Early last year, his San Francisco company, which makes social games such as “FarmVille” that are played on Facebook, was on track for one of the hottest initial public offerings of 2011. But when Zynga finally went public last month, its stock price dropped 5% on the first day of trading and has since consistently traded below its $10 offering price.

Read the rest of this post on the original site »

The problems kicked off this morning when Amazon started sending emails to select Kindle owners, alerting them to a free trial of “The Kindle Compass.”

In the email, Amazon failed to explain what “The Kindle Compass” was, and worse, implied that customers would be charged for it going forward.

An Amazon spokesperson said a second letter has been sent this evening, explaining that “The Kindle Compass” is a pilot project, and apologizing for any confusion over the price. “We built it to always be free for customers, and you will never be charged for it,” the company told its customers.

Still, the response comes hours after much of the damage had already been done.

Angry customers flooded Kindle forums, posting more than 100 complaints to topics called “Where is Kindle Compass Magazine?” and “Auto-Subscription to the Kindle Compass??”

The confusion was understandable.

In the original message, Amazon misled consumers about the terms: “If you enjoy your free trial, do nothing and your subscription will automatically continue at the monthly subscription rate.”

However, no rate was ever mentioned.

Even worse, those who contacted Amazon customer service said the reps weren’t familiar with the publication, so the best they could do was help them to unsubscribe to ensure they would not be charged. At this point, people are still confused as to what “The Kindle Compass” is all about.

A spokesperson did not return emails asking for more clarity on what the publication is, and it’s unclear how many customers were affected (not all Kindle owners received the email).

In the forums, the complaints centered on two concerns: That Amazon would sign them up for something they did not knowingly subscribe to, and that they may be charged for it.

One consumer, who used the name “Susabelle”, wrote: “I am absolutely APPALLED. Amazon, you should be completely ashamed of yourself!! An auto-subscription to a publication I’ve NEVER heard of, that you will be auto-billing me for after 14 days? HAVE YOU LOST YOUR MIND??”

Here is the apology Amazon sent to consumers this evening:

This morning we sent you an email regarding The Kindle Compass, a new free publication built by the Kindle editorial team that we’re piloting to a small number of Kindle customers.

This email incorrectly referred to The Kindle Compass as a subscription with a free trial. We built it to always be free for customers, and you will never be charged for it. We apologize for any confusion.

If you wish to unsubscribe from the pilot for The Kindle Compass you can do so from a link in the last section of the magazine, or from the Manage Your Kindle Subscriptions page at www.amazon.com/manageyourkindlesubscriptions.

Last week, I posted on the so-so overall performance of tech stocks in 2011.

Most were in the negative numbers going into last week, and they stayed that way for the full-year comparison.

Bottom line: Tech was a bad investment if you started buying stocks on the first day of trading in January of 2011. And you got really socked if you bought into most of the IPOs of a spate of new Internet companies.

No pressure for 2012, Facebook! (I’m talking to you, Sheryl Sandberg!)

As we open trading this morning after the holidays, here’s where we stand with share prices since one year ago from a sample group I wrote about the most in 2011:

UP

Google: Rose 8.7 percent.

eBay: Rose 8.98 percent.

Apple: Rose 25.6 percent.

Jive Software: Rose 6.7 percent (went public December 15, 2011).

DOWN

Amazon: Declined 4.3 percent.

Yahoo: Declined 3.01 percent.

Microsoft: Declined 6.99 percent.

Cisco: Declined 10.6 percent.

ROUT-ROH DOWN

AOL: Declined 36.3 percent.

Hewlett-Packard: Declined 38.8 percent.

Juniper: Declined 44.7 percent.

FRESHMAN SLUMP (AND INVESTOR DUMP)

Zynga: Declined 0.95 percent (went public December 19, 2011).

Groupon: Declined 20.99 percent (went public November 7, 2011).

LinkedIn: Declined 33.2 percent (went public May 20, 2011).

Pandora: Declined 42.5 percent (went public June 16, 2011).

Yandex: Declined 49.3 percent (went public May 25, 2011).

The Priceonomics Web site, which officially launched on Dec. 21, is aimed at helping sellers and buyers determine the best price for used bikes, cars, phones, TVs and other items, so no one gets ripped off.

But rather than explaining what it does in a press release, Priceonomics wrote an entertaining blog post, entitled “Adventures in Aeron Chair Arbitrage,” detailing its experiments with selling the expensive Herman Miller office furniture in San Francisco.

Trials included finding buyers among its start-up incubator classmates, finding the chairs on Craigslist, borrowing a girlfriend’s car to get them, negotiating a lower price, lugging the chairs back to the office, and then almost losing the sale in the end, when the seller’s $1,800 check didn’t go through.

Priceonomics concludes that a business based on hauling used furniture around won’t scale but that there is a need for a centralized location for pricing information.

From its blog post:

“It’s unlikely Priceonomics could build a massively successful business arbitraging used goods if we have to take possession of them. However, it was clear that having our price guides were really helpful for identifying what were the good deals on Craigslist and how much to pay for them. So for now, we’ll just stick to building better price guides to help other people buy things on Craiglist, eBay, and other emerging marketplaces like Zaarly and TaskRabbit.”

Priceonomics may be on to something here.

Not too long ago, one way to determine the fair value of an item on the Internet was through an online auction. EBay became wildly popular as an easy way for total strangers to agree on a price for an item. More recently, auctions have become less relevant, and even eBay is decreasing the alliance of used items on its site.

That’s due in large part to today’s free flow of information on the Internet, which makes pricing more transparent. After all, you can just Google it.

Still, determining the price of an item can be time-consuming. To get a good sense of the fair value, you have to cross-check prices on a handful of sites — if not a dozen.

Priceonomics’ price guide promises to help users easily find out if they are getting a good deal, by comparing items across eBay, Craigslist and even full-priced retailers that might be offering a deal.

So, how much is a second-hand Aeron chair worth?

In the end, Priceonomics says, the chairs resell for $400 to $600 in San Francisco. The company was able to acquire four, for $375 each; it then turned around and unloaded them for $1,800, representing a $300 profit.

It’s not clear if Netflix’s recent series of snafus are Amazon’s gain or not. But in a just-released report by ForeSee, one went up and one went down.

It’s an easy guess which was which.

In the well-known customer satisfaction survey of the Top 40 online retailers during the holiday season — which ForeSee has been conducting twice a year for the last seven years — Amazon rose to its highest spot ever, while Netflix’s score dropped significantly.

Amazon got an 88 out of 100, up two points, while Netflix dropped seven points to 79. The survey noted that “Netflix saw scores drop in every single element of the website that ForeSee measures, including site content, site functionality, merchandise, and prices.”

Ooops.

(Netflix fared better with customers in another poll last week, conducted by Citigroup. As Peter Kafka noted: “They’re less happy than they used to be. But they don’t seem to be going anywhere.”)

But in the ForeSee survey, Netflix moved from being a consumer darling to just another face in the crowd. It garnered the average score, which is also 79, a number that has risen from 74 since 2005.

But Netflix was not the only online retailer hit. Also down: Gap.com (down 6 percent to 73), and Overstock.com (down 5 percent to 72).

But on the up: TigerDirect.com (up 8 percent to 79) and J.C. Penney (up 6 percent to 83).

In general, ForeSee concluded that consumers are starting to get the hang of this e-commerce thing, and have become less price-sensitive, too.

And here’s a pretty chart explaining it all (click on the image to make it larger):

According to the expected year-end box-office data figures compiled by Hollywood.com, the industry raked in $10.1 billion for 2011 in North America.

While that seems like a nice haul, it’s 4.5 percent less than in 2010. While not enough to result a major downturn in limo-riding and Botox, the results are likely to cause entertainment moguls some worry, since they are accompanied by continuing trends, including another year of lower attendance.

And given that the revenue was unusually bolstered by more higher-priced 3-D movie-ticket prices — Hollywood released several dozen 3-D films in 2011, double the previous year’s amount — the latest numbers are even more disappointing.

While some holiday movies did well — namely “Mission: Impossible — Ghost Protocol,” which has taken in about $70 million domestically since its opening less than two weeks ago — it pales in comparison to such digital hits as Activision’s Call of Duty: Modern Warfare 3 videogame, which pulled in $400 million in one day from the much-desired youth market.

It surpassed $1 billion in sales in 16 days, eclipsing the box office of the blockbuster movie “Avatar,” which took 17 days to gross seven figures.

Does that mean that the continued competition for the leisure time of pretty much everyone between digital and analog has gotten worse — an epic battle of the movie industry versus game players, tablets and smartphones?

Or is it because so many movies made in 2011 turned out to be just awful? (If you saw “New Year’s Eve,” you’ll know exactly what I mean.)

One thing is clear: No one is going to pay for poor-quality content, no matter the screen size.

More number-crunching to come, as the industry debates the issue into 2012 (coincidentally, the title of a movie I happened to like, as you can see below!), and at the upcoming D: Dive Into Media at the end of the month, down near Los Angeles, in the belly of the Web-smacked beast.

Until then, let’s hope it does not come to this next year:

Yahoo shareholders felt a little giddier earlier this week, when it seemed as if the company had finally decided to make a deal with its Asian partners.

But the happiest crew might end up being the Silicon Valley Internet giant’s outside counsel, Skadden Arps — and especially Leif King, the fantastically named legal eagle who has been advising Yahoo on the deal.

That’s because today the Yahoo board approved continuing the negotiations to come to a final agreement over the stake, sources said, which should take six to eight weeks.

It’ll surely be happy holidays for billable hours!

As costly as the legal bills will be, if it all goes well, an Asian solution will mean one major problem solved, with a possible pile of cash and new assets coming in to Yahoo.

To get there, the company signed a term sheet earlier this week with Japan’s SoftBank to sell back all its holdings there, and with China’s Alibaba Group to sell off more than half its stake (moving from a 40 percent stake to a 15 percent one).

The deal values Yahoo’s total shares in both companies at about $17 billion.

While it gets a pretty accounting name — “cash-rich split “– the vehicle to unwind it all is essentially a complex tax dodge finally cooked up by the trio, in which cash, new assets and stock will be moved around until everyone gets what they want (except the U.S. government).

I would explain it — but I am on vacation, and would rather drink eggnog and sleep — so here is The Wall Street Journal’s version, which I like because it sounds like Alibaba and SoftBank are giving Yahoo a hugely loaded Starbucks card for Christmas:

“As envisioned in the scenario, Alibaba would create a subsidiary into which it would put several billion dollars of cash, plus an operating asset that Yahoo wants to buy using additional cash from Alibaba, almost like giving Yahoo a prepaid card for an asset of its choice, the people said.”

Everyone is hoping there will not be any hiccups in the deal, which has been spearheaded by Yahoo board member and Intuit CEO Brad Smith, and Jerry Yang, who is also the company’s co-founder and a major shareholder.

Alibaba CEO Jack Ma and CFO Joe Tsai, both co-founders of that company, were the point men for the Chinese company. And for SoftBank, it was its founder and CEO Masa Son and his main U.S. exec, Ron Fisher.

Now, said sources, Yahoo’s board is hoping to still keep the bids from a pair of private equity firms — Silver Lake and TPG Capital — alive.

While initially the focus on the action, the PE bidding for partial Yahoo stakes has recently been sidelined by the Asian deal.

Now, sources said, Yahoo is hoping the new infusion of cash and assets will allow it fend off shareholder unrest — stock buybacks and dividends, anyone — to solicit higher prices from the firms to make strategic investments.

Yahoo had considered the initial bids too low, as did some very pissed-off activist shareholders.

Still, it’s not clear if those firms will jack their offers now, although sources said Silver Lake is still interested in some sort of deal that would give it influence over remaking Yahoo.

Silver Lake and others think the long-troubled company could be revived with some effort, and become a much more lucrative Web property.

But those negotiations might run into roadblocks over who gets to pick leadership for the company. Yahoo has accelerated its efforts to hire a new CEO, after firing Carol Bartz in September.

The PE firms, who would buy a large stake in Yahoo, also have wanted some level of control, including CEO and board approval, in order to be able to make massive changes at the company to turn it around.

Wall Street seems to like the Asian part of the deal, at least, since it shows some sort of forward momentum at Yahoo, and from its often-lugubrious board.

Shares are up almost 7 percent in the last few days, although they are not popping as they might be, given that new valuations based on a successful Asian deal put the stock at a much higher price.

In other words, investors like what they see, but are watching and waiting for more.

Whatever you want to call him or her — a silver bullet, the cure or, as I like to say, the last unicorn — Yahoo’s ever-seeking and never-deciding board has now renewed its focus on finding a new CEO.

Also on the docket: Working on a deal to sell back at least some of its stake in its twin Asian assets — Yahoo Japan and the Alibaba Group — back to the companies. A partial sale of stock back could placate the often tense situation among the partners.

What is clear is that the two bids from private equity firms are now in an undetermined circling pattern — due to a variety of concerns around shareholder unrest (Occupy Yahoo looms for 2012).

Therefore, the idea of bringing in said fantasy leader to perhaps finally be the one to revive the long-troubled company has returned to the forefront of action, according to numerous sources both inside and outside the company.

The concept in short, said people familiar with the situation: Hire some compelling and entrepreneurial CEO to get the company moving again from a product point of view, do a massive organizational overhaul and help settle Yahoo’s thorny Asian issues.

While a number of names have been rumored in reports — such as Google business lead Nikesh Arora, who is actually not likely to leave his top post at the search giant — sources said the board has been targeting a number of candidates, including Hulu CEO Jason Kilar.

Others on Yahoo’s wish list include Juniper CEO Kevin Johnson and online advertising entrepreneur Brian McAndrews, who sold aQuantive to Microsoft. There are several others also being considered.

Sources said Kilar has met with Yahoo board members about the offer, but his hiring would be a long shot.

It’s an interesting — if complex — gambit to bring in Kilar, who has had his own wrangles with the multi-owner structure of the premium video service over the years.

Kilar’s status at Hulu has been in question ever since it was put on the block, then removed and then — well — who knows.

Hulu’s owners — News Corp., Disney and Providence Equity Partners, along with Comcast (which is a now a passive investor) — did not like the offers it got from various bidders, including Yahoo.

While the media giants have made noises about wanting to keep a stake in distribution, their commitment to that remains unclear.

The situation has put Kilar — who already had tense relations with the service’s shareholders — in limbo until a valuation is determined next year. Without going into the complex details, Kilar has a large equity stake that could be liquid in April, related to certain rights held by Providence.

It is well known that Kilar has been concerned the team that built Hulu gets some sort of payout for their work. In fact, many years ago, Hulu was seen as a possible IPO candidate.

What’s not in question is Kilar’s talent at creating a cohesive team and a compelling product — especially with an advertising and media focus — and the need at Yahoo for a vibrant leader to encourage innovation and discourage its rapidly increasing attrition issues.

The search for a new Yahoo CEO — which is being led by director Patti Hart, and is being conducted by Heidrick & Struggles — had been mostly sidelined until recently, as the board solicited bids for a partial investment from PE firms.

Two emerged, from Silver Lake and TPG Capital, which had wanted to pay from $16.50 to $18 a share for a stake of just under 20 percent in what is called a PIPE (Private Investment in Public Equity) arrangement.

But the low price, and worries about lawsuits and even a proxy fight related to such a deal, have slowed down the momentum significantly, said sources.

Instead, Yahoo has told bidders it will get back to them in the coming weeks about the direction it will take. Thus, the focus on lining up CEO candidates and plans related to reviving Yahoo.

Some of those possible execs have put their hand up, while others — like Kilar — are being solicited. In addition, some still think that Yahoo board member David Kenny remains an internal option, especially if the board of Yahoo gets a refresh, despite his recent announcement that he has no intention of seeking the job.

In general, this shift should not come has a surprise for the hurry-up-and-wait board of Yahoo, which has struggled over the years to make good choices for the Silicon Valley Internet giant.

That drift has resulted in a downturn in its prospects, even as other companies have surged.

Those troubles were brought into sharp focus in a recent report by new Goldman Sachs Internet analyst Heath Terry, who strafed Yahoo in his “sell” recommendation.

Among the gems by an analyst whose investment bank is currently an advisor to Yahoo on its strategic options:

Yahoo simply faces too many competitive and structural headwinds to believe any kind of meaningful turnaround is possible. While there is significant asset value on the balance sheet and in the company’s large, though increasingly less engaged user base, we continue to believe, as we have since before the first Microsoft offer, that the segment of management driving the company is intent on trying to revive Yahoo as a company, regardless of the cost to shareholders.

And, noting the need for a new CEO:

We would become more positive if we felt there was a likely event in the near term that might unlock the value of the balance sheet assets at Yahoo. While we believe the aggregate value of those assets is above the value reflected in YHOO, in order to be more positive on the stock we would need some proof that management is willing and able to take the steps necessary to unlock that value either through a sale or distribution to shareholders. Meanwhile, the declining profitability of the core display advertising business is masked by a search business that continues to lose share and relies on artificial support from Microsoft. We would become more positive on the core Yahoo business if the company is able to find a new CEO capable of focusing the business on its core advertising and communications opportunities, rationalizing costs, and driving growth. This would require user growth and especially engagement improvements in both online and mobile, improving monetization of advertising inventory, and stabilizing its search business.

In other words: Wanted, one unicorn to work magic against increasingly troublesome dragons. Ability to sparkle a plus.

“Let’s go. Yes, let’s go.” [They do not move.]

– Samuel Beckett, “Waiting for Godot”

In Internet terms, the removal of Yahoo CEO Carol Bartz happened a dog’s age ago.

In fact, it was September 6.

Since then, it has felt like a slow slog, especially contrasting the situation with that of another troubled Silicon Valley giant, Hewlett-Packard, which fired its CEO Léo Apotheker and appointed a new one, Meg Whitman on September 22.

Since then, in comparison, the former eBay CEO has been like the Energizer Bunny, making a series of major and often difficult decisions, including: Holding onto its PC unit; reaffirming its controversial deal to buy Autonomy; promising a decision on the fate of its webOS unit within the next two weeks; appointing new execs; and even buying a company.

To be fair, Yahoo did acquire advertising start-up Interclick.

Otherwise, still no sale or investment deal. No new CEO. No Asia resolution. And, perhaps most importantly, no clearly articulated strategy going forward.

It’s not that Yahoo’s leadership isn’t working at it.

Some fervently insist to me that there is a “plan,” as if there is some clever game of Internet Stratego going on that I cannot possibly grok.

Mebbe — but of this I have no doubt: The Yahoo board has indeed been huffing and puffing away, weighing and measuring, considering and debating.

A lot.

Maybe I’m just too impatient. I am (ask my kids).

Or maybe Yahoo’s beleaguered employees are, one of whom just wrote me plaintively, “unreal how they can drag this out,” in what has become a common refrain up and down the ranks.

Or maybe it’s the Asian partners, Alibaba Group and SoftBank, who are antsy and have considered a variety of nuclear options in order to get back stakes Yahoo holds in them. Said one: “The strategy seems to be to frustrate and exhaust us into submission.”

Or, finally, maybe it’s the newly frustrated recent bidders for a partial stake in Yahoo, Silver Lake and TPG Capital. Declared one to me after I warned that Yahoo might, in fact, drag the proceedings out longer than you might expect: “I thought you were kidding.”

Nope, welcome to the Yahoo waiting game, PE guys!

So, to help us all get through it, here’s a quick update primer on what’s what on the various fronts:

Who’s in Charge Here?

Technically, it is the Yahoo board, which is aided by interim CEO Tim Morse.

First, a word about Morse: By all accounts, he is doing a very good job as temporary head honcho — calming the troubled company, making swift decisions about daily operating issues and being a generally nice dude to deal with.

“He’s Yahoo’s no-drama Obama, in comparison to what was happening before,” said one exec, in reference to the more volatile regime under Bartz.

Still, despite his very pleasant all-hands meetings, such as one earlier this week, Morse had previously been Yahoo’s CFO and not an Internet-savvy visionary to give the company inspiration. No insult intended, but he’s the accountant guy.

To be fair, he is not meant to be the visionary, but many at the company are yearning for exactly that.

A role that is now being taken up again by co-founder, former CEO and director Jerry Yang, who dozens of employees tell me is unusually involved in operational details these days for a board member.

I get reports of sightings of him all the livelong day: Jerry in demand-side advertising confab! Jerry chitchatting with entrepreneurs from a possible start-up acquisition! Jerry weighing in on a variety of products. Look, over in the cubicle, it’s Jerry!

This is seen by Yahoo employees as a good thing and also a bad thing, since it’s hard to be running your little divisional show at Yahoo with the dude who invented it all looking over your shoulder, even if he means well. People naturally defer to Yang, the 800-pound Web icon in the room.

But, given the overwhelming state of stasis at Yahoo now — “No one can do anything until we find out how the story ends,” said one staffer — and employees eying the exits, no power at Yahoo really matters but the board.

You know, the board that has gotten the company to this moment of crisis and profound ennui, which is its own particularly ironic irony.

To better understand the power dynamics on the board, above is a little chart for you to peruse to give you an idea of which independent board member is running what key committee.

The only truly important one is the Transactions and Strategic Planning committee, which is headed by Intuit President and CEO Brad Smith and includes former Akamai President (and former Yahoo CEO candidate) David Kenny, top HP exec Vyomesh Joshi and other guy Gary Wilson.

And, in completely visible shadow form, Yang. Multiple sources close to the situation said he has been a key force in the strategery around a possible sale or investment.

This has caused not more than a little tension among board members, but everyone seems to like the much described nicest-man-in-the-room, Smith, and hopes his cool head will prevail.

Another important part of the board is the Nominating and Corporate Governance committee run by Patti Hart, who is energetically and simultaneously — if pointlessly — in search of a capable new Yahoo CEO.

Or, as I like to call this mythical person: The Unicorn.

The Deal

As I and many others have previously reported, there are bids on the table for partial investments in Yahoo by two very powerful private equity firms, Silver Lake and TPG Capital.

It’s a PE rumble, with a side of Microsoft financial backing! (I think Silver Lake’s Egon Durban makes a very nice Riff, while Microsoft’s Steve Ballmer is the perfect Officer Krupke.)

My fervent wishes for some figurative and dance-accompanied knife-play aside, the bids are essentially the same in general and different in particular. Silver Lake is offering about $16.50 a share, while TPG is dangling a tiny bit more. Silver Lake has power entrepreneur and VC Marc Andreessen on its side, while TPG is trying to get Silicon Valley fave investor and start-up whisperer Reid Hoffman of Greylock Partners and LinkedIn on its team. Both have ideas on CEOs, strategy and what to do about the Asian assets.

This type of deal could happen suddenly and you’ll hear about it quick, since the losing side will immediately trash it to the media.

As you might expect, each director has their favorite PE firm, with some not liking Andreessen, some thinking the TPG bid is a little light, some for a whole-company deal and some wanting Yahoo to hire its own CEO and run the place itself.

Of course, the last one shows a disturbing level of denial and should be a nonstarter, given the board’s abysmal record on CEO choice and its riding of Yahoo to this sad point in its storied history.

Here’s what to expect on the PE front: A lot of wrangling behind the scenes with frequent leaks to the media about what each side wants and will not yield on.

CEO choice or no CEO choice, that is the question!

Also a big factor are Yahoo’s major shareholders, few of whom like the partial investment deal, which is known as a PIPE (Private Investment in Public Equity), because of the insiderness of it all and because they prefer a whole-company sale at a higher price.

There is also pressure from activist shareholders like Daniel Loeb of Third Point, who has attacked Yang and others on the board and is ready to pounce with a proxy fight if Yahoo tries to override shareholders too egregiously. And, of course, the inevitable lawsuits over any arrangement that seems to block a whole-company bid.

That said, such a mega-deal seems unlikely, since it is too pricey and despite a lot of noise that Yahoo’s Asian partners were ready to strike with a takeover in order to get back Yahoo’s big stakes in their companies.

That’s kind of like buying a store to get back the cool pair of shoes you sold, but bankers love to scheme up this stuff. While it certainly could happen, it would be a bear of a deal.

Perhaps more like Yogi Bear, hopelessly angling for a tasty pic-a-nik basket — but grrrr anyway.

But perhaps the biggest factor in all of this mishegas is time. There is none on a lot of levels, most especially the increasing level of brain drain and drift at Yahoo. After the New Year dawns, this is going to spin right out of control and amount to the biggest internal challenge Yahoo faces.

An Asian Solution

As I and others have reported, Yahoo is entertaining yet another proposal to sell all or part of its Asian assets back to the companies, which make up a bulk of its market valuation.

The relationship between Yahoo and its Asian partners has long been fraught, and today the difficulty of reaching an agreement remains a vexing issue. That’s because it is hard and complex and because no one wants to do what the other side wants.

I am no tax attorney, but it seems as if Yahoo will ultimately come to some deal with China’s Alibaba and Japan’s SoftBank, which could include big investors like Russia’s DST Global.

And, as I reported last week, the Asian partners want to strike a deal with the current board rather than lose leverage with a much cannier new owner.

It’s a tough decision in all aspects to strike, but would remove the focus on the fact that Yahoo’s most valuable asset is something it is not running and simply holds due to a good stock trade in years past.

Years past should be the operative thought here, since the Asian assets have nothing to do with what Yahoo needs to do with its core U.S. and global brand.

You know, the thing that allowed them to buy those lucrative Asian assets in the first place?

Strategery

And that’s the crux of all this, isn’t it? Yahoo needs a new strategy and fast.

Or it needs to clarify and hone its current strategies around advertising and media and define itself once and for all. While it often touts itself as a premier digital media company, it’s still not clear exactly what Yahoo is saying by that.

In fact, incredibly, sources told me that the board was still wrangling over the tired issue of what Yahoo is at its most recent meeting — essentially, is it a products company or a media company?

If I had to listen to that who-am-I-anyway debate again, I think I would scream, given how many important Web trends that Yahoo has whiffed in recent years, many of which were right in its own wheelhouse.

How much damage this has caused to Yahoo’s core business is a critical one to determine, with many feeling the situation is too far gone to revive it and others confident that this is simply an issue of poor execution.

I am in the middle on this one, but all the indicators of Yahoo’s business have long been heading in the wrong direction, and results in the next quarter are expected to underline this even more.

Thus, the board’s navel-gazing at this point is untoward, considering that it is presiding over the possibility of a sale that should not have had to happen in the first place. While it is not quite a fire sale, it’s no cause for celebration at all the attention, either.

In fact, it’s also pointless, since — if this all resolves as it should — the current Yahoo board will not be the one determining the company’s future any longer. Remember that: This group should and will be gone for the most part.

Yahoo shareholders and employees can hope, at least.

Then, it will be up to the next group of leaders to make the very hard choices — including what are likely to be massive layoffs and radical surgery on its offerings — for what’s to come next.

In the end, that is all that will matter. Until then, as usual, you’ll have to sit tight.

Though last week’s reports were overblown and premature, it certainly might come to that at some point if past is prologue — Alibaba CEO Jack Ma has declared his interest publicly a number of times and has certainly been busy lining up his financial and strategic partners to do so.

This is one very sharp sword of Damocles hovering over Yahoo that could drop at any time and very quickly. It has impact, too, because every day there are unsettling Wall Street whispers that the bid is coming — I got three today, in fact, that it would happen Monday.

Actually, the day it is most likely to happen is the moment after Yahoo once again turns down the pair’s latest offer to buy back their shares in a complex tax-free transaction.

This has been a multi-year effort on the part of the trio, one littered mostly with recrimination and tears. Lots and lots of tears.

But this time, it’s critical to the Asian partners to strike the deal with Yahoo — and before its current board does another deal with current private equity bidders it is now contemplating.

Because once new leadership is in power, Ma’s leverage goes buh-bye. Now, it is a quantum level higher with the old Yahoos than with the next ones, who will have much more control and power over the company.

Thus, the threat of a possible whole company bid at a higher prices — a tasty treat to disgruntled shareholders — keeps the pressure on Yahoo’s current directors not to make a partial deal that is considered wanting.

This bird in the hand is seen as critical to Alibaba and SoftBank, who want only to get back their stakes and not to engage in what would turn into an ugly and hostile battle for control of all of Yahoo.

As one source told me last week: “The threat of a takeover is more useful than the damage an actual takeover would cause for everyone. No one wants this to be unfriendly.”

Perish the thought!

Yahoo board member Brad Smith — who is Intuit’s CEO and president in his spare time — has become the key man in this whole complex sales process and has also taken up the central role in dealing with the Asian proposal, along with Yahoo’s interim CEO, Tim Morse, and its legal head, Mike Callaghan.

They have to wrangle what to do with Yahoo’s 40 percent stake in Alibaba and a 35 percent holding in Yahoo Japan, which makes up a great deal of the company’s value and has become its most vexing Gordian knot.

Still, after a number of previous efforts failed miserably, Alibaba and Softbank brought yet another proposal to Yahoo in early October that would spin off the stakes to them and also avoid a big tax bill.

The sides have been talking on and off amid the other noise at Yahoo of late, which this week centered on low-priced bids for a partial investment in Yahoo from two separate PE firms, Silver Lake and TPG Capital.

Now what Yahoo does with its Asian assets matters to them, too, as both have their own plans for the dispensation of those stakes as key elements of their deals.

So it is not clear what would happen if the Alibaba and SoftBank shares were sold before either deal was done.

But it is unlikely to be a positive thing.

“The Asian assets are downside protection if the core Yahoo business is melting faster than anyone thinks,” said one person. “Without it there, Yahoo might be a lot more risky to buy into.”

Like, you might say, trying to catch a falling knife.

What an amazing coincidence.

On the very day Yahoo’s board is considering actual bids from two private equity firms interested in deals to buy close to 20 percent of the company for between $16.50 and $17.50 a share, comes a spate of eerily similar breathless media postings that there’s another bid in the making for $20!

That’s totes better, right? I mean, how can Yahoo’s directors accept a real live lesser-priced bid now when there’s a prettier one in the fog just ahead?

No, really, it’s there — if you squint really, really hard.

Except it’s not even close, when you actually check with two of the key members of the group of alleged buyers, which would apparently be Blackstone, Bain Capital and Yahoo’s Asian partners, Alibaba Group and SoftBank.

Sources close to Blackstone and Alibaba said while there have been talks, which have been previously reported weeks ago here and elsewhere, there is no bid in the offing that is close to fruition and at that price.

In an unusual public statement, in fact, Alibaba’s John Spelich said flatly: “Alibaba Group has not made a decision to be part of a whole-company bid for Yahoo.”

This from a company whose voluble CEO Jack Ma is prone to making giant and noisy speeches to signal his interest in finding a way — any way — to get back shares of the Chinese Internet giant from Yahoo.

Not this time, and several sources close to Alibaba reiterated that it was nowhere near close to any bid as yet and that a price is still up in the air. In addition, sources added, Alibaba might decide to work with another PE group, such as Providence Equity.

In addition, sources noted that if Alibaba could strike an adequate deal with private equity bidders to get a large chunk of the stake back, it would be highly preferable to a hostile takeover of Yahoo that could end in tears and little else.

“The threat of a takeover is more useful than the damage an actual takeover would cause for everyone,” said one person close to the situation. “No one wants this to be unfriendly.”

So why the rumors — doubtlessly being spread around by hopelessly cynical Wall Street types interested only in stock manipulation — surfacing today?

Simple: To get some easy-to-play media outlet to bite, report it as speculative fact and cause the stock of Yahoo to take flight tomorrow.

Hey, it could happen!

Sadly, this junior-league trick has already worked — Yahoo shares were up a dollar to $16.72 in after-hours trading tonight.

It is likely to go even higher tomorrow, which could cause the board of Yahoo to delay accepting either of the partial bids from Silver Lake or TPG Capital, even if they were the best thing for the company and its employees.

Except that the job of the Yahoo board is to evaluate what’s before them and not what is perhaps, someday, soon, wait-by-the-phone, really soon, I promise is going to be delivered.

In fact, several sources noted that it’s not clear if the Yahoo board has even asked for parties to submit whole-company bids yet.

When and if Yahoo’s board does that and if something better actually does come down the pike, with a much fatter price tag of $20 or more, then the directors can mull that over.

That would be the prudent thing to do for the company, its employees and its shareholders, even if Yahoo’s stock gets a temporary lift now.

Maybe I am just a hopeless Silicon Valley romantic and not a hardened Wall Street M&A type, but the survival of Yahoo is the real point here, rather than the lining of bankers’ already fee-stuffed pockets.

And anything other than that is just fog.

Disney, which has been busy reorganizing its interactive group, is buying Babble Media, a New York-based parenting platform that features several hundred mom bloggers.

The entertainment giant declined to provide the purchase price for the New York-based start-up, which was founded by aiming at urban hipster parents and has garnered more than $6 million in funding since it was spun off from Nerve Media several years ago.

Babble’s venture investors include Greycroft Partners, Village Ventures and iNovia Capital.

Co-founders Rufus Griscom and Alisa Volkman and the rest of the 40-person Babble staff will join the Disney Interactive Media Group unit as part of its Moms and Family portfolio, Disney said in its official press release (see below).

Disney described Babble as the “premier blogging platform for a new generation of connected parents.” To me, that roughly translates into Brooklyn-living, Bugaboo-pushing, organic arugula-eating, yoga-calm moms and sensitive New Age dads.

But don’t take my word for it — today’s front page features on Babble include “15 Vegan Recipes for Thanksgiving” and “Is It Selfish to Have One Child?” (Yum and kinda!)

The next obvious stop for its audience, after the kids get a little bigger: Gwyneth Paltrow’s fabulously twee and irksomely addictive GOOP.

But Brooke Chaffin, who is SVP of Moms and Family in the Disney Interactive Media Group, said in an interview that the highly interactive content site with a definite “sophisticated” editorial voice has become mainstream, and is actually where the whole category is going.

“Babble is sharing the experience and stories on a daily basis through the parents lens,” she said. “And it brings in a blog network that is so important to this audience, because it’s by, for and about parents, and that’s far more important for them than experts.”

There will be that, too, said Chaffin, who noted the site has grown 100 percent year over year. It is now up to four million unique monthly visitors.

Disney plans to add its more evergreen family-focused content to Babble, to give it more heft to compete with other similar parenting sites, such as Johnson & Johnson-owned BabyCenter, NBC’s iVillage, Parents.com and CafeMom.

Interestingly, Disney had taken a gander at buying CafeMom a while back.

Chaffin, who came to Disney earlier this year after a stint at Auditude and a long time at Yahoo, said Babble has carved out a unique niche in combining content with social — the current gold ring for a lot of publishers.

“What Babble is doing is best of breed … it is just a different approach to blogging,” she said. “It felt like we at Disney are about storytelling and Babble does an amazing job doing just that.”

Added Jimmy Pitaro, co-President of Disney Interactive Media Group: “Disney has a long legacy of storytelling, and no mom-blog platform empowers storytelling better or more powerfully than Babble. Babble is a strategic complement to our Moms and Family portfolio of sites, which together make up a business that is critical to Disney Interactive’s mission of delivering world-class products and content and growing engagement among our guests.”

In other words: Mainstream and hipster!

Here’s the Disney official press release:

THE WALT DISNEY COMPANY ACQUIRES LEADING ONLINE PARENTING PLATFORM BABBLE MEDIA, INC.

Burbank, California — November 14, 2011 — The Walt Disney Company, through its wholly owned subsidiary Disney Online, has acquired Babble Media, Inc., a leading online parenting platform featuring more than 200 influential mom bloggers. The acquisition of Babble further strengthens the position of Disney Interactive Media Group’s Moms and Family portfolio as a leading online resource for moms and families.

Disney Interactive’s Moms and Family portfolio is a trusted resource for parents today, giving them the online tools and information they need and the ability to share their experiences. Through the acquisition of Babble, Disney Interactive’s Moms and Family business gains a blogging platform that elevates the first-person stories of parenthood.

Since its inception in 2006, Babble has become one of the most celebrated parenting sites on the web, named by Time Magazine as one of the 50 Best Websites of 2010 and by Forbes as one of the Top 100 Websites for Women. Its stable of bloggers contribute daily to parenting topics including pregnancy, child care, health, food, family activities as well as lifestyle topics such as home, fashion and family products. As the premier blogging platform for a new generation of connected parents, Babble has created a vibrant community of parents who support, encourage and celebrate the highs and lows of raising children.

Babble attracts a broad and engaged audience with its nearly constant stream of posts, written for and by moms. Disney Interactive will infuse its Moms and Family evergreen content into Babble, thereby enriching the Babble user experience and extending the best of what Disney has to offer to today’s parents.

“Parents’ relationships with Disney are founded in stories, and Disney’s best stories are about families. We believe that Babble and Disney can harness the power of storytelling to inform, entertain and empower parents everywhere,” said Brooke Chaffin, SVP of Moms and Family, Disney Interactive Media Group. “With more than 3.9 million mom blogs in the US alone, Disney Interactive recognizes and values the important and powerful role moms have taken on in new media.”

“We can’t imagine a better next step than joining the world’s leading media company for families, The Walt Disney Company, and look forward to bringing together Babble’s resonant voice and community with Disney’s expansive family audience, wide range of content and multi-media platform,” said Rufus Griscom and Alisa Volkman, Co-Founders of Babble.

Babble will remain headquartered in New York. Rufus Griscom and Alisa Volkman will join the Disney Interactive Media Group.

Demand Media beat Wall Street expectations in the third quarter, posting a loss of five cents a share. Investors had expected it to lose from four to six cents.

Revenue was up 25 percent to $85.1 million, compared to $65.4 million in the same period a year ago. Minus traffic acquisition costs, sales increased 26 percent to $78.1 million from $62.2 million.

The stock of the Santa Monica, Calif., social content company has suffered in the quarter due to worries about its traffic and growth, but it has recently bounced back after hitting all-time lows.

After losing almost nine percent today, in profit-taking ahead of earnings after a recent price surge, Demand shares rose over 17 percent in after-hours trading to $8.30.

Some more details, according to a Demand statement on the Q3 financial results:

Content & Media Revenue increased 27% to $50.7 million, compared with $39.8 million in Q310.

Traffic acquisition costs (TAC), which represent the portion of Content & Media revenue shared with Demand Media partners, of $3.4 million, or 6.7% of Content & Media revenue, compared with $3.2 million, or 7.9% of Content & Media revenue, in Q310.

Content & Media Revenue ex-TAC grew 29% to $47.4 million, from $36.7 million in Q310.

Registrar Revenue increased 20% to $30.7 million compared with $25.5 million in Q310.

In addition to its more high-profile content business, Demand also has a domain registry unit.

“We reported another strong quarter as we continue to build Demand Media’s foundation for long-term growth,” said Richard Rosenblatt, Chairman and CEO of Demand Media in the statement. “The Company is uniquely positioned to deliver data-driven professional content through its robust content publishing platform. We are now in the process of optimizing that platform while increasing our investment in video content and enhancing the quality, engagement and user experience of our sites.”

There will be a conference call at 2 pm PT today, which I will liveblog (as long as it is lively!).

Until then, enjoy the official Q3 earnings press release:

3Q11 Earnings ReleaseFINAL

Groupon has priced its public offering at $20 a share, several dollars above the expected price range of $16 to $18. That will garner $700 million for the start-up, which is only several years old, at a valuation of close to $13 billion.

The offering for the Chicago-based daily deals site — which has had a controversial IPO process — was well upwards of 10 times oversubscribed, meaning there was a lot more demand than supply of its stock.

To alleviate the difference, Groupon has apparently added five million more shares to its offering, totaling 35 million shares sold.

Groupon has endured an unusual amount of criticism over a variety of issues — including accounting treatments, executive turmoil and growth prospects. But investors did not seem to mind all the noise and clamored to get into a possibly lucrative IPO.

The relatively small float of shares — about six percent of total — and that intense interest allowed Groupon to cherry pick its new shareholders.

It will be interesting to see if, as it endured loud critics when it was private, if short sellers will pile onto the social buying company now that it is public.

Executives from Groupon, including its CEO Andrew Mason (who has seemed to have gotten a nice haircut and suit for occasion), have been hawking the company — which sells an assortment of discounted services from a variety of local merchants — to investors all over the country over the last several weeks.

The company is set to go public tomorrow under the GRPN ticker on the NASDAQ.

Clearspring, the social-sharing company — in an effort to increase its business as a marketing analytics player — has acquired XGraph, a data science company.

Clearspring declined to provide the price it paid for XGraph, but said the deal was in cash and stock. The start-up raised $3.75 million just over a year ago.

The combined company has 85 employees — 70 at Clearspring and 15 at XGraph.

Execs at the the McLean, Va.-based company said the purchase will increase value to advertisers and publishers via audience targeting and data science. Clearspring is best known by consumers for its AddThis social-sharing tool, which provides a lot of detailed user data.

Clearspring raised $20 million in funding in May. At the time, the company said it planned to spend its new cash on acquisitions that leveraged data and built audiences more efficiently.

The New York-based XGraph focuses on modeling and monetizing the Web’s social graph.

“We get a lot of data points every day and making sense of them is something we have already been doing, but XGraph fits the bill to go even further in the multi-graph use of data,” said Clearspring CEO Ramsey McGrory. “It puts us in a position to be the market leader for the application of data.”

Key Compton, CEO and co-founder of the three-year-old XGraph, noted that the industry has become data-driven in new ways.

“People are connected to each other via social connections in a multi-graph platform,” said Compton. “I think there are some really interesting opportunities to access the data.”

Here’s the official press release for the deal:

Clearspring Acquires XGraph to Create Largest Multi-Graph on the Open Web

Company accelerates growth by deepening data team and technology

McLean, VA and New York. NY. — November 1, 2011 – Clearspring, provider of the largest social sharing and analytics platform, AddThis, announced today it has acquired XGraph, Inc., a leading data science company focused on modeling and monetizing the web-wide social graph. Clearspring’s massive reach and proprietary real-time data processing capability, coupled with XGraph’s audience technology, create the largest multi-graph platform on the web — mapping 1.2 billion user’s connections by brand affiliation, intent and social behavior.

The investment in XGraph’s data science capabilities marks another step on Clearspring’s rapid growth trajectory. XGraph’s team has deep data science expertise with applied backgrounds in advertising, sociology, mathematics and computer science. Their unique technology dynamically organizes users by shared connections and interests. XGraph’s team and platform will drive Clearspring’s existing efforts with publishers, advertisers and agencies forward while also setting the stage for new innovation.

“Clearspring is at the epicenter of two major shifts online — the web becoming social and personal, and advertising becoming data-driven and accountable. The common thread in both changes is data. To compete in this new world, companies will not only need the ability to access and process big data, but also have the ability to activate that data to create value for consumers, publishers and advertisers,” said Ramsey McGrory, Clearspring’s new Chief Executive. “The combined company has the people, technology and data to enable our clients to stay at the forefront of these changes. 2012 will be a breakout year for Clearspring.”

For advertisers, agencies and trading desks, Clearspring will immediately be able to provide the largest multi-graph audience targeting capabilities available on the open web. By using this technology to identify a brand’s core audiences and finding millions of other connected and like-minded people online, the company can now drive more efficient spending and increased campaign performance. Clearspring also plans to leverage this new capability to deliver publishers unique audience insights, monetization capabilities and actionable data products in the coming year.

“Most companies only capture one dimension of how we’re all connected, whether it be our friends or people we share with — a single graph approach. XGraph not only models these social connections, but also multiple other types of connections such as brand affiliations, intent and more — a multi-graph approach,” said Key Compton, XGraph’s CEO. “We’re truly excited to leverage our technology to unlock the value of Clearspring’s massive data set and help publishers and advertisers truly harness the power of the web-wide interest graph.”

XGraph is headquartered in New York with an office in Silicon Valley. All XGraph employees based in New York will join Clearspring’s office there. Clearspring plans to keep the office in Silicon Valley. The combined company will have 85 employees nationwide.

Apple rolled out a new iPhone today. Sort of.

Except it did not have a bigger, flatter screen. It did not have a sleeker, thinner body. It would not need all new polypropylene sleeves and other fancy accessories.

In other words, it was not an iPhone 5.

Oops, after all the breathless stories about this ideal and groundbreaking new device and predictions — including here — that this was the name of whatever Apple was releasing.

In fact, everyone was using that moniker for it, from local television news to vendors to my mother.

Instead, the tech giant launched the new iPhone 4S, which has a faster processor, an improved camera and Siri voice control feature, at a cheaper price.

Very slick, as usual, and full of cool Apple bells and whistles.

Still. Prolonged sighs could be felt all over the blogosphere and on Twitter, where Steve Brown tweeted me: “Can I be bummed now?!?”

You may.

Better still, Davin Bentti wrote: “The ‘S’ stands for ‘Steve, come back!’”

He was referring to the missing Apple icon Steve Jobs, who recently turned over leadership at the company to new CEO Tim Cook. Jobs’s Apple event performances are legendary.

Wall Street also had its iPhone 5 bubble burst, with investors shunning Apple stock. Shares are down almost five percent now.

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In the end — the bitter end, that is — there really is no good time to fire someone.

But the timing of the ouster of Carol Bartz as CEO of Yahoo is one of the more curious things about the corporate mishegas at the Silicon Valley Internet giant of late.

That included drastically moving up the clock on Bartz, which was not part of a plan until recently. In fact, several sources were told only last month by Yahoo board members that evaluation of her status — her contract ended at the beginning of 2013 — would not take place until the end of 2011.

That obviously changed.

And, because it is Yahoo — which never met a crisis situation it could not hopelessly complexify — there are numerous and conflicting accounts about the reasons it was done so quickly and abruptly.

They include the board’s feeling that Bartz had not responded to their requests for a credible strategic plan; worries that she would not ever meet annual performance goals, including improving its stock price; upcoming weak third-quarter numbers, which will continue a troublesome downward trend in Yahoo’s key advertising business; and, perhaps most intriguingly, the need to make a move before it was revealed that another activist investor, this time Third Point’s Daniel Loeb, had decided to target Bartz and the Yahoo board.

One thing is certain: The firing of Bartz was messier than it needed to be, mostly because several sources said she was caught unawares.

“She did not know it was happening, even if she probably should have seen it coming,” said one person familiar with the situation. “And she had no allies at the company to warn her, either.”

Indeed, at the time Bartz was fired over the phone by Chairman Roy Bostock — who had until late this summer been her fervent supporter — she was set to appear at a high-profile Citigroup investor conference in New York.

“It had to happen then, because you can’t put a CEO in front of investors and analysts and then fire her soon after,” said one person close to the situation.

Actually, former Yahoo CEO Terry Semel stepped down only days after appearing at the company’s annual meeting and telling the gathering he was in for the long haul.

The Loeb problem also played a part. According to several sources, while Loeb did not surface until after Bartz’s firing, several directors and Silicon Valley players were aware of his plans to target Yahoo.

While Loeb was not the more heavyweight threat that activist investor Carl Icahn had been in the past, sources said he was planning to call for Bartz’s firing, as well as a board re-do.

The large part of the reason for letting her go finally, of course, centered on not meeting performance goals set by the board.

While the overhaul of a hairball of systems and a rejiggering of staff was quickly done by the longtime and experienced manager, the turnaround and renewed product innovation promised by Bartz was slow in coming.

In addition, advertising sales results had worsened and recent quarterly reports showed little progress.

To remedy the situation, directors had asked Bartz to present a strategic plan earlier this year, which she did with the help of top execs. It further underscored the idea of Yahoo as a top-level digital media company.

But the board pressed for more details and felt Bartz was not the right exec to carry out the kind of dramatic renewal of Yahoo that is needed.

Looming, too, was the third-quarter earnings results on October 18, which sources said will show continued weakness at Yahoo.

For that, it’s likely the fired Bartz will get the blame, giving the board — which is also being criticized by large shareholders and others — a bit of breathing room as it figures out what to do next.

In other words, with no good news to report, the Yahoo board decided to deliver some bad news to Bartz.

(In related news, according to an 8-K filing by the company, interim Yahoo CEO and also CFO Tim Morse got a small bump in base salary from $600,000 to $750,000, effective September 15, 2011.)

And here is a video I did on WSJ.com’s Digits show yesterday about the buyer interest in Yahoo I previously wrote about, as well as its weak board:

According to sources at the company, Yahoo’s Carol Bartz is no longer CEO of Yahoo. CFO Tim Morse has been named interim CEO.

The situation around what is clearly an ouster is uncertain, but Bartz has had a very rocky tenure in her 32 months at the company.

[UPDATE: Yahoo confirmed the departure of Bartz in a press release outlining a reorganization.]

Bartz also sent a stunning email to staff, saying she had been ousted:

To all,

I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward.

Carol

Several sources said the board, specifically Chairman Roy Bostock and Co-founder, as well as director Jerry Yang, acted today, informing Bartz by phone of the need to make a change.

What the next steps will be are unclear, but Yahoo needs desperately to explore a range of strategic changes to bring it back to its former glory.

But Wall Street liked the move, with Yahoo stock up more than six percent already in after-hours trading.

Sources said Morse held a call with Yahoo’s senior staff this afternoon, telling them Bartz was out and that a search for a permanent CEO will be commencing.

Why Yahoo’s board did not name a new leader immediately is curious and might indicate a larger deal around Yahoo is in the offing.

As I wrote earlier today, when the Internet giant announced on January 13, 2009, that it had hired longtime Silicon Valley tech veteran — who was well-regarded for her tenure at running Autodesk — to replace outgoing CEO and co-founder Yang and turn around the company, there was much hope.

At the time, she presented a take-no-prisoners image and was touted as someone with a reputation as a professional manager who could clean up the place.

Not so, as it has turned out.

While Bartz has streamlined certain areas and made some strong management hires, her performance has been decidedly bumpy and mostly downhill.

The share price has settled in at about $12.50 (just about where it was when Bartz took over), Yahoo’s recent financial results have been weak, its key advertising business is struggling, its attrition rate among engineers and others is startlingly high and its product innovation cycle seems stopped up.

Add to that: Weak relationships with key Asian partners, a pricey but failed marketing effort and a proclivity for embarrassing verbal gaffes by Bartz.

Still, given that Yahoo’s Internet traffic, top media sites and brand remain huge, the going-sideways situation has again caused some investors — including powerful private equity firms and other monied investors — to pull out their spreadsheets about a variety of scenarios related to Yahoo.

The players who have sniffed around of late are powerful, sources said, including Silver Lake Partners, Andreessen Horowitz, former News Corp. exec Peter Chernin and Providence Equity Partners, among others. Also in the Wall Street rumor mill recently are large companies: AT&T, News Corp. and Verizon.

All the schemes are different — ranging from taking it private to making a large investment to splitting it into parts — although they all seem to require cooperation with Yahoo to get done.

And while there is no serious effort afoot as yet, there have been increasing signs of late that Yahoo’s board is ready to listen to any serious offers, said multiple sources, especially as the company has continued to drift under the leadership of Bartz.

While board chairman Bostock has publicly backed Bartz — after all, he was her biggest champion at the time of her hiring — multiple sources said he had started to become more involved at looking at the management issues at the company and its challenges.

Yang — still a key figure at Yahoo — has also become more active, said sources, and tensions between him and Bartz have increased over the last few months.

The increasing pressure on the directors of the company from its major shareholders to act has gained in recent months, said sources.

Thus, Bartz is gone and the next chapter in Yahoo’s corporate drama begins.

[Photo credit: Asa Mathat for All Things Digital]

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The success of the price cuts — as deep as 40 percent — will be vital for the company’s prosperity.

“If this price cut doesn’t work, there’s not much more they can do,” said Macquarie Securities analyst David Gibson.

Read the rest of this post on the original site »

In the last month, the stock of AOL has declined just over 50 percent.

But that drop is not just due to the turbulent markets of late. AOL stock had a 50 percent drop over the last six months, a 57 percent decline since the beginning of the year, and a 56 percent plunge since it went public in late 2009.

Which is why some in the industry — at private equity firms and bigger companies — have noted to me that the price of AOL might have gotten low enough for a very cheap takeover.

“You have to look, even with all the problems they have been struggling to fix,” said one person, who also underscored the advertising and other challenges that AOL faces. “But it is so inexpensive, it’s also an interesting idea.”

Said another large investor: “It’s almost free, given its cash on hand.”

Indeed, since in its recent second-quarter earnings report, AOL said that, as of June 30, it has $458.7 million in cash.

That matters, since at $10.22 a share — a far cry from its $28.45 high of all time in late April of 2010 — the market valuation of the New York-based Internet giant is only $1.09 billion.

You do the math.

To give that number perspective, AOL paid out $315 million in cash to buy the Huffington Post in the beginning of this year. And, let us not forget, under different management, AOL forked over $850 million in cash to buy the Bebo social network in 2008, and sold it for a song last year.

Even AOL thinks the price is low, announcing a $250 million stock buyback program this morning, just as shares hit their lowest point ever yesterday.

The stock is up today, though still in the basement.

To be fair, comparable companies’ valuations have also taken a hit recently. Yahoo shares are down 29 percent since the beginning of the year, giving it an affordable $15.3 billion valuation; and Demand Media’s stock has dropped 63 percent in that period, making its current price tag only $703 million.

Calling all shoppers?

According to multiple sources close to the situation, Ning has been talking recently to a large pool of companies about selling itself, including Google and Groupon, as well as to a number of private equity companies.

Interest has been both incoming to and outgoing from Ning.

The talks around the fate of the high-profile social networking platform — co-founded by Silicon Valley icon and investor Marc Andreessen — are still early and might not result in a sale, although a number of sources said the company was being valued at up to $150 million.

That price is well below previous loftier valuations for Ning and would mean only a break-even for investors, who have put close to $120 million into Ning since it was founded in 2004.

Among its investors: Andreessen, LinkedIn Chairman and investor Reid Hoffman, Legg Mason, Allen & Company and Lightspeed Venture Partners.

There are no bankers involved in the preliminary efforts, in which Andreessen has been involved, although discussions with Google and Groupon have been substantive in nature.

Several other companies — including AOL, Demand Media and Go Daddy — have also been approached or are kicking tires at the site. Most would be interested in Ning’s technology for creating premium social networks.

Ning bills itself on its site as “The World’s Largest Platform for Creating Social Websites.”

The sales effort grew out of a parallel one to possibly raise more money for the start-up. Sources said there was some incoming interest, so talking to a larger pool of buyers was undertaken recently.

Such a move would be an interesting one for Ning, which has undergone a series of ups and downs over its history, including dramatic management and business plan shifts.

Its most recent plan has been to go all-premium, trying to find a way to turn the start-up into a profitable enterprise.

That’s worked out well, the company has previously said, with strong growth. Since its business shift a year ago, Ning has said, it has had 400 percent year-on-year revenue growth, going from 17,000 to more than 100,000 subscribers and with 60 million monthly active users.

Ning’s shift has been under the leadership of Jason Rosenthal, who had been COO of Ning until he replaced its founding CEO, Gina Bianchini, in early 2010.

Ning has also recently tried to get into the highly competitive mobile social communications arena, with a service called Mogwee. The traction for the product does not appear to have been significant.

Ning’s Rosenthal declined to comment about any sales efforts when reached by me today.

This is perhaps the most perfect commentary on the overwrought hue and cry over Netflix raising its prices recently on DVD-by-mail rentals.

While any hike on costs is annoying, I actually just had to talk one high salaried dude down from the ledge, after I pointed out the new monthly price for the online video service was less than he spent at the Starbucks that day on a needlessly elaborate latte.

Kudos to Funny or Die for uncovering “literally the worst thing that has ever happened to white people”:

Some employees are alleging they were duped via complicated legalese and double-talk in employment contracts about how their shares would be handled upon termination or voluntary departure from the Internet telephony giant.

That matters, since Skype was recently sold to Microsoft for $8.5 billion, well above previous valuations. Thus, those who were, as a Skype PR person said, not in it to win it, um, lost.

Dramatic stuff, to be sure. But, even with all the fervor around the employment contract issue, the handwringing about what it means for compensation issues in Silicon Valley and a whole big dose of how private equity companies (in this case, a firm that had bought Skype called Silver Lake) are evil, it’s struck me as little more than an insider read-the-legally-obtuse-contract dispute.

And, although I love Reuters’ Felix Salmon’s epic tsk-tsking posts, that’s why I like to see real documents as proof of what people knew and when.

Apparently, a lot and rather clearly from this PowerPoint that was given to employees of Skype as of December 2009 as part of its changing ownership, after Silver Lake and other investors bought it from eBay.

While it’s not proof of what employees got it — typically, it is standard HR policy to hand this stuff out to everyone — and who read it (no accounting for slaggards!), it is pretty clear on what happens upon leaving Skype, either by a firing or quitting.

On the eighth slide, as you can see above, it says, in part:

“Good Leaver”: someone who gets fired without “Cause”

* Gets the fair-market value of their currently vested options

“Bad Leaver”: someone who resigns, or is fired for “Cause”

* Skype buys back their options at the lower of fair-market value or strike price

* This provision lapses post-IPO

It seems pretty buyer-beware clear, but check it out for yourself:

Skype – Employee Presentation

It was just supposed to be a three-hour tour, um, quick sale process!

But, like a storm-tossed ship looking for any safe harbor, the Myspace sale is still chugging along, with a deal that continues to be tossed around amongst low-paying and new lesser known buyers who are now in the $20 million to $30 million range, said sources close to the situation.

The price, said others, could go as high as $35 million, but it’s far cry from the $100 million that News Corp. had been aiming for.

As part of the deal, sources said the News Corp. unit will be making significant cuts in staff and costs — up to 50 percent or more — all contingent on the purchaser. The staff cuts are, obviously, directly related to the transaction and the winning bidder.

The media giant might also retain a small minority stake.

The two names — Specific Media and Golden Gate Capital — that are now in the forefront for an acquisition deal that News Corp. hopes to complete by Thursday, its fiscal year end, have not been among the acquirers mentioned previously in the myriad of reports about the deal.

Specific Media — a large, if lesser known, advertising network — seems to be in the lead, said sources. It has been around for a half-decade and has been funded by Francisco Partners.

Golden Gate Capital is a private equity firm with $9 billion under management, which has mostly specialized in turning around companies. It has never invested in a consumer Internet company.

Both companies, sources said, will focus Myspace on music, although it is not clear which rights the site has with music labels will transfer to a new owner.

Until last week, the preferred deal for Myspace centered on an investor group that included Activision CEO Bobby Kotick and in which News Corp. (which also owns this Web site) would retain a large minority ownership stake.

But sources said there were some transactional and legal complexities that made it less attractive and News Corp. opened up the deal talks with others again last week.

Golden Capital and Specific Media emerged most aggressively, although there still remain other interested parties, sources close to the situation said, among them another investor group that includes Myspace co-founder Tom Anderson, one its other co-founder Chris DeWolfe is part of and also interest from the Criterion Capital Partners, which bought AOL’s Bebo social networking site on the cheap a year ago.

But it’s now come down to time constraints and an agreement that can be reached before the end of this month, which is also the end of the media giant’s fiscal year.

In other words, let’s get Myspace off the books for 2012!

How it came to this will likely be the focus of many a business school case. After a spectacular start, Myspace has fallen on hard times both in terms of traffic and advertising revenues.

That’s why the music-focused social networking site has not sat exactly in the catbird’s seat in terms of negotiating leverage.

While there were some rumors last week that News Corp. would close Myspace down, the sale to a small player and the layoffs are the likely outcome.

While that’s cold comfort to its employees, it’s about the best Myspace can hope for right now.

(Full disclosure: News Corp. owns Dow Jones, which owns this site.)