The new executive would report to the board and could have broad powers to manage Kodak’s finances and operations.

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Ryan called AllThingsD this morning to clear the air after a report in BetaBeat painted a fairly grim picture of the situation.

BetaBeat reported this morning that as many as 170 employees would be laid off today; that Gilt Taste, the company’s high-end grocery site, was likely to be closed down; and that Jetsetter, its travel operations, was likely to be merged with Gilt City, its daily deal division.

On pretty much all accounts, Ryan declared not guilty.

“We are not closing down any businesses. We are not closing down Gilt Taste, and we aren’t merging Gilt City and Jetsetter,” he said.

Additionally, another new division, Park & Bond, which sells full-priced men’s clothing, is also doing well. “In its fifth month of business, Park & Bond did more revenue than any other business in its fifth month,” Ryan added.

The one grain of truth in all of it, he said, is that over the next couple of months, he expects to selectively trim staff by roughly 50 employees.

But for emphasis, he added, the company will still end up having more employees by the end of March than it does now.

“It’s pretty minimal in the scheme of having 900 employees,” he said. “Not only will we do that [have cutbacks], but we will continue to do that. What Gilt needs to be, and is doing, is to create a fantastic consumer experience while running an efficient company.”

He said the company achieved its goal of generating $500 million in June and now is setting its sights on transitioning the business from a money-losing organization to cash-flow break even this year.

He also said that Gilt Groupe, which raised $138 million in capital last May, is on track for an IPO, perhaps as early as the fourth quarter, but more likely in 2013.

“The timing feels about right, and we are on a steady progression,” said Ryan, who declined to give revenue estimates for this year because the company is in the sensitive lead-up to a public offering.

Ryan named two divisions that may see cuts over the next couple of months: Gilt Taste and Gilt City.

In October, Gilt City purchased BuyWithMe, and although it hired only 20-25 of the deal provider’s 190 employees, Ryan said they probably don’t need that many going forward now that the integration has been completed.

Additionally, he said there are some inefficiencies within Gilt Taste.

Ryan characterized the site as “doing great,” but said it will need fewer staffers now that it is up and running. At first, it needed to negotiate deals with dozens of vendors and shoot photos of the more than 1,000 products on the site.

Now that they’ve hit a baseline of items, they’ll probably add only a couple hundred new products a year, reducing the need for so much staff.

“There’s much less work to do there,” Ryan said. “With flash sales, you have to do that process every week, but in the full-priced business, there’s greater start-up costs. That’s part of the business.”

In particular, BetaBeat said Park & Bond President John Auerbach was likely to leave the company.

Ryan said there’s always the chance one of the top 15 executives could leave, whether it was their decision or the company’s, but that Auerbach is still working there as of now.

Today, Cisco finally laid out a cohesive strategy to become a significant player in the cloud business. It announced an offering called CloudVerse that combines three big elements — its Unified Data Center, Cloud Intelligent Network and Cloud Applications — into a big portfolio aimed at companies building out their data centers.

The idea is basically this: If you want to build a cloud, either to resell cloud services of some kind or for your company’s own internal operations, Cisco wants to talk to you. Under the CloudVerse tent are a bunch of offerings including computing, networking, collaboration and software for automating and managing it all.

Cisco named a handful of companies who are already CloudVerse customers, and a few will catch your eye, because they’re big. One is Terremark, the Web-hosting and cloud-services outfit that telecom giant Verizon acquired earlier this year. Others include Telecom Italia, Telefonica Spain and Fujitsu.

Naturally, Cisco is hoping to use its position as the supplier of choice for networking gear as a springboard into selling more stuff inside the data center, and it already has key relationships with many a corporate CIO. A key part of its go-to-market strategy will be convincing those CIOs that it has something unique to offer.

Here’s one such thing: The Network Positioning System and Cloud-to-Cloud connected. Imagine you have a sprawling set of far-flung data centers around the globe. When one center gets starts to get close to reaching its capacity load — maybe it’s Cyber Monday or something — Cisco’s NPS technology allows the routers in one data center to start automatically looking around for capacity elsewhere, to keep things humming along.

There’s a lot more detail to it, but it’s worth pointing out that, as a percentage of Cisco’s business, the cloud business isn’t huge. On an earnings conference call with analysts last month, CEO John Chambers said that the Unified Computing System that forms the backbone of its server business had recorded 116 percent revenue growth year over year; even with that, it’s on run-rate to being a $1 billion annualized business. If it hits that mark in Cisco’s fiscal year 2012, which ends in July, it will amount to about 2 percent of estimated annual sales.

But Cisco expects the cloud business opportunity to grow like crazy. Last week, it issued something called the Cisco Cloud Index, which estimates that more than half of all computing workloads will be running in data centers by 2014, and that the daily traffic conducted on cloud services of various types will amount to 1.6 zettabytes per year. My math may be off a bit, but compare it to the scale of your average hard drive — a zettabyte amounts to a billion terabytes, or a trillion gigabytes. Cisco describes it as enough data to amount to four days of high-quality video streaming for every person on Earth.

It’s a serious opportunity, no doubt. The question is whether or not Cisco can exploit it in a manner that moves the needle. Doing so is an important part of the strategy that Chambers set forth as part of the epic restructuring that has been going on at Cisco since last year. Investors seem to like what they see, as Cisco shares are trading at $18.80 today, which is up 41 percent from a recent 52-week low. As turnarounds go, it does look like progress.

Nokia Siemens, a joint venture between Finland’s Nokia Corp. and Germany’s Siemens AG, had 74,000 employees on Nov. 1.

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The move to hire restructuring lawyers signals Kodak is intensifying efforts to ensure it has the financial wherewithal to complete a difficult strategic and financial revamp. Shares in the 131-year-old company have lost around a third of their value this week following Kodak’s disclosure that it pulled $160 million from a credit line.

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The company, which has posted three straight quarters of lower profit on a long margin slide, has been broadly restructuring into what Chairman and Chief Executive John Chambers has called a “leaner and more focused” operation. That included plans announced last month to lay off 9 percent of its work force, as well as a review of its product portfolio for places to cut back. The changes build on similar strokes earlier this year, such as an internal reorganization in May to simplify structure and the sale of the Flip video camera in April.

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The number of jobs cut will be 6,500, of which 2,100 are leaving via the voluntary retirement program. The company also says it plans to eliminate about 15 percent of executives at the vice president level and above. The reduction amounts to about 9 percent of Cisco’s total work force.

Cisco will take a one-time $1.3 billion charge to cover the costs of the restructuring, of which $750 million will be recognized during Q4.

On top of the outright job cuts, Cisco says it has agreed to sell a set-top box manufacturing facility in Juarez, Mexico, to Foxconn Technology, the Taiwanese contract manufacturing giant. The sale will include the transfer of about 5,000 employees from Cisco’s payroll to Foxconn’s, effective the first quarter of Cisco’s fiscal year 2012.

The combined number of jobs leaving Cisco’s payroll through retirement, transfer to Foxconn or outright firing is 11,500. That number amounts to about 14 percent of Cisco’s total headcount of 78,000 and change. If the plan that CEO John Chambers announced during the company’s most recent earnings conference call holds true to the plan and Cisco cuts $1 billion from its annual operating costs, then the average savings works out to about $87,000 per job.

The announcement is below.

Cisco Announces Additional Detail on Comprehensive Action Plan

SAN JOSE, CA–(Marketwire – 07/18/11) – Cisco (NASDAQ:CSCO – News) today announced additional details of its comprehensive action plan to simplify the organization, refine operations, and reduce annual operating expenses.

Workforce Reduction of Approximately 6,500 Employees
As part of the company’s $1 billion annual operating expense reduction, Cisco will reduce its global workforce across all functions by approximately 6,500 employees, which includes approximately 2,100 employees who elected to participate in a voluntary early retirement program. This also includes a reduction totaling approximately 15 percent of vice president level and above employees. This represents a reduction of approximately 9 percent of Cisco’s regular full-time workforce. All affected employees will receive severance pay and outplacement assistance.

Impacted employees in the United States, Canada and select countries will be notified during the first week of August. The remainder of the global workforce reductions are expected to occur at a later date in compliance with local laws and regulations.

In connection with this plan, Cisco estimates that it will recognize total pre-tax restructuring charges to its GAAP financial results in an amount not expected to exceed $1.3 billion over several quarters, consisting of severance and other one-time termination benefits. Substantially all of these charges are cash-based. Cisco expects that approximately $750 million of these charges will be recognized during the fourth quarter of fiscal 2011, including approximately $500 million relating to the voluntary early retirement program. The remaining balance of the charges is expected to be recognized during fiscal 2012.

In connection with Cisco’s continued implementation of its comprehensive action plan to simplify the organization, refine operations, and reduce annual operating expenses, it is anticipated that Cisco will recognize other restructuring charges to its GAAP financial results. These additional charges will be disclosed in earnings conference calls and in Securities and Exchange Commission filings.

Manufacturing Facility Sale to Include Transfer of Approximately 5,000 Employees
Cisco also announced earlier today an agreement for sale of its set-top box manufacturing facility in Juarez, Mexico, to Foxconn Technology Group. The approximately 5,000 people employed at the facility will become employees of Foxconn in the first quarter of fiscal 2012 and no job losses are expected as a result of the sale. This figure is in addition to the approximately 6,500 employees impacted by the reduction in workforce and the voluntary early retirement program. While this action is expected to create improvements to Cisco’s long term cost structure, the strategic intent for this action is to simplify business operations. The labor cost associated with these employees has been categorized as manufacturing costs.

Forward-Looking Statements
This press release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the timing of reduction in force, the amount of related charges, Cisco’s planned annual operating expense reduction and Cisco’s sale of its set-top box manufacturing facility. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: Cisco’s ability to implement the workforce reductions in various geographies; possible changes in the size and components of the expected costs and charges associated with the plan; risks associated with Cisco’s ability to achieve planned reductions; and Cisco’s ability to execute the sale of its set-top box manufacturing facility. For information regarding other factors that could cause Cisco’s results to vary from expectations, please see the “Risk Factors” section of Cisco’s filings with the Securities and Exchange Commission, including its most recent quarterly report on Form 10-Q. Cisco undertakes no obligation to revise or update publicly any forward-looking statements.

About Cisco
Cisco (NASDAQ:CSCO – News) is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Information about Cisco can be found at http://www.cisco.com. For ongoing news, please go to http://newsroom.cisco.com.

A workforce reduction of that size, which Marshall expects will take place sometime in August, would reduce Cisco’s operating expenses by $1 billion per year. This would in turn add eight percent to Cisco’s expected per-share earnings in the 2012 calendar year.

Cisco has been talking about this pending reduction for a few months now. The number of people who will be fired will be determined by the number who qualify for and seek an early retirement package: Marshall expects about 1,000 to take a buyout and 4,000 to be fired. After the cuts, Cisco’s headcount would be 73,400.

The cuts, Marshall says, are the third in a series of necessary steps to get Cisco competitive again. The first two were reorganizing Cisco’s consumer business — including the infamous and unceremonious killing of the Flip videocamera line — and a corporate-wide reorganization announcement in May.

Still, there’s one other big step that Cisco needs to take, Marshall argues: It must formally lower its long-term financial targets and set more realistic growth projections. Cisco has generally projected annual revenue growth in the range of 12 to 17 percent. It has averaged 11 percent over five calendar years. Cisco should level with investors, Marshall says, and tell them to expect revenue growth of about 10 percent a year plus or minus three points, and also lower its projected operating margins from the 28-31 percent range to about 25 percent plus or minus three points.

Once the cuts are done and expectations lowered — which he expects in September — Marshall says he’d be “more constructive” on Cisco shares. Cisco fell 14 cents on Friday, closing at $15.74. The shares have fallen more than 22 percent so far this year.

One more thing: Cisco is holding its “Cisco Live” event in Las Vegas this week, and CEO John Chambers is giving a keynote tomorrow. He’s likely to focus on new products and initiatives for the coming year, rather than dwell on what a tough year it’s been so far, and maybe give investors something new to think about.

Having closed on Friday at $14.97, the price of Cisco shares is nearing its lowest point in about five years (Cisco hit $14.18 in March of 2009). CEO John Chambers has blamed toughening competition in its main networking business, lower profit margins resulting from a product transition and a drop in government spending for many of its troubles. A significant restructuring is coming some time before the end of the summer that will combine offering retirement packages to eligible employees and laying off others. It’s also possible that other parts of Cisco’s business may be sold, spun off or shut down.

Chambers’ plan is to trim Cisco’s operating costs by $1 billion a year. Meanwhile, the video business that Chambers constantly talks about is starting to get interesting and competitive, and other products, like its blade servers, are starting to show some traction. And by the way, the Internet isn’t exactly getting smaller, you know.

Whatever it is, it better happen soon, Wu says, because investors are getting impatient. “In sum, we believe Cisco is fixable and not structurally flawed, but admit we need to see more dramatic steps be taken,” he writes.

While some investors have been calling for Chambers to step down, Wu isn’t with them. “From an investor standpoint, most believe that Cisco will be very difficult to turn around and that a management change is needed. While we do not believe that John Chambers needs to go, as we believe he has proven to be one of the greatest managers and visionaries of the modern era, we do believe he needs to make bigger moves than what has been done so far.” One suggestion? Boost the dividend to 3 percent from its current 1.6 percent.

Also? Cisco may have to take some “bitter medicine” on the price of its switches and other networking gear. Many Cisco customers and its channel resellers told Wu that Cisco’s prices are too high when compared to competitors, and that it may be pricing itself out of the market. “Many believe that Cisco still deserves a premium, but 50 to 100 percent seems a bit excessive,” he writes. “Because of this, we believe Cisco will likely need to take the bitter medicine of lower gross margin for longer-term good.” He cut his assumptions on Cisco’s gross margin accordingly from about 62 percent to a little higher than 55 percent.

That said, most of the the bad news at Cisco is priced in, making its depressed price a fair buying opportunity, he says. “We believe the Cisco story is getting better, and we’d rather be a buyer at these depressed levels than wait for obvious evidence of improvement. By then it may be too late.”

Wu still rates Cisco shares a buy, with a price target of $25, which is a drop from his previous target of $29. He also lowered his fiscal year 2012 estimates on Cisco’s revenue and per-share earnings to $45.9 billion and $1.50 per share, from $46.5 billion and $1.80 a share. The new target price represents a multiple of 12.5 times Cisco’s projected calendar year earnings of $1.62.

Wu also thinks Cisco will start setting more realistic expectations going forward, and back away from its projecting a long-term annual growth rate of 12 to 17 percent, which, he says, “no one believed anyway.”

Given all that, Cisco’s close to turning the corner, he says, though it won’t happen right away. “We realize that Cisco may take a few quarters in fixing itself, but we believe management will make the right moves in restoring investor creditability.”

(Image borrowed from the 1938 Warner Bros. classic animated short, Porky In Wackyland.)

Back in April of 2009, like all the rest of the parts of the Chinese Internet giant Alibaba Group, its Alipay unit was listed this way on its Web site: “Alipay is wholly owned by Alibaba Group.”

And right now, describing the online payments platform? (my italics): “Alipay is an affiliate of Alibaba Group.”

Memo to Yahoo CEO Carol Bartz: You might have noticed that critical change in Alipay’s corporate status, which happened last August, given the company you lead owns 43 percent of the Alibaba Group.

More to the point, Alipay accounted for $1.7 billion of Yahoo’s valuation.

Not surprisingly, Yahoo shares are down more than six percent in after-hours trading, likely in reaction to an unusual statement by Yahoo yesterday, in which the company said it had no idea until March 31 that Alibaba CEO Jack Ma had transferred ownership of the Alipay unit to a separate entity.

Sources said that apparently happened in a letter from Alibaba to Yahoo’s accounting department. Since then, the company said it has been trying to figure it all out.

Said Yahoo:

On March 31, 2011, Yahoo! and Softbank were notified by Alibaba Group of two transactions that occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders. The first was the transfer of ownership of Alipay in August 2010. The second was the deconsolidation of Alipay effective in the first quarter of 2011.

Yahoo! disclosed this restructuring in its 10-Q after discussions with Alibaba Group and obtaining a better understanding of this complex situation.

Yahoo! continues to work closely with Alibaba and Softbank to protect economic value for all interested parties. We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome in the best interest of all stakeholders.

Translation: Alibaba’s Ma–who cites upcoming new rules about foreign ownership from People’s Bank of China related to operating its payment business–just snookered us and we need to play dumb until we decide whether a lawsuit will be one disaster too many for our much-beleaguered investors.

Really pissed off shareholders is more like it–BoomTown has been on the receiving end of an explosive series of calls from Yahoo’s investors today asking a variety of questions.

They include:

1. How could Alibaba have reported its results with Alipay consolidated in, even though it was a separate entity since last year? And does that spell trouble for Yahoo, since it used those numbers in its own regulatory filings in the U.S.?

2. How could Ma initiate such a transaction without approval from shareholders and its board, as Yahoo claims?

3. In any case, why weren’t Yahoo execs paying more attention to the swirling changes related to foreign ownership in China, especially since Yahoo co-founder Jerry Yang is on the Alibaba board, anticipating that there could be real problems ahead?

4. Why did Yahoo execs not tell shareholders about the situation immediately or even at its April earnings call? Or perhaps before David Einhorn’s hedge fund Greenlight Capital hedge fund took a big position in Yahoo last week, specifically noting the value of the company’s Asian assets as highly attractive.

5. Does this move mean that those pretty Chinese assets Yahoo has touted are not so pretty after all, given that these kinds of things can happen there?

6. Should U.S. investors remove themselves from that Chinese market, given that these kinds of things can happen there?

7. Is Bartz’s extraordinarily tense personal relationship with Ma a big part of the problem, creating a distasteful public feud over issues better left to quiet backroom negotiations?

There will be plenty more, of course, especially around Yahoo’s disclosures to investors.

Yahoo execs will argue that it did disclose in the proper manner from a filing point of view and that it did not reveal the fissure so as not to put its negotiations with Alibaba over the situation at risk.

But–especially given the myriad of continued missteps by Bartz that have worked investors’ last nerve–that probably is not going to fly.

In fact, that irked sentiment will surely be on display at Yahoo’s upcoming investor day on May 25.

Yahoo had hoped to show off its new team of execs and talk about some legitimate momentum the company is making.

Now, it will doubtlessly all be about China and what happened there.

So, Bartz has to have a better line than a take on a Hollywood classic: “Forget it, Wall Street. It’s China.”

Maybe so, but it’s her problem to solve now.

And here’s my favorite version of that line:

AOL CEO Tim Armstrong has certainly had a very busy year, from the continued massive restructuring of the troubled Internet portal to ziggy-zaggy strategic shifts in content and advertising to a series of frenetic acquisitions, capped by the $315 million purchase of the Huffington Post earlier this year.

Also, let’s not forget all those fabulous appearances with the mediagenic Arianna Huffington.

So, it was nice to get Armstrong to calm down for a minute–before he headed off for an off-site in Half Moon Bay, Calif., with his senior staff–and talk about how AOL plans to digest all those things.

That’s especially important, since Wall Street is still wondering about that, too. A lot, in fact, with AOL shares down 29 percent year over year, which is not exactly a shining endorsement by investors of Armstrong’s tenure.

Presumably, he’ll be explaining it all when the company reports its first-quarter earnings in a week, on May 4.

Until then, here’s his video interview with BoomTown:

]]> http://allthingsd.com/20110426/aols-hyperactive-ceo-tim-armstrong-talks-about-whats-next/feed/ 4 http://allthingsd.com/20110330/video-the-cashmere-stylings-of-yahoo-chief-product-officer-blake-irving/ http://allthingsd.com/20110330/video-the-cashmere-stylings-of-yahoo-chief-product-officer-blake-irving/#comments Wed, 30 Mar 2011 22:07:22 +0000 Kara Swisher http://kara.allthingsd.com/?p=42201

Yesterday, BoomTown spent a good part of the day at Yahoo’s HQ in Sunnyvale, Calif., meeting with various product execs and seeing some cool new stuff in the works.

I was impressed, as I had been several times over the many years I have covered the Silicon Valley Internet giant, where I have seen innovative efforts by the truckload.

That is, until they never saw the light of day, until some random teenaged entrepreneur got giant funding for the very same idea months later.

I put this question of failure to ship to Yahoo’s Chief Product Officer Blake Irving, who got to the company a little less than a year ago with the goal of shaking the place up.

Irving’s last job was as corporate VP of Microsoft’s Windows Live Platform group.

He left Microsoft several years ago, after 15 years, to spend time with his family and had been teaching at Pepperdine University.

Since he got to Yahoo, he’s certainly done some layoffs, restructuring and hiring–mostly from Microsoft–and now he is promising that there will be big changes in how Yahoo manages its product pipeline.

Here’s a longish video interview with Irving–who is a live wire, as you will see, as well as a wearer of soft and luxe candylicious sweaters–talking about this key issue, the search business, talent retention and more:

]]> http://allthingsd.com/20110330/video-the-cashmere-stylings-of-yahoo-chief-product-officer-blake-irving/feed/ 2 http://allthingsd.com/20110208/realnetworks-lays-off-10-percent/ http://allthingsd.com/20110208/realnetworks-lays-off-10-percent/#comments Tue, 08 Feb 2011 23:00:55 +0000 Beth Callaghan http://voices.allthingsd.com/?p=36074 In its third round of layoffs under a restructuring by CEO Bob Kimball, RealNetworks cut 130 jobs, equal to 10 percent of its workforce. Kimball took over from CEO Rob Glaser last year. In an announcement today, the company stated that it has “completed the restructuring required to create a more efficient and focused company.”

]]> http://allthingsd.com/20110208/realnetworks-lays-off-10-percent/feed/ 0 http://allthingsd.com/20110207/liveaol-explains-its-huffington-post-deal-to-wall-street/ http://allthingsd.com/20110207/liveaol-explains-its-huffington-post-deal-to-wall-street/#comments Mon, 07 Feb 2011 13:55:58 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=29429 Tim Armstrong and company spent yesterday explaining their $315 million Huffington Post purchase to the press. Now they’re doing the same for Wall Street, via a conference call.

AOL CFO Artie Minson prepped investors for the call with a memo laying out expectations. Short version: AOL thinks HuffPo will earn about $10 million on revenue of $50 million this year (as long as you’re okay with using “adjusted OIBDA” as a proxy for “profit”). It also thinks the purchase will save it $20 million a year, but it’s going to spend around $20 million on restructuring charges when the deal goes through.

I’ll liveblog the call below:

8:02 am: Greetings! About to start now.

8:03 am: On the call: Tim Armstrong, Arianna Huffington, Artie Minson.

8:03 am: Armstrong makes a Super Bowl joke that I can’t quite follow, and I like football. But now praising Arianna, co-founder Kenny Lerer and outgoing AOL CEO Eric Hippeau.

“The Huffington Post is one of the best properties on the Internet.” Armstrong, Huffington and Minson are all BlackBerry users.

8:06 am: On revenue: This gives an opportunity to serve more brand marketers, who are “very interested” in the scale this gives us.

8:07 am: Spending next 30 days on integration. “Really synergies to be had.”

Next steps: Next 72 hours communicating with employees, talking to partners. 1,500 AOL workers on the phone this morning explaining deal to others.

“This may be the smallest disruption” internally of any deal I’ve worked on. Majority of integration done within 35 to 40 days.

8:09 am: We’ve looked at a bunch of companies, though we’re mainly going to concentrate on organic growth. But Arianna is great [many superlatives] and she “also happens to be a woman.”

8:10 am: Here’s Arianna.

8:11 am: “Amazing” how aligned two orgs are.

8:11 am: HuffPo was profitable last year. We were thinking about bringing in additional investors last year, and an IPO down the line. But this made perfect sense.

8:12 am: This deal provides a “dramatic acceleration” for the plans we already had.

8:13 am: Some praise for Patch, AOL’s local strategy.

8:14 am: Can’t wait to start!

8:14 am: Alrighty, then. Here’s Artie Minson with some nuts and bolts.

Actually, it’s some color on the deal. But a lot of it is in the prepared remarks he put out earlier this morning.

8:15 am: Again, $20 million in cost savings here. And again, we’ll have to pay up for restructuring: $20 million for cuts, and $10 million for purchase price.

8:17 am: Still basically reading from prepared remarks. Some bookkeeping talk re: compensation accounting.

8:18 am: Remember, display ad growth coming will finally start showing up second half of this year.

8:19 am: Q&A:

Q: Talk about content strategy. Does HuffPo become hub for content going forward? Does it replace Seed? And how long is Arianna’s contract?

A: “The press” has been talking about our content strategy, so let me be clear–we’re focusing on premium content. Things like Seed and StudioNow are platforms–you can do whatever you want with them, different quality levels, at different types of scale.

And then the other thing that is important about those platforms is the ability they give us to work with advertisers.

One of our main interests in HuffPo is their technology and publishing system. So now we have multiple systems [which he is saying is a good thing]. “Our content strategy hasn’t changed.” The “stuff that was out in the press about the AOL Way” was just one way of doing things. [This is not very convincing]

Arianna, tell us how long you’re going to stay.

8:24 am: Arianna: “I’ve told Tim I want to stay here forever. I want this to be the last act of my life.” Anything I want to do I can do here.

[Sorry, missed next part but it was a defense/explanation of content strategy.]

8:26 am: Armstrong: Arianna has a multiyear contract, but it’s open-ended.

8:27 am: Arianna: By the way, we’re going to bring back commenting to AOL stories, and socialize them.

8:28 am: Q: Why buy instead of partnering? Were there other bidders? Also, how will HuffPo politics affect AOL?

8:28 am: Armstrong: We do partnerships where there is “limited upside to those arrangements” so ” we can really spend time on the areas we want to win”–i.e., we don’t care about sports, we do care about women.

“Arianna is somebody we’d rather have inside our building than outside our building.”

“If there were or weren’t bidders on the other side,” I think we got the right price.

8:30 am: Arianna. “As we’ve said, again and again, Huffington Post was not for sale….Nobody was in a hurry to cash out, everybody believed that we could do an IPO down the road.” It’s just that Tim gave us a great offer. [hrrrm.]

On politics–we used to be all about politics, now we’re not. Just 15 percent of our traffic. We have a divorce section now.

Talking up AOL’s “college” section.

8:33 am: Q: For Arianna: More on Patch, please. What do think about what AOL’s done with it, and what you can do with it?

8:33 am: [Every time Arianna says "local level" I think she's saying "locker level." It's happened at least twice, maybe more, on this call.]

There’s a “greatest person of the day” feature we have, and I think Patch should use that. [Or maybe vice-versa, sorry.] I also like their five percent “giving back” rule, cause marketing, etc.

8:35 am: Armstrong: Again, we can do national and local. That’s important. NFL rights are important, and so are local news stories.

8:36 am: Q: Who’s going to sell what? And can you talk about pricing disparity between AOL and HuffPo?

8:37 am: Armstrong: “We would like to maintain all the people from both sales forces [except for Greg Coleman!]. I think we will end up with a large-scale, large-property organization–I don’t know exactly what that’s going to look like, though.

On sell-through rate: Slightly lower at HuffPo, because they’ve been ramping up traffic, and sales force. On CPM, same story. So we can bring up sell-through rate and CPM, and have a larger sales force. [This is pretty much the best argument for the deal that Armstrong can make.]

[BTW: Good back-channel discussion on Twitter right now about AOL's SEO skills, and the people behind it. None of that coming up during this call right now.]

[Sorry, I meant HuffPo's SEO skills, much of which stem from blueprint BuzzFeed CEO Jonah Peretti set out.]

Q: Why not use equity for this deal?

A: Because our equity is priced too low, essentially. But HuffPo employees did roll over 25 percent of deal consideration into AOL options. So as that equity gets more valuable, they’ll get upside.

8:45 am: Q: In your statement, you talked about OIBDA growth in 2013. More on that please.

Minson–probably going to stick to my prepared remarks on that one.

8:46 am: Last Q: Your acqusitions have been about toolsets or content. As you think about others going forward, what else do you want?

Armstrong: We have long-term vision. On plumbing: We’ve wanted to get platforms and plumbing straightened out, and we’re doing that now. Think about the bones or foundation of a very large property. That’s why we’ve been doing infrastructure, like with video–5Min and GoViral and StudioNow.

Going forward, we’ll be doing infrastructure. And we’ll continue to look at “media properties and media brands” that fit our strategy. [Remember, Web site owners: HuffPo just got 10x revenue.

8:50 am: Minson: But we're very price sensitive and we've walked away from deals.

8:50 am: Arianna: And we like women!

8:51 am: Armstrong sums up: Success "in the Internet space" requires vision and execution. That's this deal. And remember, content and brands become more valuable as tech gets faster, more advanced. And "expect us to stay on strategy and on point" going forward. "We're going to overcommunicate" with both sets of employees as we integrate. [You've been warned!]

And we’re done. Thanks for reading.

[Photo credit: Arianna Huffington]

]]> http://allthingsd.com/20110207/liveaol-explains-its-huffington-post-deal-to-wall-street/feed/ 5 http://allthingsd.com/20110207/aol-says-huffpo-will-be-a-50-million-business-this-year/ http://allthingsd.com/20110207/aol-says-huffpo-will-be-a-50-million-business-this-year/#comments Mon, 07 Feb 2011 12:22:33 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=29427 Ahead of an investors’ conference call, AOL has laid out its financial expectations for its newest acquisition: It thinks the Huffington Post will earn $10 million on sales of “over $50 million” in 2011. It also says it will spend around $20 million on “restructuring charges” due to “cost overlap” stemming from the deal, i.e.: There are some cuts coming.

]]> http://allthingsd.com/20110207/aol-says-huffpo-will-be-a-50-million-business-this-year/feed/ 1 http://allthingsd.com/20110207/aol-huffington-post-wont-go-to-11-but-it-does-make-sense/ http://allthingsd.com/20110207/aol-huffington-post-wont-go-to-11-but-it-does-make-sense/#comments Mon, 07 Feb 2011 11:30:09 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=29392 There are lots of Web M&As that don’t make much sense. But after you get past the “OMG!!!!!” novelty of AOL’s $315 million Huffington Post buy, this one has a straightforward logic to it: Old, big, slow company buys new, small fast company, hopes some of the zippy mojo rubs off.

Steve Case is right to point out that AOL CEO Tim Armstrong’s “one plus one equals eleven” logic didn’t pan out during the first boom, when Case was running AOL and engineered the disastrous Time Warner deal.

But here, at least, both companies are trying to do the same thing: Make a lot of Web stuff at a low price, and sell ads against it.

So maybe AOL + HuffPo won’t equal 11. And maybe 10x Huffington Post’s reported 2010 revenue is a very pre-Lehman multiple. But the broad strokes here make sense to me:

AOL is pushing its workers very hard to make more content it can sell. HuffPo is a content-making machine:

Huffington Post still has the reputation as a left-leaning political site written by Arianna Huffington’s celebrity pals. In reality, it is most concerned with attracting eyeballs anyway it can. Sometimes it’s with well-regarded investigative journalism, and much more often it’s via very aggressive, very clever aggregation. And sometimes it’s by simply paying very, very close attention to what Google wants, which leads to stories like “What Time Does The Super Bowl Start?“

However they’ve done it, it’s worked–much more efficiently than AOL, which is headed in that direction as well. AOL reaches about 112 million people in the U.S. every month with a staff of 5,000. The Huffington Post, which employed about 200 people prior to the deal, gets to about 26 million.*

AOL can start selling this stuff immediately:

HuffPo reportedly generated around $30 million in revenue last year, but that was done using a relatively small staff that sales chief Greg Coleman had just started building. AOL’s much bigger sales group, which has just about finished its lengthy reorg, should be able to boost that performance immediately.

AOL can afford it:

Tim Armstrong’s company ended 2010 with $725 million in cash, much of which it generated by selling off old assets. This seems like a relatively easy check to write and one that shouldn’t involve a lot of overlapping staff–AOL figures it will save $20 million annually in cost overlaps, but that it will spend about $20 million this year on restructuring charges. HuffPo is about four percent of AOL’s size, and several of its top executives are already stepping aside. (This is the second time in two years that sales boss Greg Coleman has been moved out of a job by Tim Armstrong.) The biggest risk here will be in the way that Huffington, who is now editor in chief for all of AOL’s edit staff, gets along with her new employees. On the other hand, morale is low enough at many AOL sites that it will be hard to make things worse.

AOL Gets a Really Big Brand:

There’s some downside risk to attaching Arianna Huffington’s name to a big, mainstream media brand, as her politics and/or persona might scare off some readers and/or advertisers. But two years after Armstrong arrived from Google, AOL still doesn’t have a definable identity, other than “the Web site your parents might still pay for even though there’s no reason to do so.” Being known as “the guys who own Huffington Post” is infinitely better than that.

HuffPo’s “pro” list is much shorter, but only because there’s not much to think about for them: Huffington, co-founder Kenneth Lerer and their backers get a nice return on the five years and $37 million they put into the company. And those who stay on get to leverage the benefits of a much larger acquirer–access to more eyballs and more advertisers. Easy enough to understand.

Spinal-tap-ampli
Uploaded by TZA. – Click for more funny videos.

*(Something about these numbers, culled from AOL’s and Huffington Post’s own releases, doesn’t add up, as AOL now says the combined company will have 117 million uniques. But it’s close enough for now.)

]]> http://allthingsd.com/20110207/aol-huffington-post-wont-go-to-11-but-it-does-make-sense/feed/ 8 http://allthingsd.com/20110111/myspace-confirms-it-will-fly-at-half-staff/ http://allthingsd.com/20110111/myspace-confirms-it-will-fly-at-half-staff/#comments Tue, 11 Jan 2011 18:43:45 +0000 Voices http://voices.allthingsd.com/?p=35078 As tipped yesterday by NetworkEffect’s Liz Gannes, Myspace announced a restructuring today that includes jettisoning 47 percent of its workforce, about 500 employees. CEO Mike Jones said the site’s tighter focus on being a Gen Y entertainment destination meant a tighter ship with a smaller, nimble crew. Jones also said the company will be entering into strategic local partnerships in the U.K., Germany and Australia to manage advertising sales and content.

]]> http://allthingsd.com/20110111/myspace-confirms-it-will-fly-at-half-staff/feed/ 0 http://allthingsd.com/20101214/nokia-layoffs-stop-christmas-from-coming/ http://allthingsd.com/20101214/nokia-layoffs-stop-christmas-from-coming/#comments Tue, 14 Dec 2010 18:03:49 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=54339 A colder, more brutal winter than usual for Nokia’s Finnish workforce. The company is sacking 800 employees in its home market as part of its effort to “accelerate the company’s transformation towards a leading mobile solutions provider.”

Nokia says the cuts have been on the table since October, when it announced a personnel restructuring during its Q3 results. And indeed it has. From a press release issued that month:

“Altogether, the planned changes are expected to result in a reduction of up to 1,800 employees globally, as activities are planned to be discontinued and integrated. Nokia will begin applicable consultations with employee representatives about these plans.”

News of the layoffs comes on the same day that Nokia said it will miss another shipping deadline for its new E7 smartphone. That device, which will run the next iteration of the company’s Symbian OS, was expected to launch this year. Now its debut has been postponed until early 2011.

]]> http://allthingsd.com/20101214/nokia-layoffs-stop-christmas-from-coming/feed/ 0 http://allthingsd.com/20101130/yahoo-layoffs-coming-december-13-and-not-this-week-though-its-still-bad-news/ http://allthingsd.com/20101130/yahoo-layoffs-coming-december-13-and-not-this-week-though-its-still-bad-news/#comments Tue, 30 Nov 2010 23:16:13 +0000 Kara Swisher http://kara.allthingsd.com/?p=37806

This will be short and–considering the topic–bittersweet.

Despite a report in TechCrunch saying layoffs at Yahoo might be imminent, previously reported termination of employees in its product unit will not take place this week.

Actually, according to sources familiar with the situation, they will take place in about two weeks, around December 13th.

As BoomTown previously reported earlier this month, the cuts in staff will total about 10 percent and be almost completely centered on the product organization under Chief Product Officer Blake Irving.

That would mean layoffs of about 650, since that part of Yahoo has about 6,500 employees.

In addition, said sources, the layoffs might result in the outsourcing of some functions at the company.

The move will surely be yet another blow to morale at the much-buffeted Silicon Valley Internet giant.

Google recently gave each of its employees a 10 percent pay raise and $1,000. Facebook, similarly, is showering benefits on its fast-growing pool of workers.

Yahoo currently has just over 14,000 employees. It has undergone many restructurings and layoffs.

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