AllThingsD » spin off

TripAdvisor Dips Lower on First Day of Trading

Tricia Duryee — Wed, 21 Dec 2011 15:59:18 +0000

TripAdvisor, which has collected more than 50 million reviews from travelers around the world, is facing a critique of its own on its first day trading on the Nasdaq.

The company, which was officially spun out of Expedia yesterday, is trading down $1.24, or 4 percent, to $29.01 a share, under the ticker symbol TRIP.

Since Dec. 6, when Expedia shareholders approved the spinoff, the company had been trading temporarily under the symbol TRIPV.

While TripAdvisor’s stock price is lower today, it’s trading higher than Expedia’s, which was up 76 cents, or 2.8 percent, to only $27.61 a share.

The two companies picked a challenging time to conduct a split, with other recent IPOs, like Zynga, also struggling to trade higher. Kayak, a close competitor, has also decided to put its IPO plans on hold, however, that could change if the stocks perform well.

The breakup of Expedia and TripAdvisor creates two distinct companies.

Expedia, based in Bellevue, Wash., will be a travel agency focused on selling airline tickets and hotel and car rentals. TripAdvisor, based in Newton, Mass., will now serve as a travel-reviews site, operating in 27 countries and 19 languages. Without ties to Expedia, it can now solicit the highest referral fees from a number of travel agencies.

Much of the thought process behind the split has to do with what Expedia thinks its business is worth, compared to Wall Street’s valuation, and how much it will be valued on its own.

While Expedia’s travel agency business garners the most attention, it is TripAdvisor that has the bigger growth story.

Now that it is solo, it will be important to watch how its independent valuations evolve.

To celebrate the day, Stephen Kaufer, co-founder and chief executive officer of TripAdvisor, rang Nasdaq’s opening bell this morning — noticeably all by himself, without Expedia executives by his side.

Expedia and TripAdvisor's Breakup Is Now Official

Tricia Duryee — Wed, 21 Dec 2011 01:30:34 +0000

As planned, Expedia has formally concluded the spinoff of TripAdvisor today. Expedia shareholders will receive one share of TripAdvisor and one share of Expedia for every two shares of Expedia stock held prior to the split. Tomorrow, TripAdvisor will trade on the Nasdaq under the symbol TRIP, and Expedia will continue to trade under EXPE.

Expedia Takes Stock as TripAdvisor Gets Ready to Fly the Coop

Tricia Duryee — Fri, 09 Dec 2011 17:44:32 +0000

Now that Expedia’s spinoff of TripAdvisor is imminent, the online travel agency must explain to investors why they should stick with Expedia once its high-flying media business is gone.

In April, Expedia proposed a plan that would break the business into two public companies.

One would be a travel agency, focused on selling air, hotel and car rentals, and the other would be TripAdvisor, the travel reviews site that operates in 27 countries and 19 languages.

The deal is expected to close on or about Dec. 20, including a one-for-two reverse stock split immediately prior to the spin-off. Expedia will trade under the symbol EXPE and TripAdvisor will trade under TRIP.

Today, the company filed a presentation with the Securities & Exchange Commission detailing Expedia’s standalone growth prospects. The case will be an important one to make given that TripAdvisor is often seen as the more attractive of the two companies.

The Bellevue, Wash.-based company plans to present the slides to various investors and analysts over the next two-and-a-half months.

In the presentation, Expedia lists three major growth opportunities: International expansion, especially in Asia; a greater concentration on hotel bookings, which have higher margins than airplane tickets; and new distribution platforms, such as cellphones and tablets.

Expedia is a traditional travel agency that collects fees when an airfare or hotel room is booked. Meanwhile, TripAdvisor, which aggregates user-generated reviews, produces revenue from advertising, as well as fees when users book through other sites, such as Priceline or Orbitz.

In the quarter ended in September, TripAdvisor’s revenue jumped by 30 percent compared to the same period a year earlier. Meanwhile, Expedia’s revenues rose only 14 percent.

Additionally, the company is breaking up as it faces increasing competition from Google, which has started integrating the technology of ITA, a travel software company it acquired, into its search results.

Expedia’s stock today is trading at $28.65, up 61 cents.

Spinning Off HP's PC Business Could Have Worked … Couldn't It?

John Paczkowski — Mon, 31 Oct 2011 10:58:44 +0000

Newly appointed Hewlett-Packard CEO Meg Whitman says that spinning off the company’s PC division — as her predecessor, Léo Apotheker, had planned — was a nonsensical proposition, and that keeping it “is right for customers and partners, right for shareholders, and right for employees.”

And that may someday prove to be true. Which is not to say that there wasn’t a compelling rationale for dumping it. IBM jettisoned its PC business and never looked back. HP might have done the same.

While profitable, revenues at HP’s PC unit had been declining recently. Spinning it out might have improved the company’s overall profit margins, even if it did reduce its revenue by roughly a third.

As Bernstein Research analyst Toni Sacconaghi observes, by hiving off its PC arm, HP might actually have created some value.

If it had gotten its act together first.

“While we do believe that retaining the PC business was the right financial decision, we also understand why some investors may have wanted a spinout, as a re-rating of HP’s multiple on its remaining enterprise business could have been potentially highly value creating,” Sacconaghi said. “That said, we ultimately believe that HP should have looked to fix its prevailing operational issues first, and only afterwards potentially considered a spinout of PCs (or printers) if the company felt that it was not receiving an appropriate multiple.”

And fixing those “prevailing operational issues” — and overcoming the ataxia from which it has suffered during the past few months — is exactly what the company must do now.

Only then can it begin growing its PC business and figure out what to do with webOS, whether that means giving it another chance or squeezing some value out of it by selling it to a leading mobile-device maker — assuming it can find one that’s interested.

With HP's Raising of the World's Biggest White Flag, Will Jon Rubinstein and Todd Bradley Surrender Too?

Kara Swisher — Fri, 19 Aug 2011 16:08:13 +0000

It wasn’t until dinner this past Sunday night that CEO Léo Apotheker told Todd Bradley, the head of its Personal Systems Group, that he was about to push key parts of Bradley’s huge unit off the cliff.

That included stopping selling hardware — smartphones and TouchPad tablets — based on the webOS it acquired from Palm last year, a $1.2 billion deal that Bradley played a big part in.

In addition, HP said it was considering spinning out its PC business and would “explore options to optimize the value of webOS software going forward.”

But, until a few days ago, several sources close to the situation said, Bradley knew nothing of these plans and neither did webOS’s key driver of late, former Palm CEO Jon Rubinstein.

This surprising lack of disclosure by HP to two of its key execs begs the question: Will they stay or will they go now?

According to sources, staying put is the plan for both for now, although it depends on what such a spinoff will look like.

It’s clear at this point that Bradley — who was once the CEO of Palm himself and was once considered the most likely successor to former CEO Mark Hurd, before Hurd’s sudden resignation last year — is the leading CEO candidate of its spun-out independent PC company if that’s what HP decides to do.

But it’s not a lock, either. And, apparently, Bradley has not been locked in with regards to a spinoff either and would likely have a lot of offers from tech companies in Silicon Valley to choose from if he wanted.

“Who will they get if Bradley goes at this point, if they want to spin it off?” said one person at the company.

But, added another: “Bradley is in the catbird seat if he wants to be and it’s his to lose.”

That depends, of course, on what his is.

Questions include:

Will that new company include any of the consumer part of the printer business — a huge cash cow — if HP is indeed leaving the arena?

Will webOS go with the new set-up, so that it can take advantage of the patents and licensing income?

Will HP continue to be the brand name on the devices this computer company spinoff would make?

These are just a few of the issues in a deal of untold complexity. But perhaps the most obvious one is who would get custody of Rubinstein?

To begin: Bradley is a big fan and would certainly want him around if there were a spinoff, said several sources.

But to do what?

Rubinstein, a well-known tech exec, had been leading the webOS efforts for HP, but was recently moved upstairs to a larger but fuzzy role, to run product development and innovation for the PSG unit. He has been reporting to Bradley.

At the time, the move was seen by many as the first step out the door by Rubinstein, with one person joking that “he’d much rather be at his Mexican beach house than HP.”

Among the disgruntlements: Several sources said Rubinstein felt that TouchPad wasn’t ready to ship and that Apotheker has reneged on a public promise not to until the tablet was “perfect.”

That ire is no surprise, since the device was then subject to tough criticism, including by AllThingsD’s Walt Mossberg, who noted in his review:

“… In my view, despite its attractive and different user interface, this first version is simply no match for the iPad. It suffers from poor battery life, a paucity of apps and other deficits.”

In addition, unlike others there, Rubinstein has been more of a product guy and not an HP lifer. That begs the question of whether he’d like to sign up to another big company stint, even if he had more control.

“He’s been to that party before, and the reality is that he is not a career big company person,” said one person.

One important note: Rubinstein was unable to make webOS work when Palm was already a standalone independent company. And, although a new HP spinoff would be huge and better funded, it is still very much an uphill and competitive battle on the computer, smartphone and tablet fronts.

In addition, keeping a competitive operating system going is also a costly bear of an issue.

“It’s a cyclical, high-velocity business and there are other huge players from Apple and Google in smartphones and tablets to Lenovo and Dell in PCs,” said another source. “There might be a lot of great products in the pipeline for webOS, but it will not be easy to make them a success.”

That said, noted another person who knows Rubinstein well, “he really cares about webOS and does not want to see it go away.”

That might be true, although that is just what might happen if HP decides to sell it off to someone else or makes the spinoff a difficult endeavor.

In that case, it’s an offer Bradley and Rubinstein can refuse.

Motorola Adds Streaming Content Start-Up to Its Playlist

Ina Fried — Wed, 22 Dec 2010 16:25:36 +0000

Motorola announced Wednesday that it is scooping up Zecter, maker of the cloud-based ZumoDrive and ZumoCast services. The technologies use a virtual file system to make cloud-stored content accessible as if it were stored on the device itself.

As part of the deal, terms of which were not disclosed, Motorola said it will halt distribution of ZumoCast while it updates the software. Current customers can keep using the service. ZumoDrive distribution and use won’t be disrupted, Motorola said. The acquisition will become part of Motorola Mobility. (For those who have forgotten, Motorola is in the process of splitting itself in two, with Motorola Mobility being the cellphone-making unit.)

Motorola Split Set for Jan. 4

Ina Fried — Tue, 30 Nov 2010 23:44:56 +0000

Breaking up is, well, a lot of paperwork.

Motorola filed the details Tuesday afternoon on its plan to split itself in two. The spinoff of the cellphone unit will take place Jan. 4, with holders getting one share of the mobile unit, known as Motorola Mobility, for every eight shares of Motorola they own. The remaining Motorola company will then have a one-for-seven reverse stock split, which would have the effect of boosting the per-share price (but not the inherent value) of the suddenly smaller company.

The split will be made before the market opens on Jan. 4 to shareholders of record as of Dec. 21.

“Today’s announcement marks another important milestone toward the upcoming separation that is expected to benefit Motorola, its stockholders, as well as each company’s respective customers and employees,” Motorola’s co-CEOs Greg Brown and Sanjay Jha said in a statement. “We look forward to taking advantage of the opportunities before us as we begin the new year as two independent, publicly traded companies.”

Motorola Mobility will trade under the ticker symbol MMI, while the remaining Motorola, known as Motorola Solutions, will use the ticker symbol MSI.

Whether all this splitting and name changing will boost the company’s value remains to be seen.

Zong's David Marcus Talks About the Next Big Thing in Mobile Payments

Kara Swisher — Thu, 21 Oct 2010 13:00:40 +0000

There’s no question that mobile is the way an increasing number of payments are made for a variety of virtual goods.

Recently, BoomTown visited San Francisco-based Boku, one of the players in the race to win in this competitive space.

And, earlier this week, I motored on down to Menlo Park, Calif., to visit Zong.

While I would like to know why these services require such odd names, it’s clear Zong is good enough for Facebook to make it the mobile payment option for its Facebook Credits.

Zong is a spin-off from a company called Echovox, based in Switzerland. Zong garnered $15 million in funding from Matrix Partners earlier this year.

That investment was made by Dana Stalder, who was the former exec of PayPal, the pioneering online payment company that was bought by eBay.

Still, even with help, Zong has a complex business to run, which requires maintaining relationships with wireless companies around the world.

Sort of like herding cats, I would imagine.

Here’s my video interview with CEO David Marcus, who talks about where the business is headed:

[ See post to watch video ]

Department of Déjà Vu: Little AOL's Quixotic Quest To Land Giant Yahoo

Kara Swisher — Thu, 14 Oct 2010 19:54:40 +0000

The last time AOL gobbled up a big company–that would be its audacious grab of Time Warner in the 2000 merger of the century–it ended in tears.

Now, it will take all of CEO Tim Armstrong’s considerable sales skills and impressive cheekbones to pull off a definite longshot the struggling Internet icon is attempting.

That would be trying to convince someone with piles of money–a private equity firm or a cash-rich tech giant such as Microsoft–to help it snatch control of Yahoo and fold AOL into it.

The effort also includes a lot of other moving parts, such as an ability to convince Yahoo’s Asian affiliates to get on board, as well as competing with other predators, including powerful media giant News Corp.

But you have to give the moxie award to Armstrong for trying to take the ragged assets of AOL, which only add up to $2.65 billion in valuation and trade them for Yahoo’s powerful and impressive array of content and communications units. Yahoo’s valuation is $21.5 billion.

The former Google advertising sales head, who arrived at AOL in March of 2009, certainly has been trying to convince Wall Street–and anyone who will listen, in fact–on the idea that AOL is cool once again.

That included a splashy spin-off into a public company, compete with hiring Diddy to be at the party on the floor of the New York Stock Exchange, an aggressive marketing campaign and rebranding of AOL, copious and extravagant industry sponsorships (including one with our D: All Things Digital conference last year, which included an appearance by singer Natasha Bedingfield).

And did I mention the AOL break-dancers out in force during the recent Advertising Week in New York?

As I told Armstrong during a recent conversation: If he puts any more lipstick on the AOL pig, it will have to come live with me in San Francisco.

All joking aside, he has to because, for all of Armstrong’s Don Draper-like smoothness, he is contending with a very serious turnaround in AOL.

Its core money-making business, the access part, is drying up fast, while the advertising part is still weak. A string of results in recent quarters bear out the rocky road.

Armstrong does point out–selling, always selling!–that since he took over, he has cut the employee base in half, has added $500 million to the balance sheet, struck a good search deal with Google, has launched new content sites and ad products and has hired a top-flight management team.

All true, but AOL is still huffing and puffing as a tiny player in world of giants.

But that has not stopped Armstrong from aggressively making the rounds to try to take advantage of the distress at Yahoo and the increasing pressure on CEO Carol Bartz.

According to many sources, he has deftly painted himself as the sensible and friendly alternative to her more abrasive style.

It is certainly working–big Yahoo investors love Armstrong and frequently tout him as the long sought after answer to Yahoo’s longtime woes.

Maybe so, but News Corp. also has a strong narrative of uniting Yahoo with a media giant. Frankly, it also has to somehow parlay its weak asset, MySpace, into another format.

Sources said CEO Rupert Murdoch and his digital head Jon Miller have been in touch with the Yahoo board in recent weeks, including former CEO and Co-founder Jerry Yang.

Whatever happens, it will certainly be entertaining to watch Armstrong go up against the wily Murdoch and many others.

The question is: Will the investors of AOL and Yahoo laugh or cry in the end?

AOL and Facebook Get the New Yorker Treatment

Kara Swisher — Thu, 02 Sep 2010 04:16:27 +0000

Within the next several weeks, the New Yorker magazine will be publishing big pieces about a pair of digital icons located on the East and West coasts–an assessment of the turnaround at AOL by staff writer Ken Auletta and a profile of Facebook co-founder and CEO Mark Zuckerberg by Huffington Post senior contributing editor Jose Antonio Vargas.

For the Zuckerberg piece, Vargas was given a lot of access by the Silicon Valley social networking kingpin, including rare interviews with Zuckerberg’s inner circle and also longtime girlfriend and full-time med student Priscilla Chan.

And Auletta–whose big New Yorker takeout on Google (GOOG) turned into a book that is now being turned into a movie–will be assessing the turnaround efforts at AOL (AOL), which is now being led by former Google exec Tim Armstrong.

The Internet icon has seen troubled times in recent years, including a spinoff from Time Warner (TWX), which should make for interesting fodder for Auletta.

Also in the tech-topic kitty at the New Yorker, sources said: A profile of troublemaking Gawker Media impresario Nick Denton by Ben McGrath, which I am hoping will include his terrific tour of Chinese markets near where he lives in Manhattan’s SoHo.

Bain Leaves News Corp.'s FAN, Which Will Be Integrated Into MySpace: The Internal Memos

Kara Swisher — Mon, 23 Aug 2010 23:29:32 +0000

Adam Bain (pictured here), the well-regarded exec who ran the Fox Audience Network, called FAN, is going to Twitter to head up its early but increasingly aggressive advertising revenue efforts.

Here is the internal memo from News Corp. digital head Jon Miller about the changes at the ad network, in which it is clear the company is scrambling to shift strategy.

News Corp. (NWS) had been working on a plan for more than a year to spin off FAN and sell a piece of it to private equity investors, in part to hold onto Bain.

Now, it will go spinning back to MySpace, its principal source of ad inventory.

In his memo to employees below, Miller talked about the spin-off discussions, which failed principally due to issues over internal revenue share with MySpace.

Thus, back to the troubled social networking site, which is–after much exec turmoil–being run by Mike Jones. Jones has been trying to reinvigorate MySpace with a new look and a strategy focused on music and entertainment content.

Said Miller: “By aligning the FAN platform directly with MySpace, we will be able to utilize its services to further drive MySpace’s revenue efforts and to play a key part of the site’s planned re-launch later this year.”

News of Bain’s departure as FAN president–after a dozen years at News Corp.–to become a top exec at Twitter was first reported by TechCrunch earlier today, but without details of what would happen to FAN.

Bain also addresses his departure in the memo below.

First, here is the Miller memo:

Dear FAN employees:

I wanted to address the media reports this morning regarding Adam’s departure and also share some details on our plans for FAN moving forward. First off, Adam Bain will indeed be departing FAN–a company he has led from the ground up and built into one of the Web’s top five advertising platforms in just over two years. He has been an invaluable asset to this company and we wish him well in the future.

In addition, today we are announcing a plan to move forward with an integration of FAN’s team and technology directly with MySpace. As many of you know, we have had discussions with a number of interested parties in recent months with respect to potential partnerships involving FAN. After deliberating over these external options, we ultimately decided that the best path for FAN–and for News Corp.–is to put this leading-edge technology to work to benefit our existing assets. By aligning the FAN platform directly with MySpace, we will be able to utilize its services to further drive MySpace’s revenue efforts and to play a key part of the site’s planned re-launch later this year.

Bruce Wiseman will work closely with Mike Jones and Jack Kennedy on the overall MySpace integration efforts, and you will be hearing more from your managers shortly on details regarding the integration and how it will affect you. In addition, we will be sharing information broadly with you as much as possible over the next several weeks.

Lastly, I want to thank all of you for your commitment and dedication to FAN over the past two years–this is an incredibly talented team that’s accomplished a great deal in a very short amount of time. Also, please join me in once again thanking Adam for all his work–he will be missed both personally and professionally–and we look forward to crossing paths with him in the future.

Regards,
Jon Miller

And here is the Bain memo to his employees:

Guys–

I wanted to let you know that after 12 years at Newscorp, I’m moving on to pursue a once-in-a-lifetime opportunity in San Francisco.

As you can imagine, this is a pretty emotional decision and one that didn’t come easily. I’ve literally grown up inside this company and will always be grateful for the amazing opportunities that were afforded to me–the greatest among them: the opportunity to work with and lead this team.

The things we’ve done in the ad business–Self-Serve, Targeting, Segmentation and our work with big data–are too numerous to detail here, but they are industry-defining and have set Newscorp up to succeed for many years to come.

My deep thanks to Jon Miller–I’m humbled by the freedom and support given to me here at FAN. And lastly, I want to thank you, my team. I will miss the heck out of you, but I’m psyched to watch you continue to succeed, albeit from afar.

Bruce will be leading the company thru this transitional period.

Thanks again for all of your support and the privilege of leading this extraordinary group over the last two years.

–ab

Finally, here is the News Corp. official press release on the whole, well, messy thing:

MYSPACE AND FOX AUDIENCE NETWORK ANNOUNCE ORGANIZATIONAL INTEGRATION PLAN

MySpace to Leverage FAN’s Team and Leading Advertising Platform FAN President Adam Bain to Depart

Los Angeles, Calif.–August 23, 2010–News Corporation’s MySpace (http://www.MySpace.com) and Fox Audience Network (FAN) today announced a plan to integrate the FAN business directly with MySpace. The move will enable MySpace to leverage FAN’s team and its leading technology platform. In addition, FAN announced that its President, Adam Bain, will leave the company to pursue other opportunities.

“FAN and MySpace have worked together closely over the past several years and this integration will further align these two properties,” said Jon Miller, Chairman and CEO of Digital Media for News Corporation. “Adam has been an invaluable asset to News Corp, having led FAN’s growth from the ground up into one of the Web’s largest ad platforms, and we wish him well in the future.”

“By fully integrating FAN’s platform and team, we are in a great position to further leverage FAN’s technology, which allows advertisers to serve the right ad to the right person and apply that to content across MySpace to provide a more relevant experience for our users,” said Mike Jones, President of MySpace. “The FAN team is incredibly talented and we’re excited to welcome them to the MySpace family.”

Fox Audience Network was created in 2007 and currently reaches more than 150 million Internet users. The company leverages proprietary advertising technology to create highly-targeted advertising campaigns for a wide range of marketers, while also delivering cutting-edge tools and services to third-party publisher partners, advertising agencies and research companies.

After Some Flashy Investing, Is Andreessen Horowitz's Next Move a Big New Fund?

Kara Swisher — Mon, 12 Jul 2010 14:25:21 +0000

Since it launched almost exactly a year ago with a $300 million fund, the venture firm of Andreessen Horowitz has cut a rather high-profile path through the Silicon Valley investing community.

And it’s clear the firm has been aiming to make a big splash in the sector–from its involvement in the fractious fight over the spin-off of Skype to its funding of a series of high-profile start-ups (Zynga, Asana, Kno and Rockmelt) to its most recent aggressive moves to finally win the top spot in investing in hot social location site Foursquare.

Now, according to sources and after spending about half its kitty, Andreessen Horowitz is poised to begin another round of fundraising to further bolster its clout.

While it is unclear how much the VC firm will raise, sources expect it to be much more than its first fund.

In its last go-round, the firm had a quick completion of the fund raising, in the midst of a national econalypse. So many assume the next try will be a lot easier, especially given its knack for grabbing hot deals.

A spokeswoman for Andreessen Horowitz declined to comment on future fundraising plans.

The firm is going to need the money as it expands its partners and ambitions to change the venture landscape, as iconic entrepreneur Marc Andreessen noted when he founded the firm with his longtime business partner Ben Horowitz in July of 2009.

Andreessen said then that he was essentially professionalizing the active angel investing that he and Horowitz had been doing.

Over the last several years, either together or apart, the pair have invested in a large variety of innovative start-ups, such as Twitter, Aliph, Digg, LinkedIn and many more.

Andreessen is on the board of Facebook and an adviser to Twitter too.

In an interview with me last year, Andreessen said that unlike many VC firms, Andreessen Horowitz will invest in companies at any stage of life–from early stage to late–and of any size and in any kind of digital sector and will focus on companies led by tech-savvy founders.

He also expressed a disdain for the way the venture business was run.

“For the first time in my life, I am crossing over into the dark side,” said Andreessen at the time, in a joke about VCs being like Darth Vader.

At the time, he also noted that money talked. “It’s important to have more capital,” he said. “Sometimes having a huge checkbook is a great thing.”

Well, we’ll see if Andreessen Horowitz can make that checkbook even larger.

Until then, here is a tally of investments that Andreessen Horowitz has made so far, sourced from the firm, split up into categories and size of investment round the firm participated in with other investors. The firm declined to provide the exact amount of their participation in each investment.

It should be noted that Andreessen’s and Horowitz’s previous individual investments in some of these companies are not identified here:

Board

Kno: tablet device for students; $7.5 million
Nicira: cloud infrastructure software; $13 million
Okta: cloud app management; $750,000
Proferi: analytic applications; $2 million
Rockmelt; desktop browser for Facebook; unknown funding
Skype: Web telephony; $50 million

Passive

Apptio: IT cost transparency solutions; $14 million
Asana: enterprise collaboration; $9 million
Boku: mobile online payments; unknown funding
Digg: social media and content; unknown funding
Foursquare: social location; $20 million
Fusion I/O: enterprise I/O solutions; $45 million
Tiny Speck: social gaming; $5 million
Zynga: social gaming; $180 million

Seed

Burbn; social location; $500,000
Canvas Networks: image boards; $625,000
Factual: structured data; $1 million
GoodData: cloud-based collaborative analytics; $2.5 million
Quantifind; enterprise; unknown funding
RethinkDB: database storage; $1.2 million
Mixed Media Labs: photo sharing; $370,000
SnapLogic: open-source enterprise data integration; $2.3 million
TopProspect: social recruiting; unknown funding
Vikkii: user-generated subtitling; unknown funding
Ze Frank Games: online gaming; unknown funding

And here are video interviews BoomTown has done with both Andreessen and Horowitz in the last year on their investing theories:

AOL's Longtime PR Head, Primrose, Steps Down

Kara Swisher — Tue, 29 Jun 2010 15:45:35 +0000

Tricia Primrose (pictured here), AOL’s long-serving communications head, is stepping down from her job, according to a memo sent out by CEO Tim Armstrong to staff.

The move is personal, related to her family, according to the memo (which you can see below).

Except for BoomTown’s record run, Primrose is unusual in the length of her tenure and number of AOL (AOL) exec administrations she has survived, including Steve Case and Bob Pittman, Jon Miller, Randy Falco and Ron Grant and now, Armstrong.

To say nothing of the myriad of changes and controversies at the long-suffering Internet icon, such as its disastrous merger with Time Warner (TWX).

And those have recently included its spinoff from the media giant and its 25th anniversary celebration.

That deserves some kind of medal!

And I, for one, will miss her and her consummate professionalism throughout some decidedly dicey times. Being both loyal to AOL and honest about tough situations is no easy task, but Primrose always managed to do it unflappably and with class.

Since Armstrong took over, though, most of the company’s most recent senior management team has turned over, with Primrose being one of the last to go.

Primrose will be staying until a replacement is found and will be part of the selection process, according to the staff email.

Here is Armstrong’s internal memo:

AOLers–

As we discussed in our all hands meeting two weeks ago, our Company is about people and our brands are a reflection of the people who work on them. There is one person that has worked tirelessly toward communicating both internally and externally about the progress and challenges we have faced as a business and a team–Trish Primrose. Trish has been with AOL for over 13 years and has been at the eye of the storm of one of the most well-known brands, in one of the most well-known industries.

I wanted to let you know that Trish will be stepping down as the Head of Corporate Communications for AOL and transitioning into an advisory role at the Company which will allow her to spend more time with her family. Trish has been an exemplary executive in her role and she has become a good friend in the process which is why I understand this change makes total sense for her. As many of you know, since returning home to Virginia in December last year Trish has been commuting, spending part of every week in the NY office–a schedule that has required her to sacrifice a lot of time away from her husband, Doug and daughter, Callie. People who know Trish well know that while she is the ultimate perfectionist at work, the thing she is proudest of is her family.

Trish will leave the role having completed one of the most important events and stepping stones in the history of the Company–AOL’s re-emergence as a stand-alone public company. Trish played one of the key positions in that transition and she has built a team that has bridged the past with the future. Trish’s most recent efforts culminated in AOL’s 25th Anniversary celebration which was a success that won’t be forgotten and is a highlight for all of us. Trish and her team will continue to be instrumental in our success. We will be opening an external and internal search for a successor.

We’re grateful that we’ll be able to tap Trish’s experience in ensuring that the Company doesn’t miss a beat during this period. And while we’re thrilled she will be continuing with us in an advisory role, please join me in thanking Trish for her efforts on behalf of AOL. –TA

Viral Video: Smoke Monster on "Lost" Gets Spinoff! (Plus Letterman's Top Ten Finale Spoilers)

Kara Swisher — Thu, 20 May 2010 12:15:15 +0000

For fans of the soon-to-end mysterioso television show, “Lost,” two of the top writers on “The Late Show With David Letterman” on CBS (CBS) did a really funny spoof of what happens to the smoke monster after the series is all over on May 23.

As an added plus, “Lost” executive producers Damon Lindelof and Carlton Cuse were on Letterman last night to render the “Top Ten Spoilers for the ‘Lost’ Finale.”

My fave: “Due to pressure from the Internet, we’ve been forced to include Betty White.”

Enjoy the videos:

Exclusive: Rhapsody Selects Former MySpace Product Exec as Independent Board Member for Spinoff

Kara Swisher — Wed, 21 Apr 2010 12:34:34 +0000

Tom Andrus, former MySpace product head, has been selected to be the single independent board member of the newly independent Rhapsody digital music service.

Andrus (pictured here) joins a pair of directors from each of Rhapsody’s large shareholders: Bob Kimball and Mike Lunsford from RealNetworks (RNWK) and Wade Davis and Van Toffler from Viacom (VIA).

Andrus–who mostly worked at MySpace under the tenure of co-founder and CEO Chris DeWolfe and President and co-founder Tom Anderson–left the troubled social networking site last year.

He had been doing some consulting for Rhapsody and had considered working there too. After deciding against it, since he lives in the Los Angeles area, he said he was asked to join the board.

“I liked what I saw,” said Andrus in an interview with BoomTown. “Rhapsody is really ready to blossom and poised for some real growth.”

The Seattle-based Rhapsody spun off from RealNetworks earlier this month and has plunged into efforts to expand its offerings and become profitable.

These include a price cut for its subscription to $9.99 from $15 and aggressive mobile efforts, such as a Wi-Fi app for Google (GOOG) Android smartphones.

RealNetworks owned 51 percent of the Rhapsody, and Viacom’s MTV Networks the remainder. Restructuring gave both companies a 47.5 percent share. The rest is
allocated to the employee pool and outside investors, including Universal Music Group.

Jon Irwin is president.

For a new company, Rhapsody is one of the oldest in the music space, founded in 2001 by Listen.com.

Listen.com was bought by RealNetworks in 2003, and Rhapsody became its flagship brand as a music service offering.

But Rhapsody quickly lost ground to savvier competitors like Apple (AAPL) and its innovative iTunes service.

Rhapsody, along with Best Buy’s (BBY) Napster, has sold music via monthly subscription, as opposed to Apple’s (AAPL) a la carte download offering.

But Rhapsody has not been able to gain much traction, despite years of effort.

RealNetworks and Viacom’s MTV created a joint venture in 2007 to try to goose it, which did not work either, before the recent formation of the privately held independent company.

Currently, hotter services, such as Spotify, are getting more attention, but Andrus said Rhapsody can compete.

“The company has been through the storm and is ready to win,” he said.

Why Are AOL Shares Up Today? Maybe for Admitting Bebo Is a Total Bust?

Kara Swisher — Wed, 07 Apr 2010 21:15:01 +0000

AOL shares pushed higher today than they have been since its November spinoff, rising almost four percent to close at $27.44.

And the reason for the rise? One savvy investor suggested it was due to yesterday’s announcement that the company might shut down Bebo, the social networking site it egregiously overpaid for in 2008–$850 million in cash–only to see the asset dwindle badly.

Rather than finding a buyer, said the investor, a shutdown might allow AOL (AOL) to write down some of that acquisition, yielding it hundreds of millions of dollars in tax savings.

AOL bought Bebo in 2008, when it was still a Time Warner (TWX) division.

In addition, AOL is in the midst of selling off its ICQ instant-messaging business–likely to foreign buyers, in one of the slowest transactions ever. Once that deal is done, it could nab the company upward of $100 million to $150 million in cash.

With its current cash flow, that could give CEO Tim Armstrong a nice pile of dough, which could be further supplemented as he gears up for negotiations over a new deal for AOL’s search business with both Google (GOOG)–its current partner–and Microsoft (MSFT).

While the big-money guarantees are likely a thing of the past, AOL’s business–unlike, say, MySpace’s–is considered valuable by both companies. The current Google deal is up in December.

In any case, while the failure of translating its Bebo acquisition into any kind of success is pretty clear, perhaps the complete disaster does have some silver lining.

The MySpace Sale or Spinoff May Be a Nonstory for Now–But My Barry Manilow Badge Is Sure for Real

Kara Swisher — Wed, 17 Mar 2010 08:30:01 +0000

Like others, without inquiring, BoomTown got an email–from someone who would know–regarding inexplicably whirling rumors of the sale or spinoff of MySpace.

Read the “pre-emptive” note: “There is no truth, zero, zip to myspace sales report.”

Well, to tell my truth, I actually wasn’t wondering, especially since that was the exact same on-the-record answer I got from MySpace Co-presidents Jason Hirschhorn and Michael Jones when I asked them that very question in an interview last week about the fate of the social networking site within its parent company, News Corp. (NWS).

But whatev!

In any case, what is completely true–and I could not be more thrilled–is that I am now the proud and only owner of a Barry Manilow badge (pictured here in all its glory) from a yet-to-be-released feature MySpace is working on.

It was sent to me by Mike Macadaan, head product dude at MySpace now, after my recent video tour–which you can see below–of the changes being planned to try to revive the troubled Internet service.

[ See post to watch video ]

When shown the badge idea, full of hipster stuff about three decades too young for me, I wondered what there was on MySpace for Manilow fans–Fanilows!–like me.

Hence, my one-of-a-kind Barry badge (which sort of makes the crooner look a little like Carol Brady/Florence Henderson, whom I also love, so no foul).

I am not sure I am ready to take a chance again on MySpace–or if anyone is–but, Mike, you came and you gave without taking, so I won’t send you away.

(A free All Things Digital T-shirt to the first commenter below to name those tunes.)

And, so more will understand Manilow’s bizarre appeal, here is one hysterical video mashup of “Copacabana,” which somehow includes former British Prime Minister Tony Blair, a pimp and dog wearing a pirate hat:

(Full disclosure: News Corp. also owns Dow Jones, which owns this site.)

Video: New MySpace Co-Presidents Hirschhorn and Jones Talk About the Past (Troubled!), Present (Work in Progress) and Future (Revival?)

Kara Swisher — Wed, 10 Mar 2010 00:24:08 +0000

On Monday, as part of a press hello-there MySpace is doing this week, BoomTown traveled to Los Angeles for the day to finally check in with the new management at the turmoil-plagued company.

That would be new Co-Presidents Jason Hirschhorn and Michael Jones, who are now ferreting away on a slow rollout of a plan to turn MySpace into a socially-charged entertainment hub.

They took over the Beverly Hills-based social networking site immediately after News Corp. (NWS) digital head Jon Miller suddenly fired CEO Owen Van Natta last month.

The pair reported to Van Natta and, according to pretty much everyone you speak to, were very much at odds with him.

Perhaps that was inevitable due to the awkward way the trio was hired at the same time last April, as part of a grand plan of overhaul.

Their arrival followed the defenestration of co-founder and CEO Chris DeWolfe, who was blamed for the declining prospects of MySpace in recent years after a red-hot start.

While former Facebook and Amazon (AMZN) exec Van Natta was selected as the experienced one in charge, Hirschhorn ran product and Jones was charged with getting the trains to run on time at MySpace–when they ran right at all, that is.

That all ended when Miller and Van Natta clashed over control of MySpace, which has about 100 million monthly visitors and just above $350 million in annual revenue.

And faster than you can say Rupe, former AOL (AOL) exec and serial entrepreneur Jones, and Hirschhorn–who is a well-known media exec with stops at Sling Media and Viacom (VIA)–got the nod.

What’s that famous Shakespeare quote? Uneasy lies the head that wears a MySpace crown? Or, in this case, two heads and two crowns!

How deliciously ripe with plot.

And so much to cover: From the corporate intrigue to how News Corp. looks at the troubled property to competition like Facebook to what to do about declining traffic, engagement and advertising revenue to rampant sale or spinoff rumors.

And most of all, and what gets unfortunately lost in all this mess–what the heck they are doing to innovate the actual product and make it into an entertainment hub.

Thus, here’s a video interview I did with Hirschhorn and Jones–at their joint desk, like some digital Oscar Madison and Felix Unger–where we talk about all this and more, including whether or not Hirschhorn is a kvetcher or not.

(He is, but I am worse!)

I also posted a tour of MySpace, in which the pair talk about their plans for the revival of the service, with the help of some visual aids.

Until then, enjoy, and no kvetching over the length:

[ See post to watch video ]

(Full disclosure: News Corp. also owns Dow Jones, which owns this site.)

BoomTown Visits AOL's NYC HQ on Eve of Spinoff: CEO Tim Armstrong's Fabulous Cheekbones and More!

Kara Swisher — Thu, 10 Dec 2009 00:38:11 +0000

BoomTown is in Manhattan today and my No. 1 stop had to be the AOL HQ downtown.

The iconic Internet company–which has gone through more lives than a dozen cats–is poised tomorrow to officially spin off from Time Warner (TWX) in yet another episode of the longest running corporate soap opera on the Web.

Less than a decade ago, AOL was the most powerful Internet property in the world, its dominance culminating in a merger with the media giant that was touted as the next big thing.

Well, it was certainly a thing.

As everyone knows, the union did not turn out well, and now, after years of struggling within Time Warner, AOL is being let free to resume its journey alone.

It will start trading tomorrow on the New York Stock Exchange under the ticker “AOL.”

I am about to head out to a party for AOL on Wall Street tonight and will also be there when AOL rings the opening bell in the morning, after which investors will cast their vote on its fate. (I’ll post on all that next.)

Until then, here is a video tour I did this afternoon at AOL HQ on Broadway, including an interview with CEO Tim Armstrong–whose Don Draper executive cheekbones are admired by partners and rivals alike–as the former Google (GOOG) exec heads into the big day:

[ See post to watch video ]

AOL: Puff Daddy Parties and Cockroaches on NPR

Kara Swisher — Wed, 09 Dec 2009 13:11:03 +0000

BoomTown is winging across the country right now to New York City to attend, among other things, the analog version of the AOL spinoff from Time Warner (TWX).

Videos to come, of course!

A ringing of the opening bell for AOL and trading will officially take place on Thursday morning at the New York Stock Exchange on Wall Street in Manhattan.

This will be preceded by a party there tonigh, which will apparently feature an appearance by Diddy, who was sporting the Puff Daddy name the last time I was at the exchange for an AOL/NYSE event.

How investors will like AOL is the billions-of-dollars question, of course.

AOL went public on Nasdaq on March 19, 1992, under the ticker “AMER,” and moved to the NYSE on Sept. 16, 1996 trading as “AOL.”

While working on my first of two books on AOL–one on the company’s upward ride and the other going down–I actually attended both the fancy dinner the night before AOL moved to the NYSE from Nasdaq and the AOL party on Wall Street the next day.

And since I spent an ungodly amount of time writing that pair of tomes on AOL, the iconic once and–it’s hoping–future Internet giant, I get to be a loud-mouthed pundit on a variety of television and radio news shows this week.

Yesterday, for example, I appeared on NPR’s “Morning Edition,” where I used a term that has long been used to describe the hardy AOL: The “cockroach of the Internet.”

Here is the audio clip of the interview with Steve Inskeep:

And here is the transcript (you can also listen to it here):

STEVE INSKEEP, host:

A divorce becomes final this week. Time Warner finishes spinning off AOL as an independent company. That will end the story for what was just eight years ago the largest merger in history. Time Warner was supposed to provide content from its movies and magazines. AOL, the giant Web company, would distribute it and together they would own the world. That’s what was supposed to happen.

Author Kara Swisher has chronicled what really happened, and she’s on the line.

Good morning.

Ms. KARA SWISHER (All Things Digital): How do you do?

INSKEEP: So they, through this merger, were going to be were going to be the gigantic company. They were even bigger than Time Warner at the time, the gigantic company that was going to bring Time Warner’s content to the masses. What happened?

Ms. SWISHER: What happened? Humanity happened. There’s people involved and a lot of people didn’t like the merger at Time Warner and dragged their feet and didn’t do the necessary synergies that were necessary to make it work.

Secondly, it was part of a big bubble here in Silicon Valley. AOL was at the top of that bubble and when it burst, and it turned out there weren’t quite so many revenues attached to it as people thought, you know, that sort of changed things.

And the third thing was, it just, you know, people weren’t really ready. The Internet was well used at the turn-of-the-century…but Google actually just hardly existed.

INSKEEP: So were AOL and Time Warner just ahead of their time?

Ms. SWISHER: No. I think it was probably too big. I mean it was trying to combine these companies, media and the Internet, and just as today there’s struggles over, you know, over the music industry digitally, over movies, they’re still fighting these fights, so it was still a very difficult marriage for media–traditional media, I guess–and digital media.

INSKEEP: So Time Warner now kicks AOL out the door. AOL is a much smaller company than it used to be in terms of customers and revenues and everything else. What’s the next step for AOL?

Ms. SWISHER: Well, it’s tough because its main business, the dial-up [and access] business, it’s declining drastically, and every year it goes down by hundreds of millions more. And they’re relying everything right now on content. That’s their big play, is the idea of creating content on the Internet and selling premium advertising against it. And we’ll see what happens, but it’s definitely not the size and influence it was before.

INSKEEP: So does AOL in their ideal world basically become a USA Today for the 21st century?

Ms. SWISHER: Kind of like that. They’re kind of being like Time Warner a little bit, if you think about it. You know, Time Warner has all those magazines doing that stuff and not every bit of it’s, you know, high level journalism. A lot of it’s People Magazine and Sports Illustrated, so it’s a question of how much money you can make at this when a company, say, like Google is just manufacturing money in the basement there over these little search terms.

INSKEEP: How on earth can AOL make money creating its own content and selling it when they apparently couldn’t find a way to mine and sell all the content they had access to when they were part of Time Warner?

Ms. SWISHER: Well, that’s a good question also. But you know, they didn’t get a lot of access to it. That took forever. You know, Time Warner really is run like a separate kingdom and the magazine people at Time didn’t really hand over the goods, and so AOL was never able to take advantage of them in a really substantive way.

Same thing happened with the cable business. There was supposed to be a lot mergers of AOL distributed over cable, over broadband, which is a great idea, but the cable people resisted. The movie people, you know, it just went on and on and on.

INSKEEP: Sounds like you don’t entirely blame AOL for this failure.

Ms. SWISHER: Oh, I do. They were arrogant and rude and they came in telling people what to do and they, you know, they had all sorts of questionable issues around their revenues that sort of fell apart. So I think they created a situation where they promised a great deal of things and delivered almost nothing.

INSKEEP: Are they in better position now or with better management now?

Ms. SWISHER: Yes. Now they have an executive from Google, actually. Tim Armstrong is a very well regarded executive and he’s really changed the–he has brought in new managers–many of them from Google, fascinatingly enough. And they’ve laid off a lot of people and they’re going to sell off assets. They’re doing all the right things. It’s just a question of what’s left once they’re finished doing that.

INSKEEP: So do you think there’s going to be an AOL in five years?

Ms. SWISHER: You know what? Everyone’s always counting AOL out and they still manage. They used to be called the cockroach of the Internet and they kind of still are in a lot of ways. You know, they never die. They always fall down. And it was their image that they constantly reinvented itself. And so we’ll see. I mean they have survived multiple changes in their business.

Even–I mean before they got huge they were almost out of business a million times, and so we’ll see if they–if, you know, cockroaches, whether you like them or not, probably will survive the nuclear holocaust, so we’ll see. You know, we’ll see what happens if they can turn this into something. It’s not going to be the glory days of AOL before, but it could be something interesting.

INSKEEP: Kara Swisher is co-executive editor of All Things Digital, a tech and media blog owned by Dow Jones.

Thanks very much.

Ms. SWISHER: Thanks a lot.

AOL Readies Board Picks for Spinoff–While Holding Off Search Suitors (Plus, BoomTown Director Choices!)

Kara Swisher — Thu, 24 Sep 2009 04:01:35 +0000

According to sources close to the situation, AOL has been busy selecting the board for the company, which is still set to spin itself off by year’s end–even as it slows down a decision on a new search deal with either current partner Google or a more emboldened Microsoft.

AOL is using Spencer Stuart in the search for directors, led by well-known headhunter Jim Citrin, sources said, and the company has already settled on several outside candidates.

The final board is likely to have about 10 members, and up to a dozen.

At least one of those seats will go to CEO Tim Armstrong, with one or two more claimed by its current corporate owner, Time Warner (TWX).

AOL and Time Warner made their own wish list of potential directors earlier this year, but some people are also lobbying the company to join the board.

BoomTown is working on discovering all those names, but sources added that the candidates being looked at are a mix of personalities culled from the media, advertising and Web worlds.

Among the key attributes: More presumably fast-forward and innovative Silicon Valley types that can help burnish AOL’s tarnished tech cred.

Here are some of my picks:

Facebook COO Sheryl Sandberg, Guitar Hero CEO Dan Rosensweig, WordPress founder Matt Mullenweg (actually, AOL should buy the start-up), eBay (EBAY) CEO John Donahoe, LinkedIn Chairman Reid Hoffman or CEO Jeff Weiner, Juniper Networks (JNPR) CEO Kevin Johnson, Netflix (NFLX) CEO Reed Hastings, and former AOL iconic exec Ted Leonsis.

And, just for fun, News Corp. (NWS) digital don (and ousted former AOL head) Jon Miller or former Yahoo President Sue Decker.

(I might also add former AOL exec, Netscape co-founder and all-around entrepreneur Marc Andreessen, but if he joins another tech/Web board, he is going to get splinters.)

That’s because Armstrong has set a strategy centered around the turbocharging of online content, powered by a more flexible platform and paid for by goosing AOL’s graphical advertising business.

This puts the online icon–once a powerhouse and now not so much, having operated inside Time Warner since its merger early in this decade–in more serious competition with Yahoo (YHOO).

Yahoo now dominates content on the Web, with powerful news, sports and finance sites, and has recently been trying to reinvigorate its brand. This week, it launched a new marketing campaign with the motto, “It’s Y!ou.”

Yahoo also recently struck a search technology and advertising partnership with Microsoft (MSFT), which has now aimed its efforts at AOL.

According to sources, Microsoft execs have been aggressively courting AOL to switch its search business from Google (GOOG).

The search behemoth has long been AOL’s partner in what sources at both companies said has been a productive and lucrative relationship.

Armstrong is also a former top exec at Google, which many at the company hope will further cement its chances.

And while the renewal of that deal does not officially need to be struck until late next year, sources add that Google has already prepared and offered what it considers an attractive new deal for AOL.

But, much to Google’s chagrin, with a focus on the spinoff and preparations for some more cost-cutting in the months ahead, AOL has decided not to accept it yet and is not likely to anytime soon.

While hedging the situation in a recent video interview with MediaMemo’s Peter Kafka, Armstrong has also recently met with Microsoft execs, sources said, who have discussed a number of partnership options with him, including a tighter relationship with its MSN content properties.

“There’s no need to rush, especially since there is already a lot on AOL’s plate,” said one source close to the situation. “And, since it has options, AOL is going to take time considering them.”

(For more on Armstrong’s thinking, here’s a link to another video interview I did with Armstrong while both of us were in Germany today, in which he talked about the ad market and AOL’s strategy, but was cagey about being more specific.)

Please see this disclosure related to me and Google.

AOL CEO Tim Armstrong Speaks (Though He's a Cagey One)!

Kara Swisher — Thu, 24 Sep 2009 03:38:20 +0000

Here is a video interview I did today with AOL CEO Tim Armstrong in Germany–really!–where we both were appearing at a digital marketing conference.

In it, the former Google (GOOG) exec talked about a range of things, including the possibility of charging for content, innovating in the graphical advertising market, competition with Yahoo (YHOO) and the upcoming spinoff of the Time Warner (TWX) unit.

But Armstrong did not talk about merging or other big search deals with other companies–including Microsoft (MSFT), which I wrote about here, along with AOL’s search for directors.

In the interview, I also insulted the famous AOL yellow running man, even though the mascot icon apparently just won “a vote to be inducted into the Advertising Walk of Fame, beating out 25 rivals, including Ronald McDonald and the Vlasic Stork,” according to a report in The Wall Street Journal.

There must be hope yet for AOL if it bested a pickle-loving bird and a freaky clown.

Here’s the interview:

[ See post to watch video ]

Ellison: By MySQL, I Mean Larry’s SQL

John Paczkowski — Tue, 22 Sep 2009 14:30:31 +0000

Though some analysts claim otherwise, MySQL is an asset, not baggage, and Oracle has no plans to unload it. Nor does the company think it will be forced to win regulatory approval for its proposed purchase of Sun Microsystems.

“No, we’re not going to spin [MySQL] off,” Oracle CEO Larry Ellison told attendees of a Churchill Club event in Silicon Valley Monday evening. “We are keeping everything. We’re keeping tape. We’re keeping storage. We’re keeping x86 and SPARC. And we’re going to increase investment in all of them.”

In other words, technologists worried about Oracle’s (ORCL) intentions for MySQL and other Sun (JAVA) systems need to relax.

“Sun has fantastic technology. We think it’s got great microprocessor technology–it needs a little more investment, but we think it can be extremely competitive. It’s got the leading tape archival systems. We think the Open Storage on their new disk system is absolutely fantastic. Java speaks for itself. Solaris is overwhelmingly the best open-systems operating system on the planet….Sun has been a national treasure for the last couple of decades.”

Massive AOL Layoffs? Not Imminent–But Top-to-Bottom Cost Exam Definitely in Process.

Kara Swisher — Fri, 14 Aug 2009 08:35:32 +0000

After a while–in a BoomTown mangling of the old cliché–if you are a nail, everything begins to look like a hammer.

So, it is probably inevitable that the next thing for much-beleaguered AOL staffers to start rumbling about is 2,000 people getting laid off next week, as was reported earlier this week by Silicon Alley Insider.

After all, the Time Warner (TWX) unit has a long history of whacking employees. So, it is easier to assume things will not be different under the regime of the latest CEO Tim Armstrong.

Except it’s not actually true that such massive cuts are in the offing, since–as many sources I spoke to said–Armstrong is only in the early part of figuring out what to do about the cost structure of AOL, after laying out a company strategy and rejiggering management recently.

While the end result of the cost-to-benefit analysis might, in all likelihood, mean layoffs of a chunk of its 7,000 employees–a larger number for its smaller operations.

And, after all, staff costs are one of the biggest line items in AOL’s budget–sources at the company said Armstrong will not rely on simply cutting jobs to craft a more attractive budget for its upcoming spinoff.

Still, there is obviously a lot of pressure on Armstrong to get the financials–which are still largely dependent on AOL’s declining, but money-generating, access business–looking pretty.

That access business did almost $2 billion in revenue last year–about half its sales–and it represented almost all its profits.

In contrast, AOL’s advertising business lagged, dropping hugely over the last several quarters.

Still, Armstrong has laid out a strategy that has included, in part:

Being a new kind of content giant, via a series of branded niche media sites, with about 500 full-time writers and editors and 1,500 freelancers; selling premium display advertising on these sites and strengthening its third-party self-service ad network business; finding a way to use its communications properties to redistribute traffic to other properties in a kind of virtuous circle.

There are also local, analytical and venture elements. But–for all intents and purposes–Armstrong’s plan is a content-and-advertising model, supported for now by the dwindling piles of cash from the access business.

That’s why, of course, costs are the next item on Armstrong’s to-do list.

“The cost structure is the last part of what was going to be dealt with, as Tim has told everyone,” said one person close to the situation about the former Google (GOOG) exec. “But, if it is slash-and-burn only, that would be pretty short-sighted.”

Perhaps, except that it is that exact tactic that has been business-as-usual at AOL for far too long.

A Preview of Time Warner Earnings: Bummer at AOL, Bummer at Magazines–Just a Bummer

Kara Swisher — Tue, 28 Jul 2009 16:00:43 +0000

When Time Warner reports its second-quarter earnings tomorrow morning, before the markets open, most Wall Street analysts are not expecting much from the media giant, as it continues to slog toward a rejiggering of itself.

Time Warner (TWX)–which owns assets like the Warner Bros. movie studio, the AOL online unit, the HBO and Turner cable television networks and Time Inc. magazines–is expected to earn 37 cents per share, compared to 72 cents a year ago, according to a poll of analysts from Thomson Reuters (TRIN).

Revenue is expected to be $6.97 billion, down from $11.56 billion in the same quarter last year. This drop is mostly due to the March spinoff of its cable unit, Time Warner Cable.

With movies like “The Hangover” and the sixth in the series, “Harry Potter and the Half-Blood Prince,” doing well, there is some strength at Time Warner.

But the advertising market has been weak all over, which hits the company hard.

That’s why both AOL and the magazines are expected to keep up their drag on Time Warner’s financial prospects–at least until the November spinoff of the online unit.

Until then, most expect another miserable quarter from AOL advertising revenue. Sources noted that any turnaround won’t show till end of year at the earliest, due to the weak economy and a retooling of the company and its sales force.

That restructuring is not over, most agree, with expectations of more layoffs of some of its 7,000 employees coming. With the 100-day overview by new CEO Tim Armstrong now over, sources said, the staff size is likely to be adjusted accordingly.

Most also expect to see continued weakness at the long-suffering Time Inc. magazine division.

People outside the company think that Time Warner CEO Jeff Bewkes will want to sell or spin off Time Inc. once AOL is done.

And people inside the company talk about the fact that Time has some 125 titles, although most of the revenue and profit only come from a few titles, such as People, Sports Illustrated and Time.

According to sources at the magazine division, talk of a new round of layoffs has also been also circulating there of late.

[The t-shirt image courtesy of Zazzle.]

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