Joyus, the video shopping platform startup led by former top Google exec Sukhinder Singh Cassidy, said it had raised $11.5 million in a second round of funding, led by InterWest Partners and Time Warner Investments. Existing investors Accel Partners and Harrison Metal also participated.

In related news, Joyus said that Ido Leffler, co-founder of natural beauty brand Yes To, would join its board.

The San Francisco-based Joyus has now raised total capital of $19 million to push its efforts to combine video with retailing online. Along with the funding news, the company underscored the efficacy of its approach in a study it also released that it says shows “fashion, beauty and lifestyle brands can directly monetize video through direct response product sales.”

Using premium video content to flack its wares, Joyus said that it converts at 5.15 times the rate of visitors who only browse product listings on the site and that its viewers buy 4.9 times more than those who don’t watch the product videos.

“Every time someone watches a video, Joyus can measure the resulting sales revenue, creating the first ever metrics for return on investment (ROI) using online video to drive product sales,” said Joyus, which noted that on a half-dozen product areas that the average revenue per video (RPV) view ranges from 47 cents to 93 cents, meaning every thousand views of video on Joyus produces between $470 and $930 in direct sales revenue. Joyus shares a cut of the sales on its site with its merchants and provides the purchasing tools.

While others might dispute this performance and many online retailers have added video to their sales processes, Joyus CEO and founder Cassidy said in an interview that online retail has to shift from a focus on engagement statistics and monetization via brand advertising to direct product sales results.

“The data on video shopping needs to be aimed at a return on the investment rather than on just brand recognition,” she said. “We think by providing an informative and entertaining experience, where you can make purchases right away, consumers buy and that this is the direction online commerce is moving.”

As I noted in a previous post about Joyus when it launched in mid-2011: “If you think about a link-laden infomercial, you’ll get a general idea of what is being created by Joyus.”

While Cassidy did note that a comparison could be made to television shopping networks like HSN, which shows elaborate demos of its products, Joyus has its own tech stack and video platform that allows shoppers to watch in a non-linear way that is preferable online and also on mobile.

“We are aimed at those customers who are bred and born on digital, so the merchandising formula is different,” said Cassidy. “This is a shopper from 30 to 50 who wants entertainment and commerce together in a format that is convenient.”

Despite a large uptick in the stock earlier today, Groupon’s fourth-quarter results caused its shares to plunge 23 percent in after-hours trading.

The Chicago-based company said its revenues were $638.3 million in the three months, just below expectation of $640 million and up 30 percent from a year ago.

But the fourth-quarter GAAP loss was 12 cents per share, or $81.1 million, which included a loss of seven cents from a non-operating item. That compares to a 12 cent loss a year ago, but was well over the two cent loss Wall Street had expected.

This comes after Groupon’s third-quarter miss, which puts the fate of CEO Andrew Mason into some question. He and several board members had a bit of a kerfuffle several months ago over this management abilities.

Still, on a conference call on the results today, Mason struck a positive tone on the poor results.

In addition, the company’s guidance was also disappointing, with first-quarter revenue between $560 million and $610 million. That’s much lower than the $650.3 million, that investors were estimating. Groupon also said it would have a possible operating loss in Q1 up to $10 million.

Groupon shares were down to $4.63 after the markets closed, after a nearly eight percent run-up earlier in the day.

Here is the company’s official press release on Q4:

GRPN

Yahoo reported its fourth-quarter earnings today, with earnings higher than expected, but with a continued flattish revenue.

The Silicon Valley Internet giant aid its non-GAAP net profits were 32 cents a share, compared to 25 cents in the same period a year ago. But GAAP net earnings per diluted share were 23 cents in the fourth quarter of 2012, compared to 24 cents last year.

Shares jumped just above four percent in after-hours trading to above $21 a share, given Wall Street analysts were estimating a profit of 27 cents per share in Q4.

Net revenue, without traffic acquisition costs, was expected to be $1.21 billion. It was $1.22 billion and which is essentially flat from a year ago’s $1.17 billion. Search revenue was up nicely, while display sales declined.

Overall the results showed a non-sinking but none-too-powerful ship and not very impressive given almost every other Internet company grew revenue significantly in comparison. For example, Google reported last week that core revenue was up 21 percent in the quarter.

Still, up is up, even if it is not up that much. “I’m proud of Yahoo!’s 2012 and fourth quarter results. In 2012, Yahoo! exhibited revenue growth for the first time in 4 years, with revenue up 2 percent year-over-year,” said Yahoo CEO Marissa Mayer in a statement.

In other words, she’ll take two percent, given the nearly persistent revenue declines of recent years. It is progress, of course, even if investors are looking for more robust increases ahead.

Also of note: Yahoo said it repurchased 79.6 million shares at an average price of $18.24 for $1.45 billion in the fourth quarter, which most definitely was one of the reasons for its recent stock run-up.

Yahoo did not release information on consumer engagement and traffic in the Q4 report, which it had done until Mayer took over. As AllThingsD.com had previously reported, most metrics in the quarter were down significantly over last year.

The fourth quarter was the first that was entirely under the new regime of Mayer, who arrive at Yahoo in July from Google.

She’s gotten a big break from Wall Street, which has sent Yahoo’s stock up in recent months on the hopes of her turnaround plans.

Last week, Mayer said the long-suffering Silicon Valley giant would be returning “back to its roots,” as part of an effort to finally turn it around. It’s actually part of a bigger plan which AllThingsD.com had reported on previously, to focus Yahoo on being a center of content discovery on the Web, across multiple devices, with wide-ranging and “very friendly” partnerships with other companies.

More to come at the 2 pm PT, conference call with Mayer, which I will be liveblogging as usual.

Until then, here’s the official press release and deck from Yahoo:

YHOO_News_2013_1_28_General

Q4’12_Earnings_Presentation.vsFINAL

The culture-celebrating hijinks continue at Yahoo, it seems.

After free food and smartphones and even dressing up as a Yahoo purple banger, CEO Marissa Mayer now has a high-ranking exec dancing for employee enjoyment.

As part of an effort to improve participation in the annual Yahoo Employee Satisfaction Survey (YESS), Mayer instituted a punishment for the lowest participation rate of any division on her executive staff.

The culprit turned out to be Jackie Reses, EVP of people and development for Yahoo, which includes the unlikely combo of human resources and business development.

Thus, Reses apparently had to dance to the hit K-pop song “Gangnam Style” with her staff at the weekly FYI employee meeting at Yahoo’s Sunnyvale, Calif., HQ on Friday.

Despite having a rep as an intense New Yorker, said one employee, Reses has some “decent moves.” Others agreed.

Also decent was one of the top results of YESS, which showed that employee belief in the future vision of the company was up 32 points year over year.

That’s not a big surprise, given the upward trajectory of Yahoo’s shares of late. But, more to the point, it has a weak comparable in last year’s survey, which painted a picture of a deeply demoralized workplace. That’s because the 2011 YESS questions went out to employees the week that the company fired CEO Carol Bartz, with most of the responses gathered in the ensuing weeks.

Despite the improvement, this year’s YESS also still showed a lot of worry about whether Yahoo leadership can execute, and whether the company can achieve strong results over the long term.

[UPDATE: One reader said the Yahoo survey is now called YEES, the Yahoo Employee Engagement Survey. I could not determine if that name change had been made.]

That’s the question that at least one Wall Street firm was asking, in a downgrade of Yahoo stock today. In dropping Yahoo’s rank to “market-perform,” Sanford C. Bernstein analysts noted worries about its turnaround efficacy, a possibly jarring reorg of its advertising unit, and also whether the future sale of its assets in China’s Alibaba Group can save the day again, as it did for last quarter’s results.

“We think there may be upside from an eventual Alibaba IPO at a valuation much higher than $50B or a Yahoo! core turn-around, but it is hard to have high conviction in either given the facts we currently have,” said the report, in part. “In addition, there is manageable but real downside risk: reorganization (e.g., of the sales force) could be negative for revenues, management could decide to invest in growth now and cut excess later, and MSFT RPS guarantee could expire without a renewal.”

Those are all good questions for investors to ask, of course, although more have been caught up in the hype/hope ahead of actual performance gains.

Still, it’s no sweat to get caught up in digital execs being made to trip the light fantastic for their weak results. So, since I was not there to enjoy Reses’ performance, click here for an also fun-tastic JibJab Gangnam video I made of her.

After it set a single-day ticket sales record on Christmas Day, Fandango said that 2012 was the best performing year in its 12-year history for ticket sales, as well as for traffic and app download results.

A press release by the Comcast-owned online movie ticketing and information site said sales were up 57 percent in the year, while monthly visitors rose 34 percent to about 41 million in peak months, and there were 31 million app downloads.

Fandango, which is the online movie ticketing service for Yahoo Movies, AOL Moviefone and MSN Movies, also said that mobile sales rose 171 percent in the year, making up 30 percent of overall ticket sales.

For 2013, the company said it would increase both its reserved-seating options and paperless mobile ticketing, as well as launching two more original video series.

They like her, they really like her.

Wall Street, that is, in regards to new Yahoo CEO Marissa Mayer, assigning the former Google exec a clear premium.

And whether it is deserved or not yet from a pure performance perspective — we actually won’t know for several quarters ahead — the shares of the Silicon Valley Internet giant over the past three months have gone up 22 percent. The rise has taken place pretty much on the promise that she will finally be the one to deliver what no other Yahoo leader has done.

And that is, besides making the company relevant and innovative again: Getting Yahoo’s stock past $20 a share again.

That’s within striking distance now. Shares are at $18.40 today, close to an all-time high for the year. The recent rise certainly isn’t taking into account the results of the recent lackluster third quarter, which continued to show the worrisome downward trends — even though partial asset sales of the company’s Chinese Alibaba stake successfully masked the problems — in growth, engagement and overall profitability.

But Mayer’s confident I’ve-got-this tones on the earnings call itself — especially in pushing a mobile strategy that has not been put in place as yet in any substantive way — won over Wall Street investors, who apparently like how she sounds and, thus, are intrigued with what she might do.

While this kind of perceptual game will only get Yahoo so far, moving out of the teens in share price would be an important benchmark for the company.

The stock was last at that level in August of 2008. At the time, in fact, $20 a share was considered very disappointing, taking place after Microsoft dropped its $44.6 billion hostile bid for Yahoo a few months earlier. Indeed, $20 was a big comedown from when Yahoo shares were above $43 in 2006.

The lowest price Yahoo shares got in recent years were $9.39 in November of 2008, just before then CEO and co-founder Jerry Yang stepped down.

Now the stock is close to double that sad trough, fueled in part by some cosmetic moves to improve culture by Mayer — including free food, smartphones and a promise to end the slow-moving decision-making at Yahoo.

There has also been a start of the promised multi-billion-dollar stock buybacks by the company, although Yahoo has been cagey about how and when it is purchasing. Also helping, more recently, is that several big hedge funds are buying into the story of hope.

Following in the footsteps of successful activist shareholder Dan Loeb of Third Point, who is now on the board and is a major Yahoo investor, others like him have now joined in the party in a bigger way. That includes David Einhorn of Greenlight Capital and Chase Coleman of Tiger Global Management.

The thoughtful Einhorn, who is a friend of Loeb’s, has been in and out of the stock before, buying it on hopes that now ousted CEO Carol Bartz would be Yahoo’s savior and selling it soon after it was clear she might not be. He came back in February with three million shares, sold them in May, but now has upped his stake to just over five million more under Mayer’s regime.

More substantively, Tiger’s Coleman has grabbed 25 million shares (interestingly, he’s also upped his stakes in Groupon and Facebook).

Obviously, they must believe Yahoo is set to move upward, which all depends on Mayer. She’s made one critical stock misstep early in her tenure, by announcing that she was considering keeping the huge cash windfall from its sale of Alibaba stock and not giving it back to shareholders in some form.

That dropped Yahoo’s shares to under $15, but Mayer walked back that mistake and the stock has been climbing since.

For the year to date, it’s up almost 14 percent — a nice rise — although that pales in comparison to Apple’s 39 percent rise, Amazon’s 37 percent rise and, most of all, AOL’s 136 percent leap.

The comparison to the massive stock run that AOL has had, after CEO Tim Armstrong — also a former Googler — cut costs, focused units, sold patents and bought back stock, is often made. It’s perhaps apt, but arguably Yahoo has much better and fixable assets than AOL.

More to the point, Yahoo’s price-to-earnings ratio remains unusually low — it’s 5.6, compared to the S&P’s 14.2 average — which means that the entire business is severely undervalued by Wall Street.

It is if Mayer can create real value by actually staging the comeback she is already getting credit for accomplishing. She certainly has a lot of levers to improve results, from the stock buyback to finally making a deal to sell its multi-billion-dollar stake in Yahoo! Japan to making expense cuts to buying some innovative small start-ups to creating products that aren’t, well, lame.

Most importantly, Mayer has to stop the decimation of Yahoo’s once mighty advertising business, which makes up the bulk of its revenue, as well as improve its search monetization by rejiggering its heretofore dysfunctional partnership with Microsoft. (But, as I wrote earlier this week, she will not be making new search engines with Facebook.)

A gander at this chart of Yahoo’s declining quarterly revenue should give you a good visual of the problem with the core business:

YHOO Revenue Quarterly data by YCharts

And, indeed, Yahoo’s sales have dropped 29 percent since 2007, with typically flat display revenue and declining search revenue, which was once Yahoo’s crown jewel. While operating margins have risen over the years, very few point to the company as an exciting growth story.

And it still isn’t, although investors are starting to consider it a possibility. We’ll see as Mayer makes more significant changes in 2013, hopefully underpinning the stock’s recent rise with a true story of financial strides.

But, for now, giddy shareholders probably should not get too far ahead of themselves. Not that you can stop them: Mayer fan Eric Jackson is calling for Yahoo’s stock to be over $40 again by end of 2013.

Whether the Mayer premium can do pull off that particular investor miracle or not remains to be seen.

This is a massive move and also a risky one. Yahoo’s homepage sees about 170 million daily users who click in to do a variety of things. That huge traffic means that advertising placements earn big bucks from marketers — which inside sources said is typically upwards of $350,000 for a prime placement for a day, rising in price depending on complexity.

Thus, making any dramatic change to the powerful homepage is a big deal for Yahoo’s bottom line, especially in the important fourth quarter, when big advertisers spend a lot of money online and expect big results.

And the latest versions are certainly a major shift from Yahoo’s older look, with the latest using an interactive tiled approach at the very top that suggests the design spawn of Microsoft’s Windows 8 and Flipboard’s elegant social reading app.

As I noted last week, along with experiments in infinite scrolling, a simplified logo and giving search more prominence, Yahoo’s homepage change seems to be aimed at being consumed on touch-responsive, non-PC devices.

That’s no surprise, since Mayer declared in a recent earnings call that Yahoo was going to veer toward a “mobile first” sensibility. “Yahoo will have to be a predominantly mobile company,” she said.

She also has to aim at being a reliable digital company, it seems. In a bit of unlucky timing — even as Yahoo prepped the home page redo, as well as major overhauls of other products — its hugely popular Fantasy Football offering went down right as eight games were about to start at 10 am PT.

Yahoo acknowledged the slowness in its servers on Twitter, noting: “We’re still working to fix fantasy server issue & will update ASAP. We sincerely apologize for the inconvenience & appreciate your patience.”

Fantasy Football fans were livid, although this has happened before, especially to those who waited to do their lineup. But some were also funny about the screw-up, as you can see below:

Yahoo Fantasy Football site is down. The Republicans were right; America has officially collapsed. The apocalypse is upon us.

— Steve Fuller (@fullsteve) November 11, 2012

Dear Google, please develop a fantasy football platform. That will end Yahoo! as we know it. Love, Long Suffering Yahoo! Fantasy users.

— WFAN Audio Clips (@WFANAudio) November 11, 2012

As of two hours ago, Yahoo said it was still working on the problem. Presumably, it will be the first fix-it challenge for new COO Henrique De Castro, who starts this week.

Hopefully, Yahoo will not have such problems with the homepage rollout, once the final version is selected.

Until then, please check out two images of yet another version, which is similar — although not the same — as the one I posted last week. In the latest design, for example, the swooshy scroll at the top is smaller and a 300 by 250-sized ad unit is back in place at the top. Overall, it is a little bit more conservative, although still streamlined.

Here they are, along with a more dramatic one from last week and also a recent Yahoo homepage:

.

(Mark Sanchez photo: Debby Wong / Shutterstock.com)

Later today, new Yahoo CEO and latest savior Marissa Mayer is expected to debut in her first major turn as a public company CEO, as the company reports its third-quarter earnings.

Unfortunately, her initial script recounting the last three months is likely to be rather lackluster, with Wall Street anticipating yet another nothing-to-write-home-about financial performance from the Silicon Valley Internet giant.

Investors are expecting $1.08 billion in revenue and 25 cents in net income per share in a report that is likely to show more of the same kind of weakness Yahoo has had for far too long. The main reasons this time: Worrisome growth in search and display advertising, especially compared to robust worldwide trends.

Such concerns have kept Yahoo’s stock pretty much flatlined at about $16 a share since she arrived in July.

And that is not likely to change until Wall Street hears more specifics about Mayer’s future plans. Yahoo has previously said she would outline more about her direction on the call with investors later today, after the financial results are released.

Thus, it’s basically a wait-and-see attitude, until Mayer does that, and perhaps until after there is some actual traction.

As noted by Cantor Fitzgerald’s Youssef Squali:

“1) We’ve seen this movie before (this new CEO is the fifth in as many years) and 2) it will take some time before any of the yet-to-be-announced changes yield any meaningful P&L results. Until then, we see Yahoo! shares remain cheap with limited downside, but no clear catalyst to drive them higher short/medium-term.”

Among the highlights that investors hope will be covered by Mayer and also by new CFO Ken Goldman:

A cogent strategy to turbocharge the business, which — as ATD has reported many times — will focus on tech and product solutions; what acquisition arenas are in the pipeline; plans for new talent recruitment and perhaps layoffs of less-than-stellar employees at the bottom 20 percent of Yahoo; the status of talks to sell off its stake in Yahoo Japan; and, perhaps most of all, what are the plans to return cash to shareholders from its recent sale of its partial stake in China’s Alibaba Group.

That might already be in the works via stock buybacks that Yahoo has been engaged in, but it will be interesting to see if Mayer will provide more specifics.

Investors will also look for some details around mobile growth, and perhaps an update of how Yahoo is fixing its search monetization problems with its partner, Microsoft.

One development that some expect is that Mayer will drop future expectations, in a classic take-out-the-trash move.

As J.P. Morgan’s Doug Anmuth noted:

“Similar to what AOL CEO Tim Armstrong did when he stepped in a few years ago, we believe Mayer is likely to remove low quality ad units and over-monetization throughout the site. Despite the near-term monetization impact, we think this would be a good thing, as it would improve the user experience and de-clutter the site. Additionally, we think it’s likely new management would simply want to start off with a low bar.”

And, if she makes it low enough, anything Mayer will do going forward is likely to look pretty good.

If you invested some of your money in the series of big, splashy IPOs that Silicon Valley has largely funded and churned out over the last year, you might be a little irritated.

Even irked. Possibly quite out of sorts.

And you would have good reason if you looked at the performance of many of the freshmen companies that have come out since early last summer.

That’s because of all of them, only three — business network LinkedIn, enterprise software start-up Jive and the recently debuted travel site Kayak — are your friends, up 9.8 percent since its May 27, 2011, debut; 26 percent since a December 15, 2011, opening; and about six percent since an IPO last week, respectively. In addition, video services company Brightcove is up a small 2.7 percent since its February 21, 2012, IPO.

Not so much for the other four, which have been much rockier, in order of their public offerings: music streaming site Pandora, down 29.6 percent since its June 24, 2011, IPO; Groupon, down 72.3 percent since the daily deals site’s November 7, 2011, IPO; Zynga, down 46.6 percent since its December 19, 2011, IPO; and Facebook, down almost 23 percent since its May 18, 2012, IPO.

But the stock weakness — as social networking giant Facebook preps to release its first earnings report as a public company tomorrow, after Zynga’s disastrous Q2 results from its online gaming business earlier today — does not seem to have stopped the frothy valuations for private start-ups from being even more foamy.

Along with a $2.6 billion new mega venture fund from New Enterprise Associates, comes a Wall Street Journal report that online storage company Box is raising a new round at a $1.2 billion valuation and hopes to IPO at a $2 billion to $3 billion one next year; and online payments start-up Square is looking at a $3.25 billion-valued round, according to the New York Times, which is 13.5 times higher than just two years ago.

Caveat: While there have been some good returns to private investors in the M&A space of late, such as social enterprise network Yammer’s recent $1.2 billion sale to Microsoft, not everyone is going to get such deals.

And definitely not public investors for whom hope either springs eternal — or just springs a leak.

According to sources close to the situation, Demand Media was deep into discussions with a private equity firm to complete a deal that would have taken the online content company private, nearing a price that was double its current value.

But Demand abandoned the effort this past week — which was born from an aggressive attempt by Boston-based Thomas H. Lee Partners to purchase the company for a price of up to $1.2 billion. That was due to a number of challenges, including complications related to its financing and the ability to retain executives in its aftermath.

The move on Demand by private investors is perhaps no surprise, and is part of a wider trend related to some Internet companies whose stocks have a depressed value relative to the worth of their assets.

Among companies having been and also being evaluated by private equity firms, whose business it is to turned the undervalued into a goldmine: Yahoo and AOL.

And also Demand, which is now worth only $605 million, a market cap that is off 65 percent since it went public in February 2011. Shares now trade at $7.25 each.

That depressed share price has been due to a number of issues, most especially changes to Google’s search algorithm to improve results. Called Panda, the changes at the search giant — a critical partner of Demand’s — has cut traffic to its major content sites and also called into question its ability to monetize its scaled editorial efforts.

Such a situation is nearly irresistible to PE firms — in this case, Lee, which approached Demand.

Several sources said that the board threw out a hefty number that it assumed would shut down any interest and the pair began talking with an initial offer to take the company private at $11.28 a share.

That equals close to $1 billion for Demand, which also has more than $100 million in cash. But sources said Lee and Demand also discussed the addition of a large loan as part of the ongoing discussions, for possible acquisitions related to a content roll-up strategy it had, which would bring the total up to $1.2 billion.

One source underscored that the board of the Santa Monica, Calif., company had no interest or intention to sell the business, but that the premium was large enough that it engaged.

The deal from Lee, which also included a strategy of splitting up the content arm from Demand’s lucrative domain-registar business.

There were also large cash-out provisions for major shareholders, as well as for CEO and co-founder Richard Rosenblatt.

Thus, the two sides engaged intensely in the last several weeks in crafting an agreement, although the devil would prove to be in the details.

One big issue is that taking Demand private was still a big financial commitment for Lee — which tried to engage some of its limited partners in the transaction — as well as other investors, including Silicon Valley’s Marc Andreessen.

That proved harder than Lee thought, said sources, with some balking at the firm’s ability to make a big enough score on the possible turnaround.

“It was hoped it would be a Skype situation, but there were worries,” said one source, referring to the blockbuster sale of the Internet telephony company by private investors to Microsoft for $8.5 billion last year. That deal was widely considered a PE home run, given the excessive premium paid for it.

Demand’s challenges increasingly worried the firm as it moved forward, sources said, causing it to reevaluate its earlier bid several times.

Also a worry: Retaining major talent, including Rosenblatt and others, after they sold large chunks of their equity.

After Lee asked for more time to complete the financing, Demand ended the talks last week.

Another source, as is typical in these endings, said it was the Lee that walked away (who knows and, really, who cares — both sides were engaged seriously).

One thing was true: “Demand was definitely at the altar, but it did not get to the vows,” said one source.

Another source noted that the board also determined that Demand’s situation was improving, and that new trends are showing that the bottom might be been reached. The company reports its first-quarter earnings on May 8, which is expected to show some traction related to its many challenges.

“There is nothing Lee could do that Demand could not do for itself,” said one person. “So throwing in the towel seemed premature for now.”

Lee declined to comment, as did Demand.

In an effort to minimize the impact of massive layoffs that Yahoo’s top management has been planning, according to sources close to the situation, one of the latest ideas to save costs and presumably jobs by new CEO Scott Thompson is to sell off much of its advertising technology platform, including Right Media.

And among the possible buyers Thompson has been targeting in recent visits: Google and Microsoft, as well as Silver Lake, the private equity firm that had once been talking to the Silicon Valley Internet giant about making a large investment in the company.

(That particular deal has gone south, but there is always yet another scheme on the horizon at Yahoo!)

The concept behind such a sale, according to several sources inside and outside the company, is to turn a cost center into a revenue source, with Yahoo essentially outsourcing a business that was a cornerstone of its strategy. A negotiable number of employees affiliated with those units would then move over to the new owner.

The most ideal plan, said sources, would be to sell Yahoo’s whole advertising technology “stack,” including the Right Media Exchange, a marketplace for advertisers, publishers and ad networks to trade online ads. Yahoo bought it for $700 million in 2007.

According to info on the company’s site, it has “300,000 active global buyers and sellers and more than 11 billion daily transactions.”

Also part of the possible package is APT, a system Yahoo has built to make buying and selling online advertising easier. In addition, Yahoo’s technologies for display-ad serving have been mentioned as a possibility for sale.

It’s unclear what the potential sale means for the new ad strategy that U.S. boss Ross Levinsohn and his lieutenant Jim Heckman have been pursuing since last summer. That plan included its own acquisition of ad network Interclick and an attempt to sync up with rivals AOL and Microsoft in an effort to fend off Google and some third-party players, like ad networks.

But the reason for contemplating much a major move — which has been considered before, but never has been seriously offered — are obvious: While Yahoo once dominated this arena, it has steadily lost ground, especially to Google. The search giant has made almost all of its money in search-related ads, but has been moving aggressively via its DoubleClick and other ad-serving entities into higher-level ads.

Microsoft has also been trying to compete, as has AOL, but it’s getting to be an expensive race, and one where Yahoo would have to make major investments to once again gain momentum. Building up this business again had been the aim of co-founder Jerry Yang, who wanted to go big in the arena in a number of ways before he left the company earlier this year.

But those days seem to be over at Yahoo.

“A lot of what has happened so far under Scott [Thompson] has been trying to find more revenue anywhere it can be generated, and get out of businesses that are not growing,” said one person. “Right now, it’s a lot about what we shouldn’t do rather than what we should.”

That has meant visits to see both Google and Microsoft about possible deals by Thompson, with the involvement of CFO Tim Morse and Chief Product Officer Blake Irving.

Thompson (pictured here) has also recently been talking to Silver Lake about the ad-platform sale, in a deal that might include the Andreessen Horowitz venture fund. This would be a different kind of transaction, said sources, in which a separate company would be formed, with Yahoo owning a piece and contracting with the new entity to provide ad technology.

All this activity is related to the layoffs in the works of perhaps thousands of employees, which were to have been communicated to the company this week.

Sources said those have been delayed for some weeks for several reasons, including whether to consider more deeply if certain larger business units can be spun off, sold or somehow transformed. (To be clear: Major layoffs are still being planned, but now might take place in two parts, said sources, in what is a quickly changing and volatile atmosphere at Yahoo.)

Another area being looked at, said sources, is Yahoo’s search advertising partnership with Microsoft, which has not been as successful as had been expected. While Yahoo has been working with the software giant about improving the results, Thompson has apparently been contemplating other possibilities, including working with Google (calling all regulators!) and/or laying off up to 900 employees who work on the company’s search offering.

Any of these moves could, of course, cause a firestorm of controversy, which Thompson appears to not worry much about. He was the driving force in Yahoo’s patent lawsuit against Facebook earlier this week, which is largely attracting a negative reaction across the tech landscape.

A number of prominent voices have spoken out against the legal action, including well-known VC Fred Wilson, who yesterday penned a poisonous blog post, titled “Yahoo Crosses the Line.”

It ends thusly: “I am not writing this in defense of Facebook. They can and will defend themselves. I am writing this in outrage at Yahoo! I used to care about that company for some reason. No more. They are dead to me. Dead and gone. I hate them now.”

Ouch!

Also weighing in publicly via Twitter was former Yahoo director Eric Hippeau, who was one of the company’s first investors, which is embedded below:

Pathetic and heartbreaking last stand for Yahoo bit.ly/yirCcj It’s all over. I loved you very much.

— Eric Hippeau (@erichippeau) March 13, 2012

Double ouch!

All I can say is that Thompson certainly has a lot of gumption. That has actually been his M.O. from the start, said several sources, with the former president of eBay’s PayPal payments unit and dark horse cold-emailing his way into the Yahoo CEO job.

True story: He had not been among its list of possible candidates — largely because he had been placed in his job at eBay many moons ago by Heidrick & Struggles, which was conducting the Yahoo CEO search, and that’s a talent acquisition no-no to poach someone you placed.

That did not stop Thompson, who thought he might be good for the job and reached out directly to board members at the end of the selection effort, which then led to the search committee and soon enough to the job in what was a very quick vetting and secretive (although not secretive enough!) hiring process.

Since then, Thompson has been on a tear, from working on a restructuring to trying to assuage activist shareholder Dan Loeb to helping put the kibosh on its Asian stake sale talks to suing Facebook. And now this sale effort, too.

If the peripatetic Thompson — who might need a dose of Ritalin before this thing is over — wanted to get noticed by the tech powers that be: Mission accomplished!

“He’s definitely someone who appears to have decided on shooting the moon with a lot of these actions,” said one person close to the situation, referring to the move in the card game of Hearts, which is a risky gambit to capture every penalty card worth 26 points in order to win. “I just hope no one loses an eye in the process.”

(That would be triple ouch, by the way.)

No comments all around, but everyone was certainly cordial on this rainy morning.

A hot Internet company poised for an even hotter IPO is attacked in court by a competitor whose lunch it has been eating.

Sound familiar? Actually, it’s just as much Google in 2004 as Facebook yesterday.

What the pair have in common is Yahoo, for whom this kind of patent infringement lawsuit is a whole lot of been there, done that.

In Google’s case, Yahoo was suing the then-smaller company over search patents from its Overture acquisition. The pair settled 10 days before the Google IPO, with Yahoo getting 2.7 million more shares of that stock, which it then sold off relatively quickly.

As part of the settlement from a lawsuit started in 2002, Google licensed U.S. Patent No. 6,269,361, entitled “System and method for influencing a position on a search result list generated by a computer network search engine,” which was owned by Yahoo Overture subsidiary.

In plain terms, the patent was over its key pay-for-performance service, which was at the heart of Google’s business of allowing bidding for search results placement related to relevant keywords.

In Facebook’s lawsuit, Yahoo is alleging intellectual property violations by the social networking giant, and is also taking credit for Facebook’s success.

The 19-page lawsuit over 10 patents — related to advertising, privacy, customization, messaging and social networking — comes as Yahoo is seeking to right itself under new CEO Scott Thompson.

“Facebook’s entire social network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo’s patented social networking technology,” Yahoo’s lawsuit reads, in part.

(Cue the movie script: If Yahoo had invented Facebook, it would have invented Facebook.)

That includes, Yahoo alleges, Facebook’s popular News Feed, advertising methods, privacy settings and more. The company adds that Facebook has been “free riding” on Yahoo’s intellectual property, and that royalty payments alone will not suffice.

What happens next today will be interesting — way back when, Google finally gave in in the delicate game of chicken with Yahoo, at the last minute.

But it’s not clear whether Facebook will flinch — or not.

Until we find out, here’s the press release from the 2004 settlement between Yahoo and Google to peruse:

Yahoo! and Google Resolve Disputes

SUNNYVALE, CA & MOUNTAIN VIEW, CA — August 9, 2004 – Yahoo! Inc. (Nasdaq: YHOO) and Google Inc. today announced that the companies have resolved two disputes that have been pending between the companies.

Under the terms of the settlement agreement, Google will take a license to U.S. Patent No. 6,269,361 and several related patents, held by Yahoo!’s wholly-owned subsidiary, Overture, and Yahoo! dismissed its patent lawsuit against Google. The two parties have also resolved a dispute regarding shares issuable to Yahoo! pursuant to a warrant to purchase Google shares in connection with a 2000 services agreement.

In connection with the settlement of the warrant dispute, the patent lawsuit, and in payment for the license, Google issued shares of its Class A common stock to Yahoo!.

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

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

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

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

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

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

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

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

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

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

Last night, Yahoo’s board gathered for a pre-meeting dinner, a precursor to a day-long meeting today to weigh several bids from private equity firms to buy part of the Silicon Valley Internet giant, including Silver Lake and TPG Capital.

Among the thorniest of issues will be the low price that the firms want to pay for a 19.9 percent stake in the company. Silver Lake has offered $16.50 and TPG a dollar more.

In the past year, Yahoo share prices have seen a low of $11.09 and a high of almost $19. It closed yesterday at $15.70 — a price that is mostly due to sale rumors — making the offers not much of a gain on current market valuation.

The transaction type being contemplated is called a PIPE — or a Private Investment in Public Equity — with the investment below 20 percent, which allows Yahoo to avoid a shareholder vote on the issue.

While the Yahoo board had hoped for bids above $20, they are not expected to be forthcoming, considering the weakness in its business over recent years and the difficulty of returning it to health and growth.

Results in its upcoming quarter, for example, are expected to be weak again, with trouble in its advertising business, largely due to uncertainty around the business.

The low price, along with the attempt to bypass shareholder approval, is sure to infuriate Yahoo’s major investors, given they have watched the value of their stakes wilt over the years under current board management.

In the last five years, due to continually muddled leadership and the missing of key Internet trends, Yahoo shares have dropped 44 percent in value, which compares with huge gains from companies like Amazon and others.

Major Yahoo stakeholders are already irked by the PIPE idea itself, which could transfer power to private equity firms at preferential terms.

Another possible bone of contention will be the preservation of at least some parts of Yahoo’s current board.

Under a plan by Silver Lake, for example, it would get three board seats, as well as another one for a CEO of its choosing. Another seat will go to Yahoo co-founder and current board member Jerry Yang. There will be six independent board members, but it is not clear if they would be new or include some current directors.

One of the Silver Lake choices would be well-known Silicon Valley legend Marc Andreessen, who is now a powerful VC. The appeal of Andreessen is important to some major shareholders who have turned sour on Yang.

Who will be CEO of the rejiggered entity will also be discussed at the meeting. Sources said Silver Lake and TPG have definite candidates in mind and Yahoo has also been conducting an official search.

In other words, there’s a lot on the plate of Yahoo’s board today, which also needs to revisit continued proposals from its Asian partners — China’s Alibaba Group and SoftBank of Japan — to sell back its stakes in Alibaba and Yahoo Japan in various tax-free schemes.

Sources said Yahoo — which has thus far rejected such efforts — might now consider selling a part of their shares back, up to half. This would allow the company to give a cash dividend to its disgruntled shareholders.

If thwarted, as has been previously reported ad nauseum, Alibaba and SoftBank are considering their own bid with the help of other U.S. private equity firms, such as Blackstone.

Other PE firms — especially ones who have not signed Yahoo’s non-disclosure agreement related to any deal — are also hanging under the hoop, so to speak, to see what happens. At least one firm hopes the Yahoo board will reject the low-priced partial bids, leaving the court wide open again.

“It’s still anyone’s game,” said one possible bidder.

Except for Yahoo’s put-upon employees and shareholders, this is anything but fun. More on that soon.

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

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

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

That obviously changed.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

After a series of increasingly disappointing quarterly earnings announcements, Wall Street is hoping that Research in Motion will deliver better results today.

The Canadian phone maker — most famous for its iconic Blackberry devices — will be reporting its second-quarter earnings after the markets close later today.

Analysts are predicting earnings of 87 cents a share for the period, which is within RIM’s own guidance range of adjusted profit — between 75 cents and $1.05 per share.

Higher would be better, based on the hope that sales of its most recent smartphones with the Blackberry 7 operating system, and also its lackluster PlayBook tablet, will help its results after a downward slide that has been painful.

That’s been especially tough, since both Apple’s iOS and Google Android are surging ahead in the mobile market.

RIM hopes to also get a boost from the first phone using the QNX operating system it bought last year.

When Yahoo announced on January 13, 2009, that it had hired longtime Silicon Valley tech veteran Carol Bartz to replace outgoing CEO and co-founder Jerry Yang and turn around the company, there was a sigh of relief.

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

Not so, as it has turned out.

While Bartz has streamlined certain areas and made some strong management hires, her performance has been decidedly bumpy and mostly downhill. (Update: And this afternoon that ride took her straight out the door.)

Consider: The share price has settled in at about $12.50 (just about where it was when Bartz took over), Yahoo’s recent financial results have been weak, its key advertising business is struggling, its attrition rate among engineers and others is startlingly high and its product innovation cycle seems stopped up. Add to that: Weak relationships with key Asian partners, a pricey but failed marketing effort and a proclivity for verbal gaffes by Bartz.

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

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

“It’s hard to ignore all that value sitting there and not being managed properly,” said one person who is considering a variety of investing options related to Yahoo. “And it’s not like AOL, whose assets are so weak, so it seems like an opportunity.”

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

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

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

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

While this might, as often happens at Yahoo, lead nowhere, what’s clear is the increasing pressure on the directors of the company from its major shareholders to act.

“You watch an asset like that degrade and it makes you furious,” said one investor. “After a while, you hope it makes the board at Yahoo feel the same.”

Yahoo declined to comment (but so would I).

Related posts

• As Yahoo Continues to Wobble, Investors (And Board) Eye Options
• Exclusive: Carol Bartz Out at Yahoo; CFO Tim Morse Named Interim CEO
• Carol Bartz’s Last F%*& You — Now Aimed at Yahoo Board
• Yahoo’s Statement on Bartz Ouster
• Wall Street Likes Bartz’s Firing — Yahoo Stock Spikes on News
• My Picks for Yahoo’s Next CEO — Maybe Snoop Dogg, Ya Digg?

Yahoo turned in another flat performance in the second quarter, with $1.08 billion in revenue, which was slightly below Wall Street expectations.

Earnings per share were right on target, though, at 18 cents each, an increase of 18 percent. Net income was $237 million for the quarter.

Investors were expecting Yahoo to report revenue of $1.11 billion on earnings of 18 cents.

That means a revenue decline of five percent from a year ago, which Yahoo said was “primarily due to the revenue share related to the Search Agreement with Microsoft.”

More importantly, in a statement, Yahoo CEO Carol Bartz also pointed to changes in its display sales operations, a key business of Yahoo:

“We experienced softness in display revenue in the second half of the quarter due to comprehensive changes we have made in our sales organization to position ourselves for more rapid display growth in the future.”

Whatever the reason, it’s not good news for Yahoo, especially considering Google’s strong results last week. Then again, it’s better than the first quarter’s six percent drop in revenue for Yahoo.

That said, Yahoo stock was down between one and two percent in after-hours trading.

Here’s the full press release to peruse, before I begin liveblogging the earnings call at 2 pm PT, as well as a link to my post on its slide deck of the results:

YHOO_Q211PressRelease_Final

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:

Yahoo announced its first-quarter earnings today, showing a continued worrisome revenue growth stall, due in large part to declines in search revenue from its partnership with Microsoft.

The Silicon Valley search giant reported revenue of $1.06 billion, down six percent from a year ago, on net earnings of 17 cents a share, down 28 percent.

The performance was essentially in line with Wall Street expectations, which had been estimating that Yahoo would report $1.05 billion in net revenue and earnings of 16 cents a share, after traffic acquisition costs (TAC) was taken out of its results.

That compared to revenue of $1.13 billion and 22 cents in earnings in the same period a year ago, results that were goosed by the sale of its Zimbra email asset to VMware.

Yahoo’s revenue growth drought was due largely to declines in its search advertising business, which fell 19 percent in the quarter from $440 million to $357 million.

Contractual guarantees paid by Microsoft, its search partner, masked even larger declines.

On a GAAP basis, search revenue was $455 million, a 46 percent decrease compared to $841 million for the first quarter of 2010.

Yahoo said display revenue ex-TAC increased 10 percent to $471 million, compared to $427 million for the first quarter of 2010.

It was a good performance, but by no means a barn burner, especially compared to Google’s 27 percent revenue growth year-over-year in its earnings last week.

Thus, it seems the turnaround efforts at Yahoo, much touted by CEO Carol Bartz, are still turning.

In a statement, she said:

“We are solidly executing toward our plan for returning Yahoo! to sustainable revenue and profit growth. During the quarter, we beat the midpoint of revenue guidance while continuing to deliver on the bottom line.”

As BoomTown had previously written, in the last quarterly call, Bartz had warned that MicroHoo had not grown yet into the beautiful swan expected in this ugly-searchling tale, noting that it might take until the second half of 2011 to see some prettier results.

Thus, Yahoo is right to focus on display advertising, an arena it dominates still, despite increasingly successful incursions from Google and Facebook.

Yahoo’s stock is certainly reflecting the worry, holding fast to its share price in between $16 and $17 for a while now. It closed today at $16.12, down 23 cents a share.

A year ago it was above $18.

The shares rose almost three percent in after-hours trading, though, to $16.57.

I will be liveblogging the conference call Yahoo’s top execs have with analysts, starting at 2 pm.

Until then, here’s the official Q1 earnings press release to peruse:

YHOO_Q111PressReleaseFinal

Will Yahoo’s revenue growth drought finally end this quarter?

We’ll see tomorrow when Yahoo reports its first-quarter earnings, after the markets close.

As usual, investors will be looking for some sign that the Silicon Valley Internet giant’s lackluster revenue results have improved in CEO Carol Bartz’s over-promised but still under-delivered turnaround effort.

And despite Wall Street worries that sales will remain flat, sources insist that display revenue will be slightly better than expected, although those from its declining search business will remain weak.

A poll of analysts is expecting Yahoo to report $1.05 billion in net revenue and earnings of 16 cents a share.

That compared to revenue of $1.13 billion and 22 cents in earnings in the same period a year ago, which was goosed by the sale of its Zimbra email asset to VMware, as well as some benefits from its search and online advertising partnership with Microsoft.

There’s no extra cherries on top this quarter, especially in the search arena, which BoomTown previously reported was troubled.

As I wrote last week:

In fact, although its display business will show a definite strong recovery in Yahoo’s quarterly results next week, its search business–both in market share and revenue per search (RPS)–has, as one person close to the situation put it succintly, “fallen off the cliff.”

That’s due, in part, to getting the new system with Microsoft delivering better results, which is not happening yet (if ever!).

In this quarter, Microsoft has honored its contractual guarantees and will make up the difference–which will result in masking the magnitude of the RPS loss. It’s a worrisome trend to watch.

In the last quarterly call, Bartz had warned that MicroHoo had not grown yet into the beautiful swan expected in this ugly-searchling tale, noting that it might take until the second half of 2011 to see some prettier results.

Thus, Yahoo will turn Wall Street’s greedy eyes to display, an arena it dominates still, despite increasingly successful incursions from Google and Facebook.

A win here is key, of course, with investors hoping for a strong performance.

Yahoo’s stock certainly is not doing that, holding fast to its share price in between $16 and $17 for a while now. A year ago, the stock was above $18 a share.

As Citi Investment Research’s Mark Mahaney noted in an earnings preview today:

Valuation remains interesting, with a highly attractive Asian Internet investment portfolio. In terms of risks, we focus on: 1) Competition in the Display Ad segment from Google, Facebook, etc; 2) YHOO’s overall Internet Usage Share Loss–now less than 10% of U.S. ’Net usage minutes; 3) YHOO doesn’t have assets in place to take advantage of trends in Social, Mobile & Local Internet, and Video Advertising; & 4) We are challenged to identify a near-term positive catalyst.

“Challenged” translates to Mahaney saying politely that Yahoo has zip coming down the pike to change its situation.

That means Wall Street is not yet in the mood to give Yahoo shares a break. Here is one of BoomTown’s fave videos–the great Diana Ross, with the infectious song hit, “I’m Coming Out”–to get the right vibe going:

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

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

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

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

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

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

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

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

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

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

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

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

It will be interesting to see how he feels now.

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

Demand Media Reaffirms Outlook for Fiscal Year 2011

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

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

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

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

Another Statement About Search Engine Algorithm Changes

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

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

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

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

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

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

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

Today and tomorrow, Yahoo’s directors are gathering here in Silicon Valley for one of their regular meetings that take place over the course of the year.

While board meetings in general are usually pretty dull affairs–and Yahoo’s, in particular, are typically glacial ones–there is a lot on the plates of those with purview over the machinations of the long-struggling Silicon Valley Internet giant.

Here’s a primer of what might (and might not) be happening, according to sources, of course, as Yahoo continues on its quest to reinvigorate itself–a journey that is beginning to make Siddhartha’s transformation into Buddha enlightenment look speedy.

A Yahoo spokeswoman declined to comment on anything below, although I did run it all by them.

The U-Shaped Turnaround

At Yahoo’s recent sales meeting in San Antonio, CEO Carol Bartz went all Sesame Street on the troops, using the letter “U” as an illustration to indicate where in the cycle the company was in its turnaround.

Apparently, just on the other side of the very bottom of the letter, heading inevitably upward.

Her argument was that the company has finally cleaned up its platform mess and its confusing corporate structure, and that its display and search advertising business is now recovering nicely.

All true, except there are some other key issues, such as the slowness of the search and online advertising partnership with Microsoft to make some serious hay.

In fact, although its display business will show a definite strong recovery in Yahoo’s quarterly results next week, its search business–both in market share and revenue per search (RPS)–has, as one person close to the situation put it succintly, “fallen off the cliff.”

That’s due, in part, to getting the new system with Microsoft delivering better results, which is not happening yet (if ever!).

In this quarter, Microsoft has honored its contractual guarantees and will make up the difference–which will result in masking the magnitude of the RPS loss. It’s a worrisome trend to watch.

The Asia Situation

Yahoo and its Asian partners are still mulling over various options regarding the company’s large ownership stakes there.

What is happening with its share in China’s Alibaba Group, according to sources, is precisely nothing right now, as has been made clear in recent comments by its CEO and co-founder Jack Ma.

“If you cannot make the business cool, you have no right to be angry with me,” said Ma in an article in Forbes published this week, referring to Yahoo. “I just don’t trust them…I’ve been working with them for years, and I’m disappointed.”

Relations between Ma and Bartz, sources said, remain as bad as ever, and even the normally close one between Ma and Yahoo co-founder Jerry Yang is strained.

Plus, Ma told Forbes, as he has said before, Alibaba is not taking its auction site, Taobao, public–leaving Yahoo in possession of an appreciating but decidedly private asset.

Japan is a different story, with the disposition of Yahoo’s stake in Yahoo! Japan the subject of long and continuing negotiations for a while now.

While the earthquake and tsunami crisis there did slow discussions down, there is still active recent movement about a variety of cashing-out scenarios, all of which have massive tax and regulatory issues.

Without boring you with the specifics, one option is to create a tracking stock, another a spin-off of the asset and still another some sort of stock trade.

But no matter what happens, Yahoo will have to pay some sort of taxes on its 35 percent stake in Yahoo! Japan, now worth $8 billion.

But if its CFO Tim Morse–the key figure working on the deal–can pull it off, what will Yahoo do with all that money?

Acquisition Guns Blazing? Or Sputtering?

In a recent forum in Silicon Valley, one of its M&A minions said Yahoo had its “guns blazing” with regard to acquisition activity in 2011, as deliciously reported in The Wall Street Journal, despite the company’s lackluster acquisition record.

Sources said the exec had his ears soundly boxed by his managers for the dopey remarks, since Yahoo has had such a lackluster record in the arena–especially compared to others.

And, oh yes, Yahoo’s M&A head just decamped to gaming phenom Zynga.

That aside, Yahoo should be deep in the market for hot start-ups to help revive its innovative spirit, but it remains hindered by a continued reluctance by new start-ups to join it and by its reputation for being a place where entrepreneurs go to die.

That certainly could change at any time with the right execs in place, but Yahoo is competing with a plethora of more exciting companies and also a seemingly endless venture capital gusher of cash of late.

While it is the board’s job to approve acquisitions and not source them, perhaps it is its job to pressure Bartz and other execs to get off the stick and hit at least one of the targets Yahoo aims at.

Targets are plentiful in advertising, content and even social, with many start-ups playing right into a lot of arenas Yahoo needs some help.

And help it does need as talent keeps walking out the door daily, mostly to hotter prospects such as Zynga and social buying sites Groupon and LivingSocial.

There is no question it is hard for any large company to hold onto top staff when there are so many enticing bonbons out there as options, but it can be done.

One good thing: Its newish head of product Blake Irving and head of U.S. media and advertising Ross Levinsohn seem to be playing well together and are setting a tone of stability that is much needed.

Enter the Kenny

That said, there remains endless swirl, especially with key investors, about the performance of its CEO.

While she started off as a publicly in-your-face exec, Bartz has definitely stepped out of the limelight of late, as her pugnacious manner started to irritate Wall Street and others.

It was a good idea, since it has taken the focus off the lack of stock and revenue progress she had loudly promised.

Still, Yahoo shares have continued to stay locked in the mid-teens, as investors wait for some sign that Bartz’s turnaround has worked.

The entrance of its spanking new director, Akamai President David Kenny, has further increased speculation about management and board changes at Yahoo.

This is Kenny’s first board meeting, but this well-connected newbie is someone who is clearly going to rise quickly to the top of decision-making at Yahoo.

That’s because the smooth and well-liked Kenny, who also has deep advertising experience as founder of the Digitas agency, has a long relationship with Yahoo and also with Yang.

He also now has much more tech cred as a leader of one of the Internet’s most important infrastructure companies, with a ton of regular contacts with media giants, ad networks and video providers that are Akamai’s clients.

In other words, Kenny (pictured here) is the full package of ad and tech experience that would make him an obvious Yahoo CEO candidate when Bartz’s contract is up in early 2013, if not before.

He’s also the person most likely to take over for longtime BoomTown punching bag Roy Bostock as chairman of the board at some point.

None of this is happening soon, but it is clearly an interesting development.

There are other machinations, of course, from continued interest from private equity players in Yahoo, as well as a variety of takeover scenarios, each more complex than the next.

While often derided as yesterday’s news by the elite of Silicon Valley as on an inevitable downward path, those plots are there because Yahoo remains a stellar brand with consumers worldwide and an Internet property with huge traffic and a big ad business.

In other words, it’s a U that someday maybe could be a V.

Yesterday, Yahoo introduced a new search product called Yahoo Search Direct.

Essentially, it is a lot like Google Instant–except it is Yahoo’s version–and it’s just as fast and pretty.

Here is Shashi Seth, Yahoo’s top search dude, talking to BoomTown in a video interview about why Yahoo thinks the lightning-speed box that shows more robust search results is the direction in which search is going, what it means for consumers and advertising and why the Silicon Valley Internet giant still thinks search is key–despite a declining market share and a big search partnership with Microsoft.

Here’s the video: