The results were led by strong growth in sales of IBM’s System Z mainframe servers, which were up 69 percent. That contributed to a 21 percent boost in sales in the Systems and Technology segment, which totaled $6.3 billion. Software sales were $7 billion, up 7 percent. Services revenue was $10.2 billion, up 2 percent.

It finished the year with earnings of $11.52, up 15 percent, on sales of $99.9 billion, which were up 4 percent form 2009. It was the eighth year in a row of double-digit per-share profit growth.

Looking ahead to the new fiscal year, IBM said it expects per-share earnings of at least $12.56 on a GAAP basis and at least $13 on a non-GAAP basis. This would put it on track to meet its road map that calls for earning of at least $20 a share in operating profit by 2015.

IBM shares rose 65 cents to close at $150.65 on the New York Stock Exchange, which amounts to a record, and climbed as high as $155 in after-hours trading.

Demand Media is set to go public, according to an amended filing with the Securities and Exchange Commission, with shares priced from $14 to $16 each.

The online publisher could sell up to 8.625 million shares and, if it prices at the top of the range, it could be worth about $1.3 billion and raise $138 million.

That includes 4.5 million shares from the company, three million shares from existing shareholders and another 1.125 shares that its underwriters have an option to sell.

Demand will net $58.1 million, if the IPO price is $15.00 per share, which it said it will use for “investments in content, international expansion, working capital, product development, sales and marketing activities, general and administrative matters and capital expenditures.”

The company added that “we currently anticipate that our aggregate investments in content during the year ending December 31, 2011 will range from $50 million to $75 million.”

Demand’s ticker symbol will be DMD on the New York Stock Exchange.

In its amended prospectus, Demand said:

This is an initial public offering of shares of common stock of Demand Media, Inc.

Demand Media is offering 4,500,000 of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional 3,000,000 shares. Demand Media will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $14.00 and $16.00.

The common stock of Demand Media has been approved for listing on the New York Stock Exchange under the symbol “DMD.”

Demand’s road to an IPO has been relatively quick.

One bump came last month, as BoomTown reported after the Santa Monica, Calif. company had to satisfy government regulatory questions over the way it recognizes costs of creating content.

Currently, using a concept of “long-lived” content, Demand has been amortizing those expenses over five years, since it says it continues to generate revenue on that material over that much time. Most publisher recognize costs immediately.

That’s different from many companies in the publishing business, which typically account for costs of creating content immediately as they are incurred or over a much shorter time period.

Demand has determined that its content has a more evergreen nature, compared to more topical–and perishable, from a revenue point of view–material produced by others.

Obviously, since this accounting treatment results in more attractive financial results, the longer expense period is of great interest to many other online content creators–such as AOL and Yahoo–which are watching the Demand IPO closely.

While the SEC did not ask Demand to make changes to its accounting practices, the amended S-1 is more detailed about them.

To be allowed to expense over five years, Demand said, the company has to use a sophisticated algorithmic platform–which other content creators do not have–to provide proof of “probable economic benefits” from that content over that time.

Since Demand has long claimed that it has a new and innovative approach to content creation, it is making the case to investors that it needs to have the correct accounting for that approach.

Said Demand in its amended filing:

“In determining whether content embodies probable future economic benefit required for asset capitalization, management has reviewed, and intends to regularly review the operating performance of content published.”

But, it warned:

“Changes from the five year useful life we currently use to amortize our capitalized content would have a significant impact on our financial statements. For example, if underlying assumptions were to change such that our estimate of the weighted average useful life of our media content was higher by one year from January 1, 2010, our net loss would decrease by approximately $1.6 million for the nine months ended September 30, 2010, and would increase by approximately $2.4 million should the weighted average useful life be reduced by one year.”

The practice has passed government scrutiny and now investors will decide what they think of this and the entire business of Demand.

Demand execs will now go on a road show for the offering, which is being led by Goldman Sachs and Morgan Stanley.

The split has been a long time in the making. Owners of the old Motorola got one share of Motorola Mobility for each eight shares they owned and the remaining company then underwent a one-for-seven reverse stock split. The two halves had been trading separately on a “when issued” basis for a while now.

Both of the company’s leaders praised the move and promised that only good things will come of it.

“After more than two years of planning, today we begin operating as a financially strong, independent company trading on the New York Stock Exchange,” Motorola Mobility CEO Sanjay Jha said in a statement, touting the company’s smartphone and video business.

Motorola Solutions’ CEO Greg Brown sounded an equally optimistic note.

“With a purpose-driven brand and a strong balance sheet, we are very well positioned for the future,” Brown said.

For now, the two companies have joint custody of the name and logo. Motorola has also split its Web site in two (see below) with options pointing to each of the now separate Motorolas. Or would that be Motorolae, or perhaps Motoroli?

Yesterday, Demand Media submitted another amended S-1 to the Securities and Exchange Commission, part of its march to an initial public offering many had expected to take place sooner rather than later.

What’s taken so long, said multiple sources familiar with the situation, has been discussions between government regulators and the Santa Monica, Calif., online content company about how to more fully explain to investors–which it did so in the new S-1–how it expenses the costs of making its content.

Currently, using a concept of “long-lived” content, Demand has been amortizing those expenses over five years, since it says it continues to generate revenue on that material over that much time.

As the company noted in its S-1 filing:

“Capitalized media content is amortized on a straight-line basis over five years, representing the Company’s estimate of the pattern that the underlying economic benefits are expected to be realized and based on its estimates of the projected cash flows from advertising revenues expected to be generated by the deployment of its content. These estimates are based on the Company’s plans and projections, comparison of the economic returns generated by its content of comparable quality and an analysis of historical cash flows generated by that content to date.”

That’s different from many companies in the publishing business, which typically account for costs of creating content immediately as they are incurred or over a much shorter time period.

Demand has determined that its content has a more evergreen nature, compared to more topical–and perishable, from a revenue point of view–material produced by others.

Obviously, since this accounting treatment results in more attractive financial results, the longer expense period is of great interest to many other online content creators–such as AOL and Yahoo–which are watching the Demand IPO closely.

While the SEC has not asked Demand to make changes to its accounting practices, the amended S-1 is more detailed about them.

To be allowed to expense over five years, Demand said, the company has to use a sophisticated algorithmic platform–which other content creators do not have–to provide proof of “probable economic benefits” from that content over that time.

Since Demand has long claimed that it has a new and innovative approach to content creation, it is making the case to investors that it needs to have the correct accounting for that approach.

Said Demand in its amended filing:

“In determining whether content embodies probable future economic benefit required for asset capitalization, management has reviewed, and intends to regularly review the operating performance of content published.”

But, it warned:

“Changes from the five year useful life we currently use to amortize our capitalized content would have a significant impact on our financial statements. For example, if underlying assumptions were to change such that our estimate of the weighted average useful life of our media content was higher by one year from January 1, 2010, our net loss would decrease by approximately $1.6 million for the nine months ended September 30, 2010, and would increase by approximately $2.4 million should the weighted average useful life be reduced by one year.”

Sources said Demand’s road show for investors will not start until the SEC gives its final approval, pushing its IPO into next year.

Demand’s initial filing was to raise $125 million at a reported $1.5 billion valuation. It had said it hoped to have DMD as its ticker symbol on the New York Stock Exchange.

There is no price range yet for the offering, which is being led by Goldman Sachs and Morgan Stanley.

Until it all happens, here’s one key section on these issues in the latest S-1 to peruse:

Capitalization and Useful Lives Associated with our Intangible Assets, including Content and Internal Software and Website Development Costs

We publish long-lived media content generated by our content studio which we commission and acquire from third party freelance content creators. Direct costs incurred for each individual content unit that we determine embodies a probable future economic benefit are capitalized. The vast majority of direct content costs represent amounts paid to freelance content creators to acquire content units and, to a lesser extent, specifically identifiable internal direct labor costs incurred to enhance the value of acquired content units prior to their publication. Internal costs not directly attributable to the enhancement of content units acquired prior to publication are expensed as incurred. All costs incurred to deploy and publish content are expensed as incurred, including the costs incurred for the ongoing maintenance of websites on which our content resides. We acquire content when our internal systems and processes, including an analysis of millions of historical Internet search queries, advertising marketing terms, or keywords, and other data provide reasonable assurance that, given predicted consumer and advertiser demand relative to our predetermined cost to acquire the content, the content unit will generate revenues over its useful life that exceed the cost of acquisition. In determining whether content embodies probable future economic benefit required for asset capitalization, management has reviewed, and intends to regularly review the operating performance of content published.

We also capitalize initial registration and acquisition costs of our undeveloped websites and our internally developed software and website development costs during their development phase.

In addition we have also capitalized certain identifiable intangible assets acquired in connection with business combinations and we use valuation techniques to value these intangibles assets, with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis requires us to make various judgmental assumptions and estimates including projected revenues, operating costs, growth rates, useful lives and discount rates.

Our finite lived intangible assets are amortized over their estimated useful lives using the straight-line method, which approximates the estimated pattern in which the underlying economic benefits are consumed. Capitalized website registration costs for undeveloped websites are amortized on a straight-line basis over their estimated useful lives of one to seven years. Internally developed software and website development costs are depreciated on a straight-line basis over their estimated three -year useful life. We amortize our intangible assets acquired through business combinations on a straight-line basis over the period in which the underlying economic benefits are expected to be consumed.

Capitalized content is amortized on a straight-line basis over five years, representing our estimate of the pattern that the underlying economic benefits are expected to be realized and based on our estimates of the projected cash flows from advertising revenues expected to be generated by the deployment of our content. These estimates are based on our current plans and projections for our content, our comparison of the economic returns generated by content of comparable quality and an analysis of historical cash flows generated by that content to date which, particularly for more recent content cohorts, is somewhat limited. To date, certain content that we acquired in business combinations has generated cash flows from advertisements beyond a five year useful life. The acquisition of content, at scale, however, is a new and rapidly evolving model, and therefore we closely monitor its performance and, periodically, assess its estimated useful life.

Advertising revenue generated from the deployment of our media content makes up a significant element of our business such that amounts we record in our financial statements related to our content are material. Significant judgment is required in estimating the useful life of our content. Changes from the five year useful life we currently use to amortize our capitalized content would have a significant impact on our financial statements. For example, if underlying assumptions were to change such that our estimate of the weighted average useful life of our media content was higher by one year from January 1, 2010, our net loss would decrease by approximately $1.6 million for the nine months ended September 30, 2010, and would increase by approximately $2.4 million should the weighted average useful life be reduced by one year. We periodically assess the useful life of our content, and when adjustments in our estimate of the useful life of content are required, any changes from prior estimates are accounted for prospectively.

E-Commerce China Dangdang is the No. 1 business-to-consumer brand in China, and like Amazon, it started off selling books, but now it’s a sprawling online mall, offering everything from beauty supplies to clothing and more.

Today, it’s selling shares to the public for $16 apiece, AP reports. The stock will trade on the New York Stock Exchange starting today under the ticker DANG.

The company really should be celebrating. The price is much higher than the already boosted prices of $13 to $15 a share the company originally was expecting. In all, it expects to make $168.6 million in proceeds, with the potential to sell up to $4 million more if underwriters exercise their option to buy additional shares.

The money will be used for general corporate purposes, including adding more product categories, or for acquisitions.

The 11-year-old company has about 1,142 full-time employees, and for the quarter ended Sept. 30 earned 32.7 million renminbi ($4.9 million), up from 8.3 million RMB ($1.2 million) in 2009. In the same period, its revenue rose to 606.7 million RMB from 389.3 million RMB.

Photo Credit: Skaines.

Demand Media, which posted its S-1 regulatory filing August, filed an amended version today that is likely to allow it to move quickly to an initial public offering.

The new version for the online content company has updated financial information for the third quarter.

Demand now must now wait for the Securities and Exchange Commission to approve the filing, after which the execs of the Santa Monica, Calif.-based Demand will immediately to go on a road show for several weeks to try to convince investors to jump on board.

Then, if there’s enough interest, the IPO is likely to come before the holidays.

Demand’s initial filing was to raise $125 million at a reported $1.5 billion valuation.

You can read the whole filing here, which shows an improved performance from Demand.

In its latest filing, Demand said it had generated revenue–from advertising and a domain business–of $179.4 million for the first nine months this year and had a net loss of $6.4 million.

In the same period a year ago, revenue was $102.3 with a net loss of $5.6 million.

Losses in the third quarter itself narrowed, to $305,000 from $4.2 million in the previous quarter and $1.9 million a year ago.

But Demand points in its filing to its “Adjusted OIBDA,” using less stringent non-GAAP financial rules, which shows a much improved $41.9 million profit compared to $18.9 million last year.

As MediaMemo’s Peter Kafka wrote:

Some investors may balk at these non-GAAP numbers, but Demand, Goldman Sachs and its other underwriters clearly think there’s a market for them. And there’s certainly a hunger in the tech world for a big, brand-name IPO to break the dry spell. You can feel people willing this thing to work.

If Demand did, say, $55 million in OIBDA this year, it would need a multiple of 18 times trailing 12 months earnings to get to a $1 billion valuation. It would need 27x to get the $1.5 billion number that people are whispering to reporters.

Another way to get to $1.5 billion: Project OIBDA of $100 million for 2011, and ask for 15x on that number.

Demand is definitely growing smartly from $170.3 million in annual revenue in 2008 to $198.5 in 2009 to possibly reaching–based on six months of 2010 results–well above $230 million in 2010.

That’s due to its increasing growth in traffic, largely via Demand’s popular eHow site and a network of others.

Almost all of the money is coming from traffic, and advertising, that it generates from Yahoo and Google–Google in particular.

Demand has done this using $355 million in funding it has raised since its founding in 2006. The company said it has only $29.2 million in cash and cash equivalents left, but there is also a $100 million untouched line of credit.

Hence, the IPO, which will give it both cash and stock to use to grow its content business, either organically or via acquisition, all while keeping the costs of content creation increasingly lower via innovative technology.

From Demand’s filings, it is clear such an effort is slow going, as it seeks to carve out any entirely new business model for content.

Now, it must find Wall Street investors who agree.

In its filing, Demand said it will sell 4.5 million shares in the IPO and current shareholders will sell another three million. It hopes to have DMD as its ticker symbol on the New York Stock Exchange.

But there is no price range yet for the offering, which is being led by Goldman Sachs and Morgan Stanley.

If you had bought $1,000 worth of AOL stock back in 1992, your investment would have gained close to 15,000 percent–yes, 15,000 percent–just three years later.

That was not quite what happened this week for the iconic Internet company. It opened trading in its latest debut on the New York Stock Exchange on Dec. 10 at $23.67.

Yesterday, seven days after its execs rang the bell and spun off from Time Warner (TWX), AOL (AOL) shares closed at $23.36.

In other words, pretty much a wash so far!

That’s actually not such a bad thing, since many had expected AOL stock to fall more significantly after it went out.

Apparently, investors are still in that “Show Me” state CEO Tim Armstrong described last week in a video interview with BoomTown.

And, until he does show us, here’s that chat–along with a tour of the AOL HQ in New York:

]]> http://allthingsd.com/20091218/aol-stock-one-week-later-flat-is-the-new-up/feed/ 2 http://allthingsd.com/20091210/will-wall-street-heart-aol-today-even-if-it-partied-hearty-at-the-nyse-last-night/ http://allthingsd.com/20091210/will-wall-street-heart-aol-today-even-if-it-partied-hearty-at-the-nyse-last-night/#comments Thu, 10 Dec 2009 08:48:26 +0000 Kara Swisher http://kara.allthingsd.com/?p=21783

This morning, after AOL execs ring the opening bell at the New York Stock Exchange, the latest chapter for the long-troubled Internet icon begins as it tries to convince Wall Street that this time will be the charm.

AOL officially spins off from Time Warner when the markets open for trading on the NYSE, and here is what the company is whispering to investors:

Really. We promise this time will be different. Really. Not like the last time we promised and it was not different at all and, to be honest, was worse! Or the 17 times before that. Cross our hearts. We’ve changed. Really.

Still, despite AOL’s various missteps over the years–including being part of one of the more disastrous mergers in history–several big investors BoomTown asked this week said they were willing to give the company a break.

Shareholders of record at 5 pm ET on Nov. 27 got one share of AOL for every 11 shares of Time Warner (TWX) on the day of the long-expected spinoff of the Internet service.

A typical response was Henry Ellenbogen’s of T. Rowe Price. While noting he does not comment on the firm’s trades, he added: “[AOL CEO] Tim Armstrong has laid out a thoughtful plan focusing on rebuilding the fundamentals of the business.”

As a big holder of Time Warner shares, T. Rowe Price now has a clutch of AOL stock–which will trade under the “AOL” ticker–from its 3.64 percent stake in the media giant.

Another big stockholder of AOL, who wanted to remain unnamed, said much the same: “They still have tons of problems and issues. But, I really like Tim. If it can be turned around, he’s the best guy to do it.”

Added the investor: “It’s very cheap, so I think it’s like owning an out-of-the-money options. You can make a lot of money if it works
when you start with a $2.4 billion market cap.”

That’s what AOL is valued at today, although it was worth a lot more only a month ago, a valuation based on Time Warner’s share price, which made AOL worth just over $3 billion when the spinoff plan was announced. (The stock has actually been trading on a “when issued” basis.)

But let’s have a moment of solemn reflection: AOL was valued at about $163 billion at the turn of the century.

In any case, the real game begins this morning, when AOL flies free from Time Warner for good (riddance?).

The new company’s execs and clients were certainly flying high last night on the floor of the NYSE, where AOL held a big, honking party.

Here’s a video I did of the event, which includes a parade of AOL execs posing with guest celeb, Diddy.

As in the hipster rap mogul, who has also been known as Puff Daddy, P. Diddy and, of course, Sean Combs, whom Armstrong should put on the AOL board pronto.

Maybe then we can say AOL has definitely changed!

Judge for yourselves from this video (I will also have another video up later of my interviews with various AOL execs at the party, and you can see the video tour of AOL HQ and an Armstrong interview I did yesterday here):

]]> http://allthingsd.com/20091210/will-wall-street-heart-aol-today-even-if-it-partied-hearty-at-the-nyse-last-night/feed/ 3 http://allthingsd.com/20091209/boomtown-visits-aols-nyc-hq-on-eve-of-spin-off-ceo-armstrongs-fabulous-cheekbones-and-more/ http://allthingsd.com/20091209/boomtown-visits-aols-nyc-hq-on-eve-of-spin-off-ceo-armstrongs-fabulous-cheekbones-and-more/#comments Thu, 10 Dec 2009 00:38:11 +0000 Kara Swisher http://kara.allthingsd.com/?p=21751

BoomTown is in Manhattan today and my No. 1 stop had to be the AOL HQ downtown.

The iconic Internet company–which has gone through more lives than a dozen cats–is poised tomorrow to officially spin off from Time Warner (TWX) in yet another episode of the longest running corporate soap opera on the Web.

Less than a decade ago, AOL was the most powerful Internet property in the world, its dominance culminating in a merger with the media giant that was touted as the next big thing.

Well, it was certainly a thing.

As everyone knows, the union did not turn out well, and now, after years of struggling within Time Warner, AOL is being let free to resume its journey alone.

It will start trading tomorrow on the New York Stock Exchange under the ticker “AOL.”

I am about to head out to a party for AOL on Wall Street tonight and will also be there when AOL rings the opening bell in the morning, after which investors will cast their vote on its fate. (I’ll post on all that next.)

Until then, here is a video tour I did this afternoon at AOL HQ on Broadway, including an interview with CEO Tim Armstrong–whose Don Draper executive cheekbones are admired by partners and rivals alike–as the former Google (GOOG) exec heads into the big day:

]]> http://allthingsd.com/20091209/boomtown-visits-aols-nyc-hq-on-eve-of-spin-off-ceo-armstrongs-fabulous-cheekbones-and-more/feed/ 2 http://allthingsd.com/20091209/aol-puff-daddy-parties-and-cockroaches-on-npr/ http://allthingsd.com/20091209/aol-puff-daddy-parties-and-cockroaches-on-npr/#comments Wed, 09 Dec 2009 13:11:03 +0000 Kara Swisher http://kara.allthingsd.com/?p=21721

BoomTown is winging across the country right now to New York City to attend, among other things, the analog version of the AOL spinoff from Time Warner (TWX).

Videos to come, of course!

A ringing of the opening bell for AOL and trading will officially take place on Thursday morning at the New York Stock Exchange on Wall Street in Manhattan.

This will be preceded by a party there tonigh, which will apparently feature an appearance by Diddy, who was sporting the Puff Daddy name the last time I was at the exchange for an AOL/NYSE event.

How investors will like AOL is the billions-of-dollars question, of course.

AOL went public on Nasdaq on March 19, 1992, under the ticker “AMER,” and moved to the NYSE on Sept. 16, 1996 trading as “AOL.”

While working on my first of two books on AOL–one on the company’s upward ride and the other going down–I actually attended both the fancy dinner the night before AOL moved to the NYSE from Nasdaq and the AOL party on Wall Street the next day.

And since I spent an ungodly amount of time writing that pair of tomes on AOL, the iconic once and–it’s hoping–future Internet giant, I get to be a loud-mouthed pundit on a variety of television and radio news shows this week.

Yesterday, for example, I appeared on NPR’s “Morning Edition,” where I used a term that has long been used to describe the hardy AOL: The “cockroach of the Internet.”

Here is the audio clip of the interview with Steve Inskeep:

And here is the transcript (you can also listen to it here):

STEVE INSKEEP, host:

A divorce becomes final this week. Time Warner finishes spinning off AOL as an independent company. That will end the story for what was just eight years ago the largest merger in history. Time Warner was supposed to provide content from its movies and magazines. AOL, the giant Web company, would distribute it and together they would own the world. That’s what was supposed to happen.

Author Kara Swisher has chronicled what really happened, and she’s on the line.

Good morning.

Ms. KARA SWISHER (All Things Digital): How do you do?

INSKEEP: So they, through this merger, were going to be were going to be the gigantic company. They were even bigger than Time Warner at the time, the gigantic company that was going to bring Time Warner’s content to the masses. What happened?

Ms. SWISHER: What happened? Humanity happened. There’s people involved and a lot of people didn’t like the merger at Time Warner and dragged their feet and didn’t do the necessary synergies that were necessary to make it work.

Secondly, it was part of a big bubble here in Silicon Valley. AOL was at the top of that bubble and when it burst, and it turned out there weren’t quite so many revenues attached to it as people thought, you know, that sort of changed things.

And the third thing was, it just, you know, people weren’t really ready. The Internet was well used at the turn-of-the-century…but Google actually just hardly existed.

INSKEEP: So were AOL and Time Warner just ahead of their time?

Ms. SWISHER: No. I think it was probably too big. I mean it was trying to combine these companies, media and the Internet, and just as today there’s struggles over, you know, over the music industry digitally, over movies, they’re still fighting these fights, so it was still a very difficult marriage for media–traditional media, I guess–and digital media.

INSKEEP: So Time Warner now kicks AOL out the door. AOL is a much smaller company than it used to be in terms of customers and revenues and everything else. What’s the next step for AOL?

Ms. SWISHER: Well, it’s tough because its main business, the dial-up [and access] business, it’s declining drastically, and every year it goes down by hundreds of millions more. And they’re relying everything right now on content. That’s their big play, is the idea of creating content on the Internet and selling premium advertising against it. And we’ll see what happens, but it’s definitely not the size and influence it was before.

INSKEEP: So does AOL in their ideal world basically become a USA Today for the 21st century?

Ms. SWISHER: Kind of like that. They’re kind of being like Time Warner a little bit, if you think about it. You know, Time Warner has all those magazines doing that stuff and not every bit of it’s, you know, high level journalism. A lot of it’s People Magazine and Sports Illustrated, so it’s a question of how much money you can make at this when a company, say, like Google is just manufacturing money in the basement there over these little search terms.

INSKEEP: How on earth can AOL make money creating its own content and selling it when they apparently couldn’t find a way to mine and sell all the content they had access to when they were part of Time Warner?

Ms. SWISHER: Well, that’s a good question also. But you know, they didn’t get a lot of access to it. That took forever. You know, Time Warner really is run like a separate kingdom and the magazine people at Time didn’t really hand over the goods, and so AOL was never able to take advantage of them in a really substantive way.

Same thing happened with the cable business. There was supposed to be a lot mergers of AOL distributed over cable, over broadband, which is a great idea, but the cable people resisted. The movie people, you know, it just went on and on and on.

INSKEEP: Sounds like you don’t entirely blame AOL for this failure.

Ms. SWISHER: Oh, I do. They were arrogant and rude and they came in telling people what to do and they, you know, they had all sorts of questionable issues around their revenues that sort of fell apart. So I think they created a situation where they promised a great deal of things and delivered almost nothing.

INSKEEP: Are they in better position now or with better management now?

Ms. SWISHER: Yes. Now they have an executive from Google, actually. Tim Armstrong is a very well regarded executive and he’s really changed the–he has brought in new managers–many of them from Google, fascinatingly enough. And they’ve laid off a lot of people and they’re going to sell off assets. They’re doing all the right things. It’s just a question of what’s left once they’re finished doing that.

INSKEEP: So do you think there’s going to be an AOL in five years?

Ms. SWISHER: You know what? Everyone’s always counting AOL out and they still manage. They used to be called the cockroach of the Internet and they kind of still are in a lot of ways. You know, they never die. They always fall down. And it was their image that they constantly reinvented itself. And so we’ll see. I mean they have survived multiple changes in their business.

Even–I mean before they got huge they were almost out of business a million times, and so we’ll see if they–if, you know, cockroaches, whether you like them or not, probably will survive the nuclear holocaust, so we’ll see. You know, we’ll see what happens if they can turn this into something. It’s not going to be the glory days of AOL before, but it could be something interesting.

INSKEEP: Kara Swisher is co-executive editor of All Things Digital, a tech and media blog owned by Dow Jones.

Thanks very much.

Ms. SWISHER: Thanks a lot.

]]> http://allthingsd.com/20091209/aol-puff-daddy-parties-and-cockroaches-on-npr/feed/ 3 http://allthingsd.com/20091116/aol-to-spin-off-december-9-begin-trading-december-10/ http://allthingsd.com/20091116/aol-to-spin-off-december-9-begin-trading-december-10/#comments Tue, 17 Nov 2009 00:01:57 +0000 Kara Swisher http://kara.allthingsd.com/?p=20661

AOL will officially be spun off from Time Warner on Dec. 9, with trading to begin the next day.

Shareholders of record at 5 pm ET on Nov. 27 will get one share of AOL for every 11 shares of Time Warner (TWX) on the day of the long-expected spinoff of the Internet service.

At Time Warner’s current market cap of $38 billion, that gives AOL an implied value of $3.2 billion–a fraction of Google’s (GOOG) $20 billion valuation of the portal in 2005, when it invested $1 billion in the property. And it’s even lower than the $5.5 billion valuation Google gave the company last January, when it wrote down its investment.

AOL will trade on the New York Stock Exchange as “AOL.”

Ironically, before it merged with Time Warner at the dawn of the new century, AOL previously traded on the NYSE.

AOL went public on Nasdaq on March 19, 1992, under the ticker “AMER,” and moved to the NYSE on Sept. 16, 1996 trading as “AOL.”

(Fun fact: BoomTown actually attended both the fancy dinner the night before AOL moved to the NYSE from Nasdaq and the AOL party on Wall Street the next day.)

If you want to get really technical, AOL common stock will begin trading on a “when-issued” basis–you really don’t want to know the confusing regulatory details of why–on the NYSE under the symbol “AOL WI” beginning on Nov. 24, 2009.

On Dec. 10, when-issued trading of AOL common stock will end and “regular-way” trading under the symbol “AOL” will begin.

After that, it will be up to CEO Tim Armstrong to make the long-suffering AOL into the little Internet company that could.

The separation of AOL and Time Warner is also symbolic, dismantling the most potent symbol of Web 1.0, when AOL essentially got control of the media giant, only to see the merger crash in disaster.

If at first you don’t succeed…

Here’s the full Time Warner press release on the transaction:

Time Warner Declares Spin-off Dividend of AOL Shares

Record and Distribution Dates and Final Distribution Ratio Announced

NEW YORK–(BUSINESS WIRE)–Nov. 16, 2009–Time Warner Inc. (NYSE:TWX) and AOL Inc. today announced the timing and details regarding the spin-off of AOL from Time Warner.

The Time Warner board of directors has approved the final distribution ratio and declared a pro rata dividend of the shares of AOL common stock owned by Time Warner that will result in the complete legal and structural separation of the two companies.

On the distribution date of December 9, 2009, Time Warner stockholders of record as of 5 p.m. on November 27, 2009, the record date for the distribution, will receive one share of AOL common stock for every eleven shares of Time Warner common stock they hold.

Fractional shares of AOL common stock will not be distributed to Time Warner stockholders. Instead, the fractional shares of AOL common stock will be aggregated and sold in the open market, with the net proceeds distributed pro rata in the form of cash payments to Time Warner stockholders who would otherwise be entitled to receive a fractional share of AOL common stock.

No action or payment is required by Time Warner stockholders to receive the shares of AOL common stock. Stockholders who hold Time Warner common stock on the record date will receive a book-entry account statement reflecting their ownership of AOL common stock or their brokerage account will be credited with the AOL shares. An Information Statement containing details regarding the distribution of the AOL common stock and AOL’s business and management following the AOL spin-off will be mailed to Time Warner stockholders prior to the distribution date.

The AOL spin-off has been structured to qualify as a tax-free dividend to Time Warner stockholders for U.S. federal income tax purposes. Cash received in lieu of fractional shares, however, will be taxable. Time Warner stockholders are urged to consult with their tax advisors with respect to the U.S. federal, state, local and foreign tax consequences of the AOL spin-off.

Shares of Time Warner common stock will continue to trade “regular way” on the New York Stock Exchange (“NYSE”) under the symbol “TWX” through the distribution date of December 9, 2009, and thereafter. Any holders of shares of Time Warner common stock who sell Time Warner shares regular way on or before December 9, 2009, will also be selling their right to receive shares of AOL common stock. Investors are encouraged to consult with their financial advisers regarding the specific implications of buying or selling Time Warner common stock on or before the distribution date.

AOL common stock will begin trading on a “when-issued” basis on the NYSE under the symbol “AOL WI” beginning on November 24, 2009. On December 10, 2009, when-issued trading of AOL common stock will end and “regular-way” trading under the symbol “AOL” will begin. The CUSIP number for the AOL common stock will be 00184X 105 when regular-way trading begins.

Time Warner and AOL have entered into a Separation and Distribution Agreement and several other agreements related to the AOL spin-off. The completion of the AOL spin-off is subject to the satisfaction or waiver of a number of conditions, including the Registration Statement on Form 10 for the AOL common stock being declared effective by the Securities and Exchange Commission (“SEC”), the AOL common stock being authorized for listing on the NYSE and certain other conditions described in the Information Statement included in the Form 10 and in the agreements filed as exhibits to the Form 10. The condition relating to the authorization of the AOL common stock for listing on the NYSE has been satisfied, and today AOL sent a letter to the SEC requesting that the Form 10 be declared effective. Time Warner and AOL expect all other conditions to the AOL spin-off to be satisfied on or before the distribution date.

]]> http://allthingsd.com/20091116/aol-to-spin-off-december-9-begin-trading-december-10/feed/ 1 http://allthingsd.com/20091116/aol-spinoff-set-for-dec-9/ http://allthingsd.com/20091116/aol-spinoff-set-for-dec-9/#comments Mon, 16 Nov 2009 19:00:22 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=29147

]]> http://allthingsd.com/20091116/aol-spinoff-set-for-dec-9/feed/ 0 http://allthingsd.com/20091028/ibm-sells-unit-expands-buyback/ http://allthingsd.com/20091028/ibm-sells-unit-expands-buyback/#comments Wed, 28 Oct 2009 18:01:24 +0000 William M. Bulkeley http://voices.allthingsd.com/?p=17152 Dassault Systèmes SA agreed to pay $600 million to buy an International Business Machines Corp. (IBM) unit that sells Dassault’s design software.

The sale to Dassault, which makes software for computer-aided design and product management, removes one of the last vestiges of IBM’s once vast applications-software business. The two companies will retain a formal alliance in which the French company will recommend IBM services and infrastructure software.

Separately, IBM’s board expanded its stock buyback program, authorizing the spending of another $5 billion. It currently has $4.2 billion remaining from previous repurchase programs. The buyback announcement sparked a rally in IBM stock, which rose $1.06 to $121.17 in midday New York Stock Exchange trading.

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]]> http://allthingsd.com/20091028/ibm-sells-unit-expands-buyback/feed/ 0 http://allthingsd.com/20090929/xerox-takes-gamble-in-bid-for-acs/ http://allthingsd.com/20090929/xerox-takes-gamble-in-bid-for-acs/#comments Tue, 29 Sep 2009 18:41:32 +0000 William M. Bulkeley and Joseph Pereira http://voices.allthingsd.com/?p=16003 Xerox Corp. (XRX) and its new chief executive, Ursula Burns, unveiled the biggest acquisition in the company’s 103-year history, joining a wave of hardware makers expanding into services with a $5.6 billion deal for Affiliated Computer Services Inc. (ACS).

Aimed at snapping Xerox out of its funk, the acquisition and integration of ACS–which has 74,000 workers compared with Xerox’s 54,000–is a big gamble by a new CEO. But Ms. Burns, a Xerox veteran who took over in July, is seeking new markets as Xerox’s traditional copier and printer business faces pressure from rivals such as Hewlett-Packard Co. (HPQ).

Investors frowned on the stock-and-cash deal, sending Xerox’s shares down 14 percent in New York Stock Exchange trading. The company is taking on more than $2 billion in debt, paying $1.8 billion in cash and tapping the capital markets to finance $3 billion.

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]]> http://allthingsd.com/20090929/xerox-takes-gamble-in-bid-for-acs/feed/ 0 http://allthingsd.com/20090728/dear-tim-heres-a-tour-of-the-it-takes-a-licking-and-keeps-on-ticking-aol-brand/ http://allthingsd.com/20090728/dear-tim-heres-a-tour-of-the-it-takes-a-licking-and-keeps-on-ticking-aol-brand/#comments Tue, 28 Jul 2009 07:02:42 +0000 Kara Swisher http://kara.allthingsd.com/?p=16492

What’s next for AOL?

Reviving the “You’ve Got Mail!” motto?

Or: “The Future. Now Available.”–set to music from “The Jetsons”?

What about: “So easy to use, no wonder it’s #1!”

Or maybe, it should just use a nice loooooooong busy signal as its calling card again?

Well, it could happen, now that new CEO Tim Armstrong has fallen prey to the siren call of the AOL moniker, as have many–way too many–before him.

After years of seeing the company wander in the anything-but-the-AOL wilderness, Armstrong has decided to try to welcome the prodigal brand back home, even as he prepares to spin it off in November from Time Warner (TWX), trading on the New York Stock Exchange once again under the AOL stock ticker.

Thus, he has renamed the Platform A advertising unit AOL Advertising; changed its unfortunately named People Networks–which is made up of the communications and community properties–to AOL Communications; and done the same for its MediaGlow, which is now under AOL Media.

There is also in the new AOL-centric universe: AOL Local & Mapping and AOL Ventures, where all the bad acquisitions–like the Bebo social networking service–go to die.

While BoomTown admires Armstrong’s moxie, there is some dicey past history related to the AOL brand–which I lovingly call the “Christine” of the Internet industry–that he might want to be aware of:

* The start-up from which AOL first sprung was named Control Video Corp., which was founded to create a device that would allow users of the Atari 2600 videogame machine to download games over telephone lines.

* After it tanked, CVC was reborn in 1985 as Quantum Computer Services, which had offerings with names like Q-Link for Commodore computers and AppleLink for Apple (AAPL) Macintosh computers.

* In October 1989, the-AOL CEO, Steve Case, announced a company contest: What should Quantum rename its main online service?

The suggestions that came in—Crossroads, Explore and Infinity—sounded like drug treatment programs or new car brands.

Dismissing them all, Case offered a bland creation of his own: America Online, with a second option of Online America.

Other staffers understandably derided it as hokey, but Case essentially stuffed the ballot box and voted his suggestion the winner anyway.

Later, he would change it to just its initials, AOL.

* Case also hit on the idea of attaching voice files to the software with cheery little sound bites that would make the service feel homey.

The team settled on four phrases: “Welcome,” “You’ve got mail,” “File’s done,” and “Goodbye.”

A customer service representative named Karen Edwards had mentioned that her husband, Elwood, was a professional broadcaster, so for testing purposes, Case asked if Elwood might read those four phrases into a cassette tape.

The test tape was put into use, and Elwood Edwards, quite by chance, ended up having one of the most listened-to voices on the planet.

* In July 1993, AOL marketing chief Jan Brandt supersized the AOL brand by asking Case for permission to spend $250,000 on a direct-mail campaign.

She recalls him telling her it wouldn’t work. He told me in an interview he did no such thing.

Whatever the case, she got permission, and thus began the very low-tech marketing blitz of hundreds of millions of disks that would make AOL a household name—and annoyance.

There were even AOL disks flash-frozen in Omaha Steaks.

* In a 1993 meeting between Case and then-Microsoft (MSFT) CEO Bill Gates, annoyed by the innovative start-up, Gates famously told Case, “I can buy 20 percent of you or I can buy all of you. Or I can go into business myself and bury you.”

None of those ever came to pass, which is a reason to cheer the AOL brand. But–given Microsoft’s weak record in the online business–this is also not saying much.

* AOL’s brand has gone through a lot of name-calling, some of it quite deserved. Here are some: “The Online K-mart,” “America On Hold,” “The Giant Sucking Sound.”

But this one from its earliest days is my favorite: “The Cockroach of Cyberspace.”

* AOL did a lot of television commercials to hype the service, some of which you can see below. In one especially weird one, AOL hired Adam West of the goofy “Batman” television series.

* When AOL and Time Warner announced their merger on January 10, 2000, and renamed the company AOL Time Warner, AOL owned 55 percent and the combined market valuation was thought to be in the hundreds of billions.

Today, with Google (GOOG) selling back its five percent stake in AOL, AOL’s value has plummeted to about $6 billion. Time Warner is currently worth just over $33 billion.

* When Jon Miller–now digital head at News Corp. (NWS) took over at AOL in mid-2002, after said merger failed miserably and the brand was taken off the corporate name, he spent some time visiting the company’s other divisions, and related an anecdote to me that he’d told them, to try to help move the relationships forward.

“Have you ever had your car towed in New York?” he said he’d ask executives in other divisions. “When your car gets towed, there’s a sign at the place where you go to pick it up that says, ‘The person behind this window did not tow your car. If you cooperate with them, you will get your car back quicker.’”

Tim, Time Warner is still waiting for Christine to be returned, so good luck with that rebranding!

And, while we await the turnaround, here is a little video I did for Tim about my (lack of) AOL branding expertise with my assistant Ed, and also some of the better AOL television commercials:

]]> http://allthingsd.com/20090728/dear-tim-heres-a-tour-of-the-it-takes-a-licking-and-keeps-on-ticking-aol-brand/feed/ 1 http://allthingsd.com/20081212/nortel-agonistes/ http://allthingsd.com/20081212/nortel-agonistes/#comments Fri, 12 Dec 2008 22:53:07 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=9584 Nortel Networks is slipping closer to the abyss each day. Earlier this week it was reported that the long-suffering telecommunications equipment maker is seeking advice from Lazard Ltd. and law firm Cleary Gottlieb Steen & Hamilton about bankruptcy proceedings. Now comes news that it has received a delisting notice from the New York Stock Exchange. If Nortel (NT) can’t get its stock price above the required $1-a-share minimum the NYSE requires, its shares, which have lost a stupefying 97 percent of their value this year, will be delisted.

Grim news for the once-darling tech company, which was worth about $250 billion.

Its market value today: about $275 million.

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