There’s no question that every venture capitalist within 100 miles of Silicon Valley wanted to squeeze their khaki-clad selves into what had become tech’s hottest deal of late.

That would be to get a piece of the new round of funding for start-up phenom Pinterest.

But while piles of VCs and other investors tried to work every angle possible to noodge into the action, the iconoclastic CEO and co-founder Ben Silbermann decided to go big and go global by hooking up with a Tokyo-based Internet giant.

Japan’s Rakuten will invest upwards of $50 million in a $100 million round that values the social bookmarking site at $1.5 billion.

Rakuten is one of the largest online commerce companies in the world, with a flagship site Rakuten Ichiba, among others. It was founded in 1997 and had revenue of $4.7 billion in 2011.

Most important in Pinterest’s calculation was apparently the link with its CEO Hiroshi Mikitani, whose nickname is Mickey. One the richest men in Japan, Mikitani is one of the best known entrepreneurs there where he’s been described as “Richard Branson meets Jeff Bezos.”

I briefly chatted with Mikitani last night about why he decided on the Pinterest deal, in a conversation where he focused a bit on Rakuten’s famed “omotenashi” or “empowerment” philosophy. Simply put, the concept is that — unlike an Amazon — Rakuten is a facilitator of commerce, much like its shopping mall metaphor beginnings. The approach is to aid merchants rather than compete with them.

It’s a little eBay, a little Alibaba, some Etsy and even a little Amazon Web Services mixed in. It’s also a place that can move retail globally, which is presumably the attraction to it by Pinterest.

ATD: Why did Pinterest pick you?

Mikitani: We are not a venture capitalist. We got together and talked about our story and our history.

We agreed that we shared a vision of the future of Internet e-commerce.

ATD: Why make an investment?

Mikitani: When we started to talk about being involved in the round of investment, we wanted to invest as much as possible.

We were very impressed by their business model and also the management style.

ATD: What made Pinterest so attractive in comparsion to other similar companies?

Everyone is talking about social commerce and best solution to social commerce, but Pinterest really was the first to use graphics that well to connect with people.

Rarely have we seen such a powerful media and we were seeing huge traffic coming from Pinterest [to Rakuten sites]. It was much higher than anyone else.

ATD: What do you bring to the table?

Mikitani: I think there are some things we think we can do with our expertise. Ben and his team have an extremely strong commitment to make their products as attractive as possible.

But we have 40,000 stores in Japan and we can give them access to our customers and do aggregation to engage in everything. And we have sites in many other countries too.

ATD: How are you going to work together?

Mikitani: We are not going to stop them from doing dealings with other e-commerce companies. But we can have more constructive input on how to make their site more effective from e-commerce point of view.

This is a long-term arrangement and we have a strong committment and attachment to this business. We truly understand their business and respect their management.

Yahoo’s embattled CEO Scott Thompson (pictured here) is set to step down from his job at the Silicon Valley Internet giant, in what will be dramatic end to a controversy over a fake computer science degree that he had on his bio, according to multiple sources close to the situation.

The pair will apparently say he is departing for “personal reasons.” Sources said that Thompson will be claiming to be leaving due to a serious illness that he recently discovered he had.

But the evolving crisis — which is just over a week old — centered on his botched resume and how he handled the thorny issue is the key reason for the abrupt end to his tenure as a CEO.

Thompson’s likely replacement on an interim basis will be Yahoo’s global media head Ross Levinsohn, who most recently also ran its Americas unit, including its advertising sales.

In addition to the management upheaval, Yahoo’s board is closing in on a settlement with the man who discovered Thompson’s misstep, activist shareholder Daniel Loeb of Third Point, said sources.

The situation could change, since Yahoo’s full board still has to meet this morning to officially approve the sweeping changes at the long-troubled company.

But, if it is, this development goes a long way toward fixing some of what has been ailing Yahoo recently.

And it’ll also be a stunning victory for Loeb (pictured here), since the pugnacious hedge fund investor is set to get three board seats from a slate proposed by him as part of a proxy fight aimed at Yahoo. The new Yahoo directors will be media exec Michael Wolf and turnaround specialist Harry Wilson. Loeb’s fourth selection — former NBC head Jeff Zucker — will withdraw.

The five current Yahoo directors — who were to step down at the company’s annual meeting this summer — will leave the board effective immediately, sources said, to make way for the Third Point selections.

Finally, Yahoo’s recently added director Fred Amoroso will be named chairman of the board.

Amoroso is the director who has been conducting the investigation into the issues raised by Loeb about how the fake academic credentials got in Thompson’s public bios, as well as in Yahoo’s regulatory filings, and also the hurried circumstances around his hiring in January.

Those mysteries — read, screw-ups — might never be solved now, although Thompson made a convoluted attempt to explain it all in two awkward employee meetings at the end of last week. In those gatherings, according to numerous sources, he blamed a headhunting firm for introducing the mistake when he was being hired for a job at eBay in the mid-2000 timeframe.

That company, Heidrick and Struggles, slapped back last week with an internal memo, noting that Thompson’s claim was “verifiably not true.” Sources said that Heidrick told Yahoo’s board that it was in possession of a resume that Thompson had apparently submitted showing the inaccurate CS degree on it.

That memo, impugning Thompson’s credibility, was one of many that piled on to create an impossible situation for the Yahoo board, related to his leadership ability going forward.

Thompson had also previously issued a Yahoo statement, in which he apologized for the “distraction” caused by the problematic resume, but not for the mistake itself.

And, initially, Yahoo — under his direction — had called the borked resume an “inadvertent error.”

Such fumbling to fix the situation was among the many other issues that the board has been considering relating the ability of Thompson to remain in his job. Also of importance was the sinking morale of Yahoo employees, who had largely rejected Thompson’s excuses in the ResuMess scandal.

Internal message boards at Yahoo lit up all last week, with staffers largely rejecting his explanations. In addition, a number of top execs and engineers approached the board calling for Thompson’s firing.

While that’s not precisely what happened here, it’s close enough to describe Thompson’s departure as inevitable.

All this change comes in the wake of a massive restructuring he was in the midst of at Yahoo, after 2,000 employee layoffs.

Thompson was pushing forward a vision of adding a much more significant data and commerce element to Yahoo’s largely ad-based business.

That is likely to be less stressed under media-focused Levinsohn, who will be essentially trying out to be the permanent CEO.

Well known in the media and advertising communities, he has worked at a number of big online efforts over many years.

According to his bio at Yahoo, where he arrived in 2010:

He previously served as the President of News Corporation’s Fox Interactive Media, where he was responsible for the day-to-day operations, strategy and acquisitions that helped transformed the company into a leader in digital media. He also held senior management positions with AltaVista, an early pioneer and leader in search, CBS Sportsline where he oversaw all content and development for the top rated sports site, and HBO where he launched and oversaw a unit developing new programming and revenue streams. Levinsohn also was the co-founder and managing director of Fuse Capital, an investment and strategic equity management firm focused on investing in and building digital media and communications companies.

Levinsohn sits on the board of Freedom Communications and the Bogart Pediatric Cancer Research Program. He holds a Bachelor of Arts in Communications from The American University.

So far in my checking, Levinsohn’s resume is accurate.

More to come, obviously.

I have emails and texts and calls into everyone for comment, but apparently they are all out at a Mother’s Day brunch (except me).

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• Yahoo’s Parting With Thompson Will Be for “Cause” (a.k.a. CSLie)
• Ross Levinsohn’s Yahoo Plan: Back to the Future
• Here’s New Yahoo CEO’s First Note to Troops! (The Leaking-Internal-Memos-to-ATD Policy Remains in Effect As Usual)
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According to sources close to the situation, Facebook is anticipating getting approval from government regulators to officially distribute its S-1 public offering prospectus to investors within days, which would mean its road show could begin as early as next week.

As I reported back in January, the social networking giant is expected to go public in the second or third week of May, a timeline (get it?) which currently appears to be on track.

In addition — although some have speculated that its famous CEO and co-founder Mark Zuckerberg might not take a “hands-on” role in the high-profile process, having missed one pre-IPO meeting with Wall Street analysts and bankers (can you blame him?) — sources said he would be appearing before potential shareholders, and would be present at key meetings to help sell the company to them.

Of course, he will — although there was much speculation that the Silicon Valley superstar would bow out of any of the hubbub around the huge IPO, and that bankers were practically begging him to appear, sources said Zuckerberg is too key to all aspects of its business not to appear.

(No word as yet on whether he will don a tie, as he sometimes does, or if his usual hoodie will be Zuckerberg’s outfit of choice — although his sartorial choices on the road show are sure to get excessive media scrutiny.)

“Facebook is Mark Zuckerberg and Mark Zuckerberg is Facebook,” said one person with knowledge of the situation. “He’ll do his job as CEO, as he always does.”

Indeed, although he is often portrayed as shy and not a fan of the limelight, Zuckerberg has always stepped up — and rather enthusiastically — when a public appearance is needed, whether in times of trouble or touting for the eight-year-old company.

This is a touting-Facebook moment, of course, as it seeks to raise up to $10 billion in a blockbuster offering that could value the company at $75 billion or more. Filed in February, that will make it the biggest Internet IPO ever.

Also expected to play key roles in the road show are CFO David Ebersman and COO Sheryl Sandberg, as well as other top Facebook execs.

Whether they all can rev up the jets and get going on the road show depends on the Securities and Exchange Commission finally declaring Facebook’s preliminary prospectus of its business and finances “effective” or in legal compliance.

Facebook has updated the initial filing several times, with new financials as well as information about its purchase of photo-sharing site Instagram and its ever-nasty patent battle with Yahoo.

But, overall, the SEC process has been rather smooth for the company, and sources said it appears it will continue that way.

After the road show: A sales process in which investors ask their questions of management and then officially begin to place orders for Facebook stock.

Among the areas of likely concern are that Yahoo patent lawsuit and, most importantly, how Zuckerberg and others characterize the slowing of its explosive revenue growth in its most recent filing update.

Last week, Facebook said its revenue was $1.058 billion, up 46 percent for the year, but down 6 percent from the previous quarter. In the first quarter of 2012, its net income was $205 million, which was down from $233 million a year ago. The company attributed the decline to rising costs, including in marketing and in research.

After the road show, Facebook’s bankers will price the offering — which is widely expected to be massively oversubscribed — and then it will go public on the Nasdaq market, under the “FB” ticker.

The rest, as they say, will presumably be history — or, in fact, the future for Facebook in the public eye.

Spencer Platt | Getty Images News

According to sources close to the situation, Starbucks Chairman and CEO Howard Schultz and Accel Partners’ Kevin Efrusy will be stepping down from the board of Groupon.

Schultz’s departure will be effective today, but Efrusy — who was critical to the initial funding around the Chicago-based daily deals site — will not be standing for re-election at the company’s annual meeting in June.

The departures are voluntary, but sources said the pair will be replaced by two new directors with significantly more fiscal oversight experience, whom one source characterized as “accounting types.”

(Update: Groupon just posted a press release noting the board departures, with the names of the new board pencil pushers: Daniel Henry, CFO of American Express, and Deloitte Vice Chairman Robert Bass. Henry joins immediately in Schultz’s place. Full press release below.)

It is a move that is critical, given Groupon’s recent series of missteps around its financial reporting that have hurt both its reputation and, more importantly, its stock.

Interestingly, several sources noted that Schultz almost left the board right before Groupon’s public offering last fall, after several ongoing disputes with its management, but stayed on so as not to scuttle its IPO.

The board of the company has not involved itself as prominently in the accounting messes at the company, but it appears as if they will begin to now.

It must, given Groupon shares have been trading at a low of $11. Its stock has dipped to $10.98 today.

As Tricia Duryee wrote recently about the fall:

At that price, it is now worth just over $7 billion, down 57 percent since the company went public last November and well off the more than $10 billion it was valued at as tech’s hottest start-up of 2011.

Ironically, Groupon’s current market valuation is actually not much more than the $6 billion offered for it by search giant Google in late 2010.

The fall of Groupon has been swift, from the honorific of being the fastest-growing company ever to one that cannot keep control of that runaway growth.

That’s perhaps no surprise.

Perhaps most significantly, Groupon went public in just four years, delivering the biggest tech IPO since Google.

The quicksilver move was typical for it. In just two years’ time, the company ballooned from 37 employees to 9,625 and from serving five markets in the U.S. to 175 in North America alone. And that’s leaving out massive expansion abroad. In the past year, Groupon has acquired roughly 17 companies, including many international copycats.

The company also has entered many new segments, expanding from selling lower-priced and simpler deals on restaurants and spas to more complex and pricey arenas, including travel, physical goods and luxury items.

But Groupon is now learning that its original business does not work across just any segment, especially to more discerning customers of its higher-level and more expensive offerings.

In fact, it was those newer and potentially more lucrative markets that forced the company recently to revise the company’s fourth-quarter report after returns skyrocketed on luxury items, such as Lasik eye surgery.

The problems forced Groupon to lower revenue in the period by $14.3 million and net income by $22.6 million. It is now reporting a wider net loss of $64.9 million on revenue of $492 million, pushing it further away from its goal of profitability.

The company also disclosed at the time that independent auditors had noted “material weakness” in its financial controls. In addition, The Wall Street Journal reported that the Securities and Exchange Commission was examining Groupon’s revision. 

With many companies, investors might have shrugged off such accounting issues, but the impact on the stock has been greater since they are only the latest in a string of similar mistakes at Groupon.

In its pre-IPO period, for example, Groupon was forced to restate revenues after counting both its portion of the revenue and the revenue that goes to the merchant together. It also had to dump a controversial accounting metric that made the company look more profitable than it was, because it did not include important costs, such as critical online marketing expenses to attract new customers.

Those came after the company retracted a statement by Eric Lefkofsky, Groupon’s co-founder and executive chairman, who told Bloomberg in an interview that Groupon would be “wildly profitable.”

At least the wild part was accurate.

Much of the blame for these missteps by Wall Street is being aimed at CEO and co-founder Andrew Mason, the iconoclastic 31-year-old entrepreneur who is largely responsible for defining the company’s culture, as well as Jason Child and Joe Del Preto, the chief financial and accounting officers, respectively.

Child joined the company in December 2010, coming from Amazon, where he held several roles over a 10-year period — including VP of finance, international, and director of investors relations. Prior to joining Amazon, he worked at Arthur Andersen as a certified public accountant.

Del Preto has been Groupon’s chief accounting officer for the past year and, before that, he was the company’s global controller for three months. Before Groupon, he was controller and VP of finance at Echo Global Logistics and also served as controller at InnerWorkings, the same company where Mason was a computer programmer in his early career.

Mason, of course, is the best known and the person most responsible for establishing the company’s whimsical culture and managing — or mismanaging, depending on how you look at it — Groupon’s hard-charging growth.

It will also be up to him to turn it all around, as the company sinks in both value and investor regard. Since the restatement, Mason has said little about how he intends to do that. In February, when Mason concluded Groupon’s first-ever earnings call, he said: “Thanks, guys, this was a lot of fun, and I look forward to many more of these.”

It’s not clear fun will be on the agenda at his next outing on Groupon’s first-quarter call in mid-May.

Here is the official press release from Groupon on the board changes:

Groupon Appoints Two Directors to Board Daniel Henry, CFO of American Express, and Robert Bass, Vice Chair of Deloitte

CHICAGO — (BUSINESS WIRE) — Groupon, Inc (http://www.groupon.com) (NASDAQ:GRPN) today announced that Daniel Henry, the chief financial officer of American Express Company and Robert Bass, a vice chairman of Deloitte LLP will join its Board of Directors. Both will serve on the Audit Committee with Audit Chair, Ted Leonsis. Daniel Henry was appointed to the Board on April 26, replacing Howard Schultz, who has stepped down from the Board. Robert Bass will stand for election at the annual stockholder meeting to be held on June 19 following his retirement from Deloitte, replacing Kevin Efrusy, who will not stand for reelection at that time. “With their deep financial, accounting and operational experience, Dan and Bob will provide invaluable expertise to the Board going forward,” said Eric Lefkofsky, Groupon Chairman.

Daniel Henry, 62, has been the Chief Financial Officer of American Express Company since October 2007. Henry is responsible for leading American Express Company’s finance organization and representing American Express to investors, lenders and rating agencies. He has also served as Executive Vice President and Chief Financial Officer of U.S. Consumer, Small Business and Merchant Services and joined American Express as Comptroller in 1990. Prior to joining American Express, Henry was a partner with Ernst & Young.

Robert Bass, 62, has been a vice chairman of Deloitte LLP since 2006, and a partner in Deloitte since 1982. He will retire from Deloitte on June 2, 2012. Bass has specialized in e-commerce, mergers and acquisitions and SEC filings. At Deloitte, Bass is responsible for all services provided to Forstmann Little and its portfolio companies and is the advisory partner for Blackstone, DIRECTV, McKesson, IMG and CSC. He has also previously been the advisory partner for priceline.com, RR Donnelley, Automatic Data Processing, Community Health Systems and Avis Budget. He is a member of the American Institute of Certified Public Accountants and the New York and Connecticut State Societies of Certified Public Accountants.

“I’m thrilled to have been a part of Groupon’s development,” said Kevin Efrusy. “The Company is well on its way to becoming the operating system for all local commerce.”

“Howard and Kevin helped guide us on our journey to becoming a public company and I want to thank them and acknowledge their contributions,” said Groupon CEO Andrew Mason.

“During my tenure on the Board, I was impressed by the game-changing opportunities that Groupon has delivered for both merchants and customers on a global scale,” said Howard Schultz. “Groupon has a strong sense of mission and purpose, and as I move on to focus on my other time commitments, I wish them the very best.”

After market close, the e-commerce giant turned a massive beat: Earnings of 28 cents on revenue of $13.2 billion. Operating income fell 40 percent to $192 million, suggesting an operating margin of about 1.5 percent for the quarter.

Analysts had expected the e-commerce giant to report earnings of 6 cents per share on revenue of $12.9 billion.

A big beat, and Amazon shares are spiking in after-hours trading.

Amazon CEO Jeff Bezos was typically ebullient in the company’s earnings release, rejoicing over Kindle Store exclusives and the Kindle Owners’ Lending Library. But, also typically, neither he nor the company offered hard numbers on Kindle sales for the quarter.

“Kindle is the bestselling e-reader in the world by far,” Bezos said. “I assure you we’ll keep working hard so that the Kindle Store remains yet another reason to buy a Kindle!”

Look, if it’s “the bestselling e-reader in the world by far,” then how about showing us some numbers?

Anyway …

Looking ahead, the company said it expects second quarter revenue of $11.9 billion to $13.3 billion.

A couple details worth noting:

• Kindle Fire remains the #1 bestselling, most gifted, and most wished for product Amazon offers.
• 9 out of 10 top sellers on Amazon.com were digital products, I.E.: Kindle, Kindle books, movies, music and apps
• Worldwide Media sales grew 19 percent to $4.71 billion.
• North American sales were $7.43 billion, up 36 percent from the year prior.
• International sales hit $5.76 billion, up 31 percent from first quarter 2011.

In a lengthy analysis done by Robert W. Baird & Co., the investment bank suggests that Zynga may be becoming less reliant on Facebook, with more revenues coming from other platforms, like mobile.

But before diving into Baird’s analysis, it is important to note that Facebook released just enough data for there to be some insightful guesses as to what Zynga’s first-quarter earnings will look like on Thursday. However, there’s not enough information to know for sure.

In the first quarter, Facebook said, Zynga made up 11 percent of the social network’s revenue, from both advertising and the sale of virtual goods. In comparison, Facebook estimated Zynga contributed 12 percent of its revenue for all of 2011. (Note: Those percentages do not include the revenue coming from third-party advertisers on Zynga game pages.)

The analysis by Baird estimates that 88.4 percent of Zynga’s revenue came from Facebook in the first quarter, down from 93.4 percent in the fourth quarter of 2011.

Zynga’s dependence on Facebook is routinely considered a risk when evaluating the company’s stock, so it would be good news if the company’s revenue from other platforms — primarily mobile at this time — was starting to contribute more to the company’s top line. However, there’s also a chance that Zynga’s revenue from Facebook is slipping. That would be bad.

Baird believes that Zynga made roughly $230 million in virtual goods revenue on Facebook, and estimates that it also generated roughly $65 million in advertising and from transactions on platforms, like mobile. In all, that suggests a total bookings of $300 million, which falls short of the investment bank’s expectations of $320 million.

Again, these are all estimates until final numbers are released on Thursday.

The San Francisco company’s stock was trading down 50 cents, or 5.6 percent today, to $8.50 a share.

Facebook filed an updated version of its S-1 public offering document today, which included somewhat disappointing first-quarter financials.

In the new filing with the Securities and Exchange Commission, its fourth update for its upcoming public offering, the social networking giant’s revenue was $1.058 billion, up 46 percent for the year, but down six percent from the previous quarter.

In the first quarter of 2012, Facebook’s net income was $205 million, which was down from $233 million a year ago. The company attributed the decline to rising costs, including in marketing and in research.

Facebook also said its current share price was $30.89 each, which values the entire company at about $77 billion.

Some investors might worry about the latest results, which show a slowing in Facebook’s torrid growth. But Facebook said the quarterly decline was due to seasonality — it was flat in the same period a year ago.

As it noted in the document:

“We believe that our rates of user and revenue growth will decline over time. For example, our revenue grew 154% from 2009 to 2010, 88% from 2010 to 2011, and 45% from the first quarter of 2011 to the same period in 2012. Historically, our user growth has been a primary driver of growth in our revenue. We expect that our user growth and revenue growth rates will decline as the size of our active user base increases and as we achieve higher market penetration rates.”

Its audience, though, was still growing strongly: Facebook also said it had 532 million daily active users, up from 372 million a year ago and 483 million in December. Its monthly active users were up from 680 million last year to just over 900 million and up from 845 million from December.

Facebook also added an explicit figure for average revenue per user, which was $1.21, up six percent year over year. It also said the number of full-time employees grew 46 percent from last year to 3,539 at the end of March.

The last update to Facebook’s regulatory filing for its mid-May IPO was in late March. That one gave investors more information about a patent infringement lawsuit waged by Yahoo — Facebook noted its counter claim in the newest filing — and also its motion to dismiss Paul Ceglia’s legal attempt to garner half of the company. It then included more information about growing engagement by users of the social networking site.

Along with some other minor changes in the new document, Facebook noted, in news that was already known, that it would trade its stock on the Nasdaq market under the ticker symbol “FB.” It also said it had bought photo-sharing start-up Instagram, another piece of old news, and noted its just-struck patent deal with Microsoft.

One new detail about Instagram: Facebook forked over “approximately 23 million shares of our common stock and $300 million in cash” to buy it.

Also, said Facebook, in an interesting new section on its global business:

“In the first quarter of 2012, 50% of our revenue was generated by users in the United States and Canada, a decrease from 54% of our revenue for the first quarter of 2011, and in 2011, 52% of our revenue was generated by users in the United States and Canada, as compared to 58% in 2010, as we experienced more rapid revenue growth in markets such as Germany, Brazil, Australia, and India.”

Here is the whole updated file, if you want to peruse yourself:

4thfbs1update

Yahoo turned in better-than-expected earnings today in its first quarter, and — as usual — I will be liveblogging the call with CEO Scott Thompson.

Yahoo beat Wall Street estimates in its first-quarter earnings report earlier today, with revenues of $1.08 billion and earnings of 23 cents. That’s a gain of 28 percent from a year ago in net earnings and 38 percent per diluted shares.

Earlier:
2:03 pm: We begin with a new investor relations dude, who has replaced Marta Nichols. She is now CEO Scott Thompson’s new chief of staff.

His name is Joon and he seems much more festive than Marta, who was very, very serious.

I could not be more thrilled.

Thompson comes on quickly enough and he is also pretty jaunty.

Yahoo has been “moving very fast” on a range of things. And how — this guy seems to eat Ritalin for breakfast.

But there is still a long way to go, he notes.

“I am not satisfied with the pace of top-line growth,” said Thompson, who added he would not be until Yahoo was keeping up with others like Google, which turned in a much stronger report last week.

He can’t get no satisfaction — but he will!

Thompson said one problem was still its ongoing search and advertising partnership with Microsoft. It’s still rocky in terms of monetization and more.

2:09 pm: But first, it is CFO Tim Morse’s turn to re-read the results that were just released.

I am not actually listening until he gets to the part about Thompson giving more deets soon.

Morse is teeing this up by noting that Yahoo is adding more to its bag of tricks beyond search and display, such as commerce.

This will take investments, which are core to success.

Thompson is back: “This business can and will grow going forward.”

I am holding him to that one!

He starts first by talking about Yahoo’s content business, which remains strong, but he points out the obvious: Engagement is off.

In other words, the kids love Facebook. Also Instagram. Also Tumblr.

That’s why Thompson says he told the staff of Yahoo to rethink it all when he arrived in January.

The conclusion:

“Yahoo has been doing way too much for too long and has only been doing a few thing well.”

As in, jack of all trades, master of none.

“We have to be clearer going forward about what we won’t do,” said Thompson.

2:22 pm: He goes over some specifics.

Shutting down 50 properties — Thompson does not say which, though.

Consolidating platforms.

Dedicating key teams to innovation.

Something else about being nimbler.

Data. Also data. Did I say data?

Research and development only for Yahoo-owned and -operated properties.

That is six points, which will be underscored by better execution.

Thompson has been talking about the “complex processes” that was once called peanut butter by one former exec.

Peanut butter is sticky and that’s the point.

2:26 pm: Oops, when talking about layoffs, Thompson says “PayPal” and not “people.” He used to run the eBay payments unit.

Thompson moves to the board changes — five new members and the jacking of five from previous year.

He then defends his decision to sue Facebook over patent infringement. “Facebook must do the same or change its practices,” he sad.

Thompson adds the company is in “active” talks with its Asian partners, Softbank of Japan and Alibaba of China.

And some news! Talks related to its Japanese assets have a gap in valuation, so Yahoo is focusing on the Chinese ones.

And in summation:

“We don’t have to reinvent who we are, but we do need to reinvent our experiences … We have to move and think like a growth company.”

That would be nice.

2:32 pm: Time for Q&A, in which I like to see exactly how wimpy Wall Street analysts can be in asking tough questions.

The first is asking about some strategery specifics, including whether it can get the cool $1 billion AOL just got from Microsoft.

Thompson talks about the new commerce unit, which will be co-led by someone who worked with him at PayPal. It’s not really new, since Yahoo is in that arena already.

Morse answers on intellectual property issues, noting Yahoo is happy to license its family jewels. Most tech companies use these patents as a defense, but no longer.

The next question is on morale of sales force. I can answer that! Not good!

But Morse says there is progress.

Bygones.

Morse also notes that Yahoo still has search revenue per share guarantee from Microsoft, but that he hopes it will get better before that deal runs out.

Back to Thompson. He wants better results to advertising customers.

He keeps saying “at or above the market rate.” Yahoo’s growth has been lackluster, so this would be a key victory if Thompson could pull it off.

2:39 pm: A question about mobile, which has been one of Yahoo’s most embarrassing holes of all.

Besides Facebook, the kids love those smartphones. You would not know it from Yahoo’s shoddy products.

“We need to get good real fast in mobile … and we’re not there today,” said Thompson. Actually, Yahoo was not there yesterday, either.

Note to Scott: Real fast is a good idea.

There is a question about its advertising platforms, a back-handed way of asking if it is for sale. It is.

Thompson notes that there has been a lot of evaluating, but that “we have not come to a conclusion.”

2:42 pm: A question about its revenues from its Asian assets. China’s Alibaba — which is not run by Yahoo — is doing great.

It’s kind of like being the dude who bought Apple some years ago and is now rich through no effort of his own.

Thompson addresses a question about dividends, which Apple just gave out. Yahoo will be sticking with stock buybacks, so everyone can put away those Porsche catalogs.

I am briefly distracted during some accounting questions by the new Apple ads with Zooey Deschanel. She is so adorkable, it makes me slightly queasy.

Back to Thompson, who is non-answering a question about possible acquisitions. He’s not talking, but I am sure he will be buying if he gets a transaction with Alibaba done finally.

Given the long and convoluted and always aborted deals over the years, this would be cause for much celebration if Thompson pulls it off.

(And, if he does, I pledge to buy him dinner in Boston at the restaurant of his choice!)

2:52 pm: A question of what the heck Thompson actually means when is he talking about using Yahoo’s data.

There are apparently three main places.

Personalization, which is uniquely related content, which gives him a chance to egregiously tout Boston sports teams.

Contextual advertising, which means ads you want.

And data and analysis to advertisers that will help them do a better targeting job. Oh, joy.

A search question, which I have decided to ignore, since I feel search is simply not Yahoo’s business any longer and should be sold off.

But what do I know?

Morse keeps yammering away on “better experiences for our users” by its search team.

Hey, it’s called Google. Then, Bing. And only then, Yahoo.

2:58 pm: Last question, which I missed while I was focusing on search ranting.

And with that, it’s back to the future for Yahoo. Hopefully.

Yahoo beat Wall Street estimates in its first-quarter earnings report today, with revenue of $1.08 billion and earnings of 23 cents. That’s a gain of 28 percent from a year ago in net earnings and 38 percent per diluted share.

Analysts had been expecting Yahoo to report revenue of $1.06 billion and earnings of 17 cents a share. But, as I reported earlier today, sources had indicated that the results would be on the upside.

Still, revenue was only up year over year by 1 percent — not exactly a great achievement, given exploding growth across the Internet industry. The real drag was the Europe, Middle East and Africa regions, whose revenue was down 9 percent — which Yahoo attributed to the weak economy there — with its “contribution” down 27 percent. That region has been run by Rich Riley, who is now Yahoo’s sales lead in the U.S.

One interesting note: While display revenue was down, search revenue was up. And unique visitors to Yahoo were up 7 percent, which was lower growth than in previous quarters. The reason was declines in search and communications, with media up strongly.

Now, investors are hoping to get more clarity from new CEO Scott Thompson in a call at 2 pm PT about the overall strategy for the troubled Silicon Valley Internet giant, which just restructured its management again and also had layoffs of 2,000 employees.

Thompson has yet to articulate a specific plan beyond the broad strokes of media, commerce and data/platforms as Yahoo’s aim.

But there is a lot more to deal with and in detail, including figuring out its troubled advertising search partnership with Microsoft, the talks around selling off parts of the company’s lucrative Asian assets, Yahoo’s patent lawsuit against Facebook, how Yahoo is going to deal with activist shareholder Third Point’s possible proxy challenge and whether more layoffs beyond recent firings will be needed.

“In the first quarter, Yahoo!’s results came in at the high end of our guidance range and beat consensus on revenue and profits,” Thompson said in a statement. “We also made changes to resize the organization and establish a new leadership structure to quickly deliver the best user and advertiser experiences at scale.”

Until Thompson gives more deets on the earnings call, which I will be liveblogging, here’s Yahoo’s official press release and cool charts on the subject:

YHOO News 2012-4-17 General

YHOO_Q112EarningsPresentation

Facebook has just taken strong aim back at Yahoo’s patent lawsuit with an answer and counter-claim filing of its own, alleging infringement over a number of issues.

“From the outset, we said we would defend ourselves vigorously against Yahoo’s lawsuit, and today we filed our answer as well as counter-claims against Yahoo for infringing ten of Facebook’s patents,” said Ted Ullyot, general counsel of Facebook. “While we are asserting patent claims of our own, we do so in response to Yahoo’s short-sighted decision to attack one of its partners and prioritize litigation over innovation.”

In its counter-claim filing involving 10 patents held by Facebook, the social networking giant said that Yahoo is infringing via a wide range of its offerings, including its homepage, content optimization, relevance engine, Flickr photo-sharing service and advertising throughout its huge site.

You know: The ads that make up most of Yahoo’s revenue.

In other words, Facebook CEO and co-founder Mark Zuckerberg does not like being poked by new Yahoo CEO Scott Thompson, especially on the eve of a $100 billion IPO.

You might have heard that Facebook is going public and it’s a big deal around Silicon Valley, which is why no one much liked Yahoo’s skunk-at-a-garden-party legal move two weeks ago.

Yahoo fired back at Facebook’s firing back, in a statement:

“We have only just received Facebook’s answer and counterclaims, but on their face we believe they are without merit and nothing more than a cynical attempt to distract from the weakness of its defense. As we have made clear from the outset, the unauthorized use of our patented technology is unacceptable and must be resolved appropriately. Other leading companies license these technologies, and Facebook must do the same or change the way it operates. We have proposed that Facebook join us in discussions to resolve the matter, but our overtures have been rejected. As a result, we are prepared to continue to seek redress through the courts.”

The new filing could not come at a worse time for Yahoo, which will announce thousands of layoffs of employees tomorrow morning, in a wrenching restructuring to revive its lackluster business.

In its legal filing, Facebook also pushed back on assertions in Yahoo’s initial patent lawsuit, noting that it denies that “[w]ithout Yahoo!’s achievements, websites such as Facebook would not enjoy repeat visitors or substantial advertising revenue.”

I think Facebook — which is sure to try to drag this thing out for a long, long time — just called Yahoo a tech loser.

Here is the full document:

FB_ANSWER_AND_COUNTERCLAIMS

More to come, obvi.

Here I am talking about the whole enchilada on WSJ Live’s News Hub.

Groupon’s restatement is only the latest financial debacle for the company, which had to change the way it accounted for revenue before it went public, as well.

This time it seems investors are less willing to shake off the restatement, and are having a hard time buying that it was a simple miscalculation on the company’s part because of a higher number of returns during the holiday period.

The company said on Friday it had to increase its refund reserves due to offering more higher-priced deals, which are more likely to be refunded by customers.

In midmorning trading, the company’s stock is down $2.17, or 11.8 percent, to $16.20. On Friday, the stock tumbled about 7 percent in after-hours trading.

The change in revenue was significant.

Groupon lowered its fourth-quarter revenue by $14.3 million, and its net income by $22.6 million. The company, which is trying to prove that the daily deals model is sustainable, is now reporting a wider net loss of $64.9 million on revenue totaling $492 million.

On Friday, the company also reported that an independent auditor issued a statement that it had a “material weakness” in its financial controls. It has been working with an accounting firm for several months, and will issue a report on its controls by the end of the year.

Following the restatement, multiple lawyers have issued releases looking for any wrongdoing. Specifically, they are investigating whether Groupon knew about the refund spike or the material weakness when they filed their registration papers and went public.

Mark Mahaney, a Citigroup analyst, said that Groupon’s growth is “extremely impressive,” and that the company has established a clear platform potential. But, he added, “with hyper-growth comes unusual execution/organizational challenges. GRPN management and investors are learning this the hard way.”

Other companies in the daily deals space, like Amazon and Google, have the protection of operating within a larger company, affording them more leeway to make blunders. LivingSocial, which is the second-largest provider, is privately held and has no immediate plans to go public.

Mahaney reaffirmed his “neutral” rating and $24 price point.

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.

It’s funny that people think iPad stories generate ad revenue for media companies. That’s not how it works.

– The Atlantic’s Alexis Madrigal, via Twitter

Rao (pictured right) will be joining the online communications network as VP of international revenue, and will be starting in April in San Francisco. In that job, he’ll be in charge of setting up direct sales operations in countries and in regions where Twitter is ready to monetize.

At Google, Rao was most recently head of Google’s display ads business for Asia.

McIntyre (pictured left) has joined Twitter as a director of online sales and operations, which is its self-serve product that will debut to small businesses in March. He will be based in Dublin, Ireland. He was most recently working on Google’s international self-serve ads team in Ireland.

Both will report to Twitter sales head Adam Bain, who heads a staff of 120 employees in the U.S., the U.K., Japan and Ireland.

The pair were not the only Google hires of late at Twitter. The company recently hired U.K. YouTube sales head Bruce Daisley to run its entire sales team there.

The Round Rock, Texas, company on Tuesday reported that revenue rose just 2 percent in the fiscal period ended Feb. 3, which included an extra week that Dell said added to its growth. Dell also projected that revenue in the current quarter would decline slightly, an estimate that was lower than analysts expected.

Read the rest of this post on the original site »

Demand Media, which has suffered from stock weakness and worries about its traffic and costs, beat Wall Street expectations in its fourth quarter earnings report, which was released after the market closed today.

The Santa Monica, Calif., online media company said it earned eight cents per share, up one cent on analysts’ estimates of seven cents. Revenue came in slightly higher too, at $84.4 million compared to an expected $81.95 million.

Still, Demand shares were down almost five percent in after-hours trading on the news, to $5.94.

Demand said that about $50 million of that came from its content businesses, while just over $31 million was due to its registrar business.

Free cash flow was up five-fold from $3.3 million to $18.3 million, which Demand said was due to cost controls and decreased spend on its flagship eHow site, which has seen changes in its content and distribution platform.

Demand also said it is going to buy back more of its stock, upping a $25 million plan to $50 million.

Said the company:

“During the fourth quarter of 2011, Demand Media repurchased 1.9 million shares of common stock for $13.3 million under its Board-authorized $25.0 million share repurchase program. To date, the Company has repurchased 2.8 million shares of common stock for $20.1 million. On February 8, 2012, Demand Media’s Board authorized an increase of $25.0 million to the program, taking its total authorized repurchases to $50.0 million.”

In a conference call with analysts after the reports, CEO Richard Rosenblatt acknowledged it was a “turbulent year,” but noted that Demand would be enhancing its properties for higher page views and more direct traffic.

He also addressed the departure of some of Demand’s founders. “All three were very important members of our team,” he said. “But it’s the natural evolution of a young company.”

If you want more deets, read all about it here in the company’s official press release:

4Q11 Results Release FINAL02.16.12

A little more than a week ago, Morgan Stanley kneecapped Demand Media’s stock by downgrading the Santa Monica, Calif., online content company’s prospects.

Some worries: Pressure from algorithm-tweaking Google, upon which Demand relies heavily for traffic; worrisome drops in said traffic due to said tweaking; and not enough uptake on higher-quality, premium stories the company had promised in the fall.

Demand shares fell 6.5 percent that day, to close at $5.93.

It has recovered a bit to $6.13 today, but is still off almost 8 percent since the beginning of the year, and 71 percent from a year ago.

One irony to the tough call by Scott Devitt, of course, was that Morgan Stanley was the investment bank that had taken Demand public in January of 2011, at $17 a share.

In addition, the recent departure of three of the company’s six founders has also worried investors.

All this will presumably be on display today when Demand reports its fourth-quarter earnings. Wall Street analysts are expecting Demand to earn seven cents a share on an adjusted basis on an expected $81.95 million in revenue.

We’ll see after the market closes, as well as what its execs have to say about the key metrics of costs and traffic.

Traffic to the website — which lets users create online scrapbooks to share images of projects or coveted products — has grown tenfold over the past six months. In January, the number of visitors on Pinterest.com was almost a third of that on Twitter.com.

There is one problem: The 16-person Palo Alto, Calif., start-up isn’t sure how it is going to make money.

Read the rest of this post on the original site »

The maker of digital media delivery software reported $80.2 million in revenue for the fourth quarter of 2011, a decrease of 5 percent from the previous quarter and an 18 percent year-over-year decrease. That included a 21 percent decrease in games revenue to $21.6 million.

And its net loss for the year was $27.1 million, compared to a $5 million profit a year ago. In its outlook, RealNetworks said it expects revenue from each of its segments to decline sequentially and year over year, as new CEO Thomas Nielsen continues to restructure and simplify its businesses.

But, amid a growing social gaming market, RealNetworks is clinging to its GameHouse business — at least for now. The company has said twice before it was planning to spin off the unit, but is still holding on to what it believes could be a social gaming “powerhouse.”

While RealNetworks doesn’t break out gaming data other than the aggregate games revenue, the company’s declines were offset somewhat by gains in its social gaming business, it said.

RealNetworks’ GameHouse, as my colleague Tricia Duryee explains here, concentrates on casual games, such as puzzle games, slot machines or what might be described as “match-three” games. Currently some of its best titles are UNO, Scrabble, Collapse! Blast and its latest, Bayou Blast. Its revenues are generated from microtransactions of virtual goods.

Over the past year, GameHouse has been edging toward a top 10 ranking in terms of game makers on Facebook.

And it’s seeing a boost in daily and monthly active users that is encouraging to Matt Hulett, who’s been running the gaming arm as its president for the past year.

GameHouse’s daily active users have now hit 1.3 million, up from 700,000, Hulett said, and its monthly active users increased around 3 million to more 7.5 million. (For perspective, Zynga now has 240 million monthly active users.)

Hulett also said that GameHouse’s daily user traffic is up 75 percent quarter over quarter. Users seem to like the new Blast games, Hulett said, which he’s hoping will drive growth in the first quarter, and GameHouse plans to introduce two or three new games in the next few months, including a slots game. It also plans to expand its 270-person staff by about 45 people by the end of this year.

But on the earnings call, RealNetworks’ Nielsen would say only that GameHouse “could” be a business the company might anchor itself around, and that if it focuses entirely on gaming, the other parts of RealNetworks, which include digital video delivery and download tools and the Rhapsody subscription music service, would no longer fit into RealNetworks. (In January, RealNetworks successfully sold $120 million worth of software and patents to Intel, as the chip maker looks to use the technology in current and upcoming video streaming products.)

Another scenario could be that previously mentioned spinoff as RealNetworks looks to streamline. And the market is ripe for social gaming companies: In recent months, DoubleDown and PopCap have sold to bigger gaming companies for $500 million and $1 billion, respectively.

“We have perhaps been sniffed more times than a dog at a dog park,” Hulett said, reiterating that there’s been a lot of inbound interest for GameHouse.

Whether one of those sniffs has come from a gaming company named after a dog — Zynga — Hulett declined to say. “When we’re ready to do something, we’ll do it.”

OpenX, the online digital advertising upstart, announced this morning that it had reached profitability for the first time, as well as “exceeding an annualized revenue run rate of more than $100M” in its fourth quarter.

It’s certainly a milestone for the Los Angeles-based start-up, which competes with a little company called Google. OpenX has raised almost $51 million in funding since 2007, the latest round being $20 million last year.

CEO Tim Cadogan — a former Yahoo ad exec who arrived at OpenX in 2008 — talked about all this, and about where the online display market online is headed, in a video interview with me last week.

Here’s the chat, and the official press release from OpenX, too:

OPENX ANNOUNCES FIRST FULL QUARTER OF PROFITABILITY

Leading provider of digital advertising technology achieves annual run rate exceeding $100M

LOS ANGELES, February 13, 2012 – OpenX Technologies, Inc. (OpenX), one of the world’s leading providers of digital advertising technology, today announced it achieved a profitable fourth quarter as well as exceeding an annualized revenue run rate of more than $100M. The company also announced that it expects to continue its record of profitability during 2012 with continued robust growth across all areas of the company’s business.

2011 was a year of extraordinary success for OpenX during which the company served more than one trillion ad impressions and now handles more than 200 billion ad transactions per month. OpenX Market, the company’s unique ad exchange platform, saw a particularly strong year-over-year rate of growth of nearly 700%. This massive growth in OpenX Market is due to a growing number of publishers and advertisers recognizing the precision and strength of ad exchanges with the quality of both buy-side and sell-side customers that OpenX attracts. The company also continues to operate and manage key global partnerships, including OpenX Market Japan, a partnership with cyber communications inc. (“cci”), a subsidiary of Dentsu Inc.

The company’s advertising technology services, which include OpenX Enterprise, achieved a Q4 year-over-year growth rate of 100% compared with the same period in 2010, due to the acceleration of OpenX Enterprise, the company’s Software as a Service ad serving platform. OpenX has made significant progress over the last year in terms of both product adoption and revenue, proving its paradigm-shifting revenue serving capabilities are not only capable of driving revenue for publishers but can also do so at scale.

“2011 was a breakthrough year for OpenX with huge growth in global adoption of OpenX Enterprise and the phenomenal expansion of OpenX Market,” said Tim Cadogan, chief executive officer, OpenX. “Providing a comprehensive revenue serving solution for publishers to make them more money is the heart of what we are building and we are clearly demonstrating that we are able to do this at massive, global scale. The quality of the OpenX team and the growth levels we’re seeing put us in an incredibly strong position for 2012.”

With the launch in early 2011 of OpenX Enterprise, the Company offered the online advertising market the first true total revenue serving platform to make publishers more money. Since OpenX Enterprise combines an ad server with an ad exchange, it enables publishers to manage exclusive, guaranteed, non-guaranteed and real-time revenue sources all in one unified platform. As a result, for the first time publishers can maximize yield across all their ad revenue channels in real-time in one place.

Adoption of OpenX by major publishers, advertisers and partners has grown rapidly and is now used by thousands of customers across the world, including Groupon, cci, TheStreet.com, Turn, Invite Media, MediaMath, and [x+1].

“Reaching profitability is an important milestone in OpenX’s story,” said Rick Gombos, chief financial officer, OpenX. “What’s even more important is that we have achieved profitability by any measure of financial performance — EBITDA, cash flow and net income.”

]]> http://allthingsd.com/20120213/ceo-tim-cadogan-talks-about-openxs-first-profitable-quarter-and-where-ad-tech-is-going-next-video/feed/ 0 http://allthingsd.com/20120212/yahoo-product-unit-readies-major-exec-reorg-but-its-just-a-tremor-for-the-big-one-to-come/ http://allthingsd.com/20120212/yahoo-product-unit-readies-major-exec-reorg-but-its-just-a-tremor-for-the-big-one-to-come/#comments Mon, 13 Feb 2012 00:14:14 +0000 Kara Swisher http://allthingsd.com/?p=173742

Yahoo’s massive product unit is readying a major reorganization, which will include a new structure, a move that is being spearheaded by its Chief Product Officer, Blake Irving.

But the ground under Irving, as well as several of the Silicon Valley Internet giant’s top execs, is about to get shakier too, due to a wide range of changes now being plotted by newly installed CEO Scott Thompson.

While still in the early stages of formulation, sources said Thompson has been mulling bringing in a head of global advertising sales or revenue chief, as well as more top product execs, as he moves to initiate a plan to shake up Yahoo and also put his own stamp on the company.

Layoffs and possible wholesale abandonment of certain businesses Yahoo is currently in are likely to be parts of this larger plan.

Confused yet? So am I, but let’s sort through all the latest activity.

First, there’s the Yahoo product redo, which has been in the making for a while, well before Thompson arrived last month.

Under the new plan, which is described as “an evolution rather than blowing up the place,” Yahoo’s famously matrixed product unit could be split into three distinct areas: Monetization, which is expected to be headed by longtime exec Mark Morrissey; platform, with cloud dude Jay Rossiter in charge; and consumer-facing products, possibly in the hands of search kingpin Shashi Seth.

The idea behind the latest setup, presumably, is to spur innovation and make it easier for Yahoo to spit out products more quickly. Its recent Livestand tablet app, for example, was late to the game and continues to struggle to gain any real ground, said sources.

Overall, Yahoo still continues to lag behind other Internet rivals in a number of product arenas, for reasons that Thompson is delving into.

The way products are made got a long look-see this past week, in a day-long meeting that Thompson had with Yahoo’s top team execs. Thompson reportedly quizzed the group on its plans, and pressed it to look less at short-term features and maintenance than on finding the next great thing.

“I think it’s fair to say that Scott is wondering why Yahoo did not come up with innovations like Pinterest and Instagram,” said one person about hot new start-ups that are in the sweet spot of Yahoo’s business. “Or, at the very least, why it did not even try to buy them.”

That’s why Thompson, with the help of board members, including David Kenny, has been on the hunt for new talent for Yahoo. That includes a search that is on for a new head of marketing, too.

Thompson has been doing the same kind of assessment with Yahoo’s media and advertising execs, who include Americas head Ross Levinsohn, as well as Asia’s Rose Tsou, and Rich Riley, who heads its efforts in Europe, Africa and the Middle East.

Sources said he believes that Yahoo might need a head of global sales or a chief of revenue to better organize and align its key advertising business. Ad revenues now make up a bulk of Yahoo’s business.

As Thompson has said numerous times publicly since he came on board, he is seeking to diversify that revenue, focusing on new businesses and also goosing non-ad ones already performing well. In Asia, for example, Yahoo has a robust online commerce business in comparison to other regions.

“Yahoo has to slim down and focus in some ways and bulk up in others,” said another source.

Of course, all of this might be moot, depending on how activist shareholder Daniel Loeb, who is prepping his own frontal attack on making changes at Yahoo, decides to move. According to sources, Loeb is assembling his own slate and trying to garner support from other shareholders, in hopes of further improving the value of his more than five percent stake.

What form that will take is unclear, but it’s not completely friendly at the moment.

In addition, Yahoo execs and its board are trying to wrap up a deal to sell off parts of its Asian assets in Alibaba Group and Yahoo Japan, part of a massive arrangement that could bring many billions of dollars of assets and cash into the core company that is left.

Which could then make Yahoo more able to compete, and give Thompson a war chest to do so — or make it an even tastier treat for a wide range of outside investors looking for a deal.

Like I said: Confused yet?

A Yahoo spokeswoman declined to comment.

]]> http://allthingsd.com/20120212/yahoo-product-unit-readies-major-exec-reorg-but-its-just-a-tremor-for-the-big-one-to-come/feed/ 0 http://allthingsd.com/20120208/apple-gets-the-credit-and-the-cash-for-growth-of-mobile-computing-revenue/ http://allthingsd.com/20120208/apple-gets-the-credit-and-the-cash-for-growth-of-mobile-computing-revenue/#comments Wed, 08 Feb 2012 12:35:05 +0000 John Paczkowski http://allthingsd.com/?p=172373 What would the mobile computing industry (defined for this purpose as smartphones and tablets) be without Apple, had the company not entered it in June of 2007 with the iPhone?

Less lucrative, that’s what.

Charting the industry’s performance over the past five years, Morgan Keegan analyst Tavis McCourt figures its revenue in the fourth quarter of 2011 — $71.4 billion — is about twice what it was in the fourth quarter of 2007 — $37.9 billion.

But remove Apple from the picture, and that revenue declines — dramatically.

Turns out that without Apple, the mobile computing industry’s revenue in the fourth quarter of 2011 would be about what it was in the fourth quarter of 2007.

In Q4 2007, that was $37.93 billion. And in Q4 2011, it was $37.97 billion. In other words, non-Apple revenue in the mobile computing industry has been nearly stagnant for five years. Which is not to say that revenues wouldn’t have grown had Apple never entered the scene. Just that Cupertino has been doing a hell of a job commandeering a lot of their growth the past few years.

And that’s remarkable. Because overall, the industry’s revenue has increased over that time; it’s just that the bulk of that increase has gone to Apple. In the fourth quarter of 2011, for example, Apple generated $33.5 billion in mobile device revenue, which is about 47 percent of the $71.4 billion generated by the broader industry.

What seems to be happening, then, is that the bulk of the industry’s revenue growth is accruing to Apple, and because the company has the highest margins around, that’s where most of the profit is ending up, as well. Consider the earnings before interest and taxes chart, below.

“Apple is dominating the industry’s pool of profits,” says McCourt. “With about 11 percent of industry shipment volumes of smartphones and tablets, Apple generates about 47 percent of the industry’s revenues, and over 80 percent of its operating profits.”

]]> http://allthingsd.com/20120208/apple-gets-the-credit-and-the-cash-for-growth-of-mobile-computing-revenue/feed/ 0 http://allthingsd.com/20120206/yahoo-starts-making-wish-list-as-asian-deal-huffs-to-finish-line-and-board-changes-readied/ http://allthingsd.com/20120206/yahoo-starts-making-wish-list-as-asian-deal-huffs-to-finish-line-and-board-changes-readied/#comments Mon, 06 Feb 2012 13:45:26 +0000 Kara Swisher http://allthingsd.com/?p=170888

Let’s be clear on the much-awaited Asian deal that Yahoo and its Asian partners have been working on: While it is certainly still moving forward, once signed, it will not actually officially close until next year.

Yes, that’s right — 2013!

Still, what everyone and his investor is waiting for is the splashy announcement of the agreement, which involves the Silicon Valley Internet giant, China’s Alibaba Group and SoftBank, a large shareholder in Yahoo Japan.

Yahoo leadership has been hoping that could happen before Feb. 24, an important date after which activist shareholder Daniel Loeb could begin to mount a proxy fight against the current board.

And while the definitive agreement — involving the sale of Yahoo’s 33 percent stake in Alibaba and 35 percent stake in Yahoo Japan — has been moving back and forth among the dealmakers, one source said its completion might take a little longer than that, perhaps even into mid-March.

“It is one of the most complicated cross-border transactions in a long time,” said one person close to the situation. “It’s three different languages, three time zones and three companies that have not always seen eye to eye.”

It’s not that the companies don’t have the top talent on the effort. For Yahoo, it is CFO Tim Morse (who most recently also warmed the CEO seat, until Scott Thompson’s recent appointment); for Alibaba, it’s CEO Jack Ma and CFO Joe Tsai; and, for SoftBank, it is top man Masa Son and his top man Ron Fisher.

To make things even more complex, at the same time as the negotiating is going on, the trio also has to pay mind to how the Internal Revenue Service in the U.S. is going to view the whole deal.

As you can see here from a Wall Street Journal chart, it’s a pretty complicated “cash-rich split-off” to avoid taxes.

While the IRS cannot take an application for a “private letter ruling” until it has an actual agreement in hand, and will not issue one on a hypothetical transaction, the agreement still must be crafted so it is most likely to pass muster.

And only then can anyone move on to the many billions of dollars that Yahoo will instruct Alibaba and SoftBank to pay or contribute in kind for the asset part of the arrangement.

As the Journal noted, in more clarity than I ever could: “A key part of satisfying tax-code requirements is that the company shedding its shares get assets, not just cash, in exchange for them. Cash can’t account for more than two-thirds of the transferred value, tax rules say. This restriction was adopted in 2005 to limit misuse of the provision.”

While Yahoo’s execs have met about the various possibilities, it is more considering now than anything else.

And although a lot of names have been bandied about — Weather Channel, WebMD, as well as Glam Media and even Digg — the more likely direction Yahoo will go in will be different, according to many sources.

First, said sources, the key criteria for the purchase will be to diversify revenue streams, a theme Thompson sounded in his first earnings report recently. That could mean more online commerce, perhaps, rather than advertising or media assets.

Second, said sources, international properties might be more valuable to Yahoo than owning more U.S.-based ones, which opens up a range of interesting possibilities.

This could even include some already held by Alibaba, for example, such as garnering a big stake in its publicly-traded Alibaba.com. That property has become a prime candidate for the deal, said several sources, for a number of reasons.

Technically, via Alibaba, Yahoo already owns some of the e-commerce giant, but not directly. Another possibility is to get back the Yahoo China business, also now owned by Alibaba.

Third, U.S. companies that Yahoo might look at could be unusual and even bold. Two names brought up in recent internal meetings, for example, were Netflix (before its stock revived) and Yelp (which is prepping for an IPO, and which Yahoo once tried to buy already).

And if things were not already needlessly complex in fixing its Asia problem, expect a change in the Yahoo board composition, too, as early as this week.

As I previously reported, at least four directors are expected to move on. More to the point, there will also be replacements announced at the same time.

To stave off Loeb and even give him a perceptible win, sources said the company is considering announcing the changes sooner than later, with the hope that fresh new members will placate other shareholders.

Lastly, with Thompson starting to take the reins after a month there, I would also expect he’ll weigh in on some significant restructuring (his word, not mine!) at Yahoo soon enough, too.

Complicated? Sure is! Perplexing even? And how! But until Asian and board resolutions, the real work of fixing Yahoo can’t really begin.

]]> http://allthingsd.com/20120206/yahoo-starts-making-wish-list-as-asian-deal-huffs-to-finish-line-and-board-changes-readied/feed/ 0 http://allthingsd.com/20120201/aol-beats-low-expectations-increasing-ad-revenue-and-slowing-total-decline-in-q4/ http://allthingsd.com/20120201/aol-beats-low-expectations-increasing-ad-revenue-and-slowing-total-decline-in-q4/#comments Wed, 01 Feb 2012 12:26:06 +0000 Kara Swisher http://allthingsd.com/?p=170144

AOL said it earned 23 cents a share for the fourth quarter on revenue of $576.8 million, compared to 60 cents per share on $596 million in the same quarter a year ago.

Wall Street analysts had expected the New York-based Internet company to earn 16 to 17 cents on revenue of $572 million.

While the results are still down significantly from a year ago, AOL’s stock has been rising — gaining more than 25 percent in the quarter — since CEO Tim Armstrong has improved advertising revenue.

That was up 10 percent in the quarter, the third consecutive quarterly increase.

Subscription revenue from its access business continued to fall — down 18 percent — although that was the lowest rate of decline in five years.

AOL also noted that it had encouraging improvements in certain areas of its business:

Video: AOL grew its videos, video views, video ad impressions and revenue at double-digit rates.

Brand Advertising: Project Devil advertisers, impressions and revenue grew at double-digit rates.

Local: Patch grew traffic, advertisers and ad impressions more than 100% year over year.

Traffic: Consumer usage was flat to Q3 2011, as growth in the Huffington Post Media Group sites offset declines at MapQuest and AIM.

But read for yourself — here are all kinds of charts and graphs from AOL:

AOL_Q4_2011_Earnings Release

AOL_Q4_2011_Earnings_Presentation

AOL_Q4_2011_Trending_Schedules

]]> http://allthingsd.com/20120201/aol-beats-low-expectations-increasing-ad-revenue-and-slowing-total-decline-in-q4/feed/ 0 http://allthingsd.com/20120123/lucky-13-after-more-than-a-dozen-failing-quarters-how-will-new-yahoo-ceo-roll-the-dice/ http://allthingsd.com/20120123/lucky-13-after-more-than-a-dozen-failing-quarters-how-will-new-yahoo-ceo-roll-the-dice/#comments Mon, 23 Jan 2012 21:49:21 +0000 Kara Swisher http://allthingsd.com/?p=166262

Yahoo will report its fourth quarter earnings tomorrow, after the markets close, which most expect to be lackluster compared to a year ago.

To call this report a surprise would be, well, wrong.

In fact, it will be the 13th quarter in which the Silicon Valley Internet giant has done worse that the previous year. (This has happened as Internet advertising has boomed for sites like Google and Facebook, as a point of reference.)

Welcome aboard, new CEO Scott Thompson! Now, what are you going to do about it?

Probably cut costs first, including staff, and try to quickly figure out an all-new, this-time-it’ll-take strategery about what to do to turnaround the much beleaguered Yahoo.

But, first, the depressing quarter to deliver again.

The estimates for that weak performance have a range, but the consensus of analysts is expecting revenue to be $1.19 billion on profits of 23 to 24 cents. If Yahoo has managed to rein in costs more than expected, some analysts are hoping for a slightly better report.

Still, all the indications are for more negative signs in user engagement, search share, display advertising stats and more.

Thus, we await the light at the end of the tunnel.

As Citigroup’s Mark Mahaney noted in his cheat-sheet analysis:

“Valuation remains intriguing, but we’re still waiting for convincing Top-Line Turnaround Story Proof. With new CEO Scott Thompson, we believe YHOO will be another wait-and-see turn-around story.”

Of course, much of the action is taking place elsewhere, with the company ferreting away at the deal to sell off a big stake in Yahoo’s Asian assets and also subtracting and adding new board members.

But tomorrow, it’s once more unto the Wall Street breach, dear friends, or close the wall up with our purple dread.

Until the results are in, here’s a recent video I did for WSJ.com’s online Digits show on the possible layoffs at Yahoo:

]]> http://allthingsd.com/20120123/lucky-13-after-more-than-a-dozen-failing-quarters-how-will-new-yahoo-ceo-roll-the-dice/feed/ 0