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"Bromance Gone Awry" and Other Instagram Tidbits on Bloomberg West (Video)

Kara Swisher — Wed, 08 May 2013 18:55:51 +0000

Earlier this week, I appeared on Bloomberg West with the ever-delightful Emily Chang to talk about my recent article in Vanity Fair magazine about the rise of Instagram and its sale to Facebook, titled “The Money Shot.”

You can read the full piece here or here, but this turned out to be a long — 10 minutes — interview that has a lot more detail (if you are interested, of course).

Among other things, Chang asked me more about the fractured relationship between the mobile photo-sharing app’s co-founder and CEO Kevin Systrom and one of his key mentors, Twitter inventor Jack Dorsey, in the wake of the billion-dollar sale to Facebook (and not Twitter), which I called a “bromance gone awry.”

Indeed, Dorsey’s quote on the end of their relationship over Instagram’s choice was pretty sad:

“I found out about the deal when I got to work and one of my employees told me about it, after reading it online I got a notice later that day since I was an investor,” said Dorsey. “So I was heartbroken, since I did not hear from Kevin at all. We exchanged e-mails once or twice, and I have seen him at parties. But we have not really talked at all since then, and that’s sad.”

As I also wrote, “Dorsey’s last Instagram shot perhaps said the proverbial thousand words about it all: A picture of an empty Muni bus” (which is seen above).

You can’t always get what you want, but here’s the Bloomberg West interview, anyway:

Eventbrite Hires CFO in Expansion of Top Exec Ranks

Kara Swisher — Tue, 02 Apr 2013 17:00:41 +0000

In its first C-level hire from outside the company, Eventbrite has brought in experienced finance exec Mark Rubash as CFO. The San Francisco-based self-service ticketing platform has hired the former Shutterfly CFO — who also held top finance jobs at eBay and Yahoo — to focus on scaling and expanding its business model and global growth.

And while CEO and co-founder Kevin Hartz declined to say in an interview whether the move was Eventbrite’s first major step toward a possible IPO, he did underscore the need to gird the company’s management for future expansion.

Recently, the company said it had sold $1.5 billion in gross ticket sales since it was founded five years ago, with total tickets sold topping 100 million. Eventbrite said that it had sold $600 million of that in 2012 alone, hawking 36 million tickets in 179 countries for such events as San Francisco’s iconic Bay to Breakers footrace.

That kind of hypergrowth requires some more experienced management, “independent of any public offering process,” said Hartz.

“We had an opportunity to bring in a great operator to help us become a multi-category e-commerce marketplace,” he said. “Mark has deep experience in building marketplaces of buyers and sellers.”

Indeed. At eBay, Rubash had global purview over eBay finance, investor relations, accounting and more, while he ran Yahoo’s global finance for its paid search, display advertising and e-commerce units. He has also worked at PricewaterhouseCoopers, and at companies such as HeartFlow, Rearden Commerce and Critical Path.

“It’s a real alignment of what I am passionate about, with a team I really enjoy,” said Rubash. “With the mass of transactions growing on a global basis at Eventbrite, it’s the kind of challenge that is really hard to resist.”

Eventbrite’s investors include Tiger Global, Sequoia Capital, DAG Ventures and Tenaya Capital, with about $80 million in funding raised since 2006.

Q4 Earnings Call: Mayer Says "Chain Reaction" Needed to Blast Yahoo Into the Future

Kara Swisher — Mon, 28 Jan 2013 22:11:56 +0000

Earlier today Yahoo reported fourth-quarter earnings that beat analyst estimates, on still-flattish revenue.

Still, up is up, even if it is not really that much up, so Wall Steet bid up shares of the Silicon Valley Internet giant in after-hours trading.

Now it’s onto the conference call with investors for CEO Marissa Mayer:

2:02 pm: Before the call, you can hear Mayer complaining about the goofy music played during the pre-conference call waiting time.

“We have to get better music,” she says to some minion. “This is not good music.”

Music to my ears! I say we get Beyoncé, lipsyncing or not.

The call starts quickly after that, with the ever-eager Mayer leaping right in with the fourth-quarter news, which is not all that bad.

It’s the first full year of growth in a while — though not the first quarter-to-quarter increase — even if it is only a very modest two percent increase.

That compares to industry-wide gains in revenue of many, many, many times that, but for Yahoo this is cause for a parade. A small parade, with good music, but a parade nonetheless.

“It’s hard to believe this is only my first full quarter here at Yahoo,” says Mayer in an upbeat tone.

She notes that her focus on product excellence and user experience was continuing, with some “early positive trends” in both products and people.

Mayer then list a series of moves, from the free food and better smartphones for employees to the addition of well-regarded entrepreneur Max Levchin to the board to the refreshes of Yahoo Mail and Flickr to the acquisition of some sassy new mobile startups.

Mayer also notes that the company under her purview had removed “385 of highest priority obstacles,” although she did not name any specifics.

I imagine what No. 332 is: Switching out the iceberg lettuce at the URL cafeteria on Yahoo’s Sunnyvale, Calif. HQ campus with some tasty organic mesclun as they have at Google, from whence Mayer came.

Better roughage means better returns!

2:14 pm: Mayer turns the call over to CFO Ken Goldman, also a newbie. As usual, he runs through the numbers that are already in all the releases already. But I am enjoying his New England accent, hoping he will say the slight increase in revenue was “wicked” good.

Goldman, in fact, calls the revenue increase “modest,” which is true, although it sounds like “mah-dist.”

What’s not mah-dist is how much stock Yahoo has bought back, using its windfall from the recent sale of assets in China. It’s $1.45 billion, with more that that left to use for more share buybacks. That should keep Yahoo’s stock up nicely.

Goldman also talks about increases in the company’s search business, although notes that the Microsoft relationship is still not the most fantastic.

He speaks more effusively of Yahoo’s Asian partners, including Yahoo! Japan and China’s Alibaba Group. It’s deserved, since they have been the company’s treasure trove against its meh core performance in recent years.

Not so tasty is the problem Yahoo has with a big-money contract dispute in Mexico, which Goldman reiterates is “without merit.”

2:28 pm: Goldman moves onto Yahoo’s cash position, which is strong and which he says is going to be used to make the company better.

Mayer is back on board, talking about key focuses over multiple years.

She says Yahoo needs a “chain reaction of growth,” which needs to be fueled by a dozen new products that become a daily habits for consumers to increase usage and other metrics.

A nuclear bomb explosion is not exactly the best metaphor for a company’s turnaround, but in Yahoo’s case it is probably a pretty good one, given how stubborn its decline has been.

Mayer then switches the metaphor to one she recently used about “returning to the roots” of Yahoo.

Actually, mixing the metaphors, Yahoo has to blast some significant roots that have gotten in the way of its innovation over the years.

“The best is yet to come,” promises Mayer, in what she says will be a multi-year effort.

Now onto questions from the analysts!

2:40 pm: The first question is about commercialization of its products. Mayer answers she is both pro-advertising and anti-ad — meaning they are good when they add to user experience and bad when they do not.

There will be slight margin declines due to this, which is the real point of the query, which Goldman says will not be too impacted.

The next question is on the weaker performance in display ads and whether mobile ads can ramp up quick enough or not.

Yahoo is not breaking out mobile revenue numbers as yet — it’s not impressive as yet, so that’s what’s going on there — although Mayer points to the number of mobile users increasing to 200 million now.

As to the declines in display, Mayer gives a non-answer, but it is likely due to big changes that new Yahoo COO Henrique De Castro has put into place in the way it sells ads and which AllThingsD.com previously reported on. Mayer earlier in the call had confirmed those changes.

The fact of the matter — which is just what the analyst was asking about — is that Mayer simply has to improve display revenue, which is Yahoo’s core business.

Mayer then addresses the issue of not providing usage metrics anymore. Yahoo has withheld a lot of them since she has taken over, and she says it is because they are not indicative of metrics that, well, she thinks you need to know.

Instead, Mayer points to other metrics that she feels are better, such as number of ads sold and price per click on search.

Speaking of search, the next question is about that. What can Mayer say — and she does — but that Yahoo must also improve in that area. Indeed, it is lucrative low-hanging fruit for the company.

Here comes an interesting observation she makes based on a question of mobile versus desktop, which Mayer says should not be separated as two areas as consumers don’t think that way.

Yahoo is tuning up a dozen products, she says, having started with Yahoo Mail and its Flickr photo-sharing app.

2:54 pm: Mayer is not saying which of this dirty dozen is next to get a makeover.

“We’re investing in small, nimble, excellent teams,” says Mayer, who then tries to reference a famous Margaret Mead quote, but ends up mangling it a bit.

It is, for the record: “Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.”

This is true, which might make some Yahoo staffers nervous, since Mayer’s recent stack ranking of them means she can start on employee layoffs anytime she likes to separate the wheat from the chaff.

3:01 pm: Whoo-whee, this is going long and I am getting weary. Mayer has to be some kind of digital Energizer Bunny — she just flew in from the World Economic Forum in Davos, Switzerland and moved right into the prep for the Q4 earnings.

Tomorrow, she is presumably off to Las Vegas, where Yahoo’s global sales conference will start and she will doubtlessly be making an appearance.

I am exhausted simply by walking up and down the stairs at my house.

The next question is about third-party publishers and ad tech on mobile.

“Mobile monetization is new for everyone,” she says correctly, making the point that no one knows what is going to shake out.

She uses — as she has used — the example of when people thought search was not a moneymaker until Google proved otherwise.

The problem is, of course, that Google is Yahoo’s biggest rival in this new mobile ad arena, along with Facebook and many others. And Google, as its recent results showed, does know how to make money compared to Yahoo.

The next question is about mobile monetization eating into desktop revenue.

Mayer notes that Yahoo has hired 120 people with computer science degrees in the quarter to work on that area.

In other words, get ready for a symphony of geeks to return Yahoo to relevance.

Would they can pull it off, as that would be a tune worth listening to.

Speaking of something worth listening to, here is a video of Diana Ross’ song, “Chain Reaction,” to enjoy:

Facebook COO Sandberg Sells $26 Million in Shares

Mike Isaac — Sat, 08 Dec 2012 17:50:06 +0000

Sheryl Sandberg, chief operating officer of Facebook, sold nearly 1 million shares of company stock on Friday, according to an SEC filing. The sale comes after a strong November on the Nasdaq for Facebook shares, as the stock price rose nearly 40 percent over the past 30 days. Sandberg netted close to $26.2 million from the sale, though she still retains close to 20 million shares of company stock.

Will the "Marissa Mayer Premium" -- or Is It Those Hedge Fund Dudes Piling in -- Finally Get Yahoo's Stock to $20 a Share?

Kara Swisher — Wed, 21 Nov 2012 20:38:22 +0000

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.

Lolly Wolly Doodle's Brandi Temple Talks Facebook-Fueled, Real-Time Retail

Kara Swisher — Tue, 30 Oct 2012 19:30:36 +0000

When you have a name like Lolly Wolly Doodle, it’s hard not to get some kind of attention.

And, in fact, the online retailer of personalized, monogrammed children’s clothing has gotten a lot of it, mostly on Facebook, in what is one of the more successful efforts to take advantage of e-commerce on the social networking platform.

The company was founded by a North Carolina stay-at-home mom, Brandi Temple, who sewed clothes for her four kids. She started to branch out locally with simple A-line dresses for girls, then moved online at eBay and elsewhere, eventually almost primarily using a system on Facebook to sell her goods.

Essentially, Temple is doing a modified version of a flash sale, but with just-in-time retail elements. Customers fan the Lolly Wolly Doodle site, which puts daily sales alerts into the news feed. Once a new item comes up, the buyer comments on it with the size, the monogram desired and an email. The first people to comment get the item and pay for it immediately.

Only then is it actually made, in a kind of real-time social cycle. Unlike most retail, which is made and then sold, Lolly Wolly Doodle knows just how much demand is out there, and improves it with easy personalization.

It does not always work out on any individual item, but the fans have added up to 400,000, as have sales. With that success, Temple has raised $1.7 million in funding.

She was out in San Francisco recently, considering more investment to expand to new categories and improve on distribution arenas such as Pinterest, although she is definitely wary of taking too much money from venture capitalists for something that is already working well.

In other words, Temple is one sharp cookie.

You can hear all about it in the video interview I did below, explaining how she has turned shoulder bows and ruffles into an online phenom:

[ See post to watch video ]

With Low Expectations for Q3, Wall Street Hoping for New Yahoo CEO Mayer to Shine a Light at End of Tunnel

Kara Swisher — Mon, 22 Oct 2012 15:49:25 +0000

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.

BMC Software Explores Potential Sale

Anupreeta Das — Mon, 01 Oct 2012 19:50:40 +0000

BMC Software Inc., a $6.6 billion business software company, is exploring a potential sale.

BMC, which in July agreed to nominate two board directors chosen by activist hedge fund Elliott Management, has selected Bank of America Merrill Lynch to assist it with a strategic review, including seeking a buyer for the company, people familiar with the matter said.

Read the rest of this post on the original site »

As Yahoo Readies Doling Out Alibaba Billions to Shareholders, Mayer Memo Says Tech Reporters Can't Add

Kara Swisher — Mon, 01 Oct 2012 13:25:11 +0000

Yahoo could announce in the coming week what it plans to do with the billions of dollars it recently garnered after closing the sale of a portion of its stake in China’s Alibaba, according to sources close to the situation.

As AllThingsD has previously reported, the company is most likely to do a share buyback with the $3.65 billion, a move that could boost its still-lackluster stock.

That’s what happened when AOL did one in late June after it got a pile of cash from hawking its patent assets. Its shares are up more than 25 percent for those last three months, while Yahoo’s have gone up less than one percent in the same time frame.

When it announced the completion of the deal in mid-September, Yahoo said that it would hand over 85 percent of the after-tax proceeds to shareholders. (The Silicon Valley Internet giant will keep about $650 million for its own use.)

At the time of the transaction, a Yahoo spokeswoman said that the company declined to give any specifics around the form of return. The company could also, for example, decide to give investors a dividend, too, although Yahoo has long explicitly favored stock buybacks.

“The form and timing of returning proceeds will be determined by the board and management, taking into consideration the best interests of the company and its shareholders,” said the Yahoo flack.

Speaking of flak, new CEO Marissa Mayer tried to give some to tech journalists, some of whom have been giving her a bit of a hard time of late for showing signs of potentially being too spendy.

In a memo to staff announcing the date of its employee holiday party — it’ll be on December 1 on Pier 48 in San Francisco — Mayer took issue with a particular report from Business Insider about how she tussled over costs with departing CFO Tim Morse, whom she ousted last week.

Business Insider claimed that included her taking the price of the holiday shindig from $100,000 to $3 million, due in part to a change in venue location.

Mayer begged to differ, noting in the internal memo that the event would not bust the bank and still be tons of fun:

“Building on the theme of tech reporters not being great with math or numbers, rumors of this year’s party budget have been greatly exaggerated.”

(Is there actual time for tech reporters being math-impaired to become a theme that’s being built upon at Yahoo? I thought Mayer said the company would be building innovative products.)

But since we in the media are apparently dunces, I suppose we’ll just have to rely on Yahoo’s own numbers from its last quarter — which I embedded below — to tell the tale of continuous troubling declines in search queries and page views, declines in minutes spent on its media properties, declines in growth of unique visitors and flat-as-a-sugar-cookie growth in revenue.

Or, as Mae West famously said in the most delightful math quote ever: “A man has one hundred dollars and you leave him with two dollars. That’s subtraction.”

So is this Q2 financial performance at Yahoo — which is certainly not Mayer’s fault since she just arrived, but will be her responsibility to fix going forward:

YHOO_Q212EarningsPresentation

Yahoo's Mayer Finally Parts Ways With CFO Tim Morse, as Exec House-Cleaning Continues

Kara Swisher — Tue, 25 Sep 2012 21:05:09 +0000

Marissa Mayer, in a move that was not unexpected, has replaced Yahoo CFO Tim Morse with longtime software-focused financial exec Ken Goldman.

When she bounced Yahoo’s longtime HR exec David Windley in August, just a month into her tenure, I noted:

“Several sources at the company said that they expect Mayer to replace almost the entire current executive team, from its CFO Tim Morse on down.”

Thus: Check, please!

Morse’s departure is part of a major house-cleaning by Mayer of many longtime Yahoo execs that she had not hired herself.

Besides Morse and Windley, many others have hit the road, including former interim CEO and media head Ross Levinsohn, CMO Mollie Spillman, U.S. sales head Wayne Powers and former strategy exec Jim Heckman.

(In fact, if I were a senior Yahoo exec B.M.M. — Before Marissa Mayer — I would be doing a resume refresh about now.)

Sources said she has been looking for a replacement for Morse since she arrived, seeking to put in place her own execs.

That would be Goldman, along with several other recent hires. He comes from Fortinet, a provider of threat management technologies. He has some consumer Internet experience, having previously worked at one of Web 1.0’s most exquisite disasters, Excite@Home.

Morse, who was hired in mid-2009 by ousted CEO Carol Bartz, had served — including as interim CEO — through a number of major crises at Yahoo.

(On a personal note, Morse has always been a polite, affable and stand-up guy in my dealings with him, even in some very dicey moments and though I most definitely had to have been very irritating to the buttoned-up exec.)

Sources said Morse had been trying to leave the company for some time now, but wanted to get through its board meeting last week before departing. He has been talking recently to a number of companies about moving there.

That’s no surprise, since sources also said that Mayer had been increasingly sidelining Morse — who had previously been a key player in decision-making at Yahoo — when making a series of decisions about Yahoo’s future.

For example, he was not heavily involved in the recent strategic presentation that she unveiled in very broad strokes to Yahoo employees today.

Here’s Yahoo’s official press release on the CFO switcheroo:

Yahoo! Names Ken Goldman as Chief Financial Officer

SUNNYVALE, Calif. – Yahoo! Inc. (NASDAQ: YHOO) today announced that Ken Goldman will join the company as chief financial officer (CFO), effective Oct. 22. In this role, he will be responsible for Yahoo!’s global finance functions including financial planning and analysis, controllership, tax, treasury, and investor relations. Goldman will report directly to Yahoo! CEO Marissa Mayer.

“Ken is one of the most accomplished and respected financial executives in the technology industry having served as a CFO for more than 25 years, and we’re thrilled to have him join Yahoo!,” said Mayer. “His track record leading the financial strategy and stewardship of many successful public and private companies makes him an ideal choice for Yahoo! as we enter our next phase of growth.”

“Yahoo! is an iconic brand with an incredibly strong business model and balance sheet,” said Goldman. “I believe there is a lot of runway ahead for this business, and I look forward to working with Marissa and the rest of the executive team as we define Yahoo!’s future.”

Goldman brings more than 30 years of experience in financial, operational and business management. He joins Yahoo! from Fortinet, a provider of threat management technologies, where he served as CFO. Prior to Fortinet, Goldman spent nearly six years as senior vice president of finance and administration and CFO of Siebel Systems, until the company’s acquisition by Oracle Corp. in January 2006. He has held CFO positions at Excite@Home, Sybase, Cypress Semiconductor and VLSI Technology.

Goldman has served as a director on several public and private sector boards and has been named among “America’s 15 Most Connected Capitalists” by Forbes magazine.

Goldman succeeds Yahoo! CFO Tim Morse, who has been with the company since June 2009. Morse will leave the company later this fall.

“Tim has been a trusted leader for Yahoo! over the past three years and has expertly guided the company through some key periods as well as our most important strategic deals,” added Mayer. “I’ve personally relied on Tim’s knowledge and leadership in my first few months at Yahoo!. I know I speak for everyone in wishing him the best.”

Exclusive: Mayer Set to Get Yahoo's Alibaba Billions in One Week (But Will Investors Get Some Back, Too?)

Kara Swisher — Wed, 12 Sep 2012 04:01:24 +0000

According to sources close to the situation, Yahoo will officially close the multi-billion-dollar sale of half its assets in China’s Alibaba Group in one week.

Sources said the deal is set to be announced next Wednesday, in which the Chinese Internet giant will pay the Silicon Valley company $7.6 billion to buy back 20 percent of Alibaba. Yahoo still owns another 20 percent.

Yahoo will get $7.1 billion in the transaction, as well as a $550 million payment related to the ending of licensing fees that Alibaba has paid annually to Yahoo.

It’s a huge return from when Yahoo co-founder Jerry Yang led a $1 billion investment in the then-fledgling Alibaba seven years ago, with a belief in its CEO and co-founder Jack Ma.

But once-cordial relations between the companies became tense in the ensuing years, as Ma sought to lessen Yahoo’s 40 percent ownership.

After many public kerfuffles, Yahoo finally agreed earlier this year to sell half its stake. It still holds 20 percent, which could eventually reap even larger returns once the fast-growing Alibaba goes public in several years. Yahoo is required to sell 10 percent at that IPO and must sell the rest after that.

Still, Yahoo is getting a pile of money now. After taxes, that gives new CEO Marissa Mayer about $4.5 billion to use in some as yet undetermined way. But it will most likely be for a series of acquisitions to try to reinvigorate the long-troubled company.

Yahoo’s board and later its CFO Tim Morse had promised to return the money to shareholders by way of a stock buyback. But, last month — in a move that quickly depressed Yahoo’s shares and angered major investors — the company filed a statement saying that Mayer was reevaluating that move and could keep the money for other strategic reasons.

Given what a huge windfall it is getting, it will be interesting to see if the board of Yahoo — which is meeting next week, sources said — will choose to return a portion of the Alibaba money to shareholders. A recent similar move by AOL — using money it got from selling patents — was partially the reason for the recent run-up in its stock.

Yahoo could also presumably also give a special dividend to shareholders, but that is less likely.

That will be the question once Yahoo gets its cash in the kitty, which is no small feat.

The complicated transaction spans the globe, given the size of the borrowing — $8 billion, which will value Alibaba at $43 billion — that the company is doing to regain some control from Yahoo. The deal includes debt, as well as the sale of both convertible preferred and common shares, and includes a wide range of players.

That includes current investors, such as Silver Lake, DST Global and Singapore’s Temasek Holdings, as well as many others.

“This is a lot of money flying around the world to complete this,” said one person close to the situation.

Speaking of more money, it’s still unclear where Yahoo is in its long and very drawn out negotiations with its other Asian partner, SoftBank, over selling its stake in Yahoo! Japan.

Sources said the deal was proceeding well right before Mayer was hired, but that she slowed down the talks to reevaluate the prices being discussed. Since then, shares in Yahoo! Japan have appreciated strongly, while shares in Yahoo itself have lagged.

It’s a good thing that Yahoo has both its Asian assets — the value of them now makes up most of the company’s valuation.

Until, of course, Mayer figures out a way to turn the money Yahoo is getting into more gold.

An Alibaba spokesman declined to comment and Yahoo’s PR spokeswoman never speaks as per usual.

What's Next for Facebook's Flagging Stock? Perhaps Investors Will Finally Get Real.

Kara Swisher — Tue, 04 Sep 2012 13:00:19 +0000

As everyone with a pulse knows, Facebook shares took another dive Friday to reach the lowest level yet since its ignominious public offering in May.

Shares closed at $18.06, down 5.4 percent, which is half of its happier $38 IPO price. Actually, more than half, with a 52.3 percent decline overall since then.

Investors are not pleased. Facebook employees are not pleased. Even the New York Times Dealbook’s Andrew Ross Sorkin finally got unpleased, and unloaded on Facebook’s CFO David Ebersman (who has been under attack, by the way, for a while now).

“When Facebook’s I.P.O. first started to appear troubled back in May, I purposely avoided weighing in. Frankly, I thought it was too soon to judge,” wrote Sorkin. “But we have passed the pivotal three-month mark.”

Pivotal! Ruh-roh.

Actually, the Silicon Valley social networking giant will have to pivot for quite a while going forward, for a myriad of reasons.

Most of all, as John Paczkowski noted on Friday, and is also well known:

“The expiration of Facebook’s first lockup on 271 million shares earlier this month tanked the stock. And with four more yet to go, there is clearly further volatility ahead. On Oct. 15, 249 million shares will become eligible for sale. On Nov. 14, the lockup will expire on 1.32 billion shares. On Dec. 14, another 49 million shares. And on May 13, 2013, the final 47 million shares.”

In other words, that’s a lotta lockups to be unlocked.

And, as you can see from these two helpful lockup-expiration-focused charts for a range of other tech IPOs of late from SNL Kagan, that means a lot of downside for Facebook’s stock:

But, as I noted, this is already known by all, as Business Insider’s Henry Blodget — who has done some of the sharpest analysis on the troubled stock story at Facebook — correctly noted in a post titled, “It’s Becoming Clear That No One Actually Read Facebook’s IPO Prospectus Or Mark Zuckerberg’s Letter To Shareholders” on Friday.

“As Facebook’s stock continues to collapse, the volume of whining is increasing,” wrote Blodget. “As I listen to all this whining, I have a simple question: Didn’t anyone even read Facebook’s IPO prospectus? The answer, I can only assume, is ‘no.’”

No, they did not, or they might have read about everything from the company’s slowing growth rate to its mobile issues to, yes, all those billions of lockups to come.

Also, he noted, a bit of math would have yielded the high price-to-earnings ratio, which remains high at Facebook’s current low stock price, especially compared to Google and Apple.

That does not mean everyone is gnashing teeth. One of Facebook’s key Wall Street underwriters, J.P. Morgan, gave a stronger thumbs-up to the company in a note released yesterday for the future, even as it cut back on its target price by 33 percent.

The worst news: J.P. Morgan’s Doug Anmuth gave Facebook shares a $30 target, which is still far below his $45 target in late June.

Still, he also struck a sunnier note, saying he expects advertising revenue at Facebook to rise in the next year, even as payments revenue and overall profitability will be less.

Anmuth also said he expects Facebook to repurchase some of its now-cheaper shares to settle its tax bill related to restricted stock units via the credit or cash, rather than stock sales.

“This would essentially amount to a buyback of ~120M shares totaling $2.2B at current prices, and it would reduce the outstanding share count,” he wrote.

That’s probably cold comfort to shareholders, especially given most Wall Street analysts have urged buying, even as the stock has dropped.

Then again, since it’s not yet clear where the bottom truly is for Facebook shares, it is at least one less thing to worry about.

Exclusive: Digital Chief Jon Miller Leaving News Corp.

Kara Swisher — Thu, 23 Aug 2012 19:00:00 +0000

According to sources close to the situation, News Corp.’s Chief Digital Officer Jon Miller will soon be leaving the media giant.

It seems to be a cordial, although perhaps inevitable, parting — sources said Miller will remain an adviser to chairman and CEO Rupert Murdoch, as well as COO Chase Carey and deputy COO James Murdoch, for a year after his departure in late September.

Update: News Corp. confirmed the departure in a press release, which is embedded below.

His leaving brings into focus the fate of News Corp.’s overall digital strategy in an upcoming new structure. Miller was hired in 2009 to turbocharge the company’s long-troubled digital assets.

But I had noted in an article in July that the well-known Internet exec was not likely to continue at News Corp. in the wake of a complex transaction that will ultimately break the company apart into two separate entities — an entertainment company and a publishing one.

That’s a very different situation from when Miller was hired by the media giant to lead its tech and online initiatives and make digital a priority across its many divisions.

Not for lack of trying or access to powerful News Corp. head Rupert Murdoch — it has been a mixed bag for Miller in his tenure.

That’s due in no small part to a problem faced by many execs like Miller: The difficulty of successfully pushing digital initiatives inside a large traditional media organization.

His job has encompassed everything from a failed effort to revive its once mighty Myspace service to selling it and other properties off to working to improve its Hulu partnership, where he serves on the board.

It is not clear who will replace Miller as one of the News Corp. directors at the complexly-owned premium video service, which had been for sale and then not recently.

One of the brighter Miller accomplishments for News Corp. has been forging decidedly better relationships with key Internet companies, both large and small, as well as with venture investors in Silicon Valley and elsewhere.

That was most pronounced and visible between Apple and News Corp., which struck a number of deals to work together, some of which worked and some that had much less success.

Miller has also been active in China, working on several digital investment opportunities for News Corp. there. That included a recent $70 million investment in Bona Film Group.

He was key to a recent $45 million investment by the company and others in the company that sells the Roku video streaming device.

He also worked on various New Corp. efforts on creating channels on Google’s YouTube, including WIGS, a drama series. The jury is still out on these kinds of creative endeavors, of course, especially to a company with much more lucrative traditional film and television assets.

There was a possibility that, in his leaving, Miller might form a separate investment fund to focus on digital publishing and media, funded by News Corp. or even by the Murdoch family, who control the company.

But that has appeared not to have worked out, said sources.

Before he came to News Corp., Miller ran an investment fund with former Yahoo exec Ross Levinsohn called Fuse Capital. He also was chairman and CEO of AOL under its Time Warner ownership and was a top exec at IAC/InterActiveCorp.

Miller has remained an active angel investor, funding a range of start-ups such as Maker Studios, Voxer, Science, Solavei, Personal.com, as well many as others.

He is also chairman of OpenX and serves on the boards of Shutterstock and TripAdvisor.

Clearly, this is a world Miller will return to easily and it’s likely he’ll be starting something sooner than later. (Maybe bringing the band back together with Levinsohn?)

JonathanMillerAug23.2012

(Full disclosure: This Web site is owned by Dow Jones, which is owned — in turn — by News Corp.)

OnLive Bought by, Um, OnLive (Via Former Investor Lauder Partners)

Kara Swisher — Mon, 20 Aug 2012 01:58:33 +0000

Here’s a press release I just got sent by OnLive, about its sale to its mysterious new investor.

Which is actually an old one — Lauder Partners, which invested in the innovative cloud-gaming service in 2009. Under the new arrangement, the start-up will still be called OnLive, operate in the same manner, but with only about half its old staff hired back to work for the Lauder “affiliate.”

Whatever that is!

In other words: OnLive is dead! Long live OnLive!

Such confusion is par for the course in this most bizarre of Silicon Valley restructurings.

On Friday, the Palo Alto, Calif., company abruptly laid off its staff and went dark about what was going on, making a series of ever more opaque statements.

Along with the new press release, designed to clear up the mess, OnLive included an FAQ about the transaction. But it still leaves many questions unanswered.

Such as the price paid by Lauder for the assets, as well as whether founder and CEO Steve Perlman was still running the joint.

Here’s one thing that was made clear: The employee’s equity in OnLive the First, as well as that of investors, has gone poof in the new configuration of OnLive the Second.

That would be at least $56 million from investors, as well as tens of millions more in funding from earlier.

Said the company: “OnLive, Inc.’s board of directors, faced with difficult financial decisions for OnLive, Inc., determined that the best course of action was a restructuring under an ‘Assignment for the Benefit of Creditors.’ The assignee of the company’s assets then sold all of OnLive, Inc.’s assets (including its technology, intellectual property, etc.) to the new company.”

Incredibly, in its statement, OnLive had the audacity to say that it was a “heartbreaking transition for everyone involved with OnLive.”

For the other half of the staff — inexplicably called “non-hired” in the press release — laid off in such a manner, it certainly was.

Apparently, they might be able to consult “in return for options in the new company,” and could perhaps even be hired later.

Gee, thanks!

Oh, go read it for yourself:

OnLive Assets Acquired by New Company

All OnLive Services, Devices, Apps and Partnerships Continue Uninterrupted
Lauder Partners Backs New Company as First Investor

Palo Alto, Calif. August 19, 2012 – OnLive, the pioneer of instant-action cloud computing, announced today that on August 17th all of its assets were acquired by a newly formed company that will continue to operate under the OnLive name. The OnLive® Game and Desktop Services, all OnLive Devices and Apps, as well as all OnLive partnerships, are expected to continue without interruption and all customer purchases will remain intact; users are not expected to notice any change whatsoever. OnLive’s current initiatives will
continue as well, with major announcements of new products and services planned in the coming weeks and months. An affiliate of
Lauder Partners was the first investor in the newly-structured company, holding the view that OnLive is the future of computing and
entertainment, and a passion to see OnLive’s breakthrough technology continue to grow and evolve. The new company structure enables OnLive to do so.

OnLive, Inc.’s board of directors, faced with difficult financial decisions for OnLive, Inc., determined that the best course of action
was a restructuring under an “Assignment for the Benefit of Creditors.” The assignee of the company’s assets then sold all of OnLive, Inc.’s assets (including its technology, intellectual
property, etc.) to the new company.

Unfortunately, neither OnLive, Inc. shares nor OnLive staff could transfer under this type of transaction, but almost half of OnLive’s staff were given employment offers by the new company at their current salaries immediately upon the transfer, and the non-hired staff will be given offers to do consulting in return for options in the new company. Upon closing additional funding, the company plans to hire more staff, both former OnLive employees as well as new employees.

The OnLive Service has been in operation 24/7 without interruption since its launch over two years ago, and is expected to continue to
operate smoothly under the new company. All games, products and services remain available, and the company has new product and partnership announcements on the way.

OnLive’s breakthrough instant-action cloud computing technology has been in development for over a decade and, despite immense skepticism, OnLive successfully deployed this highly disruptive technology as a polished consumer offering with commercial-grade reliability across a vast range of devices, including TVs, tablets, phones, PCs and Macs,
connected over almost any Internet connection, including wireless and cellular. Only a few major corporations have ever developed and deployed products and services across such a broad spectrum. OnLive is rare among startups in both the depth and scope of its offerings.

The asset acquisition, although a heartbreaking transition for everyone involved with OnLive, allows the company’s core innovation and ongoing offerings — the product of over a decade of hard work transforming the OnLive vision into reality — to survive and continue to
evolve.

Given the widespread speculation about OnLive and the new company, a FAQ is below that addresses a number of questions both for the public and former employees.

FAQs

Q. Will users see any change in the OnLive Game or Desktop Services? What about their purchases?

A. Users should see no change in the OnLive Game or Desktop Services. All of their purchases remain intact and available. OnLive has been up 24/7 since launch over two years ago and expects to remain so. OnLive has over 2.5 million subscribers, with an active base of over 1.5 million subscribers, connecting from a vast range of devices and networks, with many sessions running for hours. The user base is
growing rapidly with OnLive’s addition into recently announced devices and TVs from major manufacturers. We expect this growth to continue under the new company.

Q. Is there any cash or stock in the new company provided for any OnLive, Inc. shares?

A. Unfortunately not. The nature of the transaction is such that only assets, not shares, were purchased. This is true for all shares of
OnLive, Inc., whether held by investors, employees or executives.

Q. Did Steve Perlman receive stock or compensation in this transaction?

A. Like all shareholders, neither Steve nor any of his companies received any stock in the new company or compensation in this transaction at all. Steve is receiving no compensation whatsoever and most execs are receiving reduced compensation to allow the company to
hire as many employees as possible within the current budget.

Q. Did all OnLive, Inc. assets transfer into the new company? Are any assets held by any other party?

A. All of OnLive, Inc.’s assets (e.g. technology, patents, trademarks, etc.) were transferred to an assignee, which then sold the assets to
the new company. There was no transfer to any other party.

Q. Have OnLive, Inc. employees been offered positions in the new company?

A. Almost half of OnLive’s staff were offered employment at their current salaries in the new company immediately upon the transfer, and
the non-hired staff will be given offers to do consulting in return for options in the new company. Upon closing additional funding, the
company plans to hire more staff, both former OnLive employees as well as new employees.

Yahoo Conducting a Search for a COO as No. 2 to Mayer

Kara Swisher — Thu, 16 Aug 2012 22:12:09 +0000

According to several sources, Yahoo is now on the hunt for a COO — with special emphasis on someone with turnaround experience — presumably to be a worker-bee No. 2 to product-guru CEO Marissa Mayer.

Several Silicon Valley execs and others outside of tech have been contacted by Spencer Stuart, the executive talent firm that is working on a number of other exec searches for Yahoo.

It is not clear if Mayer is on board this plan for a COO and other sources said she has different ideas for the management organization at Yahoo, including an elaborate general manager system that is similar to that at Google. Mayer, who come to Yahoo from the search giant, has put a lot of practices from her former employer in place, from free food to weekly all-hands meetings to more stringent hiring.

In any case, those candidates contacted recently have been told that the company is looking for a top exec with a focus on restructuring and also finance. Presumably, in this scenario, Mayer will focus on product and innovation — her strengths — while the COO would perhaps be responsible for making the trains run on time on the business side of Yahoo. A plethora of employees who have met with her have stressed her intense interest in products, which is mirrored by much less attention to more mundane business issues.

Perhaps the highest profile COO hire of a similar sort has been Facebook’s Sheryl Sandberg, who was brought in at a dicey time for the social networking site to work on the business while co-founder and CEO Mark Zuckerberg focused on its product.

Such an exec could be a good idea, since — despite the wide latitude Mayer has been given to make changes — Yahoo can not afford much damage to its current operations as Wall Street investors wait for her strategy to reinvigorate the company.

In fact, a recent filing in which Yahoo said Mayer was rethinking its promise to return a $4 billion-plus cash windfall from the sales of assets in China to shareholders caused the stock to drop quickly, largely due to a decided lack of information about what she planned to do with the money.

It will be interesting to see who would be intrigued by the mammoth job of helping fix Yahoo, since most think the process will inevitably include major layoffs.

Spencer Stuart’s Jim Citrin worked on the troubled tech giant’s recent CEO search, which ended up in the hiring of the high-profile Google exec. Mayer’s hiring was a public relations coup for Yahoo’s board, especially its large shareholder Dan Loeb of Third Point.

Mayer herself has also been reaching out to her extensive circle of colleagues at Google and elsewhere in tech to come help her turn around Yahoo. Most recently, she has been trying to hire a former Googler Katie Jacobs Stanton, who once worked with Mayer and now runs international efforts for Twitter.

At the same time, several top execs have left Yahoo since Mayer arrived as she conducts a house cleaning and puts her own team into place. That has included its former interim CEO Ross Levinsohn and HR head David Windley. More such departures are expected.

Mayer has also kept execs, including making interim general counsel Ron Bell the permanent one last week. She has also relied heavily on Yahoo co-founder David Filo.

But her new hires have mostly been lower-level ones, made up of staff who had been close to her at Google.

I would ask for comment from Yahoo, but one of those Mayer newbies at Yahoo — Anne Espiritu, who appears to be a ghost — is still sitting on a number of my and other reporter’s requests to comment on various issues that have been completely unanswered. I have now decided to move onto the other two — Patricia Moll Kriese and Andrew Schulte — to see if they disappear too.

In Major Expansion, Kno Adds K-12 to Digital Education Platform (Video)

Kara Swisher — Tue, 07 Aug 2012 04:00:03 +0000

In a big leap into a new but adjacent market, Silicon Valley digital education start-up Kno said it is entering the K-12 space, expanding from its college-only focus.

Its first step will be a partnership with major textbook publisher Houghton Mifflin Harcourt, which provides nearly half of such content aimed at children from kindergarten through high school.

Enhanced digital versions of those textbooks cost $9.99 or less — Kno gets a piece of each sale — and can be used via an Apple iPad app and also on the Web. Kno said its platform will also be available soon on Google Android and Microsoft Windows 7.

I did a video interview today with Kno co-founder and CEO Osman Rashid at the global HQ of All Things Digital about the effort, which is a big jump for the company that started off trying to make its own tablet device.

Armed with a pile of venture funding, it has pivoted drastically — Apple and then Google completely blew its stillborn hardware efforts up — into creating an educational software platform.

The Santa Clara, Calif.-based company has raised about $70 million from a range of prominent backers such as Andreessen Horowitz and First Round Capital, along with investors Mike Maples and Ron Conway.

It’ll need more deals to make up that tall valuation, of course. Kno said hopes to strike similar deals with the two other big textbook publishers, McGraw-Hill and Pearson, so it can offer most of the books used by schoolchildren.

It’s definitely an interesting time for electronic books in general and the education market in particular, as many efforts are being made to provide all kinds of educational tools online.

The e-book arena here is increasingly competitive, with big companies such as Amazon and even Apple interested in the important space.

Here’s my chat with Rashid about it all, as well as some screenshots of the new offering:

[ See post to watch video ]

And here’s the official press release:

KNO LAUNCHES K-12 DIGITAL TEXTBOOKS, EMPOWERING PARENTS

TO GO DIGITAL AT HOME

Houghton Mifflin Harcourt and Kno Partner to Introduce Enhanced K-12 Content at Introductory Rental Prices From $9.99 or Less

Santa Clara, CA — August 7, 2012 – Kno, a pioneer in education software, today announced that the company is entering the K-12 education market through a new partnership agreement with global education leader Houghton Mifflin Harcourt [HMH]. Previously only available to college students, Kno will offer interactive K-12 textbooks for the iPad, the Web, Android and Windows 7.

The agreement marks a turning point for elementary and secondary education by giving children and parents the resources and power to supplement classroom learning through enhanced digital content at home. Just in time for the back-to-school season, parents can now rent digital textbooks for their children, including subjects aligned with Common Core standards, for a one-year rental rate of $9.99 or less per book.

“Even if the schools have not adopted digital textbooks, we wanted to give parents the option to have their kids’ same textbooks available at home,” said Osman Rashid, CEO and Co-Founder of Kno, Inc. “With digital books priced at $9.99 or below, parents can now finally stop their kids from carrying their heavy backpacks to and from school for less than $60 for the school year by supplementing classroom materials with interactive textbooks that can be used at home and on the go.”

The Kno digital textbook app is available today for the iPad and Web and will be available for Android tablets and Windows 7 in time for back to school. With Kno’s app, parents can enhance their children’s learning experience with more than 70 interactive features that bring academic content to life, making learning more engaging and fun. All of the app’s features are engineered to help students retain information more easily and ultimately help improve their grades and comprehension of material.

“By offering digital access to enhanced K-12 content on the go and at home, this collaboration will empower parents to get more involved in their children’s education. We know parental involvement is an important factor in student achievement, and we’re proud to be the first content provider to bring Kno’s technology to the K-12 world,” said Tim Cannon, Executive Vice President of Strategy and Alliances for HMH. “HMH aims to make quality content available to the widest possible audience with the mission of changing people’s lives by fostering passionate, curious learners. This partnership with Kno supports that goal.”

The interactive features that allow students to engage with the content better and study more efficiently include:

* A digital Journal that automatically saves a student’s notes and highlights them in a study notebook.

* Automatic Flash Cards of key terms in a book to help students study more efficiently and better retain information.

* 3D models that bring difficult chemistry concepts to life to make them easier to understand.

* Quiz Me feature, which automatically turns any diagram in a book into a multiple choice quiz for easy self-quizzing before tests.

* SmartLinks that deliver instructional videos, images, and photos to formulas and concepts in a textbook in real-time for easy reference.

* Coming soon, an analytics feature that will enable active engagement between parents and students to better measure reading progress.

With AOL Set to Report Q2 Earnings Tomorrow, Tim Armstrong's Feeling Closer to Fine (Video)

Kara Swisher — Wed, 25 Jul 2012 01:34:29 +0000

When I was in New York last week, I got a chance to sit down with AOL CEO Tim Armstrong, the former not-Marissa-Mayer Googler, to talk about how it’s going in his thankless efforts to turn the New York-based Internet company around.

Unlike Mayer, who is just getting started at fixing what ails Yahoo, Armstrong has been at the job for some time now and finally seems to be getting some traction.

He talked about that and more in a video interview with me (which we did at Manhattan media-maven lunch spot Michael’s), including how it’s going with his always watchable acquisition of the Huffington Post and its eponymous founder Arianna Huffington.

Armstrong was feeling upbeat due to recent improvements in AOL’s business, as well as the lucrative sale of some patents and a victory over an activist shareholder proxy battle.

But, as usual, investors will need to focus on AOL’s performance, which will be on display in the morning when it reports its second-quarter earnings tomorrow at 5 am PT.

AOL beat expectations by 11 percent in the last quarter and Wall Street analysts expect the company to earn 10 cents per share, which has been guided down recently.

Still, because of all the recent good news, AOL’s stock has been up 82 percent since the beginning of the year, although it did drop 1.6 percent this past week.

Also important to tomorrow’s report is whether AOL can stem persistent revenue decreases in this quarter. Analysts are now expecting revenue of nearly $519 million for the period.

Here’s Armstrong chatting about the possibility that he can finally say that his long-suffering turnaround is actually turning:

[ See post to watch video ]

AOL Will Start Paying Out Its Pile-o'-Patent-Cash to Shareholders This Week Via Stock Buyback

Kara Swisher — Sun, 24 Jun 2012 22:07:42 +0000

For those AOL shareholders waiting for a juicy dividend after the Internet company’s billion-dollar sale of its patent portfolio to Microsoft, it appears you’ll have to get your gains via a stock buyback that will be announced by the end of this week.

According to sources close to the situation, after evaluating tax considerations and talking to major shareholders, New York-based AOL has decided that share repurchase is the best way to realize its gains from the $1.056 billion sale of its lucrative intellectual property of about 800 patents and nonexclusive licensing rights to those the company continues to hold.

The patent sale undoubtedly helped AOL CEO Tim Armstrong in the company’s victory in defeating an activist shareholder assault from the hedge fund Starboard Value and re-electing its eight directors 10 days ago, as well as giving its stock a boost of almost 80 percent since the beginning of the year.

Even without a dividend, the impact on AOL shares from a large buyback could be significant. Various Wall Street analysts have pegged the value of the patent payout at about $11 per share, but that is not exact.

The sale of AOL patents to Microsoft officially closed on June 15.

At the time, AOL said, as it had previously:

“AOL is committed to returning 100% of the patent proceeds to shareholders. AOL’s Board and management team are currently working on determining the most efficient and expedient method to return the proceeds of the patent transaction.”

Of concern, of course, is the possible impact if Starboard decides to sell its 5.3 percent stake in the company. That could presumably be assuaged if AOL includes one of Starboard’s nominees from its alternate slate in a current hunt for two new board members.

But sources said that was unlikely and that AOL expects the disgruntled — and defeated — hedge fund to shed its stake.

Another Day, Another RIM Sale Rumor

Kara Swisher — Sun, 24 Jun 2012 17:19:16 +0000

Here comes another rumor about Research In Motion — this time, selling off its struggling handset unit to any variety of possible buyers for all or part of the famed BlackBerry, including Amazon, Facebook and Microsoft. The latest version comes from the Sunday Times, which said that such a consideration is part of an overall strategic review by the beleaguered Canadian company that will be concluded in July. Before that, though, expect financial news — likely bad — this week, when RIM announces its first-quarter earnings.

Patent Peace: Yahoo and Facebook in Advanced Negotiations to Settle Fractious Infringement Lawsuits

Kara Swisher — Sun, 03 Jun 2012 19:08:07 +0000

Top execs at Yahoo and Facebook have been hammering out the outlines of a deal over the last several days to end their contentious patent infringement litigation, according to multiple sources close to the situation.

While that could change, sources said a settlement could happen in the coming weeks and that the advanced negotiations will put aside the lawsuits and counterclaims between the one-time close partners and return them back to what could be an even closer relationship.

The key terms being discussed, said sources, include a massive cross-licensing of patents between the Internet giant and the social networking kingpin and an even deeper integration of Facebook into Yahoo and vice versa, which has been a key element of improved engagement of late on Yahoo.

One possible glitch: While Facebook has indicated a willingness to perhaps buy some of Yahoo’s valuable patents, sources said the company is not likely to fork over a massive cash payment to Yahoo as part of a deal.

In a slap to Yahoo’s lawsuit, Facebook recently paid Microsoft $550 million to both buy and also license key patents that the software giant had acquired from AOL, and sources said it is unlikely to do the same for Yahoo.

“Facebook paid a lot of money for patents already, just not to Yahoo,” said one person close to the situation.

That could be a tough reality to swallow for Yahoo, especially since its lawsuit was predicated on the notion that it could get a huge payoff from Facebook in any settlement.

That was the argument used by former CEO Scott Thompson, under whose leadership the legal action was first filed, to convince Yahoo’s board to move forward. The lawsuit caused much consternation in Silicon Valley, but Yahoo’s directors had been told that success could mean many billions of dollars from Facebook to end the fight.

But Thompson was recently ousted from his job over a resume-padding controversy, and it appears that Yahoo board members who pushed for the lawsuit are now distancing themselves from its filing.

In other words, it was all Scott’s fault, so now that he’s gone: Bygones!

Let’s be clear: It wasn’t his doing alone by any means, but Yahoo is now facing an uphill and long-term battle in the case to win anything at all.

That’s why its new interim CEO, Ross Levinsohn, along with several board members, including Third Point’s Daniel Loeb, have stepped up talks.

(Yahoo’s on a bit of a goodwill mission, recently adding activist shareholder Loeb as a Yahoo director after settling its proxy fight with him, as well as finally completing a complex asset sale deal with China’s Alibaba Group.)

Interestingly, for Yahoo’s side, this negotiation now appears to be more of a group effort — with board members actively involved — than a solo performance by Levinsohn as the company presses for a solution now.

Facebook is also very motivated to get rid of the problem, especially because its recent borked IPO has taken up a lion’s share of the media and investor perception and attention. Sources said execs there hope that a successful settlement with Yahoo — as well as an expected announcement of an integration with Apple’s iOS at the Worldwide Developers Conference in mid-June — will return the focus to forward momentum by Facebook.

To underscore the importance of settlement, the discussions are being led by the social networking site’s powerful COO, Sheryl Sandberg, along with its VP of partnerships, Dan Rose.

Sandberg and Levinsohn (and his posse of hey-can-I-help-too Yahoo directors) talked in depth about the settlement at the recent 10th D: All Things Digital conference earlier this week, after a number of previous discussions had already taken place.

Here's the Official Yahoo Filing on Alibaba Deal

Kara Swisher — Thu, 24 May 2012 21:34:20 +0000

I am a bit sleepy and getting ready for our 10th D: All Things Digital conference next week, so you are going to have to read for yourself this short regulatory filing Yahoo just made about its recent deal to sell half of its large stake in China’s Alibaba Group for about $7 billion.

The deets were all reported here earlier, but knock yourself out if you want more:

YHOO-20120524-8K-20120520

Fat Lady Finally Sings: Yahoo and Alibaba Officially Shake on $7 Billion Stock Sale Deal (Updated)

Kara Swisher — Sun, 20 May 2012 22:34:03 +0000

As AllThingsD reported several days ago they would, Yahoo and Alibaba Group have finally reached an agreement for the Silicon Valley Internet giant to sell back half its stake in the Chinese Web company in a $7 billion deal.

The taxable shares sale agreement, which is now being approved by both boards, is part of a larger and more complex arrangement, which will also include a multibillion-dollar stock buyback by Yahoo and an eventual IPO of Alibaba.

And, perhaps most importantly, it will bring to an end what could be the longest running global cat fight in Internet history, in which the long-time partners have bickered over the terms of their relationship for years now.

It has mostly been over how they could get to the transaction they should be announcing later tonight (or morning in Hong Kong, which it is there now). While it could fall apart at the last minute, that is highly unlikely at this point.

(Update: The Yahoo board has approved the deal unanimously, said sources, so it is done done.)

(Update 2: Yahoo and Alibaba both confirmed the deal in a joint press release, which is below.)

Thus, after many failed attempts to strike a tax-free deal — also involving Yahoo’s Japanese partner, SoftBank — collapsed, the pair have finally settled on a taxable deal, which could net Yahoo upwards of $4 billion.

The transaction values Alibaba at $35 billion and is subject to a number of funding issues that could change the value of the deal.

But here is the overall situation, as I previously reported:

Yahoo is set to sell half of its roughly 40 percent stake in Alibaba, in a taxable deal. The transaction is likely to value that portion of Yahoo’s holdings at about $7 billion — or 20 percent of Alibaba’s $35 billion enterprise valuation. Alibaba is in the midst of raising capital to fund the sale.

After taxes of upward of 35 percent are paid on the long-term gains — remember that Yahoo bought the now-lucrative Alibaba stake for just $1 billion in 2005 — the company will use the funds to buy back its own shares. That stock has been caught in the mid-teens doldrums for quite a while, so this could help boost shares significantly.

A shareholder dividend is also being considered by the Yahoo board, but it is unlikely. It’s also not clear if some of the cash will be held back for acquisitions by Yahoo, sources added, but it is also unlikely.

As part of the deal, sources said, medium-term incentives have been put in place for Alibaba to move forward with a public offering, which sources stressed is without contractual obligation or a time frame. Alibaba execs have already been publicly indicating such a direction recently, but this will put them more firmly on that path.

Although there are no plans to go public as yet, the IPO incentive revolves around several terms, including the right to buy back half the remaining stake, which expires in December of 2015. As I previously reported, Yahoo will be required to sell back half of the 20 percent remaining stake upon IPO and the other half after that if Alibaba goes public in the time frame agreed to.

Lastly, the Alibaba voting rights for both Yahoo and SoftBank are much diminished in the new deal, according to sources, to under 50 percent.

Translation: Alibaba CEO Jack Ma is now in the driver’s seat completely.

Once close, the pair have been wrangling over the large Yahoo ownership, which Ma has been trying to dislodge in a variety of nice and not-so-nice ways. It has resulted in a number of very public disagreements.

That included a nasty back-and-forth over its Alipay unit with now-fired CEO Carol Bartz, threats of takeover of Yahoo with private equity firms and, more recently, making friendly with its just-ousted CEO, Scott Thompson.

Those talks with him in recent weeks, which included a visit to China by Thompson, led to the new deal, which was negotiated primarily between Yahoo’s CFO Tim Morse and legal head Mike Callahan and Ma and Alibaba’s Joe Tsai.

The talks continued even as Thompson was suddenly engulfed in a controversy over a fake computer science degree on his resume that quickly led to his departure from Yahoo.

Ironically, the error was first discovered by activist shareholder Daniel Loeb, who is now voting on the deal as a newly named director of Yahoo, after successfully helping to oust Thompson.

He owns almost 6 percent of Yahoo.

The final decision to approve the deal was in the hands of a very new board of Yahoo, which has been drastically reshaped in recent weeks. It met to decide on the deal this weekend.

While the deal with Alibaba is finally nearing an end, Yahoo’s talks to sell its 33 percent stake in Yahoo! Japan is not part of this agreement. That’s due to what Thompson had called a “valuation gap,” which sources said is still an outstanding issue.

New interim CEO Ross Levinsohn has not been involved in the Alibaba deal in any significant way. But he certainly will benefit from its halo effect, if approved, especially given that it will likely boost Yahoo shares.

It also puts Yahoo in a unique situation, in which it must sink or swim more largely based on the value of its troubled core business.

That could mean a lot of things, including the eventual sale of the company, whose most lucrative asset recently — its Alibaba holding — will matter much less.

As soon as I get the press release, I will post it here, but no one is commenting, despite the inevitable happy ending to this long-running story.

And here’s the press release, finally:

Yahoo! and Alibaba Reach Agreement on Comprehensive Plan for Alibaba Stake Agreement Realizes Significant Value, Immediate Liquidity and Path to Future Monetization

Yahoo! Board Increases Share Repurchase Plan by US$5 Billion

May 20, 2012 — Sunnyvale, California and Hangzhou, China – Yahoo! Inc. (NASDAQ: YHOO) and Alibaba Group Holding Limited today announced they have entered into a definitive agreement for a staged and comprehensive value realization plan for Yahoo!’s stake in Alibaba.

The first step is the repurchase by Alibaba of up to one-half of Yahoo!’s stake, or approximately 20% of Alibaba’s fully-diluted shares. The purchase price will be based on a valuation of Alibaba to be established through equity financings that Alibaba intends to undertake to finance the transaction, subject to a floor valuation of approximately US$35 billion. The agreement includes substantial financial incentives for Alibaba to raise the additional equity at a valuation higher than US$35 billion. At the minimum price and assuming the initial repurchase of the full 20% stake, Yahoo! would receive from Alibaba consideration of approximately US$7.1 billion, composed of at least US$6.3 billion in cash proceeds and up to US$800 million in newly-issued Alibaba preferred stock.

The agreement also establishes a framework for Yahoo! to monetize its remaining interest in Alibaba in stages. First, at the time of an initial public offering (IPO) of Alibaba in the future, Alibaba will be required either to repurchase one-quarter of Yahoo!’s current stake at the IPO price or allow Yahoo! to sell those shares in the IPO. Second, following such an IPO, Yahoo! has registration rights and rights to marketing support from Alibaba to enable Yahoo! to dispose of its remaining shares, at times of Yahoo!’s choosing following a customary lock-up period.

This agreement is a result of extensive discussions between the two parties and a comprehensive review of both taxable and tax-efficient alternatives. Yahoo! and Alibaba believe this agreement to be the best path to align incentives and maximize value for shareholders of both companies and it paves the way for Alibaba to achieve future public market liquidity for all of Alibaba’s shareholders. For Yahoo!, the agreement provides for a staged exit over time, balancing near-term liquidity and return of cash to shareholders with the opportunity to participate in future value appreciation of Alibaba.

“Today’s agreement provides clarity for our shareholders on a substantial component of Yahoo!’s value and reaffirms the significance of our relationship with Alibaba,” said Ross Levinsohn, Interim CEO of Yahoo!. “We look forward to continued collaboration with the Alibaba team on business initiatives as we explore joint opportunities for growth and benefit from Alibaba’s future. I want to thank Jack Ma, Joe Tsai and the Alibaba team, as well as Tim Morse, Michael Callahan and our Yahoo! team for their dedication in achieving this successful outcome.”

“This transaction opens a new chapter in our relationship with Yahoo!,” said Jack Ma, Chairman and Chief Executive Officer of Alibaba Group. “I look forward to working with Ross Levinsohn and the Yahoo! team as Alibaba builds China’s leading e-commerce company. Yahoo!’s global audience reach will provide attractive partnership opportunities for Alibaba to explore markets outside of China. The transaction will establish a balanced ownership structure that enables Alibaba to take our business to the next level as a public company in the future.”

“We look forward to delivering the proceeds of the near-term transaction to our shareholders, and to the further enhancement of value and the additional monetization in the future that this agreement enables,” said Timothy R. Morse, Executive Vice President and Chief Financial Officer of Yahoo!.

In addition to the share repurchase, the companies have also agreed to amend their existing technology and intellectual property licensing agreement. Among other things, this amendment will result in Yahoo! granting Alibaba a transitional license to continue to operate Yahoo! China under the Yahoo! brand for up to four years, while restrictions on Yahoo!’s ability to make other investments in China will be terminated. Alibaba will make an upfront lump sum royalty payment of US$550 million to Yahoo! and continuing royalty payments for up to four years. In addition, Alibaba will license certain patents to Yahoo!. Upon closing of the repurchase transaction, the Alibaba shareholders’ agreement will be amended so that the parties’ respective rights will be commensurate with the parties’ post-closing level of ownership in Alibaba. Yahoo! will continue to be represented on Alibaba’s board of directors with the right to appoint one of four existing directors.

Yahoo! intends to return substantially all of the after-tax cash proceeds to shareholders following the closing of the transaction. While the form of the return of capital to shareholders has not yet been finalized, Yahoo!’s board has increased Yahoo!’s share buyback authorization by US $5 billion concurrently with this transaction.

The transaction is subject to customary closing conditions. Alibaba will be required to close the repurchase with respect to at least one-quarter of Yahoo!’s current stake in Alibaba regardless of the amount of financing raised, and up to one-half of Yahoo!’s current stake if it obtains the requisite financing. Alibaba intends to finance the repurchase through a combination of its own cash resources, debt, equity and equity-linked financing. The transaction is expected to close within approximately six months.

UBS Investment Bank acted as lead financial advisor to Yahoo! and Allen & Company LLC and Goldman Sachs & Co. also served as financial advisors. Skadden, Arps, Slate, Meagher & Flom LLP acted as lead legal counsel to Yahoo! and Weil, Gotshal & Manges LLP also acted as legal counsel. Munger, Tolles, & Olson LLP acted as legal counsel to the Yahoo! Board of Directors. Credit Suisse acted as lead financial advisor to Alibaba and Wachtell, Lipton, Rosen & Katz acted as lead legal counsel to Alibaba. Freshfields Bruckhaus Deringer LLP acted as counsel to Alibaba on certain financing and Hong Kong legal matters and Fenwick & West LLP acted as counsel to Alibaba on intellectual property matters.

Exclusive: Yahoo Finally Set to Strike Alibaba Share Deal -- Half Now, Then Half of What's Left After Eventual IPO

Kara Swisher — Fri, 18 May 2012 06:39:00 +0000

Yahoo is in the final stages of selling a large chunk of its stake in the Alibaba Group back to the company — in a complex deal that is set to include a multibillion-dollar share buyback to investors of the Silicon Valley Internet giant and an eventual IPO of the Chinese company — according to multiple sources close to the situation.

The deal has yet to be officially approved by the boards of both companies, but sources said it is likely to be, and could be announced as early as Monday.

This all could change, of course, since negotiations between Alibaba and Yahoo have taken place in a variety of ways in recent years, without success and with much acrimony. Talks over a tax-free deal — also involving Yahoo’s Japanese partner, SoftBank — collapsed in February, for example.

But the 324th time is apparently the charm — so here are the details of what looks to be a nearly complete agreement that I have ferreted out thus far from lots of relieved sources familiar with the situation:

Yahoo will sell half of its roughly 40 percent stake in Alibaba, in a taxable deal. The transaction is likely to value that portion of Yahoo’s holdings at about $7 billion — or 20 percent of Alibaba’s $35 billion enterprise valuation. Alibaba is in the midst of raising capital to fund the sale.

After taxes of upward of 35 percent are paid on the long-term gains — remember that Yahoo bought the now-lucrative Alibaba stake for a fraction of that, many years ago — the company will likely use the funds to buy back its own shares. That stock has been caught in the mid-teens doldrums for quite a while.

A shareholder dividend is also being considered. It’s not clear if some of the cash will be held back for acquisitions by Yahoo, sources added, but it is unlikely.

As part of the deal, sources said, incentives have been put in place for Alibaba to move forward with a public offering, which sources stressed is without the contractual obligation or a time frame. Alibaba execs have already been publicly indicating such a direction recently, but this will put them more firmly on that path.

In return, Yahoo has agreed to sell the remaining quarter of its current holdings when that IPO does occur. It would then have an only 10 percent stake of Alibaba, which it could sell at any time after the IPO.

If finally struck, the transaction will finally bring to an end one of the more protracted and disputed relationships in the Internet world.

Once close, the pair have been wrangling over the large Yahoo ownership, which Alibaba CEO Jack Ma has been trying to dislodge in a variety of nice and not-so-nice ways. It has resulted in a number of very public disagreements.

The talks continued even as Thompson was suddenly engulfed in a controversy over a fake computer science degree on his resume that quickly led to his departure from Yahoo on Sunday.

Ironically, the error was first discovered by activist shareholder Daniel Loeb, who will now vote on the deal as a newly named director of Yahoo, after successfully helping to oust Thompson.

He owns almost 6 percent of Yahoo, and is expected to approve the transaction.

But the final decision to approve the deal will be in the hands of a very new board of Yahoo, which has been drastically reshaped in recent weeks. It is meeting tomorrow and perhaps over the weekend to vote on it.

While the deal with Alibaba looks to be nearing an end, Yahoo’s talks to sell its 33 percent stake in Yahoo Japan is not part of this agreement. That’s due to what Thompson had called a “valuation gap,” which sources said is still an outstanding issue.

Next up for Levinsohn, who has just rejiggered Yahoo management again, other sources said, is an effort to settle the patent-infringement lawsuit with Facebook, and also to renegotiate its search deal with Microsoft.

And, oh yes, fix Yahoo’s rocky core-advertising business, which is still in distress and needs a major overhaul to push it back to growth.

But that, as they say, is yet another episode of Yahoo’s ongoing reality show.

They Shoot Yahoo CEOs, Don't They? But Not Without a Really Smoking Gun and a Much Stronger Board.

Kara Swisher — Sat, 05 May 2012 16:33:02 +0000

Earlier today, Yahoo’s persistent thorn, activist shareholder Dan Loeb of Third Point poison-penned another letter to the board of the Silicon Valley Internet company, demanding that Yahoo fire its new CEO Scott Thompson, as well as director Patti Hart, over bizarre inaccuracies related to their academic achievements.

“Permitting Mr. Thompson and Ms. Hart to stay with the Company after apparently violating the Code of Ethics sends a message to all Yahoo! employees that a different set of rules applies at the top,” Loeb wrote.”[Yahoo must] terminate Mr. Thompson for cause immediately given his demonstrable unsuitability to remain Chief Executive Officer and a director of Yahoo! and accept the resignation of Ms. Hart for similar reasons.”

And while many across the blogosphere — including some very clever tweets — called for his head tout de suite, that’s just not going to happen.

At least for now, at this early point in a controversy over Yahoo filing legal documents that misrepresented Thompson’s long-ago degree from Stonehill College.

In a nutshell: Thompson does not have a computer science degree, as he had maintained he did in public bios for almost a decade, a falsehood that mysteriously seeped into documents Yahoo filed with the Securities and Exchange Commission.

That’s bad news for Yahoo, for sure, on many levels, but moving against Thompson at this moment is not likely to be the answer — for the short term, at least.

That’s due to many reasons, that I like to think of it as three hopelessly complex puzzles that need solving pronto.

The What-Did-Yahoo-Know-and-When-Did-It-Know-It Question

There is no question the first thing Yahoo’s board needs to do is a thorough investigation to determine how a borked bio could proliferate so widely and for so long.

Most importantly, Yahoo will have to reveal if Thompson actually gave them this incorrect information, as he aggressively lobbied for the then-open CEO job.

As I had previously reported several times, Thompson cold-emailed a Yahoo director — Intuit CEO Brad Smith, as it turns out — despite not being on the list of potential candidates. Thompson was then shuttled over to Hart, who was running the vetting process with the help of headhunting firm Heidrick & Struggles, and hired within weeks.

Oddly, sources said Thompson never filled out the required informational papers for the job, nor did Heidrick conduct the normal background check on him. Instead, another forensic firm Yahoo hired did the work.

If it turns out Thompson gave any of them the bad bio info, it would be quick curtains for him.

But if Yahoo’s board members obtained his info on their own, the next key query would be how no one at Yahoo — especially its legal and compliance staffers, as well as outside help — managed to catch the problem during the vetting of Thompson.

Here are some good questions to start with:

Who put a faux computer science degree on Thompson’s bio in the first place, why and when did it happen?

Where did Yahoo get the inaccurate information?

Who was in charge of checking Thompson’s academic record for Yahoo?

And, who checked the work of the checkers?

The problem is made more complicated, because correct information was easily available in the SEC filings of eBay for years, since Thompson was head of its PayPal payments unit.

While the resume information was indeed wrong on eBay’s Web site and on numerous bios of Thompson for years, how did eBay legally get it right while Yahoo did not?

That calls into question the expertise of the company, its directors and those they hired to make sure execs were completely on the up and up, a task they clearly failed at.

If rank incompetence is the reason, which it looks like it might be, expect certain board members and other Yahoo staffers to go, along with anyone who helped in the Thompson vetting, or lack thereof.

Unless, of course, the gang-that-couldn’t-shoot-straight actually did shoot straight and some one at Yahoo found out about the educational discrepancy before the new CEO was announced, but declined to fix it.

While sinister, such a scenario is not entirely implausible, given how much pressure Yahoo was under at the time to hire a CEO quickly, due to Loeb and his looming proxy fight.

If any evidence were to surface that this was so, it is curtains all around, which would rain the kind of disaster down on Yahoo’s Sunnyvale HQ that would make Loeb’s attacks look like a Nerf battle. Instead, it would be “The Hunger Games” — except that no one survives.

The Chaos-in-Sunnyvale Conundrum

Which brings us to the profound implications of Yahoo jacking its second CEO within six months.

While it’s easy to yell “Fire the CEO” on a crowded Twitter, it’s simply not so easy in practice.

How long did it take Yahoo’s lugubrious board to figure out Carol Bartz needed to go? A … long … time. (And, she had a CS degree!)

More to the point, Thompson — and his not-so-merry band of consultants from Boston Consulting Group and, this week, McKinsey & Company — has only just completed a massive layoff of 2,000 employees and a jarring restructuring of management.

He’s also in the early stages of rolling out a new and decidedly still-squishy strategic plan to top execs (also just this week), along with working on some other key initiatives.

That includes renegotiating its search partnership with Microsoft; noodling around on a possible deal with Google; contemplating the sale of a variety of assets; and — oh, yes — trying to take on social networking Godzilla Facebook over patent infringement.

Busy much?

But, most importantly, Thompson is now the umpteenth Yahoo CEO to be working on the never-ending talks with its Asian partners over selling back a piece of the company’s lucrative stake to them.

While Yahoo CFO Tim Morse and head lawyer Mike Callahan are the point men on the deal, the lack of CEO would be an issue in the now-proceeding again talks.

This is a sale that must — and I underscore must — get done and soon, giving Yahoo much-needed breathing room and a whole lot of cash to fork over to increasingly disgruntled shareholders.

So, expect Yahoo to try to milk that deal for all it’s worth in the coming week, in order to give the appearance, at least, of positive forward momentum.

And, like it or not, Thompson has to play a key role in it getting done.

Thus, the likelihood of wait-and-see over point-and-shoot on Thompson is higher than you might think.

That’s especially true given four members of the board are leaving within six weeks and have either or are in the process of being replaced by new members.

Then, Thompson will be their problem to solve.

Again, no small thing, since the old crew — led by feckless Chairman Roy Bostock — is not likely to want to end its appalling tenure with yet another disaster.

Such a move would further tarnish the legacy of its outgoing directors, although I am not sure how it could be any more sullied, given their consistent record of one bad decision after the next.

What do I really think? I think this cursed board will maintain its 100 percent score of doing the wrong thing at the right time.

It could be a different case with the new directors, of course, who all seem pretty sharp and not as easily impressed by a record of failure.

They will surely be monitoring Thompson carefully, as will employees, who have taken to internal message boards with a rage not seen in a while over the resume debacle.

Their morale might be one uncertainty impacting Thompson’s fate. If a lot of key employees continue to bolt Yahoo or those remaining more loudly express their disdain for the bio antics, the new directors might listen.

The Whatever-Loeb-Says-We-Won’t-Do-Till-Later Head-Scratcher

Which brings us back to Loeb, whose noisy campaign to grab seats on the Yahoo board has certainly hit home this week.

And, though Yahoo likes to ding him a lot, since he started his campaign of terribly entertaining investor terror, a lot of what he’s been calling for has happened.

That includes a major flushing of the board — with five longtime members, including co-founder Jerry Yang, going, going and gone.

In addition, Loeb brought pressure to slow down some questionable deals, from Yahoo’s PIPE dream to a tax-free spinoff in Asia in a deal only an accountant could love.

He’s also — though they try to deny it — got the Yahoo directors in the dangerous habit of reacting to him, rather than playing their own game.

While the Yahoo board has resisted any deal with Loeb (pictured here), blaming him for rejecting their kind offers of settlement, it is he who is setting the tone more than Yahoo.

And that tone is of alarm and trouble and chaos at Yahoo.

That’s not going to work to convince other Yahoo investors to back his cause — in fact, Loeb has a decidedly uphill battle to win his proxy challenge — he has still scored a direct win with the bio relevations.

So far, though, Loeb has not sunk Yahoo’s battleship, so it is unlikely the board will acquiesce to his latest demand of Thompson being fired by noon on Monday.

Maybe it will eventually, or maybe it will just scold Thompson or maybe it will do nothing at all.

All that is an unknown — a riddle, wrapped in a mystery, inside an enigma, with a lot of managerial incompetence thrown in. And that, most of all, is the sad definition of today’s Yahoo.

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Yahoo Gives Dan Loeb a Fresh One, but Real Action in Proxy Fight Begins in Coming Weeks

Kara Swisher — Thu, 03 May 2012 00:28:54 +0000

Earlier today, Yahoo released a letter talking itself up to investors, introing a new Web site called Yahoo Forward to do more bragging and — you guessed it — giving yet another smackdown to activist shareholder Dan Loeb of Third Point.

The move comes as the proxy fight over the Silicon Valley Internet giant moves ever closer to its annual meeting, which is set to take place sometime this summer.

In the letter, which had precisely zero new news, Yahoo recounted again that it tried hard to settle things with its disgruntled shareholder, but underscored its desire not to have Loeb on the board.

Why? Because the man who owns about six percent of Yahoo — which is about 99.99 percent more than any other current board member, which seems to make him pretty interested in Yahoo’s fate — is not qualified to be a director.

“The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board,” the Yahoo letter read. “In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. “

Buuuurn! (Not really.)

Loeb has his own Web site, Value Yahoo, which he launched last month to pillory Yahoo. He used it today to post an infographic titled “The Incredible Shrinking Yahoo.”

Buuuurn! (Not really.)

In fact, the real fire could start as early as next week and in the months ahead when other Yahoo investors start to pick sides in the fight.

That should really begin when independent proxy advisory firm Institutional Shareholder Service gives its recommendation on the issue to Yahoo investors.

A backing by ISS for another prominent proxy advisor Glass Lewis will help Loeb, although he still has an uphill battle to convince other shareholders to vote down Yahoo, which has a new CEO in Scott Thompson and a mostly new board.

That will be even more difficult, given how active Thompson has been in making a ton of productive-sounding moves, such as a recent restructuring which included 2,000 layoffs. While results will not be in for a while, a lot of we’re-hard-at-work strategery noise is probably a good tack for Yahoo.

The company will surely try to drop some more Yahoo bombs on Loeb to burnish its chances in the coming month — most likely first around a taxable sale of a large portion of its Asian assets related to new rounds of talks now taking place again, which might include a fat dividend to investors.

(Investors like fat dividends and the people who give them fat dividends, by the way!)

The company could also sell off some of its underperforming units, such as its advertising technology business and renegotiate its search partnership with Microsoft, all of which will give Yahoo more of a case that Loeb’s complaints are now unfounded.

But don’t count Loeb out, either. He’s a deft campaigner and also deserves some credit for forcing Yahoo to make several of its recent moves to oust weak members of its longtime dysfunctional board.

In that regard, at least, Loeb has been very relevant.

Here’s Yahoo’s letter today, in full (the odd bolding is all done by the company):

Yahoo! Shareholder Letter Outlines Forward Momentum and Urges Election of Its Board Nominees

SUNNYVALE, California, May 2, 2012 — Yahoo! Inc. (NASDAQ: YHOO), the premier digital media company, today released the following letter to all shareholders from its board of directors:

Dear Shareholder,

Since last August, Yahoo! has moved forward aggressively, implementing a plan to position itself for future success and to increase the value of Yahoo! for you, our shareholders.

* Just four months ago, we appointed CEO Scott Thompson, a highly accomplished and dynamic leader with the experience and expertise required to lead Yahoo! to renewed growth, innovation, and success. Scott is already moving the company forward fast — dramatically reorganizing the business around its core strengths with a mindset of focus, speed, discipline, and putting the customer first.

* The company has reconstituted the board of directors, with the optimal mix of expertise, experience, and fresh perspectives to accelerate the company’s transformation. We recruited five new, highly qualified independent directors through the Nominating and Corporate Governance Committee’s thorough search process. In addition, four of our directors volunteered not to stand for re-election at the 2012 shareholders’ meeting. As reconstituted, following the annual meeting a majority of Yahoo!’s directors will be new to the board this year, and all directors will have joined the board since 2010.

* Following a detailed and diligent review in an accelerated timeframe, the company produced a comprehensive strategic framework that will change what we do and, most importantly, how we do it to enable us to put our customers first in everything we do. We will deliver fun, engaging, and personalized experiences on all screens and forge strong relationships with our advertisers by producing measurable results, including consumer insights derived from our vast data, and delivering a higher rate of return on advertising spend. Specifically, we will focus all we do on the consumers who trust us to deliver personalized content and communications in our core businesses, and on the advertisers who want to connect with our consumers. Just as importantly, we are identifying what we will no longer do, in order to direct resources toward those businesses that generate the highest consumer engagement and the best return on our investment. As we excel in our core business, we will earn the right to pursue new growth opportunities.

* With this renewed operational focus, the company has defined a new organizational structure to support our core business and put resources closer to our customers. Effective May 1, Yahoo! will operate in three groups — consumer, regions and technology — all supported by our corporate teams. Each of these three groups will have clear accountability for getting results by delivering the best customer experiences. This more efficient structure will enable faster decision-making and more effective delivery of innovative products and services that measurably impact the bottom line.

* Beyond our core business, we are committed to continuing to be prudent stewards of our non-core assets and investments and to be thoughtful and diligent about monetizing their significant value at the right time and in the right manner. Should we do so, returning capital to shareholders will be a high priority.

In identifying qualified new members for the board, the Nominating and Corporate Governance Committee, led by its independent chairperson Patti Hart, conducted a thorough and impartial search process. Working with a leading executive recruitment firm and using the committee’s desired skill sets and experience for new board members, the committee identified over 100 potential candidates and sought input from a number of our major shareholders. Committee members engaged with over 20 individuals, including the four nominees proposed by Third Point. Committee members then conducted numerous in-depth interviews and carefully analyzed the qualifications of each candidate, including each of Third Point’s nominees. Committee members conducted additional interviews with those candidates that warranted further consideration, as determined by the committee in its meetings held throughout the process. Following completion of the full process, the committee and the board determined that the distinguished group of five candidates recently announced were the best choices, based on their individual accomplishments, experience directly relevant to Yahoo!’s business and its challenges, and records of value creation.

The new directors have strong records of significant accomplishment at the highest levels of media, advertising, marketing, Internet, technology, and finance, including corporate finance and restructuring, and insight into customers’ perspectives. The continuing directors are independent thinkers who bring impressive track records of success, and have been actively and constructively engaged as the company has developed its strategic framework to deliver renewed success and value to shareholders. We are challenging Yahoo!’s entire leadership team by asking tough questions, establishing rigorous goals, and developing a framework for strict accountability to move Yahoo! forward … fast.

Our focus now is on operating the company so that it delivers superior value to our shareholders. Supported by the many talented people who have contributed to charting our new course and inspired by the many shareholders, customers, and employees who have communicated passion for this great brand, we know that we will succeed.

Regrettably, our efforts to avoid a proxy contest with Third Point were unsuccessful. Following the recommendation of the Nominating and Corporate Governance Committee, we offered Third Point two board seats, including one of its nominees and a second mutually agreeable candidate, which would bring Third Point’s perspective into the boardroom. Unfortunately, Mr. Loeb declined to end his proxy solicitation on that basis, insisting that there could be no settlement unless he was personally appointed to the board. The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board. In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. Nevertheless, we want to emphasize that we remain committed to an open dialogue with all our shareholders and to working in a constructive manner with Third Point.

At the end of the day, we recognize that you, our shareholders, will make the decision as to the board you want to lead your company. We are confident that when you assess our new board’s qualifications against Third Point’s slate, you will come to the same conclusion that we did—that this is the right board with the right mix of skills and experience to lead the company forward to create value for shareholders. We also recognize that we have a great deal of work to do to support and challenge the management team to move the company forward fast. We intend to keep ourselves and the company focused and we do not intend to let ourselves be distracted from the work at hand.

Yahoo! is looking forward, focused on delivering superior value to all of our shareholders. We are building momentum with a great leadership team, unified in focusing the company on its core strengths, redeploying resources to the most productive areas of the business, and equipping the company to invest in growth and innovation. Your new board includes individuals who have proven operating expertise in media, advertising, marketing, Internet, technology, and finance, and have consistently proven to be thoughtful and responsible stewards of shareholder value, with a strong emphasis on disciplined capital allocation and a willingness to embrace structural change. They are already contributing to the rigorous action plan to realize Yahoo!’s potential and deliver increased value for shareholders.

With new leadership and the new board, we are building a stronger, nimbler, more profitable Yahoo! that is better equipped to innovate for our customers and will ultimately increase the value of Yahoo! for all shareholders.

You can read more about Yahoo!’s actions to move the company forward and create shareholder value at http://yahooforward.com.

Thank you for your support.

Yahoo! Board of Directors