Very little about Web-based email has changed since the arrival of Gmail, and it is time for something better. It’s the case Microsoft made several years ago when it overhauled Hotmail, and the same one it made when it offered a significant update to Hotmail.

That said, Hotmail is still seen by many as decidedly unhip, particularly in the U.S. Rather than attempt to give Hotmail another face-lift, Microsoft is introducing an all-new Web service, to be dubbed Outlook.com.

“We decided it was time for a new email service,” Microsoft’s Brian Hall told AllThingsD.

Under the hood, many of the features of Outlook.com are carried over from the latest iterations of Hotmail. The biggest change to the service is the appearance of the inbox, which now looks much more like a desktop program, with fewer and smaller ads.

For now, Hotmail and Outlook.com will coexist, but over time, Outlook.com will become Microsoft’s only Web mail service, with Hotmail’s users transitioned to the new service.

“We will move all Hotmail users, just because it is a hell of a lot better,” Hall said.

However, the first goal, Hall said, is for Outlook.com to attract tens of millions of new users — folks like young people and tech enthusiasts who haven’t been joining Hotmail in recent years.

There were a variety of issues with Hotmail, Hall said, ranging from its stodgy brand perception to the fact that it had lots of in-your-face banner advertisements.

“People weren’t satisfied, and with good reason,” Hall said. The ads, he noted, “weren’t creepy, like Gmail, but they were distracting.”

Outlook.com features some advertising in the main inbox, as well as in messages from unknown senders. When a message comes from a known contact, the small ad space on the right hand side is replaced instead with contact information, as well as context-specific ways to engage with that person. With a Facebook contact, for example, Outlook.com users can see their latest status update and reply.

Another feature of Outlook.com is its unified contact system, bringing together all the information one has about a person, whether from Microsoft or a third-party service like Twitter, Facebook and LinkedIn.

New users can get an Outlook.com e-mail address, while existing account owners can transfer their account while keeping their existing Hotmail.com or Live.com address.

In a future release, Hall said, Outlook.com will also get the ability to make Skype video calls directly from within the inbox.

Hall declined to say what Microsoft’s expectations are for adoption of Outlook.com, but said the company is building the service to work for a billion or more customers.

“Our expectations are pretty high as far as people liking it,” he said.

But these days, lurking is becoming much more of an active behavior than it was before, because even just looking at content is something that gets reported back to other people.

As of this week, if you look at a post within a Facebook group, the social networking site will tell the rest of the group that you saw it and when.

That means an end to the question, “Hey, did you guys see that thing I posted?” because the evidence is right there.

But it also points to a world where one of the most core online activities — lurking — gets increasingly stamped out.

Passive becomes active. Lean back becomes lean forward. Stalking becomes, well, showing you’re interested in someone.

Facebook, which recently added similar features in its messaging products, is not the only service making online communications more accountable. Many messaging and social products also have “read receipts.”

For instance, it’s a prominent feature of the mobile social network Path, which tells users who has scrolled past their content and who has visited their profiles.

Evite shows which people open an invitation, OkCupid shows users who has visited their profile, and email systems like Outlook let users attach delivery and read receipts. BlackBerry Messenger has long shown if a message has been seen, and now other mobile chat services like Apple iMessage do, too.

Some people love this increased digital accountability. It makes conversations feel more alive. If you know your conversation partner is aware that you have read a message, you may feel more pressure to reply quickly. And vice versa — if you know someone hasn’t seen something, you can assume they’re offline and unavailable, not just ignoring you.

For some, it’s a kind of personal analytics. Drew Olanoff wrote Wednesday on The Next Web, “It’s my content, and I should be able to know exactly who saw it.”

Josh Constine at TechCrunch made the next logical leap and asked whether Facebook planned to include “read” receipts in its company’s core products, news feed and photos.

Groups and messages are one thing — they’re communication and collaboration, where accountability is somewhat natural. But socializing is a different beast.

Facebook declined to answer Constine’s question, but that’s obviously something the company must be considering.

Facebook now shows whether and when members of a group have seen a message.

As for the big picture, all these little pieces of accountability make online communication more like real life. If you’re talking to someone face to face, it’s a lot harder to pretend that you didn’t hear their last sentence. And now the same is becoming true online.

The larger forces driving toward more online accountability are everywhere. There’s the rise of real names (Facebook, Google+), video calling (Skype, FaceTime), service providers reviewing their customers and vice versa (Uber, Airbnb), unified identity and login systems (Facebook, Twitter), and all the Facebook Open Graph apps, such as Spotify, that automatically report every song played or action taken.

But even so, most of the time we are online, we can still choose whether to declare our presence. We can opt to wander around the Web in passive mode, never leaving a comment on a blog, perusing other people’s vacation photos, stalking our romantic crushes and reading celebrities’ tweets.

Personally, I love that kind of stuff. I know I spend way too much time wandering the Internet, rather than interacting with people, going outside or making things.

So, this world of “read receipts” is scary for us lurkers, but at this point, it’s clearly where things seem to be going.

I guess it’s time for active mode.

(Image courtesy of Shutterstock/fcarucci)

However, that forecast apparently hasn’t eased investors’ concerns that the South Korean electronics giant’s overall earnings outlook for the second quarter may not meet the market’s expectations.

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“We see strong momentum for our flagship in-memory platform SAP HANA, our cloud and mobile solutions, and our core applications and analytics products,” SAP Co-Chief Executives Bill McDermott and Jim Hagemann Snabe said.

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The projected loss, more than double the ¥220 billion loss forecast in Sony’s previous outlook in February, would be the deepest so far in the electronics conglomerate’s 65-year history.

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Organizing your inbox might sound tempting. The Radicati Group reports that the average employee spends about 25 percent of their day on email; by 2013, approximately 507 billion email messages will be sent each day. Many people dream of hyperproductive days unhampered by junk mail, forwards and unimportant exchanges. We’re envious of (and slightly annoyed by) friends who accomplish that “inbox zero” feat (and then post about it on Facebook or Twitter — you know who you are).

But before you get obsessive-compulsive about color-coding and labeling emails, keep in mind that over-organizing doesn’t necessarily solve your email problems. In fact, you’ll likely remember less of the information that’s in the emails if you do that.

A study conducted last year by IBM Research — originally posted on MIT’s Technology Review — found that while “active foldering” reduces the complexity of the inbox, there’s a lack of systematic data about the extent to which these folders are actually used, so it’s hard to determine whether the hours occupied by filing emails to folders is time well spent.

Also, “frequent filers” tend to remember less than non-frequent filers about their email messages. The IBM Research study, which analyzed 345 frequent users’ methods of finding emails, found that email users tended to have pretty good memories when it came to content, purpose, or task-related information in emails, recalling more than 80 percent of such information; those who moved things into folders were less likely to remember these things, possibly because they were not frequently exposed to the information in the inbox.

Of course, users aren’t going to remember everything that’s conveyed in every email. But when it comes to effective search — which in some cases negates the need for all that foldering — remembering key words is, well, key.

Lastly, the study suggests that email threading is the better alternative to manually moving emails into designated folders. People with high thread-count emails were less likely to use or need to use folders, and people with more threads were less likely to need to scroll through their inboxes, as well, suggesting that threads were an effective way to compress inbox information.

Gmail already has a pretty efficient search function and collates emails into threads. But as part of Google’s efforts to push Google+ in other areas — like search — the company is also suggesting Gmail solutions through Google+. In fact, new Gmail users don’t have a choice when it comes to Google+; building a profile is part of the sign-up process. (Google’s current Gmail user base: 350 million; Google’s social network users: Murky.) Searching for emails through Google+’s circles seems a bit confusing for the average user, though, and would benefit only those users who have spent a lot of time building up their Google+ contacts.

For those looking for outside apps to aid in email organization, some of the more popular ones include Xobni and Postbox. Others, such as Shortmail and Clarify, think simpler, shorter emails could put you on the path to inbox nirvana.

(Photo courtesy of robep/Flickr)

Motive

As the saying goes, people are motivated by either greed or fear. I think for many big companies, it’s more the latter. And Microsoft has a lot to be scared about.

If you poke behind its $71 billion in revenue and 39 percent operating margins, 30 percent of the goldmine comes from multiyear volume licensing agreements, which Microsoft calls Enterprise Agreements (EAs). According to industry analyst firm Forrester Research, “these profitable agreements bring in the kind of regular revenue preferred by financial-market analysts that monitor Microsoft’s performance.”

What motivates a customer to sign up for an Enterprise Agreement instead of simply buying Microsoft products, like Office, off the shelf? Well, historically, Microsoft pitched EAs as a way to ensure you can cover your workforce with Microsoft products at a discounted price level.

With companies investing in post-PC devices like smartphones and tablets, and evaluating alternatives to Microsoft productivity solutions, such as Google Apps or Salesforce.com, CIOs are starting to wonder whether renewing their EA is still a top priority.

In response to this threat, Microsoft is now pushing its Software Assurance (SA) licensing model, which allows customers to upgrade to newer products and also use its cloud services. The reason for the possible shift, Forrester says, is that “the twin revolutions of client mobility and cloud servers will kill device-based licensing, which is Microsoft’s existing model.”

So if Microsoft doesn’t embrace the cloud in a big way, the EA gravy train could come to an end.

Means

Apple is cool. Facebook is friendly. And Google isn’t evil. Yet look across a sea of computers in a typical company, and you’ll still see Microsoft everywhere.

And I’m not just talking about Windows. Microsoft has two key assets that will help it win the enterprise cloud:

• Office: While the Web and Web-based apps are fabulous for consuming content and even collaborating around it, Microsoft Office is still the standard in productivity to create corporate content. Love or hate those PowerPoint presentations, but they are still how most companies run. And for flexible analysis, Excel is unmatched. Heck, the Macintosh Business Unit at Microsoft (which is primarily Office for Mac) is a $350 million business on its own.
• Outlook/Exchange: For many workers, Microsoft Outlook (with Microsoft Exchange Server on the backend) is the first thing they boot up to start their workday, and the program they remain in all day long. According to industry analyst firm Radicati, 301 million corporate mailboxes used Outlook in 2010. Indeed, some companies have switched from Microsoft Outlook/Exchange to Google Apps and back, because users are too addicted to the interface and functionality of Microsoft Outlook.

So Microsoft still owns two of the key ways “knowledge workers” work with knowledge.

Opportunity

Microsoft isn’t working from a standing start. It actually jumped into the cloud relatively early in 2008 with its Business Productivity Online Suite (BPOS), a hosted platform for collaboration. While BPOS suffered from many challenges, mainly because it was based on a platform that wasn’t designed for the cloud, Microsoft made it clear several years ago that they are “all in” as a company in the cloud.

This year, after many delays and much anticipation, Microsoft finally announced its first platform built for the cloud, Office 365. The new version of Exchange is finally on par with its on-premise alternative. Microsoft SharePoint Online is now flexible enough to meet many enterprise use cases. And Microsoft Lync Online, a real-time chat and videoconferencing system, could be a game changer for company productivity.

In parallel, Microsoft is working away on Windows 8, its big bet on the tablet revolution. With all of Microsoft’s failed past attempts at mobility and tablets, some level of cynicism is expected. But some believe Microsoft’s conviction is real. If Microsoft even gets it 80 percent right on tablets, they will likely win in enterprises that are used to the manageability of Windows, and will be attracted to the inevitably deeper Office integration.

Conclusion

Don’t get me wrong: The innovation in the cloud is coming from all over, mainly from start-ups. For many of these start-ups and other non-enterprise organizations, a non-Microsoft approach will likely be the winner. But for the millions of you working in corporate America, Microsoft is probably the one bringing the cloud to a desktop near you.

Nick Mehta is CEO of LiveOffice and has served in senior operating roles in the enterprise and consumer technology markets for much of his career. He spent more than five years at Symantec Corporation and Veritas Software Corporation (now Symantec), where he served as vice president and general manager of the Enterprise Vault information archiving and discovery software business.

Intel now says that it expects its sales in the fourth quarter to come in at $13.7 billion — $1 billion shorter than previously given guidance. It also said it expects its gross margin to be lower by a half-percentage point than before: 64.5 percent, plus or minus a couple percentage points, down from 65 percent plus or minus.

Intel shares dropped nearly 4 percent on the news, and traded at $24.06, down 96 cents, by 9:35 am ET. The news rocked several stocks in the PC sector. Intel rival Advanced Micro Devices also fell by more than 3 percent, down 19 cents to $5.35. Hewlett-Packard, the world’s biggest maker of personal computers, fell nearly 2 percent to $27.27, down 51 cents. Dell fell 2 percent to $15.37, down 32 cents. Microsoft fell 35 cents, or more than 1 percent, to $25.35.

The hard drive industry has been hit with severe flooding in Thailand, where many factories that build key components used in drives are based. Drive manufacturers have been predicting that the industry’s capacity to deliver drives will come in about one-third short of demand, making it probably the most significant supply-chain disruption to hit the PC industry in a generation.

Intel’s statement is below:

SANTA CLARA, Calif.–(BUSINESS WIRE)– Intel Corporation today announced that the company’s fourth-quarter results are expected to be below the company’s previous outlook due to hard disk drive supply shortages. The company now expects fourth-quarter revenue to be $13.7 billion, plus or minus $300 million, on both a GAAP and non-GAAP basis, lower than the previous expectation of $14.7 billion, plus or minus $500 million.

Sales of personal computers are expected to be up sequentially in the fourth quarter. However, the worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of hard disk drive supply shortages. The company expects hard disk drive supply shortages to continue into the first quarter, followed by a rebuilding of microprocessor inventories as supplies of hard disk drives recover during the first half of 2012.

The company now expects the fourth-quarter gross margin to be 64.5 percent, plus or minus a couple of percentage points, lower than the previous expectation of 65 percent, plus or minus a couple of percentage points. The expectation for a non-GAAP gross margin is 65.5 percent, plus or minus a couple of percentage points, lower than the previous expectation of 66 percent, plus or minus a couple of percentage points.

All other expectations are unchanged.

Intel will hold a public webcast at 8 a.m. PST today on its Investor Relations website at www.intc.com. A webcast replay and MP3 download will also be made available on the site.

The game, which was released today, is expected to be the videogame publisher’s top-selling title this year, even though it faces steep competition from Electronic Arts’ Battlefield 3 title.

The company also said today that other franchises, including a brand new game called Skylanders, enjoyed unexpectedly high adoption from users.

“Based on our third-quarter performance, stronger than expected consumer response to our new entertainment property, Skylanders: Spyro’s Adventures, and Call of Duty: Modern Warfare 3, we are raising our full-year financial outlook and expect once again to deliver record operating margins and the highest earnings per share in our company’s history,” said Activision’s CEO Robert Kotick, in a release.

Skylanders uses small miniature toys that come to life in the videogame across multiple platforms.

In the third quarter, the company reported Q3 revenues of $754 million, up from $745 million, and a profit of $148 million, or 13 cents a share, up from $51 million, or 4 cents a share in the year-ago period. On an adjusted basis, the company recorded a profit of 7 cents a share.

Results easily beat analyst expectations, who were expecting, on average, adjusted earnings of two cents a share on revenue of $564.8 million, according to a poll by FactSet.

The company was previously expecting revenues of $4.18 billion, or 68 cents a share. It has now upped those estimates to $4.33 billion, or 76 cents a share.

During regular trading today, shares of Activision Blizzard at one point rose nearly 3 percent to $14.11, which put the stock to a new three-year high. The stock ended up closing up 1.38 percent, but in after-hours trading the stock continued to jump, increasing more than 4 percent to $14.55.

As expected, the European Commission approved Microsoft’s $8.5 billion acquisition of Skype late last week.

Next, the deal for the popular Internet communications company — which had previously been cleared by U.S. regulators — is likely to officially close later this week (paperwork!), said several sources close to the situation.

Now, of course, comes the hard part — which is whether Microsoft can successfully integrate the more nimble Skype into the belly of the software beast and allow it to thrive.

Some key questions:

How smoothly can Microsoft integrate Skype into its existing products, such as its unified communications platform, Outlook mail and Hotmail, Office, Messenger and Xbox Live? And, perhaps most of all, Windows Phone devices?

That said, will Skype also get to do what it needs for its own success beyond Microsoft? That includes working with mobile rivals Apple and Google, who now dominate the smartphone market, as well as many others. It has already managed to buy GroupMe group messaging start-up for $85 million, just months after its own acquisition in May.

And can the division — which will be led by Tony Bates, Skype’s CEO and now a Microsoft president — operate successfully located mostly away from the power center of Redmond, Wash.? Skype has a substantial office in Silicon Valley, as well as key engineering units in Estonia and Stockholm.

In that vein, will Microsoft be able to hold on to new talent like Bates and Skype’s geek squad, all of whom have substantial choices elsewhere? Like a lot of large tech companies, Microsoft is not known for being able to hold on to those who come in from the outside, in large part due to its insular culture of longtime execs.

In other words, how big a welcome will Microsoft’s other powerful presidents — such as Windows division head Steven Sinofsky — give Bates and company?

Cisco also did what many analysts have been urging for some months and reduced its long-term growth targets to levels it has a better chance of meeting. It said it now expects revenue to grow annually at 5 to 7 percent through 2014 and called for operating margins in the 25 percent range, which is pretty much in line with what some analysts had suggested.

So were they convinced? A little. John Marchetti of Cowen and Co. called it “a positive analyst day.” The more aggressive stance versus competitors and the realistic targets should give the shares a “boost over the near term,” he wrote in a note to clients today. While Cisco’s valuation, which is at about nine times Marchetti’s forward EPS for the 2012 calendar year, is arguably low, he kept his rating at neutral. “Shares look cheap,” he said, “but we do not see a near-term catalyst to drive the stock higher and believe the muted growth outlook and macro-headwinds especially in light of Cisco’s exposure to government and European customers.”

Sanjiv Wadhwani of Stifel Nicolaus was more convinced. In a note to clients today he wrote that “the worst seems to be behind” Cisco following a product transition in its switching business that was responsible for at least part of its troubles over the last few quarters. Moreover, the pricing environment in switching — which had been driven down in part by an aggressive Hewlett-Packard campaign and profit margins on many of its switching products — are “approaching historical levels.” On top of that, he says Cisco has some moves it can make to trim some operational expense — he called them “opex levers” — to make sure that per-share earnings grow faster than sales. He rates Cisco shares a buy with a $20 price target.

Cisco sees Juniper as being “spread too thin” in the marketplace right now, Wadhwani writes. But Cisco’s line of attack won’t necessarily be lower prices. Indeed, the opposite may be true, he wrote: Cisco “will intensely focus on gross margins going forward.”

But that’s not to say there won’t be other weapons, like marketing trash talk. Here’s a sample: Cisco has launched a site where it accuses Juniper of “overpromising and under-delivering.” If there’s more to come like this — frankly, from both sides — the fight should be fun to watch.

Of course, if Ballmer’s exhortations aren’t enough, here’s another enticement: Cold hard cash. Microsoft said today that it has committed $5.8 billion in incentives, training and tools for members of its Microsoft Partner Network to get accustomed to the new products and services and to encourage them to sell them to their customers.

One big place where it’s putting that cash is behind messaging. It’s an area where Microsoft’s Exchange platform and Outlook desktop software has been under attack lately from the likes of Google Apps, and it’s a key component of Office 365, the new cloud-based version of Microsoft Office. Partners can train up in the newly created Messaging and Communications competencies and learn all about deploying Exchange and Office 365 and its video conferencing software Lync.

In August, Microsoft says it will offer new services in software assurance and planning, essentially paying partners to help their customers deploy Microsoft’s private cloud, and its Azure public cloud service, which competes with, among others, Amazon’s Web services and IBM.

Another area of focus: Dynamics CRM, an area where there’s stiff competition from Salesforce.com, plus longer-term CRM players like Oracle and SAP. Partners are being offered 40 percent of the sale of each new subscription to Microsoft Dynamics CRM. Microsoft is just a bit player in the online CRM world for now, but as history shows, it rarely stays in that position for long.

TI’s lowered guidance, announced at the company’s midquarter update Wednesday, comes after Nokia last week sharply lowered its sales forecast. The Finnish handset maker, a big customer of TI chips, has been struggling to keep up in a smartphone market increasingly dominated by rivals like Google Inc. and Apple Inc.

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What’s funny is many of these developers (in fact, all the examples I just used) run their own app platforms. So everybody’s an app, and everybody’s a platform.

Xobni’s offering has two distinctive aspects: it offers developers access to the millions of corporate Outlook users, and it is built using the open standard OpenSocial APIs so Web app developers will be able to easily extend their products to the desktop.

Xobni said it plans to bring the Gadget Store to its own Web and mobile products, but did not give a date.

ARM’s performance mimics that of others in the semiconductor space, including STMicroelectronics, which Tuesday reported that first-quarter earnings nearly tripled from a year earlier. Intel and Apple have also posted strong numbers over the past week on the back of strong demand.

The FTSE 100 company, which is trading at 50 times its earnings, posted a 10 percent rise in first quarter net profit to £21.5 million on the back of a 26% increase in revenue to £116 million. It secured 39 processor licenses in the quarter ended March 31 after signing 35 processor licenses in the previous quarter.

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Tonight, Demand Media–in reaction to a new study showing that its flagship eHow site had now gotten much more negatively impacted by Google’s rejiggering of its search algorithm than previously–released a statement and blog post about the tempest.

In it, the Santa Monica, Calif.-based company reaffirmed its outlook for fiscal year 2011, noting, in part:

“Certain third parties that have published reports attempting to estimate the effect of recent search engine algorithm changes made by Google on traffic to the Company’s owned and operated websites have significantly overstated the negative impact of those changes on traffic to eHow.com, as compared to the Company’s directly measured internal data.”

The company, though, declined to give specific details about the impact of Google’s attempt to clean up its search results by tweaking its algorithms to cut out poorly made material from so-called “content farms.”

While others had apparently been initially impacted by Google’s first foray, such as Yahoo’s Associated Content unit, Demand had not been.

That is, until a recent Sistrix poll (see chart below), showing eHow has now been hurt badly by even more Google search changes, codenamed Panda.

While acknowledging a decline in search traffic on eHow from the Google changes, Demand said the Sistrix data was way off.

In a blog post, Larry Fitzgibbon, Demand’s EVP of Media and Operations, wrote, in part:

“However, recent third-party reports attempting to estimate the impact to our search driven traffic, including one projecting a 2/3rds decline in eHow.com traffic, are so significantly overstated that we decided to comment.”

When Google began making changes to its search formula, Demand CEO Richard Rosenblatt told MediaMemo’s Peter Kafka in an interview that its relationship with Google was all sunshine and roses.

When asked how its relationship with Google was, Rosenblatt said:

“This is why our partnership with Google makes sense. 1) We help them fill the gaps in their index, where they don’t have quality content. 2) We’re the largest supplier of all video to YouTube, over two billion views and 3) we’re a large AdSense partner. So our relationship is synergistic, and it’s a great partnership. And it’s a partnership that we’re excited to continue to expand.”

It will be interesting to see how he feels now.

Here are both Demand’s official press release and blog below:

Demand Media Reaffirms Outlook for Fiscal Year 2011

SANTA MONICA, Calif., Apr 18, 2011 (BUSINESS WIRE)

Demand Media, Inc. (NYSE: DMD), a leading content and social media company, announced today that it is reaffirming its financial outlook for fiscal year 2011 that it previously provided on February 22, 2011.

Certain third parties that have published reports attempting to estimate the effect of recent search engine algorithm changes made by Google on traffic to the Company’s owned and operated websites have significantly overstated the negative impact of those changes on traffic to eHow.com, as compared to the Company’s directly measured internal data. Recent search engine algorithm changes have negatively impacted search driven traffic to some of our websites, including eHow.com, resulting in moderately lower year-to-date page view growth for the Company’s owned and operated Content & Media properties compared to page view growth rates before the algorithm changes. Nevertheless, the Company currently expects that its year-over-year page view growth across its owned and operated Content & Media properties in the second quarter of 2011 will be comparable to, or greater than, the year-over-year page view growth achieved in the second quarter of 2010.

As previously announced, the Company will report its first quarter 2011 financial results on May 5, 2011. The Company will host a conference call to discuss the results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be available and can be accessed within the investor relations section of Demand Media’s corporate website at ir.demandmedia.com.

Another Statement About Search Engine Algorithm Changes

Posted by larry fitzgibbon at 4/17/2011 10:05 PM PDT

It’s hard to imagine a company more focused on the connection between consumers and content than Demand Media. That point of connection gives us the opportunity to inform, engage and serve the consumer. And it’s where trusted relationships start. So, how our content reaches the consumer–whether it’s through direct visits, social media referrals, apps or search–continues to be top of mind with everyone at the company. Consumers are connecting with more content than ever before as social media and mobile access have emerged to play huge roles that didn’t even exist just a few years ago. And search engines, of course, continue to play an integral part in content discovery and have been hard at work improving their products to create the best consumer experiences possible.

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

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

Demand Media has a myriad of impactful sites and many sources of traffic. We are encouraged that the investments we’ve been making in site experience and content quality are making an impact with our consumers. Organic growth in visits from non-search sources to eHow continue to grow rapidly and Cracked.com is now the most visited humor site on the Internet with the majority of its page views coming from direct visits. Improvements have been registered from eHow’s recent redesign and the introduction of new video series leading to significant growth in Facebook likes. Our brand advertisers have also reported encouraging results with their intent-targeted campaigns. Rest assured, just as we have been innovators in building one of the largest online audiences, we are applying that same rigor and intensity to delivering a quality experience for consumers and advertisers.

As a disruptive digital media and technology company, we have been operating in a fast moving environment since the company’s founding five years ago. While change is frequent, one thing is certain–Demand Media is steadfast in our commitment to produce great outcomes for our consumers, advertisers and community of creative professionals. We’re in the trenches listening, learning, adapting and innovating–and we are very excited about the opportunity in front of us. We look forward to providing details on all of these topics and more in our previously announced conference call at 5:00pm (Eastern) May 5th, 2011 to discuss first quarter 2011 financial results.

Larry Fitzgibbon is Demand Media’s EVP of Media and Operations, and manages the company’s rapidly growing network of consumer properties.