Of all the tech stocks to watch, perhaps none have been more interesting to follow than those of Microsoft, Google and Apple in recent days.

With so much news emanating from this trio of tech icons, their shares have been gyrating and twisting on each and every piece of information, including:

Microsoft (MSFT) and its many new products, from Windows 7 to the Bing search service.

Google (GOOG), which has never met a launch it did not tout in a blog post, from Google Wave to its Android efforts in the smart-phone market.

Apple (AAPL), of course, which gets a mass of coverage every time the company clears its throat. The noise everyone is listening for now, as you might have guessed, is any shred of news about the new tablet, whose name–a BoomTown educated guess only–is going to be iSlate.

So, here are some things of note about the stocks:

Like Silicon Valley Bobbsey Twins, Apple and Google are neck and neck with regard to their market valuation, each hovering in the $169 billion to $170 billion range. (Microsoft’s stock is still much bigger at $247.6 billion.)

Apple’s shares have been tamped down over the last month, up only 2.4 percent, compared with a 10.2 percent rise for Google and an 11.7 percent rise for Microsoft. That said, Apple fared a lot better than Yahoo (YHOO), which was down 5.9 percent for the month.

But, year-to-date, Apple’s stock performance still reigns supreme, up 121.8 percent, compared with Google (73.6 percent) and Microsoft (43.4 percent).

For the week, though, they are all down–Apple is off 6.5 percent over the last five days, while Google is down 3.6 percent and Microsoft declined slightly less, 2.8 percent.

Here’s a chart of the three stocks below, over the last month (click on it to make the image larger):

Please see this disclosure related to me and Google.

According to sources, Microsoft is close to striking a nonexclusive data-mining deal with Twitter to integrate the microblogging service’s full feed into the results of its Bing search service.

News of the deal, which was still being worked on by engineers and execs at both the software giant and the start-up as late as yesterday, could even come as early as today at the Web 2.0 Summit conference in San Francisco.

Qi Lu, the head of Microsoft’s online services division, is being interviewed at the event at 11:30 am PDT.

Note: Lu is scheduled to appear onstage after Yahoo (YHOO) CEO Carol Bartz, who is now too sick to attend, the company said. She also missed Yahoo’s third-quarter conference call due to an unspecified illness.

Thus, Lu is the main event of Web 2.0 tomorrow morning and it would be a good place to make a big announcement, if the talks are successful.

But sources close to the situation caution that the deal could still run into a snag and was not yet complete, although it seems more likely than not that a deal will soon be struck with Microsoft (MSFT) first and then Google (GOOG), which is the other company Twitter has been negotiating with.

BoomTown had previously reported that Twitter was in advanced talks with both the search rivals about just such a real-time search arrangement.

There could be other possibilities on the table, said sources, such as one of the big companies advertising on Twitter or any number of other Twitter partnerships with either one.

When asked about the talks onstage at Web 2.0 yesterday, Twitter CEO Evan Williams turned coy, according to numerous reports, joking “Whose deals?”

But, in fact, Twitter, which is based in San Francisco, is very much engaged in dealmaking in this regard.

Here is what I wrote previously, as to what and why:

Sources said a number of scenarios are being discussed to compensate Twitter for its huge and potentially valuable trove of real-time and content-sharing information, generated from the data stream of billions of tweets from its 54 million monthly users.

These include a number of structures, including a payment of several million dollars to Twitter, along with various revenue-sharing proposals that would give Twitter a piece of the revenue made from search results.

The deals, stressed sources close to the situation, are nonexclusive, especially because Twitter’s management is keen to remain independent and also nonpartisan in the growing search battle between Google and Microsoft.

This means Yahoo–which recently struck a search-technology and online-advertising partnership with Microsoft–could also license Twitter’s feed to make its search results even more robust, although Boomtown could not determine if the company is in talks with the San Francisco start-up.

Sources said it is also possible that no agreement would be reached with either company.

And execs at Twitter, Microsoft and Google had no comment when asked about talks.

But doing these kinds of data deals with big search players does make a lot of sense, since it would be hard for Twitter to turbocharge its own search engine without running into the big cash-laden guns at both Google and Microsoft, which recently launched its new Bing search service.

Twitter is, instead, seeking to create a large open platform, which many could plug into, from search engines to marketers to publishers to developers.

Twitter has also been considering offering premium services to these groups and is contemplating some form of advertising offering.

But, most of all, Silicon Valley’s hot start-up is focusing now on spurring growth and engagement, along with fine-tuning its product offering.

Being deeply integrated into big search services would give Twitter a huge footprint.

Microsoft had already done a small experiment this past summer integrating Twitter data into search results, starting with tweets of bloggers like me.

How much indexing of its data Twitter will allow is unclear, but the company has certainly bought itself time to think carefully about all its options, given that it now has a lot of money in the bank.

Late last month, Twitter raised another $100 million in new funding, after already having raised $55 million.

This has given it a $1 billion valuation, despite negligible revenue.

The valuation also effectively stated that the innovative company was pretty much putting itself out of play to be acquired and is very interested in forging its own destiny.

Both Google and Microsoft execs have contemplated the idea of buying Twitter in the past, although no serious talks ever moved forward.

If they both strike data deals with Twitter, they will get the next best thing–an ability to offer all the information disseminated on Twitter in search results.

Is there gold in them thar tweets?

Maybe so, because–according to sources familiar with the situation–Twitter is in advanced talks with Microsoft and Google separately about striking data-mining deals, in which the companies would license a full feed from the microblogging service that could then be integrated into the results of their competing search engines.

Sources said a number of scenarios are being discussed to compensate Twitter for its huge and potentially valuable trove of real-time and content-sharing information, generated from the data stream of billions of tweets from its 54 million monthly users.

These include a number of structures, including a payment of several million dollars to Twitter, along with various revenue-sharing proposals that would give Twitter a piece of the revenue made from search results.

The deals, stressed sources close to the situation, are nonexclusive, especially because Twitter’s management is keen to remain independent and also nonpartisan in the growing search battle between Google (GOOG) and Microsoft (MSFT).

This means Yahoo (YHOO)–which recently struck a search-technology and online-advertising partnership with Microsoft–could also license Twitter’s feed to make its search results even more robust, although Boomtown could not determine if the company is in talks with the San Francisco start-up.

Sources said it is also possible that no agreement would be reached with either company.

And execs at Twitter, Microsoft and Google had no comment when asked about talks.

But doing these kinds of data deals with big search players does make a lot of sense, since it would be hard for Twitter to turbocharge its own search engine without running into the big cash-laden guns at both Google and Microsoft, which recently launched its new Bing search service.

Twitter is, instead, seeking to create a large open platform, which many could plug into, from search engines to marketers to publishers to developers.

Twitter has also been considering offering premium services to these groups and is contemplating some form of advertising offering.

But, most of all, Silicon Valley’s hot start-up is focusing now on spurring growth and engagement, along with fine-tuning its product offering.

Being deeply integrated into big search services would give Twitter a huge footprint.

Microsoft had already done a small experiment this past summer integrating Twitter data into search results, starting with tweets of bloggers like me.

How much indexing of its data Twitter will allow is unclear, but the company has certainly bought itself time to think carefully about all its options, given that it now has a lot of money in the bank.

Late last month, Twitter raised another $100 million in new funding, after already having raised $55 million.

This has given it a $1 billion valuation, despite negligible revenue.

The valuation also effectively stated that the innovative company was pretty much putting itself out of play to be acquired and is very interested in forging its own destiny.

Both Google and Microsoft execs have contemplated the idea of buying Twitter in the past, although no serious talks ever moved forward.

If they both strike data deals with Twitter, they will get the next best thing–an ability to offer all the information disseminated on Twitter in search results.

Please see this disclosure related to me and Google.

It was meant all in fun, as poking holes in the frothy atmosphere around the innovative microblogging hottie is kind of an easy layup.

But Matthew Alexander called my use of the wacky Kool-Aid pitcher man image (see below) “kinda harsh” in a tweet.

And I got several other how-could-I-not-see-the-genius-in-overblown-investing-hype emails too.

Sensitive Sallys all, but in the interest of fairness, here are some other visual choices–in images and videos–for a metaphorical depiction of the Twitter valuation.

Please select whichever suits you!

Frothy beer mug hat:

Nena-99’s Luftballoons (How much do I love this song? Muchly much!):

Bubbles the chimp with his special friend:

Violet Beauregard blowing up like a blueberry in the “Charlie and the Chocolate Factory” movie, including cool Oompa-Loompa song:

And, for all your dreamers, just right:

Since the beginning of the year, Apple shares have more than doubled from $90.75 on Jan. 2 to almost $186 today.

Google (GOOG) has done about half that performance, while Microsoft (MSFT) has done one-third. (See the chart below; click on it to make it larger.)

But that’s apparently not enough, according to Thomas Weisel analyst Doug Reid, who has raised his price target on Apple (AAPL) stock to $210 from $180 a share.

Citing higher sales and profit estimates, healthy demand and the iPhone headed to China–and the launch of a cheaper $800 MacBook soon–Reid wrote, “We believe there is a high likelihood Apple will fortify its entry into the holiday season and that such a move will be a positive for AAPL shares.”

While this all makes sense, one wonders if the froth can reach that level.

In any case, perhaps what is more interesting is the $166.4 billion market cap for Apple, which is well below Microsoft at $232 billion.

But it is well above Hewlett-Packard (HPQ) at $113.4 billion, Google at $158 billion, Dell (DELL) at $30.6 billion and Palm (PALM) at a paltry $2.4 billion.

With that kind of massive valuation and a pile of it in cash, perhaps the better question is what Apple will do with its soaring stock.

Oddly enough, Idina Menzel and Kristin Chenoweth singing the big number, “Defying Gravity,” in the musical, “Wicked,” sound a lot like they are channeling Apple’s corporate mantra these days.

Witness:

The board of iLike planned a meeting earlier tonight to go over a buyout offer by MySpace, several sources close to the situation said. But it was suddenly canceled because of some thorny tax implications related to the talent-retention part of the deal to purchase the social music start-up.

This does not mean the pending acquisition is in jeopardy, sources said, and it could be on track to be signed as early as today, barring any more complications.

That is what both iLike and MySpace execs are hoping, said sources, one of whom described the outstanding issues as a “technicality.”

What’s also been unclear is the actual price the social networking giant is paying for iLike, which has been reported as about $20 million.

In fact, only $13.5 million will be paid upfront in cash, with about $8 million of that money likely going to one of its major shareholders, Ticketmaster Entertainment (TKTM), due to its preferred shares.

Another $6 million has been promised by MySpace in forward payments to retain some key employees–including iLike co-founders and twin brothers Ali and Hadi Partovi.

Although those employees can remain in Seattle, where iLike has its HQ, they must stay employed at Beverly Hills, Calif.-based MySpace for two and a half years to get their money.

It’s that talent part of the deal that caused the Partovis to cancel the iLike board meeting, which they explained to key investors was necessary due to some confusion over how the money paid to these employees would be taxed.

A person briefed on the issue said that if it was taxed as compensation, it would have a much higher tax rate than if it were considered long-term capital gains.

The Partovis said in the email that they were working on the problem with their advisers on the sale, Allen & Co., as well as with lawyers and accountants.

Tax snafus in the middle of a sale are not exactly the way the entrepreneurial Partovis envisioned it was going to go for iLike (see my various video interview related to iLike below) when they created the compelling music sharing and recommendation service in 2006.

After only a few years, the innovative start-up claims it has 50 million registered users overall.

A lot of that growth was due to iLike quickly becoming one of the most popular widgets on social networking sites like Facebook, where it has also been the top music application, with 10 million active monthly users.

The Partovis–who once were close with execs at Facebook (see my party video below), particularly founder and CEO Mark Zuckerberg–placed great faith in its growth lifting all Web 2.0 boats.

It did not turn out that way, though, especially from the important financial point of view, and iLike scrambled to diversify.

The iLike service recently began offering a music downloading service, for example, as well as other such features, all of which would be attractive to the music-centric focus at MySpace.

Once an Internet sensation, MySpace has been struggling to restructure itself after losing momentum and buzz in recent years, as well as a huge advertising revenue drop in its most recent quarter.

Its owner, News Corp. (NWS), replaced its founders with new management four months ago, including former Facebook exec Owen Van Natta as CEO.

After making major staff layoffs and rejiggering management, Van Natta and his new team have been working on an overhaul of the MySpace product and seem to be refocusing it to become a global music and entertainment service.

MySpace also has a joint venture with major music labels, MySpace Music, which has been trying to attract consumers and build a viable business. Sources said MySpace Music could also buy into the iLike deal or simply license its technology to improve its features.

Thus, purchasing iLike would fit in well with MySpace’s overall plans.

And iLike has also been in need of a fix itself.

For all its popularity, especially on Facebook, it has moved slowly toward profitabilty, and its $17 million in funding has been dwindling, as has its viability as a standalone company.

Back in more frothy Web 2.0 days, iLike’s generous funding gave it a valuation of more than $50 million, which has also lost steam over time and as the economy has worsened.

In the last quarter of fiscal 2008, for example, Ticketmaster wrote down its $13 million investment by $6 million.

Tensions between its execs and iLike have gotten worse over time, although some thought at one time that Ticketmaster would buy iLike.

No longer, which is why the founders turned to Allen & Co., as MediaMemo reported as far back as November, to find another big investor or buyer.

Wrote Peter Kafka: “Delivering free music on the Web has so far proven to be a high-cost, low-revenue endeavor…”

So, the New York deal-making firm ginned up a small group of suitors, which included Facebook, Activision Blizzard (ATVI) and Microsoft (MSFT), as well as MySpace.

Of the three, Activision was most serious, with interest in integrating iLike’s community and technology tools with its Guitar Hero franchise.

But Activision never actually made a formal bid, said sources.

Both Microsoft and Facebook also considered the purchase, but sources said they would only offer stock in a deal. But iLike wanted cash in the deal.

The Partovis were also was wary about working at either place.

Both Partovis, for example, had worked at Microsoft (Ali after selling it LinkExchange in 1998 for $265 million; Hadi several times, once following Microsoft’s acquisition of Tellme Networks, which he co-founded).

As it has turned out, in its short life, iLike’s last, best alternative is apparently MySpace.

“Look, iLike has been shopped around for a while, and while the team and technology are great, it only has one choice and that’s to be sold,” said one person involved in the various scenarios. “The question for the buyer then is whether it was worth it to pay up or just move on and do it ourselves.”

So until the bean counters settle this IRS nightmare, here is my video interview with Hadi Partovi about a year ago at iLike’s HQ in the Capitol Hill section of Seattle, when times were a little more hopeful:

And here is a very dark and very shaky video I did when iLike threw a fete in Silicon Valley to celebrate its start-up two years ago and to send some appreciation in Facebook’s direction–it is so dated that Facebook COO Sheryl Sandberg, who is in the video, is still at Google (GOOG).

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

]]> http://kara.allthingsd.com/20090817/sale-of-ilike-to-myspace-135-million-in-cash-6-million-for-talent-retention-delayed-over-tax-issues-reallyplus-the-list-of-other-suitors/feed/ 0 http://kara.allthingsd.com/20090728/dear-tim-heres-a-tour-of-the-it-takes-a-licking-and-keeps-on-ticking-aol-brand/ http://kara.allthingsd.com/20090728/dear-tim-heres-a-tour-of-the-it-takes-a-licking-and-keeps-on-ticking-aol-brand/#comments Tue, 28 Jul 2009 07:02:42 +0000 Kara Swisher http://kara.allthingsd.com/?p=16492

What’s next for AOL?

Reviving the “You’ve Got Mail!” motto?

Or: “The Future. Now Available.”–set to music from “The Jetsons”?

What about: “So easy to use, no wonder it’s #1!”

Or maybe, it should just use a nice loooooooong busy signal as its calling card again?

Well, it could happen, now that new CEO Tim Armstrong has fallen prey to the siren call of the AOL moniker, as have many–way too many–before him.

After years of seeing the company wander in the anything-but-the-AOL wilderness, Armstrong has decided to try to welcome the prodigal brand back home, even as he prepares to spin it off in November from Time Warner (TWX), trading on the New York Stock Exchange once again under the AOL stock ticker.

Thus, he has renamed the Platform A advertising unit AOL Advertising; changed its unfortunately named People Networks–which is made up of the communications and community properties–to AOL Communications; and done the same for its MediaGlow, which is now under AOL Media.

There is also in the new AOL-centric universe: AOL Local & Mapping and AOL Ventures, where all the bad acquisitions–like the Bebo social networking service–go to die.

While BoomTown admires Armstrong’s moxie, there is some dicey past history related to the AOL brand–which I lovingly call the “Christine” of the Internet industry–that he might want to be aware of:

* The start-up from which AOL first sprung was named Control Video Corp., which was founded to create a device that would allow users of the Atari 2600 videogame machine to download games over telephone lines.

* After it tanked, CVC was reborn in 1985 as Quantum Computer Services, which had offerings with names like Q-Link for Commodore computers and AppleLink for Apple (AAPL) Macintosh computers.

* In October 1989, the-AOL CEO, Steve Case, announced a company contest: What should Quantum rename its main online service?

The suggestions that came in—Crossroads, Explore and Infinity—sounded like drug treatment programs or new car brands.

Dismissing them all, Case offered a bland creation of his own: America Online, with a second option of Online America.

Other staffers understandably derided it as hokey, but Case essentially stuffed the ballot box and voted his suggestion the winner anyway.

Later, he would change it to just its initials, AOL.

* Case also hit on the idea of attaching voice files to the software with cheery little sound bites that would make the service feel homey.

The team settled on four phrases: “Welcome,” “You’ve got mail,” “File’s done,” and “Goodbye.”

A customer service representative named Karen Edwards had mentioned that her husband, Elwood, was a professional broadcaster, so for testing purposes, Case asked if Elwood might read those four phrases into a cassette tape.

The test tape was put into use, and Elwood Edwards, quite by chance, ended up having one of the most listened-to voices on the planet.

* In July 1993, AOL marketing chief Jan Brandt supersized the AOL brand by asking Case for permission to spend $250,000 on a direct-mail campaign.

She recalls him telling her it wouldn’t work. He told me in an interview he did no such thing.

Whatever the case, she got permission, and thus began the very low-tech marketing blitz of hundreds of millions of disks that would make AOL a household name—and annoyance.

There were even AOL disks flash-frozen in Omaha Steaks.

* In a 1993 meeting between Case and then-Microsoft (MSFT) CEO Bill Gates, annoyed by the innovative start-up, Gates famously told Case, “I can buy 20 percent of you or I can buy all of you. Or I can go into business myself and bury you.”

None of those ever came to pass, which is a reason to cheer the AOL brand. But–given Microsoft’s weak record in the online business–this is also not saying much.

* AOL’s brand has gone through a lot of name-calling, some of it quite deserved. Here are some: “The Online K-mart,” “America On Hold,” “The Giant Sucking Sound.”

But this one from its earliest days is my favorite: “The Cockroach of Cyberspace.”

* AOL did a lot of television commercials to hype the service, some of which you can see below. In one especially weird one, AOL hired Adam West of the goofy “Batman” television series.

* When AOL and Time Warner announced their merger on January 10, 2000, and renamed the company AOL Time Warner, AOL owned 55 percent and the combined market valuation was thought to be in the hundreds of billions.

Today, with Google (GOOG) selling back its five percent stake in AOL, AOL’s value has plummeted to about $6 billion. Time Warner is currently worth just over $33 billion.

* When Jon Miller–now digital head at News Corp. (NWS) took over at AOL in mid-2002, after said merger failed miserably and the brand was taken off the corporate name, he spent some time visiting the company’s other divisions, and related an anecdote to me that he’d told them, to try to help move the relationships forward.

“Have you ever had your car towed in New York?” he said he’d ask executives in other divisions. “When your car gets towed, there’s a sign at the place where you go to pick it up that says, ‘The person behind this window did not tow your car. If you cooperate with them, you will get your car back quicker.’”

Tim, Time Warner is still waiting for Christine to be returned, so good luck with that rebranding!

And, while we await the turnaround, here is a little video I did for Tim about my (lack of) AOL branding expertise with my assistant Ed, and also some of the better AOL television commercials:

]]> http://kara.allthingsd.com/20090728/dear-tim-heres-a-tour-of-the-it-takes-a-licking-and-keeps-on-ticking-aol-brand/feed/ 1 http://kara.allthingsd.com/20090721/ning-raises-15-million-more-at-a-yes-really-750-million-valuation/ http://kara.allthingsd.com/20090721/ning-raises-15-million-more-at-a-yes-really-750-million-valuation/#comments Tue, 21 Jul 2009 23:45:00 +0000 Kara Swisher http://kara.allthingsd.com/?p=16197

In a quiet fund-raising effort, Ning has raised $15 million more, a round that is valuing the social networking start-up at an eye-popping $750 million valuation.

In its last fundraising $60 million round a little more than a year ago, Ning was valued at $500 million.

The money for this fifth Series E round comes from a Silicon Valley venture firm, Lightspeed Venture Partners.

The Palo Alto, Calif.-based Ning, founded by well-known entrepreneur and Ning Chairman Marc Andreessen and CEO Gina Bianchini, confirmed the funding when contacted by BoomTown. It was not actively searching for funding.

Other investors in Ning include LinkedIn Chairman Reid Hoffman, Legg Mason, and Allen & Co.

The additional funds raised bring the total garnered by Ning to $119 million.

Ning is a platform aimed at offering customizable tools that let users create their social networks about their interests, such as for fans of the movie “Twilight.”

Ning puts online ads on the sites, using Google (GOOG), and is also working on its own advertising platform. It also offers an array of other services and is planning more soon, such as a virtual-gift offering.

Founded in early 2007, it currently has 29.3 million registered users, who are using 1.3 million social networks, and it is adding one million registered users every 15 days, said the company.

But not all its social networks are active, and Ning’s monthly unique visitors are lower, according to various surveys, at about six million in the U.S.

Ning is one of Andreessen’s angel investments, although he recently raised $300 million for a new venture fund he is running with longtime investing partner Ben Horowitz.

In an interview, Bianchini said the goal was to become an even bigger platform for building social networks and the money would be used for possible acquisitions and other strategic options, attracting more talent and also to offer its social networks more tools to be discovered.

“It’s clear to me when you look the market…there needs to be a place for people to express their interests and passions,” said Bianchini, who noted Facebook and Ning do not necessarily overlap. “We want to be the social network for interests and passions online.”

Lightspeed’s Ravi Mhatre, who led the investment for the venture firm, said it was due to a lot of reasons, although he noted that the effort was not a traditional fund-raising effort, but more of an interest by Ning in adding a top VC to its investor pool and by Lightspeed in Ning’s hyper-growth.

“The growth at Ning has been massive in the last year and, combined with the quality of the team and seeing that kind of momentum, it worked out well for us both,” said Mhatre.

]]> http://kara.allthingsd.com/20090721/ning-raises-15-million-more-at-a-yes-really-750-million-valuation/feed/ 5 http://kara.allthingsd.com/20090714/amazon-buys-netflix-microsoft-is-much-a-better-guess-as-a-potential-acquirer/ http://kara.allthingsd.com/20090714/amazon-buys-netflix-microsoft-is-much-a-better-guess-as-a-potential-acquirer/#comments Tue, 14 Jul 2009 10:37:13 +0000 Kara Swisher http://kara.allthingsd.com/?p=15776

Yesterday, shares of Netflix got their semiregular rocket boost–with its stock up more than five percent to close at just over $42–from rumors that Amazon was interested in buying Netflix.

Oh, it’s a seemingly dreamy match–the top online retailer snapping up the upstart U.S. mail-order DVD movie and television show service.

But the speculation completely ignored the giant price needed to buy the Silicon Valley-based Netflix (NFLX)–well above its current $2.43 billion market cap, to be sure–which would be a big chunk of Amazon’s $35 billion valuation.

And it also leaves out the nearly impossible tax problem Amazon (AMZN) would acquire if it ever bought Netflix, given that Netflix has many U.S. distribution locations for its subscription rental business. Amazon does not like paying state taxes and avoids them carefully.

Instead, those interested in seeing the independent company in the embrace of a larger one might want to consider a more suitable and very interested candidate: Microsoft.

Neither Microsoft (MSFT) nor Netflix will comment about such a hookup.

But several sources close to Microsoft told BoomTown that that the partnership between Netflix and Xbox Live to allow users to watch movies and TV episodes on the Xbox 360 device–struck exactly one year ago today–is going like gangbusters, with one saying it was “en fuego.”

Very loosely translated: On fire.

So much so, several sources said, that Robbie Bach–who is president of Microsoft’s Entertainment and Devices division, which includes the Xbox business–has been meeting with Netflix CEO and co-founder Reed Hastings (pictured) in recent weeks about what else the pair can do together to expand its current partnership.

The deal already in place between them is a hit, according to sources at both companies.

It gave Netflix access to 12 million Xbox members and handed Microsoft what has turned out to be a very popular application and an unusually successful joint effort.

While an acquisition would be a much bigger move, some at the software giant think it would necessarily be such a bad one for Microsoft, which has long been seeking to forge better ties in the entertainment arena.

Many of Microsoft’s major Hollywood forays over the years have been duds. So, stronger ties with Netflix–even a more robust partnership, at the very least–would give it a more definitive video strategy most think it lacks.

Its archrival, Google (GOOG), has been trying–with similarly lackluster impact–to accomplish the same results via its pricey and money-losing YouTube unit.

But Netflix–which has an office in Beverly Hills, as well as Los Gatos, Calif.–has much better relationships with the industry there, mostly because it has become such a big buyer of DVDs as it has grown its business (see charts below of subscriber and revenue growth; click on them to make them larger).

In addition, it has added more subscribers than ever in the last year and is solidly profitable, mostly due to sending consumers all those DVDs in little red envelopes.

And while a lot of execs at Hollywood studios that Netflix does business with have been wary–and told me so in no uncertain terms on my recent visit to Los Angeles–about its entry into the digital video delivery business, they have also been thrilled with the checks that Netflix has been writing them since it was founded more than a decade ago.

But, it is that main DVD business that Hastings, in a recent interview with The Wall Street Journal recently, has said is “doomed.”

Noted the article:

“As soon as four years from now, [Hastings] predicts, the business that generates most of Netflix’s revenue today will begin to decline, as DVDs delivered by mail steadily lose ground to movies sent straight over the Internet. So Mr. Hastings, who co-founded the company, is quickly trying to shift Netflix’s business–seeking to make more videos available online and cutting deals with electronics makers so consumers can play those movies on television sets.”

With Internet video still in its infancy–and barely in gestation in terms of any viable business model–Netflix might indeed need help, especially since Hollywood has been slow to give it rights to more movies for online distribution.

That will be increasingly troublesome, given that digital delivery is the way consumers are headed. According to the Journal story, over 20 percent of Netflix members now use the streaming service.

But it only has about 12,000 titles–mostly older films–licensed on its online service, compared to 100,000 DVD rental titles.

That’s because, for now, much more powerful pay channels usually win out over Netflix in these online video distribution wars, which also include Amazon and Apple (AAPL), along with many others.

Thus, even with a strong and unusually long-term executive bench, the close-knit Netflix will still be facing a major battle in moving in a direction it must head in sooner than later

Such an epic journey could be easier for Netflix with a powerful ally like Microsoft.

One more interesting link would make such a relationship even smoother: Hastings is also on the board of Microsoft, having joined in 2007.

So, the savvy and innovative entrepreneur–well-known for his close-to-the-vest dealmaking and eager to not miss a key turn for his company–might very well decide to keep friends very close.

]]> http://kara.allthingsd.com/20090714/amazon-buys-netflix-microsoft-is-much-a-better-guess-as-a-potential-acquirer/feed/ 3 http://kara.allthingsd.com/20090713/facebookers-start-cashing-out-with-new-100-million-investment/ http://kara.allthingsd.com/20090713/facebookers-start-cashing-out-with-new-100-million-investment/#comments Mon, 13 Jul 2009 16:55:17 +0000 Kara Swisher http://kara.allthingsd.com/?p=15711

[UPDATED: With news that employees can sell up to 20 percent of their shares.]

According to sources close to the situation, current and former employees of Facebook are now going to be able to sell up to 20 percent of their common shares.

It is part of a $100 million add-on investment in the social networking company by the Russian investors who recently put $200 million into the company for preferred shares.

That investment a month ago by Digital Sky Technologies was valued at $10 billion, since those shares have various special rights, depending on what was negotiated.

The new tender offer by DST values the company at $6.5 billion for the common shares, or $14.77 a share. The last common share valuation of the company was around $4 billion.

The move has been expected for Facebook employees since DST made its first investment.

It will allow them to monetize shares, since the company is not likely to go public for at least a year or more.

Employees have 20 days to decide to take the offer or not and can only sell up to 20 percent of their stock–in other words, they cannot cash out completely.

“I can afford a down payment on a house now,” said one longtime employee, who is typical of many. “But not a really big house.”

But the top leadership of Facebook, such as CEO Mark Zuckerberg or COO Sheryl Sandberg, are not eligible to sell shares.

Facebook confirmed the DST investment, with a statement from Zuckerberg:

“While individuals must make their own decisions about participating in this program, I’m pleased that the price DST is offering is much greater than the price originally considered last fall. This is recognition of Facebook’s growth and progress towards making the world more open and connected.”

If fully accepted by those employees eligible, it will give DST 1.54 percent more of Facebook, for a total of 3.5 percent of the company.

That makes DST–based in London and Moscow–one of the bigger Facebook investors, with a stake larger than one owned by Microsoft (MSFT).

The software giant invested $250 million in Facebook for preferred shares in 2007, but the valuation was then $15 billion. That huge figure was due to a competing bid from archrival Google (GOOG) at the time.

In any case, neither DST nor Microsoft got a board seat or “special observer rights” in return for its money.

Here’s a video interview I did with one of DST’s top execs, Alexander Tamas, along with Sandberg, right after it made its first investment in May, while both were attending the seventh D: All Things Digital conference:

]]> http://kara.allthingsd.com/20090713/facebookers-start-cashing-out-with-new-100-million-investment/feed/ 0 http://kara.allthingsd.com/20090624/boomtowns-top-10-list-of-fact-challenged-revelations-that-should-be-in-the-facebook-tell-all-book/ http://kara.allthingsd.com/20090624/boomtowns-top-10-list-of-fact-challenged-revelations-that-should-be-in-the-facebook-tell-all-book/#comments Wed, 24 Jun 2009 22:34:39 +0000 Kara Swisher http://kara.allthingsd.com/?p=14955

How much is BoomTown and everyone else in Silicon Valley trying to nab a copy of Ben Mezrich’s likely-to-be-entirely-made-up-but-who-cares tale of dirty doings at Facebook?

Muchety-much! So much so that I called all my book industry contacts–hey, I am a published author, ya know!–even though I have not actually completed reading a book since the Internet started and gave me permanent attention deficit disorder.

But, so far I have come up peanuts in grabbing an early copy of Mezrich’s tome, “The Accidental Billionaires,” which is set to come out July 14.

Facebook is not pleased, of course, and will likely be challenging Mezrich’s work as specious dreck. But the drama around the book should be interesting, to say the least.

More so, since this week also came news that actors Michael Cera and Shia LaBeouf are being considered to play founder and CEO Mark Zuckerberg and that David Fincher, the director of the lugubrious Brad Pitt snoozer, “The Curious Case of Benjamin Button,” is “attached” to the movie version.

Even better: “West Wing” creator Aaron Sorkin will pen it and actor Kevin Spacey will produce the Columbia Pictures film, which will be called “The Social Network.”

Well, Hollywood sure came up with an original title!

It certainly does not signal the juiciness of the proposal for the book–which did manage to leak out last year–with a lot of tale tales in it that seem to have pretty much tracked on its oddly purple subtitle of “The Founding of Facebook: A Tale of Sex, Money, Genius and Betrayal.”

The cover–which you can see on the book’s Facebook page (the delicious gall of Mezrich!)–features a spilled martini glass and a red bra flung nearby.

Martinis? Red bras? Sex? Facebook? Really?

Obviously, Mezrich has not actually met Zuckerberg, who is a very nice geekish young man, but who has approximately the sex appeal of a rack of Facebook servers.

Powerful yes! Spockish? Yes! Sexy? Um, no, no, no.

I will not even begin to parse the red bra thing, although I am attributing the martinis to stylish former COO (and now MySpace CEO) Owen Van Natta.

But, apparently, the sex part seems to have to do with Zuckerberg starting the company with others while an undergrad at Harvard University, as a scheme to meet some ladies.

I would say there are easier ways to attract the womenfolk–not that I could give tips or anything–but whatever!

Thus, since I cannot get my mitts on the book (yet!), here’s my list of 10 completely made-up, utterly fabricated, just-call-me-Jayson-Blair things that should be in the book.

10.) Facebook was actually going to be called OnlyPrettyLadyFacebook, but cooler heads prevailed.

9.) The Wall? A clever plot by Zuckerberg to build his online service on a fascist construct, touting his hegemony over all he surveyed.

Wait, that actually happened, and now some Russians are even investors.

Long live the Zuckrepublic of Palo Alto!

8.) Reason for stealing, oops, borrowing, oops again, completely separately developing an exact replica of ConnectU social network at Harvard:

The Olympically muscle-headed Winklevoss twins used to beat up the brainy Zuckerberg on his way back to the dorm, prompting a “Revenge of the Nerds” plot line.

7.) Facebook’s Beacon advertising? All Randi Zuckerberg’s idea, so she could find out what she was getting for her birthday from her billionaire-on-paper brother.

6.) Zuckerberg’s famous flip-flops were made in China under dubious working conditions. Wait, that’s true too.

5.) The 20-something Zuckerberg is actually 93 years old, a real-life version of Benjamin Button, which would explain the social awkwardness and staring-into-space-sometimes thing.

4.) The no-breast-feeding-pictures controversy pretty much proves no one is interested in bras or, more precisely, what goes in them at Facebook.

3.) COO Sheryl Sandberg is a cyborg sent to Facebook from Google for purposes of infiltration. She and her crafty sidekick, Elliott Schrage, will become self-aware in 2012 and hunt down Zuckerberg in a thrilling chase that will also become a movie.

2.) The sex, drugs and rock-and-roll stuff actually all took place at MySpace, which really pisses off certifiably dashing co-Founders Chris DeWolfe and Tom Anderson because, once again, Zuckerberg stole their mojo!

1.) This work of fiction, oops, “fact”-ion, oops again, nonfiction, is probably not going to sell many copies because it will mysteriously be uploaded in its entirety by a widget that will distribute it free to Facebook’s 200 million plus users while simultaneously SuperDuperPoking Mezrich, by throwing real sheep at him.

Don’t say I didn’t warn you, Ben.

(By the way, here is an extra for you: The $15 billion valuation for Facebook, along with all the other Web 2.0 ones? Totally true. Just ask any VC.)

And, in case anyone was wondering what the real Facebook looks like, here is a recent video tour I did of its new HQ in Palo Alto, Calif.:

]]> http://kara.allthingsd.com/20090624/boomtowns-top-10-list-of-fact-challenged-revelations-that-should-be-in-the-facebook-tell-all-book/feed/ 6 http://kara.allthingsd.com/20090609/twitter-co-founders-biz-stone-and-evan-williams-the-full-d7-interview/ http://kara.allthingsd.com/20090609/twitter-co-founders-biz-stone-and-evan-williams-the-full-d7-interview/#comments Tue, 09 Jun 2009 15:09:51 +0000 Kara Swisher http://kara.allthingsd.com/?p=14312

As promised, we kick off posting the full sessions of the seventh D: All Things Digital conference with the interview that Walt Mossberg and I did onstage with two of the three founders of the hot microblogging service Twitter, Biz Stone and Evan Williams.

Our selection of the pair as the first interview of D7 was due to the enormous attention and, yes, hype, that the San Francisco-based start-up has received of late.

But, along with a massive funding and a frothy valuation, despite no clear business model as yet, the clear innovation of Twitter has also attracted the acquisition attention of Web giants like Facebook, Google (GOOG) and Microsoft (MSFT).

In any case, no matter what you think of its prospects, there is no question–thanks be to Oprah–they’ve become the latest It boys of Silicon Valley.

Williams and Stone talked about all this and more in the interview, as well as how they plans to make money eventually, the impact of real-time search and where they see the social networking going.

We also got them to react to a video of my mother questioning the point of the service, which tracked on some polling we also did about Twitter.

Here’s the video of entire session:

You can find all of our conference coverage on the D7 Highlights page.

]]> http://kara.allthingsd.com/20090609/twitter-co-founders-biz-stone-and-evan-williams-the-full-d7-interview/feed/ 1 http://kara.allthingsd.com/20090526/the-first-video-interview-with-facebooks-new-russian-investor-plus-coo-sheryl-sandberg/ http://kara.allthingsd.com/20090526/the-first-video-interview-with-facebooks-new-russian-investor-plus-coo-sheryl-sandberg/#comments Tue, 26 May 2009 19:33:47 +0000 Kara Swisher http://kara.allthingsd.com/?p=13902

Because a lot of tech’s big shots are converging on our seventh D: All Things Digital conference, BoomTown managed to grab Facebook COO Sheryl Sandberg and Alexander Tamas, one of the key execs of the social-networking site’s newest megainvestor, Digital Sky Technologies.

Here’s my video interview with them about the $200 million that the Moscow- and London-based DST announced today that it had invested in Facebook, at a $10 billion valuation.

The pair are queried about the investment, the valuation, the advertising prospects for the Silicon Valley-based Facebook, competitors and when the IPO might come.

Sandberg also offers to buy the All Things Digital empire with Facebook’s piles of new cash. We said: Nyet! (with a shoe pounding on table for emphasis).

Here’s the video:

]]> http://kara.allthingsd.com/20090526/the-first-video-interview-with-facebooks-new-russian-investor-plus-coo-sheryl-sandberg/feed/ 0 http://kara.allthingsd.com/20090226/buying-spree-the-sequel-why-not-ibmsun-googletwitter-microsoftanyone/ http://kara.allthingsd.com/20090226/buying-spree-the-sequel-why-not-ibmsun-googletwitter-microsoftanyone/#comments Thu, 26 Feb 2009 15:47:05 +0000 Kara Swisher http://kara.allthingsd.com/?p=10373

About 10 days ago, BoomTown posted a piece titled, “With a King’s Ransom in Cash, Why Is There Still No Buying Spree in the Tech Space Yet?”

Noting the big cash hordes being held by a plethora of giant tech and Internet companies and their strong cash flows too, even in the midst of the economic meltdown–I wondered when the mergers and acquisitions would ever begin.

The answer is two-fold: No one wants to buy when prices could just keep going down. And no one wants to sell at all-time lows.

Another issue? While public companies have a market value, as low as they might be, noted a prominent Internet player, the bulk of tasty private ones no longer have a set price, since there have been no sales of late.

Well, that just won’t do! So, in the interest of jump-starting the economy–I mean, there are investment bankers out there running low on caviar and Dom, folks!–here are three suggestions for interesting deals.

IBM Buys Sun:

I mean someone has to buy Sun Microsystems (JAVA)–now hovering in the $5-a-share range with a market valuation of just $3.62 billon–right?

But it’s not going to be Hewlett-Packard (HPQ), despite a deal announced just yesterday in which HP will distribute and provide support for Sun’s Solaris operating system on a line of HP servers.

Analysts dismissed the deal as meaningless in terms of true revenue, with one noting that it did not mean HP would buy Sun either, especially for its server business, because of redundant hardware products.

That leaves, according to many observers I spoke to: IBM (IBM), which competes with Sun in the server business too. Many think the products fit better together, and IBM has a $115.3 billion valuation, so the purchase would be doable.

The server business is sucking wind, according to a report earlier this week, due to the global economy, so finding safe harbor for Sun is something Wall Street seems to be looking for.

Of course, Sun CEO Jonathan Schwartz curiously did use the term “Live Free or Die” in his blog post about the HP deal yesterday–although he was not referring to Sun’s independence, but noting that the phrase was “synonymous with software independence, innovation and intellectual property freedom.”

Google Buys Twitter:

A lot has been written about the supposed “threat” of Twitter to all Web, media and communication companies in the known universe. (How we are all scared by a start-up whose name is so flighty is a question for another day.)

I am not so much convinced, although Twitter certainly is on a roll from a hype and growth perspective.

And I do understand why Twitter–flush with venture funding and an allegedly low burn rate–might want to bide its time to see what happens and not sell out too early.

But while the hot microblogging service declined to sell to Facebook, it might want to reconsider if Google (GOOG) or Microsoft (MSFT) or a big telecom company comes calling with, say, a $1 billion check.

Why? Simply because Twitter–while it says it is poised on the verge of announcing its grand plan to make money–is operating in an arena I have seen many other shooting stars in, traversing a very dangerous crevasse of hype and expectation.

Due to that, it has a very big red target on its back, one that a competitor in the status space–such as the spurned Facebook, whose update business is much bigger–will not ignore.

Right now, Twitter could ask for a lot, as one of the only Web 2.0 companies that everyone is uniformly excited about.

It might want to think about how such excitement can turn rather quickly. Digg–which was almost bought by Google–might give them some advice on how quickly the winds change, for example, as can many too many others.

Microsoft Buys Anyone:

With its $20.7 billion in cash and still casting about for a really bold Internet strategy–sources tell me that newly installed digital head Qi Lu just wrapped up a meeting-rich look-see at the path ahead, including a day-long session on Super Bowl Sunday–Microsoft really should stop futzing around with the PowerPoints and jump right in.

It already has an investment in Facebook. While the social-networking phenom might not be for sale, one wonders if a $10 billion offer and a promise of autonomy might not be well-considered at Facebook’s Palo Alto HQ.

Or what about the social-networking/communication assets of AOL and its low-margin advertising business, with owner Time Warner (TWX) keeping the media part of the unit? Rival Google actually wants to keep that AOL search business, so sticking it to that company would be an added bonus.

As to the continual flirting with Yahoo (YHOO), it is getting to be as annoying as Chuck Bass and Blair Waldorf’s persistently unconsummated roundelay on “Gossip Girl.”

But, of course, once again this week, Microsoft CEO Steve Ballmer said he was interested (sort of, but not), while Yahoo’s CFO Blake Jorgensen said Yahoo was too (sort of, but not).

Said Ballmer at a strategy gathering: “They have share. We don’t have share. They have a huge team. We’ve got a much smaller team….I’m hoping that’s a reasonable conversation to have with new management at Yahoo.”

Said Jorgensen at an investor’s conference: “We’re not opposed to doing a deal…[but] it’s extremely difficult to draw a line down the middle of the organization and split it into two pieces.”

Aaaaaagghhhh!

Dear Steve: Yahoo is the only way Microsoft is ever going to gain the share it so covets, and it looks like new CEO Carol Bartz is at least showing that Yahoo does not have to be roadkill.

Dear Carol: Get while the getting is good because 20 percent is still pretty weak, compared to Google’s 70 percent, and competition is only going to get pricier.

And even though Ballmer could not resist and made a jibe at former CEO Jerry Yang–with whom he famously tangled in the botched acquisition attempts–noting “I don’t want to be known as the Jerry Yang of this market,” everyone knows these two crazy kids belong together.

So kiss, please, declare your undying affection and intent to stick it to Google, and pronto, so we can all move onto the next episode.

]]> http://kara.allthingsd.com/20090226/buying-spree-the-sequel-why-not-ibmsun-googletwitter-microsoftanyone/feed/ 1 http://kara.allthingsd.com/20090213/hey-over-here-everyone-plotzing-over-twitter-funding-aarrr-its-facebook/ http://kara.allthingsd.com/20090213/hey-over-here-everyone-plotzing-over-twitter-funding-aarrr-its-facebook/#comments Fri, 13 Feb 2009 23:33:00 +0000 Kara Swisher http://kara.allthingsd.com/?p=9807

Nobody, but nobody, releases news late Friday afternoon before a holiday weekend, unless they are trying to do a PR pirate raid on another company.

So it was nice to see Facebook, which tried and failed to buy Twitter, having the moxie to release impressive user numbers for the fast-growing social-networking site just as all the oxygen was getting sucked out of the media room by news that the microblogging start-up got $35 million in new funding and a $250 million valuation.

In a Facebook press release today that arrived at 2:31 p.m. PST: More than 175 million users, with an average of 120 friends on the site; three billion minutes spent daily on Facebook; 850 million photos uploaded monthly; and more.

And, oh, yes: “More than 15 million users update their statuses at least once each day.”

Translation from Facebook founder and CEO Mark “Talk-Like-a-Pirate” Zuckerberg: Aarrr! Yer a scurvy bilge rat, puny Twitter!

Here’s an image of the new Facebook stats page (click on it to make it larger):

]]> http://kara.allthingsd.com/20090213/hey-over-here-everyone-plotzing-over-twitter-funding-aarrr-its-facebook/feed/ 0