Wednesday, April 30, 2008
Most of the nation's biggest newspapers saw circulation tumble at an increased rate, a sign that the migration of readers online may be picking up speed.
The Audit Bureau of Circulations reported Monday that average weekday circulation at 534 daily newspapers fell 3.6% for the six months ended March 31, compared with the year-earlier period. The rate of decline is accelerating: ABC had reported an average weekday circulation drop of 2.1% in the year-earlier period and 2.6% in the six months to November.
Sunday circulation fell even more, losing 4.6% on average.
Newspaper circulation has been falling for more than 20 years amid increasing competition for advertising dollars and readers' attention. The latest results were grim but unsurprising, said John Morton, an independent newspaper analyst. "Big-city papers are suffering right now, and this is just reflective of that."
Newspaper publishers have also seen worsening drop-offs in print-ad revenue over the past few months, at least partly because of the economic slowdown.
Nearly all of the 10 biggest newspapers in the U.S. posted circulation declines. Circulation at the Los Angeles Times -- which has struggled with turnover among its newsroom management as real-estate magnate Sam Zell took effective control of its parent, Tribune Co., in December -- fell 5.1% to 773,884. The New York Times' average weekday circulation fell 3.9% to 1.08 million. It saw an even steeper drop in Sunday circulation, which was down 9.3% to 1.48 million.
"This was a decline that we planned and budgeted for," said New York Times spokeswoman Diane McNulty. The company has eliminated "bonus days," in which the Sunday paper was delivered to weekday subscribers, and has cut back on discounted and advertiser-paid distribution as it attempts to grow more-profitable circulation, she said. In that shift, she added, "We do expect to see some copy decline."
A Los Angeles Times spokeswoman said it too has cut bonus-day issues, which lowered circulation. She also noted a price increase for home-delivery subscribers and competing pressure from other media outlets.
Of the top 10, only two newspapers saw circulation growth. Gannett Co.'s USA Today, the largest paper in the U.S., posted a 0.3% increase in weekday circulation to 2.28 million. At The Wall Street Journal, which is owned by News Corp., the number of subscribers inched up 0.4% to 2.07 million, a figure that includes print subscriptions as well as about 352,000 online-only ones that qualify under the Audit Bureau's rules. The year-earlier figure included 340,618 online-only subscriptions. Other papers also offer electronic editions that qualify as part of their circulation, but the Journal has a far larger number of such subscriptions.
Some particularly big declines occurred among big newspapers below the top 10 ranking, including the Boston Globe (down 8.3%), which is owned by New York Times Co.; Cox Enterprises Inc.'s Atlanta Journal-Constitution (down 8.5%) and Advance Publications Inc.'s Star-Ledger of Newark, N.J., which lost 7.4%. A.H. Belo Corp.'s Dallas Morning News experienced the biggest percentage drop among the top 25 newspapers, losing 43,607 weekday subscribers, about 11% of its weekday circulation, compared with the year-ago report.
The Morning News said last year that its efforts to reduce bulk circulation -- free copies sent to hotels and airports -- as well as a smaller delivery zone, would cause it to lose circulation at a faster rate for a year.
The Daily News and the New York Post maintained their fierce battle for readers, although both lost subscribers. The Daily News, owned by real-estate developer Mortimer Zuckerman, ended the period with 649 more average weekday subscribers than its local rival the New York Post, which, like The Wall Street Journal, is owned by News Corp.
Both papers lost circulation, with the Daily News down 2.1% to 703,137 and the Post down 3.1% to 702,488.
The ABC announced in March changes that may allow papers to count more copies in their paid circulation, while separating some bulk circulation, including copies distributed at hotels, into a separate category. Those new rules won't go into effect for at least another year.
By: Andrew Lavallee
Wall Street Journal; April 29, 2008
Cubs fans have griped that Sam Zell, who led the recent buyout of Wrigley Field owner Tribune Co., might rename the ballpark if a corporate sponsor pays for the rights. But the proposed merger between the 117-year-old gum giant and Mars Inc. isn't likely to have a significant effect on the nation's third-largest metropolitan economy, experts say.
At a news conference in Chicago on Monday, Wrigley Chairman William Wrigley Jr. declined to comment on what the Mars deal could mean for the ballpark, but said, "the Wrigley family loves the fact that the name's on the field."
If the Mars deal is completed, the Wrigley company will become a stand-alone entity within Mars, retaining its name and its signature downtown headquarters overlooking the Chicago River.
Mr. Wrigley said the company will continue its civic and philanthropic involvement in the city, and Wrigley's 16,000 employees shouldn't expect big changes. "We might actually be adding some people to the Chicago base," he said.
Wrigley shuttered a chewing-gum manufacturing plant in the city in late 2006. That came shortly after the company opened a research and development center, subsidized by millions of dollars in city and state money, on Chicago's north side. The shift reflects the broader Chicago economy's own evolution from one based largely on manufacturing to one that relies on a large swath of legal, marketing, financial and other service jobs.
In the last two decades, the city has lost many high-profile corporate headquarters to acquisitions and mergers, including Quaker Oats, Bank One and Amoco Corp., but other companies have chosen to move their base to Chicago, including Boeing Co., which arrived in the early 2000s.
"Overall the city is doing very well," said Edward Snyder, dean of the University of Chicago Graduate School of Business.
William Fruth, founder and owner of Policom Corp., an independent research firm based in Palm City, Fla., ranks Chicago ninth out of 363 metropolitan areas in the U.S. for overall economic strength.
"Anytime there is a loss of a headquarters or a manufacturing company it will negatively impact a local economy but the Chicago economy is so large the impact will likely be absorbed," Mr. Fruth said.
*Therefore, despite these manufacturing losses, Chicago still remains a highly desirable city, in which many live in downtown Chicago apartments.
The Wrigley company, founded in 1891, joined a booming confectionary industry around Chicago. By the 1920s Chicago was a national center for confectioners and was exporting its candy and gum around the world.
The Wrigley headquarters, a 30-story French-Renaissance-inspired stone structure that was once one of the city's tallest buildings, anchors the Magnificent Mile shopping strip. In 1920, the company founder bought the Chicago Cubs, and later their ballpark became Wrigley Field.
By: Ilan Brat & Douglas Belkin
Wall Street Journal; April 29, 2008
Media conglomerate Cox Enterprises Inc., betting its future on Internet advertising as newspaper and television audiences shrink, plans to spend $300 million to buy a start-up that helps Web sites pool their ad space. The all-cash deal with Adify Corp. is set to be announced Tuesday. With Adify, Cox gets a technology platform that can help Web sites more successfully sell higher-priced ads targeted to specific audiences, such as travel enthusiasts.
By: Associated Press
Wall Street Journal; April 2008
With two swimming pools, a rock-climbing wall, a plush theater, and cabins for 2,000 guests, the Rhapsody of the Seas is the biggest passenger cruise ship ever to have offered round-trip sailings from
Rising incomes, especially in
Cruise operators say their biggest challenge in mainland
Star Cruises still offers a one-day round trip to nowhere in the South China Sea, but it plays down its casinos now. Instead the company promotes "family karaoke" and waterslides, as Asians take their children on cruises more often than their counterparts in
Star is the dominant player in
Royal Caribbean, the world's No.2 cruise line in terms of fleet size, passengers and revenue, has tailored the Rhapsody of the Seas for Asia's nascent market by offering acrobatic and magic shows-"language-neutral" entertainment for passengers who don't necessarily share languages or understand English. Crucially, it and other cruise companies are offering Asians shorter itineraries, as people here get less vacation time than Europeans or Americans. In another part ofthe world, the Rhapsody might take passengers on intercontinental journeys lasting weeks. In
"If you try to offer something over seven days, you are dead. There is no market," says Massimo Brancaleoni, vice president for operations in Asia at Costa Crociere SpA, a Genoa, Italy, company that is part of the No. 1 cruise operator Canival Corp. Cost Crociere, which has 12 ships around the world, since 2006 has based the 1,000-passenger Costa Allegra in Hong Kong and Shanghai. In March, it plans to put another ship in
Teddy Tsang, a 48-year-old publishing plant manager in
Before bringing the Rhapsody to
"Very few Asians have experience in cruising, but our experience here so far demonstrates that that's only because there has been little opportunity in the past," says Richard Fain, Royal . But Rhapsody's very size presents a problem. The ship is too tall to squeeze beneath all of
But Rhapsody's very size presents a problem. The ship is too tall to squeeze beneath all of
Legend has room for 1,800 passengers, 200 fewer than Rhapsody, but the ships have similar amenities. Indeed, the smaller ship has one feature that its sister lacks: an 18- hole miniature golf course. Legend will offer cruises lasting between four and seven days and will operate from
Cruise lines are still learning how best to satisfy their Asian customers. Kelvin Tan, Royal Caribbean's director of business development in the Asia-Pacific region, says his company's cruises aim to be "very family friendly," with activities such as a "pirates night" dress-up event for kids. For adults, offerings include cooking classes, spa services, ping-pong competitions and singles mixers.
Nevertheless, Mr. Tsang, who sailed to
By: Bruce Stanley
Wall Street Journal;
The new fundraising, which closely held Tudou announced Monday, reflects investors' continued strong interest in China amid a global economic slowdown. In the first quarter of the year, 116 Chinese firms received $940.7 million in venture-capit funds, more than double the $419 million that companies in China raised in the same three months of 2007, according to a report last week by Zer02IPO Group, Beijing-based research company.
Overall, foreign direct invesl ment in China in the first quartE surged 61% from a year earlier t $27.41 billion, according to government statistics.
Online video is a growing industry in China, which by some estimates has the world's largest population of Internet users, with more than 220 million. But the technology has also challenged the government's control over distribution of video images.
In December, Chinese regulators suprised industry executives by announcing new rules requiring all viedo-streaming Web sites to be owned or controlled by government entities. The state agencies that issued the rules later clarified that these wouldn't apply to existing, privately owned video sites whose content is in compliance with regulations.
Given uncertainty so far about how the new rules will be applied, it isn't guaranteed that China's three video-sharing leaders - Tudou, Youku.com and 56.com - in the futures can continue to operate as they currently do.
Liu Bin, an analyst for BDA China Ltd., a Beiking-based technology research first, said the new investment in tudou, which proceeded despite that uncertainty, indicated that investors are still eager to bet on the online-video sector.
Tudou, the oldest of China's three major online video companies, received a warning last month from the State Administration of Radio, Film, and Television for carrying content the agency said violated government censorship rules. Neither the state body nor Tudou has disclosed the specific reason for the warning. Pornography, violence and politically sensitive topics are among the content categories that China's government requires Web companies to censor.
Tudou didn't name its investors, but said they include family and venture funds from overseas, including Singapore and the U.S. Including Monday's amount, Tudou has completed four rounds of funding - raising a total of $85 million - since it was founded three years ago.
By: Loretta Chao
Wall Street Journal; April 2008
Wireless Unit Helps Compensate for Decline In Land -Line Business
Verizon Communications Inc.'s profit climbed 9.8% as the telecommunications carrier took the biggest share of the industry's best wireless customers.
As with rival AT&T Inc., Verizon's results suggest the industry is largely shrugging off the effects of a slowing economy.
"We're really not seeing a change in trends," Chief Financial Officer Doreen Toben said in an interview. "How many people are really going to drop their wireless phone?"
In March, Ms. Toben reassured Wall Street that the New York telecom giant was on track to duplicate its solid performance from last year but hinted that an economic slowdown was making a small dent in its wireless business. In the past several months, telecom operators have signaled to varying degrees that they were being affected by broader economic problems as consumers pulled back on spending. Cable operators and satellite operators have also partly blamed lackluster results on the souring economy.
In focus has been the rate of customers who have canceled their services because they could no longer afford to pay their bills. Ms. Toben said during a conference call Monday the rate in the landline side had improved, while the wireless side had stabilized.
Like AT&T, which has posted more rapid profit growth than Verizon in the past two quarters, wireless business drove Verizon's total results. Revenue rose 13% at Verizon Wireless, a joint venture with Vodafone Group PLC. The turnover rate rose to 1.18% from 1.08% a year earlier. Average monthly revenue per customer rose 1.3%.
New-subscriber growth slipped 12% to 1.5 million, putting total subscribers at 67.2 million. More important, 1.3 million of the new customers were ones who signed long-term contracts, or nearly twice as many as AT&T had in the first quarter.
The $99 unlimited-calling plans, which all the major carriers unveiled in February, were driving growth in high-end consumers and' helped results, said Dennis Strigl, chief operating officer of Verizon.
The wireless unit's performance is compensating for the deteriorating land-line business. The 13% increase in revenue at Verizon Wireless helped offset the 1.4% decline in wire-line revenue Verizon's total base of phone fell 8.2%.
"Wire line is losing the battle, but wireless is winning the war," said Moffett, an analyst at Sanford C. stein & Co. LLC.
Broadband connections stood at 8.5 million as of March 31, up 15%. Sales of wireless and Internet services have helped phone companies such as Verizon and AT&T ease the impact of declining sales of fixed lines.
Verizon added 263,000 FiOS TV customers, taking the total to 1.2 million on March 31. Verizon is using FiOS as its weapon to beat back cable television operators that offer all-in-one packages of video, phone and internet services.
Shares of Verizon were up 91 or 2.5%, to $37.95 in 4 p.m. New York Stock Exchange composite trading.
By: Roger Cheng
Wall Street Journal; April 29, 2008
Tuesday, April 29, 2008
Microsoft Corp. is experimenting with a subscription-based model to sell its popular Office software suite and other applications to U.S. consumers, as the company faces heightened competition in its core desktop-products market.
In a statement on its Web site Friday, Microsoft said that the program, code-named “Albany,” had been launched in a private beta testing, with plans to release the product before the end of 2008.
If launched, Albany will mark the first time Microsoft, the dominant maker of consumer office software, has experimented with a subscription-based Office product in the U.S. The company has already launched subscription-based versions of its Office products in some emerging markets.
The package will include the latest versions of word-processing application Word, spreadsheet tool Excel and presentation-software tool PowerPoint. It will also include security tools to blog viruses.
A Microsoft spokesman said pricing and distribution details for the commercial launch of the product hadn't been set and declined to comment on the planned launch date.
Bryson Gordon, group product manager for Microsoft Albany, said on the company's Web site that the test was designed to address consumer demand.
“Consumers...expressed frustration at having to spend time and effort installing different types of software, keeping current on new versions and getting their computers set up,” he said.
“We found from our research that when yo bring these categories together and keep them automatically updated, a subscription model makes a lot of sense.”
The test comes amid heightened competition from search gaint Google Inc., which has recently been making applications, including word-processing and spreadsheet tools, available free over the Internet.
Other Internet companies, including Yahoo Inc. and Salesforce.cm Inc., have recently been making similar business and office applications targeted at consumers and small businesses available free over the Internet.
By: Jessica Hodgson
Wall Street Journal; April 2008
A discrepancy between Google click data and comScore's estimates of those data before they were released caused the Web-measurement firm's share price to plunge last week. But on Madison Avenue, the difference wasn't much of a shock. Rather, it was another reminder that the science of tracking Internet usage is still far from perfect.
Digital-advertising executives say they have long taken comScore numbers with a grain of salt and don't plan on curtailing their use of the Reston, Va., research firm because of the Google flap. "We have not expected the numbers to be 100% accurate," says Sarah Fay, chief executive of both Carat and Isobar US, ad companies owned by Aegis Group. "I think that comScore has been as good as anything we've had previously."
Marketers rely heavily on comScore and the other major Web-measurement company, Nielsen Online, when trying to decide how to spend their online ad dollars. Advertisers study their data -- including a Web site's total visitors or page views and time spent on the site -- to try to determine which sites are popular among particular demographic groups or in certain topic areas, such as news or sports. They typically compare those data with a Web site's own figures.
Both Web-measurement companies have gaps in their research. Because they use panels of Web users to gather data and then extrapolate, the results are estimates. And both companies lack the capacity to measure total international audiences.
The companies are trying to address those shortcomings by looking for ways to increase the size and depth of their panels, investing in technology and expanding overseas. Nielsen Online, which is owned by the audience-measurement firm Nielsen, also is trying to combine its Web research with usage data from other media, such as mobile-phone and television measures.
To complicate matters, disparities between comScore and Nielsen data are common, as the two companies use different methodologies to measure their audience panels. For instance, according to comScore Media Metrix, Yahoo's finance site received 15.8 million unique U.S. visitors in March. According to Nielsen Online, the site received 20.2 million unique U.S. visitors during that period.
"There is no truth on the Internet, but you have two companies vying to say they are the truth of the Internet, and they disagree," says Brad Bortner, an analyst with Cambridge, Mass.-based Forrester Research.
In its earnings report Thursday, Google said consumer clicks on its advertisements in the first quarter increased 20% from a year earlier. Earlier in the week, comScore had estimated 1.8% growth in U.S. clicks from a year earlier. ComScore's stock dropped more than 8% in after-hours trading Thursday. Friday, comScore shares closed down 1.7%, or 40 cents, to $23.18.
ComScore points out that Google's and comScore's numbers aren't an apples-to-apples comparison and says that explains the discrepancy. ComScore tallied only U.S. clicks and excluded Google's nonsearch ads. Google's own numbers were overall, world-wide figures.
"We anticipated that Google's revenues would do better than what our paid-click data were interpreted to imply," says comScore CEO Magid Abraham. "We are always concerned about maintaining our reputation and want to be as accurate as possible."
The syndicated data from comScore and Nielsen are used by media buyers as a research tool -- but not to determine how much advertisers pay. The pricing is calculated by outside ad-serving firms, such as Google's DoubleClick, that track the performance of ad campaigns for such measures as how many times an ad is clicked or viewed.
"We are not going to look at comScore to determine the effectiveness of Google. We are going to look at our own campaign-performance measures," says Sean Muzzy, senior partner and media director at Neo@Ogilvy, a digital ad agency owned by WPP Group's Ogilvy & Mather.
Even though they are fully aware of the holes in comScore's and Nielsen's data, media buyers sometimes put more weight in them than they probably should. "When time is really pressed, or when the complications are overwhelming, the temptation has got to be that media buyers take them more seriously than any of us should," says Sarah Chubb, president of CondéNet, the digital division of magazine publisher Condé Nast.
The reliability of third-party Web-measurement data has been a hot topic in the online media world for some time. About a year ago, the Interactive Advertising Bureau, a trade group that includes more than 375 Web publishers, asked comScore and Nielsen to submit to an outside audit to find out why the two companies report such different measurements for the same Web sites. The measurement firms are in the midst of completing those audits, which are expected to continue through the year and detail the differences between their panels and methodologies.
By: Emily Steel
Wall Street Journal; April 21, 2008
Monday, April 21, 2008
The job of the algorithm is to best match Web pages with people's search terms. One tweak the company tried last week was increasing the "diversity" of search results so the listed Web pages would cover a broader scope in an attempt to compensate for the ambiguities of search terms, he said.
And while some might see the industry of search engine optimization (SEO), which strives to get Web sites higher placement on search sites, as gaming the system, Manber said that at least a basic amount would make his life easier.
"I wish people would put more effort into thinking about how other people will find them and putting the right keywords onto their pages," he said.
He also said Google doesn't adjust search results by hand.
"If we find, for a particular query, that result No. 4 should be result No. 1, we do not have the capability to manually change it," he said. "We have to find what weakness in the algorithm caused that result and find a general solution to that, evaluate whether a general solution really works and if it's better, and then launch a general solution."
For those interested in the subject, I also recommend the New York Times interview with Manber from last year and another from Eric Enge at SEO firm Stone Temple Consulting. (I can't help but note that the latter piece shows up higher in Google search results.)
Posted by Stephen Shankland on news.com
April 17, 2008
The Internet giant topped Wallstreet estimates for first-quarter revenue and fit, and it said that the weak economy don't hurt its business, as some investors had red. Google's solid performance came despite slowing growth in the number of times consumers clicked on ads that appear alongside Google's Web-search results and on partner sites.
Google's shares surged more than 17% in after hours trading after it reported first-quarter profit rose 30% from the year before, compared with 17% profit growth in the 2007 fourth quarter. Revenue rose 42% from a year earlier. Before the earnings were released Thursday afternoon, Google's shares had dropped 35% since the beginning of the year.
Chief Executive Eric Schmidt said that the Mountain View, Calif., company has studied the potential for any impact from a weaker economy in the future. "Our conclusion is we're well-positioned, should economics change, to continue to do well because our model is so targeted, and targeted advertising does well in pretty much most scenarios," he said. Investors have worried that a consumer slowdown could affect online advertising, which represents about 99% of Google's revenue.
Google reported that clicks on the ads it shows increased 20% in the first quarter from a year earlier, compared with 30% in the fourth quarter. Google generally charges advertisers only when a consumer clicks on the ads.
The overall paid-click gains in the quarter were significantly greater than research firm comScore Inc.'s Tuesday estimate of 1.8% growth in U.S. clicks-excluding some nonsearch Google partners-from a year earlier. ComScore's estimates had fueled concerns during the quarter that Google was being hurt by the softness in the U.S. economy, though the research firm said the cause was more likely Google-initiated changes.
"The comScore data have caused a lot of angst and anxiety for investors that look largely unfounded," said Jeffrey Lindsay, Internet analyst with Sanford C. Bernstein, whose firm makes a market in Google shares. ComScore declined to comment, but its Chief Executive Magid Abraham said in an interview Wednesday that some investors had jumped to conclusions that comScore's data don't support.
Google said it has continued to take measures to reduce the number of ads that consumers see per search query in order to show only the most relevant ads, which will lead to sales for advertisers.
"We're showing fewer but much better ads in each cycle, and that's a key part ofthe Google success story," Mr. Schmidt said.
On average, advertisers are paying more for each click. Mr. Schmidt acknowledged in an interview that, in some unspecified areas, those prices are near the maximum levels advertisers may be willing to pay, given their other advertising options.
"There are some 'verticals' where we might be hitting limits, and there are plenty of verticals where we're not-but in aggregate there's still plenty of room for growth," he said. He also specifed that there were hundreds of thousands of vertical advertising categories in Google's systems, factoring in such things as types of advertisers and regions. The price of search advertisements is determined by an auction-based system where advertisers bid against each other to have their ads displayed more prominently.
In 4 p.m. Nasdaq Stock Market composite trading, Google's shares dropped $5.49, or 1.2%, to $449.54. Following the news, shares rose 17% in after-hours trading to $526.62, adding almost $25 billion to the company's valuation.
Google executives highlighted their efforts to sell advertisements beyond the small text ads that are currently the company's core revenue driver. One key development during the quarter was the closing of its $3.2 billion acquisition of DoubleClick Inc., which offers services to Web publishers, ad agencies and advertisers for handling display advertisements, such as banner ads. "We're in a position to become the world's largest display-ads provider," said Jonathan Rosenberg, senior vice president for product management. Yahoo Inc., the target of an unsolicited takeover bid by Microsoft Corp., is the largest U.S. display ad seller, according to research firm eMarketer Inc.
Mr. Rosenberg said Google has seen consumer clicks in some categories traditionally affected by economic softness grow "a little less rapidly" than the overall growth. "But on an absolute basis, they are all showing healthy growth in ad revenue," he added. Areas such as financial services are among those analysts say are probably affected.
Google's solid financial performance comes as Yahoo is testing using Google ads alongside a small percentage of its Web search results. People familiar with the matter have said that test, announced last week, has been performing well, increasing the likelihood of a broader pact. But any such deal would probably face tough regulatory scrutiny because of the companies' combined majority share of the search-ad market.
Mr. Schmidt declined to discuss the test in any detail, but he said, "It's nice to be working with Yahoo-we like them very much."
International operations generated 51% of Google's revenue in the first quarter, compared with 48% in the fourth quarter. "International was a big part of the surprise here," said Rob Sanderson, Internet analyst with American Technology Research Inc. Google's employee growth rate in the first quarter climbed to 14%, compared with 6% in the fourth quarter.
By: Kevin Delaney
Wall Street Journal; April 18, 2008
EBay Inc.'s first-quarter profit climbed 22% and revenue increased 24%, propelled by its flagship online auction business and its Pay Pal electronic-payments unit.
The San Jose, Calif., company also raised its forecast for 2008 revenue and earnings, surpassing Wall Street estimates. EBay expects revenue for the full year in the range of $8.7 'billion to $9 billion, up fr9m the mean forecast by analysts surveyed by Thomson Financial of $8.79 billion. EBay also said it expects earnings, excluding items, of $1.70 to $1.75 a share.
The report marks John Donahoe's debut as chief executive of eBay and the first since he introduced in February big structural changes-such as better customer service and a different fee structure-aimed at rejuvenating the company's flagship auction site. While those policy changes helped somewhat to generate higher revenue, the company said revenue growth in its main auction business unit was driven primarily by advertising, elassifieds and the online-ticketing unit Stub Hub, rather than by expansion in core auction sales.
Revenue exceeded Wall Street's forecast of $2.07 billion and surpassed eBay projected range of $2 billion to $2.05 billion.
While revenue from the flagship auction business rose 19% to $1.48 billion and new listings rose 10%, eBay's active users rose 1%, its slowest-ever growth rate.
The revenue growth rate is down from 23% a year earlier. And early feedback from merchants offers a mixed picture of how the changes are affecting them; some sellers are concerned that buyers haven't returned to the site.
"The noncore businesses performed better but there are certainly challenges in the core [auction business]," said Jeetil Patel, a Deutsche Bank Securities analyst.
The company's PayPal electronic-payments unit had a strong quarter. Revenue rose 32% to $582 million as PayPal did more business with merchants such as JetBlue Airways Corp. Skype, eBay's Internet-calling business, generated revenue of $126 million, up 61%.
Ebay's forecast for the current quarter, which ends in late June, essentially matched analysts' expectations. The company said it expects revenue in the range of $2.1 billion. It projected earnings, excluding items, of 39 cents to 41 cents a share.
Friday, April 18, 2008
A broader partnership between the companies is now increasingly likely, the people said. Yahoo and Google said last week that they would undertake the test to evaluate the revenue potential of a broader search-ad outsourcing arrangement.
A deal might increase Yahoo’s cash flow by more than $1 billion a year, according to Citigroup Global Markets analyst Mark Mahaney.
But a partnership also might serve as needed leverage for Yahoo as it tries to ward off an unwelcome $44.6 billion bid from Microsoft Corp., of Redmond, Wash. Some view the potential combination as gamesmanship, particularly in light of antitrust concerns of a Google-Yahoo linkup.
A broad partnership between Google, based in Mountain View, Calif., and Yahoo could complicate Microsoft efforts but doesn’t derail it immediately. Yahoo could simply pull out of the partnership should it agree to a takeover by Microsoft.
Nevertheless, a deal with Google might make it easier for Yahoo, of Sunnyvale, Calif., to do a separate deal it has been deliberating with Time Warner Inc’s AOL. Yahoo has been in talks with New York-based Time Warner about merging with AOL. Time Warner would receive a stake of about 20% in the merged entity in return.
By: Matthew Karnitshnig
Wall Street Journal; April 17, 2008
A:Not if you are using a cable set-top box, like the vast majority of cable customers. If you are one of the minority of cable households whose TVs use an internal cable tuner, you may need a converter box. To be sure, contact your cable company or TV manufacturer.
Q: In your laptop buying guide last week, you recommended buying a machine equipped for the “n” type Wi-Fi of wireless router. I was under the impression that this has not yet been standardized. Is that wrong?
A:The engineering committee that has been debating the standard for years has not yet completed its work, but the market has simply moved ahead on its own. This new, faster version of Wi-Fi is being built into routers, computers and other devices by nearly every major manufacturer. In my limited tests, I have found no compatibility problems, and it is backwards compatible with the older “g” and “b” standards.
Q: Is the Mac immune to viruses? If not, do you have a recommendation of the type of antivirus software one should procure and load onto a Mac?
A:No personal computer or personal computer operating system of which I am aware is “immune” to viruses, spyware or other malicious software. That includes the Macintosh and its operating system, Mac OS X Leopard. Hackers have demonstrated the ability to invade the Mac. However, there are only a handful of viruses or other malicious programs for the Macintosh that have successfully spread beyond the lab. And these have harmed only a small number of actual users.
Of the well over 100,000 known viruses, spyware programs and other malicious software applications that are about in public, all but this handful are written to run on Microsoft Windows, and cannot operate on the Macintosh OS. For that reason, I don’t believe Macintosh owners need security software, unless they install and run Windows on their computers. If they do run Windows, Mac owners are well advised to purchase and install Windows security software to protect the Windows portion of the machine.
Having said that, I do not mean that Mac owners should be blind to security threats that don’t involve viruses or spyware. Just like Windows users, Mac users can succumb to what is called “social engineering” — scams and schemes that operate via email and Web sites that are often authored by crooks but made to look official. So, like Windows users, they must be on their guard.
The News: FCC Chairman Kevin Martin will hold a hearing on limits placed on Internet traffic.
The Background: A move by Comcast to restrict downloads through file-sharing software has drawn criticism, and is likely to make the company a focus of the hearing.
Outlook: Comcast recently backed away from the restrictions. Broadband providers have argued new FCC rules on traffic aren't necessary.
Mr. Martin will preside over a seven-hour hearing at Stanford University that will explore what responsibilities Internet providers have to deliver traffic fairly, and what phone and cable companies should be telling consumers about the services they can expect for their $40 or $60 a month.
"We'll focus on the disclosure issues and the broader impact these practices are having from the consumer perspective," Mr. Martin said in an interview Wednesday.
If an Internet provider decides to limit traffic in some way to manage its network, that should be "clearly and reasonably disclosed to the consumer," Mr. Martin says. "If people are going to upgrade [their Internet service] they need to understand what they're getting."
Comcast declined an FCC invitation to attend Thursday's hearing, though it appeared at a hearing earlier this year. A Comcast spokeswoman said the company "felt the issues specific to us were well covered at the first hearing, and the focus of this event should be broader than any individual company's issues."
A few years ago, Mr. Martin expressed the view that he didn't think the FCC needed new rules to make sure all online traffic was treated equally -- an issue that has come to be known as net neutrality -- because there were no examples of Internet providers degrading traffic.
But his stance changed last year when Comcast was accused of deliberating dropping some traffic by users of file-sharing service BitTorrent, Inc. Consumer advocates and file-sharing company Vuze Inc. filed complaints at the FCC, accusing Comcast of violating the FCC's net-neutrality principles and asking the agency to wade into the area of deciding what constitutes "reasonable" network-management practices.
Now, the FCC is pressing an investigation into whether phone and cable companies can deliberately slow or block some Internet traffic, and Mr. Martin has strongly suggested companies provide more consumer disclosure before the FCC makes them do so.
Mr. Martin's interest in enforcing the FCC's net-neutrality stand hasn't flagged in recent days, despite efforts by Comcast to cut deals with some file-sharing companies whose users consume an outsized share of the capacity of high-speed networks.
Last month, Comcast and BitTorrent Inc. announced they'd begun collaborating on ways to allow BitTorrent's applications to work more smoothly on the cable company's network. Comcast had a policy of deliberately slowing some traffic flowing over BitTorrent's file-sharing network during peak Internet usage times.
Instead of slowing file-sharing traffic used by specific applications during peak times, Comcast said it would target consumers instead, slowing traffic for those who use too much bandwidth.
Earlier this week, Comcast announced it had teamed up with peer-to-peer software company Pando Networks Inc. to create a "Bill of Rights and Responsibilities" for network owners and consumers who use peer-sharing software. The effort was mocked by consumer advocates and bloggers.
Despite Comcast's efforts, it is not clear Mr. Martin or other FCC officials are willing to let them off the hook.
"I'd be interested in hearing what they're talking about in the 'Bill of Rights,' " said Mr. Martin, who indicated he has not ruled out a third public net-neutrality hearing. "I think we obviously need to continue to focus on the complaint that's in front of us and how that's impacting consumers."
Some FCC officials and telecom lobbyists have privately questioned whether Mr. Martin's interest in investigating Comcast's network-management practices have more to do with his ongoing battle with the cable industry.
Mr. Martin dismisses the speculation, noting that he backed a condition in two mergers -- involving AT&T Inc. and Verizon Communications Inc., respectively -- that required the companies to abide by the FCC's net-neutrality principles.
Mr. Martin's investigation into Comcast's efforts to limit traffic for file-sharing programs set off alarms in Hollywood and the recording industry. Entertainment-industry executives would welcome help from Internet providers to block the illegal online sharing of movies, television shows and music. Several entertainment-industry officials will testify at the FCC's hearing Thursday.
"How should network operators deal with certain kinds of content that's illegal?" Mr. Martin asked. "The commission's net-neutrality principles don't only apply to legal content, but it's important to hear from those people concerned about how the principles might apply."
By: Amy Schatz
Wall Street Journal; April 17, 2008
First-Period Net, Out Today, Will Show Whether Worries Affecting Stock Are Justified
When Google Inc. reports first-quarter earnings after the market close Thursday, investors will find out whether their worries about the impact of the softening economy on Google search ads are justified.
Data from research firm comScore Inc. showing a drop in the number of times people click on the ads have fueled the jitters, which have already knocked almost $75 billion off Google's market value since the beginning of the year.
ComScore released new data late Tuesday estimating that U.S. consumer clicks on Google search ads in the first quarter declined 9.3% from 2007's fourth quarter, and rose just 1.8% from the 2007 first quarter. That compares with the 30% increase in fourth-quarter clicks from the year before that Google reported in January and a roughly 50% average increase during the previous four quarters. This "paid click" volume matters because Google gets paid for the small text ads it shows on Web search results pages only when a user clicks on one of them.
Investors worry that the Mountain View, Calif., Internet giant has finally grown to the point where its core U.S. search-ad business is more vulnerable to swings in the economy and less capable of producing the outsized growth that boosted the company and its shares in the past. That issue also has implications for the outlook for online advertising revenue in general, as well as Microsoft Corp.'s effort to double down on its exposure to Internet ads with an unsolicited bid to acquire Yahoo Inc.
Some analysts have concluded that U.S. consumers are clicking on ads less frequently because economic problems have made them less willing to buy things. "It's very similar to the shopping mall, where it's full of traffic and you see people window shopping but they're not buying anything," says Sandeep Aggarwal, senior Internet analyst at Collins Stewart LLC. He says people are using the Internet for email and reading news, but they're doing fewer searches for things like "cruise to Bahamas."
ComScore says its data don't support the idea that the economy is significantly affecting consumer search-ad clicking. "If it is, it's to a minor degree," says comScore Chief Executive Magid Abraham. (Google, like other Internet companies, is a paying client of comScore, though Mr. Abraham says comScore didn't have any contact with Google during the first quarter to discuss its search-ad data.)
Instead, Mr. Abraham and some analysts cite Google-initiated efforts that are affecting the number of clicks, such as a change that made it harder for consumers to accidentally click on ads. They also note that the click data don't take into account other factors affecting Google's revenue, such as the price paid for each click and international activity, which represents close to half of Google's revenue.
Mr. Abraham says comScore's data are "compatible" with first-quarter Google revenue growth of 5% to 10% from the fourth quarter, depending on such factors. According to analysts surveyed by Thomson Financial, Google is expected to report first-quarter revenue of $3.61 billion when certain payments to partners are factored out, a 6.5% increase from $3.39 billion on that basis in the fourth quarter.
Google declined to comment on the comScore data or its earnings report. When it posted its fourth-quarter earnings on Jan. 31, Google CEO Eric Schmidt said the company hadn't seen any impact from macroeconomic softening. In public comments since then, Google executives have said it isn't clear yet whether those problems will hurt its business.
Since going public in 2004, Google has sworn off giving any detailed public earnings guidance, which increases the difficulty of assessing any risks to its performance. That's a major reason investors turn to comScore's search-ad click data, despite analysts' warnings that the data haven't always predicted Google's results reliably in the past.
"The comScore click data has been a huge focus for the investment community and probably has been one of the bigger influences on the stock this quarter," says John Aiken, managing director of Majestic Research in New York.
ComScore's Mr. Abraham says some people have jumped to conclusions that comScore's data don't support. "People automatically assumed Google's revenue is going to be missing their target," he says. "People were assuming we said something we didn't say."
In 4 p.m. trading on the Nasdaq Stock Market Wednesday, Google shares rose 1.8%, or $8.19, to $455.03. They are down about 34% since the start of the year.
Mr. Aiken says his analysis of search-ad activity and conversations with search-ad buyers indicate that small- and medium-sized search advertisers are pulling back. Such a development would probably drag on Google's search-ad revenue, because about 99% of its more than one million advertisers and the majority of its revenue come from that category, according to people familiar with the matter.
Mr. Aiken says large search buyers are spending the same or more, and ad firms that work with large advertisers support that idea. "We don't really have any instances where we're seeing clients pull back their search ads," says Steve Governale, senior vice president and managing director of SMG Search, a unit of Starcom MediaVest, itself a unit of Publicis Groupe. If anything, big advertisers are shifting dollars to search ads because it can be easier to measure the revenue generated by them than it is for ads like glossy magazine spreads, some ad executives say.
Still, some analysts say ad spending is dropping in some industry areas most affected by economic problems, such as financial services. Spending by advertisers in the financial, travel and retail areas declined or grew more slowly in the fourth quarter, compared with a year earlier, Yahoo President Susan Decker told analysts in January, though she said that overall the company had seen "a solid start to the year."
It remains unclear how online advertising beyond search is affected by any consumer slowdown. Search advertising is the largest category of U.S. online ad spending, expected to account for 40% this year, according to research firm eMarketer Inc. Other forms of online advertising, such as graphic display ads and video ads, are generally priced using different models than per-user clicks.
EMarketer last month reduced its 2008 forecast for U.S. online spending because of concerns about the softening economy. U.S. advertisers will spend $25.8 billion on Internet ads, eMarketer says, down 6.2% from earlier estimates but up 23% from $21.1 billion in 2007.
By: Kevin Delaney
Wall Street Journal; April 17, 2008
Thursday, April 17, 2008
Yahoo Inc.'s directors meet Friday to discuss alternatives to a Microsoft Corp. takeover, with many insiders still seeing a Microsoft deal - without the participation of News Corp. - as the most likely outcome.
Behind the battle over Yahoo is a scramble by Internet and media giants to capture the flood of advertising dollars moving online and block Google Inc. from extending its Web-search-ad domination.
Aside from Microsoft's solo bid Yahoo's directors will likely discuss a plan under which Time Warner Inc. would fold its AOL unit into Yahoo.Another option for Yahoo is a joint deal with Microsoft and Rupert Murdoch's News Corp., owner of The Wall Street Journal.
Microsoft and News Corp. talked about options involving Yahoo as early as last year, people familiar with the talks said. Now, News Corp. is discussing joining forces with Yahoo and Microsoft to combine News Corp's MySpace, Microsoft's MSN and Yahoo into a separate company, people familiar with the talks said.
But people close to Microsoft discounted the likelihood that it would bring News Corp. into a Yahoo deal. Meanwhile, the potential AOL-Yahoo deal has encountered skepticism from some major Yahoo shareholders, according to people familiar with the investor's thinking.
At the least, the jockeying could leave Yahoo with greater leverage to extract a better price from Microsoft. Yahoo shares rose 82 cents, or 2.95%, to $28.59 in 4 p.m. Nasdaq trading Thursday, as investors welcomed the apparent emergence of alternatives.
Many analysts and investors say Microsoft could probably complete the deal if it sweetened the unsolicited cash-and-stock offer it extended to Yahoo on Jan. 31. That offer, originally valued at $31 a share, or $44.6 billion, was worth $29.34 a share, or $42.2 billion, based on Microsof's share price Thursday. A central question is whether Microsoft is willing to raise its bid.
Yahoo's directors aren't expected to make any big decision Friday about their direction. One person familiar with the matter said Yahoo's options are likely to come to a head next week.
Among the players battling over Yahoo, there's a common assumption: Major brand advertisers are gearing up to move big chunks of money from traditional ads including TV commercials and glossy magazine spreads to online outlets such as video-sharing services and Web sites for women. Although online ads garnered only an estimated 7% of total U.S. advertising dollars last year, Internet companies believe the percentage will increase sharply as Americans ratchet up their daily use of the Web and advertisers gain confidence in the medium.
Google handily won the last phase of online competition focused on ads tied to Web searches. Those ads account for roughly 40% of the U.S. online ad market. But Google and others have turned their sights to display advertising, such as banner ads and video ads, where they expect the next phase of growth to kick in. Such ads currently account for about 30% of U.S. Internet ad dollars.
The Internet's old-guard portals-Yahoo, MSN and AOL have all lost share of the U.S. online-advertising market since 2004, according to estimates from eMarketer Inc. Google's share, driven by its domination 'of search advertising, has jumped at their expense to 28.4% last year from 13.1% in 2004. Looking for growth, the old guard has accelerated efforts to sell ads on partner sites in exchange for commissions, using ad platform systems they have bought and built.
Google's focus on display advertising is taking shape. It recently closed its acquisition of Internet ad-services company DoubleClick Inc. and is trying to take advantage of the popularity of its You Tube video site.
Yahoo is an attractive partner or takeover target because it has the most U.S. visitors, with 137 million in February, according to research firm comScore , Inc. Google, Microsoft, AOL, and News Corp.'s Fox Interactive Media Internet unit follow in the second through fifth places.
Whether called "portals" or "social networks," sites such as Yahoo, MSN, AOL and News Corp.'s MySpace are points of entry to the Internet for consumers. Pooling their resources could bring economies of scale and better attract advertisers. Microsoft's unsolicited pursuit of Yahoo is forcing other players to review their tie-up strategies.
In a Saturday letter to Yahoo director,s, Microsoft Chief Executive Steve Ballmer threatened to go hostile in three weeks if Yahoo didn't agree to a friendly deal, implying that Microsoft wou drop the price in that case. Some major Yahoo investors who believe Yahoo is worth more than Microsoft original $31-a-share offer say the threat to lower the price was counterproductive, giving Yahoo more opportunity to find viable alternatives.
People involved in the negotiations described an unusual level of uncertainty on everyone's part about what is real and what may be smoke and mirrors. It remains unclear even to the participants whether some of them are being used as stalking horses. .
The scenario that News Corp. and Microsoft are discussing would combine MSN, Yahoo and MySpace in an effort to dominate the display-advertising market as an offset to Google's dominance in search adverstising.
The latest Microsoft-News Corp. discussions got more serious after News Corp.'s own discussions with Yahoo-about trading MySpace and some other Web sites for a stake in the Internet company-fell apart because Yahoo wouldn't agree to a $10 billion to $15 billion valuation for the News Corp. properties, according to people familiar with the talks.
Microsoft and News Corp. last year had discussed a broad advertising pact that fell apart when News Corp. chose other partners for an online video service called Hulu, according to a person familiar with the situation.
Later last year, the two companies started to talk about options for Yahoo, according to a person familiar with Microsoft's thinking. The plan the two companies discussed, according to this person, was for Microsoft to operate Yahoo's search and advertising technology, while News Corp. would contiol everything else, including Yahoo's broad array of online media properties.
A partnership with News Corp. could allow Microsoft to focus on the software and technical underpinnings of online services while offloading content and information-historically weak points for the software company-to News Corp., which specializes in that realm. "All Microsoft cares about is search and the ad engine," one person familiar with the situation said.
The partnership could also soothe the concerns of some Microsoft executives who balk at swallowing Yahoo whole. Microsoft has historically eschewed large acquisitions.
Nonetheless, people close to Microsoft said the company, while willing to discuss alternatives, still intends to do the deal alone. "We don't need the help," one person said.
People close to News Corp., say the company has several reasons for wanting to stqy involved in a deal. News Corp. continues to weigh how it might sell MySpace, which faces steep competition. The site continues to grow overall, but some executives feel its growth may have peaked.
Google and News Corp. have a pact that allows Google to sell search advertising on MySpace. While News Corp. Chairman Murdoch recently said News Corp. is "very happy to be in the Google camp," some within the company believe that News Corp. could do better.
Yahoo itself has been talking with Google. On Wednesday, the two companies announced a two week test in which Yahoo will carry Google search advertisements next to a small portion of its Web search results. Yahoo and Google are studying a broader search advertising pact, which could allow Yahoo to demonstrate that it is worth more than Microsoft has, offered, according to people familiar with the matter. Antitrust experts have said such a broader pact would likely raise regulatory issues.
The deal Yahoo is discussing with Time Warner would value AOL at around $10 billion. That valuation excludes AOL's fading dial-up Internet-access business, which had complicated negotiations with potential partners in years past.
Time Warner Chief Executive JeffBewkes said earlier this year that he would split the dial-up business from AOL's more attractive advertising and portal businesses-a move seen as a possible precursor to the sale of both businesses.
While AOL's position as a Web destination has eroded-reducing the value of a potential tie-up with Yahoo-AOL has quietly built a strong online advertising brokerage.
That business could give Yahoo ammunition to argue that a deal with AOL would create substantial value. For Yahoo Chief Executive Jerry Yang, the advantage of such a deal over a transaction with Microsoft is that it would allow Yahoo to maintain its independence. He would also likely remain in control of the company he co-founded.
AOL has little to lose in negotiating with Yahoo. The Internet unit remains the biggest headache for Mr. Bewkes, who is under pressure to boost the company's sluggish share price. Time Warner's weary investors are eager to see an AOL solution after the disastrous merger in 2001 and subsequent failed attempts to reinvent the Internet company.
Time Warner has explored combining AOL with other companies before, most seriously in 2005 when it held discussions with both Microsoft and Yahoo. Time Warner ultimately opted for an eleventh-hour deal struck with Google, in which Google bought a 5% stake inAOL that valued the unit at $20 billion.
By: Kevin Delaney, Matthew Karnitschnig, & Jessica E. Vascellaro; Merissa Marr, Robert A. Guth and Nick Wingfield contributed to this article
Wall Street Journal; April 11, 2008
Wednesday, April 16, 2008
As Economic Leaders Meet, Subprime Woes Look Done But Not So Other Crises
Is the worst over? That will be a big talking point when finance ministers, bankers and central bankers gather in Washington this weekend for meetings of the International Monetary Fund and Group of Seven industrial nations.
The answer to the question depends on which crisis one is talking about. If it is risky subprime mortgages, the answer probably is yes. If it is the broader economy, the damage has barely started. As for the turmoil in the banking sector, we may be over the hump but it would be foolish to count on it.
Look, first, at the U.S. subprime crisis. The IMF calculates banks have recognized roughly two-thirds of their expected losses from U.S. residential mortgage lending to risky borrowers, and a somewhat smaller portion of expected losses from commercial real estate and loans for leveraged buyouts.
Getting this far has been painful. It has forced several financial institutions to the brink, notably Bear Stearns. But the
U.S. Federal Reserve stepped in to prevent a catastrophe, in the process throwing its protective mantle around pretty much the whole investment-banking industry.
What is more, banks are coming. to terms with their problems. The writedowns haven't come as fast as a purist would like. Still, they have come a lot faster than, say, in Japan in the 1990s. Banks also have started to repair their tattered balance sheets, most recently Washington Mutual with its $7 billion of new capital.
So the subprime crisis probably is about halfway over. Still, this chapter won't be closed until dodgy assets start trading smoothly-and that isn't happening yet. Wall Street no longer is churning out new, trashy paper; but the old inventory is still semi-stuck. Even headline-grabbing deals like Citigroup's proposed sale of $12 billion in leveraged loans aren't quite what they seem. In a round-robin deal, the bank is set to lend the buyers three-quarters of the cash they need to buy the assets.
Although some assets now appear cheap, nobody wants to call the bottom. Morgan Stanley boss John Mack this week said he was keeping his powder dry. Another Wall Street titan was even blunter in private: He still is looking to cut debt. No wonder banks and brokers seem to be falling over themselves to tap central-bank lending facilities on both sides of the Atlantic and that the gap between interbank interest rates and base rates still is exceptionally high.
Now look at the broader economy. Many observers think the U.S. already is in a recession and that the pace of European economic growth is slowing rapidly. But financial pain from the higher unemployment and increase in bankruptcies that typically mark recessions has yet to be felt.
Much of the focus, again, will be housing-albeit no longer loans that started out as subprime. House prices already have fallen sharply in the U.S. and'have started to decline in other markets, such as Britain. But they could fall a lot more. The sharp rise in defaults in the past few months presages a further decline of 14% in average house prices, according to a Goldman Sachs Group analysis of historical patterns.
Further declines in house prices will cause consumers to tighten their belts, creating more of a drag on the economy. That, in turn, will provoke a new rash of loan losses for banks. Given the wounds they already have suffered, they may not be well placed to take much more pain.
Would the losses be enough to provoke a new chapter in the banking crisis? The central bankers converging on Washington this weekend will certainly hope not. Still, they should realize that they, especially the 'Fed, have exhausted a lot of their firepower by slashing rates and pumping cash into the markets in recent months.
The authorities should use the current breathing space to redouble their pressure on banks to raise more capital. That way, if another tsunami hits, there is less risk of everybody being swept away.
By: Hugo Dixon and Edward Hadas
Wall Street Journal; April 11, 2008
Retailer has first profitable quarter in three years; Fractured Housing Market Poses Extra Challenges
While other retailers worry about the economy, Pier 1 Imports Inc. makes money- in the latest quarter, at least.
A number of chains Thursday lowered expectations for coming quarters and reported disappointing sales trends. But Pier 1 shares rose 9.4% to $7.54 after the company beat earnings estimates for the quarter ended March 1, its first profitable quarter in three years. The share-price increase continues an impressive stampede that has resulted in a 51% gain since March 17, when the shares were at $4.99.
There are caveats. Pier 1, unlike most retailers that want to stay in business, had 16 consecutive quarters of declining sales at stores open at least a year before breaking that streak of futility in the recently ended quarter. Between Jan. 1, 2006, and March 17, 2008, its shares declined 43%, catching the eye of investors, who bet on a turnaround.
Several analysts commented that sales trends and margin have improved, but the fractured housing market makes it difficult for any furniture-oriented retailer. William-Sonoma Inc., Bed Bath & Beyond Inc., and Ethan Allen Interiors Inc. have all lowered expectations because of the rough environment.
“Pier 1 is attempting to turnaround in a really intense down cycle for home furnishings,” said Laura Champine at Morgan Keegan. “I don’t think [a turnaround] is a layup.”
By: David Gaffen
Wall Street Journal; April 11, 2008
The Revived Art of Quilting Brings a Kentucky Ghost Town Back to Life
What Italy provides for people who love food is what Paducah does for quilting. A small Kentucky town on the Ohio River halfway between St. Louis and Nashville, Tenn., Paducah has become one of the prime destinations for quilt tourism, 21st-century style.
In late April every year, the American Quilter's Society draws 35,000 quilt makers and quilt lovers to Paducah for one of the biggest quilt shows in the country. The niche craft has been used as an economic engine to revive this once-declining town. The story of Paducah also helps demonstrate why quilting is now a $3.3 billion industry, with an estimated 27 million enthusiasts.
When I first came here in 2002 to research a book about the modern quilt world, I was stunned by the enormity and sophistication of the AQS show. Similar to this year, there were about 400 contest quilts on display in the convention center, more than 250 vendors selling quilt supplies, 150 classes and loads of lectures. The intricate quilts ranged from traditional appliqué and patchwork block patterns to striking original designs such as portraits and painterly abstracts. The cash prizes given to the winning quilters totaled $100,000.
This is the handiwork of Bill and Meredith Schroeder, who decided to turn Paducah into "Quilt City USA," a name they trademarked after creating the American Quilter's Society and staging the first show in 1985. Along with publishing a quilting magazine and how-to books, they founded and funded a $2.2 million quilt museum in 1991, building it just steps from the convention center. The museum's year-round quilting exhibits and classes help make Paducah more than a seasonal stopping place.
Writer Meg Cox explains how Paducah has used the arts to propel its economy and why it has earned the distinction Quilt City, USA.
Shrewdly, the Schroeders stipulated that the annual show's top prize-winners would get a hefty cash prize only if they gave their quilt to the museum. Now the museum is among a select group "that not only have strong and expanding collections of quilts, but are active forces in making these collections accessible for research and educational use," says quilt historian Marsha MacDowell, curator of the Michigan State University Museum in East Lansing, home of the Great Lakes Quilt Center.
During the show, quilts decorate almost every shop window in town -- for the first time this year some of the contest quilts will be for sale at the show -- and an annual exhibit of antique quilts fills the Civic Center. Locals rent out rooms to visitors. When the show ends each day, quilters crowd into Market House Square, the heart of the restored downtown. The most-popular eateries are those with the television tuned to the Quilt Channel: During this week, Channel 17 on local cable runs programming and interviews about the quilt show every day until midnight.
Gerry Montgomery, who was mayor 20 years ago, says the downtown died after a big shopping mall opened out of town in the early 1980s. But after the quilt show began, vendors starting opening in the vacant buildings in the center of town. "Locals and out-of-towners saw quilters walking down the street with shopping bags and soon had ideas on how to bring a ghost town back to life," she says.
As quilters boosted the local economy, the town's planners started an Artist Relocation Project in 2000, practically giving away derelict downtown buildings to artists and crafters willing to turn them into living spaces, studios and galleries. There are now 50 artists living and working in the Lowertown arts district, and 18 art galleries. Tourist dollars flowing into Paducah grew to $276 million in 2006 from $66 million in 1991, the year the quilt museum opened.
Not everything is perfect in this quiltopia. In recent years, the AQS says that the Executive Inn, the hotel next to the convention center, had deteriorated so much that the society threatened to pack up its quilt show and leave town. (Tourism locals say that some upgrades have since been made to the hotel. Bhupindar Singh, owner of the Executive Inn, declined to comment.)
Now, the city leaders are negotiating deals for developers to build a bigger hotel and convention center as part of a $50 million plan to develop Paducah's riverfront.
Paducah's success in quilt tourism has spawned a rise in big quilt shows across the country. In 2000, the AQS added a summer show in Nashville, and in October it will inaugurate an annual fall show in Des Moines, Iowa. Even bigger than the Paducah show is the International Quilt Festival, which takes place every fall in Houston.
The town's rebirth dovetails with a rising national interest in quilting. The comeback was helped, in part, by the 1976 Bicentennial, when quilts were made to mark the celebration. More recently, the vivid and original patterns of the Gee's Bend quilters of Alabama have toured the country's top art museums. Now, serious quilters can take classes online, search 1,000 quilt shops for the quilting fabric they need and blog about their latest quilt.
Bus trips to see quilting in Amish country are still plentiful, but quilt travel has also gone global and upscale. One tour operator, Sew Many Places, offers quilt-themed cruises and trips to China, Africa, Ireland and Australia.
When my mother taught me to quilt 20 years ago, it was the tail end of the post-Bicentennial nostalgia phase, and it was seen as cheating to use sewing machines at all. In 1989, when a machine-quilted piece by Caryl Bryer Fallert won the top prize at Paducah, it was a near-scandal. Many quilters were aghast, but others thought Ms. Fallert helped prove that quilting by machine wasn't just a valid design option but also a timely one. (Now, only about a third of the contest quilts in the Paducah show are hand-quilted.)
At the 2002 show, it wasn't just the craftsmanship of the quilts that amazed me, but also what the vendors were selling. Computerized sewing machines made by Bernina, Husqvarna Viking and Pfaff costing more than $4,000 offered hundreds of different stitches and let quilters embroider any design they could download.
A major fixture at the show each year is Eleanor Burns. She might look like Betty Crocker's sister, but she's the Martha Stewart of quilting, with a multimedia business called Quilt in a Day. Ms. Burns, based in California, has more than 70 books in print and has taped "Quilt in a Day," her how-to show on PBS, since 1990.
She weds old patterns to cutting-edge techniques, milking nostalgia with patterns called Romance Rose and Grandmother's Garden, while teaching quilters to use speed-cutting tools and shortcuts for piecing on the latest sewing machines.
Ms. Burns erects an enormous tent at a Paducah park and puts on three shows a day for 700 people at a time. These shows are like infomercials for her books, patterns, DVDs and custom rulers, with a lot of audience participation. This year, she'll be dressed as Rosie the Riveter to promote a new book with quick versions of quilt patterns popular in the 1940s.
Her down-home style isn't for everyone, but some fans will buy fabric scraps in plastic bags autographed by Ms. Burns.
There are many quilters who wouldn't be caught dead making a quilt pattern from yesteryear. For them, Ms. Fallert -- who took that top prize in 1989 -- is a mentor, an art quilter whose works hang in museums, and the only person ever to win the top prize in Paducah three times. A pioneer in using graphic-design software for quilts, this former stewardess also made a major commitment to Paducah, moving here a few years ago under the Artist Relocation Program.
Paducah gave her two city lots for $1, so Ms. Fallert built her dream studio and gallery in 2006, a big two-story brick building with white columns and ample porches. Visitors can stop by her gallery year-round to see examples of her vivid geometric quilts. Her shop sells fabrics, her patterns and keepsakes such as tote bags and trivets. Classes in computer design for quilts, fabric dyeing and other techniques are offered much of the year, and rooms are rented above her shop for $70 a night -- she's already booked for this year's show.
Ms. Cox, a former reporter for The Wall Street Journal, is the author of the new book "The Quilter's Catalog: A Comprehensive Resource Guide."
By Meg Cox: special to the Wall Street Journal
Wall Street Journal; April 12, 2008
Monday, April 14, 2008
Yahoo Inc.'s directors met Friday to weigh the company's strategic options, but remained undecided about which path the Internet portal should pursue.
Yahoo's advisers gave the board their latest assessment of Yahoo's' options. These include deepening negotiations with Time Warner Inc.'s AOL and Google Inc., or engaging with Microsoft Corp. to discuss its unsolicited takeover offer.
Yahoo is in talks with Time Warner about combining with AOL. Under that scenario, Time Warner would fold AOL into Yahoo and make a cash contribution in return for an equity stake of about 20%, according to people familiar with the matter.
The proposed deal would value AOL at about $10 billion. That valuation excludes AOL's fading dial-up Internet-access business, which had complicated negotiations with potential partners in years past.
Yahoo also has been talking with Google. Wednesday, the two companies announced a two-week test in Steve Ballmer which Yahoo will carry Google search advertisements next to a small portion of its Web search results. Yahoo and Google are studying a broader search-advertising pact, which could allow Yahoo to demonstrate that it is worth more than Microsoft has offered, according to people familiar with the matter. Antitrust experts have said such a pact likely would raise regulatory issues.
Friday's meeting capped a tumultuous week for Yahoo. It began with a testy exchange of letters between Microsoft Chief Executive Steve Ball-mer and the Yahoo board.
Frustrated that Yahoo hasn't embraced Microsoft's offer, Mr. Ballmer gave the board three weeks to cut a deal or face a proxy fight. He also hinted that Microsoft would cut its bid if Yahoo didn't agree to a friendly deal. Yahoo responded with a letter of its own in which it called his ultimatum "counterproductive."
Yahoo rejected Microsoft's unsolicited $44.6 billion stock-and-cash offer in February, saying that it undervalued the Internet company. Since then, the value of the offer has declined because of a drop in Microsoft's share price. It is currently valued at about $42 billion.
News Corp., owner of Dow Jones, the publisher of The Wall Street Journal, has held discussions with Microsoft about joining its bid but people close to the software company say it plans to pursue Yahoo on its own.
By: Matthew Karnitschnig
Wall Street Journal; April 11, 2008
WASHINGTON - Can Google Earth save the world?
The U.N. High Commissioner for Refugees announced a new partnership with the search engine this week. The goal: To use the company's globe-mapping software to illustrate the plight of parts of the planet's population.
Google Earth, a free, virtual-globe program from the search engine company, lets users zoom in on locations around the planet. Users can also use special programs known as layers, which organizations can build to incorporate video, text or other interactive features.
Under an outreach program, Google has been populating its virtual globe -' with socially minded projects from such organizations as Greenpeace, the U.S. Holocaust Memorial Museum and Unicef. Six such layers have been launched in the past two weeks.
Click on the United Nations' "visit a camp" button in Google Earth, for example, and an online depiction of the globe spins and zeroes in, . on a satellite view of a refugee camp in Chad. There, visitors learn about the refugees' who have fled to that country from western Sudan's Darfur region. Click on a button and users can find out how much money it costs to install, say, a new water source at the camp. Click again and users can donate that amount.
Originally published in the Traverse City Record Eagle, courtesy of the Washington Post; April 13, 2008
Acer Inc. plans to offer a low-cost notebook computer in June, a person familiar with the situation said. Quanta Computer Inc. has signed an agreement to be the exclusive supplier for the notebooks, said the person, who didn’t provide details. An Acer spokeswoman declined to comment. Quanta Computer, the world’s largest contract manufacturer of notebook computers by revenue, makes a low-cost PC called XO PC for MIT Media Lab. Acer joins the world’s biggest PC makers, Hewlett-Packard Co. and Dell Inc., in focusing on less-expensive notebooks for emerging markets and first-time computer users.
Originally published in the Wall Street Journal
For years, I have focused my twice-a-year computer buyer's guides on desktop PCs, with less-frequent columns focusing on laptops. Now that the latter are outselling the former, though, I am going to center my main buying guides on laptops. Many of the specs I recommend will also apply to desktops.
As always, this is a general guide aimed at mainstream, nontechnical consumers who dwell on common tasks such as email, instant messaging and surfing the Web; managing and lightly editing photos, videos and music; and using basic office applications. It is not intended for heavy gamers, video producers or corporate buyers.
Walt Mossberg says when shopping around for a laptop, know your software needs and know your budget limits. He previews his annual laptop buyer's guide.
There's a vast variety of laptop models, but this guide is meant to cover the most common types of laptops, those with screens from about 12 inches to 17 inches, and weights ranging from around 2.5 pounds to 7 pounds.
For this column, I'm not including the category of tiny machines now called netbooks, with screens under 10 inches. I am also ignoring the huge, heavy laptops with screens larger than 17 inches that are primarily aimed at gamers.
Even the remaining mainstream machines range wildly in price, from bargain-basement models at $350 to high-end ones that can top $3,000. In my experience, the top brands for technology and reliability are Apple and Lenovo's ThinkPad line, but various models from Sony, Hewlett-Packard, Toshiba and Dell are also worth investigating.
So, here is a quick guide to the key factors you should consider when buying a laptop.
Size: If you are a constant traveler, think about the subnotebook models, which generally weigh 3 pounds or less. There are two types of these. The classic subnotebook has a small screen, 12 inches or less, and a cramped keyboard. This year, a new type emerged, with a full keyboard and a normal 13.3-inch screen packed into a thin, light body. There are two of these: the MacBook Air from Apple and the Lenovo ThinkPad X300. All subnotebooks are relatively costly, typically ranging from $1,500 to over $3,000.
If your laptop will mostly stay at home, the office, or in class, a 5-7 pound machine with a screen of either 13.3 inches or 15.4 inches is the best bet. A well-equipped model in this class is likely to run you between $800 and $1,200. Typical models in this class are the Dell Inspiron 1525, the HP dv6700 and the Apple MacBook.
Windows vs. Mac: This is the eternal question. In my view, Apple's Leopard operating system is faster, better and far less prone to malicious software than Microsoft's Vista operating system. And the Mac laptops also come with better built-in software. The $1,099 MacBook is a solid, fairly priced machine, and the $1,999 MacBook Pro is even better. Both also can run Windows.
But Windows laptops are often less expensive, tend to have a greater variety of ports and slots, and come in more styles and sizes.
Operating system: If you are buying a Windows laptop, be aware that Vista is slower than Windows XP, in my experience, and still has compatibility issues with add-on hardware and software. If you'd prefer to stick with XP, you will find that many fewer models are available with it. And Microsoft has decreed that after June 30, mainstream, name-brand laptops will no longer come pre-equipped with XP.
Video: I recommend getting an LED-powered screen, which is brighter and saves power. Also, if you are choosing Vista, or if you do a lot of converting video for use on portable devices, consider getting a laptop with a separate video card inside that has its own memory.
Memory: If you're buying an Apple laptop, two gigabytes of memory is plenty. If you're using Vista Home Premium, I'd consider three gigabytes for best performance.
Processor: Any dual-core processor will be fine. Don't pay a penny extra for faster processor speed.
Storage: In a mainstream laptop that will be your main computer, look for a 160-gigabyte hard disk or larger. A new kind of storage, called SSD, or solid state disk, is now available. But it is still way too costly for most users, and at the moment is available only in smaller capacities.
Battery life: Many laptops today rarely spend time away from an electrical outlet. But if yours will, look for a battery life of at least three hours between charges.
Wireless: Make sure your new laptop has the new, faster "N" version of Wi-Fi built in. Many cheaper laptops don't. You can also get a cellphone modem built in, but they are costly and carry a monthly fee. You can always add an external cellphone modem later.
Other features: A built-in camera and microphone can be quite useful, and so can a feature on some Windows machines that allows you to play music and videos without fully booting up the computer.
Don't let yourself be swayed by sales pitches, or by fanaticism for or against Windows or the Mac. Think hard about how you use your computer and what your budget will allow, and stick to those priorities.
By: Walter Mossberg
Wall Street Journal; April 10, 2008
Friday, April 11, 2008
News Corporation is again wading into the tense takeover negotiations between Microsoft and Yahoo, this time discussing how it could back up the technology giant's bid for the web company.
A deal could create a powerful internet alliance between the News Corp-owned MySpace site, Microsoft's MSN brand and, if the takeover of Yahoo succeeds, its online network.
The New York Times, which today reported that negotiations were at a "sensitive stage" between News Corp and Microsoft, said that with Rupert Murdoch's backing the technology company could increase its offer for Yahoo.
"There's a long way to go before anything is definite," one source told the paper.
Another source said the terms were still being worked out, but that MySpace's parent company, Fox Interactive Media, would be put into the mix as part of the alliance between the two companies' internet assets.
The source also suggested that News Corp would put cash into the Microsoft bid for Yahoo.
When Microsoft made the unsolicited cash and stock offer for Yahoo on January 31, the deal was valued at $44.6bn. But a subsequent drop in Microsoft's share price has pushed the value down to $42bn.
Yahoo has rejected the offer, claiming it undervalues the company, but has also been pursuing various alternatives to revive its finances - including discussions with News Corp about a similar merger of internet assets.
Rupert Murdoch, the News Corp chairman and chief executive, reportedly met Yahoo chief executive Jerry Yang shortly after Microsoft made its offer earlier this year.
This revives the possibility of News Corp swapping MySpace for a stake in Yahoo and discussing an advertising partnership that would see the two partnering with Google.
The latest twist in the battle for Yahoo comes as the internet company announced a two-week experiment to bring Google's powerful AdSense service on to its search site in the US.
This test will be limited to showing Google ads against 3% of Yahoo's search queries. But it is a move designed to frustrate Microsoft, which responded by saying a definitive deal would "consolidate 90% of the search advertising market in Google's hands" and "make the market far less competitive".
Earlier rumours of discussions between Yahoo and Time Warner's AOL division have also been revived, with the Wall Street Journal reporting yesterday that the two sides are nearing an agreement over combining the two web companies.
Such a deal would reportedly see Time Warner paying Yahoo in cash for a 20% stake in the newly merged internet firm.
By: Jemima Kiss
guardian.co.uk; April 10, 2008