To impress shareholders, Yahoo Inc's next chief executive needs just one qualification: the willingness to do a deal with Microsoft Corp.
That's because this remains Yahoo's best option, short of a dramatic turnaround plan, analysts said.
But if Microsoft does eventually buy Yahoo, shareholders should brace themselves for a price far lower than the $47.5 billion the software behemoth offered earlier this year.
Wall Street analysts estimate that Microsoft would not offer more than $17-$20 per share for Yahoo, whose stock has fallen below $12 from a high of $30.25 in February.
Online display advertising, a core Yahoo business, has also shrunk as corporate advertisers scale back on Web marketing promotions amid a global economic slump.
Under Chief Executive Jerry Yang, who on Monday agreed to step down from his role once the board finds a replacement, Yahoo searched for alternatives to being bought, exploring partnerships with Google Inc and Time Warner Inc's AOL unit.
But Google, which struck a search advertising deal with Yahoo in June only to abandon it as regulatory concerns grew, is unlikely to come back for more.
Meanwhile, Yahoo's months-long discussions with Time Warner about combining its AOL unit, have not led to a deal so far.
And Microsoft, for all its proclamations to the contrary, still needs Yahoo's assets to bolster its presence in online search and advertising, analysts said.
But the scales will be tipped in Microsoft's favor if and when the new Yahoo CEO does reach out to negotiate a new deal.
"It's not going to be Microsoft calling Yahoo saying, 'We're making a bid for $17 a share'," Needham & Co analyst Mark May said.
"Microsoft is done negotiating with Yahoo. If Yahoo wants to do a deal, its board needs to have full agreement" on the price they want to sell the company for, May added.
Microsoft offered to buy Yahoo for $44.6 billion on Jan. 31, which Yahoo rejected. It sweetened its cash-and-stock bid to $47.5 billion, but withdrew it after talks fell apart on price.
Microsoft later came back with a proposal to buy Yahoo's search assets, but Yahoo turned it down as well, choosing to team up with archrival Google instead.
Yahoo and Time Warner also began talking about a deal under which Yahoo would fold AOL's online content and advertising assets into its operations, with Time Warner taking a stake in the combined company, sources have told Reuters.
Despite advanced talks, a deal hasn't happened because of challenges to valuing the businesses given the weak advertising market and Yahoo's falling stock price, as well as concerns over integrating the platforms, the sources have said.
Analysts have been skeptical about such a deal because they don't believe it would dramatically improve Yahoo's earnings.
"Yahoo-AOL? What would that bring to the table? There's no point in having a marriage of convenience. It's not going to last," said Mukul Krishna, global digital media director at Frost & Sullivan, a research and consulting firm.
Krishna said Yahoo's shareholders are looking for something more tangible to offset the stock's losses.
Yahoo needs either a substantial turnaround plan, complete with cost-cutting and a "roadmap to profitability," or an acquisition by Microsoft to satisfy investors, Krishna said.
"Microsoft will be only too happy to restart the conversation, but it will be calling the shots," he said.
Activist investor Carl Icahn's presence on Yahoo's board may help bring Microsoft to the table, analysts said.
Icahn, a major Yahoo shareholder, has publicly reiterated hopes of a Yahoo-Microsoft deal several times. He did not return calls seeking comment.
Analysts said they expect Microsoft to eventually come back because it needs Yahoo nearly as much as Yahoo needs it.
"Microsoft wants Yahoo's search audience, the traffic, the clicks," Needham's May said. "They want to have as much as Google does. So it's important for Microsoft to have a big presence in search and display."
But Cowen & Co analyst Jim Friedland said Microsoft is unlikely to want to rush into talks with Yahoo even with a new CEO knocking on its door.
Both companies are seeing declines in their Web businesses due to the global economic downturn, and as Yahoo's "only potential buyer," Microsoft can take its time, he said.
Thursday, November 20, 2008
Tuesday, November 18, 2008
MySpace Japan bets on world demand for J-Pop
Banking on the global appeal of Japanese pop and video games, social networking site MySpace said it would more than double the number of artists on its Japanese pages to get more clicks internationally.
The growth of new sign-ups and page views is slowing in Japan for rival networking services such as mixi Inc, but Myspace, which launched its Japanese site two years ago, aims to buck the trend by expanding the range of sales artists can make on its site.
This, allied with growing interest in J-Pop music and Japanese video games in other parts of the world, will help the site grow rapidly, said the Japanese head of MySpace, which is owned by Rupert Murdoch's News Corp.
"Until now, Japanese artists catered primarily to the home market, but the home market is no longer big enough," MySpace Japan CEO Atsushi Taira said in an interview with Reuters. "Demand for Japanese music and games is strong abroad, and we are now uniquely positioned to clear barriers posed by language."
The number of artists that have registered with the Japanese version of MySpace has doubled in the last six months to a little under 90,000 people, Taira said.
"I think we can easily double that in a year's time," as more artists use MySpace to sell their music and T-shirts next year, he said. "Once we have a large group of artists using MySpace, the content will win more fans and other users."
MySpace recently went into business with music labels such as Sony BMG Music, Universal Music Group and Warner Music Group that allows users of the website to stream and download music, grab ringtones and buy concert tickets.
The service will be available in Japanese next year.
Popularity of social networking sites is waning in Japan, where they are often used to reinforce existing friendships, rather than to expand networks, according to market research firm Synovate, which conducted a poll in October that found 55 percent of Japanese users saying they were losing interest.
The growth of new sign-ups and page views is slowing in Japan for rival networking services such as mixi Inc, but Myspace, which launched its Japanese site two years ago, aims to buck the trend by expanding the range of sales artists can make on its site.
This, allied with growing interest in J-Pop music and Japanese video games in other parts of the world, will help the site grow rapidly, said the Japanese head of MySpace, which is owned by Rupert Murdoch's News Corp.
"Until now, Japanese artists catered primarily to the home market, but the home market is no longer big enough," MySpace Japan CEO Atsushi Taira said in an interview with Reuters. "Demand for Japanese music and games is strong abroad, and we are now uniquely positioned to clear barriers posed by language."
The number of artists that have registered with the Japanese version of MySpace has doubled in the last six months to a little under 90,000 people, Taira said.
"I think we can easily double that in a year's time," as more artists use MySpace to sell their music and T-shirts next year, he said. "Once we have a large group of artists using MySpace, the content will win more fans and other users."
MySpace recently went into business with music labels such as Sony BMG Music, Universal Music Group and Warner Music Group that allows users of the website to stream and download music, grab ringtones and buy concert tickets.
The service will be available in Japanese next year.
Popularity of social networking sites is waning in Japan, where they are often used to reinforce existing friendships, rather than to expand networks, according to market research firm Synovate, which conducted a poll in October that found 55 percent of Japanese users saying they were losing interest.
Nokia sees world cellphone market falling in 2009
The world's top cellphone maker Nokia Oyj said the mobile phone market would be weaker than it expected in the fourth quarter due to the economic slowdown, and was set to fall further in 2009.
It forecast 1.24 billion phones being sold worldwide this year, down from its previous estimate of 1.26 billion.
"In the last few weeks, the global economic slowdown, combined with unprecedented currency volatility, has resulted in a sharp pull back in global consumer spending," Nokia said in a statement.
"Industry mobile phone volumes will be lower in the fourth quarter 2008 than previously expected. We now estimate fourth-quarter 2008 industry mobile device volumes will be approximately 330 million."
Nokia also said it estimated that handset volumes will be down in 2009 compared with 2008.
The phone maker said it expected its market share in the fourth quarter to be at the same level or slightly up from the third quarter but that sales and profitability in key devices and services would be hurt.
It forecast 1.24 billion phones being sold worldwide this year, down from its previous estimate of 1.26 billion.
"In the last few weeks, the global economic slowdown, combined with unprecedented currency volatility, has resulted in a sharp pull back in global consumer spending," Nokia said in a statement.
"Industry mobile phone volumes will be lower in the fourth quarter 2008 than previously expected. We now estimate fourth-quarter 2008 industry mobile device volumes will be approximately 330 million."
Nokia also said it estimated that handset volumes will be down in 2009 compared with 2008.
The phone maker said it expected its market share in the fourth quarter to be at the same level or slightly up from the third quarter but that sales and profitability in key devices and services would be hurt.
Microsoft's new Windows Live aims to be hub for Web
Microsoft Corp said on Wednesday its next release of Windows Live online services will integrate e-mail, instant messaging, photos and Web applications from other companies into a single platform.
Microsoft aims to position Windows Live with its widely-used e-mail and messaging services as the hub for a growing number of Internet applications and incorporate new features similar to those found on popular social networks.
The strategy puts Microsoft into competition with social networking sites Facebook and News Corp's MySpace, which started to open their fast-growing websites to outside software developers last year.
The new Windows Live service plans to feature a main profile page that updates users to their friends' activities within Windows Live and on more than 50 outside Web services including Yahoo Inc's Flickr photo site and career-oriented social networking site LinkedIn.
"It's a race to see who will work better and faster with everyone else," said Charlene Li, founder of consulting company Altimeter Group. "It's the recognition that you can't be an island of yourself."
Microsoft said Web users are overrun with accounts at multiple Internet sites, each requiring a password and each with a different set of friends. Its goal is to simplify the Web lives of its users who go to Microsoft's Windows Live e-mail or instant messaging accounts.
The company's Windows Live strategy is also central to its plans to wrestle away online advertising revenue from Google Inc, which has used its dominant search engine to expand into e-mail, online word processing and other businesses that compete directly with Microsoft.
Microsoft plans to roll out the new Windows Live services, which will include a revamped e-mail, calendar and a new photo application, in the United States over the coming weeks and then make it available in 54 countries early next year.
FILL IN THE SEAMS
In this third major release of Microsoft's Windows Live services, Microsoft said it aims to fill in the seams between its different Web services to create a unified experience.
Brian Hall, general manager of Windows Live, pointed to Microsoft's Outlook application, which brought together e-mail, calendar and contacts programs into a single integrated software suite, as a model for how it wanted to tie together a loose network of Web services.
He also noted that the latest Windows Live release is focused on creating a more polished user experience, which, in the past, may have been sacrificed in order to get new programs out quicker.
Other new services include an online movie maker program, a "groups" service that allows a group of users to create a joint calendar, share photos and documents or chat together online. Microsoft also plans to increase the size of its free storage service to 25 gigabytes from 20 GB.
Microsoft boasts more than 460 million Windows Live users and analysts said the goal for the company is to keep that audience in front of the company's websites for as long as possible and to prevent defection to other Web destinations.
"I don't think Microsoft is going to steal a whole lot of eyeballs from Facebook or MySpace," said David Card, research director at Forrester.
Facebook has 120 million active users and many of those rely on its mail and chat applications to communicate with friends instead of traditional e-mail and messaging services offered by Microsoft and Yahoo.
Microsoft and Facebook are pursuing the same strategy, according to analysts, albeit from different sides and areas of strengths. Last year, Microsoft paid $240 million for a 1.6 percent stake in privately-held Facebook.
Microsoft aims to position Windows Live with its widely-used e-mail and messaging services as the hub for a growing number of Internet applications and incorporate new features similar to those found on popular social networks.
The strategy puts Microsoft into competition with social networking sites Facebook and News Corp's MySpace, which started to open their fast-growing websites to outside software developers last year.
The new Windows Live service plans to feature a main profile page that updates users to their friends' activities within Windows Live and on more than 50 outside Web services including Yahoo Inc's Flickr photo site and career-oriented social networking site LinkedIn.
"It's a race to see who will work better and faster with everyone else," said Charlene Li, founder of consulting company Altimeter Group. "It's the recognition that you can't be an island of yourself."
Microsoft said Web users are overrun with accounts at multiple Internet sites, each requiring a password and each with a different set of friends. Its goal is to simplify the Web lives of its users who go to Microsoft's Windows Live e-mail or instant messaging accounts.
The company's Windows Live strategy is also central to its plans to wrestle away online advertising revenue from Google Inc, which has used its dominant search engine to expand into e-mail, online word processing and other businesses that compete directly with Microsoft.
Microsoft plans to roll out the new Windows Live services, which will include a revamped e-mail, calendar and a new photo application, in the United States over the coming weeks and then make it available in 54 countries early next year.
FILL IN THE SEAMS
In this third major release of Microsoft's Windows Live services, Microsoft said it aims to fill in the seams between its different Web services to create a unified experience.
Brian Hall, general manager of Windows Live, pointed to Microsoft's Outlook application, which brought together e-mail, calendar and contacts programs into a single integrated software suite, as a model for how it wanted to tie together a loose network of Web services.
He also noted that the latest Windows Live release is focused on creating a more polished user experience, which, in the past, may have been sacrificed in order to get new programs out quicker.
Other new services include an online movie maker program, a "groups" service that allows a group of users to create a joint calendar, share photos and documents or chat together online. Microsoft also plans to increase the size of its free storage service to 25 gigabytes from 20 GB.
Microsoft boasts more than 460 million Windows Live users and analysts said the goal for the company is to keep that audience in front of the company's websites for as long as possible and to prevent defection to other Web destinations.
"I don't think Microsoft is going to steal a whole lot of eyeballs from Facebook or MySpace," said David Card, research director at Forrester.
Facebook has 120 million active users and many of those rely on its mail and chat applications to communicate with friends instead of traditional e-mail and messaging services offered by Microsoft and Yahoo.
Microsoft and Facebook are pursuing the same strategy, according to analysts, albeit from different sides and areas of strengths. Last year, Microsoft paid $240 million for a 1.6 percent stake in privately-held Facebook.
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