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Liveblogging Yahoo Q4 Earnings: "Encouraging" Is the New Black

Kara Swisher — Tue, 25 Jan 2011 22:10:56 +0000

BoomTown was looking over Victoria Harbour in Hong Kong as I blogged the conference call after Yahoo released its fourth-quarter earnings after markets closed today.

It’s pretty! But Yahoo’s revenue growth–still, not so much.

Let’s begin:

2:02 pm PT: Yahoo turned in earnings that were slightly better than expected, although no big shakes either, so the call was likely to sound exactly like the last several quarterly calls.

Bingo! We’re trying! It’s encouraging! You’ll see!

In fact, “encouraging” was just the word that CEO Carol Bartz used as she tried to focus on a doubling of operating income, operating margin and earnings per share.

Impressive, the revenue at Yahoo is still stubbornly not moving, which the company continued to attribute to the new search and online advertising partnership with Microsoft.

“This is all part of our plan to turn Yahoo around,” said Bartz, who added a new buzzword, “personalized content,” to its offerings.

She turned the call over to Yahoo CFO Tim Morse, who ran through the numbers, which pretty much came down to this: Display advertising up 16 percent from last year, while search revenue dropped 18 percent.

As in previous quarters, Morse talked about how “headwinds” will soon lessen and it will be smooth sailing for Yahoo ahead.

After the stormy seas of recent years, that would be nice, since investors have gotten pretty seasick owning Yahoo shares.

Morse offered that, “while there is still much to do, we are still executing well against our plan” and went on about how good things are.

Finally, we have a “unified purpose,” which he characterized as personalized content too.

It’s a nice new catchword for Yahoo, and I liked Morse’s strong tone and gumption, which for an accountant was like hollering.

His big Achilles’ heel: The revenues projections ahead remain soft.

2:24 pm: Back to Bartz, who focused on the future success of the Microsoft advertising alliance and also Yahoo’s leadership in display advertising.

She listed some big offline brands, such as Wal-Mart and Macy’s, noting when looking for online ads, “That’s right, they all came to Yahoo.”

Bartz moved on to its stake in China’s Alibaba Group and noted it was a “great investment with a bright future.” Translation: We are not selling for now.

But noting its investment in Yahoo! Japan, Bartz had a slightly different take, mentioning talks to “unlock” the value of the stake. Translation: Maybe we’ll sell if we can figure out how not to pay all those taxes.

Bartz did the same with all of Yahoo properties, putting a sunny spin on what is still a turnaround situation.

It’s a good strategy, but it is one that is starting to sound like a broken record, especially when Google, Facebook and others seem to be like a house on fire.

2:35 pm: Now on to Q&A, in which Wall Street analysts ask softball questions of executives.

And so they do, asking queries that include small details about its operating margin, questions on tiny changes in numbers due to accounting changes. And very little about larger strategy.

You can read about this stuff in the press release, but whatever.

I am thinking of starting an investment bank, so I can jump in on these calls and ask some questions that have actual substance.

The United Bank of Swisher? Goldman Sucks?

Ooh, I was wrong, because one analyst asked a good one about possible future layoffs.

Bartz noted the company would be adding people, um, after laying some employees off.

It’s all about “re-allocating” staff, which Yahoo did earlier today by laying off one percent of its workforce, after an earlier four-percent cut.

Next, a question about search share, with Morse noting there will be search volume growth in the future.

Big message: We are in this to grow the share.

Except it has not been growing, as the last several months of surveys of search share have shown.

But Bartz firmly declared: “We’ll be up” in 2011.

A question focused in on mobile, and Bartz pointed out that Yahoo had the disadvantage of not having a mobile operating system such as Google does with Android.

Good point!

2:59 pm: Another terrific analyst comment about the disconnect between the execs encouraging comments and the actual financials, which show a downturn in, yes, revenue.

It is exactly the point here, which Yahoo has been trying to spin. Morse went through the list of excuses, from bumpiness of the search transition to weakness in affiliate sales to whatever.

Bartz jumped in and blamed the search alliance again, noting that moving advertisers over to the new platform was hard to do.

“I will not back down on the fact that we are gaining momentum,” said Bartz about search. “There is a lot going on here.”

Morse chimed in, noting he was the one using “gaining momentum” in his script. “I really believe that,” he said, going through the terrific plans.

“You’re correct the top line is not showing that yet,” said Morse in an increasingly loud voice. “There’s an awful lot there to be optimistic about.”

The accountant that roared.

Encouraging.

But then came the last question about the growth of Facebook, the Silicon Valley social networking phenom that is clearly going to be Yahoo’s biggest rival over the next years.

Bartz acknowledged Facebook’s explosive growth, but declared the company more compatible than competitive.

“There’s room for everybody here,” she said.

Presumably, that’s the hope for Yahoo.

(Also, you can see a slide deck of the financials here.)

Promoted Tweets Graduate to Google

Voices — Wed, 03 Nov 2010 21:27:26 +0000

Quite the week for the paid ads that Twitter calls Promoted Tweets. First they start showing up uninvited in some users’ timelines in a test ahead of a broader rollout. And over the next couple of days, they’ll start to appear along with certain query results in Google’s Realtime Search. This is the first time that ads from an outside network will appear on Google, reports Danny Sullivan of Search Engine Land, and the revenue will be split 50-50.

Google's Victory Dance: Check Out Our Go-Go Numbers!

Peter Kafka — Thu, 14 Oct 2010 22:45:28 +0000

After showing off financial numbers that blew away Wall Street’s earnings estimates, what could Google do for an encore? Trot out even more numbers, via a tantalizing but not-that-revealing striptease.

Here are the three data points that the search giant showed off during its earnings call this afternoon. All of them “begin with the letter B,” as product SVP Google Jonathan Rosenberg noted, and all of them come with caveats:

$2.5 billion: Non-text display ad revenue run rate. That number includes ads from its DoubleClick unit as well as YouTube.
2 billion: YouTube monetized views per week.
$1 billion: Mobile annualized revenue run rate.

All of those seem big–and they are! But they’re also deliberately fuzzy enough that it’s hard to tell exactly what they mean.

For instance: As Henry Blodget notes, those display-ad dollars are gross revenue, which means that Google only keeps a portion of them. And while that two billion YouTube views number is up from a billion a year ago, it’s proportionally the same: A year ago YouTube said it was monetizing a billion views a week while serving up a billion views a day; now the video site says two billion views a week and two billion a day.

Meanwhile Google officials, who routinely announce that YouTube is close to profitability, refused to tell analysts whether YouTube is actually profitable.

No matter! The point of b-as-in-big numbers was to impress Wall Street with Google’s ability to create new revenue streams beyond its core search ads. And the data, along with the company’s impressive Q3 performance, seems to have worked: Shares are up nine percent in after-hours trading.

——————

EARLIER

There’s the beat Wall Street was looking for. Google reports earnings of $7.67 a share and net revenues of $5.48 billion. The consensus was for $6.67 and $5.25 billion. GAAP EPS was $6.72.

Google (GOOG) has been plowing money into capital expenditures and people–it now has 23,300 employees, up from 21,800 months ago, a 6.8 percent increase–but it has been able to keep operating income quite healthy, anyway. Adjusted operating income was $2.93 billion, well above the $2.77 billion consensus.

GOOG is up considerably, now seven percent, in after-hours trading. Robot cars for all!

You can listen to (and watch) Google’s 4:30 pm ET earnings call by clicking on this YouTube link. I’ll add updates from the earnings call occasionally starting here:

As in recent quarters, CEO Eric Schmidt is sitting this one out.

CFO Patrick Pichette starts off. Aha! Teases that “we may have” Schmidt available for the first 30 minutes of Q&A before he gets on a GooglePlane.

300 of those new 1,500 employees came from acquisitions.

Discussion of “long-term” growth–”the next 5 to 10 years.” “Simply put, we’re on this growth agenda at full throttle…investing heavily in people and in product.”

There’s a “war for talent” in our industry, which is “out of synch” with the broader economy. Currently exploring how to attract and retain people. Winners and losers determined by this battle.

Re: Product investment, which you’ll hear about from product SVP Jonathan Rosenberg. He’s going to tell you about some numbers, but don’t expect to hear an update on these–they’re merely “proof points” about Google’s success.

Here’s Rosenberg, teasing new previously unreleased numbers.

Here they come. Starting with search and Google Instant:

Impact has been “very minimal” on revenue and “quite expensive” from a resource perspective.

But! “We launched it because we could.”

As search gets better, ads have to keep pace. Great momentum with AdWords.

New ad formats appear on more than 10 percent of query. Some formats show clickthrough rates as much as 10 percent on some, up 30 percent in others.

Big numbers, “which all begin with the letter B.”

$2.5 billion: Non-text display ad revenue run rate. That includes DoubleClick, YouTube.

2 billion: YouTube monetized views per week

$1 billion: Mobile annualized run rate

Mobile search queries up 5 times in the last few years.

Back to Pichette, to tamp down numbers.

In some cases, there is overlap with numbers. For instance, with AdMob, numbers counted in both display and mobile.

Time for Q&A, Schmidt is now on the line.

Schmidt says query growth is pushing click growth, and so are new ad formats. Ads are more compelling, etc.

Pichette notes that AdX numbers are included in the $2.5B display total.

Q: Please talk about YouTube. Of the two billion monetized views, what percent is that of total views? And are you profitable yet?

Pichette: Re: Profitability, “We have not made any comments on it.” [Except of course when they do, over and over.]

Rosenberg: Note that we’ve said we do two billion views per day–that will give you context.

Sorry, missed a Q.

Schmidt says growth of Android is “well past what I had ever hoped for.”

90,000 apps on Android “and growing very fast.”

Question about “proprietary benefits” of Android.

Schmidt: Android is the “largest single platform play” in mobile today.

We’re growing it by giving software away. How does that help us? Well, for starters, people who use Android search two times more than anyone else. Obvious benefit for us there, and search is more lucrative for us there as well, and that makes Android “hugely profitable.”

And we can add other value-added services to Android, but that’s not the focus right now.

Questions on cost: Cost per employee has declined. Can you continue that? And on mobile, will you stay with the “indirect monetization” Android strategy?

Pichette: Wouldn’t read anything into the cost-per-employee numbers. But we’re continuing to be frugal and generous.

Ad boss Nikesh Arora: We’re excited about the revenue model we have. We have no reason to change the model we have with Android.

Schmidt: And display will become a very big component of mobile.

Q: On display, can you break out YouTube and AdX numbers? And what do you think of competitive Android marketplaces?

Pichette: No breakout of numbers. [Duh.]

Schmidt: Goal of the app store is to make money for developers. Not a revenue goal for Google. More stores are a “win for everybody.”

Question about CPC on mobile devices. Rosenberg: They’re lower than desktop, because there aren’t many practical ways to consumate transaction. But on the iPad, activity looks a little bit more like it does on a PC, because there’s more room to enter credit card numbers, etc.

Q: Please discuss cannibalization between smartphone and PC–are iPad and tablet searches incremental or cannibalization? And can you give us color on international 26 percent growth?

Rosenberg: We don’t see cannibalization. We see mobile as complimentary to desktop. Different use patterns–mobile search is on weekends, during lunchtime, etc.

Arora: Generally, trend positive across the board. U.K. a bit weaker, but some of that is FX. Southern Europe way better than Northern. Asian markets robust.

Q: Competitors make $300 profit per handset sold over the lifetime of a device.You’re approaching this with a different model, but do you think that’s an upper limit on that number?

Schmidt: Our model is that handset makers and manufacturers make a lot of money from the phone, and we make money from advertising. So can’t compare the two, and premature for us to guess what we can do. “It should be highly lucrative” and a “very very strong revenue stream compared to a PC.”

Q: On social search. How do you “capture the signal” without access to the data feeds, as you have with Twitter.

Schmidt: “There are some ways we can do that” now, and we’re working on new ways.

Sorry, stepped out. Back now.

Q: TAC rate seems to be lowest since IPO. Sustainable? Growth has been driven by volume, not price. Sustainable, and/or will pricing increase going forward?

Pichette: MySpace deal is now over. That saved us a bunch of money. And mix of our partners will effect our TAC. That’s about it.

Rosenberg: Can’t answer volume/price question without “being forward-looking.” [Heh]

Q: Microsoft/Facebook deal was exclusive. But do you think you’ll see exclusive data deals? And what about Groupon, etc.? Can you compete there?

A: Value of exclusive data is “swamped” by “vastness” of the Web. So no concern there.

Schmidt: Always a concern that large chunks of data are not accessible to search engines….long pause… up to the content owner to decide how much to expose. We believe the world is better off if more information is searchable. “We fundamentally believe that.”

Rosenberg: Daily deals are very exciting. “A lot of small companies doing a fabulous job there.” We participate a little bit via sitelinks. But no question “that’s a very exciting and hot space.”

Q: When will Google Instant be on the BlackBerry or iPhone? What’s Android activation rate? And why not let advertisers bid directly on mobile inventory?

Rosenberg: Instant availability on other platforms “relatively soon”–probably this fall.

Not updating Android activation numbers.

Q: Given that non-core search is more material, do you think you’ll keep allocating resources with your 70-10-10 model? And when do you anticipate mobile overtaking desktop?

Schmidt: On mobile vs. display: Even if we knew I don’t think we’d talk about it.

On core vs. emergent: We talk about this all the time. Depends. Android is very small, and growing fast, so they get all the resources they need. We end up still at 70-10-10, but that’s not really a formula for us.

Pichette: What really matters the most to us is as Eric says, “When you see a hockey stick, pour gasoline on that fire.”

Q: Big-picture data question: What does Google think about leveraging user data to better target ads (see Facebook, Yahoo, etc.)–particularly with search data and display?

Schmidt: “We have a pretty strong opinion that we’re not going to do very much of it.” We’re intensely serious about privacy.

So “we’re not going to do the kinds of things that we could do with it… without your explicit permission. And in many cases we probably won’t do it forever.”

A question on display, which I’ve missed but will have to return to.

Pichette wraps things up. Today’s data points “are not about giving you information” for coming quarters, but to give you confidence that we’re building long-term businesses.

Call ends.

Mark Mahaney’s cheat sheet will help you decipher the numbers:

Liveblogging the Bing-Facebook Bromance: "Underdog" Search With a Little Help From Your Friends

Kara Swisher — Wed, 13 Oct 2010 18:46:53 +0000

BoomTown motored on down to the Microsoft campus in Silicon Valley on a fabulously sunny day to liveblog the latest Bing event.

The software giant is updating its search service, announcing deep integration–part of a deal announced last year–with Facebook.

The theme, according to Microsoft (MSFT) SVP Yusuf Mehdi, quoting the Beatles, was search with “a little help from your friends.”

Let’s hope it’s not: “Help, I need somebody.”

11:35 am PT: Mehdi kicks off the show, announcing the line-up, which includes Facebook CEO and co-founder Mark Zuckerberg.

Well, it just got 100 percent more interesting here in this nondescript auditorium.

Mehdi talks a little bit about the future of search and making it better. He talks about social being an important part of it.

While I’d have gone with Barry Manilow, he quotes the Beatles.

Mehdi is followed by Microsoft Online Services Division President Qi Lu, who throws more love bombs at Facebook.

“With the partnershop of Facebook and Bing, we will be able to unlock…how people in a social relationship can be first-class citizens in a search experience,” said Lu.

It sounds so lofty, even though it is mostly trading movie review recommendations or good places to take the kids on a rainy Sunday.

Lu thanks Zuckerberg effusively and invites him onstage.

11:54 am: No hoodie.

Zuckerberg is also “honored to be here,” giving us a little history lesson about the origins of the social networking giant and its various and sundry efforts.

I’ll be honest, the lack of donuts is making me distracted.

He’s not actually saying more than bromides about “what would social search look like.”

And looking around at who would be the right partner in the arena. Microsoft! Of course! That giant investment way back when was nice too!

“They’re really the underdog here,” said Zuckerberg in the first interesting comment, noting that overdogs–that would be Google (GOOG), which he does not mention by name–never innovate much.

His take: Underdogs are the best.

12:01 pm: Mehdi is back to show off the wares in a demo.

First, what’s there. Web search in Facebook and Facebook status updates on Bing.

Zzzzzzzz. Get to the good stuff!

First, a module that brings in a Like module from Facebook into the search, with all the other information provided by Bing.

It is, said, Mehdi, particular for a person.

“This is going to profoundly change how we search,” he said of personalized experiences.

Mehdi also shows off a way to differentiate your friends who have names of famous people, who are the ones who come up on search first.

Interesting, but people search is not the biggest problem I have.

He also says more is coming, such as friend experts surfacing in search and Like in every result on a page that it was possible. Yipes!

Also, thank the Lord, the ability to turn it off.

12:15 pm: Now Facebook exec Dan Rose comes up and starts talking about the Facebook-Microsoft bromance.

Apparently, four years is an eternity in Silicon Valley in terms of a relationship.

Actually, four weeks is long, so congrats you two crazy kids!

I’d celebrate with a donut if they were here.

“More and more” social in Bing, said Rose.

It’s a match made in digital heaven!

12:22 pm: Q&A time!

So what more? The press is so unsatisfied! Yes, we are.

Zuckerberg takes the lead. New interfaces! More!

A privacy question. “This is Instant Personalization,” said Zuckerberg, who said that Facebook has five partners in that effort.

He explains Instant Personalization, saying he wants to clear up misconceptions.

It’s private enough, you oversharers!

“Just because it is all public information about you, this is really good,” he said.

But is it by default? Of course, it is. That’s Facebook modus operandi!

Opt-out should be tattooed on employees at Facebook as a requirement.

Bing does put up a warning at the top of the page, but only five times. Then, you need to go foraging to turn it off.

Next: Does Bing search queries get sent back to Facebook? Not necessarily.

But, “everything is going to be social eventually,” said Zuckerberg, as long as it is public.

Public is apparently the new black.

More questions about new Facebook Groups and other deets, none of which is that bracing.

Apropos of nothing, I am considering asking a question about the ever-exciting Hewlett-Packard (HPQ) scandal, just to jack up the volume.

I try to ask a question about Zuckerberg’s underdog comment, but no more time.

But Zuckerberg sort of addresses it, going on about why he has picked Microsoft as the favorite.

While he does not say it, it’s because Facebook is the overdog here and, as you know, every overdog needs an underdog.

Speaking of cartoon heroes, here is the opening of that classic television show:

Googzilla! Yahoo Japan Confirms Google Switch From Yahoo for Both Paid and Algo Search

Kara Swisher — Tue, 27 Jul 2010 06:44:33 +0000

Please see this disclosure related to me and Google.

As BoomTown reported earlier today, Yahoo Japan confirmed it would switch its search technology and paid search provider to Google from Yahoo.

The move is a definite blow to Yahoo’s new search and advertising alliance with Microsoft (MSFT), although Yahoo (YHOO) sought to minimize the damage in a statement (which you can read below in its entirety).

But make no mistake, given the huge Japanese market: It’s Googzilla totally wiping the floor with MicroHooSoftra.

While it might seem unusual that Yahoo Japan will be using Google’s search, the company is not actually owned by Yahoo, which holds a 35 percent stake.

SoftBank Corp., the giant Japan-based Internet service provider and cell phone provider, has a stake of around 40 percent in Yahoo Japan.

Both SoftBank Founder Masayoshi Son–one of the first key investors in Yahoo–and Yahoo co-founder Jerry Yang sit on the board of Yahoo Japan, which is operated independently as a separate publicly traded company run by President and CEO Masahiro Inoue.

Now that Yahoo Japan and Google (GOOG) have announced their engagement–in a statement at the time of Yahoo Japan’s first-quarter earnings announcement–it is certain that Microsoft will move to stop deal from gaining regulatory approval in Japan, even though a Google spokesman told BoomTown it had already consulted the proper authorities in Japan and had gotten no objections.

Still, I would not expect Microsoft to settle for that, and it is likely to do some lobbying
much as it did successfully when Google tried to enter into a similar deal with Yahoo itself in the U.S. in 2008.

That deal failed after government opposition to the creation of a near-monopoly in search in the U.S. became clear.

In Japan the combination is even worse, with the pair controlling almost the entire market share of search there, both paid and algorithmic.

In search query volume, according to one recent report, Yahoo Japan currently has just over a 53 percent share of the search market and Google has just over 38 percent.

Other polls differ, but it all spells an overwhelming and definite monopoly when combined.

Coincidentally, Bing just entered the Japan market with its branded search, but it has only a small share there of almost three percent.

The same market share among the big players holds in paid search too, with Yahoo Japan and Google controlling almost the whole thing between them.

Maintaining a modicum of competition in Japan was Yahoo’s to lose. And lose it did.

After Yahoo and Microsoft struck their wide-ranging search and online advertising partnership last year, Yahoo Japan–which now uses Yahoo technology for algorithmic and paid search–was then free to pick whatever search service it wanted.

Most expected it to use Microsoft’s Bing technology, which will be powering Yahoo in the U.S. by the end of the year, as well as in many other countries where Yahoo operates.

But, because Yahoo Japan is its own entity, any such deal needed to be negotiated among the parties, putting Yahoo Japan in play, much as if it were AOL (AOL) or News Corp. (NWS) unit MySpace in the U.S.

Investors are sure to ask what Yahoo management was doing as the Google effort took shape.

Those efforts obviously paid off, despite a declaration by Yahoo Japan’s Inoue in an January interview with a Japanese news organization that he was not impressed with some other Google services, such as its Street View mapping service.

Thus, the fallout from this is likely to be tough on Yahoo and also its nascent search relationship with Microsoft.

Yahoo Japan said the date of the switch was yet to be determined.

Here’s the statement from Yahoo on the changeover:

Yahoo! Japan announced that it has chosen to implement Google as its backend algorithmic search engine and paid search infrastructure. Yahoo! Japan made this decision as an independent and separate publicly traded company, in which Yahoo! holds a 35% equity interest. We amended our agreement with Yahoo! Japan as a result of this decision, and we do not anticipate that this amendment will have a material financial impact on our revenues. We will provide support, as required by our agreement, for the search experience Yahoo! Japan has chosen for its business, and we will continue to partner closely with Yahoo! Japan in other areas including mail, messenger, mobile, our content properties and more.

This decision by Yahoo! Japan does not impact the global rollout and implementation of the Yahoo! search alliance with Microsoft, except in the Japanese market. We remain confident in our transition plans for the search alliance, are driving innovation in the user experience around search on the Yahoo! network, and continue to be committed to our alliance with Microsoft.

Exclusive: Is Yahoo Japan Poised to Switch to Google Search?

Kara Swisher — Mon, 26 Jul 2010 22:53:03 +0000

Please see this disclosure related to me and Google.

In what would be a stunning blow to the massive search alliance between Microsoft and Yahoo, Google is apparently zeroing in on a deal to grab the algorithmic search business for Yahoo Japan, said several sources.

The agreement between Yahoo Japan and the U.S. search giant could be announced as early as today in Japan, sources said, and could be part of a larger deal between the two companies around mobile or other products.

Financial terms of such a deal were unclear.

News of the deal could come when Yahoo Japan announces its financial results at 3:10 pm Japan time on July 27, which is 11:10 pm PT today.

If Google (GOOG) and Yahoo Japan join together, the pair will control almost the entire market share of search in the Japanese market. It is not clear whether or not paid search is part of this deal at this time.

But in search query volume, Yahoo Japan currently has just over a 53 percent share of the search market and Google has just over 38 percent.

It is a monopoly in comparison to Microsoft, which has almost a three percent share.

Yahoo Japan is not actually owned by Yahoo, which holds a 35 percent stake. SoftBank Corp. has a stake of around 40 percent.

Both SoftBank Founder Masayoshi Son–one of the first key investors in Yahoo–and Yahoo co-founder Jerry Yang sit on the board of Yahoo Japan, which is operated independently and run by President and CEO Masahiro Inoue.

When Yahoo (YHOO) and Microsoft (MSFT) struck their wide-ranging search and online advertising partnership last year, Yahoo Japan–which now uses Yahoo technology for algorithmic search–was free to pick whatever search service it wanted.

That meant it was not obligated to use Microsoft’s Bing technology, which will be powering Yahoo in the U.S. by the end of the year, as well as in many other countries where Yahoo operates.

But, because Yahoo Japan is its own entity, any such deal was to be negotiated among the parties, putting Yahoo Japan in play, much as if it were AOL (AOL) or News Corp. (NWS) unit MySpace in the U.S.

Both those companies signed search deals with Google–and both are also now up for renewal.

Coincidentally, Bing just entered the Japan market with its branded search, but it has only a small share there.

And, ironically, Yahoo Japan’s Inoue said in an interview in January with a Japanese news organization that he was not impressed with some other Google services, such as its Street View mapping service.

In any case, if Yahoo Japan and Google do buddy up, it’s clear that Microsoft will likely try to block the deal from gaining regulatory approval in Japan, much in the same way it did successfully when Google tried to enter into a deal with Yahoo in the U.S. in 2008.

That deal crashed and burned after government opposition became evident.

It will also be interesting to see which search technology the Alibaba Group, which owns Yahoo’s name in China and of which Yahoo itself owns 40 percent, will select or if it will do search on its own.

Like Yahoo Japan, Alibaba–which is using Yahoo’s search and email technology now–is also not obligated to switch to Bing when Yahoo does. Such a deal is also subject to negotiation.

That said, Google’s relations with China remain tense, which could play a role in any talks with Alibaba.

Emails and calls to spokespeople at Yahoo, Yahoo Japan and SoftBank seeking confirmation were not returned as yet. Microsoft declined to comment.

Here's What Analysts Should Be Asking About at Yahoo's Investor Day: The Microsoft Search Deal (And No Silver Bullets)

Kara Swisher — Wed, 26 May 2010 07:17:51 +0000

This morning, Yahoo is holding its annual investor day at its Silicon Valley HQ, starring CEO Carol Bartz and a panoply of top execs at the Internet giant.

While this kind of dog-and-pony show is typical for companies–an effort to get all chummy with institutional investors and financial analysts and convince them that there is a grand scheme for the road ahead–what’s really at stake is the need to cover over problems and play up the prettier parts.

That’s why–after a period of rather fallow deal activity–Yahoo (YHOO) suddenly started pulling out the shiny objects just last week, designed, in part, to show that Yahoo is on the move and pushing vigorously forward.

We have a plan, folks! Silver bullets all around!

That included its acquisition of both social media start-up Associated Content and Koprol, a social location service in Asia, as well as a big, noisy partnership with mobile handset giant Nokia (NOK) related to email and maps.

But while those are all well and good, they will have almost zero impact on Yahoo until they get revved up and results can be judged.

Thus, it’s probably more helpful for those in analog attendance–the press was not invited as we are apparently considered akin to skunks at a garden party–to focus on some key issues that are present and accounted for right now and to grill Yahoo about them.

To be fair, Yahoo is planning on covering the most important of these at the moment: The status of its partnership deal with Microsoft (MSFT), related to search and online advertising.

It will be interesting to see what advertising operations exec Mark Morrissey, the Yahoo-side integration lead, has to say about it all and what impact the company expects from it.

Some key questions that need asking:

How soon does it roll out–late this year or early next year?

How does Yahoo get search share up–via improvements to its homepage and user experience–to make this as lucrative as possible?

Will the deal, which is intended to result in bigger search-query volume, finally bring a key metric–revenue per search–up, especially after the Microsoft RPS guarantees run out in 18 months?

Do the cost savings of letting Microsoft’s Bing power Yahoo search compensate for trading away control of a key source of income and revenue?

And perhaps most of all, will any of this put a dent in the overwhelming search dominance of Google (GOOG)?

Here’s a really good analysis by Citigroup’s Mark Mahaney on this very subject, with lots of nice numbers to chew over:

yhoo search deal

Of course, there are a lot of other thing to look at, such as:

The continuing issue around the talent drain (Yahoo is smart to trot out lively new Chief Products dude Blake Irving, formerly of Microsoft, to counter the drip-leak-of-execs issue), an explanation of its penny-ante (but pricey) marketing efforts so far, a report on what’s most innovative in its oft-clogged product pipeline, a detailed assessment of the online display market and thoughts on increased competition in this key Yahoo arena from Google. Also: What’s up with mobile?

You can see the whole agenda for the day here, and BoomTown will be following the proceedings via a Webcast.

Also, as Yahoo notes on its Welcome page for the event: “Everything you’ll hear today–from looking back at what we’ve done to looking ahead at the incredible opportunities we’re tackling–add up to one thing: creating shareholder value.”

So analysts, let’s don’t forget about the stock price, which has stubbornly stuck in the $15 range for a long time now.

In fact, it is now almost the exact same price as it was one year ago and 75 cents lower than at its last investor day in late October last year.

Yes, definitely ask about that.

China Drops Google's Call

Peter Kafka — Mon, 29 Mar 2010 14:38:46 +0000

Another step up in the escalating battle between Google and China: The search giant reports that its mobile service is being disrupted in the People’s Republic.

Google, via a page dedicated to “Mainland China service availability,” reports that mobile services are “partially blocked” (see image below; click to enlarge). As the Los Angeles Times notes, this is the first time Google (GOOG) has changed the status of any of its services since it posted the page a week ago.

Taken at face value, the update means that China has moved beyond threats and selective search-query blocks and is now disrupting a key part of Google’s remaining business in that country. Which is pretty much what it has been promising to do over the past few weeks in response to Google’s decision to close down its Chinese search engine.

Google Going to Abide by Chinese Law Whether Google Likes It or Not

John Paczkowski — Tue, 23 Mar 2010 19:12:09 +0000

Well, that didn’t take long at all. China parried Google’s challenge to its control of the Internet this morning, limiting access to the search giant’s unfiltered Hong Kong site. Multiple reports out of China today claim Beijing is restricting access to Google.com.hk and blocking searches on a sensitive queries.

Evidently, clicking on a contentious query more than a few times invites a block that requires users to restart their browsers in order to regain access to the site. So Google.com.hk, the uncensored site to which Google (GOOG) has been redirecting Chinese searchers, is still available in China, but it’s usefulness has obviously been undermined. Oddly, Google’s Mainland China Service Availability page doesn’t seem to have noticed this yet.

Meanwhile, Tom.com stopped using Google to power its searches, and rumors are beginning to circulate that some of the country’s mobile operators are reconsidering plans to launch new phones running on Google’s Android OS.

Reached for comment, Google didn’t have much to offer: “It seems that certain sensitive queries are being blocked,” a spokesperson told me. “However, the Google.com.hk site is not currently being blocked.”

Yep.

Aardvark Confirms It Has Been Acquired, but Not by What Company (But It's Google)

Kara Swisher — Thu, 11 Feb 2010 19:20:44 +0000

Aardvark, the social search engine that has been the subject of much attention since it was founded in late 2007, confirmed that it has been acquired.

“We can confirm that we signed a deal to be acquired,” wrote CEO Max Ventilla in an email to BoomTown this morning.

But Ventilla would not reveal the buyer, which a report by TechCrunch earlier this morning said is Google (GOOG), for $50 million.

The Silicon Valley search giant has since confirmed that it is the buyer. “We have signed a definitive agreement to acquire Aardvark, but we don’t have any additional details to share right now,” said the company in a statement.

There have been other possible suitors along with Google, from Facebook to Yahoo (YHOO) to Microsoft (MSFT) to IAC/InterActiveCorp (IACI), which gave the San Francisco-based start-up a serious look-see to differentiate that company’s lagging Ask search service.

The 30-person Aardvark has raised a total of $6 million from August Capital and others to perfect and distribute its service.

It uses social networks, such as Facebook, to get relevant answers via email and instant messaging. It also has a Web version.

In many ways, Aardvark is yet another version of the iconic Six Degrees, mixed with Yahoo Answers or expert sites, a cup of Twitter-like sociability, and completed with a big dollop of algorithmic calculation.

Its founders, including Max Ventilla and Damon Horowitz, worked at Google and wanted to try to solve the problem of data that cannot be easily reduced to a keyword query.

At least that’s the goal of the innovative Aardvark.

Here is a recent video interview I did with Ventilla and Horowitz, in which they tried their best not to answer the potentially multimillion-dollar question about being bought.

The video also includes a tour of Aardvark, whose offices are, of course, called the Mechanical Zoo:

[ See post to watch video ]

No More Bing Brother, Says Microsoft

John Paczkowski — Tue, 19 Jan 2010 19:05:05 +0000

Google has long claimed that the server log data it collects are a critical driver of innovation. Over the years, to appease privacy advocates, the company has tweaked its treatment of those data and the length of time it stores them. Google continues to collect IP addresses, though it makes them anonymous after nine months (it used to do so only after 18-24 months).

This may soon change. And not because of any initiative on Google’s (GOOG) part but because of one by Microsoft (MSFT).

Responding to Article 29 Working Party guidelines for protecting users’ personal data online, Microsoft this morning said its new search engine, Bing, will purge all the data it collects on users after six months. Not make the data anonymous, but purge.

“Today we sent a letter to the Article 29 Working Party notifying them of our intention to make a change to Bing’s data retention policy,” Bing Privacy Manager Reese Solberg wrote in a post to the Bing blog. “Specifically, we are reducing the amount of time we store IP addresses from searchers to 6 months. Currently we keep that information for 18 months before we delete it.”

Elaborating, the letter continues, “Generally, when Bing receives search data we do a few things: first, we take steps to separate your account information (such as email or phone number) from other information (what the query was, for example). Then, after 18 months we take the additional step of deleting the IP address and any other cross session IDs associated with the query.”

In conclusion, the letter describes Microsoft’s initiative succinctly: “Under the new policy, we will continue to take all the steps we applied previously–but now we will remove the IP address completely at 6 months, instead of 18 months.”

Microsoft’s move leaves Google in the uncomfortable position of being far less a friend to privacy than Microsoft. And hard as the company might argue in favor of storing user data, it will likely have to match Microsoft.

It’s difficult to claim that server log data are “a crucial arm in the battle to protect the security of our services against hacks and fraud” when a prominent rival is essentially claiming exactly the opposite.

The One-Year Report Card of Yahoo’s Carol Bartz–Financials: C+

Kara Swisher — Sat, 16 Jan 2010 07:48:21 +0000

Yesterday, BoomTown began grading the performance of Yahoo CEO Carol Bartz, after she gave herself a B- for overall performance for the year since she took over the troubled Internet giant.

But I decided to be more specific, splitting the grades into five categories: Management, financials, product innovation, deal-making and moxie.

For management, I gave Bartz an A-, because she has been a definite improvement on previous leadership in terms of decision-making, speed and essentially grabbing the mantle of control firmly from the start.

Some thought I was too generous and others thought the grade should have been an A+. Which means it was just about right!

Today, let’s look at financials–by which I mean Yahoo’s fiscal performance and its stock price.

In this regard, Bartz only gets a C++ (it’s a techie joke, get it?).

I could have given her a B- here, I guess, but–to me–C+ simply means financials have remained in a holding zone under Bartz, so she does not deserve to be completely decried, or applauded either.

Why? Well, let’s start with the stock.

While Yahoo (YHOO) shares are up about 38 percent for the year, which is a good thing, they still lag those of other Internet companies, as well as the market.

In the same period, the Nasdaq was up about 44 percent, Google’s stock has doubled and Microsoft (MSFT) shares are also up a lot more.

In an interview with Bloomberg recently, Bartz claimed that Yahoo was in the “penalty box” with investors–a hangover from former management, presumably–and this is the reason for its weaker stock gain.

Whatever. But Bartz has been the CEO for a year and Wall Street is still holding out. Thus, she has to fully take the blame instead of pointing at the previous administration.

In other words, former CEO and co-founder Jerry Yang and the Yangtanic are ancient history. So, all is forgiven, Jerry (call me!).

Bartz also blamed the recession for Yahoo’s continued revenue decline in 2009, about 12 percent overall in the most recent quarter.

She told Bloomberg, “We came out of one of the worst climates ever. And if you look at growth of Fortune 500 companies, only being down 12 or 15 percent is damn good. I’m not going to apologize for our growth.”

Again, whatever. But she runs a company in a high-growth industry and is not selling hams or socks, so perhaps bragging that being down 12 to 15 percent is “damn good” is a bit of a stretch.

(Microsoft certainly did not crow over its 14 percent decline in revenue in the most recent quarter even though it beat expectations, and its fiscal results rely a lot on something that does get profoundly affected–namely, sales of PCs–in a recession.)

Specifically, in the third quarter, Yahoo’s search advertising revenue was off 19 percent, and display was off eight percent at “Owned and Operated” sites on Yahoo.

Google, in contrast, reported a seven percent rise in its third-quarter results, and its execs projected a mood of smooth sailing ahead and no more econalypse. Financial performance at Amazon (AMZN) was also way up, as it was at Netflix (NFLX) and Apple (AAPL).

Still, Yahoo’s fiscal performance relies a lot on premium branded advertising, so it has remained weaker and will do so until the economy really comes back.

Many analysts are predicting exactly that, with double-digit sales growth in this area ahead.

And Yahoo’s bottom line is likely to get a boost when its costs are off-loaded to Microsoft, as part of the search and advertising partnership Bartz struck with the software giant earlier this year. The deal awaits regulatory approval, which is likely, and will then start to kick in later in the year.

Still, a dark cloud hangs ominously over the persistent search share declines Yahoo has suffered, which Bartz and others attribute to loss of toolbar and other distribution deals that Google (GOOG) and Microsoft picked up.

But query growth rates are also down and that’s a red flag, especially since Microsoft and Google are up a lot.

Nonetheless, depending on how these various parts of Yahoo revenue sort themselves out, along with Bartz’s cost-cutting, Yahoo’s bottom line is most likely to look better in the quarters ahead, so the stock could certainly go up quickly.

And so could her financial grade. Bartz is well known for being great at managing the bottom line and Wall Street expectations, so I suspect it is top of mind for her.

That said, once that registers, everyone will then be looking for not just a return to normal, but for actual growth.

And that can only come from product innovation–the name of the game in Silicon Valley–which is what will be on the grading block Monday.

Aardvark's Max Ventilla and Damon Horowitz Speak (Plus a Tour!)

Kara Swisher — Fri, 11 Dec 2009 20:11:20 +0000

Earlier this week, BoomTown motored over to the San Francisco HQ of Aardvark, the social search engine that has been the subject of much attention since it was founded in late 2007.

While there, I got a tour of the 30-person start-up, which has raised a total of $6 million from August Capital and others to perfect and distribute its service.

Aardvark uses social networks, such as Facebook, to get relevant answers via email and instant messaging. It also has a Web version.

Its founders, including Max Ventilla and Damon Horowitz, worked at Google (GOOG) and wanted to try to solve the problem of data that cannot be easily reduced to a keyword query.

At least that’s the goal of the innovative Aardvark, unless it ends up selling itself off to any of a wide range of companies, from Google to Facebook to Yahoo (YHOO) to Microsoft (MSFT) to IAC/InterActiveCorp (IACI), to differentiate that company’s lagging Ask search service.

Or not.

Ventilla tries his best not to answer that potentially multimillion-dollar question in this interview with Horowitz.

The video also includes a tour of Aardvark, whose offices are, of course, called the Mechanical Zoo.

Here’s the video:

[ See post to watch video ]

MySpace's "Work in Progress": Losing Money and Traffic, Blowing Google Guarantees

Peter Kafka — Wed, 04 Nov 2009 23:03:02 +0000

Did Rupert Murdoch wait way too long to fix MySpace? It’s easy to get that impression from the News Corp. earnings call today.

The takeaway: The site is losing traffic and money and no longer expects to get all of the $900 million it once counted on from a Google search deal. Also, the company really doesn’t know what to expect of the property going forward, except that it’s a work in progress.

So: Either digital media boss Jon Miller, MySpace CEO Owen Van Natta and the rest of the new team brought in this year to fix the site have an impossible task or expectations are now so low that even modest improvement will look like a huge victory.

Details from the earnings call, which I covered live this afternoon:

Revenue was down 26 percent at Miller’s Digital Media Group (MySpace and a handful of other sites).
That’s in part because conventional ad revenue is down and in part because search ad revenue is down.
But isn’t Google (GOOG) supposed to be paying $900 million over three years in a search deal? Yes, but only if News Corp. (NWS) hits certain traffic/query guarantees, which isn’t happening anymore, says Murdoch.
How much is MySpace going to miss by? This question occasions much confusion on the call. “I don’t know. But it will be a real figure,” Murdoch says. Then he throws out the number $300 million. His lieutenants suggest that it’s closer to 10 percent, or $90 million. I’ve since checked with News Corp. PR, which says the figure is “in the 100 [million] zone for the year.”
So what’s the plan to fix all of this? “It’s a work in progress,” News Corp. officials say over and over during the call. Chase Carey, Murdoch’s new number two, uses the phrase at least three times in one answer.
Any other color on overhaul plans? Nothing you haven’t heard before: The company is trying to become an entertainment portal instead of a social network. Carey: “We’re not trying to beat Facebook. We’re not trying to beat Twitter.”

(Disclosure: News Corp. owns Dow Jones, which owns this Web site).

LIVE: Google Searchology

John Paczkowski — Tue, 12 May 2009 17:13:04 +0000

The architects of Google search are holding court at company headquarters in Mountain View, Calif., this morning offering what promises to be a sort of state of the union on the subject of search. Overseeing the event, dubbed “Google Searchology”: Udi Manber, VP of Search Engineering, and Marissa Mayer, VP of Search Products and User Experience.

Gabriel Stricker, Google’s Director of Search Communications kicks things off by noting that the company will be sharing a number of new developments that cater to the growing demands of its users. With that, Udi Manber takes the stage to offer a big-picture overview of search.

Manber says what Google does is the new “rocket science.” Search has to be fast, relevant, and fresh, he explains. But even that’s not enough. The real goal is to solve users’ problems. If users can’t spell, it’s our problem. If the content is there but in a language the user doesn’t speak, that’s our problem. If the Web is too slow, it’s our problem. Manber offers a few examples of how Google works to address these challenges: real-time data, translation, etc. With these services nailed down, he says, Google can move on to the more important task of working on “understanding.”

Manber invites Pat Riley, senior search quality engineer, to the stage to talk a bit about Google’s “did you mean” link. Lots of people use the link, Riley says, and Google has been working to improve it. Called “spellmillion,” the project provides not only related results for a misspelled query but for alternate ones as well (think labor as in “work” and labor as in “pregnancy”). But it requires Google to process multiple searches for a single query and demands a lot of processing power.

Riley notes that the project has been somewhat contentious because it also potentially questions user intent. He offers the example of “Macy Ray.” Some users might be searching for “Macy Gray,” the singer, others for a person actually named “Macy Ray.” How do you address those two potential queries on a single search results page?

Riley is followed by Engineering Director Scott Huffman, whose subject is mobile search. Huffman starts things off with a few truisms. Mobile search is often local. It should be easy to use. Effortless. And it should provide all that Google has to offer. Huffman notes that this is quite a task since Google must optimize its search for different mobile experiences and different user interfaces: Google’s own Android, Apple’s (AAPL) iPhone, etc. Some of these platforms require gestures–touch, swipe–others use a keypad. All must provide access to the Web and the mobile Web–sites that have been optimized for mobile devices. On the screen behind him, Huffman displays an example of Google search that displays desktop Web results and mobile Web results, the latter denoted by a red square.

Mobile search must also be easy. Huffman demos a shared desktop-mobile search for a flight number. Since he’s logged into his Google account, his search for “ba 284? SF-London on the desktop is immediately shared with the Google app on his mobile device. An unreleased feature, but it’s on its way. A quick look at local listings automatically delivered to devices on the basis on GPS/cell tower location, and then Huffman brings Mayer on stage.

Mayer talks a bit about universal search before moving on to Google’s “bento box” of search results. She talks about Google’s focus on the importance of presentation and its efforts to make search results more usable for the user. An example of this SearchWiki, a tool that allows users to annotate their searches, to “keep their train of thought,” says Mayer. We need to help our users find more and do more with it, she says, noting that the company is still working to address some longstanding user problems:

Finding recent information
Expressing that you want just one type of result
Assessing which results are best
Knowing what you’re looking for
Expressing your searches in keywords

Mayer introduces Google Search Options, a feature that appends a search option panel to results, allowing users to “slice and dice” the results as they choose. A demo of the feature, in a search for “Hubble Telescope,” allows for search calibration by time, pages that include images, etc. Another search for “solar oven” is filtered down to specific genres–videos, discussion forums, reviews. Click on those links and that new search context is immediately displayed on the page.

Interestingly, the reviews feature uses something called “sentiment analysis” to extract sentiments from a review and present them in displayed snippets.

Search Options also includes a timeline feature that allows users to visualize results over time. And there’s something called “Wonder Wheel,” which presents a visual representation of a query surrounded by potential refinements (hence “Wonder Wheel”). Click on a refinement and results update automatically. Search Options should be going live now, says Mayer.

A bit of geometry monomania here today at Google Searchology. First the Wonder Wheel and now “Google Squared,” a sort of spreadsheet visualization of search being cooked up in Google Labs. Unstructured data pulled directly from search and organized according to the whim of the user. A search for “small dogs” pulls up a lists of–wonder of wonders–small dogs organized by size, weight, breed, etc. Click on an individual cell and you can change its source. Pretty slick. Still a work in progress, though. It should be available later this month, Mayer says during the Q&A.

Another new feature: Rich Snippets. A search for “drooling dog BBQ” returns your standard Google results along with a list of metadata–average user reviews, for example. A search for a GPS system includes an additional pointer to a recent CNET review of the unit in question. Rich Snippets is open API, incidentally.

Last up, an Android star map app that uses GPS to create a star map “local to your place on earth” and to your position. Move the phone and the map adjusts to your view–essentially the app transforms the device into map overlay for the sky. And how does this tie into search? Search for “Gemini” and a sort of pointer appears onscreen directing you to its location in the sky. And with that, Mayer wraps things up.

Google: I Know What You're Thinking

John Paczkowski — Wed, 25 Mar 2009 17:32:12 +0000

“Google does have to be all things to all people. Our search does not need to be all things to all people.”

– Microsoft CEO Steve Ballmer, March 20, 2009

Looks like Microsoft (MSFT) just lost the sole advantage its CEO Steve Ballmer claimed it had over Google in search: the ability to experiment. The search sovereign made two changes to its search results pages Tuesday that it says will produce better results for complicated searches.

The first is a simple one: extending the length of site description for longer search queries. The second, however, is a bit more complex. Google (GOOG) is adding semantic search capabilities to its engine, an enhancement it claims will allow it to better understand the concepts and relationships associated with a query. “We’re deploying a new technology that can better understand associations and concepts related to your search, and one of its first applications lets us offer you even more useful related searches,” Ori Allon, from Google’s Search Quality Team, explained in a post to the company blog. “For example, if you search for [principles of physics], our algorithms understand that ‘angular momentum,’ ‘special relativity,’ ‘big bang’ and ‘quantum mechanic’ are related terms that could help you find what you need.”

Essentially, Google has tweaked its engine to detect when a particular search is related to other concepts that don’t necessarily contain the same words as a query. It’s given the engine a sort of conceptual understanding. And that may well keep users on Google longer because they’ll be able to find relevant information about their queries without having to click through to a second site. Certainly a significant improvement and one that shows that contrary to Steve Ballmer’s claims, Google continues to experiment and innovate.

Google: I Know What You're Thinking

John Paczkowski — Wed, 25 Mar 2009 17:32:12 +0000

“Google does have to be all things to all people. Our search does not need to be all things to all people.”

– Microsoft CEO Steve Ballmer, March 20, 2009

Google Tries to Get Smarter, More Useful

Jessica E. Vascellaro — Mon, 23 Mar 2009 20:27:45 +0000

Search engines are pretty good at finding Web pages closely related to exact terms users type in. They’ve had less success finding results that are conceptually related to what a user is looking for. For instance, a search for “abstract expressionism” may have missed certain results for the related artistic movement “surrealism.”

Google (GOOG) took a step toward cracking that nut Tuesday, releasing an upgrade to its technology that better understands associations and concepts related to search. The feature is based on technology called Orion that was developed by Ori Allon while he was a Ph.D. student in Australia. Google acquired it in 2006.

Mr. Allon, who now works at Google, said in an interview that the technology–-which seeks to understand the context around a query–is a key part of Google’s effort to provide more useful and trustworthy results beyond matching keywords with Web pages. Eventually, Google wants to be able to provide trustworthy answers to questions like “What is good pain medication after eye surgery,” he said.

It’s starting slow, by using it to suggest conceptually related searches at the bottom of the search result page, where it already highlights related searches the user might to try. So a search for “principles of physics” will recommend “physics angular momentum” as well.

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