As I reported late last night, Yahoo said it had named PayPal President Scott Thompson as its new CEO. The exec is currently in charge of the large eBay online payments unit.

He’ll start next week, but there are staff conference calls today and also an all-hands meeting on Yahoo’s main Silicon Valley campus (meet at URLs, troops!) tomorrow.

Yahoo shares are down almost three percent on the news so far, as Wall Street has been hoping for a big sale of some sort and not another turnaround.

Yahoo will be holding a 7 am PT press conference about the move and presumably to swan around Thompson.

(Welcome, Scott! I hope you were informed — please do not listen to what co-founder Jerry Yang says on this important issue — that you are supposed to send all internal memos to me! Also, as one of my Twitter followers, Mike Dudas of Google just tweeted: “If Thompson leads companies as well as he grows a moustache, Yahoo made a great CEO choice!!” I concur.)

A Yahoo PR person confirmed the hire very cordially in a phone call early this morning and the Internet giant also put out a press release.

So did I, of a sort, last night. Given I am too tired to rewrite myself, here is what I had reported:

The company fired its last CEO, Carol Bartz, in September, and Yahoo has been run by the board and also by interim CEO Tim Morse, who had previously been its CFO.

After Bartz’s ouster, Yahoo said it was looking at a range of strategic options, including the possible sale of all or part of the company.

That was the focus at first, although Yahoo had simultaneously hired Heidrick & Struggles to look for a new CEO.

The company attracted two partial investment bids from private equity firms, Silver Lake and TPG Capital, but shareholders were unhappy with the low prices of these so-called PIPE — Private Investment in Public Equity — arrangements.

Yahoo then moved to try to strike a tax-advantaged deal with its long disgruntled Asian partners, China’s Alibaba Group and Japan’s SoftBank, to sell back parts of the large stakes it has long owned in Alibaba and Yahoo! Japan.

Those complex negotiations are still ongoing and look promising, which could yield Yahoo billions of dollars in capital to be given to investors, for stock buybacks or to invest in new initiatives.

Since then, the board — long considered one of the more cloddish in tech — has turned its attention to hiring a new CEO, in the hopes of trying once again to revive its flagging fortunes.

Thus, it began looking to hire someone with deep tech experience at a large public consumer Internet company in Silicon Valley.

That narrowed the field, with Yahoo looking at a range of choices with expertise in advertising, technology platforms and more.

There is a lot of that on the deep bench that eBay CEO John Donahoe has assembled at the online commerce giant, including Thompson.

Plus, he is a genuine Internet geek.

According to his eBay bio, Thompson became president of PayPal in early 2008, after serving as its CTO in charge of information technology, product development and architecture.

Before eBay, he worked at Inovant, a subsidiary of Visa formed to oversee global technology for the organization. He was also CIO of Barclays Global Investors and has worked at Coopers and Lybrand on information technology.

And here’s a tasty new wrinkle: Thompson recently “liked” Yahoo on his Facebook page, along with the decidedly more interesting Kickstarter and Splunk.

Again, Scott, thanks for the Facebook tip — I knew the social networking site could come in handy!

(Also, here is an interview I did with him post-announcement.)

And here is Yahoo’s official press release where Yahoo Chairman Roy Bostock says nice stuff about Thompson:

YHOO_News_2012_1_4_General

Jared Grusd, AOL’s SVP of business development and chief of strategy, is leaving the New York Internet giant to work at Spotify, according to sources close to the situation.

At AOL, according to his bio, Grusd “oversees the organization responsible for all domestic and international strategic partnerships and commercial alliances for AOL and each of its operating units. He is also responsible for identifying and evaluating new corporate strategies and opportunities for the company.”

The marathon fiend and former Google exec — who held top legal-deal jobs there — also serves on AOL’s Executive Management Team.

It is not clear what the well-respected Grusd will be doing at the online music service, which has been expanding its executive ranks as it has moved aggressively into the U.S. market. But sources said it was a high-level position in New York.

Spotify recently hired former Clear Channel exec Gerrit Meier as GM of distribution and partnerships, reporting to U.S. head Ken Parks.

Spotify also just scooped up former AOL sales head Jeff Levick — another Google alum — as its chief advertising officer.

The departure of Grusd further thins out the exec ranks at AOL, which is still mired in a turnaround under the leadership of CEO Tim Armstrong (yes, he too is a former Googler!).

I lobbed a query into AOL PR for comment, and am awaiting news of my news.

The move to hire restructuring lawyers signals Kodak is intensifying efforts to ensure it has the financial wherewithal to complete a difficult strategic and financial revamp. Shares in the 131-year-old company have lost around a third of their value this week following Kodak’s disclosure that it pulled $160 million from a credit line.

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

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

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

That obviously changed.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Yahoo — which turned in yet another disappointing second quarter on Tuesday, but with all new excuses for the continuing decline in revenue — is now getting toasted by Wall Street.

That would be the marshmallow — and not the champagne — kind.

The stock of the Internet giant dropped below $14 a share, to close at $13.48 yesterday, after the company said its display advertising business in the U.S. was hard hit.

Today, it’s already down even further.

That’s close to an eight percent haircut for the past two days and a decline of 20 percent for the past three months.

In that same three months, Google is up over 13 percent, Microsoft is up over five percent, Amazon is up over 17 percent and Apple is up 13 percent.

You get the general idea here.

The decline means Yahoo’s market value is now only $17.5 billion, and more than two-thirds of that value is accounted for by its Asian assets (more than $9 billion) and cash ($3.3 billion).

That means its other properties are worth just above $5 billion now.

And while CEO Carol Bartz tried again — in a conference call with analysts after the earnings were released — to portray the situation as another part of her never-ending turnaround of the company, the issues at Yahoo are not new.

They range from display weakness to search declines to a talent drain to ineffective marketing to the lack of a consistent and fast-developing pipeline of innovative products to its flaccid board.

The earnings mess — no surprise, given estimates going forward were also missed — was seized on by investors and the press. (See, it’s not only me!)

In a column earlier this week in Forbes, titled “Carol Bartz’s 8 Blind Spots That Sunk Yahoo,” longtime and noisy Yahoo critic Eric Jackson noted:

“[T]he Bartz hiring is a cautionary tale to all boards and investors: An over-confident ex-CEO with no industry experience can make a bad company worse before things get better.”

But perhaps more damaging was a post today in The Wall Street Journal’s Heard It on the Street column by Martin Peers, titled: “Yahoo’s Unsurprising Surprise.”

It began with the cutting line: “Talk about having a credibility gap on display.”

Then it got worse:

“Admittedly, it may be that Yahoo has dropped off the radar screens of so many investors that this latest episode can’t do further damage. Certainly, aside from cutting costs, Ms. Bartz’s turnaround plan for Yahoo remains stillborn.”

That might be too kind if the stock continues to decline, a development that — in turn — might once again begin the speculation of Yahoo as a takeover target.

Which, if that could manage to get Yahoo shares back up, might be a reason to break out the bubbly.

A Yahoo spokeswoman declined to comment, which — given stock prices are what they are — is probably a good idea.

Yahoo turned in another weak performance in the second quarter, with yet another decline in revenue.

This time it was five percent, compared to last quarter’s six percent. In other words, at least things are looking up as they go down!

While earnings per share rose smartly, Wall Street is still looking for strong sales growth from the Silicon Valley Internet giant, which seems unable to provide it.

Blamed most this time for the revenue fall: Yahoo’s changes in its display sales operations in the key Americas region, reasons for which were largely unspecified in the initial company press release. (You can see the damage in this slide deck from the company here.)

Maybe Yahoo CEO Carol Bartz will explain it all in its upcoming conference call with analysts (or she could try the I-don’t-know approach taken by News Corp. CEO Rupert Murdoch in PhoneGate hearings in Britain earlier today!).

2 pm PT: It starts with the usual regulatory blah-blah, which I always enjoy.

Bartz gets right into it, opening with the key problems with China’s Alibaba Group, as well as its display and search revenue weaknesses.

The fight with Alibaba is over its Alipay payments unit, which was spun out of the Chinese company without Yahoo’s say-so. Yahoo is a big shareholder.

Bartz says that the company was working on a settlement night and day.

But she quickly gets onto how display did not perform as expected in its key Americas arena. “Obviously, I am not happy,” she said.

Obvi! Neither are shareholders, Carol.

She says it was not about new competitive development. It was not about the economy. It was not about engagement.

So what was it? Changes in its sales leadership and organization, says Bartz, which has included talent walking out the door in droves.

A lot more than Yahoo expected, but no surprise to anyone who has been paying any attention to the brain drain at the company.

Bartz promises a new approach to sales, part of its endless turnaround, which is beginning to feel like a digital version of “Waiting for Godot.”

Search revenue, though, says Bartz, was better than expected.

2:11 pm: CFO Tim Morse is on now, running through the numbers and the display shortfall in the Americas region.

“We simply did not have appropriate coverage,” says Morse, noting consumer products, tech and autos as weak spots in the advertising market.

Thank goodness, then, for the guarantees from search revenue in the Microsoft partnership deal.

More numbers and then it is back to Bartz to talk about search, which is going better than the last quarter, when it was the culprit for the revenue decline.

She says that Microsoft and Yahoo were working together to improve the issues.

“We’d like to be further down the road,” says Bartz about the goal of search revenue per search growth, as well as settling all the other problems, such as the Asian issues.

And, by further, I am presuming she means actual forward movement, which is what roads are actually for.

2:27 pm: Q&A time, the part of our program where Wall Street analysts do not ask the questions that need asking (and where I win fancy journalism awards for pointing this delta out!).

Therefore, Bartz is first thanked for providing “color” about the display disaster and is not asked about more specifics of the disaster itself.

The second question still does not get to it either, but she does note Yahoo’s sales force has to sell beyond “Gee, we’re big” and come up with better ad solutions.

“The issue is we did not have enough sales people in front of the big clients,” says Bartz.

That’s because all those former Yahoos are now working at Groupon, LivingSocial, Facebook and on down the line and now in front of big clients for those hotter companies.

2:34 pm: Question about its Asian assets. Yahoo’s talks with Yahoo! Japan and Alibaba are separate, says Bartz, although I would add that they have non-movement in common.

And also a question about Yahoo’s interest in the acquisition of the Hulu premium online video service.

Bartz winks verbally and says nothing, which translates into: Of course, it is interested.

More on the reasons for the display fall-off, which Bartz makes clear is not due to big competitive threats, but internal issues.

Maybe she’s saving big competitive threats as the reason for a revenue decline in the third quarter!

I look forward to the quarter I get the finger pointed at me for causing revenue to fall, due to my snarky posts.

Now, we are into softball questions about improvements in engagement. It’s up, but no one asks why Yahoo is still not doing anything very cutting edge in product innovation compared to competitors.

I believe Google has launched at least 14 new social networks since this Sunday, along with its strong quarterly performance last week. And Apple, well, blew away its quarter today as it is about to release more cool new stuff later this week.

And that might be the crux of the issue for Yahoo, which might not solve its woes by throwing a more focused sales army at the issue.

That’s because Yahoo’s products are simply not nearly has social as Facebook or even Google right now, which might be the true problem as old customers move on to new advertising solutions.

Whatever the reason, Yahoo clearly needs a refresh of its ad products and how it sells them, especially in its fast-growing mobile, video and communications products.

Bartz talks about getting better expertise, a tighter regional focus and other issues of going to market, which is perhaps something she might have realized many, many quarters ago.

After all, she’s been in charge for a while, and these issues are not new.

In fact, in an earlier quarter, Bartz was stressing “tentpole” events and anchor media properties and the power of the size of Yahoo as a selling point.

This was in April, in fact, in the first quarter of this year.

As I wrote then:

“CEO Carol Bartz excited was the Silicon Valley Internet giant’s traffic gusher for big tentpole events such as the Super Bowl and the Oscars. In fact, Bartz practically sounded like a gushy “Entertainment Tonight” flunky when talking to Wall Street analysts about Yahoo’s Oscar news, games and other offerings. She proudly noted the site’s efforts generated more than a billion pages views.”

Now big is out! Moving on!

The last question is another about Yahoo’s talks with its Asian partners.

“It’s complex,” says Bartz.

You can say that again.

MicroHoo is funky!

At least according to Yahoo CEO Carol Bartz on the Silicon Valley search giant’s first-quarter earnings conference call about its recent financial performance.

Yahoo’s results showed a continued worrisome revenue growth stall, due in large part to a search advertising fall-off, and a still-turning turnaround.

Yahoo reported revenues of $1.06 billion, down six percent from a year ago, on net earnings of 17 cents a share, down 28 percent.

The results were essentially in line with Wall Street expectations.

2:03 pm PT: The call started right on time, as per usual. Maybe they can’t get search right anymore, but Yahoo execs sure know how to start an analysts’ confab.

Bartz started off the call, noting “overall, our turnaround is proceeding on schedule.”

Well, the schedule of a three-toed sloth, I suppose, but it’s on schedule!

Bartz is too smart, though, and quickly noted the problems with search revenue declines, related to its search and online advertising partnership with Microsoft.

Still, she then used the unusual term “funky comparisons” to dismiss the key issue.

But isn’t she the one who struck the funky deal with Microsoft that has resulted in these funky comparisons and these even funkier search advertising revenues?

Just askin’!

Bartz proceeded quickly to noting Yahoo’s advances due to technology improvements, which showed a doubling of impressions to big events such as the Super Bowl and the Oscars.

It’s a good point, since Yahoo–for all its troubles–is still a huge traffic driver, including serving up 1.3 billion page views for the Oscars.

Bartz talked about monetization and said a lot of other stuff, but got to the finances quickly.

“Search was a mixed bag,” she said flatly. You can say that again–but not in a good way.

Bartz tried to put a good-news spin on it, but had to admit that “on the downside [Microsoft's] adCenter is not seeing strong RPS,” she said.

That’s revenue per search and a key number that Yahoo had thought would be better by now.

Bartz noted that the paid search markets internationally will be delayed until MicroHoo gets its act together.

Good idea!

2:16 pm: CFO Tim Morse took over to go through the numbers.

“We had good display momentum around the globe,” he said.

But search was, um, bad. It underperformed, but Yahoo had that guarantee from Microsoft to pay out, which Morse called a “financial floor.”

Morse pretty much read the press release from here on out.

2:24 pm: Bartz was back talking up the huge audience Yahoo has abroad. And it is true–the Yahoo brand is a golden one globally.

Also video consumption is up too, as it is across the Web, in terms of views and time spent. Yahoo’s “Primetime in No Time” got 500 million streams in the quarter.

Bartz turned to mobile, which is weak no matter what she said about the laudable Livestand. It’s one of many in a very competitive market.

Same for social, which Yahoo has essentially abdicated to Facebook. That said, Yahoo has tried to weave social within its myriad of sites and it gets it, especially compared to the socially awkward Google.

Bartz summed up that she hoped everyone gets that profitability and revenue growth were on track to get better, promising more at the investor day in May.

2:30 pm: Q&A time!

The first question is about display growth. It’s a softball, since display was up.

The next is about other revenue growth areas to come.

Bartz–who seemed not so prepped for such an obvious question–ticked off shopping, travel and uuuuuh….

Morse jumped in and talked about making internal connections, which I also did not understand.

An analyst then wanted to “dig into” search problems. I’d say it’s time to call in Mike Mulligan and his steam shovel!

Relative to RPS, Bartz acknowledged it was low and everyone was studying the issue. There is a plan, apparently. Again, Bartz was maddeningly vague.

I missed the next question and then it was back to search.

Bartz was not getting too specific about search, but would say video advertising was going to do well.

She did note that Yahoo expected a dip in Q1 related to search revenue, “but the dip went a little lower than we expected and lasted a little longer than expected.”

Bartz said she had recently sat down with Microsoft execs to go over the problems. How much would I have liked to have been a fly on that wall!

The next question was about video and it turns out Bartz loves the babbling babies too! I knew we had something cool in common.

The next question is about Japan and the possible deal to sell off Yahoo’s ownership of Yahoo Japan!

Morse said diddly, except “we continue to make progress.”

A question about display and possible content verticals.

Verticals Yahoo is interested in, according to Bartz: Entertainment, lifestyle, women, gossip.

“The things people really want to do, they want to disappear,” said Bartz, which was an interesting way of putting it.

Yet another question in what was beginning to feel like an endless call.

It was about Right Media, Yahoo’s advertising exchange. Cleaning it up, etc.

The next question is about communications, as in email.

Bartz even sounded bored and messed up a few words. “I’ve had too many Diet Cokes,” she joked.

Personally, I am considering disappearing into some content, since there is yet another question.

It’s–no surprise–an RPS question!

Funky!

Search guarantee payments from Microsoft are in place for another four quarters. Thank goodness.

Bartz got more detailed about the problems. There is some kind of prediction issue, which she said Microsoft is working on.

Now a local advertising question and its relationship with Facebook.

Bartz grabbed this one by the horns, noting you don’t have to run to the social networking powerhouse to get you a social ad!

It’s about branding with a social component. Which would be, um, Facebook, which was part of Yahoo’s Chrysler campaign referenced by Bartz.

A question about daily deals.

It’s growing, but more at Groupon and LivingSocial, which Morse does not mention.

Finally, the last question.

Another gigantic softball on engagement and Yahoo’s new content platform and some mobile deets query about whether Yahoo can make it there.

Bartz said she was working on it. As to content, Bartz said stats show big lifts.

“The good news is that it’s all in the right direction,” she said.

Up would certainly be good.

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

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

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

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

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

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

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

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

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

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

In a statement, she said:

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

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

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

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

A year ago it was above $18.

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

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

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

YHOO_Q111PressReleaseFinal

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

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

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

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

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

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

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

As I wrote last week:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The U-Shaped Turnaround

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

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

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

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

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

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

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

The Asia Situation

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

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

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

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

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

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

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

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

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

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

Acquisition Guns Blazing? Or Sputtering?

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

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

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

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

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

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

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

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

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

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

Enter the Kenny

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It is definitely a bummer of a day at AOL today, for those employees getting the boot.

Last night, BoomTown broke the news that the layoffs were coming today in both the U.S. and India.

Sources said those being laid off on the AOL staff in the U.S. will be getting four weeks of severance plus one week for each year of service.

It will be paid out every two weeks, instead of a lump sum.

In a memo, AOL said “impacted employees will be notified by 3 PM EST today and we will be scheduling an all-employee call at 5pm EST to answer any questions you may have.”

After all the bad news today, sources at AOL said there will be a series of more forward-leaning announcements about changes to AOL’s editorial offerings, now run by the Huffington Post’s Arianna Huffington.

AOL is making a lot of these drastic changes as its CEO Tim Armstrong seeks to turnaround the long-suffering Internet giant.

Finally, here the actual layoff memo, although I am not sure exactly what a “hyper-local, national and global media company” is:

From: Armstrong, Tim
Sent: Thursday, March 10, 2011 07:16 AM
To: Armstrong, Tim
Subject: AOL’s Next Step

AOLers -

Today is the next critical step on the comeback trail for AOL. We are creating a next generation hyper-local, national and global media company, and every action we’ve taken since AOL became an independent company has taken us further down that path. Our strategy remains clear: create high quality content experiences for consumers, at scale. As the digital landscape quickly evolves, so must our business, and we must continue to transform our organizational structure to one that works for today’s Internet.

Today, we are announcing an organizational structure that will significantly improve AOL’s ability to focus on growth. The structure will also impact areas of our team–making the decision to reduce staff levels is a necessary part of rebalancing our workforce to be competitive in our industry. Affected employees will be notified today and AOL will offer assistance programs–including workspace, counseling, and technology. We ask all of our employees to help impacted employees find career opportunities within our industry.

The structural changes at AOL are possible because of the progress we have made as a team in the last 12 months. The majority of our sites have materially improved their consumer experiences, our advertising business continues to get healthier and more innovative, our video position is strengthening everyday, our local footprint is quickly expanding, we are attracting some of the most talented people in the world to work at AOL, and our technology infrastructure is simpler and more robust. AOL is a global brand and a global opportunity and we are doing the hard work that will once again make the company an industry leader.

There are three important aspects to the structural changes we are making today. The first is the architecture of our brand portfolio. The second is the organizational design of The Huffington Post Media Group. The third is our shift from India being a business process center to India being a consumer products group focused on the APAC market.

New Structure: Investing in our Brand Portfolio

AOL’s brand portfolio has become more focused and stronger over the last year and we will continue to invest in our brands. We are committed to an AOL brand architecture that empowers us to build best-in-class brands that serve valuable audiences with incredible content and great experiences. As you have seen and have access to, AOL’s brands are measured with a consistent set of criteria that will allow us to transparently judge the health of each brand. As we considered adding The Huffington Post, we looked at the combined assets of the two companies and have found creative ways to strengthen our portfolio and will continue the brand refinement process over time. AOL will have four areas of significant brands: Media (Media & Ads–including Local), Publisher Networks (Media & Ads for Publishers), Applications (Communications, Mobile, Commerce), and Subscriptions (Paid Subscribers).

We have a clear path to brand success–which is only turbo-charged with the addition of the Huffington Post to our brand portfolio. We have an AOL brand that enjoys 99% brand awareness and our commitment to reinvigorating the AOL Brand has enabled us to begin to shift brand perception of AOL–including being named as one of the top 50 brands “loved” by consumers at the end of 2010. We will continue to invest in the AOL Brand as well as support best-in-class brands that will allow us to grow our overall audience and reflect our focus on the most valuable audiences–our 80, 80, 80 strategy.

New Structure: Huffington Post Media Group

The addition of the Huffington Post will be a core foundational element in our drive to be a leading digital media and brand advertising company. HuffPost attracts over 27 million people a month–its unique visitors have increased 588% over the last three years, and revenue has increased 400%. The company is leading the way in connecting content with social communities. AOL will be replacing approximately $20 million of loss in our news and finance operation with a high growth company and a team that is pioneering the way the world gets information.

The newly formed Huffington Post Media Group (HPMG) is a vehicle to house and grow our investments in journalism and content in general. The goal of HPMG will be to create compelling, content-driven experiences for users. Consumers, world-class brands, relevant audiences, and innovative brand advertising opportunities are a winning formula for the future of the web and HPMG will have significant resources and distribution to be a leader in our space.

With Arianna’s leadership and vision, HPMG will be fueled by high-quality editorial content, and will give AOL the enhanced ability to deliver a scaled and differentiated array of premium news, analysis, entertainment, information, and community – all integrating our local, national and global content initiatives. As President and Editor-in-Chief, Arianna will lead the content vision. Jon Brod, as HPMG Chief Operating Officer, will be Arianna’s business partner and lead the business strategy for HPMG. We will replicate this model through the vertical content areas and become an editorial-led media organization that allows us to create higher quality content in real time, while better aligning the editorial and business sides of our company.

We are creating Department Editor positions for each of the editorial departments and their partners will be the General Managers (formerly our Mayors), who will continue to serve as CEOs, driving revenue, distribution and overall growth strategy for the departments they support. We will be expanding the advertising programs (like Project Devil) and the distribution opportunities (like mobile and video) through the work of the GMs. GMs will also work to connect the content brands with our central sales force.

The editorial-driven model of The Huffington Post Media Group will also change the way we create our content. Going forward, AOL will invest more heavily in our in-house editorial team and transition away from a reliance on freelance journalists. Journalists are the heart and soul of a media company, and our reporters and editors will be working closely with the tech group to produce compelling and engaging editorial content–including lots of video.

As part of this enhanced focus on quality journalism, we will be making new editorial hires in the HPMG as well as continuing to expand and grow Patch. With the acquisition of The Huffington Post and this renewed focus on editorial creation, we have increased the number of staff dedicated to content creation to over 1200 people and remain a net importer of journalists.

As a result of this new structure, close to 200 people will be leaving the AOL Media and tech groups in the US. These changes, among others, will be necessary as we execute our Media Group’s vision of creating real-time engagement and continuing to build a comprehensive source of compelling news, entertainment, information, opinion, and community. Specific elements of this integration are still being finalized, and we will communicate them to you as soon as we know more.

New Structure: Refocus in India

India is an important consumer and business market for AOL and we have a talented workforce covering many aspects of our business. As Kumar has announced to AOL India, as part of the new organizational structure, we have decided to focus our efforts on the India consumer market and move the business processing functions to scaled partners. India is gaining importance as a consumer market and we are actively working on products for that market and will be ramping up research and product engineering after the restructuring. A small number of project engineering functions will transition to Dulles and Dublin, while India starts to focus on Asia and India related consumer products and revenue.

Back office and support functions will transition to 3rd party partners and many current AOL India employees will transition along with those roles to continue to support core AOL functions with new partner companies. For our business and our scale, it makes business and financial sense to partner with other providers.

Overall, the structural changes in India will impact close to 700 jobs, with approximately 400 transitioning out of the company, and 300 transitioning to outsourcing partners to continue to work on the AOL business. AOL India has been a significant part of AOL, starting with call center outsourcing in 2002 and morphing into a business operations center. The employees of AOL India are talented, energetic, and hard-working – and we will be offering impacted people transition services. I would hope that India becomes a great future consumer market for AOL based on India-first product development.

Today is a day that represents a step toward the future, but also a day where change will cause an impact across our team. AOL remains in the middle of the disruption that the Internet is causing and we are starting to move from being a disrupted brand to a brand that is leading the disruption. The changes we are making are not easy, but they are the right changes for the long-term health of the company, the brand, and for our employees.

Impacted employees will be notified by 3 PM EST today and we will be scheduling an all-employee call at 5pm EST to answer any questions you may have. Please do not hesitate to reach out to me directly -TA

There’s no question it’s a jarring contrast–layoffs versus champagne and cookies.

But that’s the reality at AOL as its acquisition of the Huffington Post closes this week, even as it sheds employees as part of its ongoing turnaround effort.

Sources said the New York-based Internet portal could announce layoffs as early as today.

[UPDATE: Layoffs will not come until after the Huffington Post deal is closed said other sources, although they are coming.]

AOL CEO Tim Armstrong indicated job cuts were definitely coming at a paidContent conference in New York yesterday.

“There will be job changes,” he said, when asked about layoffs.

Perhaps sooner than later.

BoomTown received several emails from worried AOL employees, noting that human resources staffers were taking steps to initiate the layoffs at 10 am ET/7 am PT this morning and that there would also be employee meetings then too.

I followed up with several sources close to the situation, who confirmed that the layoffs are imminent. Nonetheless, they could not specify the timing, size and scope of them.

[UPDATE: There will be an all-hands meeting for AOL staff with Armstrong, as well as new content head Arianna Huffington.]

The last time AOL laid off employees a year ago, it was a large action with job cuts of 2,300.

The latest slashing comes just as AOL management will try to aggressively tout the closing of its $315 million purchase of the Huffington Post.

The integration of the well-known news and opinion site will mean a significant change for AOL’s editorial efforts, as well as an opportunity to impress advertisers.

Thus, AOL is prepping boxes with Greek cookies and pricey champagne to send out to key advertising clients, to celebrate the deal’s close.

Why Greek cookies? Because it’s the original country of Huffington, co-founder and editor-in-chief of the Huffington Post.

I have emails into AOL for a comment.

Despite all the polite throat-clearing in the various internal memos coming out of AOL today, with a rejiggering of its content management–including the [elimination of the job] of Media and Studios President David Eun [from the original one he had been appointed to by AOL CEO Tim Armstrong earlier this year]–what is really happening is what sources said will likely be a [drastic rejiggering of] more recent strategies of how to run its media business.

That is likely to begin with the hip-checking of [a controversial, if miscontrued, internal document titled] “The AOL Way,” which many sources tell BoomTown was [sponsored by Armstrong and created to stress best new media practices, including to garner better traffic], once the $315 million acquisition of the Huffington Post is completed.

[Whatever the original intent of "The AOL Way," it was badly received both inside and outside the New York-based company, thought of as too focused on SEO and not as much on creating the kind of high-quality journalism loudly touted by Armstrong.]

And that could mean a new and [perceptually journalistically friendly] direction forged by its the Web site’s Co-founder and new AOL editorial chief Arianna Huffington will take place.

In fact, much of what has [been put into place since Armstrong took over, from an editorial perspective at least,] is being questioned and reevaluated.

While what exactly that means is still being formulated by Huffington and others at AOL, it will likely not be using most of the mostly by-the-numbers recommendations of the infamous “AOL Way” deck.

Subtitled “Content, Product, Media Engineering and Revenue Management” and leaked to the media, it was all about how the struggling Internet portal thinks about its content properties.

Pretty much like cows to be milked, which has caused endless hand-wringing among the editorial troops at AOL. [While it might have been intended as a "best practices" memo for new media], this should come as no surprise, given damn-the-journalists-full-speed-ahead tone and SEO-overboard themes.

As reported by Silicon Alley Insider on February 1:

* AOL tells its editors to decide what topics to cover based on four considerations: Traffic potential, revenue potential, edit quality and turn-around time.

* AOL asks its editors to decide whether to produce content based on “the profitability consideration.”

* The documents reveal that AOL is, when the story calls for it, willing to boost traffic by 5% to 10% with search ads and other “paid media.”

* AOL site leaders are expected to have eight ideas for packages that could generate at least $1 million in revenue on hand at all times.

* In-house AOL staffers are expected to write five to 10 stories per day.

* AOL knows its sites are too dependent on traffic from AOL.com, and it wants its editors to fix the problem by posting more frequently, with more emphasis on getting pageviews.

[It was Eun's job to push the themes in "The AOL Way,' of course, along with upgrading the content business at AOL, which has become its main focus under Armstrong's turnaround effort.

While Eun has added several measures to stress quality journalism at AOL, since he was brought in from Google with much hype a year ago, having the colorful and influential Huffington as the flagship editorial personality at AOL--paired with trusted Armstrong lieutenant Jon Brod as COO--proved irresistible to the AOL CEO.

Of course, that left Eun without the job he had been hired for, which has now essentially been split among Huffington, Brod and also AOL exec Ned Brody.

And while Armstrong offered him different opportunities within AOL, sources said, with his original position gone in the new regime, Eun declined and decided to depart.]

In his parting email to staff, in fact, Eun continued to stress the numbers achieved under his tenure.

But, at the start, he was clear:

“With the historic acquisition of The Huffington Post, my role and responsibilities as President, AOL Media are changing. Tim and I have discussed at length how I might continue within the new organizational structure, but ultimately there isn’t a role that matches what I am seeking to do.”

Nor, it seems, for “The AOL Way.”

For your enjoyment, here’s Eun in happier days–late January–in a jiggy video he did for the troops:

]]> http://allthingsd.com/20110225/with-david-eun-ousting-the-aol-way-makes-way-for-the-arianna-way/feed/ 0 http://allthingsd.com/20110206/youve-got-arianna-aol-buys-huffington-post-for-315-million-in-cash/ http://allthingsd.com/20110206/youve-got-arianna-aol-buys-huffington-post-for-315-million-in-cash/#comments Mon, 07 Feb 2011 05:01:47 +0000 Kara Swisher http://kara.allthingsd.com/?p=40217

In a bold and definitive move, AOL is paying $315 million, mostly in cash, to buy the Huffington Post, one of the Web’s most prominent news and opinion sites.

As part of the deal, Huffington Post co-founder Arianna Huffington (pictured here)–who was derided by some when she co-founded the left-leaning site in 2005 with investor and well-known communications exec Kenneth Lerer–will become president and editor in chief of the Huffington Post Media Group within AOL.

The deal was signed late this afternoon, and the board of directors of each company and shareholders of the privately held Huffington Post have approved the transaction.

In an exclusive video interview BoomTown conducted earlier today in Dallas, just before Super Bowl XLV, both Armstrong and Huffington were jovial that the whirlwind deal, begun in November, actually worked out so quickly.

Perhaps giddy, they hit upon a common motto:

“One plus one equals 11.”

Get it? One and one next to each other is the number 11!

Let’s move on, shall we?

AOL said it is expected to close in the late-first or early-second quarter of 2011.

Once culminated, it will put Huffington in charge of all AOL content and other properties, including well-known names such as Engadget, Moviefone, MapQuest and TechCrunch.

She said she plans to move to New York from Los Angeles, although she will also maintain her longtime Brentwood home there.

And content for all these sites will be integrated deeply into the Huffington Post, giving it a huge new infusion of editorial material.

More to the point, the flashy acquisition–which essentially came together in less than two weeks in January–will become the linchpin of AOL CEO Tim Armstrong’s aggressive, if risky, strategy to focus the long-troubled company as a content and advertising powerhouse.

For AOL, the deal gives it a popular branded site that is very good at generating lots of page views and impressions very efficiently–which is the company’s whole thrust these days.

That means lots more ad inventory to sell and an injection of content talent, giving AOL the scale it desperately needs.

The move also obviously gives AOL a much-needed editorial identity and cohesion, which it doesn’t really have.

In fact, many think AOL needs a rallying point to bring clarity to its hodgepodge of recent acquisitions that all center on the notion that a strong company has yet to emerge in the premium content space.

Here is a mock-up of the front page of AOL tonight (click on it to make it larger):

While it all makes for a riveting narrative by the charming Armstrong, AOL still has not delivered the business turnaround promised after its spinoff from Time Warner in 2009.

Wall Street, which has given Armstrong a lot of rope, has become more impatient of late to see results–especially more robust increases in its display advertising business, as its access business dies off–after AOL spun off from Time Warner in 2009.

In its quarterly report last week, AOL reported earnings of 61 cents a share on revenue of $596 million.

But, as MediaMemo’s Peter Kafka wrote:

The bigger picture is that Armstrong’s turnaround is still in progress. Ad revenue was down 29 percent in the last quarter, although that number is worse than it looks. A big chunk of the decline comes from moves AOL has intentionally made that will cut revenue in the short run in return for more profitable sales down the road.

A more representative data set for Armstrong are his display ad sales, which are down 14 percent overall and eight percent in the U.S..

The bad news is that the rest of the Web ad industry is well into rebound mode; the good news is that AOL has trained Wall Street to expect numbers like these. If you’re waiting to see positive sales numbers, Armstrong said during AOL’s earnings call this morning, wait until the second half of this year.

In any case, the move is a good one for the Huffington Post since it will vault it to the next level of growth.

Other companies, such as Yahoo and NBC Universal, had looked at the company as a purchase target, and many expected it to eventually sell out to a larger company.

Sources close to the Huffington Post said that that outcome seemed the most likely, and the recent expansion of the site and its audience made it a good time to do a deal now.

Talks with Yahoo last year went nowhere, sources said, but Armstrong was not as slow to act.

Indeed, the actual deal happened quickly, said Armstrong and Huffington in a video interview with BoomTown earlier today (which you can see here).

The pair started talking in early November of last year at the Quadrangle Conference in New York and continued their discussions through the holidays.

Armstrong made the official offer to Huffington by phone in January, while she was at the World Economic Forum in Davos, Switzerland, and he was snowed in in New York.

Five time multiple to the Huffington Post’s upward of $60 million in expected revenue for the coming year, and nearly 10 times the $31 million for 2010, the offer was accepted quickly.

AOL used cash for $300 million of the purchase and $15 million in stock for the rest.

“The idea of turning a fire hose of traffic onto our content made enormous sense,” said one person close to the situation. “Everything is changing so fast, it seemed like the time was right.”

An IPO was also considered for the Huffington Post, sources said. But since the site only recently moved into profitability–although barely–such an event would have been farther out.

That’s despite the fact that the Huffington Post has seen fast-growing traffic and influence, spurred in part by Huffington’s larger-than-life persona in both the mainstream media and blogosphere.

The wide-ranging site–which has added a number of content areas in recent years beyond its flagship political offering–currently has almost 26 million unique monthly visitors, according to recent stats, moving in close range to established news organizations such as the New York Times.

That kind of success seemed unlikely when the Huffington Post launched on May 9, 2005, positioning itself as as a liberal counterweight to the popular right-leaning Drudge Report.

But the Huffington Post’s heady mix of celebrity bloggers, personality and voice, as well as aggressive curation of links from other sites, quickly caught on.

To fund its efforts, the New York-based online media company has raised $37 million from angel investors such as Lerer–the largest individual shareholder, followed closely by Huffington–and venture firms such as Greycroft Partners, Softbank Capital and Oak Investment Partners.

The growth has not been without controversy around issues such as lack of payments to bloggers who contribute and accusations that the site uses too much content from other Web sources when linking.

And Huffington herself has also been a lightning rod, which has been both positive and negative for the site.

But, there is no question she is one of the Web’s most prominent players, along with writing books, appearing on television frequently and being a fixture at high-profile events in New York, Los Angeles and Washington, D.C.

That includes a never-ending panoply of parties that feature a potent mix of movie stars, corporate poo-bahs, glad-handing politicians and lots of journalists from all over the media.

In fact, full disclosure, I was at one of those parties this past weekend for actor Colin Firth and others involved in the making of the Oscar-nominated film “The King’s Speech.” (Apropos of nothing, actor Helena Bonham Carter is as smart as you would expect, but much more delicate.)

As part of the AOL deal, CEO Eric Hippeau–who has been integral to professionalizing the business and will be joining Lerer Ventures–and Chief Revenue Officer Greg Coleman will leave the Huffington Post.

Ironically, Coleman was replaced by Armstrong as head of ad sales at AOL after he took over as CEO. Coleman got a big payout and will now apparently get another.

But the rest of the 200 Huffington Post employees are moving over to AOL with Huffington, who Armstrong hopes will be the company’s ace in the content hole going forward.

There are likely to be changes to come too at AOL, within weeks, especially in its content-side management and site staffs.

AOL provided some quotes in support of the deal from prominent Internet figures who know Huffington well.

“Arianna is one of the preeminent authors and editors of our time, and Tim has a remarkable track record of business success,” said Facebook COO Sheryl Sandberg. “Bringing them together creates tremendous potential for AOL.”

And Twitter co-founder Biz Stone said:

“Editorial vision and leadership are essential in order to transmute our shared cacophony of voices into a valuable dialogue. Arianna’s expertise, empathy, and entrepreneurial enthusiasm forms a kind of alchemy turning mere words and phrases into powerful expressions of humanity.”

Inter-Internet harmony: How sweet!

Here is the official press release, with all the details, but there is also an 8 am ET AOL conference call tomorrow:

AOL AGREES TO ACQUIRE THE HUFFINGTON POST

Acquisition Will Solidify AOL’s Strategy of Creating a Premier Content Network With Local, National and International Reach

Arianna Huffington To Lead Newly Formed The Huffington Post Media Group Which Will Integrate All Huffington Post and AOL Content, Including News, Tech, Women, Local, Multicultural, Entertainment, Video, Community, and More

The New Combined Media Group Will Reach 117 Million Americans and 270 Million Globally

Group Uniquely Positioned To Redefine the Future of Brand Advertising and Marketing For an Engaged and Influential Audience

New York, NY–February 7, 2011–AOL Inc. [NYSE:AOL] announced today that it has entered into a definitive agreement to acquire The Huffington Post, the influential and rapidly growing news, analysis, and lifestyle website founded in 2005, which now counts nearly 25 million unique monthly visitors*.

The transaction will create a premier global, national, local, and hyper-local content group for the digital age–leveraged across online, mobile, tablet, and video platforms. The combination of AOL’s infrastructure and scale with The Huffington Post’s pioneering approach to news and innovative community building among a broad and sophisticated audience will mark a seminal moment in the evolution of digital journalism and online engagement.

The new group will have a combined base of 117 million unique visitors a month in the United States and 270 million around the world**. Following the close of this transaction, AOL will accelerate its strategy to deliver a scaled and differentiated array of premium news, analysis, and entertainment produced by thousands of writers, editors, reporters, and videographers around the globe.

As part of the transaction, Arianna Huffington, The Huffington Post’s co-founder and editor-in-chief, will be named president and editor-in-chief of The Huffington Post Media Group, which will include all Huffington Post and AOL content, including Engadget, TechCrunch, Moviefone, MapQuest, Black Voices, PopEater, AOL Music, AOL Latino, AutoBlog, Patch, StyleList, and more.

“The acquisition of The Huffington Post will create a next-generation American media company with global reach that combines content, community, and social experiences for consumers,” said Tim Armstrong, Chairman and CEO of AOL. “Together, our companies will embrace the digital future and become a digital destination that delivers unmatched experiences for both consumers and advertisers.”

Armstrong continued, “Arianna is a singularly passionate and dedicated champion of innovative journalistic engagement, and a master of the art of using new media to illuminate, entertain and enhance the national conversation. Arianna is a remarkable person and she will continue to create remarkable outcomes for the combined company.”

“This is truly a merger of visions and a perfect fit for us,” said Huffington. “The Huffington Post will continue on the same path we have been on for the last six years–though now at light speed–by combining with AOL. Our readers will still be able to come to the Huffington Post at the same URL, and find all the same content they’ve grown to love, plus a lot more–more local, more tech, more entertainment, more finance, and lots more video. We are fusing a legendary and powerful new media brand with a vibrant, innovative news organization, known for its distinctive voice, a highly engaged audience, an expertise in community-building, and a track record for demystifying the news and putting flesh and blood on the data while drawing our audience into the conversation.”

Huffington continued, “By uniting AOL and The Huffington Post, we are creating one of the largest destinations for smart content and community on the Internet. And we intend to keep making it better and better.”

Kenneth Lerer, The Huffington Post’s Co-Founder and Chairman, said, “The Huffington Post team has created a potent brand with the proven track record of knowing how to grow traffic, inform and entertain its readers and build a one-of-a-kind online community. Add that to the powerful scale and resources of AOL and you have the perfect combination for today and the future. Together these two companies will be a premier online content provider. From local citizen reporting through AOL’s Patch, to The Huffington Post’s national reporting on politics, business and culture, consumers will have access to everything they want whenever they want it.”

AOL has agreed to purchase The Huffington Post for $315 million, approximately $300 million of which will be paid in cash funded from cash on hand. The Huffington Post is privately owned by its two cofounders, as well as a group of investors. The proposed transaction is subject to customary closing conditions, including receipt of government approvals. The boards of directors of each company and shareholders of The Huffington Post have approved the transaction. The transaction is expected to close in the late first- or early second-quarter 2011.

The Huffington Post over-indexes on educated, affluent users, reaching the key decision makers in C-suites around the globe. The Huffington Post speaks to this influential audience via a host of prominent voices on its group blog. Among those who have blogged on The Huffington Post are: President Barack Obama, Secretary of State Hillary Clinton, Mayor Michael Bloomberg, Larry Page, Diane Sawyer, Buzz Aldrin, Nora Ephron, Bill Maher, Madeleine Albright, Robert Redford, Katie Couric, Neil Young, Rahm Emanuel, Mia Farrow, Senator Russ Feingold, Senator Al Franken, Ari Emanuel, Harry Shearer, Senator John Kerry, Representative Nancy Pelosi, Madonna, Lawrence Summers, Jamie Lee Curtis, Ryan Reynolds, Craig Newmark, Alec Baldwin, Aaron Sorkin, Natalie Portman, Scarlett Johansson, Russell Simmons, Sean Penn, Bill Gates, Norman Lear, Charlie Rose, Elizabeth Warren, Tavis Smiley, Sheryl Sandberg, George Clooney, and former President Bill Clinton. And the audience speaks back, generating four million comments a month***.

The Huffington Post’s affluent, influential audience, that is growing at a rate of 22 percent (December 2009 vs. December 2010)****, when combined with AOL’s massive scale, video offerings and local expertise, will represent an incredibly desirable demographic for a broad range of advertising partners across the board.

And here is Armstrong’s internal memo to the AOL staff:

AOLers,

We are taking another major step in the comeback of AOL. Today we are announcing that we have agreed to acquire The Huffington Post, one of the most exciting, influential, and fastest growing properties on the Internet. We believe in brands, quality journalism, and the positive role of communities in the world–The Huffington Post shares our values and the combination of the two companies will create the premier global and local media company on the Internet.

Co-founded six years ago by Arianna Huffington and Ken Lerer, The Huffington Post has grown to become an industry leader–one of the Web’s most popular and innovative sources of online news, commentary, and information. Arianna and team have created a brand and a destination that focuses on the consumer experience. By combining The Huffington Post with AOL’s network of sites, thriving video offerings, local expertise and enormous reach, we will create a company that is laser-focused on serving our audiences across every platform imaginable–social, local, video, mobile and tablet.

The Huffington Post is core to our strategy and our 80:80:80 focus–80% of domestic spending is done by women, 80% of commerce happens locally and 80% of considered purchases are driven by influencers. The influencer part of the strategy is important and will be potent.

The Huffington Post is a strong influencer brand and it attracts a valuable audience, including a great focus on women’s content. In addition, Arianna Huffington is a world-renowned expert on women’s topics and issues, and has enabled The Huffington Post to grow rapidly by continually developing new audiences.

In the local area, the combination of the two companies will create a scaled connection between global and local communities on one platform. This will create a new way for people to get local and global information in a timely and entertaining way.

The Huffington Post will join the family of AOL Brands that are destinations for an influencer audience, brands like TechCrunch, Engadget, AutoBlog, and Moviefone. Uniquely, The Huffington Post is the platform for influential people–the people that drive trends, commerce, politics, entertainment, news, and information. Adding this strategic platform to our already strong network of sites, including the AOL homepage, has the potential to make AOL the most influential company in the content space.

Arianna Huffington is one of the most successful entrepreneurs in the Internet space and someone that is even more successful in building communities and relationships in every corner of the globe. The Huffington Post and Arianna have created a company that has partnered with the most successful and well-known leaders in all aspects of society that touch important topics to give consumers direct access to the most influential decision makers and community leaders.

This acquisition will create a high-quality and diverse digital ecosystem encompassing local, national and international news, politics, entertainment, technology, fashion, sports, health, personal finance, green, lifestyle, the arts and more. This deal will combine the amazing talent at AOL with the innovative and talented staff of The Huffington Post. Here are just a few high-level points around what this deal brings to market:

* Together, AOL and The Huffington Post will have 117MM unduplicated domestic monthly UVs, and ~270MM monthly UVs worldwide (according to comScore Dec 2010).

* The Huffington Post is one of the fastest growing web properties on the Internet. It grew 22% last year–that’s faster than Twitter, which grew 18% – and 15x as quickly as the Internet grew last year (comScore Dec ’09-’10).

* Both AOL and The Huffington Post count powerful, affluent users among their top loyal visitors, significantly over-indexing in $100K+ income users.

* AOL passed Hulu in unique viewers on video in the fourth quarter of 2010; video views on AOL are up 400 percent year-over-year.

* Between AOL’s innovative Project Devil ad unit, engaging users for 27 seconds longer than traditional display ads, and The Huffington Post’s highly-vocal community, with 4MM+ comments per month, we will marry attention-grabbing content and brand experiences for both advertisers and consumers.

In the local area, the combination of the two companies will create a premier global/local syndication network at scale. This will create a new way for people to get local and global information in a timely, informative and entertaining way.

To maximize the strategic advantage of this great deal, we will be creating a new group at AOL called The Huffington Post Media Group. Within this group will be AOL Media, AOL Local & Mapping, AOL Search and our new friends at The Huffington Post. We will continue operating the towns structure, AOL.com and HuffingtonPost.com.

I’m thrilled to announce that Arianna Huffington will join AOL’s executive team as President and Editor in Chief of The Huffington Post Media Group. We have asked Jon Brod to lead the overall operational integration on the AOL side of the combined entities. Jon will lead the local group integration and work closely with David Eun and the teams in AOL Media. We will work quickly with The Huffington Post to create a combined organizational design to coincide with the deal closing. While we wait for the required regulatory reviews to be completed and the transaction to close before implementing the design, we will move very quickly to plan the details of the integration of the two companies. To this end, we will announce the new organizational structure as soon as possible.

In the meantime, we will continue creating great content and products for our consumers within the town structure and stay laser-focused on the aggressive goals we have set for our winter luge. We are on the right track and will continue our weekly operating cadence and town structure to drive successful results against our company goals.

Here’s a special message for all of you we taped to welcome The Huffington Post and Arianna to our AOL Family:

http://today.office.aol.com/company-news/2011/02/aol-agrees-buy-huffington-post

And of course we wanted to welcome Arianna to our “You’ve Got” video of the day–check her out on AOL.com.

We will be holding a company all hands meeting to address your questions related to today’s exciting news. We will video conference from our New York office on the 6th Floor at 9:30 AM ET and will be joined by Arianna Huffington and key executives from her organization. We will also be holding a call for our west coast offices at 2:00 PM ET and for our Patch offices at 2:45 PM ET. See below for meeting info (conference rooms will be sent out shortly).

AOL is playing to win…and The Huffington Post and AOL will occupy a unique place in the future of the Internet. Let’s go get it done.

–TA

(More full disclosure: As has been previously reported by MediaMemo, All Things Digital had the briefest and most preliminary of discussions with Armstrong about moving to AOL last year, while exploring several other options. All’s well that ended well: We stayed at Dow Jones, which is owned by News Corp.)

]]> http://allthingsd.com/20110206/youve-got-arianna-aol-buys-huffington-post-for-315-million-in-cash/feed/ 22 http://allthingsd.com/20110126/marlo-thomas-meet-heidi-klum-shes-your-new-aol-co-worker/ http://allthingsd.com/20110126/marlo-thomas-meet-heidi-klum-shes-your-new-aol-co-worker/#comments Wed, 26 Jan 2011 14:15:08 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=28579 Last year, Tim Armstrong got Marlo Thomas to pitch in on his AOL turnaround effort. Now he’s tapping a woman whose TV credentials are more recent: “Project Runway”‘s Heidi Klum. The “multi-hyphenate superstar,” along with Full Picture Entertainment, which makes “Project Runway” for the Lifetime cable network, are supposed to make “engaging video content, inspiring articles, addictive blogs [and] instructional photo galleries.”

]]> http://allthingsd.com/20110126/marlo-thomas-meet-heidi-klum-shes-your-new-aol-co-worker/feed/ 0 http://allthingsd.com/20110125/liveblogging-yahoo-4q-earnings-encouraging-is-the-new-black/ http://allthingsd.com/20110125/liveblogging-yahoo-4q-earnings-encouraging-is-the-new-black/#comments Tue, 25 Jan 2011 22:10:56 +0000 Kara Swisher http://kara.allthingsd.com/?p=39921

BoomTown was looking over Victoria Harbour in Hong Kong as I blogged the conference call after Yahoo released its fourth-quarter earnings after markets closed today.

It’s pretty! But Yahoo’s revenue growth–still, not so much.

Let’s begin:

2:02 pm PT: Yahoo turned in earnings that were slightly better than expected, although no big shakes either, so the call was likely to sound exactly like the last several quarterly calls.

Bingo! We’re trying! It’s encouraging! You’ll see!

In fact, “encouraging” was just the word that CEO Carol Bartz used as she tried to focus on a doubling of operating income, operating margin and earnings per share.

Impressive, the revenue at Yahoo is still stubbornly not moving, which the company continued to attribute to the new search and online advertising partnership with Microsoft.

“This is all part of our plan to turn Yahoo around,” said Bartz, who added a new buzzword, “personalized content,” to its offerings.

She turned the call over to Yahoo CFO Tim Morse, who ran through the numbers, which pretty much came down to this: Display advertising up 16 percent from last year, while search revenue dropped 18 percent.

As in previous quarters, Morse talked about how “headwinds” will soon lessen and it will be smooth sailing for Yahoo ahead.

After the stormy seas of recent years, that would be nice, since investors have gotten pretty seasick owning Yahoo shares.

Morse offered that, “while there is still much to do, we are still executing well against our plan” and went on about how good things are.

Finally, we have a “unified purpose,” which he characterized as personalized content too.

It’s a nice new catchword for Yahoo, and I liked Morse’s strong tone and gumption, which for an accountant was like hollering.

His big Achilles’ heel: The revenues projections ahead remain soft.

2:24 pm: Back to Bartz, who focused on the future success of the Microsoft advertising alliance and also Yahoo’s leadership in display advertising.

She listed some big offline brands, such as Wal-Mart and Macy’s, noting when looking for online ads, “That’s right, they all came to Yahoo.”

Bartz moved on to its stake in China’s Alibaba Group and noted it was a “great investment with a bright future.” Translation: We are not selling for now.

But noting its investment in Yahoo! Japan, Bartz had a slightly different take, mentioning talks to “unlock” the value of the stake. Translation: Maybe we’ll sell if we can figure out how not to pay all those taxes.

Bartz did the same with all of Yahoo properties, putting a sunny spin on what is still a turnaround situation.

It’s a good strategy, but it is one that is starting to sound like a broken record, especially when Google, Facebook and others seem to be like a house on fire.

2:35 pm: Now on to Q&A, in which Wall Street analysts ask softball questions of executives.

And so they do, asking queries that include small details about its operating margin, questions on tiny changes in numbers due to accounting changes. And very little about larger strategy.

You can read about this stuff in the press release, but whatever.

I am thinking of starting an investment bank, so I can jump in on these calls and ask some questions that have actual substance.

The United Bank of Swisher? Goldman Sucks?

Ooh, I was wrong, because one analyst asked a good one about possible future layoffs.

Bartz noted the company would be adding people, um, after laying some employees off.

It’s all about “re-allocating” staff, which Yahoo did earlier today by laying off one percent of its workforce, after an earlier four-percent cut.

Next, a question about search share, with Morse noting there will be search volume growth in the future.

Big message: We are in this to grow the share.

Except it has not been growing, as the last several months of surveys of search share have shown.

But Bartz firmly declared: “We’ll be up” in 2011.

A question focused in on mobile, and Bartz pointed out that Yahoo had the disadvantage of not having a mobile operating system such as Google does with Android.

Good point!

2:59 pm: Another terrific analyst comment about the disconnect between the execs encouraging comments and the actual financials, which show a downturn in, yes, revenue.

It is exactly the point here, which Yahoo has been trying to spin. Morse went through the list of excuses, from bumpiness of the search transition to weakness in affiliate sales to whatever.

Bartz jumped in and blamed the search alliance again, noting that moving advertisers over to the new platform was hard to do.

“I will not back down on the fact that we are gaining momentum,” said Bartz about search. “There is a lot going on here.”

Morse chimed in, noting he was the one using “gaining momentum” in his script. “I really believe that,” he said, going through the terrific plans.

“You’re correct the top line is not showing that yet,” said Morse in an increasingly loud voice. “There’s an awful lot there to be optimistic about.”

The accountant that roared.

Encouraging.

But then came the last question about the growth of Facebook, the Silicon Valley social networking phenom that is clearly going to be Yahoo’s biggest rival over the next years.

Bartz acknowledged Facebook’s explosive growth, but declared the company more compatible than competitive.

“There’s room for everybody here,” she said.

Presumably, that’s the hope for Yahoo.

(Also, you can see a slide deck of the financials here.)

]]> http://allthingsd.com/20110125/liveblogging-yahoo-4q-earnings-encouraging-is-the-new-black/feed/ 1 http://allthingsd.com/20110125/will-yahoo-earnings-later-today-show-revenue-growth-or-more-of-the-same/ http://allthingsd.com/20110125/will-yahoo-earnings-later-today-show-revenue-growth-or-more-of-the-same/#comments Tue, 25 Jan 2011 13:31:40 +0000 Kara Swisher http://kara.allthingsd.com/?p=39888

Yahoo will report its fourth-quarter earnings later today, and BoomTown will be covering them all the way from Hong Kong (the miracle of the Internet!).

Analysts expect the troubled Internet giant to turn in exactly what has been expected for the period–the consensus is $1.19 billion in net revenue and earnings of 22 cents a share.

That revenue number is lower than a year ago, especially due to declines in search ad revenue at the company.

Earlier this week, Google turned in a strong quarter. But Wall Street is only looking for meeting expectations from Yahoo, which will report after the markets close.

At a conference call with analysts after the earnings release, expect Yahoo CEO Carol Bartz to get questions on increased competition to its display advertising business from Facebook and Google, declining usage of its sites, as well as what she will do about continued product drift and talent drain.

And, if the growth picture remains lackluster, about how much longer her long-promised turnaround will take.

The slowness of the effort is starting to worry major investors, some of whom have gone sour on Bartz’s ability to reinvigorate the Silicon Valley icon and have been telling exactly that to board members in recent months.

]]> http://allthingsd.com/20110125/will-yahoo-earnings-later-today-show-revenue-growth-or-more-of-the-same/feed/ 6 http://allthingsd.com/20101231/myspace-mulls-significant-layoffs-with-potential-sale-looming/ http://allthingsd.com/20101231/myspace-mulls-significant-layoffs-with-potential-sale-looming/#comments Fri, 31 Dec 2010 09:34:07 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=1821 Myspace–the long-troubled social networking site turned social entertainment hub–is in the midst of planning that could soon result in significant layoffs of its staff, according to multiple sources familiar with the situation.

That number could be as much as 50 percent of the 1,100 employees at Myspace, largely based in the U.S., but also in international locations.

While the decision of what cuts to make to its employee base have not been made yet, nearly the entire Myspace staff was given the last week of December off from work to save money. Update: Myspace tells us via email the week off was an employee perk, not a cost-cutting measure.

Sources stressed that management was still working out the details of more drastic cost-cutting measures that owner News Corp. has been wanting from Myspace, as its revenues and traffic have declined.

The layoffs are also part of a larger rethink about the future of the Beverly Hills, Calif.-based company, which has had many difficulties in recent years, including several leadership upheavals and a talent drain, as well as stagnant growth.

Among the many options contemplated has been the sale of the Myspace unit, as has been widely reported. According to sources, Jack Kennedy, EVP of operations for News Corp. Digital Media, has been tapped to explore the sale of Myspace.

Until now, both large-scale cost-cutting and exploration of an acquisition were on hold as Myspace launched its redesign as an entertainment hub, which was rolled out about six weeks ago.

Myspace also recently started user account integration with former foe Facebook.

And the company also revamped its mobile offerings and signed a new search advertising deal with Google (at which time MediaMemo’s Peter Kafka predicted layoffs were around the corner).

But, according to many inside and outside the company, the redesign and strategy moves are not expected to result in a major turnaround of Myspace. Meanwhile, the piles of money the company once got from its Google relationship have also gotten much smaller. It’s not much of a surprise that News Corp. is moving to remedy the situation now.

In fact, during News Corp.’s earnings call in November, COO Chase Carey called attention to Myspace’s ever-weakening performance and said “current losses are not acceptable or sustainable.”

He added: “We judge in quarters, not in years.”

At this point, a sale would be the likeliest save for the media giant.

One juicy rumor that has been going around suggests Facebook game-maker Zynga as a potential acquirer of Myspace. While the two companies had discussed closer ties in the past–back when Zynga COO Owen Van Natta was still CEO of Myspace–those talks went nowhere.

Several sources said a private equity buyer for Myspace is now the likeliest outcome if the online property is sold.

Myspace declined to comment on layoffs or acquisition talks.

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

]]> http://allthingsd.com/20101231/myspace-mulls-significant-layoffs-with-potential-sale-looming/feed/ 21 http://allthingsd.com/20101103/aol-100-million-shopping-spree-5min-techcrunch-thing-labs/ http://allthingsd.com/20101103/aol-100-million-shopping-spree-5min-techcrunch-thing-labs/#comments Wed, 03 Nov 2010 13:46:43 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=25439 Money is flowing back into Internet advertising, but not at AOL: Tim Armstrong’s company saw ad revenue drop 27 percent in the last quarter.

The good news for Armstrong is that he has now conditioned Wall Street to expect these drops, as he works on a turnaround effort that began in the spring of 2009.

And because some of the ad drop is “self-inflicted”–the result of AOL’s decision to focus on quantity instead of quality as it revamps its ad team and strategy–it’s possible to add a more positive spin to the data. For instance: AOL’s domestic display ads, where the company has the most control of results, are only down 8 percent.

Armstrong’s vision is that eventually his company will once again be one of the industry’s top players: “AOL’s goal is to be competitive with Google and Facebook,” he said during his earnings call this morning. “We’re not trying to be competitive with people farther down the chain.”

Okay. But when? Today Armstrong announced that he expects AOL’s ad sales to mirror the broader industry’s by the second half of 2011. That will be more than two years after he took over.

Then again, you can argue that AOL languished within Time Warner’s grasp for the past 10 years. By comparison, that’s a reasonably speedy turnaround–and bear in mind that any Internet turnaround is a very rare thing.

So here’s the question: Will Wall Street wait to find out if he can do it?

—————
EARLIER:

A quick first look at AOL’s Q3: Revenue of $563 million and adjusted earnings of $0.93 a share. The Street was looking for $557 million and adjusted earnings of $0.50 per share.

AOL’s ad slump continues, though Wall Street expected that: Ad revenue was down 27 percent this quarter, and display ads were down 14 percent. Domestic display was down 8 percent.

Things to look for in the company’s financials and during its conference call this morning: Most important, an update on its attempt to turn around its ad sales unit, which has been a mess–analysts are still expecting AOL to post a substantial ad sales decline this quarter; additional news about the company’s renewed search pact with Google; and perhaps insight into Tim Armstrong’s M&A plans following a shopping spree that included TechCrunch and 5Min.

AOL says it spent $97 million on TechCrunch, 5Min and Thing Labs, and that it could spend up to $23 million more on earnouts/retention bonuses over the next three years. $65 million of that total went to 5Min.

Here’s what AOL’s ad story looks like, quarter by quarter:

And here’s what AOL wants you to think about as you evaluate its ad decline–moves it has made on its own that will cut down sales in the short term, like its decision to more or less shutter its European operations.

I’ll update with notes following the company’s 8 am earnings call.

]]> http://allthingsd.com/20101103/aol-100-million-shopping-spree-5min-techcrunch-thing-labs/feed/ 1 http://allthingsd.com/20101029/heres-aol-now-live-new-homepage-and-welcome-back-lindsay-campbell/ http://allthingsd.com/20101029/heres-aol-now-live-new-homepage-and-welcome-back-lindsay-campbell/#comments Fri, 29 Oct 2010 19:44:00 +0000 Kara Swisher http://kara.allthingsd.com/?p=36513

Today, BoomTown interviewed AOL CEO Tim Armstrong, along with NPR CEO Vivian Schiller, at the Online News Association Conference in Washington, D.C., about the future of journalism on the Web.

Afterward, I talked to him about the future of content on AOL, most particularly its new homepage revamp that focuses intently on editorial “curation,” rather than a more social direction being taken by rival Yahoo.

I also got a short demo of the new homepage, which is rolling out right now, instead of Monday as has been reported.

The new version–with a clean and spare design and a rotating logo–prominently features local news, video and content from AOL’s network of sites, such as Engadget.

It also launches three original video shows: A morning promotional feature called “You’ve Got”; a two-minute news program called “Daybreak,” with former “Wallstrip” host Lindsay Campbell–yay!–and produced by Ben Silverman’s Electus; and “The One,” an expert/opinion segment, done by Next New Networks.

The redo is yet another splashy move by AOL and Armstrong to push the company into a new direction of growth as its core access business declines.

It’s one wrapped almost completely around content, in hopes that creating premium branded content will attract lucrative advertising.

So far, not so good, as AOL’s ad revenues continue to lag in the midst of a difficult turnaround effort.

Presumably, Armstrong hopes a new look will help goose results in a better direction.

Here is a screenshot of the page, which is now available to users (click here to see the full image):

]]> http://allthingsd.com/20101029/heres-aol-now-live-new-homepage-and-welcome-back-lindsay-campbell/feed/ 0 http://allthingsd.com/20101004/no-massive-reorg-at-yahoo-but-more-exec-departures-plus-the-schneider-goodbye-letter/ http://allthingsd.com/20101004/no-massive-reorg-at-yahoo-but-more-exec-departures-plus-the-schneider-goodbye-letter/#comments Mon, 04 Oct 2010 08:05:35 +0000 Kara Swisher http://kara.allthingsd.com/?p=34712

Sorry, folks, but–despite reports–Yahoo will not be unveiling another new organizational structure this week.

In actuality, the beleaguered Internet giant is just cleaning up from last week’s shake-up–in which it announced that a chunk of its top media and sales leadership was leaving–as well as settling in new hires made in recent months by its relatively new product head, Blake Irving.

In fact, those changes in Irving’s unit have resulted in the departure of two more execs. That would be former SVP of Media Products and Solutions Jeff Kinder and SVP for Cloud Computing Shelton Shugar, who are on their way out.

Kinder actually left his job many weeks ago and was offered the chance to find another within Yahoo (YHOO), although sources said he has now definitely decided to leave the company on his own.

CEO Carol Bartz held a meeting Friday with senior leadership to go over the situation and to assure management that changes to come would stabilize the company going forward.

To be sure, Yahoo needs some kind of reassurance and fast.

BoomTown broke the news last week that U.S. head Hilary Schneider was departing the company (see her goodbye memo below), along with U.S. Audience head David Ko and SVP of Media Jimmy Pitaro.

Pitaro has since landed a big job as co-president of the Internet unit of Disney (DIS).

The overall corporate turmoil has put more scrutiny on Bartz. For two years, she has been trying to turn around the company, with only a modicum of success.

While Bartz did strike a search and online advertising partnership with Microsoft (MSFT) to better battle Google (GOOG), she has not goosed flat revenue nor been able to boost Yahoo’s moribund stock.

Perhaps more critically, she has not stopped the steady exodus of talent, especially of more senior execs.

Departures in the last six months include U.S. advertising sales head Joanne Bradford, Integrated Consumer Experiences SVP Tapan Bhat, CTO Ari Balogh, as well as the heads of its social platform and communications product units.

But last week’s departure trifecta of the execs running Yahoo’s powerful and successful media unit drove the talent drain issue home for many investors and other observers.

While each departure case was different, of course, the leavings have lent a feeling of instability inside and outside the company.

That has happened more quietly over the several months of reshuffling by Irving (pictured here), who came to Yahoo from Microsoft, and which I have reported on here previously several times.

For example, in September, Irving hired Microsoft exec John Matheny to head the communications products and communities unit.

Previous to that, in July, Irving brought in another old colleague from the software giant–Bill Shaughnessy–as SVP of Product Management.

Thus, Irving–who is a little too busy traveling to a number of Yahoo product and technology units in Asia and India over the next weeks to announce yet another reorg–has pretty much already moved his part of the business around, although there are likely to be some more hires to come.

It is not unusual for a new senior exec to do this, of course, but Irving’s many moves reportedly sparked some tension between him and Schneider.

That might have been moot, since she had decided to leave some months ago, but was asked to stay on by Bartz.

To be sure, in recent months, many sources said that their relationship had become strained too as Yahoo ad sales continue to struggle, and they also disagreed on the company’s strategic direction.

Still, it should be noted that Schneider is staying on until a new exec is named to replace her.

Whatever the various machinations in the corporate suite at Yahoo, Bartz needs to find a way to convince Wall Street that she still has the ability to complete her much touted turnaround of the Silicon Valley pioneer to a new period of growth and innovation.

How quickly she is doing that will come into sharp relief in a few weeks when Yahoo reports its third-quarter earnings on October 19.

And while executive departures garner a lot of attention, that is the bottom line for Yahoo, the thing most important of all to watch.

Finally, given I love a good internal memo, here is, belatedly, the email that Schneider sent to her staff last week about her leaving:

Team,

I’m sure by now you’ve all had a chance to read Carol’s note, and know that I made the decision to move on to the next stage of my career. When I joined Yahoo! four years ago, I knew it would be an amazing and rich experience…and it has exceeded every expectation. Our consumers look to Yahoo! as they navigate their lives, our advertisers look to Yahoo! for leadership, and publisher looks to Yahoo! for our amazing scale and reach. Our team, however, is our secret weapon!

Meanwhile, the search for my successor is under way and I will continue to lead our team until we make the transition.

Additionally. David Ko, SVP of Audience and Mobile, and Jimmy Pitaro, VP of North America Media, have decided to leave Yahoo! David and Jimmy are amazing leaders and we will miss them. Yahoo!’s leadership positions in Sports, News, Entertainment, Finance and Mobile are their legacy that we have to proudly continue.

Raymond Stern will be the SVP of North America Audience and will be responsible for the Audience teams. Raymond has been an integral part of Americas leadership team as the SVP of Business Development and Partnerships. Before joining Yahoo! a year ago, he held a wide range of business leadership positions, including more than 10 years as a Partner the Boston Consulting Group where he ran the Technology and Media Practice on the west coast. He also held senior leadership roles at Intuit, including CMO.

Raymond will immediately start diving in to the Audience business, and David and Jimmy are committed to working with Raymond through the transition. Right now, Raymond will continue overseeing the business development and partnership teams while we think through the best structure for these teams moving forward.

I know that transitions can create swirl–but our customers, both consumer and marketers, are looking to us for continued leadership…and I know we can deliver this.

You are Yahoo!’s magic, and I thank you for your tremendous commitment, leadership, and support.

Hilary

]]> http://allthingsd.com/20101004/no-massive-reorg-at-yahoo-but-more-exec-departures-plus-the-schneider-goodbye-letter/feed/ 4 http://allthingsd.com/20100930/here-comes-the-yahoo-spin-cycle-so-try-boomtowns-soap-free-guide-to-whats-actually-happening/ http://allthingsd.com/20100930/here-comes-the-yahoo-spin-cycle-so-try-boomtowns-soap-free-guide-to-whats-actually-happening/#comments Thu, 30 Sep 2010 07:53:01 +0000 Kara Swisher http://kara.allthingsd.com/?p=34475

Here’s how Yahoo’s top brass and board–with the help of its newly re-engaged crisis-management PR firm, Abernathy MacGregor–are already trying to spin the latest executive turmoil to hit the company:

Trashing those on the way out, to take focus off those remaining who have been just as responsible for driving the Internet icon and claiming that this is all part of yet another well-planned reorganization at Yahoo (YHOO).

Don’t believe most of it for a second. Some of it is corporate politics as usual, some of it rejiggering of events, some just not true at all.

After BoomTown’s scoop earlier today that Yahoo’s U.S. head Hilary Schneider, as well as Audience head David Ko and VP of Media Jimmy Pitaro, would be departing the company–all of which Yahoo is still planning to announce after the markets close on Friday–here comes this gem in a follow-up story in The Wall Street Journal:

“[Yahoo CEO Carol] Bartz, who joined Yahoo in January 2009, is in the midst of a turnaround effort. People familiar with the matter said she is removing the company’s old guard to assemble a new team.”

Let’s parse this ridonkulous spin-addled blame game, shall we?

Bartz is, in fact, the very person who picked all those execs for prime responsibility in her last reorg.

If they were so incompetent, why not dump them much quicker? After all, it’s not like the problems have not been mounting for months and months, with more and more talent taking off.

In addition, the exec exodus at Yahoo over the last year has been unrelenting and broad, encompassing way too many employees for her to act as if it were all planned and okay.

As to the “midst of a turnaround effort” canard that Bartz keeps insisting on, even comparing herself to Apple (AAPL) CEO Steve Job’s epic journey to return that legendary company to health?

Um, we are deep in the second year of the Bartz regime, and there appears to be no iPod-like save in sight, and it’s a little long in the tooth to keep using the turnaround excuse for all that has not yet happened under her command.

Which is to say, stock with a pulse and real growth across all metrics, as Facebook and Google (GOOG), to name a few, are showing.

In addition, it was Bartz herself who handed over a lot of the responsibility for the revival of Yahoo to Schneider.

Which meant Schneider had to be thrown under the wheels of the bus in the Journal by dragging out a very old–and tangential to the much larger flat revenue crisis at Yahoo–newspaper deal as pretty wet cannon fodder:

“Ms. Schneider is leaving because officials haven’t been satisfied with her performance, according to people familiar with the matter. Ms. Schneider was responsible for a 2006 deal with industry group Newspaper Consortium, in which Yahoo sold ads for newspaper websites and print editions. The effort continues but has not met Yahoo’s expectations, according to a person close to the company.”

Memo to readers: “People familiar with the matter,” I am guessing, would be current Yahoo execs.

The fact of the matter is that there have been both critics and admirers of Schneider at Yahoo, which comes as no surprise for one of its top execs. Some consider her smart and canny, while others complain of indecisiveness and slowness to act.

And, she has definitely had some very big whiffs, including the newspaper consortium, but most especially not finding an ad sales chief to replace Joanne Bradford, who left in March, about which I gave her a hard time when a very squishy structure was announced.

And, right now, sources tell me, Yahoo’s upcoming quarterly report could be an even tougher one.

And that falls to Schneider, of course, who has been in charge of its many partnerships, as well as advertising sales across the key Americas region.

Perhaps good reason for an ouster, except I have been tracking Schneider’s status for many months now, since hearing from many sources–not her, ever, in case you wanted to know–that she had told Bartz she wanted out.

Maybe that is what began to sour the boss on Schneider. But to now suddenly call her performance poor seems unusual, especially when you can just as easily point to Yahoo’s disastrous and pricey marketing campaigns–it is definitely not You!–helmed by CMO Elisa Steele, which has failed to move the needle on key user metrics.

But she has a tight relationship with Bartz, so she’s all right, jack? I am dizzy from all the spinning.

In other words, execs make mistakes and there is a lot of blame to go around and–as the old saying goes–the buck really does stop with Bartz.

But, guess what? Perhaps it should be noted that Bartz has also misstepped badly of late by making a series of wild remarks that have seriously angered many partners and other companies in Silicon Valley.

And I have heard from countless and very significant investors, all of whom are deeply concerned about her tone and recent public comments.

Just ask Yahoo Japan’s Masayoshi Son. Or Alibaba’s Jack Ma in China. Or the fine folks over at Apple in Cupertino, Calif.

And, I can also report that several execs at Yahoo’s new search technology partner, Microsoft, are also increasingly alarmed. Said one to me yesterday: “It is becoming a little unsettling.”

I can say for certain that Ko, who will doubtlessly be the next to get dinged, left on his own motor, telling Bartz himself recently.

He was quickly followed by Pitaro, who, as I reported earlier this week, is headed to another big company. No matter what the spin, his departure is a big loss, as he is well-liked inside and outside the company.

Then Schneider rounded out the latest trio of execs to go.

Thus, sources said, Yahoo is about to go on the offense, which is the expected thing to do, ready to announce a plan to move most of the product organization under Chief Product Officer Blake Irving.

The former Microsoft (MSFT) online exec is as sharp as a tack, in my experience, and clearly an even sharper corporate player, recently bringing in a series of his old cohorts from the software giant to take over big jobs at Yahoo.

He’s obviously now won some version of a corporate power play, and is now in favor with Bartz. But that means he’s being handed the entire thing.

Apparently, Irving has told numerous people that he plans to “rip it all down” and streamline the whole organization.

More rearranging at the company that has moved around the corporate living room umpteenth times over the past several years? Except it is still essentially the same room and same house.

Okay, Irving should probably have his choice of where the sofa goes, but as one exec wisely told me tonight: “Yahoo needs to build great products, not have another reorg….It needs a win.”

Indeed, just as board member Eric Hippeau apparently said at a recent meeting to deal with the latest executive kerfuffle.

Yahoo Chairman Roy Bostock–who has presided over so many stumbles over the years that I have lost count–said to the room: “We need crisis management.”

Countered Hippeau, a longtime Internet exec who is now CEO of the Huffington Post: “What we need is revenue.”

Indeed. And innovation. And a vision. And, most of all, spin-free leadership.

]]> http://allthingsd.com/20100930/here-comes-the-yahoo-spin-cycle-so-try-boomtowns-soap-free-guide-to-whats-actually-happening/feed/ 12 http://allthingsd.com/20100922/ebays-marketplace-chief-leaves-in-midst-of-revamp/ http://allthingsd.com/20100922/ebays-marketplace-chief-leaves-in-midst-of-revamp/#comments Wed, 22 Sep 2010 07:00:16 +0000 Geoffrey A. Fowler http://voices.allthingsd.com/?p=30175 Top eBay Inc. executive Lorrie Norrington announced her departure from the Internet company at a critical time in its turnaround effort.

Ms. Norrington, who runs eBay’s marketplace business–which accounts for more than half of its revenue–decided to leave for “personal family reasons,” the company said.

People familiar with Ms. Norrington’s decision said it was driven by concerns for the health of a family member.
The 50-year-old executive will remain at eBay through March, with Chief Executive John Donahoe heading the marketplaces division until Ms. Norrington’s successor is named.

EBay (EBAY) declined to make Ms. Norrington available for comment. In a statement, Mr. Donahoe said, “Lorrie has led eBay Marketplaces through significant fundamental change as we drive a multiyear turnaround strategy to enhance the shopping experience for buyers and sellers.” The marketplace business includes eBay’s auction and fixed-price listings, as well as a classifieds site and the StubHub ticket exchange.

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]]> http://allthingsd.com/20100922/ebays-marketplace-chief-leaves-in-midst-of-revamp/feed/ 0 http://allthingsd.com/20100901/aol-and-facebook-get-the-new-yorker-treatment/ http://allthingsd.com/20100901/aol-and-facebook-get-the-new-yorker-treatment/#comments Thu, 02 Sep 2010 04:16:27 +0000 Kara Swisher http://kara.allthingsd.com/?p=33224

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.

]]> http://allthingsd.com/20100901/aol-and-facebook-get-the-new-yorker-treatment/feed/ 0 http://allthingsd.com/20100720/yahoos-2q-earnings-expected-to-be-good-but-are-big-investors-getting-restless/ http://allthingsd.com/20100720/yahoos-2q-earnings-expected-to-be-good-but-are-big-investors-getting-restless/#comments Tue, 20 Jul 2010 12:15:53 +0000 Kara Swisher http://kara.allthingsd.com/?p=30873

Suddenly–although not entirely unexpectedly–the major investors of Yahoo are getting restless.

If you talked to many of them in recent weeks, there has developed a confusion over the stock sitting stagnant in the mid-teens for far too long now, a vague disgruntlement that CEO Carol Bartz has not provided enough of a vision and innovation in her 18 months in charge to turn around the iconic but long-struggling Internet giant, a nagging worry about the continuing exodus of top execs and, perhaps most of all, vexation that Yahoo (YHOO) is just too big not to be, well, bigger than it is.

“It just feels like there is nothing going on to get any momentum going,” said one major shareholder, whose sentiment is more common than not among longtime stock owners of Yahoo. “And it is not clear if there is anything on the horizon to get it going.”

Many point to the value of Yahoo’s Asian holdings, especially its stake in China’s Alibaba Group, as its most promising set of assets, valuing them much more than management’s recent attempts to focus on its media properties while shedding search technology costs under its ongoing partnership with Microsoft (MSFT).

“A Yahoo shareholder has to have the patience of Job,” said another major stock owner, noting shares of the Silicon Valley company are down more than 10 percent compared to a year ago, in contrast to an 8.3 percent rise at Google (GOOG) and a 3.9 percent increase at Microsoft.

To be fair, for the year to date, all Yahoo shares have declined less than those of either of those two digital giants.

And analysts are expecting some sunshine from today’s second-quarter earnings results, which will be reported after the markets close.

The company is expected to report a strong gain in profits, even with revenues rising only slightly.

The consensus: Yahoo will earn 14 cents a share for the three months ended in June, on $1.16 billion in revenue. That compares to 10 cents on $1.14 billion in the same period a year ago.

Several analysts are raising their ratings on Yahoo, noting that Bartz’s efforts to cut costs and improve margins have not been fully appreciated by investors.

Reaction to Yahoo’s results will be interesting. Google’s earnings report earlier this week disappointed Wall Street, since its profit was less than expected, although U.S. revenue growth was promising.

“In particular, we believe that the robust and accelerating Google U.S. revenue results, based on both Search and Display growth, provide a broad positive market read-thru for Yahoo!,” wrote Citigroup analyst Mark Mahaney in his “cheat sheet” note ahead of earnings.

Mahaney reiterated his $22-a-share price target, pointing to display advertising recovery, margin expansion, search share stabilization, Yahoo’s recent stock buyback authorization and the eventual value of the Asian assets.

Yahoo shares closed yesterday at $15.10.

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