All Things Digital

Here is a great chart from The Wall Street Journal that kind of says it all.

Start stacking them up in your mind like your kid’s Legos and it gets interesting (click on the image to make it larger):

Please see this disclosure related to me and Google.

Finally.

But, I am sorry to say, probably much too late.

Still, it was nice to see a relatively bold statement from Yahoo (YHOO) leadership yesterday about its growth prospects and plans, a clearer statement of purpose it would have been much, much nicer to see a year ago.

And the assessment of Yahoo executives, who filed documents with regulators and will take its show on the road to visit shareholders this week?

No surprises for 2008 off guidance (whew!), strong gains in revenue and cash flow for 2009 and 2010 and a resulting share price closer to $40, $9 above the original $31 a share–the cash-and-stock offer is actually now worth about $29.50–offered by Microsoft (MSFT).

Yahoo had to do this, times being what they are–with the troubled Internet portal with the sterling brand name fighting off efforts by the software giant to buy it in an unsolicited bid. Thus, the prone Yahoo stood up for itself for reasons that look an awful lot like it was prettying itself up for the inevitable sale.

The goal? To justify its initial rejection of Microsoft, signal a decent quarter to deny the software giant a reason to drop its price or even exit and, most of all, to get an even better acquisition price, as prospects for alternatives dwindle.

So far, Microsoft has showed no indication that it would budge on price and some execs there even worry that the decline of Yahoo’s business is more significant than is apparent and Microsoft is paying too much.

Yahoo disagreed yesterday, outlining a blue-sky outlook for its future that is, of course, all about whether the current management could execute to reach very lofty goals. (See this Wall Street Journal chart.)

Looking over its estimates, I would say Yahoo’s glass is half-full in its happy display and video ad estimates and half-empty in its projections in the search arena, where Google (GOOG) dominates with increasing power. And it is all predicated on the fact that Yahoo must also streamline its costs.

An analyst, Mark Mahaney of Citi Investment Research, quoted in a Wall Street Journal article about the Yahoo numbers said it best: “Those are not easy numbers. We think it’s the most likely outcome that Microsoft buys Yahoo, and at a higher price than $31.”

(The Journal article also raises the uphappy prospect that the Alibaba Group, which Yahoo owns a 39% stake in, could use a sale to Microsoft to extricate itself from Yahoo’s arms, taking away one of the more attractive assets of Yahoo from the deal.)

Last week, I was in Santa Barbara at the Bacara Resort for The Wall Street Journal’s ECO:nomics: Creating Environmental Capital conference, which described itself as a “CEO-level view of the rapidly developing relationship between the environment and the bottom line.”

Topics that were delved into via interviews were wide-ranging: “Sales Job: Will Consumers Spend to Go Green?” with Wal-Mart (WMT) President and CEO H. Lee Scott Jr.; “Living With Ed: The View From Hollywood” with Ed Begley Jr.; and “Green Deals: The Environmental Factor in Corporate Investments” with VC John Doerr.

I interviewed Doerr, as well The Journal’s Alan Murray, who was one of ECO:nomics’ hosts, and others for this video:

The thudding failure of the online-born “quarterlife” original series on network television Tuesday night, garnering some of the worst ratings in NBC’s history (after experiencing a declining Internet audience too), was loudly touted yesterday as a possible impediment to online-to-offline dreams of original-content creation that Hollywood has been nurturing.

Well, it’s not. One show, which just did not work, is in no way representative of a trend, any more than the box-office failure of the movie “Snakes on a Plane” meant online marketing and hype was finished.

The Wall Street Journal’s excellent Jessica Vascellaro wrote a great piece today on the subject of online content creation, focusing on social-networking efforts, such as Bebo’s “KateModern,” an original online show from the creators of “lonelygirl15,” as well as stuff being made by MySpace and others.

The goal is to keep users more engaged. More importantly, it is to fight the continued audience attraction to user-generated videos on YouTube, which is owned by Google (GOOG). It dominates the online video market, as you can see from this chart below (click on it to make it larger).

BoomTown has written about the Bebo hit several times (including a video visit to Bebo’s HQ in London last summer and an interview with a “KateModern” producer in November, both seen below), as it represented the right way to start to develop original online content.

And that would not include pulling some failed television pilot out of a drawer, making it on the cheap, cutting it up into shorter segments and slapping it online.

Instead, true success–besides the material actually being good, which should be a given–requires the content to be interactive, pioneer new filming techniques and be made specifically for the medium, using its tools, rather than being shoehorned into it.

“KateModern,” for example, has been changeable by the second by its audience and the creators have moved the action along with startling speed.

But it still has someone professionally producing it. Set in East London, it follows a “troubled young art student named Kate and her three closest friends: an Australian wild-child named Charlie, a young entrepreneur named Tariq and a mischievous computer whiz-kid named Gavin.”

As The Journal’s Vascellaro correctly writes: “Past efforts by Web companies to turn themselves into online versions of television networks have been hampered by the difficulty in changing ingrained consumer habits–while people are happy to watch short video clips from time to time, few until recently saw the Web as a forum to follow regular episodes of series. For online-only shows, weak advertiser interest, subpar production quality and lack of promotional muscle were added hurdles.”

Indeed. But that will change quickly.

Here is our too-long video of the visit to Bebo and the interview with “KateModern” producer Pete Gibbons:

To: Rumormongers

Re: Wacky–even by Google standards–stock market schemes

Google (GOOG) –let me get this straight–is apparently considering buying just under 20% of Yahoo (YHOO) shares at some elevated price, according to a post on TechCrunch yesterday, “although the goal isn’t so much to close the deal, which would almost certainly be opposed by U.S. regulatory agencies. But rather to throw another curve ball at the Yahoo Board…”

Excuse me for a second, as my brain just exploded. While I don’t doubt TechCrunch had a good source on this report, it just goes to show the level of kooky desperation and out-of-control emotion that Microsoft’s (MSFT) unsolicited bid for Yahoo has had on all the parties involved.

Were Google to actually take wacky advice like this, I would worry about more than its recent stock drop. Such a move is neither savvy nor effective (after all, Google cannot shimmy its way out of the fact that it just really just cannot have Yahoo, in whole or part, because of its huge market share in search and search advertising).

Why? It just makes me a little nervous if Google, a major U.S. corporation with lots and lots of government rules and regulations to follow, is contemplating “pretend” buying of shares of Yahoo to trip up rival Microsoft, as if it were a kid playing a stock market equivalent of Ding Dong Ditch (see helpful video below on how to do a successful DDD).

Quoting an anonymous adviser to the deal, the TechCrunch post noted: “It’s a relatively cheap way for Google to confuse the situation further, and, potentially delay or disrupt a Microsoft acquisition.”

Well, if $10 billion or more, along with inevitable shareholder lawsuits, is cheap, I guess so!

OK, not so much. But the scheme concocted by anonymous wheelers and dealers sure wins points for being interesting. And creative. I might even say: crazy like a fox.

But let’s just stick with crazy, shall we?

For a little better take on the situation, try the excellent (and, more importantly, accurate) analysis of the stock situation around the deal by The Wall Street Journal’s Matthew Karnitschnig of the Deal Journal blog posted yesterday too, which I post in its entirety below (also, a picture of what Microsoft might look like if it manages to swallow Yahoo whole):

Yahoo’s Deteriorating Defenses Against the Microsoft Bid

Like a coiled python eyeing its quarry, Microsoft appears content to wait for Yahoo to exhaust its defenses before moving in for the kill.

To understand Microsoft’s sanguine approach, look no further than Google’s share price. Until Microsoft made its offer for Yahoo on Jan. 31–-then valued at $44.6 billion–-Google and Yahoo were both down about 18% on the year. Yahoo has jumped about 50% since the offer; Google has fallen a further 16%.

Part of Google’s slide is connected to concern that a combined Microsoft/Yahoo would cost it business. Still, investors appear most worried about a decline in Google’s advertising revenue. Those concerns sent its shares to a nine-month low Tuesday.

One needn’t be a certified financial analyst to surmise that were it not for the Microsoft bid, Yahoo, which faces the same challenges in the marketplace as Google, also would be getting thrashed in the stock market.

If Yahoo shares suffered the same percentage decline as Google’s have since the Microsoft offer–not an unfair assumption considering Google stock rose 12% in the 12 months before the offer and Yahoo’s fell about 35%–then Yahoo would now be trading at about $16. That is about half of Microsoft’s original $31-a-share offer, which Yahoo dismissed as “undervalued.”

If Google’s stock keeps dropping, the Yahoo board might want to solicit a new valuation. Because if Microsoft does strike, the attack is likely to be unrelenting. Microsoft won’t crush any bones, but its objective is the same as the African python’s: to swallow its prey whole.

Please see this disclosure related to me and Google.

If you are feeling a little déjà vu about the news BoomTown broke this morning about new retention packages and enhanced severance benefits for Yahoos, in order to keep them from bolting in the face of Microsoft’s unsolicited bid (and to give them a payout in case it works), you are not wrong.

According to several execs who contacted me today, this is what Yahoo (YHOO) did in late 2006, when the troubled Internet portal was starting to suffer from drift and its stock was struggling. The solution was “Project Engage,” which was a combination of granting options and restricted stocks units (RSUs).

At the time, employees were given two of each kind, with the stock options and one RSU grant having a longer vesting timeframe (typically several years). The other RSU grant, which is essentially outright grant of stock, actually just vested on Feb. 2, which might explain some recent departures of top talent to new jobs.

Said one exec: “Everyone was just biding their time for the RSU to vest and the Microsoft bid just gives everyone an excuse to leave, because it is hard to imagine wanting to work for Yahoo if it gets forcibly taken over.”

The new Yahoo retention packages would again presumably help hold onto talent, if the deal does not go through, while the enhanced severance would give them a comfy escape route if Microsoft (MSFT) takes over.

As an added benefit to Yahoo, which is seeking to escape Microsoft’s embrace, it will make acquiring Yahoo even more pricey for Microsoft. In addition, if it wins Yahoo, the software giant will still have to hand out even more retention benefits to stave off an exodus.

In a follow-up to BoomTown’s story, Kevin Delaney of The Wall Street Journal has more details of the severance plan, which will cover all employees even if they are laid off due to a change of control at the company.

Yahoo CEO Jerry Yang alerted employees to the severance benefits plan in an email Friday, promising specific details would be available to staff today, the story said.

Eek, diamonds are now apparently being used in a new water-delivery system that debuted at the International Builder’s Show in Orlando, Fla., this week.

For those who do not know it, BoomTown is a closet–get it??–home renovation freak and once had a column in The Wall Street Journal called “Home Economics.” (Here is a link to my 2004 review of high-tech toilets, for example, with the unfortunate lede: “Is happiness a warm toilet seat?”)

Nonetheless, we press on, and “Home Economics” might even return here in a new video format, so get ready.

Until then, check out this sparkling MarketWatch video:

BoomTown is suffering from Rupert Murdoch déjà vu.

Back in July, I actually wrote a post about the head of News Corp. (owner of Dow Jones and this site) in which the first sentence was: “MySpace and Yahoo should merge.”

I was referencing a very interesting comment that Murdoch (pictured here) made in an interview in June of 2007 with Time’s Eric Pooley.

In it, he floated the idea of trading a 25% stake of Yahoo for MySpace.

As the Time article noted:

MySpace’s much smaller archrival, Facebook, is surging: what started as a narrower college site is broadening and accelerating. … But as MySpace showed signs of reaching saturation, Murdoch began very preliminary, exploratory talks about trading the site for 25% or more of Yahoo. ‘Terry Semel was enthusiastic about it,’ he says of the then Yahoo CEO. ‘We were looking to see if it was a good idea. I wasn’t sure.’ Now Semel is gone, and Murdoch needs to see what Yahoo will become under its new boss, co-founder Jerry Yang.”

And as I noted in my post:

In one fell swoop, Murdoch had confirmed the talks, but made it seem as if it was Yahoo’s execs who were desperate to do a deal (and you know Semel and Yang would never talk about how they felt about it), while also giving MySpace an instant valuation of $8 billion at today’s nearly $32 billion Yahoo valuation…

It is no small leap to imagine the sly Murdoch calculating that he should be thinking right about now about getting while the getting is good and the hype is at an all-time high.”

Well, nothing much seems to have changed with the news yesterday that News Corp. was interested in grabbing just under 20% stake in Yahoo in exchange for MySpace and News Corp.’s other online properties in its Fox Interactive Media group.

(The discussions were first reported on the blogs Silicon Alley Insider and TechCrunch.)

This is an unusual switcheroo, since, on Feb. 4, Murdoch had publicly said it was unlikely News Corp. would vie for Yahoo. “We are definitely not going to make a bid on Yahoo,” said Murdoch on a conference call with analysts.

It depends on your definition of “definitely” and “a bid for Yahoo,” I guess. Classic rope-a-dope that even Muhammad Ali would admire!

This time the idea is reportedly to value MySpace at $10 billion (which is actually $5 billion less than the $15 billion that Microsoft’s recent $240 million investment gave smaller MySpace rival Facebook).

Of course, such a Yahoo mash-up with News Corp. would likely be a hopelessly complex deal, especially compared to the cleaner and simpler giant-pile-of-cash-and-stock that Microsoft is offering that big shareholders are likely to prefer.

“The only one who would understand such a complicated News Corp./Yahoo tie-up is Murdoch,” said one large Yahoo investor. “It is too much to figure out and not enough clarity compared to Microsoft’s bid.”

In any case, according to The Wall Street Journal, Yahoo CEO Yang supped with Murdoch and News Corp.’s President Peter Chernin last week to talk about the idea.

Presumably, the thinking is the same as I noted more than six months ago:

To merge his massively popular social network with Yahoo’s still-powerful-despite-struggles ad and search empire would create a powerful media and technology giant that would have a lot of key elements for the next generation of Web interaction.

For Yahoo, which is in need of a dramatic move, this would deliver a smack to Google (which still has reportedly not completely closed its $900 million ad deal with MySpace), solve its inability to enter the social-networking space and boost its distribution network dramatically.

For MySpace, Murdoch gets to unload a service that is increasingly going to need a major dose of technology expertise and own a big chunk of what could be a drastically undervalued property.”

The more things change…

Please see this disclosure related to me and Google.

The Yahoo board meeting, via phone, went off today without a resolution, as BoomTown surmised in an earlier post today.

See this report on the telephonic meeting from our excellent reporting colleagues at The Wall Street Journal, Kevin Delaney and Matthew Karnitschnig.

As you can see, the breathless reporting that Yahoo’s fate was to be decided today was, shall we say, a bit premature, and Microsoft will have to wait a bit longer to claim its prize.

Of course, as we also noted, it is unlikely Yahoo will have many options other than Microsoft, given that none seem viable.

That includes the threat of doing a deal with Google to take over its search-ad business.

As BoomTown noted:

But the Google threat is just that, claim sources close to Microsoft–-a threat that is relatively empty given that it still carries with it all the monopoly issues related to Google’s dominance over the search market if struck. If Google takes over Yahoo’s search business, the thinking goes, it might as well buy the whole company, given that the regulatory headaches are the same.

Google will argue, of course, that an independent Yahoo is free to pick whatever partner it wants, if it decides to outsource its search-ad business, without noting that the pickings are pretty slim.”

And getting slimmer.

(And here’s a very good email Silicon Alley Insider’s Henry Blodget penned for Yahoo CEO Jerry Yang to send out to the troops, which would be a step in the right direction.)

Please see this disclosure related to me and Google.

Don’t miss a terrific Wall Street Journal profile of Yahoo’s new non-executive Chairman Roy Bostock, penned by the always excellent Kevin Delaney in today’s paper. The longtime ad exec definitely has his work cut out for him, given Microsoft’s unsolicited $31-per-share bid last week.

Delaney outlines the stakes for Bostock, who was installed only minutes before the Here’s-Johnny! call from Microsoft CEO Steve Ballmer, demanding to buy Yahoo for $44.6 billion or else. Bostock replaced former CEO Terry Semel, who got out of Dodge just in time. And, within minutes, Bostock apparently improved Yahoo.

Wrote Delaney:

Microsoft’s offer carried a 62% premium over Yahoo’s recent share price when it was extended. As Yahoo’s directors absorbed the offer that day, someone in the room joked that Mr. Bostock had been chairman for only half an hour and had already increased the company’s value more than 60%, says a person familiar with the matter.”

Well, that’s a plus. Kind of. OK, not so much.

(Here’s a post I did about all the Yahoo board members last week, ahead of its earnings call.)

Over the last year, as he has sought to revive the flagging fortunes of Yahoo, CEO and Co-Founder Jerry Yang has ferreted himself away from the spotlight and has seldom made himself available to talk to investors or reporters about what he has been up to.

I dubbed it the “cave” strategy, mostly because that’s what many around Yahoo called it. Since Yang really didn’t have anything good to say about the troubled Internet giant, he didn’t say anything at all.

I always thought that a big mistake, since it was very insular and defensive. Like my politicians, I like my Internet execs able and willing to take on all critics (and for all the grief I have been giving Facebook, in stark contrast to Yahoo, its execs are very willing to go a round with anyone who questions their moves).

So you might have thought that the surprising unsolicited bid to grab Yahoo by Microsoft might have brought out the fighting spirit in Yang.

That’s especially true, since it has been widely reported (and entirely true) that he had rebuffed such advances many times and was actually not shocked (despite what has been reported, Yang had to know it was coming given the weak, stock-depressing quarter he turned in on Tuesday) by the $31 per share offer he received on Thursday.

But, no.

“So they are now deeper in their cave than ever,” reports one frustrated person close to the top execs at Yahoo yesterday, echoing a widespread sentiment at Yahoo’s Sunnyvale, Calif., HQ.

Deeper? Is that even possible? If so, Yang must now be living in the Mariana Trench of the Web world.

Read more »

Yes, indeedy, this is about as insider as you get in Silicon Valley. But we are just addled enough by all the spiked eggnog we drank this weekend to think you might be interested in this video we did at a variety of industry holiday parties BoomTown attended.

They include a stop at angel investor Ron Conway’s Pacific Heights (San Francisco) apartment, where we talked to Ron, entertainer and entrepreneur MC Hammer, blogger Om Malik and The Wall Street Journal’s Kevin Delaney.

Then, a visit to investor Ram Shriram’s home in Woodside, Calif., where VC James Joaquin and YouTube’s Chad Hurley are harangued by our Flip camera.

And also, a sojourn at the downtown San Francisco abode of Google’s Marissa Mayer, where we interfaced with her, as well as Google’s Sergey Brin, WSJ’s Rob Guth and, yes, someone we can only call Hot Santa.

No surprise, but BoomTown just could not resist that one.

Here’s the video:

Please see this disclosure related to me and Google.

Don’t miss this Wall Street Journal story on finding charity information on the Web as you are contemplating your annual giving.

Money quote: “Over the past couple of years, the nonprofit watchdogs that help donors have added more information to their sites, and they’ve increased the number of organizations they follow. Moreover, information about thousands of charities–including Internal Revenue Service returns and governance details–is now available free on the Web.”

See this chart below for some information on charity watchdog groups (click on the image to make it bigger):

The Wall Street Journal gave a big hello to its new owner, Rupert Murdoch, who takes over Dow Jones (owner of this site) today, by publishing this tough piece also today on the disaster of News Corp.’s investment in Gemstar-TV Guide International.

It comes from breakingviews, an online financial commentary Web site that the news organization regularly adds to its print paper and online site. Dow Jones also is a minority investor in the site, which was writing about the recently announced deal for Macrovision to buy Gemstar, in which News Corp. owns a 41% stake.

Money (or, more precisely, non-money) quote:

But in gross terms, Mr. Murdoch looks to have paid $1.6 billion–after selling the magazines in 1991 and receiving cash from Mr. Malone in 2000–for the first half of his Gemstar stake. He paid $6 billion in News Corp. stock for the other half. That is nearly $8 billion for an investment valued at $1 billion today.”

Ouch!

Despite the progress of digital video recording pioneer TiVo in reviving its business, the goal of getting Internet programming on your television set for it and many other players is still an uphill battle, according to The Wall Street Journal’s Nick Wingfield in an article yesterday.

Why? Um, it’s still a minefield out there for the dogged companies trying to do so (i.e., everyone), even though there is a huge boom–billions and billions served and more to come–in watching such fare on the computer.

Wingfield lists five key problems: Too many boxes; too complicated (we can relate); high prices; not enough content; and basic slowness of downloads and streaming.

Here’s a video about the issues: