AllThingsD » Yusuf Mehdi

Microsoft Appoints Online Unit's Yusuf Mehdi to Run Xbox Marketing (Plus Internal Memos!)

Tricia Duryee — Wed, 09 Nov 2011 20:49:00 +0000

Microsoft said today that longtime company veteran Yusuf Mehdi will be shifting roles to head marketing for the unit that includes its Xbox gaming division. Previously, Mehdi was in charge of the company’s online services division audience efforts. He will now report to Don Mattrick, president of the Interactive Entertainment Business.

Here are the internal memos on the move from Online Services Division President Qi Lu and from Mattrick:

Hi Everyone,

This email is to inform you that Yusuf Mehdi, Chief Audience Officer for OSD, will be moving on to a new and exciting chapter in his career, working for Don Mattrick, President of the Interactive Entertainment Business (IEB), as the Chief Marketing Officer for IEB, effective 12/05/2011.

Yusuf and I have been discussing his career plan for several months, and we both felt with OSD and OABG’s success and momentum, the time is right for Yusuf to take on a new challenge for Microsoft. With more than ten years of service in Microsoft’s online services businesses, he has been a trusted adviser, a great leader of people, and has helped get us to where we are today in OSD. We are fortunate to have had Yusuf be an important part of OSD for the past ten years, and are equally fortunate that he is staying close, helping IEB continue its great momentum as it becomes a global entertainment brand for Microsoft.

Throughout my tenure at OSD, Yusuf has been a key member of the OSD LT and a trusted partner, from whom I have learned a tremendous amount about marketing, the industry, and Microsoft. I have thoroughly enjoyed working with Yusuf and I am confident he will do an amazing job for Don, and continue to be a great partner to OSD and a great advocate for Bing and MSN.

Yusuf has been involved with leading Microsoft Online Services businesses longer than anyone else on the OSD LT, and has been a pivotal leader at critical milestones of our division’s journey from the early days of MSN, to the original MSN and Live Search products, to the launch of Bing and the consummation of key strategic deals for OSD and MS, including Yahoo!, Facebook, Twitter and Nokia. Most importantly, he has built a world class marketing, business development, strategy, and product management organization that has made incredible contributions to the success of OSD and Microsoft. I want to take this opportunity to express my heart-felt thanks to Yusuf for everything he has done for OSD.

I have asked each of Yusuf’s direct reports to step up their contribution to help lead through this transition period. On an interim basis, all of Yusuf’s directs will now report into me. I have also asked that Mike Nichols help with coordination of the OABG ROB and represent OABG at the OSD LT level, in addition to maintaining his current responsibilities as GM of Bing Product Management.

Please join me in congratulating Yusuf in his new role, thanking him for his many contributions to Online, and wishing him all the best.

Thanks.
-Qi

From: Don Mattrick
Sent: Tuesday, October 11, 2011 3:33 PM
Subject: RE: IEB Global Marketing News

After 21 years of outstanding service, Mike Delman has decided to retire from Microsoft at the end of the calendar year. Mike’s decision will allow him to spend more time with his family. He will also continue his non-profit efforts with Children’s Hospital and lecture at the USC Graduate School of Business.

While there’s never a great time to lose a valued leader, the time is right for Mike and the business to transition as we embark on our next journey to significantly grow our business in the next five years.

Between now and the end of the year, Mike will lead marketing through our biggest holiday ever, continue to set us up for long-term success, and work with me and Janet Zimmerman to identify his successor.

Mike’s marketing contributions at Microsoft are innumerable — he joined Microsoft in 1990 as director of corporate communications, responsible for advertising, collateral, point of sale, direct marketing and worldwide packaging for the entire Microsoft product line. Mike later became the director of marketing for Microsoft EMEA. He also served as general manager of the MSN and managed worldwide marketing operations, data and analytics, advertising, relationship marketing and events in the Central Marketing Group.

In 2008, he joined IEB as the CVP of IEB Global Marketing. Here in IEB, Mike played an extraordinary role in redefining the marketing organization. Specifically, under his leadership, the marketing organization has deepened the connection between marketing and product development, reinvigorated our research and business intelligence efforts, and set the course for repositioning Xbox from a core games brand to an entertainment brand for everyone. Over the same time period, the Xbox business doubled. I also want to thank Mike for his leadership in working with the team in EMEA to drive growth and success in that region.

Please join me in thanking Mike for his years of great work, and a heartfelt congratulations on his upcoming retirement. He has always been a strong strategic advisor for me, and I look forward to spending the next few months together.

Best,

Don

My Picks for Yahoo's Next CEO -- Maybe Snoop Dogg, Ya Digg?

Kara Swisher — Wed, 07 Sep 2011 14:00:32 +0000

The firing of Yahoo CEO Carol Bartz leaves open one of the bigger and more difficult jobs in tech — one that has taken its toll on many.

Nonetheless, rapper Snoop Dogg stepped right up to the Twitter plate yesterday, as soon as news broke of the ouster.

Tweeted Snoop Dogg:

“Im takn over as tha CEO of Yahoo. Need sum of tha Snoop Dogg content ya digg. Nuff Said.”

Not nearly nuff!

Thus, while the Yahoo board has yet to begin a search, I have already been hard at work on selecting the next CEO.

(Last time, the company took none of my suggestions, but after the most recent result, the directors might want to pay mind!)

Sources said Yahoo is looking for an experienced Internet type, either from inside or outside the company.

“Yahoo has put its flag in the ground as a digital media company with a technology base,” said one source. “The job requires big buckets of expertise and needs someone who will grow the company.”

Here I go with the outsiders:

Peter Chernin: The former News Corp. exec has been eyeing Yahoo for a possible takeover with other investors. Both Yahoo and I had picked him when co-founder Jerry Yang stepped down as CEO almost three years ago, and he had declined the offer. This time, perhaps a big chunk of the company and total autonomy would work, even if making a hit like “Rise of the Planet of the Apes” is more fun.

Sheryl Sandberg: The COO of Facebook is sort of the anti-Bartz, with a smooth and efficient persona, and she is an experienced tech exec. But the former Google exec is at a place of growth at the social networking site, and is unlikely to want to leave the big show, especially since a blockbuster IPO is looming.

Jason Kilar: The Hulu CEO is in the midst of the process of selling the premium video service, with Yahoo as a bidder. While he has some tense relations with the studios, Kilar is top notch in his dedication to consumer products, and has a lot of experience from his stint at Amazon, too.

Dan Rosensweig: Currently CEO of IPO-headed Chegg textbook rental service, the former Yahoo exec never got a chance to run the company as its top leader. Well-connected and still well-liked by the troops at Yahoo, it still would be pretty hard for him to go home again.

Dave Goldberg: Sure, he’s married to Sandberg (see above), but the savvy CEO of polling phenom SurveyMonkey is one of the sharpest thinkers in Silicon Valley. He sold his music company to Yahoo many years ago and has a strong background in consumer online services.

Jon Miller: The chief digital exec at News Corp. almost got the CEO spot years ago when Carl Icahn was agitating for change at Yahoo, before Time Warner blocked him via a noncompete. With the mishegas at the media giant, and dwindling digital businesses there, it might be a good escape hatch for Miller.

Susan Wojcicki: The accomplished Google exec, who runs all its ad products, has the kind of calm, cool, collected persona that Yahoo could use right about now. The search giant was founded in her garage, and she has been a key part of its success since then. Wojcicki is also an understated class act in hey-look-at-me Silicon Valley.

Todd Bradley: The Hewlett-Packard exec just got blindsided when the company kicked webOS to the curb. While he is in line to run a possible spinoff of the device business, Bradley might also want to jump out of the frying pan into the fire.

Mike McCue: The CEO of Flipboard would certainly energize Yahoo with his intense focus on quality and consumer delight. The news app start-up could be a good addition to Yahoo, and McCue, the former Netscape and Microsoft exec who is well-liked in the Internet scene, would be, too.

Joanne Bradford: The former Yahoo advertising head bolted Bartz’s regime early on to run revenue for Demand Media. Well-liked in the ad business, she also knows where all the bodies are buried at Yahoo. Since ads and media are key at the company, she’d make an interesting choice.

Yusuf Mehdi: The Microsoft online exec would also be a left-field candidate to run Yahoo, given his even-keeled personality and longtime experience in the sector. And, though pricey, Mehdi’s impact on Bing search has been important. But he’s also been involved in the software giant’s lackluster ad and search partnership and still has not turned around the situation at MSN.

Kevin Johnson: The former Microsoft exec and current CEO of Juniper was once slated to be the CEO of Yahoo, had Microsoft managed to win the company in its hostile takeover attempt. In fact, Johnson was the architect of the idea of Yahoo running the media and Microsoft running the tech.

Tim Armstrong: Well, he might have been a good candidate before the downward slide of AOL and a recent series of questionable judgments. If Armstrong can’t keep a loud tech blogger in line, it’s not clear he can wrangle the Yahoo beast.

And here’s the insider scoop:

Ross Levinsohn: The former News Corp. exec is running the Americas for Yahoo, which puts him in charge of the company’s key businesses. But he’s still struggling to turn the ad business around, and how well he does that could be a major determinant of his success. But fantastic hair!

Blake Irving: The former Microsoft exec has an amiable nature and is well-liked at Yahoo, but he still needs to show that the company can ship some innovative products, and quickly. Like Livestand, the news reader, which is muchly late.

David Kenny: The Yahoo board member is now president of Akamai, which might preclude him from the job. But the well-regarded exec — he’s a snazzy dresser, too — ran one of the Internet’s top digital ad agencies and now has tech chops from the content delivery network.

Memo to Yahoo board: I have a million more ideas, from former Viacom exec Tom Freston to former Yahoo board member Eric Hippeau. Or why not bring back a passel of former Yahoos to advise, such as former CEO Terry Semel or former president Sue Decker?

Or Oprah! I hear Winfrey will be in Silicon Valley later this week, and she has a lot more free time now.

Like Snoop Dogg, she would fo shizzle be the bomb to cover.

Don't Rain on Microsoft's Ad Parade (Except It's Raining in Seattle, Natch!)

Kara Swisher — Wed, 30 Mar 2011 20:10:47 +0000

BoomTown scrambled the All Things Digital jet (aka, United Airlines, Seat 7A) late last night to get up to Microsoft’s big event for its online advertising clients today.

Called “Imagine 2011: Marketing Leadership Summit” and held at its Redmond, Wa. HQ, the two-day gathering is designed to wow peeps by trotting out a spate of strategery concepts those who buy advertising on Microsoft’s various digital offerings from its Bing search service to MSN to Xbox to Windows Phone 7.

Some program topics: “Elsewhere USA,” “Teens Hanging Out, Messing Around, and Geeking Out” and “Audience Buying Goes Real-Time: True or False?”

Presumably the goal of all this heavy-duty thinkery is to get these marketers to buy more ads from Microsoft by warning them about being left behind on the platform as the train chugs inevitably off to the digital future.

And just in case that doesn’t work, there will be a free concert tonight featuring the hipster band Train for the Imagine 2011 attendees at Microsoft Co-founder Paul Allen’s Experience Music Project venue to open those ad wallets.

Hey, Geek Mister: Stop sending all those digital marketing bucks to Google and Facebook and give them to us!

Before a panoply of various social, design and anthropology experts pontificated, Microsoft CEO Steve Ballmer kicked off the day with his patented loud and lovable Ed McMahon act, complete with the booming catchphrases.

Hey-Yo!

“You have to move forward or die!” (About the Web.)

“If you wanna get big, you have to think big!” (About the Windows 7 Phone smartphone deal with Nokia.)

I love the U.S. government, I don’t want to give it a hard time.” (About its crappy Web site, not the antitrust conviction thing.)

Ballmer outlined some key trends, which are not new to anyone paying attention over the last five years: Location; social; pervasive displays; ubiquitous connectivity; computers everywhere; cloud; data; and natural user interaction

He also joked about how there were 10 fake Steve Ballmers on Facebook, all using Steve Ballmer photos. Imagine that!

You’d think Microsoft’s badillion-dollar investment in the social networking site would get you a verified account!

Status: Monkey boy mad!

Actually, pissed off is more related to the fact that the person who conceived and organized the Imagine 2011 event was former global ad sales head Carolyn Everson.

But, she left the company in mid-February after only six months, for essentially the same job at Microsoft partner Facebook.

Since then Microsoft and Facebook have been wrangling over the talent raid, including Microsoft even considering legal action to block the move.

Nonetheless, the show must go on and it did in a pretty classy way.

But not without another road bump in today’s action–the news that Microsoft’s own marketing head, longtime company veteran Mich Mathews, was leaving the software giant later this year.

The departure had the halls buzzing about what happened and who will be taking over the big job with a $1 billion marketing budget.

Maybe some external CMO sitting right there in the audience or perhaps some internal Microsoft candidate such as Yusuf Mehdi or Capossela?

I suppose it’s time for some strategery stat!

Until it is all figured out, here is the music video for Train’s hit song, “Hey, Soul Sister”:

Microsoft Bing's Yusuf Mehdi Talks About Facebook Search Lovefest!

Kara Swisher — Thu, 14 Oct 2010 12:15:42 +0000

After yesterday’s press event at which Facebook and Microsoft declared their never-ending love for each other via a search integration into the Bing service of a lot of data from the powerful social networking behemoth, I sat down to talk about it with Yusuf Mehdi, a longtime exec at the software giant.

It is the first sign of a major deployment of a deal announced last year between Microsoft (MSFT) and Facebook.

The theme, according to Mehdi, who demoed the new social features and quoted the Beatles, was search with “a little help from your friends.”

After execs from both companies spent a lot of time air-kissing each other over the whole thing and Facebook CEO Mark Zuckerberg happily threw some raspberries at search giant Google (GOOG), BoomTown sat down with Mehdi for an interview.

Here’s the video of that, done in an odd fake living room–no idea on the many old radios–at Microsoft’s Silicon Valley HQ:

[ See post to watch video ]

Liveblogging the Bing-Facebook Bromance: "Underdog" Search With a Little Help From Your Friends

Kara Swisher — Wed, 13 Oct 2010 18:46:53 +0000

BoomTown motored on down to the Microsoft campus in Silicon Valley on a fabulously sunny day to liveblog the latest Bing event.

The software giant is updating its search service, announcing deep integration–part of a deal announced last year–with Facebook.

The theme, according to Microsoft (MSFT) SVP Yusuf Mehdi, quoting the Beatles, was search with “a little help from your friends.”

Let’s hope it’s not: “Help, I need somebody.”

11:35 am PT: Mehdi kicks off the show, announcing the line-up, which includes Facebook CEO and co-founder Mark Zuckerberg.

Well, it just got 100 percent more interesting here in this nondescript auditorium.

Mehdi talks a little bit about the future of search and making it better. He talks about social being an important part of it.

While I’d have gone with Barry Manilow, he quotes the Beatles.

Mehdi is followed by Microsoft Online Services Division President Qi Lu, who throws more love bombs at Facebook.

“With the partnershop of Facebook and Bing, we will be able to unlock…how people in a social relationship can be first-class citizens in a search experience,” said Lu.

It sounds so lofty, even though it is mostly trading movie review recommendations or good places to take the kids on a rainy Sunday.

Lu thanks Zuckerberg effusively and invites him onstage.

11:54 am: No hoodie.

Zuckerberg is also “honored to be here,” giving us a little history lesson about the origins of the social networking giant and its various and sundry efforts.

I’ll be honest, the lack of donuts is making me distracted.

He’s not actually saying more than bromides about “what would social search look like.”

And looking around at who would be the right partner in the arena. Microsoft! Of course! That giant investment way back when was nice too!

“They’re really the underdog here,” said Zuckerberg in the first interesting comment, noting that overdogs–that would be Google (GOOG), which he does not mention by name–never innovate much.

His take: Underdogs are the best.

12:01 pm: Mehdi is back to show off the wares in a demo.

First, what’s there. Web search in Facebook and Facebook status updates on Bing.

Zzzzzzzz. Get to the good stuff!

First, a module that brings in a Like module from Facebook into the search, with all the other information provided by Bing.

It is, said, Mehdi, particular for a person.

“This is going to profoundly change how we search,” he said of personalized experiences.

Mehdi also shows off a way to differentiate your friends who have names of famous people, who are the ones who come up on search first.

Interesting, but people search is not the biggest problem I have.

He also says more is coming, such as friend experts surfacing in search and Like in every result on a page that it was possible. Yipes!

Also, thank the Lord, the ability to turn it off.

12:15 pm: Now Facebook exec Dan Rose comes up and starts talking about the Facebook-Microsoft bromance.

Apparently, four years is an eternity in Silicon Valley in terms of a relationship.

Actually, four weeks is long, so congrats you two crazy kids!

I’d celebrate with a donut if they were here.

“More and more” social in Bing, said Rose.

It’s a match made in digital heaven!

12:22 pm: Q&A time!

So what more? The press is so unsatisfied! Yes, we are.

Zuckerberg takes the lead. New interfaces! More!

A privacy question. “This is Instant Personalization,” said Zuckerberg, who said that Facebook has five partners in that effort.

He explains Instant Personalization, saying he wants to clear up misconceptions.

It’s private enough, you oversharers!

“Just because it is all public information about you, this is really good,” he said.

But is it by default? Of course, it is. That’s Facebook modus operandi!

Opt-out should be tattooed on employees at Facebook as a requirement.

Bing does put up a warning at the top of the page, but only five times. Then, you need to go foraging to turn it off.

Next: Does Bing search queries get sent back to Facebook? Not necessarily.

But, “everything is going to be social eventually,” said Zuckerberg, as long as it is public.

Public is apparently the new black.

More questions about new Facebook Groups and other deets, none of which is that bracing.

Apropos of nothing, I am considering asking a question about the ever-exciting Hewlett-Packard (HPQ) scandal, just to jack up the volume.

I try to ask a question about Zuckerberg’s underdog comment, but no more time.

But Zuckerberg sort of addresses it, going on about why he has picked Microsoft as the favorite.

While he does not say it, it’s because Facebook is the overdog here and, as you know, every overdog needs an underdog.

Speaking of cartoon heroes, here is the opening of that classic television show:

More Bling From Bing, as Microsoft Adds Social Zing and More

Kara Swisher — Wed, 13 Oct 2010 16:15:16 +0000

Microsoft is holding yet another feature update event for its Bing search service later today at its Silicon Valley HQ.

Microsoft (MSFT) Online Services Division President Qi Lu will be there, as well as SVP Yusuf Mehdi, for–according to the invite–”a conversation about new directions and future opportunities of search and a demonstration of some new search innovation by Bing.”

Those two are the big guns at Bing, so this won’t be a minor update.

As has been widely reported, a lot will be about its continuing integration with Facebook data, which BoomTown scooped out last year.

Big giant and sustained yawn, since it is a year gone and everyone is doing this in some fashion, including Google (GOOG) and Yahoo (YHOO).

Unless, of course, it is executed in some distinct and unusual manner.

Maybe a search of Facebook CEO and co-founder Mark Zuckerberg’s data, every time yours is displayed without explicit permission?

We can dream!

I am hoping, as before, there is some kind of mapping update, since Bing often shows some cool new stuff at these regular events.

And I’ll be asking about how the Yahoo search and online advertising partnership is going, natch.

Liveblogging and possible video attack to begin at 11:30 am PT. (Note to Microsoft minions: Donuts, not cream puffs.)

More Change at Microsoft's Bing, as It Goes Deep Into Entertainment

Kara Swisher — Wed, 23 Jun 2010 01:00:27 +0000

Microsoft is rolling out a new series of updates to its Bing search service tonight, including a deep dive into a media-rich entertainment vertical, as well as other improvements to its existing offerings.

The software company has been pushing hard in the search arena, trying to gain market share from the dominant Google (GOOG) and the No. 2 player, Yahoo (YHOO).

The effort has so far included a different look and feel and very detailed results in certain niches, such as travel and health.

The push to improve entertainment search is a natural one, given its popularity with consumers.

For example, Microsoft (MSFT) will now allow users to listen to entire songs from its 6.8 million-song catalog rather than just samples of the songs.

It will also offer lyrics and more detailed artist profiles, as well as loads of movie and television information.

“We want to be one of the two major players in search and we are building out to do that,” said Yusuf Mehdi, SVP of Microsoft’s Online Audience Business. “The economic opportunity of search is as good as it gets in the business, if we can make these inroads.”

Those inroads have been encouraging, with Bing gaining market share. But they have also been costly, with the Online Services division bleeding cash.

Of course, search is an area Microsoft cannot abandon, so I would imagine the push will continue.

That’s good for consumers, of course, and it sure is pretty.

But seeing is better than a BoomTown description–here are some entertainment-focused screenshots (click to enlarge, except for music and movies homepages), and below them, the official fact sheet:

Music Homepage:

Music/Lady Gaga Songs:

Movies Homepage:

Movies/Visual Search:

TV/”Gossip Girl”:

Games/”Bubble Town”:

Bing Spring Update Fact Sheet

Microsoft's Qi Lu Talks About Bing (and Confirms Facebook and Twitter Real-Time Data Deal) at Web 2.0

Kara Swisher — Wed, 21 Oct 2009 18:30:52 +0000

Microsoft digital head Qi Lu took to the stage at the Web 2.0 Summit conference this morning, where he confirmed a “strategic” deal with both Facebook and Twitter to integrate real-time information into Microsoft’s Bing search service.

BoomTown broke news of those twin deals earlier today.

Bing’s Twitter integration in beta form is now live here (see an image of it below; click on it to make it larger).

Facebook’s integration will come later, said Microsoft (MSFT).

Before announcing the deal, Lu–who is a quintessential techie–first went a bit deep into the weeds to talk about “how we think about search.”

Said Lu: “To start with, we think about search holistically…it’s about user intent. What it amounts to is that you are trying to build a mind reader.”

Top MSN exec Yusuf Mehdi then bounded onstage to talk about the deals with Twitter and Facebook and do a demo, which was what the audience gathered in San Francisco wanted to hear about and see.

“If today’s search is about getting to the UPS or the FedEx site, tomorrow is much more complicated,” said Mehdi, who described the deals as “strategic.”

Google (GOOG) is also in talks with both Twitter and Facebook about a similar arrangement, but Microsoft’s move was a clear one-upsmanship with its search rival.

And what Mehdi showed was impressive, with the ability to sort tweets in a number of ways.

Such information in search will obviously improve results.

Lu gave few specific monetary or operational details of the service–such as if Facebook and Twitter get a cut of its search advertising revenue or if Microsoft will archive the status updates–mostly focusing on Twitter, since it is first to roll out.

“This is just the beginning,” said Lu. “The Twitter corpus…is still evolving and emerging.”

Added Lu at the end: “Give us a try!”

Here is Microsoft’s press announcement on the deals with two of Silicon Valley’s innovation hotshots:

This morning at the Web 2.0 Summit in San Francisco, Qi Lu, President of Microsoft’s Online Services Division is announcing a new beta feature that enables people to easily search Twitter’s real-time information feed directly in Bing. This new feature helps people make better decisions and more fully understand Twitter conversations by collecting, analyzing and uniquely presenting real-time Twitter content.

More specifically, the new Twitter developments in Bing include:

A real-time index of the Tweets that match your search queries in results. This feature makes it easier to follow what’s going on by reducing the amount of duplicates, spam, and adult content.

Giving you the option to rank tweets either by most recent or by “best match,” where we consider a Tweeter’s popularity, interestingness of the tweet, and other indicators of quality and trustworthiness.

Providing the top links shared on Twitter around your specific search query by showcasing a few of the most relevant tweets. Additionally, Bing automatically expands those small URLs (like bit.ly) to enable you to understand what people are tweeting about. Instead of showing standard search result captions, we select 2 top tweets to give users a glimpse of the sentiment around the shared link.

You can try out the new Bing Twitter search beta here momentarily or learn more about it at the Bing blog. Please note that this is a U.S. only feature at this time.

Facebook Partnership

As part of his on-stage discussion at the summit, Dr. Lu is also announcing a global partnership with Facebook that will bring public Facebook status updates to Bing search results. The experience will be available at a later date.

AOL: More Org Chart Shuffles Coming; So Are Ad Dollars. But Mum on Microsoft.

Peter Kafka — Mon, 21 Sep 2009 15:15:01 +0000

It’s Advertising Week in New York! Which means that for the next few days, ad sellers will be meeting, greeting and buttering up ad buyers in hopes of prying some of their dollars free. Just like every week in New York.

One difference for the likes of me: Big ad sellers are making themselves very available to the press. This morning, for instance, AOL sent out CEO Tim Armstrong, sales boss Jeff Levick, sales deputy Erin Clift and content boss Bill Wilson to poke at eggs and ignore a plateful of bagels and lox.

Oh, and they talked, too! The big message was that they’re still in the process of overhauling the Internet giant on behalf of Time Warner (TWX), which brought in Armstrong from Google (GOOG) earlier this year and says it still plans on spinning off the company by the end of 2009.

Afterward, I got a brief interview (along with PaidContent’s David Armstrong) with the AOL chief. The video is at the bottom of the post, and you may need to turn up your speakers to hear it. But the takeaways are:

AOL is still looking for a chief marketing officer. The search is in the “early stages.” Do you know anyone? Internet experience is not a prerequisite.
More org chart moves, like the one that saw COO Kim Partoll pushed out last week, are coming. They’ll be part of the internal review process Armstrong has dubbed “Project Everest,” which should be complete by the end of the year.
So are layoffs. See above.
Internet ad dollars are beginning to flow out again–or if they’re not flowing, Armstrong thinks they will be, as big marketers like Procter & Gamble (PG) make permanent shifts in their advertising mixes.
Armstrong professes to be surprised by a report last week that he had met with Yusuf Mehdi, who runs Bing and MSN for Microsoft (MSFT). “I know Yusuf. I’ve known him personally for years. So if I saw him I would be happy, but…”

[ See post to watch video ]

Weekend Update 8.08.09–The Lolcats Edition

Beth Callaghan — Sun, 09 Aug 2009 00:48:22 +0000

It’s been a long time between weekend updates, and a long week without Peter Kafka, All Things D’s intrepid MediaMemo reporter. He returns Monday, and just in time, too, since John Paczkowski and Digital Daily will be out all next week. Must be August–do Europeans still take the whole month off? Or is that an urban legend? No matter; it definitely has not been sleepy around here. To wit:

On a trip to Seattle, BoomTown visited the headquarters of the Pet Holdings empire, which includes Lolcats (icanhascheezburger.com), Fail Blog and now, Emails From Crazy People. While there, Kara filmed a video with Ben Huh, CEO of the (profitable!) company. There is obviously a method to Huh’s wackiness.

Elsewhere in Seattle, BoomTown got some of the lowdown on the machinations in the wake of the Yahoo-Microsoft deal. Satya Nadella and Yusuf Mehdi are just two of the Microsoft (MSFT) execs charged with leveraging the deal to knock Google (GOOG) out of its number one spot. They each sat down in front of the Flip camera to share their thoughts.

BoomTown also noted the beginning of the Yahoo-Microsoft regulatory filings this week and provided the full document of Yahoo’s (YHOO) 8-K to the Securities and Exchange Commission about the deal. To think: this is only the tip of the MicroHoo iceberg.

If you were one of the many wondering about Twitter’s high-profile outage this week, don’t worry–Kara provided a handy translation of the co-founder Biz Stone’s blog post about the whole matter. If you weren’t wondering at all, you’re not alone–Kara’s mother and older son, Louie, think the whole thing is a waste of time.

Google CEO Eric Schmidt’s resignation from Apple’s (AAPL) board of directors was just some of the news on Digital Daily this week. In some of the other news, the FTC responded with a “nice try, but we’ll continue our investigation anyway.” Better news for Apple, then, that it claims 32 percent of operating profits in the handset industry, even though it’s only the fifth-largest handset vendor.

In the not-so-good department on Digital Daily this week, NewsCorp. (NWS) (which owns the Wall Street Journal and this Web site) reported a 32.5 percent drop in fiscal-year-adjusted operating income–largely because of its “red-hot” social network, MySpace. Elsewhere, Cisco (CSCO) reported a 46 percent drop in quarterly profit while still beating the Street’s estimates, and Vonage (VG) recorded a second-quarter profit of $2.3 million while losing 89,000 net subscribers in the same quarter.

On Personal Tech, Walt Mossberg reviewed a new netbook from Toshiba this week great battery life and a winning keyboard, among other things. On the Mossberg Solution, Katie Boehret reviewed the Wii MotionPlus remote accessory, an add-on to the Wii remote that includes a gyroscope and allows for more precision and sensitivity in gameplay. Walt responded to readers on Mossberg’s Mailbox, answering emails about buying a new no-frills laptop, switching ISPs and moving contacts emails without too much pain, and discerning the minimum system requirements for Windows 7.

Walt went into a little more detail about Windows 7 on his MossBlog. Unfortunately, he discovered that more detail does not equal more clarity when it comes to a Windows 7 upgrade. At his request, Microsoft sent along a handy chart meant to simplify all aspects of the matter for readers. It is an astoundingly, even comically, complicated document. The company has promised to send a newer, simpler one. Stay tuned.

More next week.

Microsoft's Point Man on Search–Satya Nadella–Speaks: "It's a Game of Scale"

Kara Swisher — Tue, 04 Aug 2009 07:33:31 +0000

Another Microsoft exec BoomTown spoke to–while in Seattle last week–was Satya Nadella, SVP of Research and Development at its Online Services division, also known as the man in charge of search and online advertising technology for the just-struck partnership with Yahoo.

Nadella came to Microsoft in 1992 from Sun Microsystems (JAVA)–much like another company lifer and key dealmaker in the Yahoo partnership, Yusuf Mehdi, whom I also interviewed via video here.

After all that time, though, Nadella is probably facing his biggest challenge yet.

Because how the search business of Microsoft (MSFT) evolves, improves and, most of all, out-innovates–especially in the face of heretofore withering competition from search behemoth Google (GOOG)–is going to be a big factor in the success of the deal with Yahoo (YHOO).

In fact, the Silicon Valley Internet giant has essentially put its search technology eggs in the software company’s work-in-progress basket.

Now the Microsoft team must make a series of innovative tech leaps in order to grab more market share beyond what the pair bring to the table together.

Nadella, who was one of the key execs involved in the deal, has to make sure the companies hold onto top talent until the partnership is approved, while continuing to keep up the momentum of its new Bing search offering.

No pressure, Satya!

Nadella does acknowledge in the video interview here that Microsoft has has not been able to catch up with Google and talks about how that might now be possible.

Watch:

[ See post to watch video ]

Microsoft's Yusuf Mehdi Speaks: "Yahoo Has a Fantastic Opportunity"

Kara Swisher — Mon, 03 Aug 2009 20:12:38 +0000

BoomTown visited Microsoft HQ in Redmond, Wash., last week, right after the online advertising and search deal with Yahoo was struck.

While there, I interviewed a passel of Microsoft (MSFT) execs, including Online Audience Business SVP Yusuf Mehdi, who has been a key player in the many–and mostly disastrous–attempts that the software giant has made to form some sort of alliance with Yahoo (YHOO) over the years.

It finally stuck for Mehdi, who has been with Microsoft for closing in on two decades (although he still kind of looks like a teenager).

In this video interview with me, he talks about the deal, defending it as a “win-win”–what else is he going to say?–for both companies.

While Wall Street threw raspberries at the Silicon Valley icon for giving away its search technology business without an adequate payoff, Microsoft got kudos for grabbing a large piece of share that it could use in its ongoing battle with archrival Google (GOOG).

And that much is true–now, it is execs like Mehdi who are charged with using the new purchase to try to unseat Google’s dominance in search, which is a little bit of a harder job than doing a Yahoo deal.

Here’s the video:

[ See post to watch video ]

Yahoo Search Ad Deal With Microsoft "Down to the Short Strokes"–But Caution Also Advised

Kara Swisher — Fri, 17 Jul 2009 02:49:29 +0000

Unless there is some major glitch, there might finally be a search and online advertising deal struck between Yahoo and Microsoft at long last.

Top executives at Microsoft–including SVP of the Online Audience Business Group Yusuf Mehdi, search head Satya Nadella and top digital exec Qi Lu, as well as others–have all flown down to Silicon Valley from their Redmond, Wash., HQ today to iron out the remaining issues, which seem to have to do with the deployment of technology.

“It is an entourage,” joked one exec.

Microsoft CEO Steve Ballmer is also deeply involved in the talks, although he is not with the group.

If all goes well, the deal could be announced within the next week, sources at both companies said.

The most recent talks have been unusually close to the vest at both companies, and spokespeople for both Yahoo (YHOO) and Microsoft (MSFT) declined to comment on the issue.

And, of course, they should not, since there is no certainty any deal will be struck at all, especially since the pair have been down this road before, unsuccessfully.

In those cases, both sides have thought they were close, too, with fingers quickly pointing at each other for the failure of the discussions.

While BoomTown has gotten several different versions of terms of the latest deal, they all include Microsoft (MSFT) paying Yahoo (YHOO) several billion dollars upfront to take over its search advertising business and guarantee certain payments back to Yahoo.

There is also a display advertising element to the deal, which would likely have Yahoo take the lead in selling premium advertising for the companies.

That they are so close is a good sign, although sources on both sides of the deal cautioned that it could just as easily come apart.

And, indeed, Microsoft and Yahoo have long argued the particulars of this deal, including over the rate for traffic-acquisition costs, the ability of Yahoo to have control over data and the simple fact that such an arrangement is exceedingly complex.

But, said one person close to the situation, “It is down to the short strokes, for sure, it is just a question if we can finally close this.”

That’s a good question, given the push-me-pull-you relationship between Yahoo and Microsoft over the last two years.

But both need each other, especially since they lag so far behind search market leader Google (GOOG).

Yahoo was even ready to strike a similar deal with Google in the midst of Microsoft’s hostile takeover attempt last year. That partnership failed due to regulatory concerns.

Talks between Microsoft and Yahoo have waxed and waned too, as I reported earlier this week.

When last we checked in, Yahoo CEO Carol Bartz and Microsoft’s Ballmer had a little private tete-a-tete about the deal, when both were attending the seventh D: All Things Digital conference in Southern California in late May.

Bartz and Ballmer also both acknowledged discussions in onstage interviews at D7, with Bartz even boldly stating that she was open to the deal if good and reliable data and “big boatloads of money” were forthcoming from Ballmer.

(You can see the video of her saying that here, while Ballmer is less colorful here.)

Since then, Microsoft did an aggressive launch of its new Bing search service, which has been an initial success.

The company has become more confident with the early success of Bing, which has garnered good reviews and small improvements in market share in surveys.

Sources at the software giant maintain that the improvement–via innovation and a huge marketing spend–has given Microsoft a bit of leverage against Yahoo, although the bets are still out on exactly how much sustained share Bing can garner.

Yahoo is aware, of course, that is can ill afford to lose search market share, although Bartz has been focused on beefing up Yahoo management and marketing.

Still, the companies have never given up on the talks, which began in March, although all the back and forth underscores a very real debate by both sides about whether joining together will benefit them both or not.

The possible pluses are clear: Huge technology cost-savings and cash for Yahoo and another weapon to fight archrival Google for Microsoft.

It needs as much firepower as it can get. A recent comScore (SCOR) report for June showed Google with a 65 percent share, Yahoo at 19.5 percent and Microsoft at just 8.4 percent.

The deal, if struck, could give a big boost to shares of both companies, which have been up a lot since the beginning of the year.

While sources at both sides stressed that this was in no way a merger, a deal would bind their fates together rather strongly.

There was a report earlier today by 24/7 Wall Street that a deal was “imminent.”

One source advised caution when asked about that word, although this person was more confident than ever.

In any case, if it does not work out, the source said, “this will be it…we will all finally go our separate ways and be done with it.”

Yahoo and Microsoft: Breaking (And Making) Up Is Hard to Do

Kara Swisher — Tue, 14 Jul 2009 00:44:10 +0000

Oh, they’re still talking. Except when they’re not. And, then, they are.

Such has been the course of discussions Yahoo and Microsoft continue to be engaged in about a possible partnership deal around search and online advertising.

“It runs hot, then cold, then hot, then who knows,” said one person close to the situation.

It’s kind of like a digital version of the romantic travails of Lindsay Lohan and Samantha Ronson, minus the paparazzi and screaming matches in trendy clubs.

(Spokespeople for both companies declined to comment on any talks. Curiously, both joked separately that they would prefer to be the Lohan character in my sick metaphor because she was so “unpredictable,” which is good in business–until I pointed out that was just another word for an addiction-challenged lunatic.)

But I digress!

The temperature now, after talking to a dozen sources with knowledge of the situation?

Warmer than two weeks ago–with one of Microsoft’s principal dealmakers on the case–Charlie Songhurst–down in Silicon Valley where Yahoo is located, focused solely on the talks and making progress with them.

When last we checked in, Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer had a little private tete-a-tete about the deal, when both were attending the seventh D: All Things Digital conference in Southern California in late May.

That meeting, as well as meetings between other top Microsoft (MSFT) and Yahoo (YHOO) execs in attendance, went well enough.

(You can see the video of her saying that here, while Ballmer is less colorful here.)

Well, that ship has not yet sailed, with the two sides–whose history together is tumultuous–still niggling over price and control issues.

Thus, talks in the weeks after languished, especially in the wake of Microsoft’s launch of its new Bing search service and Bartz’s focus on beefing up Yahoo management and marketing.

And while Ballmer has consistently said that Microsoft was open to a deal, Bartz has since made a variety of public statements related to it, many in conflict with previous statements.

It is an indication of the push-me-pull-you tone of the talks, which began in March.

When last asked about Microsoft by a stockholder at the Yahoo annual meeting in late June, Bartz said she had nothing to say about any deal and said it would be said publicly only after any such deal was struck.

Setting expectations is probably a good idea, since all the back and forth underscores a very real debate by both sides about whether joining together will benefit them both or not.

The possible pluses are clear: Huge technology cost-savings and cash for Yahoo and another weapon to fight archrival Google (GOOG) for Microsoft.

Sources said Bartz had been getting a lot of pressure to do a deal from Yahoo board member Carl Icahn, whom she has managed to isolate, even as she has gained total control over the company.

She is also under less immediate scrutiny, sources said, since the cost-savings related to a series of layoffs at the company have given Yahoo some financial breathing room. Still, it can ill-afford a search arms war.

Yahoo, as well as Microsoft, will report its quarterly earnings next week and both are expected to show continued weakness, due to the economy.

Still, the stock of both companies has also improved a lot since the beginning of the year, with Yahoo shares up 23 percent and Microsoft’s up 19.5 percent.

As for Microsoft, the company has also become more confident with the early success of Bing, which has garnered good reviews and improvements in market share in surveys.

Sources at the company maintain that the improvement–via innovation and a huge marketing spend–has given Microsoft a bit of leverage against Yahoo, although the bets are still out on exactly how much sustained share Bing can garner.

In a blog post today, for example, Yusuf Mehdi, Microsoft SVP of the Online Audience Business Group (really, that is his actual title), touted Bing’s success after just a month:

“We saw 8 percent growth in unique users to Bing.com in June, which is an important indicator that you are trying Bing and the word is spreading….We have a long term view, and we are committed to steady progress over the years to come.”

Does that mean these two crazy kids will probably not get together in the end? Well, like LiLo and Sam, they seem to be trying, but striking a lasting partnership is not as easy as it looks.

And, until the companies decide to unite or part for sure, please enjoy this delightful video trailer for “The Parent Trap,” a time when Lohan was adorable and much, much less–like a possible Yahoo-Microsoft deal–complicated:

Bartz and Ballmer Meet One-on-One Again at D7

Kara Swisher — Thu, 28 May 2009 19:00:01 +0000

Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer (pictured here) had yet another one-on-one meeting yesterday evening at the D: All Things Digital conference in Carlsbad, Calif., said several sources, in ongoing discussions about a search and advertising partnership.

In addition, top deal execs from both Yahoo (YHOO) and Microsoft (MSFT) continued their talks, including Yahoo U.S. head Hilary Schneider and top Microsoft digital exec Yusuf Mehdi.

BoomTown originally broke the news recently that the pair had met in person several months ago to jump-start talks that had waned under Yahoo’s previous management.

Both Bartz and Ballmer were interviewed onstage at D7, and were asked about the talks.

Ballmer dodged the question about meeting, joking about a Post-It note Bartz had left him in the D7 Green Room.

Bartz acknowledged that they had been talking, but was not specific.

Microsoft CEO Steve Ballmer: Bing!

John Paczkowski — Thu, 28 May 2009 15:10:00 +0000

“Search and advertising, we are a small share….It’s all about Google. They have share, we don’t have share.” Microsoft CEO Steve Ballmer said that back in February, and according to the latest metrics from comScore (SCOR), it’s as true today as it was then. Google (GOOG) grew its share of the search market once again in April, and once again, Microsoft (MSFT) did not. The search sovereign’s share rose to 64.2 percent in April from 63.7 percent in March and 61.6 percent from a year ago, according to new data from comScore. Its April query volume grew 45.5 percent, the fastest growth rate since October 2007. Meanwhile, Microsoft’s market share for the month topped out at 8.2 percent, down from 8.3 percent in March and 9.1 percent a year ago.

They have share, we don’t have share. Truer words. How much longer will Ballmer have to utter them? We may find out today when he debuts Microsoft’s newest search offering from the D7 stage.

[ See post to watch video ]

Live Blog

After another song from Jill Sobule and some introductory remarks, Walt welcomes Steve Ballmer to the stage. He’s drinking a massive iced-coffee, as if he really needs the caffeine …
Walt kicks things off with a question about the souring economy. Ballmer’s opinion of it is apparently more sober than most. Ballmer says this is a “different recession. A recession implies that you sort of go down and go up. In this case, I think this is money that’s just got to come out of the economy….We’re really resetting the economy. Maybe we should think of today as normal and yesterday as the bluebird.” So how long will this continue, asks Walt. Ballmer says to think things will return to the good old days quickly is naive….“Is this a 50-year phenomenon? I don’t think so. But it’s not going to be over in three months, either.”
So how does this affect your business? Ballmer says Microsoft (MSFT) is doing a lot of soul-searching and flattening out its business and cost base. “We’re shaking up the future product investment stream.” That said, he notes that the company continues to invest aggressively in R&D. “We’re investing in areas where there’s room for improvement.” Interesting euphemism.
Referring to poll data, Walt notes Microsoft’s paltry share of the search market. “There’s a lot of distance between you and Google,” he says. “Is search the most important thing to you as CEO or are you more concerned with Windows, etc.?” “Our foremost concern is great people,” says Ballmer. “I spend more of my time on talent than trying to be ‘the search guy.’” He refers to Microsoft’s “seven big things.” What are they? “I’ve got seven children, I love,” says Ballmer, referring to Microsoft’s various businesses. “Look, we’re obviously where we are in search and we want to do better….We’re hoping to be one of the companies that moves the industry forward….The PC business continues to be big, we’re going through an economic reset, but there’s still vibrance there.”

Ha. Walt convinces Ballmer to refer to Google (GOOG) as Google, rather than “the market leader” as he has in years past. “Goo… Google,” he says.
Walt refers to another slide about search–how consumers choose search. He notes that most choose search out of habit and because of the brand. Given that, how can Microsoft compete? We’re about to find out apparently. But first a video…
It’s a “Star Trek” parody– “Search: the final frontier. To boldly go where someone had gone before.” “A bold search for a new name.” Video runs over Microsoft’s chronic renaming of its search engine.
And there it is: the new name is “Bing.”

Referring to Apple (AAPL) CEO Steve Jobs, Ballmer jokes that the name might have been Boom–“We should have named it ‘BOOM!’”
Why Bing? Obviously we needed a better name, says Ballmer. “We needed a name that says this is all about search.” Ballmer doesn’t seem to really know. “I’m not the creative guy, here…short mattered…people like to ‘verb up’…works globally, doesn’t have negative connotations.” Walt: So everyone is going to walk out of here and say “Bing me”? Clearly that’s Ballmer’s hope. “This is a very important step…it’s not a substitute for innovation, but we need to build brand equity in addition to technology equity.”
Was securing the trademark problematic? Ballmer says there were a few challenges. Bing Crosby, apparently, was not an issue. In any case, Ballmer seems to enjoy saying the word of his new search service. Maybe Microsoft should consider a new name for Zune. “Zing”?
Ballmer brings out Yusuf Mehdi to demo Bing. It’s going live on June 3. From a UI perspective, it’s a box and a button format with screensaver-esque background. Demoing basic Web searches. Best Match denotes an official or definitive site–the site we know to be authoritative. Instant Answer–answers to obvious questions delivered along with search returns; a search for Oscars immediately returns a result for who won an Academy Award. A search for UPS (UPS) automatically returns a customer service number at the top of the page. Walt asks to search on “Microsoft.” Much laughter, but the search return does feature a customer service number.
Bing also returns real-time flight data. Handy. Mehdi notes that Bing includes the technology Microsoft acquired when it purchased Powerset. Using it to “understand” pages, mine data. Walt notes that returns from Encarta, Microsoft’s now-defunct encyclopedia, appear along with material from Wikipedia. “Encarta? What’s that?” he jokes. Ballmer chuckles: “Encarta is an encyclopedia…that is not getting much ongoing investment.”

Demoing media searches now. Video searches pull up a nice screen of thumbnails that play in the search pane when clicked. On to weather. Bing gives a full five-day forecast, as opposed to what Google offers–a single day, I think. Search for a city returns, weather, events, sports games, video mentions of the area.
On to shopping. A search for a Canon (CAJ) camera returns a hybrid search shopping page. Price comparisons, user reviews. Also, Cashback, which rewards people for purchases made through the site. Here’s a nice feature: Farecast. Flight search–issues a query across airlines by price, hops, etc. Also tracks flight pricing trends. Tells you if your fare is likely to go up.
Bing seems to be designed specifically to keep people on its search pages as opposed to sending them off to other sites. Is that what Microsoft is trying to do? Won’t this annoy content owners? Ballmer says no and adds that content deals are possible. “We’re not trying to get in the way of copyright holders,” he says. “If value should be redivided somehow between content providers, advertisers and search engines, let’s have that conversation….We’re not trying to profit off of anyone else’s work.”
Recalling Ask’s big redesign and it’s subsequent rise and fall, Walt asks if the same thing might happen to Bing. “No,” says Ballmer. Bing is too tremendous a stride. It differentiates itself from Google. It might not appeal to everyone, but if it appeals to 20 percent of them, that’s a success. Ask wasn’t able to do that.
Ballmer: “Search has not been a dynamic category in terms of innovation.”
Not at Microsoft, anyway …

Walt circles back and notes that Ask spent an enormous amount of money on a rebranding campaign that ultimately failed despite some good buzz. How much money is Microsoft dedicating to the Bing branding campaign? “Lots,” says Ballmer. “When I approved the budget, I gulped, and a gulp in a $60 billion company, well, that’s a big gulp.”
Walt asks Ballmer about the overhaul of Windows and how important it is in an era when we’re moving to cloud-based services and from PCs to netbooks and mobile devices. Ballmer seems puzzled by the question. Smartphones are PCs. Netbooks are PCS. “The Web is designed for the PC….Most of these mobile apps are substituting for the fact that the original app wasn’t designed for the PC,” he says.
Walt refers to some survey data again. Notes that many consumers say they don’t plan to purchase a netbook in the near future. How do you interpret that? Ballmer: “I just think netbook is a funny brand….What is a netbook? Is it defined by its operating system, its memory, its screen size? They’re really just PCs. I bet if you asked people if they planned to buy a portable computer you’d get a much better response….It’s a little hard to know what the heck the difference is between the netbook and the PC.”
Walt: Windows 7 is on track? Ballmer: “I’m not sure what ‘track’ it is, but whatever it is, it’s on it.”
On to the Q&A. First question: How is Microsoft going to convince users to learn the new Windows 7 and Office UI? Ballmer says change is difficult. Notes that he hates whenever The Wall Street Journal changes its format. He says Microsoft’s internal testing has determined that the changes the company has made to the OS and Office suite are good ones that will be embraced. That said, there will always be some difficulties.
Questioner asks about natural-language search, wondering how Bing would deal with a search for a Hilton hotel in Paris, when there’s the possibility that it might return a list of results for Paris Hilton. He asks for a demo, but Ballmer declines. He can try it for himself on June 3.
Question about Microsoft’s efforts in the medical arena. Ballmer: “Health’s a tough business. People who make IT decisions in the medical industry don’t make them quickly.” That said, Microsoft is “full speed ahead” in the area.
How is Microsoft differentiating sponsored searches in Bing? Cashback is obviously differentiated, Ballmer says. Paid side is tougher though.
Final question from Walt: Does Bing mean that your interest in Yahoo (YHOO) is waning? Ballmer jokingly recites the standard bullet points. “I think there’s a lot that can make sense in terms of a search partnership, not an acquisition,” he says in a monotone. “Whether such a thing will happen I don’t know.” Walt presses him further about a meeting between Ballmer and Yahoo CEO Carol Bartz. Ballmer jokes that the meeting was actually a note that Bartz left for him in the Green Room. According to Ballmer, it read: “The makeup couldn’t fix me if it tried.”
Quick update: we managed to get our hands on the actual note: It was left next to the makeup in the Green Room and reads:

Steve,

Forget it

Won’t help

Ha

Carol

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

Yahoo and Microsoft Deal Progress "Meaningful"–Plus the Deal Team Rosters

Kara Swisher — Tue, 05 May 2009 02:11:22 +0000

Recently, BoomTown reported that talks between Microsoft and Yahoo had gotten “hot and heavy.”

That mood seems to be continuing, as many sources close to the situation on both sides said that the pair are coming ever closer to a search and advertising partnership deal.

Said one source: “It’s closer than it has ever been…we’re finally talking about the how rather than the if.”

“It’s meaningful,” added another source. “The fact that there is even progress and engagement, after so many failed attempts between us, says a lot.”

Indeed, it remains a good sign that there seems to be a lot of engagement between the two sides of late, and some sources think a deal could even be struck within the next few weeks.

As I also reported last week, the latest idea is one in which Yahoo (YHOO) would take over both search and display advertising sales and Microsoft (MSFT) would run the tech for both behind the scenes.

It’s not clear if trading other assets–such as content–or an investment in Yahoo by Microsoft are being considered too.

In any case, any such deal would be a major shift for both companies in their business focus and would also tether them tightly together.

Many think they need to be tethered, given that Google (GOOG) overwhelmingly dominates the lucrative search market. Yahoo is strong in display, although that market has been harder hit in the recent economic downturn.

But whether or not Yahoo and Microsoft can come to a partnership agreement–given the deep complexities of the situation, the wariness over controlling key technologies and tense history between them–is a big if, of course.

Still, sources on both sides seem more positive than ever before.

Microsoft execs, for their part, report that new Yahoo CEO Carol Bartz is much more straightforward to work with than former CEO Jerry Yang.

And Yahoo’s side seems convinced that Microsoft appears more willing to make a deal happen and is more flexible on terms than in previous encounters.

Both sides are using very small teams to discuss the possible partnership, mostly in Silicon Valley. Some of the Redmond, Wash.-based Microsoft team, in fact, are in the Bay area now.

Sources said those involved on the Microsoft side include: Digital head Qi Lu, a former Yahoo tech star; top M&A and strategy exec Charles Songhurst; Online Audience Business SVP Yusuf Mehdi; and several others.

On the Yahoo side: North America EVP Hilary Schneider, who leads the efforts; General Counsel Michael Callahan; top Yahoo ad operations techie Mark Morrissey, who was key to its revival of the Panama ad system and has recently been leading product development on its new ad platform; finance SVP and Chief Treasury Officer Mike Gupta; and Products EVP and CTO Ari Balogh, although he is more in the background.

Of course, the only two execs who will matter, if these teams finally manage to hash out details, are Yahoo’s Bartz and Microsoft CEO Steve Ballmer, as well the both companies’ boards.

Interestingly, Ballmer is slated to be at Stanford University’s Memorial Auditorium to give a lecture on innovation and entrepreneurship as part of the Entrepreneurial Thought Leaders Seminar on Wednesday afternoon.

Whether Ballmer is seeing Bartz on this trip or not is not clear.

But he has to at some point. The approval of a deal–which could be struck soon, if terms can be reached–will be entirely their call.

[Postcard image courtesy of CarbonClothing on Zazzle.com.]

MSN Changes Afoot?

Kara Swisher — Thu, 22 Jan 2009 13:49:33 +0000

According to several sources, more restructuring is about to hit Microsoft’s online division, as various departments are moved among and between its top execs, with changes to be announced as early as today.

While BoomTown is still gathering information, it looks like longtime Microsoft exec Yusuf Mehdi (pictured here), who is now in charge of marketing, online audience business development and product management for MSN and the search properties, will get more added to his portfolio, including overall business development for the online properties.

Mehdi, whose current title is SVP of the Online Audience Business, could also eventually get purview over programming for MSN too, said several sources.

Both those business units currently (and somewhat inexplicably) report to Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group.

Nadella and Mehdi are the two key execs who report to Qi Lu, a former Yahoo tech star who was recently hired as president of Microsoft’s online services group

What that means for MSN’s Corporate VP Erik Jorgensen and the GM of its Global Media Group, Greg Nelson, who report to Nadella, is unclear.

But it appears that the Microsoft (MSFT) online group is essentially being split into two clear parts: Engineering, and business and content operations.

Advertising sales, which had previously been under now-departed Microsoft exec Brian McAndrews, has been moved to Microsoft’s centralized Sales, Marketing and Services Group, led by chief operating officer Kevin Turner.

The changes are interesting, given all the behind-the-scenes talks that are now going on between Microsoft and Yahoo (YHOO) and Time Warner (TWX) online unit AOL over their search and search advertising businesses.

Microsoft has been seeking to take over search for both Yahoo and AOL, with its CEO Steve Ballmer recently in talks with both companies, in order to give it a decent market share in its ongoing quest to compete with Google (GOOG) in search.

Right now, Google dominates that market with an over 70 percent share, while Microsoft has just under 10 percent.

Microsoft is announcing its second-quarter earnings today, and many expect it to also announce layoffs, due to the tough economic environment.

The Entire Internal Microsoft Memo on New Dell and Verizon Deal

Kara Swisher — Thu, 08 Jan 2009 21:29:14 +0000

BoomTown loves a good memo and here’s one that two of Microsoft’s top online execs, Yusuf Mehdi and Satya Nadella sent out about the deal the tech giant signed with Dell (DELL) and Verizon (VZ) to distribute its search and other products.

Microsoft (MSFT) is opening its fat wallet to do such a deal and try to best archrival Google (GOOG). It was announced last night at Microsoft CEO Steve Ballmer’s keynote kickoff for the Consumer Electronics Show in Las Vegas.

Here’s the memo:

From: Yusuf Mehdi
Sent: Wednesday, January 07, 2009 6:29 PM
To: OSD R&D FTE World Wide; Online Audience Business Group FTE; APSP FTE–Adv & Pub Solutions Platform
Cc: Yusuf Mehdi; Satya Nadella; Qi Lu
Subject: Announcing Dell and Verizon Strategic Partnerships!

Team,

This evening, in his keynote address at the Consumer Electronics Show in Las Vegas, Steve Ballmer announced two major new distribution partnerships that will significantly increase the reach of our Online businesses to end users.

Starting in February, Dell–the number one PC manufacturer in the US and number two worldwide – will begin to distribute Live Search and Windows Live Essentials on a majority of consumer and small business PCs shipped globally. Under the terms of the agreement, Live Search will be the default search engine in the Web browser, as well as including a Live Search-powered toolbar on all new PCs over the next several years.

Steve also announced a five-year partnership with Verizon–the number one wireless carrier in the US–that covers mobile search and display advertising. The deal will provide more than 70 million subscribers in the U.S the ability to use Live Search to find local business and shopping information, access maps and directions, find ringtones and other online mobile products and services.

Partnering with the #1 PC manufacturer and the #1 wireless carrier in the US is a huge win for our Online Services business. More importantly, the partnerships will benefit our mutual customers as we make it easier to access their email, IM, homepage, and Search services from their PC and Phone.

As you know, these are just two–albeit big ones!–examples of our partnering to grow our audience through distribution and bring our services to new users. Our momentum is building from previous and existing partnerships with Sun Microsystems, Facebook, Lenovo, and most recently HP for all their PCs in North America.

A big thanks to the many individuals across the company that helped secure these partnerships. Now onward to executing very well on our product offerings and marketing to make the most of our investment!

Satya and Yusuf

Ex-Yahoos Weigh In on Their Choices for New Yahoo CEO

Kara Swisher — Sat, 13 Dec 2008 10:00:58 +0000

With so many more ex-Yahoos out there now that the most recent layoffs have taken place, BoomTown put out feelers to a range of them to ask whom they would like to run the company they no longer work for.

After all, who better than to pick a new CEO than an ex?

The response I got was swift and varied wildly, depending on which way the ex-Yahoo felt the company should go, including quite a few who thought Yahoo needed to sell itself off completely.

Some considered Yahoo (YHOO) a media and advertising company, for example, while others thought of it as a more Web tools outfit. Still, others considered it a turnaround situation, requiring a wholly different kind of CEO.

Perhaps therein lies the problem–it is still hard to define precisely what Yahoo is and is not, even for its ex-employees.

In any case, here are some of the best suggestions:

1. The Media Mogul

“I think they need to sell to a media company,” said one ex-Yahoo, who posits the move needs to be drastic enough to truly reset Yahoo.

In this scenario, search gets sold to Microsoft (MSFT) and Yahoo’s online content is combined with media assets of a big entertainment and news conglomerate.

That would make the leader of Yahoo one of the following: Bob Iger of Disney (DIS); Rupert Murdoch/Peter Chernin of News Corp. (NWS); Jeff Zucker of General Electric (GE) unit NBC Universal; or Les Moonves of CBS (CBS). (News Corp. is the owner of this Web site.)

2. The Insider

A lot of votes here for former Yahoo COO Dan Rosensweig and not so many for current President Sue Decker.

Why? Several ex-Yahoos mentioned a need to refocus intently on products and the need for a product-obsessed leader, but one who also knew Yahoo well and could get things moving without needing a lengthy learning curve.

“Since Dan R. left, I think there’s been a definite void (at the senior exec level) on the product/consumer expertise and advocate front,” said another ex-Yahoo.

Other execs mentioned are former Yahoos Jeff Weiner and Jeff Mallett.

But several also pointed to board member John Chapple, who is the one most insiders say they are guessing will be the next CEO, especially since he has been reaching out to Yahoos on many levels and asking questions.

3. The Microsoftie or Googler

The new top name here is obviously recently departed online ad exec Brian McAndrews, former CEO of aQuantive, whom many think would be a strong pick and would focus the company on advertising.

In addition, most of those leaving–including several technical people–all seem to agree that Yahoo needs to get out of the search business, and pronto.

Said one engineer: “I hate to say this, but as good as we can be, we cannot compete in the war that is breaking out between Google and Microsoft. And it will only get uglier.”

Other names mentioned in this category include Yusuf Mehdi and Kevin Johnson of Microsoft, as well as Tim Armstrong of Google (GOOG).

4. The Fixer

While there are a lot of different opinions out there among the ex-Yahoos I spoke to, all agree that the company is in need of a sharp operator and someone who can do what it takes to turn the company around quickly.

That means someone like former Vodafone CEO Arun Sarin, whose name has popped up recently, or even nontechie execs known for operational skills.

“We need a decisive leader, given how slowly it takes for things to change at Yahoo, who has a real sense of urgency from the minute he or she gets the job,” said one ex-employee.

Another former exec described it as a “two-step process.” First, the turnaround CEO needs to come in and reorient, focus, and get the company going in the right direction, then a more product-oriented person can be installed under that CEO later.

5. The Holy Grail-Steve Jobs Option

I think the most interesting idea I got from all the many former Yahoos I spoke to was that Apple (AAPL) CEO Steve Jobs swoop in and buy Yahoo.

When I laughed out loud at this notion at first, the exec insisted that it was a feasible idea, given that Apple was interested in expanding its platform beyond its now-popular devices.

It’s an interesting bit of wishful thinking, of course, to imagine a “great leader” to calmly guide the company back to its roots.

Jobs, in fact, memorably addressed a meeting of Yahoo VPs in the fall of 2007. As I wrote then: “Jobs basic message [to Yahoo]: You have great assets–just like Apple did–and now it is all about execution.”

Yes, that tiny little detail.

6. Raise the Yangtanic

Interestingly, pretty much all the ex-Yahoos I talked to–as angry as some are at him for his tenure as a CEO less successful at execution and the ensuing loss of market value at Yahoo–said they did feel there was a need for Co-Founder Jerry Yang to stay around in a significant way.

“Jerry has been a really bad CEO,” said one former employee. “But he could still be an important leader at Yahoo and give the company the kind of inspiration it so desperately needs.”

Not everyone is on board with that.

“I completely disagree that Jerry should stay around. Jerry is one of the main issues at Yahoo and he and [David] Filo must go, as well as most of the board,” said one former Yahoo. “There needs to be free rein for the new CEO to make changes and that won’t be possible if Jerry is still there. Jerry is a nice guy and his heart is in the right place but he has failed as both board leader and CEO and the company needs to start fresh if it is to have a chance.”

Adds the ex-Yahoo: “Steve Jobs would be great, but I think he is busy.”

Microsoft Officially Confirms Qi Lu Hired as Digital Chief; McAndrews Out

Kara Swisher — Thu, 04 Dec 2008 21:36:38 +0000

Microsoft moved up its official announcement of former Yahoo (YHOO) tech star Qi Lu to be the head of its Online Services Group.

BoomTown reported on the selection earlier this morning.

As part of the changes, Microsoft digital ad head Brian McAndrews, who had also wanted the job, is leaving.

Here’s the full announcement from Microsoft (MSFT):

For Immediate Release
Dec. 4, 2008
Microsoft Appoints Dr. Qi Lu to Run Online Services Group
Yahoo! veteran to oversee Internet offerings for consumers, advertisers and publishers.

REDMOND, Wash.–Dec. 4, 2008–Microsoft Corp. today announced that Dr. Qi Lu will join the company as president of the Online Services Group. Dr. Lu will lead Microsoft’s efforts in search and online advertising and all the company’s online information and communications services. Dr. Lu will report to Microsoft Chief Executive Officer Steve Ballmer.

Lu most recently served as executive vice president of Engineering for the Search and Advertising Technology Group at Yahoo!, where he was responsible for development efforts around Yahoo!’s Web search and monetization platforms. Dr. Lu left Yahoo! in August 2008 after 10 years of service.

“I am tremendously excited to welcome Qi to Microsoft,” Ballmer said. “Dr. Lu’s deep technical expertise, leadership capabilities and hard-working mentality are well-known in the technology industry, and Microsoft will benefit from his addition to our executive management team.”

“I am genuinely excited about the opportunities ahead for Microsoft to make an enormous impact on the online industry,” Dr. Lu said. “Microsoft has built a great foundation for its search and advertising technologies and put an amazing team of researchers and engineers in place to drive the next wave of innovation in online services. I’m looking forward to working with them to help transform the way people and businesses use the Internet to find and share information.”

Before his most recent role at Yahoo!, Lu was vice president of engineering responsible for the technology development of Yahoo!’s Search and Marketplace business unit, which includes the company’s search, e-commerce, and local listings of businesses and products.

Before joining Yahoo! in 1998, Dr. Lu was a Research Staff Member at IBM Almaden Research Center. Before IBM, Dr. Lu worked at Carnegie Mellon University as a Research Associate, and at Fudan University in China as a faculty member. Dr. Lu holds 20 U.S. patents, and received his bachelor of science and master of science in computer science from Fudan University and his Ph.D. in computer science from Carnegie Mellon University.

Lu’s first day at Microsoft will be Jan. 5, 2009. In his role running the Online Services Group, he will oversee several groups including the Advertiser & Publisher Solutions business, managed by Scott Howe who was promoted to corporate vice president; the Online Audience business, managed by Senior Vice President Yusuf Mehdi; OSG Research & Development, managed by Senior Vice President Satya Nadella; and OSG Finance, managed by Rik van der Kooi who was promoted to corporate vice president.

With the successful integration of aQuantive now complete, Brian McAndrews, former CEO of aQuantive and senior vice president of Microsoft’s Advertiser & Publisher Solutions Group, has decided to transition out of Microsoft, and will do so over the next several months, serving in a consultative capacity to Steve Ballmer and Qi Lu during that time.

“Brian McAndrews built a world-class business for advertisers and publishers and led the successful integration of aQuantive into Microsoft, setting the foundation for our next phase of growth,” Ballmer said. “While I am sorry to see Brian leave the company, I respect and understand his decision and wish him nothing but the best in the future.”

“I also want to congratulate Scott and Rik on their well-deserved promotions and look forward to their leadership in the Online Services Group alongside Qi, Yusuf and Satya,” Ballmer said.

As part of today’s announcement, several teams will move to further align resources. The field sales organizations in the Online Services Group will move to Microsoft’s centralized Sales, Marketing and Services Group led by chief operating officer Kevin Turner. This group, called Consumer & Online, will be led by Corporate Vice President Darren Huston and will include the Global Advertising Sales and Services organization, led by vice president Bill Shaughnessy.

Former Yahoo Tech Star Qi Lu Likely to Be Named Microsoft's Digital Head by Next Week

Kara Swisher — Thu, 04 Dec 2008 13:01:18 +0000

Former Yahoo tech star Qi Lu (pictured here) is poised to take on the big job of being Microsoft’s top digital executive, according to several sources inside and outside the company.

The appointment could be announced by Microsoft as early as next Monday.

A variety of details is still being ironed out, though, including whether the well-regarded techie Lu will be “paired” with another executive at Microsoft (MSFT) with more general business experience.

While Lu has managed large teams while at Yahoo (YHOO) and also huge projects, he does not have advertising sales and media experience that will be a big part of his purview at Microsoft.

In that job, he will be the boss of three strong digital execs at the software giant: Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group; Yusuf Mehdi, whose online services portfolio includes marketing, online audience business development and product management for MSN and the search properties; and Brian McAndrews, the SVP for the advertiser and publisher solutions group.

That executive partner could be some higher-ranking Microsoft exec or even CEO Steve Ballmer himself.

Elevating McAndrews is also a possibility, as he has also wanted the digital chief job and could decide to leave after not getting it. (He also would not be a bad choice for Yahoo’s new CEO.)

McAndrews was the CEO of aQuantive, an ad company bought by Microsoft for $6 billion last year.

As I have previously written, Lu would be a different choice for the post than many had expected.

In picking a serious tech-oriented executive over a more media-centric one, a dichotomy that Ballmer has been puzzling over, according to several people with whom he has spoken, he is clearly staking out an even more head-on fight with Google (GOOG).

But since a lot of Microsoft’s future rests on winning in the search and search-advertising space and trying to catch up with its techtastic Silicon Valley archrival from way back in the race, Lu is also well suited for the position.

Lu was EVP of engineering for the Search and Advertising Technology Group at Yahoo, where he ran all development initiatives for its search and monetization platforms. He was at Yahoo for a decade.

Importantly, Lu will definitely be a draw in bringing in top talent to Microsoft, especially from Yahoo.

Microsoft already grabbed another top Yahoo search exec, Sean Suchter recently.

And it is reportedly in a competitive bidding war with Google right now for yet another top Yahoo engineer.

Ballmer (pictured here), who led the now-defunct takeover bid for Yahoo and who has indicated a strong interest in buying only Yahoo’s search assets, could almost be seen as bypassing it all by sucking the talent right out of the place instead.

That might be a good move, since Yahoo’s board, while under intense Wall Street pressure to do so, is still debating whether to strike a deal with Microsoft to sell off its search and search ad business for massive guaranteed ad revenues.

While board member Carl Icahn has been pushing that deal, others on the board are still dubious that decoupling search from Yahoo is the right strategic move and believe it could leave the company at the mercy of Microsoft.

Yahoo might already be, especially if it keeps losing critical engineering talent to Microsoft. Being able to convince talent like Suchter and Lu to switch is a very bad sign.

Before he left Yahoo earlier this year, Lu was on the staff of the IBM Almaden Research Center, and worked at both Carnegie Mellon University and Fudan University in China (he also got degrees from both places).

And, in the kind of cred Microsoft likes, Lu holds 20 U.S. patents.

He left Yahoo after becoming dissatisfied with all the turmoil there, quitting in June, without another job lined up.

There has also been speculation that Lu would take a position as CTO of Facebook or even return to China for a tech job.

The well-respected Lu certainly has a multitude of choices, but the chance to lead money-laden Microsoft’s digital efforts–as it suits up for battle with Google–has been perhaps too hard to resist.

BoomTown has been poking around to try to figure out who Ballmer would choose for the digital head, ever since the man who used to be in charge, Kevin Johnson, departed in July for Juniper Networks (JNPR), after the software giant’s takeover bid to buy Yahoo failed.

I raised Lu’s name in a post several weeks ago as Ballmer’s top choice.

Several people close to the situation say the aggressive CEO has been keeping the deliberations close to the vest.

On an interesting side note, another one of Lu’s reports at Microsoft would be Harry Shum, corporate vice president of Search Product Development, who was his classmate and friend at Carnegie Mellon.

Please see this disclosure related to me and Google.

Musical Chairs at MSN: Here's a Partial Scorecard of What's What

Kara Swisher — Tue, 25 Nov 2008 09:13:21 +0000

Here’s part of an internal memo BoomTown obtained about some small, but interesting, changes at Microsoft’s MSN unit, sent out by the GM of its Global Media Group, Greg Nelson, which is under the leadership of–well, frankly–a confusing panoply of execs.

Essentially, Nelson now reports to Satya Nadella, SVP of the Search, Platform and Advertising Group (think engineering and search) and Erik Jorgensen, Corporate VP of MSN (think business and other stuff).

In addition and apropos of nothing, Yusuf Mehdi serves as SVP of the Online Audience Business and Brian McAndrews is SVP of the Advertiser & Publisher Group.

Also, there is a Windows Live group that does mail, communications and groups too, and a lot of other digital bosses too numerous to mention.

You can see why I have been haranguing Microsoft (MSFT) CEO Steve Ballmer for a little digital clarity, especially around its consumer digital businesses and brands. But Microsoft–like a lot of tech-born businesses–loves to overdesign!

Ballmer has been searching for an overall head of that business to sort it all out since Kevin Johnson left in July, whose massive duties were divvied up.

While he has looked at a lot of execs from inside and outside the company, I recently posted that Ballmer’s latest quarry is former Yahoo tech star Qi Lu.

Only Ballmer knows for sure, many have told me, keeping his decision-making on the issue close to the vest.

But, as many insiders and outsiders familiar with the business have noted to me, whoever takes that role as its digital guru has some very hard decisions to make in all its arenas, from search to advertising to content.

There has been no share growth in search for Microsoft, for example, where archrival Google (GOOG) dominates, even as there have been billions of dollars of investment in data centers and engineers.

And it will fall to the person Ballmer ultimately selects as digital head to figure out what to do next.

Microsoft’s failed attempt to buy Yahoo (YHOO) was one way of dealing with the many issues Microsoft is facing, as well as its current interest in buying Yahoo’s search business.

In any case, here are some new changes at MSN, in Nelson’s words:

· Network Programming, led by Rob Bennett–This group will prioritize investments against Network priorities, shape audience strategy, set Network standards, and sponsor cross-network initiatives.

· Network Entry Points, led by Steve Cvengros–This group will focus on increasing exposure, distribution and discoverability of assets by optimizing and expanding entry points to the Network.

· Vertical Programming, led by Sandy Henson–This group will create content experiences to deeply engage the audience and grow Network value in vertical areas. All channels will move into this group.

· Monetization and Analytics, led by Dell Wilkinson–This group will focus on improving yield by making MSN easier for advertisers to buy and APS to sell through inventory insights and APS engagement.

· Chief of Staff, Eva Corets–This role is responsible for driving team processes and business rhythm, and assisting with prioritization of network projects and interaction with cross-division and cross-Microsoft teams.

BoomTown Pick for Microsoft Digital Head: Qi Lu (Yes, the Former Yahoo Search Guru)

Kara Swisher — Thu, 20 Nov 2008 09:01:32 +0000

Yesterday, BoomTown opined that Microsoft was nearing a decision on who would become the head of its digital efforts.

And, according to several sources and some puzzling by me–if an agreement can be reached–I think that Microsoft (MSFT) CEO Steve Ballmer’s top choice is former Yahoo tech star Qi Lu.

While this is by no means a done deal, Lu is just the kind of top tech exec that Ballmer and Microsoft would warm to over a more media-centric choice like former Yahoo COO Dan Rosensweig or former AOL head Jon Miller.

Lu was EVP of engineering for the Search and Advertising Technology Group at Yahoo (YHOO), where he ran all development initiatives for its search and monetization platforms. He was at Yahoo for a decade.

If Ballmer manages to pull off the hire of Lu–on the heels of already grabbing another top Yahoo search exec, Sean Suchter, which I reported on yesterday–the aggressive exec could almost be bypassing a Yahoo search partnership he has long sought by sucking the talent right out of the place instead.

Ballmer is like Edward in “Twilight,” attracting top-notch search execs to Microsoft’s Redmond HQ, as if they were geek versions of Bella.

Lu would be a different choice for the post than many had expected, with a much more technical background than one in online media or advertising sales.

But since all of Microsoft’s future rests on winning in the search and search advertising space and trying to catch up with its archrival Google (GOOG) from way back in the race, Lu is also well suited for the position.

If Lu takes the job, he will be the boss of three strong digital execs at Microsoft: Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group; Yusuf Mehdi, whose online services portfolio includes marketing, online audience business development and product management for MSN and the search properties; and Brian McAndrews, the SVP for the advertiser and publisher solutions group.

Lu is known as as solid manager, but he is also called a very nice man and unusually humble for a tech star by many, which could be a good influence on Microsoft.

Before Yahoo, Lu was on the staff of the IBM Almaden Research Center, and worked at both Carnegie Mellon University and Fudan University in China (he also got degrees from both places).

And, in the kind of cred Microsoft likes, Lu holds 20 U.S. patents.

He left Yahoo after becoming dissatisfied with all the turmoil there, quitting in June, without another job lined up.

Since he left Yahoo, there have been rumors that he might be headed to Microsoft, but not in such a prominent job.

There has also been speculation that Lu would take a position at Facebook or even return to China for a tech job.

The well-respected Lu certainly has a multitude of choices, but the chance to lead money-laden Microsoft’s digital efforts–as it suits up for battle with Google–is compelling.

BoomTown has been poking around to try to figure out who Ballmer would choose for the digital head, ever since the man who used to be in charge, Kevin Johnson, quit in July, after the software giant’s takeover bid to buy Yahoo failed.

Several people close to the situation say Microsoft’s Ballmer has been keeping the deliberations close to the vest–perhaps because so many of those he has targeted have declined to consider the job.

But this week, many sources both inside and outside the company have told me that Ballmer is close to announcing his choice.

Annoyingly, one source has decided to play a digital version of “The Da Vinci Code” with me, dribbling out clues–more technical than media, very well liked in Silicon Valley, humble–about the candidate, which he wanted me to solve as if I were Robert Langdon and on the hunt for the progeny of Jesus.

Well, my solution is in: Microsoft’s most promising digital Holy Grail is Lu.

On a related note, bizarrely, the day after this column broke the story about Lu’s leaving Yahoo, I caught him by accident in the background of a video I was doing at a Harvard Business School event honoring Facebook’s Mark Zuckerberg.

You can see him at 4:14 minutes in the video, laughing at me, as I bother Greylock Partners VC David Sze and make a bad pun related to former Yahoo exec Jeff Weiner’s departure from Yahoo.

Here’s that video:

Please see this disclosure related to me and Google.

Steve Bomb-mer Drops Another One on Yahoo, Whose Shares Tank to $9, as Microsoft Settles on Digital Head Pick

Kara Swisher — Wed, 19 Nov 2008 21:25:47 +0000

At least Yahoo got one day of stock euphoria, on the news that its CEO, Jerry Yang, was stepping down, before Microsoft CEO Steve Ballmer dropped yet another bomb on the troubled Internet giant by saying once more with feeling that he is not at all interested in buying it.

Yahoo (YHOO) stock plummeted on the news, dropping below $10 a share to close at $9.14, down $2.41 or an astonishing 21 percent.

While lack of interest in acquiring Yahoo is a sentiment that Ballmer has expressed more times than Alaska Gov. Sarah Palin said “maverick” in the presidential campaign, Wall Street continues to hold out hope that Microsoft might swoop in and make a new takeover bid for all of Yahoo.

It will not. Let’s repeat. It. Will. Not.

Thus, an obviously frustrated Ballmer reiterated his nondesire for Yahoo at Microsoft’s annual shareholders meeting, near its Redmond HQ today.

“We are done with all acquisition discussions with Yahoo,” Ballmer said. “We did our best…we’ve moved on.”

And so should investors, stock analysts and hedge fund vultures, who actually contact BoomTown on a daily basis, asking if when I wrote that Microsoft (MSFT) was not interested in buying Yahoo, I actually meant that it was interested.

Not interested means, well, not interested, except when it comes to those who wish fervently for a pop in Yahoo stock.

But the only way that is going to happen is slowly, as Yahoo rebuilds its much-battered business, brick by brick. And that presumably will happen when a new CEO is selected to run Yahoo.

Lucky for Yahoo, what Ballmer has repeatedly also said is that he was very interested in (and said again today) a search partnership deal with the company.

Microsoft essentially wants to take over that part of Yahoo’s business and will likely give it a pretty penny to do so. For all its troubles, Yahoo remains the No. 2 search player, well behind Google (GOOG), but well ahead of Microsoft.

Microsoft execs think grabbing Yahoo’s business will help it gain on Google–good luck with that, but it gets an A for effort!

And it also hopes another reorganization of its digital businesses will help it do so.

Right now, for example, newly annointed digital exec Yusuf Mehdi is deep in the midst of a restructuring of his division.

Mehdi’s online services portfolio at Microsoft now includes marketing, online audience business development and product management for MSN and the search properties, but divisions and execs are being shifted around.

But the big news, of course, will be the person Ballmer selects to be Mehdi’s boss, as well as the boss for Satya Nadella, the SVP who heads engineering for Microsoft’s search, portal and advertising platform group, and for Brian McAndrews, the SVP for the advertiser and publisher solutions group.

While Ballmer has taken his sweet time in picking someone, after Kevin Johnson left his post overseeing the division in late July, sources inside and outside Microsoft have told me the company is very close to picking a new head.

That would be a good thing since Ballmer has worn out his Rolodex trying–he has been turned down by many, including former Yahoo CEO Dan Rosensweig.

While I am trying to ferret out the current choice, sources said the main candidate is more technically oriented and is well known in Silicon Valley.

Please see this disclosure related to me and Google.

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