Typically at this point in the hardware cycle, he said, the cost of developing new videogames would lead to a loss. But in a conference call with investors yesterday, Riccitiello said revenue from digital content will keep EA profitable.

“In the face of, unfortunately, somewhat of a headwind relative to console, we’re getting top line growth, robust digital growth, robust margin expansion, robust EPS growth, while affording the investment in the next-gen console. I don’t think, going back to our foundation in ’82, that’s ever happened before. So what we are guiding for is entirely unprecedented, and it’s a function of everything we’ve been saying on the call so far. … It’s our hope to be able to accelerate top line through a transition and accelerate bottom line growth through a transition because we won’t be facing sort of negative console compares.”

Nintendo expects to release the Wii U later this year, which will require new games that tap into both the TV and a touchscreen device. Neither Microsoft or Sony have unveiled plans for their respective next-generation hardware systems, the Xbox and PlayStation. Riccitiello did not mention the new consoles by name, and instead referred any direct questions about hardware to Sony, Microsoft and Nintendo.

“We intend to invest $80 million in Gen4 console development in fiscal ’13. We are strong believers that console will return to strong growth, and represent a great opportunity — one that is in lockstep with our digital plans.”

In fiscal 2012, EA generated $1.2 billion in digital revenues, representing a 47 percent increase year over year. In the past six months alone, FIFA 12 — one of the company’s traditional packaged good titles — was able to break $100 million in digital revenues for the first time. This year, it’s predicting digital revenues of $1.7 billion, representing 40 percent of the company’s overall business.

Even though Riccitiello painted a positive outlook, he failed to turn to the tide.

Along with a broader market meltdown, the company’s stock fell 65 cents, or 4.3 percent, at $14.48 a share. At that price, the company’s stock is off more than 40 percent from its 52-week high of $26.13 a share.

During the call, Riccitiello also tried to stress that while Star Wars: The Old Republic is an important title for the company, it is getting an unfair amount of attention by analysts. In the quarter, he said the number of subscribers fell to 1.3 million from 1.7 million when the game launched.

“So while I understand there’s an enormous amount of interest, I don’t know that it warrants as much as what we’re seeing right now,” he said, according to a SeekingAlpha transcript.

The final highlight from the call was when Riccitiello questioned how much Zynga paid for OMGPOP and its hit title Draw Something, which was No. 1 for a short period of time. He didn’t actually name the two companies, but it was implied.

“Right now, what I’m starting to see is valuation expectations that assume that these things are all hockey stick moving up and to the right with no end in sight, and I think those are bad assumptions,” he said. “Some of them will work, some of them won’t, but they can’t all be worth the multiple that I’m seeing in the market right now.”

Indeed, people do seem to be separating their online professional identities from their personal identities more than they used to, now that the tools are available. Web users increasingly use LinkedIn to sign in to business-oriented sites, according to the social toolmaker Gigya.

LinkedIn started offering its credentials as a Web sign-on system early last year, and many business-oriented sites now offer users the option of authenticating using their LinkedIn account in addition to other options like their Twitter and Facebook accounts.

Gigya has seen a major increase in LinkedIn log-ins to sites it identifies as business-to-business. Twenty percent of social logins on such sites used LinkedIn credentials in January 2011, up from three percent in July 2010.

LinkedIn accounted for 26.6 percent of social sign-ons in January on the stock market news site Seeking Alpha, 20 percent on the Harvard Business Review and 14 percent on the Internet Advertising Bureau site. (The rest of social sign-ons were through Facebook and Twitter, mostly.)

To be sure, LinkedIn is still a minority share of social sign-ons on such sites, and these numbers don’t include users who register for a site without the help of a social network, or users who visit without registering.

Plus, the trend may be headed in the other direction. Many people propose that our personal and professional identities will increasingly merge, especially for younger generations. That’s the theory behind the legion of LinkedIn 2.0 start-ups like BranchOut and Assetmap.

LinkedIn is the first major U.S. social networking site to file for an IPO. It hopes to raise $175 million.

Which is why this qualifies as news: Financial commentary site Seeking Alpha is going to start paying some of its writers.

The seven-year-old site, which relies on a pool of several thousand contributors to stock it with chatter about stocks and anything else you can trade, will now offer them a chance to get paid for their work. It’s a one-size-fits-all rate: $10 for every 1,000 page views a story generates, as long as the story doesn’t appear anywhere else on the free Web.

That’s not going to make any of the site’s writers rich. Seeking Alpha CEO David Jackson says “it’s possible” that his most popular writers could generate a couple of thousand dollars per month, but most are going to make much less.

Jackson, on the other hand, is potentially on the hook for a decent-size bill.

Quantcast pegs his site’s daily page views at around two million. Not all of those views come from contributors–Seeking Alpha’s free transcript service, for instance, is popular and useful, and I assume the site gets a decent chunk of direct traffic. But if, say, half its page views were from volunteers who now want to get paid, that’s an outlay of $1,000 a day.

But why pay anything at all? Jackson’s longtime strategy has been to get people like newsletter publishers and money managers to give him free stuff, and offer them exposure/leads in return. Why change now?

You can read Jackson’s explanation of the move, along with some other details, in a letter he’s distributing to his writers today. But maybe he’s just following this sound advice from the Joker:

Dear Seeking Alpha contributor,

I wanted to let you know personally about three new initiatives that have rolled out on SeekingAlpha.com this morning:

1. Sharing revenue with contributors

I’ve always viewed Seeking Alpha as a partnership with our contributors: you provide us with outstanding articles, and we invest heavily (we now have over 70 employees) in technology, web design, editors and traffic partnerships to get your ideas in front of a large and valuable audience and drive customer leads to your business. But we’ve always known that some of our contributors don’t have businesses we can drive leads to, and that many contributors would appreciate additional direct income from their articles.

We’ve spent over a year building a direct sales team, and our readership has hit an all-time high and continues to grow (see: http://www.quantcast.com/seekingalpha.com). As a result, we can now share meaningful revenue with contributors: you’ll earn $10 for every thousand page views to articles which are published by Seeking Alpha and given to us exclusively (i.e. they don’t appear for free elsewhere on the Web). We call payment for exclusive articles our “Premium Partnership Program”. It’s on an article by article basis, so there are no contracts or forward commitments, and if for any reason you don’t want to receive payment yourself, you can pick a charity to receive your earnings instead. And if you don’t want to give us exclusivity for articles, nothing will change from the way we publish your articles now.

2. Upgrade to our leaderboards and reputation system

We’ve introduced a new reputation system and set of leaderboards, called “SA Opinion Leaders”. You’re now ranked by page views (trailing 90 days) to your articles according to the themes you write about. For example, if some of your articles are tagged “Media”, you automatically appear in the Media Sector leaderboard and are ranked by the number of page views you received to those articles. You can appear in multiple leaderboards, determined by the themes your articles are tagged with. Additionally, if you’re ranked in the top 5 for any theme, that information is displayed on your articles and also on your profile page.

We think this new reputation system has strong advantages. First, we’ve discovered that the number of followers a person has on Seeking Alpha (and, parenthetically, Twitter also,) doesn’t necessarily equate to reader engagement or influence. In contrast, the number of people who read your articles is a direct measure of reader engagement and thus your influence. Second, reputation is far more meaningful when measured in specific areas of expertise. So if you focus on media stocks, it’s far more valuable to know (and tell people) that you’re the number one on Seeking Alpha in the Media Sector than that you’re number 33 in some general ranking. We think that measuring real engagement and ranking contributors in categories will be valuable for contributors and — critically — valuable for readers.

3. Access to stats

You can now view detailed stats on Seeking Alpha, including total page views, page views by article, and page views by category. Additionally, you can track your page views and earnings for exclusive articles.

The future

Any major change carries risk, so why are we doing this? After all, churn in our contributor base is remarkably low, we’re about to add our 4,000th contributor, traffic is at an all time high, we recently crossed our 600,000th registered user, we have over 40,000 comments on the site per month, and our audience is of outstandingly high quality.

The answer is: this is about a vision. Investment research has been dominated by the sell side, but there’s a world out there of other people who have considerable knowledge and insight about stocks, options, bonds, ETFs and investment strategy. Whether you’re a fund manager, financial advisor, industry expert or a smart individual investor, we want to be the partner that brings that insight to light and unlocks value for contributors by offering exposure, reputation, customer leads and direct income. If this is successful, it should transform the investment research industry.

Thank you for your partnership with us, and wishing you a happy and prosperous 2011,
David

Not going to happen. At least not anytime soon, says Jeff Bewkes. The Time Warner (TWX) boss was asked about that scenario during yesterday’s earnings call and promptly batted it down. The short version goes something like this: The cable business is a very good business for us. Why would we want to screw with that?

The longer version, via Seeking Alpha, is worth reading, too:

Don’t get ahead of yourself. I would say, yes, HBO could easily do that. The question is, is whether it would in its interest to do that. Remember, HBO GO means that all the HBO subscribers in the United States are going to have HBO programming on demand across every device for no extra charge. So that is a powerful offering. And that will mean, if they want to access it on the broadband device, including any device made by any company, could be Korean, could be Apple, when they turn the thing on, they’ll be looking at HBO. So they don’t need to make a deal or an arrangement or diffuse some of the money or leverage to a device maker because they’ll view on every device for no extra charge. It’s a very powerful position. Not only HBO will be in that position, every network on the dial is going to be in that position, and so is every magazine.

There’s a twofer buried in there:

• A reiteration of the “TV Everywhere” strategy Bewkes champions, whereby paying cable subscribers–but only paying cable subscribers–get to watch their shows on the Web, too.
• And some chest-pounding about not letting Apple (AAPL) or anyone else dictate how Time Warner distributes its stuff.

Still! Note that Time Warner’s Time Inc. unit is falling over itself to rush out magazine apps for Apple’s iPad. Apple has a great deal of say over how those apps work, and it gets to collect 30 percent of the sale price. So Bewkes’s position has plenty of flexibility.

In fact, I wouldn’t be shocked if HBO does market an online-only subscription in a couple of years, especially if cord-cutting moves from apocryphal trend to documented fact.

The cable guys won’t like it, but the cable guys didn’t like it when HBO and other networks began selling their stuff to the satellite guys back in the 90s. As long as Bewkes can tell the cable guys that he’s selling his online stuff at the same price as his offline stuff, there’s not a lot they can do.

But you won’t hear Apple boast about how much money it’s making from iTunes. Because there’s not much to boast about.

Even at today’s hyper volume, the digital store is still running at “a bit over break-even,” the company reminded analysts during its earnings call last month.

Here’s the relevant excerpt from that call, via Seeking Alpha (thanks to Venrock’s David Pakman for pointing this out yesterday at the Digital Music Forum East):

Maynard Um–UBS
We have seen a number of industry revenue forecasts for applications and just given kind of the expected explosive growth there I am just wondering if that is still a break-evenish type of business as you look forward over the next couple of years?…

[Apple CFO] Peter Oppenheimer
…Regarding the App Store and the iTunes stores, we are running those a bit over break even and that hasn’t changed. We are very excited to be providing our developers with a fabulous opportunity and we think that is helping us a lot with the iPhone and the iPod touch platform.

As Oppenheimer says, this isn’t a new development. Apple (AAPL) has always maintained that iTunes wasn’t a real money maker. It’s supposed to help sell iPods, iPhones, and soon, iPads.

For years, industry observers figured that as the iTunes business scaled, this would change. An alternate theory, held by some of Apple’s media partners–the company was being overly modest about its success.

Apple doesn’t break out iTunes sales, but lumps them into a category called “Other music related products and services,” which generated net sales of $4 billion last year. That’s an increase of 21 percent over 2008, and the company attributed this growth to “increased net sales of third-party digital content and applications from the iTunes Store.”

Can the paper cut costs even more? It’s going to try, starting with a 100-person cut in its newsroom, which will bring headcount down by eight percent. But the Times is also counting on the ad market to pick up at some point, and it says it can now see the faint outline of a recovery taking shape.

During the paper’s earnings call yesterday, it offered a bit of insight into who was buying ads and who wasn’t. In the latter category: Banks, mutual funds and insurance companies, which were burning cash a year ago in an effort to convince customers that things were okay; movie studios and telcos also pulled back. But health-care spending was up, via big pharma and hospitals. Were they pitching consumers or legislators?

Bear in mind that ad revenue dropped 26.9 percent for the quarter, so all of this is relative. So when the Times talks about seeing “encouraging signs of improvement,” as CEO Janet Robinson mentioned in a press release yesterday, what exactly does she mean?

Here’s Robinson’s answer to that question, delivered during yesterday’s call. Transcript via Seeking Alpha:

We’re seeing improvement, a modest improvement. We’re seeing certainly more requests for proposals across the board. We’re seeing a modest growth in regard to commitment. We still are seeing just in time commitments, so the visibility continues to be cloudy, but I think we are encouraged that indeed we see advertisers telling us that their business is improving and consequently requesting more information from us in regard to rates and placement and certainly customized programs.

I’ll give you an example. The retailers in September as noted in my remarks, we started to see a little bit of a pickup. We have had in depth conversations with them in regard to their improvement. So we do see traffic improvement in regard to the stores and consequently when that’s the case, they tend to want to do more in regard to building even more traffic.

Same holds true in regard to some of the national advertisers with technology and national automotive, with certainly the bankruptcies behind General Motors and Chrysler and some activity certainly in technology and healthcare, we are seeing more commitments coming our way in regard to national schedules as well.

Yesterday, the publisher said that overall ad revenue had dropped 30 percent in the last quarter, which wasn’t surprising. But Internet ad revenue dropped 15.5 percent, which was a surprise, since it’s an acceleration from the previous quarter’s loss. What gives?

Times officials have multiple explanations:

1. A lot of the loss comes from our classified ads, which have been vaporized.
2. This year’s numbers don’t look good because last year’s numbers were so great.
3. At least we’re not Yahoo (YHOO)!

Check out this exchange from yesterday’s earnings call between analyst John Janedis, New York Times (NYT) digital boss Martin Nisenholtz and ad boss Denise Warren. Seeking Alpha:

John Janedis–Wells Fargo Securities: Martin, can you just talk a bit more about where you’re seeing on the display side with the news media, did any major customers pull out? And do you think you’re losing share relative to the total industry?

Martin A. Nisenholtz: No, I mean I’ll ask Denise to comment on this specific to The New York Times, but I don’t think we can point to any major losses. I think that her comments about overall volume on the side, on the businesses, is true of the digital side as well. I would point out that, to point to Janet’s [Robinson, NYT CEO] comment about most of the hit, a disproportion of the hit coming in the classifieds area.

Denise Warren: Can I just jump in and remind you again that we had a really, really, really robust quarter overall for nytimes.com last year, but really in the display area? So we are up against really significant comps. That’s just some context that I think is important that you have.

And just based upon what we’ve been seeing in the marketplace comparing to other sites there, we do believe we are taking share in the display marketplace, and we do believe we are performing better than most of our competitors in the display marketplace.

Martin A. Nisenholtz: I mean Yahoo just announced a 14% decline in display. I think, while we’re not breaking out the numbers, I think our display performance overall at nytimes.com and across the News Media Groups was better than that.

All of this sounds right to me (for the record, last year the Times’s Web ads grew 18.3 percent in Q2). But if the Times wants to keep investors optimistic about the company’s prospects, it’s going to need a better pitch than “we’re doing better than Yahoo.”

UPDATE: For a pretty good roadmap of where the Times is headed–more dollars from customers, fewer from advertisers–check out this smart piece from the Columbia Journalism Review. It notes, for instance, that the Times is now making nearly as much from subscribers as from advertisers.

My bloggy brethren are hopped up about Apple’s disclosure, via its most recent quarterly filing with the SEC, that its retail group had “approximately 14,000 full-time equivalent employees” at the end of March. Three months earlier, that number had been 15,600.

But let’s be clear: Those aren’t 14,000, or 15,600, employees. Those are 14,000, or 15,600 full-time equivalents–basically, an accounting term that measures the number of man-hours Apple (AAPL) is paying for, not the number of men (or women) it employs. So the very strong likelihood here is that Apple cut a lot of workers’ hours, but not workers themselves.

I asked Apple officials for a definitive statement on this, but they referred me back to their 10-Q.

Still, there’s no denying that sales have slowed at Apple’s 252 retail stores. Just ask CFO Peter Oppenheimer, who said this week that average revenue per store in the last quarter was $5.9 million, down from $7.1 million a year earlier, and that margins for the retail unit had shrunk accordingly. From the company’s earnings call, via Seeking Alpha:

“We believe that the year-over-year decline in average store sales and segment margin is a reflection of the continued weakness in the spending environment, coupled with third party channel expansions relative to the year-ago quarter.”

So the cutbacks make sense, as did the fact that the company only opened one store in the last quarter. It says it still intends to open 25 this year. That’s down from 50 a year ago, though that disparity may be a bit deceiving since Apple opened 17 stores in September–the last month of its 2008 fiscal quarter. Had a few of those opened a week later, the numbers would have evened out a bit.

[Image credit: Victoria Peckam]

Procter & Gamble (PG), which spends upwards of $6.7 billion a year on advertising, won’t be trimming that number, even though the company missed its earnings goal and cut its guidance last Friday. The people behind… well, pretty much every packaged consumer good in the world, aren’t going to stop pushing those brands like Tide, Gillette, Pampers, etc.

But they are getting more bang for their buck, CEO A.G. Lafley said during the company’s earnings call last week. And they are planning on spending some of those dollars in different ways. That may mean more digital–and more coupons and in-store displays. Transcript from Seeking Alpha:

We have held our marketing spending, advertising spending and in fact what is really going on is the advertising markets are softening and for the same dollar we are buying more delivery…we have been shifting support in general to the store and the point of purchase….It is couponing in markets where couponing is a well established consumer habit and coupon redemptions go up in recessionary times. In markets like the U.S. we have clearly shifted dollars to coupons….Then depending on the market we are doing more digital and there are a number of categories that are doing quite well with the digital.”

There’s your good news for the day, media folks. Now you have to figure out how to capitalize on it.

[Image Credit: Clean Wal-Mart]

Yesterday, for instance, the New York Times (NYT) provided a wealth of information about the state of the ad business. Here’s a summary, with an assist from Seeking Alpha, of stuff I found interesting:

What kinds of companies are still buying ads? Corporate advertisers like energy companies and financial companies–those that haven’t gone bust–trying to reassure customers; advocacy groups trying to influence the new administration.

Who’s cutting back? Hollywood: Fewer movies released, and less marketing money put behind each release (though that will change during awards season this spring); telcos, because there’s less growth out there; books, for obvious reasons.

Classified ads are killing us. Above and beyond anything else, the newspaper business is dying because its super-lucrative classified ads business is (still) dying. Technology, in the form of competition like Craigslist, critically wounded classifieds, and now the economy is finishing it off. The dropoff in the help-wanted category accounted for half of the the Times’s digital decline in Q4, said digital exec Martin Nisenholtz.

NewYorkTimes.com is a meaningful brand for display advertisers. Other properties–like About.com–aren’t. Nisenholtz says ad rates at NYT.com actually increased for most of the year. But About.com, which had been the company’s star digital performer, fell apart at the end of the year because of its display ad business–there’s nothing about the site’s brand or audience that commands a premium from display advertisers. The paper is now redesigning About.com to emphasize cost-per-click ads–that would be ads from Google (GOOG), primarily–because there’s still growth there.

Perhaps as much as 50 percent of the company’s digital inventory is sold by ad networks In response to a question, Nisenholtz wouldn’t put out an exact number. But he came close: “I would say that from an industry-wide perspective, you are probably looking today at around 50 percent. Some of our properties are above that, some of them are below that, but that’s about where the industry is at this point.”

That odd bit of cognitive dissonance surfaced yesterday, when the DVD rental company said it hadn’t been able to buy Web ads at a discount at the end of 2008. Hard to tell if it’s meaningful–does this mean the slowdown hasn’t been as great as people think, or is it just a statistical anomaly?–but it is interesting.

The details: During the company’s Q4 earnings call, CEO Reed Hastings told analysts that Netflix “didn’t see any benefits” from lower online ad pricing during the last three months of last year.

That’s odd, since Netflix (NFLX) buys more online ad inventory than just about everyone. Last year, when Nielsen Online was providing monthly reports about top advertisers on the Web, Netflix routinely made the Top 10 list, along with a handful or mortgage and finance companies. (Surely you’ve been annoyed by the company’s omnipresent pop-under ads). So if anything, its leverage should have increased in the past few months.

That prompted a follow-up question along those lines. Transcript via Seeking Alpha:

Youssef Squali–Jefferies & Co.

Barry, just a quick clarification, I think you said in your answer to a question that was posed before that you have not seen any benefit from lower ad rates in Q4. I’m just trying to reconcile that. Everything that we’re hearing from ad players out there, online ad players that at least on the CPM side and particularly on non-premium inventory where you guys seem to spend a lot of money, we’ve seen double digit declines year-on-year. Given the fact that you’re one of the top 20 online advertisers out there how can you not see a benefit?

Netflix CFO Barry McCarthy

You know, I put the question to our chief marketing officer in almost exactly the same tone and he reminded me that we already buy at low rates in mostly the remnant market so what must be happening is that the trickle down affect hasn’t yet hit the remnants space which is already incredibly discounted.”

It’d be great to think that remnant space–the cheap inventory Web sites usually hand over to ad networks or Google (GOOG) when they can’t sell it on their own–hasn’t come down significantly, but that’s not what I hear anecdotally, and that’s not what a barrage of reports has indicated.

The graph below, for instance, comes from ad optimization company PubMatic, which just reported “dramatic” drops in pricing over the last year. We’re likely to hear more of the same from Yahoo (YHOO) today. Anyone want to explain why Netflix hasn’t seen a benefit from those fire sales?

The post was written by named Liam Mulcahy, who was described as someone who “works in a hedge fund that is short Microvision.”

The plot thickens.

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