Friday, April 25, 2008
  • Ross Fadner, April 25, 2008, 11:45 AM
  • Yahoo is taking the bold new step of completely drinking the Web 2.0 Kool-Aid: The Internet giant will is opening up its Web services to developers and link its platforms together in an attempt to get users to interact with the site more like a social network. Yahoo has been moving in this direction for some time, having introduced social media features to its Web mail, joining Google's Open Social initiative and introducing Search Monkey, a new social search initiative.

    There are three components to the company's so-called Yahoo Open Strategy: Platformization, opening services and portability. Platformization is a movement to make the overall Yahoo experience more social by linking each of its many services to a single user profile. Yahoo mail will be the focal point of that experience to which friend lists and activity feeds will be added.

    Opening Yahoo's services is an extension of the Web firm's commitment to OpenSocial. Through the Google-led initiative, developers will have access to a common set of APIs, but Yahoo will also layer its own APIs on top of OpenSocial to allow deeper integration with Yahoo services. Yahoo will also let developers use their bandwidth, storage, database and CPU resources to host their applications through Yahoo's Application Platform, which like Google App Engine, will be free up to a point. Finally, Yahoo will allow its services (including their user data) to be ported outside of the Yahoo ecosystem. Read the whole story...
  • The Silicon Alley Insider's Henry Blodget says there's a 60% chance that Microsoft will retract its bid for Yahoo once the deadline passes on Saturday. As a result, Yahoo's stock will fall back into the low $20s and Microsoft's will shoot back up.

    Why the sudden change? For starters, Microsoft's weaker than expected first quarter makes it even less likely that the software giant would be willing to pay more money for the Sunnyvale, Calif.-based company. And Yahoo, after holding off so spectacularly for a better price, can't cave in now. "(Yahoo CEO Jerry Yang) has demonstrated that he's...been prepared for the possibility that Microsoft would walk," Blodget said. "In fact, we think Jerry would see this as a victory (which it would be) even if many Yahoo shareholders do not."

    Other reasons the union looks unlikely: lots of Microsoft employees and shareholders hate the deal "as well they should," Blodget said, "Because it would be a disaster." By now, Microsoft CEO Steve Ballmer has had plenty of time to listen to internal complaints and consider that a proxy fight would take another 3-4 months minimum and regulatory approval another year. Even Microsoft's public statements seem to have gone "beyond threats to what appears to us to be acceptance and resignation." Read the whole story...
  • After comScore issued a series of reports showing that Google's paid click growth in the U.S. was nearly flat in the first quarter, investors blamed the Web measurement firm for costing them millions when the search giant actually delivered stronger than expected earnings. In an email to clients, comScore CEO Magid Abraham responds to the criticism, saying that not only was the data accurate, but it reveals that Google's U.S. business is weakening.

    Abraham claims that many pundits failed to draw a distinction between Google's domestic and international operations in concluding that his company had missed the mark: while international paid click growth was strong, U.S. paid click growth was nearly flat, and so was domestic revenue growth. In fact, Abraham claims that comScore's U.S. paid click data for Google mirrors the company's U.S. revenue trend over the past year.

    While comScore's data doesn't include AdSense, the impact of changes in Google's price-per-click, or paid clicks from partner sites like AOL, Abraham says "the strong relationship of the two trends is undeniable." Moreover, he adds that there's a lesson to be learned here: "To extrapolate a single data point across all aspects of a company's business can lead to wildly inaccurate conclusions." Indeed. Read the whole story...
  • Who says AOL is tanking? The Time Warner Company's properties are growing nicely, according to the company. AOL Money & Finance, News, Sports, Health, Food, Music, Games and Moviefone hit an all-time high in unique visitors and traffic in March, gaining 35% in page views and 11% in unique visitors to 56 million. Overall, these properties have seen six consecutive months of growth in uniques and page views.

    AOL attributed the good news to a year-long rebranding and redesigning effort. Many of the programming sites have actually dropped the AOL brand. Meanwhile, comScore says AIM, MapQuest, AOL Music, AOL Television, Black Voices, TMZ and Asylum are No.1 in their respective categories in terms of unique visitors, while AOL Money & Finance, Real Estate, Moviefone, Women, Health and AOL Latino are in the top three of their respective vertical categories.

    Of course, all of this is being monetized by Platform A, AOL's massive (still under construction) advertising network. In March, 91% of the total Internet audience went to a Platform A site, making it the largest ad network by reach, ahead of Yahoo, 85% and Google, 81%. Read the whole story...
  • Microsoft CEO Steve Ballmer has said the company is prepared to walk away from its $44.6 billion bid for Yahoo, but BusinessWeek thinks Ballmer is bluffing. The business journal says Microsoft needs Yahoo, as first quarter results again exposed the persistent downward trend in the software giant's online services division.

    As Brent Thill, Citigroup's director of software research says, "it wasn't a spectacular quarter by any means," especially in online services, where losses widened to $228 million. The division, which relies almost exclusively on online advertising, went a further $43 million into the red from a year ago, although revenues grew 43% to $843 million. Yahoo, meanwhile, reported first-quarter sales of $1.35 billion.

    Ballmer said Yahoo's results, which slightly beat analysts' estimates, won't cause Microsoft to raise its offer. But Microsoft has to make this deal soon-if it's going to make it at all. As UBS analyst Heather Bellini wrote in a research note, "Microsoft must get this acquisition right to remain relevant in the Internet age," because as Thill says, "There's still a runaway train they're trying to catch (Google). And (Microsoft and Yahoo) are two little trains trying to hook up." Read the whole story...
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