Autonomy–which makes software that helps companies keep track of their mass of e-mails, phone calls and documents–said the acquisition consists of the digital archiving, e-discovery and online backup and recovery solutions of Iron Mountain Digital.

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Autonomy–which makes software that helps companies keep track of their mass of e-mails, phone calls and documents–said the acquisition consists of the digital archiving, e-discovery and online backup and recovery solutions of Iron Mountain Digital.

Read the rest of this post on the original site »

To some investors, the mood is reminiscent of 1995, when the initial public offering of Netscape set off the dot-com craze, leading to a technology bubble. That bubble popped in 2000, littering the tech field with failed companies and red ink.

— “In Silicon Valley, Investors Are Jockeying Like It’s 1999,” The Wall Street Journal, April 19, 2011

Depending on your outlook, the latest venture capital numbers are either further evidence of a recovery or froth growing around an expanding bubble.

Investment in U.S. venture-backed companies rose 35 percent in the first quarter, according to some new metrics from Dow Jones VentureSource. VCs doled out some $6.4 billion spread across 661 deals. That’s a 35 percent increase in investment year over year and a 5 percent increase in the number of deals done. Which is encouraging, particularly since the median sum of VC funding raised in the first quarter was $5 million, up from $4.4 million a year earlier and roughly on par with the 2009 median.

One caveat: this first quarter spike in funding size was driven largely by a few big money deals. Digital music outfit Beyond Oblivion, for example, pulled in $77 million in early-stage funds.

“Investment in consumer-focused Web companies is taking off but only for a select few,” says Dow Jones VentureWire’s Scott Austin. “A handful of large rounds are boosting the total amount of capital invested, but the median amount raised by consumer companies is a reasonable $4 million. That’s not far off from the first quarter of last year and is less than half of the median round sizes we saw in 2000 leading up to the implosion of the dot-com bubble.”

The headliner was VNXe, its first low-end offering, priced at less than $10,000 and aimed at small and medium businesses, a segment where Dell used to resell EMC equipment. In another bit of product-launch theater, EMC had a fourth-grade boy onstage to demonstrate that the box–which in this case was mounted on the back of another Mini Cooper–could be managed and configured from an iPad.

I caught up with EMC Chief Marketing Officer Jeremy Burton to talk about it and the 40 other products EMC launched yesterday.

NewEnterprise: So 41 products all at once?

Burton: I’ve never been in a situation where the release dates of so many products aligned. We realized we might as well do them all at the beginning of the year. Internally we called it the “mega-launch.”

What kind of opportunities do you see in that lower-end market. This was your first entry into that market.

We estimate maybe a $4 billion opportunity there. We don’t have much of it now, call it zero. We’ve never really built a product that’s tailor made for that market. And for a product like that, you can’t just build it–you have to build it in a way that the channel can make money on and create customer satisfaction. We’ve got several partners who will take this product to market. We’ve committed $20 million there to generate demand and bootstrap the whole thing.

Tell me about this go-to-market effort.

Traditionally EMC has been led by direct sales. We have a sales force and they call on the customer directly. With a products that sells for $9,000 or $10,000 you can’t afford to sell that in the same way. We have to create pull for the product with our partners. You have to get the customers calling to ask for the product. It’s a little bit of everything. There’s advertising, there’s direct campaigns. Anything to get the phones to ring. To get the reps at the events jazzed up we’ve leased a fleet of 21 Mini Coopers. We’ll be doing 108 partner events around the world.

So who do you see as a typical customer for this?

Before I worked for EMC I ran a software company that had about 700 or 800 people. We had about 20 guys in the IT department. We didn’t have a lot of specialists, we had a lot of generalists there. So I’d say any company that’s at less than $25 million in annual sales is a perfect candidate. They’re not going to have the high-end skills to deal with the complexity of the high-end arrays. But they’ll have VMWare, they’ll have exchange environments, they have file shares, and they’ll want to get going quickly.

It’s funny I should be talking to you today. I just published a Q&A with Ping Li of Accel Partners. We got to talking about the storage needs of companies moving to the cloud, particularly around their database environments, and he said the trend is toward running open-source things like Hadoop on commodity hardware. He said he’s not seeing a lot of EMC gear at Google or Facebook or many of the other Web companies. There’s a lot of people who are seeing both a trend and an opportunity around that. What do you see?

If you’re Google and you’ve got your own team of rocket scientists who can build your own file system and kernel and download modules from the Internet every day, you don’t need it. But if you’re Pfizer, you probably have a lot of rocket scientists, but you probably don’t want them working on reconfiguring kernels, you probably want them working on discovering new drugs. And so, picking the techiest of the tech companies and saying they don’t use our stuff, yeah those are companies with the smartest tech guys on the planet. The problem is they’re not in all the Fortune 500 companies in the world, and in fact I’d argue they’re in almost none of them.

So if you want to have that scaled-out commodity storage and you want to manage big data, and you don’t want to hire 1,000 rocket scientists to do it, we can sell it to you. It won’t be true commodity hardware, but then you won’t have to hire so many people to manage it. That to me is kind of the rub. EBay is a big name on the Web, and it uses our Object Storage infrastructure. Could they have built it themselves? Probably. But there’s a little intellectual snobbery inside these companies. They say, “We don’t want to buy your stuff because we’re smarter than you.” Those are the edge cases. If we just get the rest we’re happy.

Let’s talk about the broader picture in IT spending. What are you hearing from your largest customers about their intent to spend this year?

2010 was a decent year. Going into 2010 folks said they thought their spending would increase two to three percent. They probably ended up with three to four percent. Looking out into this year, people seem a little more optimistic. But even still I think it’s in the three to five percent range. One thing we saw in 2009 is that folks didn’t buy much storage capacity last year and instead tried to use what they had. Going into 2010 there were signs of recovery and people started to spend again, and we see that continuing into 2011. One reason for the Isilon acquisition is that we do see a trend toward spending into different areas of the business.

At another level I think I agree with you and with Ping that certain companies will move to Hadoop for a certain class of application and we’ve got a pretty strong relationship between our Greenplum division and Hadoop. What a lot of people want to do is analyze traditional enterprise data in conjunction with something else. What Greenplum has tried to do is bridge the gap between Hadoop and the more traditional storage infrastructure. Hadoop is not going away, and its something that we fully intend to work with.

The Walldorf, Germany-based company, which competes with Microsoft Corp. and Oracle Corp., said third-quarter net profit rose to €500 million ($692.6 million) from €447 million a year earlier.

The results missed analysts’ expectations of €560 million due to an increased provision for its upcoming law suit with Oracle. Costs related to its $5.8 billion acquisition of Sybase Inc. that completed in July also weighed on profit. Revenue increased 20% to €3 billion from €2.51 billion.

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In both cases, that lurch on the right hand side shows you how unpleasant things got post-Lehman, and the subsequent recovery shows that we’re getting close to where we were back in 2008. So that’s good.

The only problem with the data is that it only goes through this summer, and we’re just about to get a new set of Q3 numbers, starting with Google’s (GOOG) on Thursday. So best to check back then to get an updated sense of how things really stand.

The recovery in consumer spending and auto sales is evidently giving Sirius (SIRI) quite a lift, enough for it to boost projected new subscriptions to approximately 750,000 from about 500,000, its revenue to $2.75 billion and its profit to $575 million.

Quite a change from last year, when the company seemed headed toward almost certain bankruptcy. Its shares are up some 75 percent this year.

Yesterday Armstrong sent CFO Artie Minson out to Barclays Capital to repeat the message. It got through. Here’s analyst Douglas Anmuth noting that ad sales will be underwhelming for a while, even though the Web ad business is bouncing back:

Management was quick to point out that AOL’s overall display pipeline for the back half remains soft. Management indicated that it has booked roughly 60% as much inventory for the back half as it had booked at the same time last year–and that was in a softer overall macro environment.

On the plus side, pricing for the ads AOL (AOL) does sell are improving, which it can attribute both to the overall recovery and AOL’s focus on selling high-end inventory while dumping its low-cost stuff. Still, Anmuth says, “We do not expect the uptick in CPMs to offset the removal of low quality ads and the sales force dislocation in the near term.”

So lower those expectations, okay?

But not too much!

AOL also suggests that its new search pact, which will replace the one with Google (GOOG) that expires in December, will be a big deal. According to Anmuth, “Management is approaching the renewal as a broad strategic partnership for the company that has many potential outcomes. AOL mentioned mapping and local could be part of the deal and we wouldn’t be surprised if a display ad partnership was also included.”

Barclays thinks Armstrong’s recent hire of ad tech executive Alex Gounares from Microsoft (MSFT) means the deal could end up tipping to Redmond. Stay tuned.

And so this morning, the handset maker announced another sweeping overhaul of its management structure, its second reorganization in less than a year. This time around, Nokia (NOK) is dividing its Devices and Services business into three units.

Mobile Solutions (smartphones and services), will be headed by Anssi Vanjoki; Mobile Phones (low-end handsets) by Mary McDowell and Markets (sales, marketing and distribution) by Niklas Savander. Solutions will handle smartphones and services; Mobile will oversee Nokia’s low-end phones and Markets will take care of sales and marketing, supply chains and sourcing. (Click on chart below to expand.)

Another significant rejiggering of Nokia’s management. Interestingly, there appears to be no place in it for former Chief Financial Officer Rick Simonson, who was tapped to run the company’s mobile phone business as part of its last restructuring seven months ago. Remember, it was Simonson who heralded Nokia’s recovery in smartphones.

“Yes, we have lost ground in the smartphone space over the past 18 months, but the decline has stopped and stablised in the second and third quarters of 2009,” he told India’s Economic Times in January.

“The New Year will see [our] recovery in smartphones….By 2011, our efforts will start producing results, as we will be at par with Apple and RIM in smartphones,” Simonson added. “Not only [will] we draw level with them, we will also win the war because, in addition to e-mail, we will be adding content, chat, music, entertainment and several other features, which will soon become very critical for success of any company in this space.”

Pulling that off evidently wasn’t quite so easy as Simonson or Nokia expected.

In any event, Nokia believes it has things dialed in now. “In addition to extending our leadership in mobile phones, we are decisively moving to respond faster to growth opportunities we expect in smartphones and mobile computers,” CEO Olli-Pekka Kallasvuo said in a statement. “Nokia’s new organisational structure is designed to speed up execution and accelerate innovation.”

In theory. But in practice? Well, we’ll have to see how things play out. The company’s last organizational shakeup was intended to do exactly the same thing, and as far as I can tell, didn’t substantially improve Nokia’s position in anything.

BoomTown started off at what has become a magically bottomless trough of posts. Kara reported on yet another exec, this time Angela Courtin, SVP of Marketing, Entertainment and Content, scurrying down the gangway of the SS MySpace. Kara mused that while posts on executive departures from My Space and Yahoo have been plentiful lately, they can’t keep coming forever. Midweek, she got on a plane to Beantown and caught up with Walt Mossberg at MIT’s new Media Lab facility. The video she came back with features foldable cars, cities of the future, awesome electro-opera gloves and the weirdest glowing-eyed owl-thing Weekend Update has ever laid eyes on. Seriously: Worth a watch. Toward the end of the week, Kara got deep in a piece she wrote for the Washington Post, where she worked back when newspapers were king. She wrote about what she thought the world would benefit from being rid of, namely physical keyboards and computer mice. Full disclosure: She wrote the post on her Apple (AAPL) iPad.

Digital Daily was a posting machine this week, starting early with some bad news for Steve Ballmer and the Internet Explorer fanboys out there (theoretically there should be some right?). It looks like IE’s dominating market share dropped seven percent, down to 59 percent since this time last year, under pressure from other browsers, according to a Net Applications study. Midweek, John moved on to a post about recent speculation that low AT&T (T) data plan prices for the iPad 3G may indicate an extension of the exclusive deal between AT&T and Apple. John finished things off with a nice post that brings some perspective to all the Apple ogling by the press. The comScore (SCOR) report names Samsung as the top mobile device maker in the U.S. market, even if an analysis of media coverage volume might suggest otherwise.

Over at MediaMemo, Peter brought us a post early in the week on Google’s investment in Invidi, a start-up working on “addressable ads” in the TV space. We aren’t sure if Google (GOOG) is looking more Appley or if Apple is looking more Googley these days. From the light-at-the-end-of-the-tunnel files, Peter posted that Time Inc. saw gains in both ad and subscription dollars last quarter. The question remains: Will it be a V- or a W-shaped recovery? At least it’s not just a backslash. Delivering a much anticipated piece of news, Peter posted that it appears Facebook will finally start rolling out location services sometime in the next several weeks. Advertising Age reported that McDonald’s (MCD), the international corporate face of individualized services, will be a partner for the launch. It makes a lot of sense if you think about it. At Mickey D’s, you can have it any way you want, as long as it’s the McDonalds way.

Personal Technology this week was a little more of a conceptual piece than a gadget review, but Walt always mixes it up at the right time. He devoted his entire column to demystifying some of the concepts around cloud computing and explains what it may mean for Joe and Jane user. Walt seems keen on the change with allows flexibility and interoperation among devices, and his explanation brings it down to ground level. Katie rounded us out with a hands-on review of Microsoft’s new Kin One, a roundish little smartphone designed to be a social platform as much as a phone. She liked the design and execution in most areas, though felt that the polish on this first Microsoft smartphone reincarnation was a little lacking. Best of all? Seems like Kin’s constant wireless upload of all content to the cloud might be the feature to beat.

Thanks for tuning in, logging on and tweeting out with our new Meebo bar. We’re in the final countdown to the D8 conference now, and we’re ready to level up to full-tilt awesome. Stay tuned!

Remember Rupert Murdoch’s plan to convince other media companies to join him behind a pay wall and offer their stuff only via subscription? It’s still around, in some form. We’ll hear more about it in “three to four weeks” Murdoch said today during News Corp.’s earnings call.

Just what Murdoch has in store isn’t entirely clear. Last year, he sent digital media head Jon Miller out to convince rival newspaper publishers to join News Corp.’s Wall Street Journal in the pay-to-play ring. But it appears that Murdoch may now be thinking of a subscription offering that extends beyond newspapers and into entertainment.

I’ve asked News Corp. if it has anything to add to Murdoch’s hazy comments this afternoon, but I’m not optimistic. I do think we’ll hear more about this before the press conference Murdoch plans for later this month, though.

Meanwhile, here’s some background on “Project Alesia,” the subscription/pay wall plan that may or may not be what Murdoch was talking about today.

Earlier

We’ve seen the numbers, so we know that News Corp. had a very nice quarter. Now let’s hear what Rupert Murdoch has to say about his company’s performance. I’m also interested to see how much ire Murdoch expresses for Google (GOOG) and how much ardor he has for Apple’s (AAPL) iPad, among other digital topics.

The following is a live paraphrase that includes my editorial notes; I’ll note direct quotes where appropriate.

Liveblog

Dave DeVoe going over numbers from the release.

Earnings include one-time items of three cents per share. [Should net that out of earlier reports when comparing to Wall Street expectations.]

Newspapers: Operating income up nearly five times. Higher advertising across nearly all markets. Forex helps, too.

“Other” (includes Myspace): Lower search and ad revenue, but costs are down.

Some balance-sheet talk: We’ve got a lot of cash on the books, and we know it. Some of it will get paid out to Jim Cameron and other participants in “Avatar.” But we’re working on ways to deploy the extra cash. We’ll get back to you on it by the next quarter.

Guidance: We’ve done better than anticipated in lots of our business for the last nine months, but our next quarter will be down. That’s because we expect the film business to be down $100 million, even including “Avatar” DVD releases (reason: We had very good quarter last year). Also, Fox Broadcast will be down. So we’re only bumping up guidance a bit.

Rupert Murdoch:

Exceptional results, “pretty much across the board.”

We’re psyched for five reasons:

1. Content. Really important, and we’re really good at it. Shout-outs for “Avatar,” Fox News Channel, newspapers, TV shows. “Fortune favors the bold,” etc. “We have the no. 1 national newspaper on all three continents.”

2. Technology: We’re good at that, too. The Apple iPad, “which I believe will lead a revolution in content consumption.” First month, 64,000 active users for The Wall Street Journal iPad app. “Unlike the Kindle, we keep 100 percent of the subscriber revenue from the iPad.” Innovative subscription model coming to deliver content to people whenever they want it (paging Jon Miller, James Murdoch).

[Apologies, lost the thread here. But Rupert is gung-ho about TV and other core businesses]

Q&A

Is there concern that you can’t keep growth in the next fiscal year? Can you?

Murdoch: Absolutely! Hedges on numbers. “We have a great slate of films coming up, but we don’t have an ‘Avatar’ in there.” If ad growth keeps up, “I think we can be very confident.”

COO Chase Carey: I agree! The ad market is actually picking up. Sports has been a little slower than other ad markets, and they’re now picking up. “Looks great.”

Question for Devoe: Please talk more about that big cash pile.

Murdoch: I can answer that! “We’re well aware that our balance sheet…is inefficient at the moment.” Increased dividends, stock buy backs, investing in our businesses, possibility of “opportunistic investments,” which we’ve been “nervous” about doing in past year but now we have some things we’re looking at. Cue M&A klaxons!

More color on the TV biz, please.

Carey: Strong recovery in most categories. Not just auto and telecom. Financial, insurance, all sorts of stuff. “It’s pretty broad.”

Murdoch: “We’re seeing pretty optimistic and expanded advertising budgets from the big advertisers.” Not sure when that money is coming, but would guess Q2, when they’re launching new cars. “There’s a lot of money out there on the boards.” And as free over-the-air audiences shrink–and ours is shrinking less–that money is finding its way to cable. So any show that can show any sort of advertising can attract money. “It feels good; that’s all I’m saying.”

Please talk about new retrans/carriage negotiations.

Carey: Fox News deals starting to come up. Will be staggered over a couple of years. “I think the Fox News network…is certainly–maybe with ESPN–second to none.” So pay up, cable guys! (And customers!)

Carey mounts a long defense of Sky Italia. I’ll refrain from transcribing.

Similarly, you’re probably not interested to read what he has to say about satellite TV in Europe.

Netflix is killing it. What does that mean for you guys? Good news because it says good thing about your library? Or maybe an opportunity for you to do more with your library?

Carey: Noncommittal answer. But: “There is a question whether the Netflix model is getting us fair value for our product.” So we’ll keep looking at windowing content and whether we’re getting paid enough for our stuff. “I think it’s a focus.”

Please talk about Fox Audience Network plans and MySpace/Google plans.

Carey: Google plan doesn’t affect FAN. Not going to comment on “rumors.” “I don’t think that’s productive.” But! The key is to build enough traffic to attract enough dollars. FAN has a done a good job.

Let me try to re-ask the same question regarding restructuring or spinoff of FAN.

Murdoch: Praises MySpace. In the past few years “we made some big mistakes,” but we have fine new management now. “Early indications, and they’re only indications, are that we’re getting new visitors, and they’re staying longer,” so ad dollars will follow.

[Sorry missed this question, but I believe it is about guidance.] Murdoch is not talking up the film slate, but indicates that he’s spending a bunch of money on movies, and the company will take hits on those initially before they see dollars come back.

Carey: The film business fluctuates from quarter to quarter. But our team is great, and we have great movies coming. “We couldn’t be more excited and positive about the film business.”

Murdoch: Our movie investors praise us.

Any film properties you’re interested in?

Murdoch: “We’d look if something real came onto the market,” but we don’t put MGM in that category, at least not at the price it’s asking. We prefer to invest in our own stuff, and that goes for TV shows as well. “Glee” is a big hit and we own it. Same goes for “Modern Family.”

More info on digital, please. What about MySpace profitability? What happens when Google deal ends w/MySpace?

Carey: “Clearly, MySpace is a work in progress.” [This is a familiar refrain.] But promising signs. Talking up “Glee” tryouts. Improved the platform, etc. By the end of 2010, we want a foundation installed that we can go forward with, and we want to have a cash positive business going into 2011. “The trends are better but they’re not what they need to be….A number of the key metrics are not going up, but they’re better than what they were.”

Are you getting retrans fees for Fox broadcast now?

Not yet.

Why isn’t TV station top-line growth showing up on overall segment results?

Has to do with way we present results. [Confusing and confused discussion about bookkeeping ensues.]

[Still going!]

Press Q&A! (Usually much more entertaining)

Question about Australian news story about…mining?

Murdoch: “Nothing to do with media.”

Same guy has a question about Australian football (?). Rupert professes shock about whatever the scandal was.

Eighty-one advertisers bailed on Glenn Beck. Now it seems as if the only ads are in-house and for gold. When will you stop subsidizing the show and require it to carry its own weight?

Rupert says the 81 number is wrong and that Glenn Beck show doing great.

More color on that subscription model, please.

Rupert: Press conference coming in three-to-four weeks.

But: We’re getting about $4 a week for The Wall Street Journal… [voice trails off].

So this would be about entertainment as well?

Oh, you bet. Everyone’s been talking about negotiating with Apple.

[Both Rupert and FT's Ken Li seem confused. Me too.]

How much did you invest in Wall Street Journal New York edition?

Rupert. “Happy to tell you. We invested nothing.” Maybe $1 million in it. But ti already covers its costs. The notion that we’re spending $30 million on it is “BS.”

[Sorry, missed next two questions.]

Soon to-be Murdoch employee Claire Atkinson has questions about TV ads and online video ads.

Murdoch: WSJ.com is up 11 percent. $100 million in digital revenue at Dow Jones. At Fox news.com, “absolutely thriving.” [If he answered TV question, I didn't hear it, but I think he passed on that one.]

That’s all, folks.

Yahoo will announce its first-quarter earnings after the markets close today and have a call with Wall Street analysts at 2 pm PT.

BoomTown will be liveblogging the proceedings, of course.

Until then, here are preview reports about Yahoo (YHOO) from a pair of sharp analysts: Imran Khan of J.P. Morgan (JPM) and Mark Mahaney of Citigroup (C).

Overall take: Recovery mode for the Internet giant, due to an upswing in display advertising online, which has been a good thing for the stock. It has risen smartly to prices above $18 in recent weeks, closing yesterday at $18.39.

Khan:

Yahoo Inc: 1Q’10 Earnings Preview: Expect Display Ad Recovery to Continue

Overweight

We are modeling Yahoo! 1Q revenue to be flat on a Y/Y basis (down 8% Q/Q) to $1.16B, slightly below consensus of $1.17B. We expect Yahoo! to achieve 1Q pro forma EPS of $0.14 vs. consensus of $0.13. Given macro-economic improvements as well as company specific changes, we feel that there may be upside to guidance of gross revenue of $1.58B to $1.68B and our estimate of $1.63B.

Display advertising should recover. We are modeling 7% Y/Y growth (down 21% Q/Q) on O&O display revenue. This would be an acceleration from last quarter’s down 1% Y/Y performance. We feel confident in our estimate and think there could potentially be upside as the ad environment improved throughout the quarter and we see guaranteed inventory showing the largest improvement. We note that page views on the homepage, Yahoo! sports, and Yahoo! finance were up 5% Y/Y, 24% Y/Y, and 2% Y/Y during the quarter, according to comScore data.

Search market share shows signs of stabilization. However, despite this positive data point in March, we continue to expect 1Q search revenue growth to underperform Google due to modest market share loss earlier in the quarter, and as advertisers are moving ad dollars from the Yahoo! Platform in anticipation of the migration to the Microsoft Platform. We are modeling 1Q O&O search revenue to decline 10% Y/Y (3% sequentially), as comScore data suggests US queries declined 10% Y/Y.

Margins should continue to improve. We feel good about our EBITDA estimate of $370M, roughly in-line with consensus of $372M. Our EBITDA margin est. of 32.1% implies a 370 bp Y/Y decline as we expect increased marketing spend. However, we think there may be upside to this number.

Key things to look for on the call. We are hoping to attain more insight into Microsoft synergies, the ramp-down of search related expenditures and the outlook on search RPS.

Reiterating our OW rating. Yahoo! trades at 6x our F’10 EV/EBITDA vs. the large cap peer group ave. of 12x. We think this discount is unjustified and reiterate our OW rating and $21 price target.

Mahaney:

From: “Mahaney, Mark “
Date: Mon, 19 Apr 2010 11:18:10 -0400
To: Undisclosed recipients
Subject: Flash: YHOO: YHOO Q1:10 “Cheat Sheet”

Yahoo! is expected to report Q1 earnings on April 20th, after the close. For the March quarter, we are looking for Gross Revenue of $1.63B, Net Revenue of $1.16B, EBIT of $100MM and GAAP EPS of $0.09 vs. consensus estimates of Gross Revenue of approximately $1.63B, Net Revenue of $1.17B, EBIT of $108MM, and GAAP EPS of $0.09. Based on intra-quarter channel checks and our model sensitivity work, we believe Street Q1 estimates are reasonable, with no material signs of upwards or downwards variance. We do note that YHOO will give additional detail on one-time payments and cost savings from the YHOO-MSFT Search deal, which received regulatory approval in Q1.

Read-Thru From Google’s Q1 Results–We believe GOOG’s Q1 results provided a modestly positive read-thru for YHOO’s Q1 EPS results. Google’s U.S. revenue growth showed Y/Y acceleration (even after we adjusted for its Nexus One sales), and Google noted that it saw strength in every vertical, including Retail, Travel, Entertainment, Finance and CPG. Google also noted that Q1 showed a resurgence among large advertisers. We note that Yahoo!’s business is heavily weighted towards the U.S., and that its key verticals include Finance, CPG, Autos, and Entertainment. Finally, YHOO has a strong focus on large, branded advertisers, so we believe Google’s Q1 results should provide a positive outlook for YHOO Q1.

Our YHOO Q1 “Cheat Sheet” [see embedded below]–On page 2, we provide a one-page grid of what we would view as Positive, Neutral & Negative results for YHOO on Key Q1 P&L Items, Key Q1 Underlying Metrics, and Q2 Guidance. This Cheat Sheet will hopefully provide a guide to interpreting YHOO’s results.

We reiterate our Buy & $22 PT–Our Long Thesis: 1) YHOO will participate in an Ad recovery that is already showing real traction on the ‘Net; 2) New management focus significantly increases odds of sustained operating margin expansion; 3) YHOO has highly attractive Asian Internet portfolio & 4) @ 6X ’10 EV/EBITDA, YHOO shares don’t fully reflect 1, 2, 3… We view YHOO as the Large Cap Internet Turnaround/Value Play.

Link to our full note: https://www.citigroupgeo.com/pdf/SNA54039.pdf

SNA54039

The latest evidence for the rebound came Thursday, when Internet giant Google Inc. (GOOG) posted a 37 percent profit jump for the first quarter and chip maker Advanced Micro Devices Inc. (AMD) reported a 34 percent revenue increase to record levels. The results follow the strong showing of bellwether Intel Corp., (INTC) which Tuesday announced quarterly profit that nearly quadrupled on a 44 percent jump in sales.

The trio of results kicks off what is likely to be a strong earnings streak as tech spending by companies and consumers picks up. Next week, Apple Inc. (AAPL), Amazon.com Inc. (AMZN) and Microsoft Corp. (MSFT), among others, are slated to report quarterly results. Tech-research firm ISI Group projects that overall revenues from such companies will rise more than 10 percent for the first quarter, compared with a 16 percent decline a year earlier. Meanwhile, Standard & Poor’s forecasts a 79 percent increase in tech earnings for the quarter from year-ago levels.

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