SoftBank Capital and Yahoo Japan said they had created an unusual $20 million fund to help U.S. startups break into the Japanese market, while also upping a presence in the U.S.

The partnership between Japan’s largest Internet company — which is also a joint venture with Yahoo — and the venture arm of the giant SoftBank Corp. will invest in companies from early-stage funding to later-stage expansion and focus on mobile applications, social media, e-commerce, online advertising, gaming and cloud computing.

The new funds for that are being put into SoftBank Capital’s $100 million Technology Fund ’10. As part of the deal, Toshiaki Chiku will become head of U.S. operations in Manhattan. SoftBank Capital also recently announced a $250 million PrinceVille Fund, aimed at growth-stage startups in Asia.

Among the firm’s recent exits: Bluefin Labs went to Twitter, Buddy Media to Salesforce.com, Huffington Post to AOL, Hyperpublic to Groupon and OMGPOP to Zynga.

Now, it will be focusing even more on helping U.S. startups in Asia.

“Japan can be challenging for many U.S. companies, and given our scale and affiliation with SoftBank Corp., we’re in a great position to help them grow and succeed,” said Chiku in a statement.

SoftBank Capital and Yahoo Japan used performance display advertising company Criteo as an example of a successful investment, in which it also helped the company enter the Asian market (although, technically, Criteo is HQed in France).

Peeved that Microsoft has ignored its repeated requests to register as an electronic communications operator, French telecommunications regulator Arcep on Tuesday asked the Paris public prosecutor to determine once and for all whether or not the IP telephony unit is ducking its legal obligations.

According to Arcep, the fact that Skype supports voice calls to both hardline and wireless numbers makes it a de facto telephone service, one that must comply with local regulations permitting emergency calls and the monitoring of voice traffic when legally required.

Skype, predictably, rejects that argument. “Skype is not a provider of electronic communications services under French law,” the company said in a statement. Of course, Skype’s opinion of what it is and isn’t is of little consequence here. Ultimately, regulators will determine whether or not the services Skype offers constitute a telephone company, and Arcep’s move today suggests that the interpretation may be evolving.

Outside the U.S., iMac shipping windows remain at a week or more. In France and the U.K., they’re five to seven business days for the 21.5-inch models and one to two weeks for the 27-inch models. In Germany, the window is two weeks for both models. And in Japan, the 21.5-inch models ship in two to three weeks, and the 27-inch models in three to four weeks. So, overseas, iMac availability clearly remains somewhat constrained.

Why the intercontinental disparity in shipping windows? Simple: Apple has amassed enough North American inventory to meet expected demand. But this is true only of the iMac’s four standard models. The addition of any customization, even if it’s simply swapping in a trackpad for a mouse, pushes the device’s ship time back out to two to three weeks. Outside the U.S., the story is the same as it has been to date. IMac supplies still aren’t at the level Apple wants. As CEO Tim Cook noted on the company’s last earnings call, “We left the quarter with significant constraints on the iMac. … We are confident that we are going to significantly increase the supply. But the demand here is very strong, and we are not certain that we will achieve a supply-demand balance during the quarter.”

That remains the case today, as these varied shipping windows demonstrate. Which is not to say that Apple isn’t making headway. It is. As I noted here recently, Mac sales rose 31 percent year over year for the month of January, according to NPD, and the reason was likely improved iMac availability. But again, that was in the U.S. To reach supply-demand equilibrium overseas, Apple has to ramp up iMac production even more.

Last week, the fight between Apple and pugnacious hedge fund investor David Einhorn of Greenlight Capital went all flat when he withdrew a lawsuit after the company yanked a proxy proposal that would have allowed shareholders to vote on eliminating preferred stock from the company charter.

But the real issue at the core of the fight — the massive mountain of $137 billion in a cash hoard that Apple holds and that Einhorn wants it to distribute in some fashion to shareholders — still remains.

It’s not clear what Apple will do now, especially since a lot of it is overseas. But execs have indicated that they are evaluating what to do to best serve nervous investors, who have bidded the stock down 40 percent since the fall. While it’s not clear what that will be, it’s also pretty likely Apple will do something.

Until the company decides, though, I have some good ideas for CEO Tim Cook to consider:

* Apple could purchase 1,567,506 Tesla Model S Performance vehicles with 85 kWh battery and a carbon fiber spoiler at $87,400 each, which would effectively allow CEO Elon Musk to buy the New York Times (a bargain at $1.42 billion!) and use it as his own personal blog.

* It could buy 17.9 houses for each Yahoo employee located near its Sunnyvale, Calif., HQ, so they could be super-close to work, per CEO Marissa Mayer’s wishes. That breaks down to 206,015 overall homes for 11,500 workers, at a median sales price of $665,000 for the area.

* Apple could acquire a big chunk of the Internet all at once, including Groupon ($3.36 billion), Yahoo ($25.95 billion), Facebook ($61.7 billion), Twitter ($10 billion), LinkedIn ($18.32 billion), Yelp ($1.47 billion), AOL ($2.81 billion), Pandora ($2.09 billion), Zynga ($2.69 billion), OpenTable ($1.32 billion) and, finally, Pinterest ($2.5 billion). Phew.

* It could pay Andrew Mason’s $378.36 severance after getting jacked as CEO of Groupon 364,013,179 times over.

* Apple could pay for 97,857 parties for Yammer’s David Sacks’s 40th birthday (at $1.4 million each). Snoop Dogg included.

* It could foot the bill for the budget cuts to save the U.S. government $85 billion this year, so Americans could stop having to say “sequester.”

* Apple could buy $329 16 gigabyte Wi-Fi iPad minis for 416,413,374 people — everyone in the U.S. (315,429,318), plus France and Spain.

* Or it could just give the 7,069,909,686 people on the planet $19.38 each, and call it a day.

* Apple could use $1 bills to carpet an area of 560 square miles, which would more than cover Silicon Valley.

* Finally — and I think this would be a nice gesture to make up for calling his efforts a “silly sideshow” — Apple could give Einhorn 15.56 times the value of his $8.8 billion fund.

Or, of course, not.

Word started circulating last night that Salesforce has quietly bought the French software firm EntropySoft. VentureBeat moved a story pointing to a LinkedIn profile of an EntropySoft sales exec who changed his profile.

This morning, there are a lot more LinkedIn profiles reflecting changes from EntropySoft to Salesforce.com.

Also this morning, there was this on the EntropySoft website:

Okay, then. Also, a Salesforce spokeswoman confirmed the acquisition. Obviously, there are no financial details.

So EntropySoft appears to specialize in management of Web content for enterprises. It is based in France, but has a team in the U.S. as well, and in 2011 closed a $3.5 million round of funding led by Alven Capital, a French VC firm. The company has reselling agreements with EMC’s Documentum, Symantec and Box, and counts French energy giant Total as a customer.

Obviously, it’s a small firm, and Salesforce appears to be going through motions similar to when it acquired the small Israeli data-mining startup BlueTail. It’s hard to know if this is a situation where Salesforce is acquiring for the talent, the product or both. The near-radio-silence from Salesforce’s official channels suggests that it’s more about the team.

Fleur Pellerin, France’s technology minister, said the government is looking at how existing telecommunication regulations could be harnessed to ensure Web giants help pay to roll out and maintain high-speed networks.

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Overall, it was a very appy holiday season for the mobile industry, according to Flurry, which is known for producing reports based on the information it gathers through the thousands of developers who use its analytics tools.

In its report today, Flurry said that more than 50 million iOS and Android tablets and smartphones were activated from Christmas to New Year’s Eve, and 1.76 billion applications were downloaded worldwide during that period. That’s a huge jump from last year’s figures.

In comparison, Flurry estimated last year that 1.2 billion apps were downloaded worldwide across both Android and iOS.

Here is a chart comparing the holiday week to the same number of days earlier in December:

The year-over-year progress shows just how commonplace app downloading is around the globe.

In fact, this year Flurry said that a number of weeks since late November delivered more than a billion downloads, which just last year was considered record-shattering. This year, it is forecasting that a billion weekly downloads could become a regular occurrence.

“Looking forward to 2013, Flurry expects the trend of one-billion-download weeks to become the norm, and that the industry will surpass the two-billion download week during Q4,” wrote Flurry marketing VP Peter Farago in a blog post.

Most of these downloads are still occurring in the U.S., where there is widespread adoption of smartphones and tablets. During the week, the U.S. downloaded 604 million applications, or 34.3 percent of the total. China is not exactly a close second with 183 million downloads, and the U.K., Germany and France are much further behind.

Based on Flurry’s previous reports, one of the most popular app categories is games. And based on evidence from at least two game companies, that continued to be the case this holiday season, as people picked up their phones and tablets for entertainment during their time off.

Disney Mobile said game downloads jumped 98 percent year over year to more than 15 million in 2012, from Dec. 22 to Dec. 28. It benefited from new titles such as Where’s My Holiday? and Nemo’s Reef and Monsters climbing the charts. Separately, Storm8, which publishes such titles as Dragon Story, City Story and Jewel Mania, reported that it had two million game downloads on Christmas Day, an increase of four times compared to an average Tuesday.

Reed Midem, an international trade show organizer, has bought a majority stake in the well-known European Internet conference, LeWeb.

The event, which now has two annual gatherings, recently attracted 3,500 people in Paris, hosting such Silicon Valley speakers as Instagram’s Kevin Systrom and Nest’s Tony Fadell, as well as a range of European execs and others. LeWeb also has a London-based conference.

In an interview this morning, LeWeb’s co-founder Loïc Le Meur said that the sale will allow the business to expand.

“We want to keep the growth going, being in more places and more countries,” said Le Meur, who started LeWeb with his wife, Geraldine Le Meur, in 2004 with just 200 attendees. “We needed a partner that could help us do this.”

The Le Meurs will continue to run LeWeb, although it is not clear for how long. Le Meur also declined to say how much Reed paid for the large stake in the conference.

Reed, which did not have a tech-focused event, runs well-known shows such as Mipcom for the television industry and Midem for the music sector.

“LeWeb fits very well with Reed MIDEM. We share the same ambition for developing premium international events where participants network and build relationships, do business, launch new products and discover the latest innovations,” said Reed Midem CEO Paul Zilk in a statement.

Here is a video message from the Le Meurs, as well as the official press release:

LeWeb Reed MIDEM Press release US

Criteo, the performance display advertising company, just nabbed about $40 million in additional venture funding.

The Series D round, led by SoftBank Capital, gives the Paris-based company an $800 million valuation, according to sources, although Criteo declined to comment on the figure.

Previously, Criteo had raised just over $23 million from investors that include Bessemer Venture Partners and Index Ventures.

In an interview, CEO J.B. Rudelle said the money would be used for growing its footprint in the U.S., as well as Japan and Asia, more quickly.

The company has seen quick growth here and the market has already become profitable. But Rudelle said, “This funding is obviously a big step. We are going to use it to accelerate our efforts in key markets.”

Criteo now operates in 32 countries, he said, and it hopes to extend its global footprint as more companies are looking for better performance from online advertising.

“The need for performance to drive display advertising is enormous,” said Criteo president Greg Coleman, referring to “personalized retargeting,” which delivers highly targeted ads to consumers.

Ad tech such as Criteo has become a hot arena of late with larger companies such as Yahoo and Facebook interested in acquiring assets in the space.

For now, at least, it looks like Criteo filled its kitty to stay independent.

Here’s the official press release from Criteo:

Criteo completes €30 million Series D led by SoftBank Capital
Syndicate of investors includes Yahoo! JAPAN, SAP Ventures, Adams Street and Bessemer

NEW YORK — 26 SEPTEMBER 2012 – Criteo, the global leader in performance display advertising, today announced a €30 million round of financing led by SoftBank Capital to support the company’s hyper-growth trajectory.

Profitable since 2009, Criteo has continuously delivered growth, exceeding all forecasts since the company’s founding. The company now serves more than 3,000 advertisers worldwide, with the US being the number one revenue generating market. This new investment will help Criteo to continue reinventing the online display advertising market, with a goal of making it as efficient as search marketing.

JB Rudelle, CEO and Co-Founder of Criteo said: “In a period of high-growth for Criteo, this new financing enables us to invest substantially in innovation, technology and people. In addition, we are very excited to leverage the knowhow and footprint of SoftBank and Yahoo! JAPAN for our expansion in Asia, a very strategic region for us. Overall, the fact that such a sophisticated syndicate of investors has decided to join us is a powerful validation of our unique model.”

Matt Krna, Principal at SoftBank Capital added: “We are delighted to partner with Criteo and help the company extend its leadership in the cost-per-click performance display advertising sector, particularly in Japan and throughout Asia. In speaking with Criteo’s clients and partners, it became clear to us that the company’s analytical, performance-based model offers clear advantages to the entire online ad ecosystem, including consumers.” Mr. Krna will join Criteo’s board as an observer.

Recently Criteo announced an exclusive partnership with Yahoo! JAPAN — in terms of cost-per-click personalized display advertising, it is the first time that a third party technology company has had access to its inventory. To support its growth, Criteo has also recently invested in a state-of-the-art 100,000 square foot R&D centre in Paris, France.

Interim Yahoo CEO Ross Levinsohn released a travelogue of an internal memo today to Yahoo staff about his recent sojourn in the south of France.

There, he attended the big annual advertising confab called the Cannes Lions Festival, where he got a lot of petting from marketers such as Procter & Gamble.

When he got back, he penned an internal memo for employees about it all.

Apparently, there was a lot of body movement.

“While there were questions and concerns about our path ahead, I saw body language change during meetings,” he wrote. “Clients leaned forward, asked questions, and in several cases, global CMOs committed to moving spend to us.”

Ooh, la, la — Levinsohn can hope!

Enjoy the email:

Yahoos:

This past week I was in London for an EMEA All Hands, and then at the Cannes Lions Festival of Creativity for more than 150 executive meetings between our teams from around the globe and the world’s largest brands and advertising agencies.

While in London, I was able to interact with hundreds of our fellow Yahoos live and hundreds more via webcast. The passion and desire I felt and heard made me proud. We have to grow our business and presence in EMEA, and that will only happen with focus and investments.

In Cannes, we spoke to our partners from around the world about our revival, our focus, and the opportunities to collaborate on bringing fresh creative experiences to consumers. And we listened. This was a very different Cannes than last year. There was an energy in our meetings that didn’t exist last year. While there were questions and concerns about our path ahead, I saw body language change during meetings — clients leaned forward, asked questions, and in several cases, global CMOs committed to moving spend to us.

I learned a lot about what the world thinks of Yahoo!, and wanted to share a few thoughts and insights with you:

**Our consistent message around a tech powered media company really resonates. Our focus is clear as we describe how we’re leveraging great technology to deliver unique and compelling experiences across screens. We talked a lot about flawless execution, global opportunities, and how we can build value for advertisers and consumers.

**Clients had a wide-eyed reaction when shown a glimpse of our innovative upcoming products and experiences where we are re-imagining how consumers can discover and explore content across screens. The global digital lead of one of the largest advertising agencies called some of the things we showed “the best products I’ve seen from Yahoo! in years,” and another remarked this is “the best new product idea we’ve heard at Cannes.”

**We’re continuing to change the perception versus reality issue. At the end of a long meeting, a top executive at a beauty care product company told us that when he arrived, he was unclear about how Yahoo! was positioned for the future or why he should believe — after hearing from the team, he left “knowing how Yahoo! is going to compete and succeed in a different way than anyone else in the market.” He understood how content can drive people into a commerce funnel; how communications can enable powerful sharing of experiences; how the ability to ‘discover’ across the Yahoo! network and the Web at large means something different and additive to simply searching.

**There is nothing stronger than 3rd party validation for what you already know to be true. On Friday, I was on a panel (which you will find on Backyard later this week) with Publicis’ CEO, Maurice Levy — one of the most influential businessmen in France and in advertising worldwide; and Marc Pritchard, global marketing and brand building officer for Proctor and Gamble — the world’s largest advertiser. Discussion topics ranged from the ‘new Yahoo!’ and the importance of creative content to digital shifts, and how agencies, publishers, and brands all need to partner together to the benefit the consumer. Maurice and Marc validated our business and gave the crowd “A fresh perspective on Yahoo!” — with Marc personally endorsing Yahoo! as the technology driven media company!

**So, what do we need to do more of? We need to be more vocal and communicate our wins — both internally and externally. Tell our teams, clients, partners, friends, and critics about the great experiences we bring to life every single day. Each and every one of us needs to be the company’s largest advocate and educate others with the same passion and enthusiasm we bring into the office daily. We’re far too reserved for the leadership positions we hold, and too quiet for the ambitious plans we have.

I recorded a video message with some additional thoughts from Cannes here. If you want to learn more about Yahoo!’s presence and interviews with other industry figures, visit advertising.yahoo.com.

I want to thank the teams that made the EMEA All Hands and Cannes remarkable experiences. I’m back in the States this week — recharged and ready to sprint forward!

Ross

Even if the board of Yahoo is taking its sweet time in naming him as permanent CEO — and it is as it conducts what appears to be a serious search effort to find the unicorn leader it has never found yet — the media-focused strategy of its interim CEO Ross Levinsohn was getting some love from a big advertiser in France at the Cannes Lions creative festival this week.

In a panel discussion at the event yesterday with Publicis Groupe Chairman Maurice Lévy and Mark Pritchard, the top marketing exec for consumer goods powerhouse Procter & Gamble, the man who would be lion-haired king of Yahoo talked about the Silicon Valley Internet giant, but first had to listen to the obvious joke about fake resumes.

That was an it-must-be-said Levy reference to the just ousted Yahoo Scott Thompson, who lost his job because of a faux computer science degree on his bio. (Communications major Levinsohn has none on his, which is entirely accurate.)

The discussion soon moved into what it would take to right Yahoo, which prompted Levinsohn to point out the need for careful change while still keeping up traditions.

“Any company which has been around for sometime has a lineage and that held true for Yahoo as well,” he said.

Yes, we know, everyone bleeds purple at Yahoo — but it’s the constant bleeding part that has been worrisome. In fact, at this point, it is a wonder Yahoo has any blood left at all.

In a related vein (get it?), Levinsohn later compared Yahoo to a boxer, noting that a good one can survive various setbacks and can win from there.

(Now I am going to have to spend the weekend, trying to figure out if Yahoo is in “Rocky IV” — the one with the scary Soviet killer — or “Rocky V,” in which he went back to his roots as a poor dude with that idiotic hat.)

But it was Pritchard who gave Levinsohn a needed boost, noting, in part, “a successful Yahoo is good for P&G, as well as the industry.”

Putting in a plug for Levinsohn’s clear preference for a strategic direction toward content and not so much tech at Yahoo, Pritchard also added that solid media offerings online would be the key to success in the future with big-spending companies like his.

“Technology can be matched but not creativity,” he said. “What I see Yahoo as is a technology-driven media company.”

Hear that from the guy with the pile of money to spend, Yahoo directors?

As part of the deal, a French author association that had been suing Google for copyright infringement said it had agreed to withdraw its lawsuit, the last such pending suit in France after other publishers withdrew theirs last year.

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Seagate has offered $186 million, or about 4.05 euros per share, for 64.5 percent of the shares of LaCie controlled by Philippe Spruch, the company’s chief executive. The offer amounts to a premium of almost 30 percent.

Anecdotally, I can also say that LaCie’s drives are probably the most popular among people who own Apple Macs. I see its orange-encased ruggedized external drives everywhere Macs are used, and I own about a half-dozen of them myself. From a consumer retail perspective, Seagate has generally struggled to penetrate the Mac-owning market. And as we all know, the size of the Mac market is growing faster than the rest of the PC-owning world.

There’s also LaCie’s considerable retail and distribution footprint to consider. Under terms of the deal, Spruch would join Seagate.

Seagate is approaching the deal from a position of renewed strength. It weathered the flooding in Thailand, which hammered the hard drive industry’s supply chain and caused a shortage last year, better than rival Western Digital.

In a recent letter to CEO Larry Page, the National Commission for Computing and Civil Liberties (CNIL), France’s data protection authority, criticized Google for deploying its new privacy policy without first addressing the concerns the CNIL detailed in its February letter to the company. And the CNIL put to Google a list of 69 questions it would like answered so that it can determine whether or not the company is complying with European data protection legislation.

Among the CNIL’s questions: Queries about the legitimacy of the need for linking consumer data across services, and some of the subtle tweaks Google has made to language regarding users’ rights and consent. A good example:

QUESTION 22.

A) What does the sentence “We will not reduce your rights under this Privacy Policy without your explicit consent” mean? Please provide examples of reduction of rights that would require explicit consent according to Google’s privacy policy.

B) In this respect, Google removed the sentence “we may give you the opportunity to opt out of combining such information,” which appeared in the previous version of the privacy policy. Do you consider that the fact Google no longer gives the opportunity to opt-out of combining such information constitutes a reduction of the user’s rights?

An interesting question, for which Google, I’m sure, has an equally interesting answer. Indeed, the company is already hard at work preparing it.

“We have received the letter from the CNIL, and we will respond in due course,” Google said in a statement to AllThingsD. “We are confident that our new simple, clear and transparent privacy policy respects all European data protection laws and principles.”

In broad brushstrokes, one key aspect of the deal addresses a problem with Cisco’s set-top box business: Its lower profit margins. Adding high-value software to the mix will boost that unit’s overall profitability, De Beer told me. NDS, which has been private since 2009, is on a run rate to about $1 billion in sales this year. “And it’s a very profitable revenue stream,” he said.

But there’s also some pretty interesting tech in play. NDS specializes in software that creates a unified entertainment experience across several devices. You can watch your shows on the TV, as always, but if you want to switch to your PC or tablet, you can do it with a user-interface environment that’s entirely consistent and customized according to the service provider’s branding and needs. NDS has a software architecture called Snowflake that’s supposedly pretty good and is the basis of the Zon TV service that is being plugged in the ad that can be seen below, which I think is for Portuguese TV.

But there’s another Snowflake interface video that’s worth seeing first. Check out the demo reel (also below) of the user interface for SFR’s Neufbox Evolution, which I think is a streaming Internet media box.

The point, De Beer said, is to get more closely engaged with the service providers, and by those he means the cable, satellite and other TV and entertainment outfits around the world, and offer them white-label software they can build and brand as they see fit, to deliver a consistent experience across any device. “They’ll be able to constantly update and upgrade their experiences,” he said.

Another point: NDS is strong in India and China with the satellite TV outfits, whereas Cisco is strong in North America with the cable companies. “They’re strong where we’re weak, and vice versa,” he told me.

There are a few critical points. ISI analyst Brian Marshall observed that Cisco is using up about 20 percent of its offshore cash balance. Also NDS’s business is pretty highly concentrated. About 70 percent of its revenue comes from 10 customers, and a little less than half comes from the top three: DTV, BSkyB and Sky Italia.

While Marshall sees the opportunity in comprehensive digital media, he thinks the price Cisco is paying is “rich for a company growing sales at less than 10 percent year on year.” And with revenue per employee at $200,000 at NDS — much lower than Cisco’s $750,000 per employee — Marshall wonders how the deal will be accretive to Cisco right away. “We struggle identifying sources of accretion in year one other than headcount reduction.”

NDS STUDIO DESIGN & SFR AWARDED from NDS Design on Vimeo.

ZON online from NDS Design on Vimeo.

Here is a very cool — if slightly creepy — video that debuted at the Game Developers Conference this week in San Francisco.

Made by the Paris-based Quantic Dream, developers of the groundbreaking Heavy Rain game, the “Kara” concept video is a look at the future of gaming, using full-body motion capture and a new computer-graphics engine. It is running in real time on Sony’s PlayStation 3 platform.

Mostly, it is just heartbreaking, as a robot comes to life and is quickly scared by the idea of how precious that can be.

Enjoy:

This morning, a French court denied Samsung’s request for an injunction banning sales of the iPhone 4S in France, sought on the grounds that it violated the South Korean company’s wireless-communications patents.

Describing Samsung’s plea for an injunction as a “disproportionate” measure, the Tribunal de Grande Instance de Paris ruled Samsung must reimburse Apple $134,100 for its legal fees. But it also denied Apple’s request for damages and said Samsung’s infringement lawsuit against its rival can move forward.

So another loss for Samsung, though the company will have a chance to take another shot at Apple soon. Next week, a Milan court will hold a hearing to review the company’s request for a ban on the iPhone 4S in Italy.

Here’s the key quote, courtesy of Google Translate:

What will you do with your operating system webOS?

We should announce our decision in the next two weeks. This is not an easy decision, because we have a team of 600 people which is in limbo. We need to have another operating system.

Also in the interview, Whitman concedes that if iPads count as PCs, as the research firm Canalys has argued, then Apple will likely overtake HP as the world’s top vendor of PCs. But she says HP would try to retake the crown in 2013.

Whitman is in Europe for an HP corporate event in Vienna, at which HP made some big announcements on the enterprise IT front, specifically around a new concept it calls “information optimization.”

The interview, in the original French, is here; a fair translation into English is here.

When we last heard from Whitman on the subject of webOS, she admitted she wasn’t sure what to do. On Nov. 8, she told an all-hands meeting of HP’s webOS team that she was still mulling over the situation.

Having failed to get any traction in hardware sales, HP killed the TouchPad and all the other webOS-running hardware on Aug. 18. Yet in killing it, HP managed to make its TouchPad device suddenly popular — at a reduced price.

Whatever the result, the whole $1.2 billion acquisition of Palm — which created webOS — has turned out be a bit of a mess for HP. On its earnings call last week, the company said that it is writing off $1.66 billion related to the winding down of the webOS business. Decisions, decisions.

Samsung, which is embroiled in a neck-and-neck race with Apple to become the world’s largest seller of smartphones, is trying to gain an upper hand in a legal battle that started in April when Apple accused it of copying key design elements in smartphones and tablets.

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Several social and Jewish groups had urged Apple to withdraw the application, saying it breaches French laws that ban disclosing people’s religion without their consent as well as compiling data about people’s religions. Groups that objected to the app included a council representing French Jewish institutions known as Crif, France’s Jewish student union, and an anti-racism group called SOS Racisme.

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The South Korean company has sued Apple for patent infringement in France. Filed in a Paris district court, the complaint claims the iPhone 3G, iPhone 3GS, iPhone 4, and the 3G iPad violate three Samsung patents. It’s not clear which, but sources tell the AFP they’re likely related to UMTS, a third-generation wireless technology.

With this latest suit, Apple and Samsung are now battling it out in eight courts worldwide: The U.S., Australia, Korea, Japan, Germany, the Netherlands, Britain and France.

Facing a barrage of negative press about its upcoming IPO, Groupon CEO and co-founder Andrew Mason took up a pen to counter critics of the social buying service.

Especially under scrutiny has been the Chicago-based Groupon’s accounting of its finances — along with worries that its torrid growth is slowing — both of which Mason addressed in detail in a pugnacious email memo to his thousands of employees.

Specifically referencing a recent article speculating that the daily deals site was running out of money, Mason said, in part:

“While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.”

Mason also took on the controversial ACSOI — or adjusted consolidated segment operating income — metric that Groupon used in its initial filing and later stepped back from.

“The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state — we just didn’t realize there would be so many skeptics,” wrote Mason.

Mason also took some aim at competitors, such as LivingSocial and Yelp, in the email.

As for the public offering, which is expected next month:

“If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.”

Then again, that is exactly what a dad-to-be would say about his baby, whatever it looked like.

Mason, when asked about the memo, declined to comment.

There is a lot more than that, so here’s Mason’s full email for all you pencil pushers to peruse:

Dear Groupon,

This weekend, I did a Google News search on our company — my first in awhile. The first story that popped up was called The Fall of Groupon: Is the Daily Deals Site Running Out of Cash? I laughed when I read the headline (in the car by myself, weirdly). First — with this article, the degree to which we’re getting the shit kicked out of us in the press had finally crossed the threshold from “annoying” to “hilarious.” Second, I was struck by the irony — I had just finished a board meeting last Wednesday saying this to myself: I’ve never been more confident and excited about the future of our business.

I realize that this sounds like the kind of thing that CEOs say when they’re trying to pep people up. First of all — I’m all about not pepping people up. If you don’t believe me, just ask my fiancée, Jenny “why don’t you ever say anything nice about me” Gillespie. Want another example? Look at the magazine covers in our lobby, which are there to make you sad by reminding you of the impermanence of success.

I’m going to spend the rest of this email explaining why I’m so excited. You need some ammo to argue back against your blog-reading “friends” (silently argue in your mind, that is — you can’t actually say any of this yet), and I’ve been told that the “what have you ever done with your life that’s so great?” rebuttal isn’t working as well for you guys as it has for me.

While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.

I’ll summarize my excitement with four points: 1) Growth in our core business is strong 2) Our investments in the future — businesses like Getaways & NOW — look great, 3) We are pulling away from competition, and 4) We’ve built a great team that I would pit against anyone. In other words, all the stuff that one would want to look good? It looks good.

Many of the long-term unknowns of our business are becoming known, and we like the answers. I will now elaborate in a level of financial detail that will give Jason Child a stomach ulcer.

1. GROWTH IN THE CORE BUSINESS

Thanks to a tremendous effort by our sales team, August in the U.S. is shaping up to be a pivotal month. It appears that will revenues grow by about 12% over last month (which is a lot), while we cut our marketing expenses by 20% in the same period.

Beyond their obvious goodness, these numbers are important because they answer one of the main criticisms thrown at us in the past few months, relating to a metric we put in the S-1 called ACSOI (adjusted consolidated segment operating income) to help people understand how we think about marketing expenses. The reason everyone in the world seems to hate ACSOI is that it makes us look magically profitable by subtracting a bunch of our customer acquisition marketing costs from our expenses. The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state –we just didn’t realize there would be so many skeptics. I think it’s worth going deep on this one more time — brace yourself.

Our internal forecast shows two different types of marketing: what I’ll call “normal marketing” — which is NOT excluded from ACSOI — and “customer acquisition marketing,” which is. The way Groupon spends on marketing is unique in three ways:

1. We are currently spending more than just about any company ever on marketing — in Q2, we spent nearly 20% of our net revenue on marketing, while a typical company spends less than 5%. Why do we spend so much? The simple answer is “because it works.” But thats only part of what makes our situation special.

2. Our marketing — at least the customer acquisition marketing that we remove from ACSOI — is designed to add people to our own long-term marketing channel — our daily email list. Once we have a customer’s email, we can continually market to them at no additional cost. Compare this to Johnson and Johnson, McDonald’s, or most other companies. If I’m a Johnson, and I’m trying to sell you a box of Band Aids, I have to keep spending money on commercials and magazine ads and stuff to remind you about how sweet Band Aids are, even after you’ve bought your first box. With Groupon, we just spend money one time to get you on our email list, and then every day we email you a reminder of the sweetness of our metaphorical Band Aid. There is no cost of reacquisition — that’s unusual (and we created ACSOI to point that out). If Johnson wanted to follow the Groupon strategy, he would have to start a free daily newspaper about bandages and then run Band Aid ads in it every day.

3. Eventually, we’ll ramp down marketing just as fast as we ramped it up, reducing the customer acquisition part of our marketing expenses (the piece that we remove in ACSOI) to nominal levels. We are spending a ton now because we’re acquiring as many subscribers as we can as quickly as we can. We aren’t paying attention to marketing budget (just marketing ROI) in the way a normal company would, because we know that even if we wanted to continue to spend at these levels, we would eventually run out of new subscribers to acquire. So our customer acquisition spend drops severely to reflect the fact that eventually we’ll run out of people we can add to our email list. We view this internally as a very large one-time expense and then our job forever after will be to continually convert these subscribers into customers and to make sure our customers keep buying from us. Ongoing, the normal marketing dollars we spend are not something we would remove from our internal calculation of ACSOI.

I tried my best to explain this simply, but it’s not lost on me that if you actually understood this, you probably had to read it three times. It’s not easy stuff. It’s much easier to assume that we’re goons. So people can be forgiven for being suspicious. In fact, feel a little bad about how downhearted the critics will be when we don’t turn out to be a Ponzi scheme — those are good impulses for journalists to have, and I hope our non-evil ways don’t destroy their spirits.

Anyway, there’s a reason that I just went on about ACSOI. One of the questions that skeptics ask is, “when you ramp down marketing, won’t revenues stop growing as well? Aren’t you just buying growth?” Over the past several months we’ve been consistently reducing our marketing spend and yet revenues are still increasing at a significant pace. In Q1 of this year, marketing represented 32.3% of our net revenues. By the end of Q2 it had fallen to 19.4%. And it has continued to fall over the past several months all because we’ve been investing in our own long-term marketing channel — our email list.

Internationally we see the same trends — marketing is down, but revenues are up — every country is either losing less or making more. Even in young markets like Korea, where we’re still making massive investments, we’re seeing unprecedented growth. We started building our Korean team this January, despite the presence of two competitors that were larger than any we’d previously battled from behind. Thanks to the brilliant execution of the Korean team, we are set to be the market leader within months. We’ve never had a country grow as fast as Korea!

What about our joint-venture with Tencent in China? Did you read the article that Gaopeng’s CEO has kidnapped the first born children of all our employees and is putting them to work building a laser beam he’ll use to slice the moon in half? It turns out that that one isn’t true either. China is definitely a different market, but every month we inch closer to profitability. As has been our strategy in launching other countries — Germany, France, and the UK, included — our China growth strategy was to hire quickly and manage out the bottom performers. So far, that strategy has improved our competitive position in China from #3,000 to #8. Will we one day reach the dominant status we enjoy in most (come on, Switzerland!) other countries? It’s too soon to tell, but there’s no question in my mind that we’re building a business that will be around for the long haul.

2. NEW BUSINESS LINES ARE BOOMING

Travel and Product are enormous opportunities. After only a few months, they’re already making up 20% of revenue in some countries. We sold $2M worth of mattresses in the UK — in one day! Groupon Getaways will do $10M in its first calendar month — which you might think is awesome, but we’re actually disappointed with those results because we know how much better we’ll be doing soon.

While there’s still a ton of work to do, Groupon Now! continues to see weekly double digit growth. The model works and I believe it will play a major part in the future of our global business as more merchants and customers join the marketplace.

3. WE ARE PULLING AWAY FROM COMPETITION

If there’s a question I’ve received from Groupon skeptics more than any other, it’s, “how will you fend off the competition — especially massive companies like Google and Facebook?” I could give a dozen reasons to bet on Groupon, but it’s impossible to predict the future or the actions of others. Well, now the sleeping giants have woken up — and the numbers are showing that what was proven true with literally thousands of other competitors is just as true with the incumbents of the Internet: it’s kind of hard to build a Groupon. And since anyone with an Internet connection can track the performance of our competitors, I can be more specific:

Google Offers is small and not growing. In the three markets where we compete, we are 450% of their size.

Yelp is small and not growing. In the 15 markets where we compete, our daily deals are 500% of their size.

Living Social’s U.S. local business is about 1/3rd our size in revenue (and smaller in GP) and has shrunk relative to us in the last several months. This, in part, appears to be driving them toward short-sighted tactics to buy revenue, like buying gift certificates from national retailers at full price and then paying out of their own pocket to give the appearance of a 50% off deal. Our marketing team has tested this tactic enough to know that it’s generally a bad idea, and not a profitable form of customer acquisition.

Facebook sales are harder to track, but are even less significant at present.

My point is not that our competitors will fail — some may actually develop sustainable businesses, or even grow — after all, local commerce is an enormous market. The real point is that our business is a lot harder to build than people realize and our scale creates competitive advantages that even the largest technology companies are having trouble penetrating. And with the launch of NOW, I suspect our competition will have an even harder time in light of the natural barriers to entry that are needed to build a real-time local deals marketplace.

4. OUR TEAM

This is the fluffiest of the four points, but maybe the most important — we’ve built a global team of hungry entrepreneurial operators and seasoned executives that rivals any team I know of. Almost every day, I find myself in a scenario where I silently think, “I can’t believe I got this person to work for me — that failure of judgement is perhaps their single flaw.”

I point out the team because while today the business is strong and it appears we must endure success for awhile longer (despite its impermanence), we will inevitably be challenged with issues we didn’t predict — and when that happens, the quality of our team will be a deciding factor in our ultimate long-term success.

FINAL THOUGHTS

I wrote this email because when I read some of the press this weekend, I realized a rational person could read this stuff and wrongly conclude that we’re in trouble. The irony is hopefully clear: We’ve never been stronger.

And while we’ve refrained from defending ourselves publicly, you’ve continued to create our best defense, with every department innovating new practices that are taking our business to the next level. Thanks for staying tough, determined, and agile throughout this process. For now we must patiently and silently endure a bit more public criticism as we prepare to birth this IPO baby — a breed for which there are no epidurals. If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.

I’ve been as candid as possible — hope this sheds some light on things. Reply with your questions if anything remains unclear. Amidst all this, I hope you remember what we’re doing here — we are making history together. I guess you don’t get to build something that reshapes the local commerce ecosytem without getting a few bruises. I’m so proud of the work we’re doing, and I feel extraordinarily lucky to work on what I think is the best thing that’s happened to small businesses since the telephone We’ve invented something that is catalyzing millions of dollars of local commerce every single day in 45 countries and fills the lives of millions of customers with unforgettable experiences — it’s pretty remarkable.

Looking forward to getting this behind us!

Andrew

P.S.: I almost forgot to address the nonsense about us running out of money in the article above. If you apply the same logic used in the article, you’d have concluded long ago that companies like Amazon and Wal-Mart were running out of cash too. Both have often had payables far in excess of their cash. Finance geeks call this a working capital deficit. It’s normal, manageable and a lot of folks actually believe it’s good thing and would kill to get paid from their customers long before they have to pay their suppliers. We are generating cash, not losing it — we generated $25M in cash last quarter alone, adding to the $200M we had before. In other words, we’re doing the opposite of running out of money.

Speaking of “it looks good,” here is Conan O’Brien with a Tourette’s version of Mason’s new catchphrase:

At Google, Steib was most recently Director of Video Advertising for the Americas region, and before that had led Google’s Americas business teams for its emerging ad products, including Mobile Ads, Local Ads and Commerce.

The joint venture is expected to launch late this year, and, like its counterpart in France, will offer designer apparel at low prices for limited amounts of time to people who sign up for a free membership.

Back in May, when the joint venture was announced, the two companies said they will be equal partners, but the terms of the deal were not disclosed, such as the size of the investment or the kinds of resources the companies would be required to contribute.

In the U.S., the company will be competing against other flash sales sites, such as Gilt Groupe, Rue La La and ideeli.

Before joining Google, Steib was the General Manager of Strategic Ventures at NBC Universal, and also served a stint as VP in the NBC Corporate Development group.