 percent of revenue; and two-year-old FrontierVille accounts for 10 percent.

Zynga said the primary reason that FarmVille’s bookings increased during the quarter was the release of new content in the game.

However, older titles don’t always perform better.

Mafia Wars is a case in point. Last year, the game was Zynga’s third-best-performing title, and accounted for 18 percent of the company’s revenues. But after the company launched the sequel, Mafia Wars 2, the game suffered, as longtime Mafia Wars players failed to make the transition to the new version.

Now the game makes up less than 10 percent of the company’s revenue, which means Zynga is not required to break out its individual performance. It did note, however, that the quarter’s online game revenue was offset by a decrease of $26.5 million in revenue from Mafia Wars, compared to the first quarter of 2011.

Ouch. That’s a lot less ammunition.

Exclusive: The Billion-Dollar Inside Story of How Demand Media Almost Went Private Last Week (And Then Didn't)

Kara Swisher — Sat, 28 Apr 2012 18:02:46 +0000

According to sources close to the situation, Demand Media was deep into discussions with a private equity firm to complete a deal that would have taken the online content company private, nearing a price that was double its current value.

But Demand abandoned the effort this past week — which was born from an aggressive attempt by Boston-based Thomas H. Lee Partners to purchase the company for a price of up to $1.2 billion. That was due to a number of challenges, including complications related to its financing and the ability to retain executives in its aftermath.

The move on Demand by private investors is perhaps no surprise, and is part of a wider trend related to some Internet companies whose stocks have a depressed value relative to the worth of their assets.

Among companies having been and also being evaluated by private equity firms, whose business it is to turned the undervalued into a goldmine: Yahoo and AOL.

And also Demand, which is now worth only $605 million, a market cap that is off 65 percent since it went public in February 2011. Shares now trade at $7.25 each.

That depressed share price has been due to a number of issues, most especially changes to Google’s search algorithm to improve results. Called Panda, the changes at the search giant — a critical partner of Demand’s — has cut traffic to its major content sites and also called into question its ability to monetize its scaled editorial efforts.

Such a situation is nearly irresistible to PE firms — in this case, Lee, which approached Demand.

Several sources said that the board threw out a hefty number that it assumed would shut down any interest and the pair began talking with an initial offer to take the company private at $11.28 a share.

That equals close to $1 billion for Demand, which also has more than $100 million in cash. But sources said Lee and Demand also discussed the addition of a large loan as part of the ongoing discussions, for possible acquisitions related to a content roll-up strategy it had, which would bring the total up to $1.2 billion.

One source underscored that the board of the Santa Monica, Calif., company had no interest or intention to sell the business, but that the premium was large enough that it engaged.

The deal from Lee, which also included a strategy of splitting up the content arm from Demand’s lucrative domain-registar business.

There were also large cash-out provisions for major shareholders, as well as for CEO and co-founder Richard Rosenblatt.

Thus, the two sides engaged intensely in the last several weeks in crafting an agreement, although the devil would prove to be in the details.

One big issue is that taking Demand private was still a big financial commitment for Lee — which tried to engage some of its limited partners in the transaction — as well as other investors, including Silicon Valley’s Marc Andreessen.

That proved harder than Lee thought, said sources, with some balking at the firm’s ability to make a big enough score on the possible turnaround.

“It was hoped it would be a Skype situation, but there were worries,” said one source, referring to the blockbuster sale of the Internet telephony company by private investors to Microsoft for $8.5 billion last year. That deal was widely considered a PE home run, given the excessive premium paid for it.

Demand’s challenges increasingly worried the firm as it moved forward, sources said, causing it to reevaluate its earlier bid several times.

Also a worry: Retaining major talent, including Rosenblatt and others, after they sold large chunks of their equity.

After Lee asked for more time to complete the financing, Demand ended the talks last week.

Another source, as is typical in these endings, said it was the Lee that walked away (who knows and, really, who cares — both sides were engaged seriously).

One thing was true: “Demand was definitely at the altar, but it did not get to the vows,” said one source.

Another source noted that the board also determined that Demand’s situation was improving, and that new trends are showing that the bottom might be been reached. The company reports its first-quarter earnings on May 8, which is expected to show some traction related to its many challenges.

“There is nothing Lee could do that Demand could not do for itself,” said one person. “So throwing in the towel seemed premature for now.”

Lee declined to comment, as did Demand.

Zynga Reports Higher Revenues, Loss in First Quarter

Tricia Duryee — Thu, 26 Apr 2012 20:56:57 +0000

Zynga reported a net loss of $85 million, or 12 cents a share on revenues of $329 million, in the first quarter ended March 31.

When excluding some charges, including stock-based compensation, the company’s non-GAAP earnings totaled 6 cents a share, beating analyst expectations of 5 cents a share. Revenues also exceeded the expectations of analysts, who were anticipating first-quarter revenue of $318 million.

In the period a year earlier, the company reported a profit of $16.8 million on revenues of $242.9 million.

In after-hours trading, the social game developer’s stock bounced around, at one point increasing by 13 cents and then falling later by 2 cents.

The company’s results were solid, considering that it was Zynga’s second quarter as a public entity.

Still, it is also the second time in a row that the company reported a loss, despite seven previous quarters of profitability. It said most of that loss was attributable to $133.9 million in stock-based expense during the quarter, which was up from the $14.5 million reported in the same period a year earlier.

The company, which released such games as Hidden Chronicles and Scramble with Friends during the quarter, also updated its 2012 outlook, projecting non-GAAP earnings of 23 cents to 29 cents a share on bookings in the range of $1.4 billion to $1.5 billion. The company said it expects slower sequential growth in the first half of the year with most of its growth weighted toward the second half.

Bookings are what Zynga actually sells in the quarter versus revenue, which is amortized over multiple quarters. It reports these two figures because virtual goods are perceived as having a long shelf life. Bookings are often considered a better measure for how the company did during the immediate period.

In the first quarter, bookings totaled $329.2 million, an increase of 15 percent compared to the first quarter 2011, and an increase of 7 percent compared to the fourth quarter 2011.

Updated S-1: Facebook's Yearly Revenue Growth Up 45 Percent, But Down Six Percent From Last Quarter

Kara Swisher — Mon, 23 Apr 2012 19:13:53 +0000

Facebook filed an updated version of its S-1 public offering document today, which included somewhat disappointing first-quarter financials.

In the new filing with the Securities and Exchange Commission, its fourth update for its upcoming public offering, the social networking giant’s revenue was $1.058 billion, up 46 percent for the year, but down six percent from the previous quarter.

In the first quarter of 2012, Facebook’s 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.

Facebook also said its current share price was $30.89 each, which values the entire company at about $77 billion.

Some investors might worry about the latest results, which show a slowing in Facebook’s torrid growth. But Facebook said the quarterly decline was due to seasonality — it was flat in the same period a year ago.

As it noted in the document:

“We believe that our rates of user and revenue growth will decline over time. For example, our revenue grew 154% from 2009 to 2010, 88% from 2010 to 2011, and 45% from the first quarter of 2011 to the same period in 2012. Historically, our user growth has been a primary driver of growth in our revenue. We expect that our user growth and revenue growth rates will decline as the size of our active user base increases and as we achieve higher market penetration rates.”

Its audience, though, was still growing strongly: Facebook also said it had 532 million daily active users, up from 372 million a year ago and 483 million in December. Its monthly active users were up from 680 million last year to just over 900 million and up from 845 million from December.

Facebook also added an explicit figure for average revenue per user, which was $1.21, up six percent year over year. It also said the number of full-time employees grew 46 percent from last year to 3,539 at the end of March.

The last update to Facebook’s regulatory filing for its mid-May IPO was in late March. That one gave investors more information about a patent infringement lawsuit waged by Yahoo — Facebook noted its counter claim in the newest filing — and also its motion to dismiss Paul Ceglia’s legal attempt to garner half of the company. It then included more information about growing engagement by users of the social networking site.

Along with some other minor changes in the new document, Facebook noted, in news that was already known, that it would trade its stock on the Nasdaq market under the ticker symbol “FB.” It also said it had bought photo-sharing start-up Instagram, another piece of old news, and noted its just-struck patent deal with Microsoft.

One new detail about Instagram: Facebook forked over “approximately 23 million shares of our common stock and $300 million in cash” to buy it.

Also, said Facebook, in an interesting new section on its global business:

“In the first quarter of 2012, 50% of our revenue was generated by users in the United States and Canada, a decrease from 54% of our revenue for the first quarter of 2011, and in 2011, 52% of our revenue was generated by users in the United States and Canada, as compared to 58% in 2010, as we experienced more rapid revenue growth in markets such as Germany, Brazil, Australia, and India.”

Here is the whole updated file, if you want to peruse yourself:

4thfbs1update

Yahoo's Q1 Earnings: New CEO Will Get Some Satisfaction!

Kara Swisher — Tue, 17 Apr 2012 21:06:33 +0000

Yahoo turned in better-than-expected earnings today in its first quarter, and — as usual — I will be liveblogging the call with CEO Scott Thompson.

Yahoo beat Wall Street estimates in its first-quarter earnings report earlier today, with revenues 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 shares.

Earlier:
2:03 pm: We begin with a new investor relations dude, who has replaced Marta Nichols. She is now CEO Scott Thompson’s new chief of staff.

His name is Joon and he seems much more festive than Marta, who was very, very serious.

I could not be more thrilled.

Thompson comes on quickly enough and he is also pretty jaunty.

Yahoo has been “moving very fast” on a range of things. And how — this guy seems to eat Ritalin for breakfast.

But there is still a long way to go, he notes.

“I am not satisfied with the pace of top-line growth,” said Thompson, who added he would not be until Yahoo was keeping up with others like Google, which turned in a much stronger report last week.

He can’t get no satisfaction — but he will!

Thompson said one problem was still its ongoing search and advertising partnership with Microsoft. It’s still rocky in terms of monetization and more.

2:09 pm: But first, it is CFO Tim Morse’s turn to re-read the results that were just released.

I am not actually listening until he gets to the part about Thompson giving more deets soon.

Morse is teeing this up by noting that Yahoo is adding more to its bag of tricks beyond search and display, such as commerce.

This will take investments, which are core to success.

Thompson is back: “This business can and will grow going forward.”

I am holding him to that one!

He starts first by talking about Yahoo’s content business, which remains strong, but he points out the obvious: Engagement is off.

In other words, the kids love Facebook. Also Instagram. Also Tumblr.

That’s why Thompson says he told the staff of Yahoo to rethink it all when he arrived in January.

The conclusion:

“Yahoo has been doing way too much for too long and has only been doing a few thing well.”

As in, jack of all trades, master of none.

“We have to be clearer going forward about what we won’t do,” said Thompson.

2:22 pm: He goes over some specifics.

Shutting down 50 properties — Thompson does not say which, though.

Consolidating platforms.

Dedicating key teams to innovation.

Something else about being nimbler.

Data. Also data. Did I say data?

Research and development only for Yahoo-owned and -operated properties.

That is six points, which will be underscored by better execution.

Thompson has been talking about the “complex processes” that was once called peanut butter by one former exec.

Peanut butter is sticky and that’s the point.

2:26 pm: Oops, when talking about layoffs, Thompson says “PayPal” and not “people.” He used to run the eBay payments unit.

Thompson moves to the board changes — five new members and the jacking of five from previous year.

He then defends his decision to sue Facebook over patent infringement. “Facebook must do the same or change its practices,” he sad.

Thompson adds the company is in “active” talks with its Asian partners, Softbank of Japan and Alibaba of China.

And some news! Talks related to its Japanese assets have a gap in valuation, so Yahoo is focusing on the Chinese ones.

And in summation:

“We don’t have to reinvent who we are, but we do need to reinvent our experiences … We have to move and think like a growth company.”

That would be nice.

2:32 pm: Time for Q&A, in which I like to see exactly how wimpy Wall Street analysts can be in asking tough questions.

The first is asking about some strategery specifics, including whether it can get the cool $1 billion AOL just got from Microsoft.

Thompson talks about the new commerce unit, which will be co-led by someone who worked with him at PayPal. It’s not really new, since Yahoo is in that arena already.

Morse answers on intellectual property issues, noting Yahoo is happy to license its family jewels. Most tech companies use these patents as a defense, but no longer.

The next question is on morale of sales force. I can answer that! Not good!

But Morse says there is progress.

Bygones.

Morse also notes that Yahoo still has search revenue per share guarantee from Microsoft, but that he hopes it will get better before that deal runs out.

Back to Thompson. He wants better results to advertising customers.

He keeps saying “at or above the market rate.” Yahoo’s growth has been lackluster, so this would be a key victory if Thompson could pull it off.

2:39 pm: A question about mobile, which has been one of Yahoo’s most embarrassing holes of all.

Besides Facebook, the kids love those smartphones. You would not know it from Yahoo’s shoddy products.

“We need to get good real fast in mobile … and we’re not there today,” said Thompson. Actually, Yahoo was not there yesterday, either.

Note to Scott: Real fast is a good idea.

There is a question about its advertising platforms, a back-handed way of asking if it is for sale. It is.

Thompson notes that there has been a lot of evaluating, but that “we have not come to a conclusion.”

2:42 pm: A question about its revenues from its Asian assets. China’s Alibaba — which is not run by Yahoo — is doing great.

It’s kind of like being the dude who bought Apple some years ago and is now rich through no effort of his own.

Thompson addresses a question about dividends, which Apple just gave out. Yahoo will be sticking with stock buybacks, so everyone can put away those Porsche catalogs.

I am briefly distracted during some accounting questions by the new Apple ads with Zooey Deschanel. She is so adorkable, it makes me slightly queasy.

Back to Thompson, who is non-answering a question about possible acquisitions. He’s not talking, but I am sure he will be buying if he gets a transaction with Alibaba done finally.

Given the long and convoluted and always aborted deals over the years, this would be cause for much celebration if Thompson pulls it off.

(And, if he does, I pledge to buy him dinner in Boston at the restaurant of his choice!)

2:52 pm: A question of what the heck Thompson actually means when is he talking about using Yahoo’s data.

There are apparently three main places.

Personalization, which is uniquely related content, which gives him a chance to egregiously tout Boston sports teams.

Contextual advertising, which means ads you want.

And data and analysis to advertisers that will help them do a better targeting job. Oh, joy.

A search question, which I have decided to ignore, since I feel search is simply not Yahoo’s business any longer and should be sold off.

But what do I know?

Morse keeps yammering away on “better experiences for our users” by its search team.

Hey, it’s called Google. Then, Bing. And only then, Yahoo.

2:58 pm: Last question, which I missed while I was focusing on search ranting.

And with that, it’s back to the future for Yahoo. Hopefully.

Yahoo Beats Q1 Expectations (as Expected) -- Now, Will New CEO Outline More Strategery on Investor Call?

Kara Swisher — Tue, 17 Apr 2012 20:15:24 +0000

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

Kung Fu Panda Too? Demand Media Q1 Earnings All About Battling the Bears

Kara Swisher — Thu, 05 May 2011 13:06:06 +0000

Later today, Demand Media will report its first-quarter earnings, its second outing after its IPO earlier this year.

Wall Street is expecting the company to report about $69.6 million in revenue for the three months, with 4 cents a share in profits.

But what most will be paying more mind to will be what the online content company’s top execs–especially CEO Richard Rosenblatt–have to say about the impact of search algorithm updates at Google to its various Web offerings.

Codenamed “Panda,” the effort by the Silicon Valley search giant is aimed at improving results by getting rid of poorly conceived content.

And, indeed, the tweaks have been chewing away at a range of Web sites–such as those owned by Demand–which rely heavily on search engine optimization to bring in huge traffic.

One big hit for Demand, due to Panda, has been to its flagship eHow site.

All the mishegas has hurt the Santa Monica, Calif., company’s stock. It’s down just over 30 percent since its public offering in late January, as bearish investors fret over the implications of Panda.

That said, Demand shares were up more than six percent yesterday, to close at $15.75. And some think the recent stock fall has been overblown.

However the winds blow, Rosenblatt must play it cool, since he cannot spook Wall Street, but also does not want to indicate to Google that its efforts are not effective either.

Tune in after 1 pm PT today to get the first-quarter results, and even more at Demand’s 2 pm conference call with analysts, where BoomTown will translate it all for you.

Until then, please enjoy the movie trailer for “Kung Fu Panda 2,” which opens May 26:

Exclusive: OpenTable CEO Jordan Likely to Head to Silicon Valley VC Firm Andreessen Horowitz

Kara Swisher — Wed, 04 May 2011 05:28:00 +0000

Jeff Jordan, the president and CEO of OpenTable who unexpectedly stepped down from his job today at the online restaurant reservation leader, is set to take a job at a major venture firm in Silicon Valley.

Sources said Jordan has spoken to several major VCs about moving to their firms recently.

While Benchmark Capital was a big funder of OpenTable before it went public in 2009, sources said the likeliest home for the well-known Internet player–Jordan has also been a major exec at eBay–is Andreessen Horowitz.

The move would be a coup for the firm, which has been busy adding partners since its founding only a few years ago by Web icon Marc Andreessen and his longtime business partner Ben Horowitz.

Jordan’s announcement that he was leaving OpenTable today during its first-quarter earnings call caused the stock to decline precipitously today, even though he said he would remain active as executive chairman.

CFO Matthew Roberts was named as his replacement.

Explaining the move, Jordan said:

“I’ve been managing Internet businesses since 1999. That’s 12 years of being in the tornado, and it’s pretty exhausting. I’ll be looking at the next challenge, but in terms of operating an Internet business, I’ve scratched that itch very well.”

It’s an itch that he will be scratching as a VC apparently and likely at one of tech’s hottest firms, which has investments in everything from gaming phenom Zynga to social buying service Groupon to microblogging start-up Twitter.

A spokeswoman for Andreessen Horowitz declined to comment and Jordan has not responded to an email query.

Ahead of Earnings Next Week, Demand Media Shares Drastic Dip Due to Googley Panda-Monium

Kara Swisher — Wed, 27 Apr 2011 18:35:16 +0000

April showers bring…well, a bad month for the still-young stock of online content maker Demand Media.

After a successful IPO in January, shares of the Santa Monica, Calif., company had stayed largely in the mid-$20 range, including a high of $27.38.

That is, until this month, when gloom in the form of algorithm changes at Google–with the seemingly dulcet code name of “Panda” and designed to weed out poorly made content–appeared to hit SEO-heavy Demand hard.

At first, the updates by the search giant seemed not to effect Demand as much as other sites. But more recent tweaks have caused traffic to its flagship site, eHow.com, to be much more negatively impacted.

And–presumably due to its search advertising-heavy business model–that worry then caused the stock to plummet from above $24 in the beginning of April to yesterday’s close of just above $15.

Since Demand went public, its shares are now down almost 34 percent.

You can see the situation pretty clearly in this Demand stock chart below (click on the image to make it larger):

Of course, this might all be needless panic on the part of Wall Street investors, but the drop has been all too real.

Not surprisingly, Demand acknowledged the dip, but also countered some third-party reports that were more dire.

It tried to staunch that worry on April 18, with a press release and blog post by its Media and Operations EVP Larry Fitzgibbon, which read in part:

…Google recently made significant search algorithm changes in an update dubbed Panda that has rolled out in various capacities from late February thru mid-April. With respect to Panda’s mid-April update, some of our properties saw Google search referrals move up while other properties, including our largest property eHow.com, saw these referrals go down.

As I said in my prior post, we generally do not comment or speculate on changes by major search engines, as these changes can happen nearly daily. However, recent third-party reports attempting to estimate the impact to our search driven traffic, including one projecting a 2/3rds decline in eHow.com traffic, are so significantly overstated that we decided to comment. As discussed in our press release issued today, we currently expect that in Q2 2011 our owned and operated Content & Media properties will generate year-over-year page view growth comparable to or greater than the year-over-year page view growth reported for Q2 2010. We have also reaffirmed our calendar year 2011 financial guidance in this press release.

That’s why it will be interesting to see what Demand execs will say on its first-quarter earnings call next Thursday, May 5, to explain how it will cope with Panda and–more importantly–what it plans to do to minimize the skadoosh impact on its business and share price.

Video: AOL's Hyperactive CEO Tim Armstrong Talks About What's Next

Kara Swisher — Wed, 27 Apr 2011 01:37:51 +0000

AOL CEO Tim Armstrong has certainly had a very busy year, from the continued massive restructuring of the troubled Internet portal to ziggy-zaggy strategic shifts in content and advertising to a series of frenetic acquisitions, capped by the $315 million purchase of the Huffington Post earlier this year.

Also, let’s not forget all those fabulous appearances with the mediagenic Arianna Huffington.

So, it was nice to get Armstrong to calm down for a minute–before he headed off for an off-site in Half Moon Bay, Calif., with his senior staff–and talk about how AOL plans to digest all those things.

That’s especially important, since Wall Street is still wondering about that, too. A lot, in fact, with AOL shares down 29 percent year over year, which is not exactly a shining endorsement by investors of Armstrong’s tenure.

Presumably, he’ll be explaining it all when the company reports its first-quarter earnings in a week, on May 4.

Until then, here’s his video interview with BoomTown:

[ See post to watch video ]

Yahoo Focuses on Tentpole Events With New Head

Kara Swisher — Wed, 20 Apr 2011 14:11:25 +0000

At least one thing in yesterday’s lackluster first-quarter earnings report for Yahoo that got its Microsoft-search-bashing CEO Carol Bartz excited was the Silicon Valley Internet giant’s traffic gusher for big tentpole events such as the Super Bowl and the Oscars.

In fact, Bartz practically sounded like a gushy “Entertainment Tonight” flunky when talking to Wall Street analysts about Yahoo’s Oscar news, games and other offerings. She proudly noted the site’s efforts generated more than a billion pages views.

There will be more of that, it seems, with the elevation of Yahoo exec Sam Silverstein (pictured here) as head of its special events coverage. Sources said it will be a major area of emphasis, given obvious advertiser interest.

It’s all part of a lot of dramatic changes being made in the media unit at Yahoo, which is run by its newish Audience head Mickie Rosen.

Previous to his new duties, Silverstein has been mostly focused on major sports events for Yahoo, but has also been managing content on its front page and in tech and green arenas.

The move to taking over more comes after Lawrence Yee–who led Yahoo entertainment efforts and was once the managing editor of its omg! celebrity site–headed to TMZ.com, the competing and much sassier celebrity site, owned by AOL. His new job is as managing editor of its TooFab site, TMZ overlord Harvey Levin confirmed to me.

Also gone recently is Annette Cardwell, who was managing editor of Yahoo’s Shine women’s site, who is now working as director of digital content and games at Future US, according to her LinkedIn profile.

Now it will be up to Silverstein, who is well-regarded at Yahoo, to run the upcoming Royal Wedding coverage by himself.

William and Kate, as well as Bartz, will be watching.

Charting Yahoo's Q1 Search Stumble: The PDF of MicroHoo

Kara Swisher — Tue, 19 Apr 2011 23:55:50 +0000

Earlier today, Yahoo reported its first-quarter earnings, which showed revenue and earnings declines, which the Silicon Valley Internet portal said was due to its search and advertising partnership with Microsoft.

BoomTown liveblogged the conference call with Wall Street analysts, but there’s more deets to peruse and numbers to crunch–in order to figure out whether to blame Microsoft CEO Steve Ballmer or not.

Thus, here’s a deck by Yahoo, with all kinds of charts and graphs to wallow around in:

YHOO_Q111EarningsPresentationFinal

Liveblogging Yahoo's Q1 Earnings Call: Get Me to Funky Town

Kara Swisher — Tue, 19 Apr 2011 21:21:01 +0000

MicroHoo is funky!

At least according to Yahoo CEO Carol Bartz on the Silicon Valley search giant’s first-quarter earnings conference call about its recent financial performance.

Yahoo’s results showed a continued worrisome revenue growth stall, due in large part to a search advertising fall-off, and a still-turning turnaround.

Yahoo reported revenues of $1.06 billion, down six percent from a year ago, on net earnings of 17 cents a share, down 28 percent.

The results were essentially in line with Wall Street expectations.

2:03 pm PT: The call started right on time, as per usual. Maybe they can’t get search right anymore, but Yahoo execs sure know how to start an analysts’ confab.

Bartz started off the call, noting “overall, our turnaround is proceeding on schedule.”

Well, the schedule of a three-toed sloth, I suppose, but it’s on schedule!

Bartz is too smart, though, and quickly noted the problems with search revenue declines, related to its search and online advertising partnership with Microsoft.

Still, she then used the unusual term “funky comparisons” to dismiss the key issue.

But isn’t she the one who struck the funky deal with Microsoft that has resulted in these funky comparisons and these even funkier search advertising revenues?

Just askin’!

Bartz proceeded quickly to noting Yahoo’s advances due to technology improvements, which showed a doubling of impressions to big events such as the Super Bowl and the Oscars.

It’s a good point, since Yahoo–for all its troubles–is still a huge traffic driver, including serving up 1.3 billion page views for the Oscars.

Bartz talked about monetization and said a lot of other stuff, but got to the finances quickly.

“Search was a mixed bag,” she said flatly. You can say that again–but not in a good way.

Bartz tried to put a good-news spin on it, but had to admit that “on the downside [Microsoft's] adCenter is not seeing strong RPS,” she said.

That’s revenue per search and a key number that Yahoo had thought would be better by now.

Bartz noted that the paid search markets internationally will be delayed until MicroHoo gets its act together.

Good idea!

2:16 pm: CFO Tim Morse took over to go through the numbers.

“We had good display momentum around the globe,” he said.

But search was, um, bad. It underperformed, but Yahoo had that guarantee from Microsoft to pay out, which Morse called a “financial floor.”

Morse pretty much read the press release from here on out.

2:24 pm: Bartz was back talking up the huge audience Yahoo has abroad. And it is true–the Yahoo brand is a golden one globally.

Also video consumption is up too, as it is across the Web, in terms of views and time spent. Yahoo’s “Primetime in No Time” got 500 million streams in the quarter.

Bartz turned to mobile, which is weak no matter what she said about the laudable Livestand. It’s one of many in a very competitive market.

Same for social, which Yahoo has essentially abdicated to Facebook. That said, Yahoo has tried to weave social within its myriad of sites and it gets it, especially compared to the socially awkward Google.

Bartz summed up that she hoped everyone gets that profitability and revenue growth were on track to get better, promising more at the investor day in May.

2:30 pm: Q&A time!

The first question is about display growth. It’s a softball, since display was up.

The next is about other revenue growth areas to come.

Bartz–who seemed not so prepped for such an obvious question–ticked off shopping, travel and uuuuuh….

Morse jumped in and talked about making internal connections, which I also did not understand.

An analyst then wanted to “dig into” search problems. I’d say it’s time to call in Mike Mulligan and his steam shovel!

Relative to RPS, Bartz acknowledged it was low and everyone was studying the issue. There is a plan, apparently. Again, Bartz was maddeningly vague.

I missed the next question and then it was back to search.

Bartz was not getting too specific about search, but would say video advertising was going to do well.

She did note that Yahoo expected a dip in Q1 related to search revenue, “but the dip went a little lower than we expected and lasted a little longer than expected.”

Bartz said she had recently sat down with Microsoft execs to go over the problems. How much would I have liked to have been a fly on that wall!

The next question was about video and it turns out Bartz loves the babbling babies too! I knew we had something cool in common.

The next question is about Japan and the possible deal to sell off Yahoo’s ownership of Yahoo Japan!

Morse said diddly, except “we continue to make progress.”

A question about display and possible content verticals.

Verticals Yahoo is interested in, according to Bartz: Entertainment, lifestyle, women, gossip.

“The things people really want to do, they want to disappear,” said Bartz, which was an interesting way of putting it.

Yet another question in what was beginning to feel like an endless call.

It was about Right Media, Yahoo’s advertising exchange. Cleaning it up, etc.

The next question is about communications, as in email.

Bartz even sounded bored and messed up a few words. “I’ve had too many Diet Cokes,” she joked.

Personally, I am considering disappearing into some content, since there is yet another question.

It’s–no surprise–an RPS question!

Funky!

Search guarantee payments from Microsoft are in place for another four quarters. Thank goodness.

Bartz got more detailed about the problems. There is some kind of prediction issue, which she said Microsoft is working on.

Now a local advertising question and its relationship with Facebook.

Bartz grabbed this one by the horns, noting you don’t have to run to the social networking powerhouse to get you a social ad!

It’s about branding with a social component. Which would be, um, Facebook, which was part of Yahoo’s Chrysler campaign referenced by Bartz.

A question about daily deals.

It’s growing, but more at Groupon and LivingSocial, which Morse does not mention.

Finally, the last question.

Another gigantic softball on engagement and Yahoo’s new content platform and some mobile deets query about whether Yahoo can make it there.

Bartz said she was working on it. As to content, Bartz said stats show big lifts.

“The good news is that it’s all in the right direction,” she said.

Up would certainly be good.

Yahoo's Q1 Earnings: The Revenue Growth Drought Continues Due to MicroHoo Search Fall-Off

Kara Swisher — Tue, 19 Apr 2011 20:41:51 +0000

Yahoo announced its first-quarter earnings today, showing a continued worrisome revenue growth stall, due in large part to declines in search revenue from its partnership with Microsoft.

The Silicon Valley search giant reported revenue of $1.06 billion, down six percent from a year ago, on net earnings of 17 cents a share, down 28 percent.

The performance was essentially in line with Wall Street expectations, which had been estimating that Yahoo would report $1.05 billion in net revenue and earnings of 16 cents a share, after traffic acquisition costs (TAC) was taken out of its results.

That compared to revenue of $1.13 billion and 22 cents in earnings in the same period a year ago, results that were goosed by the sale of its Zimbra email asset to VMware.

Yahoo’s revenue growth drought was due largely to declines in its search advertising business, which fell 19 percent in the quarter from $440 million to $357 million.

Contractual guarantees paid by Microsoft, its search partner, masked even larger declines.

On a GAAP basis, search revenue was $455 million, a 46 percent decrease compared to $841 million for the first quarter of 2010.

Yahoo said display revenue ex-TAC increased 10 percent to $471 million, compared to $427 million for the first quarter of 2010.

It was a good performance, but by no means a barn burner, especially compared to Google’s 27 percent revenue growth year-over-year in its earnings last week.

Thus, it seems the turnaround efforts at Yahoo, much touted by CEO Carol Bartz, are still turning.

In a statement, she said:

“We are solidly executing toward our plan for returning Yahoo! to sustainable revenue and profit growth. During the quarter, we beat the midpoint of revenue guidance while continuing to deliver on the bottom line.”

As BoomTown had previously written, in the last quarterly call, Bartz had warned that MicroHoo had not grown yet into the beautiful swan expected in this ugly-searchling tale, noting that it might take until the second half of 2011 to see some prettier results.

Thus, Yahoo is right to focus on display advertising, an arena it dominates still, despite increasingly successful incursions from Google and Facebook.

Yahoo’s stock is certainly reflecting the worry, holding fast to its share price in between $16 and $17 for a while now. It closed today at $16.12, down 23 cents a share.

A year ago it was above $18.

The shares rose almost three percent in after-hours trading, though, to $16.57.

I will be liveblogging the conference call Yahoo’s top execs have with analysts, starting at 2 pm.

Until then, here’s the official Q1 earnings press release to peruse:

YHOO_Q111PressReleaseFinal

Yahoo Earnings Preview: Display Revs Yay!?! (Search Not-So-Yay)

Kara Swisher — Mon, 18 Apr 2011 17:00:01 +0000

Will Yahoo’s revenue growth drought finally end this quarter?

We’ll see tomorrow when Yahoo reports its first-quarter earnings, after the markets close.

As usual, investors will be looking for some sign that the Silicon Valley Internet giant’s lackluster revenue results have improved in CEO Carol Bartz’s over-promised but still under-delivered turnaround effort.

And despite Wall Street worries that sales will remain flat, sources insist that display revenue will be slightly better than expected, although those from its declining search business will remain weak.

A poll of analysts is expecting Yahoo to report $1.05 billion in net revenue and earnings of 16 cents a share.

That compared to revenue of $1.13 billion and 22 cents in earnings in the same period a year ago, which was goosed by the sale of its Zimbra email asset to VMware, as well as some benefits from its search and online advertising partnership with Microsoft.

There’s no extra cherries on top this quarter, especially in the search arena, which BoomTown previously reported was troubled.

As I wrote last week:

In fact, although its display business will show a definite strong recovery in Yahoo’s quarterly results next week, its search business–both in market share and revenue per search (RPS)–has, as one person close to the situation put it succintly, “fallen off the cliff.”

That’s due, in part, to getting the new system with Microsoft delivering better results, which is not happening yet (if ever!).

In this quarter, Microsoft has honored its contractual guarantees and will make up the difference–which will result in masking the magnitude of the RPS loss. It’s a worrisome trend to watch.

In the last quarterly call, Bartz had warned that MicroHoo had not grown yet into the beautiful swan expected in this ugly-searchling tale, noting that it might take until the second half of 2011 to see some prettier results.

Thus, Yahoo will turn Wall Street’s greedy eyes to display, an arena it dominates still, despite increasingly successful incursions from Google and Facebook.

A win here is key, of course, with investors hoping for a strong performance.

Yahoo’s stock certainly is not doing that, holding fast to its share price in between $16 and $17 for a while now. A year ago, the stock was above $18 a share.

As Citi Investment Research’s Mark Mahaney noted in an earnings preview today:

Valuation remains interesting, with a highly attractive Asian Internet investment portfolio. In terms of risks, we focus on: 1) Competition in the Display Ad segment from Google, Facebook, etc; 2) YHOO’s overall Internet Usage Share Loss–now less than 10% of U.S. ’Net usage minutes; 3) YHOO doesn’t have assets in place to take advantage of trends in Social, Mobile & Local Internet, and Video Advertising; & 4) We are challenged to identify a near-term positive catalyst.

“Challenged” translates to Mahaney saying politely that Yahoo has zip coming down the pike to change its situation.

That means Wall Street is not yet in the mood to give Yahoo shares a break. Here is one of BoomTown’s fave videos–the great Diana Ross, with the infectious song hit, “I’m Coming Out”–to get the right vibe going:

Apple's Touch-Panel Appetite Leaves Little for Rivals

John Paczkowski — Thu, 17 Feb 2011 16:35:54 +0000

Apple is to the touch-panel business what Starbucks is to the coffee business–a market maker and mover. Particularly a mover. To wit: Claims today that Apple’s voracious appetite for the component is expected to cause an industrywide shortage this year.

According to Taiwanese trade mag DigiTimes, Apple has locked up nearly 60 percent of the world’s touch-panel capacity, leaving behind a very tight supply for its rivals to scrap over.

“Touch panels are currently suffering the most serious shortage due to Apple holding control over the capacity of major touch panel makers such as Wintek and TPK, and with US-based RIM, Motorola and Hewlett-Packard also competing for related components,” says DigiTimes. “Second-tier players are already out of the game.”

So Apple ends up with a double advantage–not only has it secured supply enough for its own needs, but it has also caused scarcity in the market and disadvantaged its rivals. It’s impossible to say definitively, but my guess is this is the result of that mysterious $3.9 billion component supply investment COO Tim Cook mentioned during Apple’s first-quarter earnings call.

“We’ve historically entered into certain agreements with different people to secure supply and other benefits. And the largest one in the recent past has been we signed a deal with several flash suppliers back at the end of 2005 that totaled over $1 billion because we anticipated that flash would become increasingly important across our entire product line and increasingly important to the industry. And so we wanted to secure supply for the company, and we think that, that was an absolutely fantastic use of Apple’s cash. And we constantly look for more of these. And so in the past several quarters we’ve identified another area and come to some recent agreements that [CFO Peter Oppenheimer] talked about in his opening comments, in that these payments consist of prepayments and capital for process equipment and tooling. And similar to the flash agreements, they’re focused in that area we feel is very strategic.”

Indeed. Funny how Apple now controls–largely—both the demand and supply sides of the touch panel business.

Apple Using Cash to Secure Cache of Components

John Paczkowski — Mon, 24 Jan 2011 12:55:56 +0000

Asked last October about Apple’s plans for the nearly $60 billion in cash it had on hand, CEO Steve Jobs suggested the company intended to allocate some to future big-ticket purchases.

“We strongly believe that one or more very strategic opportunities may come along, that we are in a unique position to take advantage of because of our strong cash position,” he said. “You know, we’ve demonstrated a strong track record of being very disciplined with the use of our cash. We don’t let it burn a hole in our pocket, we don’t allow it to motivate us to do stupid acquisitions. And so I think that we’d like to continue to keep our powder dry, because we do feel that there are one or more strategic opportunities in the future. That’s the biggest reason.”

That remark spurred all sorts of speculation about what sensible large-scale acquisitions Apple might make. And while it was certainly reasonable to conclude from Jobs’s remarks that Apple is preparing itself for some big M&A plays in the future, there was another equally plausible conclusion: What if by “strategic opportunities,” Jobs was referring to supply chain investments–money spent to overcome impediments to growth? Apple has done this before, most notably in 2005, when it arranged to purchase up to 40 percent of Samsung Electronics’ holiday NAND flash output for use in it iPods. It inked a similar iPhone-related deal in 2008, forcing Samsung to reduce its supply to other customers to fulfill its obligation to Apple. And there was another half-billion-dollar deal with Toshiba is 2009.

And according to COO Tim Cook, Apple just did it again–but on a much grander scale. During the first-quarter earnings call last week, Cook said the company had invested $3.9 billion to secure component supplies and capacity.

“We’ve historically entered into certain agreements with different people to secure supply and other benefits,” he said. “And the largest one in the recent past has been we signed a deal with several flash suppliers back at the end of 2005 that totaled over $1 billion because we anticipated that flash would become increasingly important across our entire product line and increasingly important to the industry. And so we wanted to secure supply for the company, and we think that, that was an absolutely fantastic use of Apple’s cash. And we constantly look for more of these. And so in the past several quarters we’ve identified another area and come to some recent agreements that [CFO Peter Oppenheimer] talked about in his opening comments, in that these payments consist of prepayments and capital for process equipment and tooling. And similar to the flash agreements, they’re focused in that area we feel is very strategic. And so I’d prefer not to go into more detail about what specific area it’s in, but it’s the same kind of thinking that led us to those deals that led us to the flash deal.”

For what particular components, he wouldn’t say. There are some likely candidates, though: The high-res LCDs used in the iPhone 4 and iPad; solid-state drives like the ones in the new MacBook Air, which are presumably headed to other portions of the MacBook line as well; or perhaps some new system on a chip that will infuse the next-generation iPad and iPhone with significant performance gains. I’m sure there are others as well. And all fit quite nicely into Jobs’s vision of “strategic opportunities.”

PlayBook on Track for Q1 Kick-Off

John Paczkowski — Fri, 07 Jan 2011 11:00:00 +0000

Research in Motion’s PlayBook tablet is on schedule for launch in the first calendar quarter of 2011. That’s the word from the company itself, which was forced to issue a hasty clarification after its announcement of a 4G version of the device launching this summer raised fears that the Wi-Fi-only version might be delayed.

“The BlackBerry PlayBook is expected to begin shipping in the U.S. in Q1,” RIM said in an email statement.

And there you have it.

Meanwhile, the device is garnering mixed reviews at CES. After some hands-on time with it, Engadget described the PlayBook as “blazingly fast, comfortable to hold, and intuitive to use.” Gizmodo liked it as well, talking up its hardware, responsive display and UI. “RIM’s got something here that could really stand on top of the bajillion other crappy tablets that are going to launch this year,” the site concluded. “They just have to take it the rest of the way.”

Wunderlich Securities analyst Matthew Robison agreed. “RIM’s PlayBook strategy [is] exceptionally compelling— pending successful execution,” he wrote in a note from CES. “The company’s ace card in tablets is sure-fire security for IT departments who loathe adding another piece of client software to enterprise networks.”

But others, like Wedge Partners analyst and RIM bear Brian Blair, were not so impressed. Though he praised the device’s sturdy build and crisp screen, he slagged its lack of native email and calendar support.

“There is not a built-in e-mail program that we saw, nor is there a calendar: arguably the two most critical features of a Blackberry,” Blair said. “Calendar and Email are only available, if the PlayBook is “tethered” to a Blackberry. Short of that, users need to use the browser for e-mail and calendar.”

And, admittedly, that does seem silly. Unless you’re a CIO. In which case, you probably prefer to push data (and remotely wipe it, if necessary) from one device instead of two, and appreciate the gesture.

Still, Blair came away with the impression that the PlayBook isn’t yet fully baked, and to be fair, it isn’t–after all, this is a pre-release device.

“We know this is an early build and that bugs are being worked through over the next couple of months, but nearly every feature we tried on our demo unit was having problems,” he concluded. “The video player froze and the games wouldn’t play. The only thing that worked was the ‘Coverflow-like’ scrolling of the different applications, which the device did with ease.”

But as Blair himself observed, a lot can change in three months. And presumably RIM is doing its damndest to ensure that it does–before Apple debuts the iPad 2, which will undoubtedly become the new standard against which all tablets are compared.

In the meantime, here are a few PlayBook promo videos RIM released in conjunction with CES.

PlayBook Sequel Will Run on Sprint 4G

John Paczkowski — Thu, 06 Jan 2011 18:23:54 +0000

A noteworthy development in the evolution of Research in Motion’s tablet strategy. The company today told Reuters it will release a 4G version of the PlayBook with Sprint Nextel, which it says has the most “ubiquitous 4G network at this point.” The device will arrive at market sometime this summer after its Wi-Fi-only predecessor debuts in the first quarter of this year–wise choice of scheduling, since this allows RIM to launch ahead of carrier certification and the delays that often accompany it.

No details yet on price, though RIM Co-Ceo Jim Balsillie is on record saying that the first iteration of the device, which relies on Wi-Fi or BlackBerry tethering for a data connection, will be sold for “under $500.”

And as for the recent controversy over the PlayBook’s battery life, RIM says it’s overblown and claimed the device will last at least as long as other 7-inch tablets. One could view that as an admission that the PlayBook’s battery life won’t rival the 10 hours of the iPad–a 10-inch tablet. On the other hand, it’s also an assertion that it will match Samsung’s Galaxy Tab, which claims six hours of battery life. Evidently, that’s what RIM meant when it said back in December that the PlayBook would have “comparable battery life.”

UPDATE: As noted in the comments below, RIM is telling media at CES that its “target and … attainable goal” for PlayBook battery life is eight hours.

Adobe Turns In Profit on Strong Sales

Jeanette Borzo — Mon, 20 Dec 2010 23:16:02 +0000

Adobe Systems Inc. swung to a fiscal fourth-quarter profit, as strong product sales boosted revenue.

The software maker forecast first-quarter earnings of 54 cents to 59 cents a share on revenue of $1 billion to $1.05 billion. Analysts surveyed by Thomson Reuters expect earnings of 51 cents on revenue of $992 million for the current quarter.

In after-hours trading on Monday, Adobe shares were up 4.5% to $30.48 on the Nasdaq Stock Market.

Read the rest of this post on the original site »

RIM Shares a Page From Its PlayBook

Ina Fried — Tue, 07 Dec 2010 23:36:47 +0000

Research In Motion CEO Mike Lazaridis arrived at D: Dive Into Mobile with more than just his BlackBerry–he also showed off various features of RIM’s forthcoming PlayBook tablet, including the ability to play Adobe Air applications.

“It’s really simple to use, very fluid,” Lazaridis said, demonstrating various Adobe Air apps, a Flash-based calculator and revamped versions of the productivity applications RIM got through its acquisition of DataViz. He also showed the device’s multitasking capabilities, with 1080p video running alongside other applications.

“This is how we like to be entertained,” Lazaridis said.

As for the size, Lazaridis said it was ultramobile but doesn’t compromise in performance or display. “Seven inches is just the perfect size.”

Pressed on that point, Lazaridis did say it might not be the only size. “We’ve got different sizes potentially coming,” he said.

The PlayBook, which RIM unveiled earlier this year, is due on the market early next year. “It’s tracking first quarter,” Lazaridis said.

Lazaridis said that the QNX operating system used by the PlayBook will make it into smartphones when RIM moves those devices to multicore chips.

A liveblog of his talk can be found here.

Air Pockets Force Cisco CEO to Turn On Seatbelt Sign

John Paczkowski — Thu, 11 Nov 2010 11:00:37 +0000

Cisco’s shares took a beating yesterday and they’ll likely take another one today, now that investors have had time to ruminate on the company’s latest earnings, its guidance for the next quarter and CEO John Chambers’s forthright comments about it.

On a conference call with analysts, Chambers said Cisco expects revenue to grow by just 3 percent to 5 percent in the current quarter, compared to last year–not even close to the 13 percent Wall Street was projecting. “Our view on this guidance is, we’re disappointed,” Chambers said, adding that sales orders were below the company’s initial Q1 forecast by more than $500 million. “We hit a couple of air pockets,” he said. “We wish we‘d seen them coming.”

Air pockets. Interesting way to describe the challenges the company’s facing these days, which according to Chambers include everything from Cisco’s set-top box to the public sector, service providers and European businesses.

Sounds like Cisco’s flight this past quarter has been a bumpy one, but as Chambers observed, “When you hit an air pocket, that doesn’t mean that what you have been doing strategically is wrong.” I suppose it doesn’t. And keeping that in mind, Cisco will stay the course as it moves forward.

“We are going to power through what we believe to be some short-term challenges in the next several quarters,” Chambers said. “We also believe that the intermediate and long-term growth opportunities far outweigh the short-term challenges. With that in mind we plan to continue to invest in new markets and technology. It is realistic to return to a 12 to 17 percent growth goal in the not too distant future, assuming a return to a good economic growth.”

Cisco: Earnings Up, Share Price Down

John Paczkowski — Wed, 10 Nov 2010 21:23:36 +0000

Investors unsettled by Cisco’s last earnings report and the “mixed signals” CEO John Chambers said he’d been getting from customers aren’t finding much solace in the company’s latest earnings report. While Cisco did beat analyst estimates, its market outlook doesn’t seem all that much improved from last quarter.

Posting first-quarter results after the bell today, Cisco reported earnings per share of 42 cents on revenue of $10.75 billion, up from 30 cents a share and $9 billion a year earlier. Analysts had been expecting 40 cents a share, on revenue of $10.75 billion.

So a beat, but one couched in some pretty subdued language from CEO John Chambers.

“Cisco delivered solid financial results, during a challenging economic environment. While we have seen capital spending moderate in some areas of our business, our execution in the areas we can control and influence speak to the success and relevance of the company’s strategy. Our position in the market, including continued product innovation, market share momentum and operational excellence, positions us for growth and flexibility well into the future as we strengthen our role as a trusted business partner to our customers.”

“challenging economic environment”
“capital spending moderate”
“execution in the areas we can control and influence”

All red flags for investors, who don’t seem to have much cared for Chambers’s remarks. Cisco shares are down 4.3 percent as I write this.

Microsoft to Wall Street: Analyze This

John Paczkowski — Thu, 28 Oct 2010 20:15:03 +0000

Microsoft reported earnings for the first quarter of the company’s fiscal 2011 this afternoon, and they were record-breaking despite the pessimism of analysts who have been downgrading its stock lately.

Earnings per share were 62 cents on revenue of $16.2 billion, better than the 55 cents per share on $15.8 billion in revenue that analysts had been expecting. Net income spiked from $3.57 billion in the same quarter a year ago to $5.41 billion in the current one, bolstered by strong sales of Windows 7 and Office 2010. And pretty much all of the company’s divisions showed significant growth.

Revenue at Microsoft’s Windows division rose to $4.8 billion from $2.9 billion, with a profit of $3.3 billion.
Revenue at the company’s business unit, which includes Microsoft Office, rose to $5.1 billion from $4.5 billion. Profit was $3.4 billion.
Revenue at its Entertainment and Devices Division rose to $1.7 billion from $1.5 billion. Profit was $382 million.
Finally, revenue at Microsoft’s money-losing online services division rose to $527 million from $487 million, though it did post a wider loss of $560 million.

“This was an exceptional quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7 and Xbox 360 consoles and games,” Microsoft CFO Peter Klein said in a statement. “Our ability to grow revenue while continuing to control costs allowed us to deliver another quarter of year-over-year margin expansion.”