This is a great example of how Yahoo! can work with TV stations and integrate all of the numerous bells and whistles in its arsenal (news, flickr pics etc).
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WatchMojo NewsletterA decade ago, the media world - which at the time consisted mainly of TV, print, radio, etc., ie. the World Wide Web was a small piece of the puzzle - was tripping over one another to merge together. AOL / Time Warner being the poster boy of what can go wrong at one extreme.
Today, the Web is the media that garners most interest. The reason is simple: people spend 25% of their online, advertisers only spend 10% of their budgets online. Given that advertising is a $200 billion+ industry, those numbers matter, especially when the stocks of Disney, Viacom, News Corp. have been flat for years.
TV is confused, radio’s terrestrial and satellite are going through a civil war, print is - to quote Jon Stewart - sitting at the kiddie’s table… etc. The Web is sexy, the Web is hot, the Web is set to grow by leaps and bounds. What’s odd is that despite all of this potential, a lot of Web players are looking to sell.
One reason is that many companies who were founded before or during the crash of 2000 know how hard it is to compete in this space, especially when you have Tiered players (Tier 1: MSN, Google, AOL, Yahoo! / Tier 2: CNET, iVillage, IGN, etc.). Many have seen paper value evaporate so when they smell money on the table, even if they know it could be more, they decide not to risk it all and cash out.
Another reason is that many of the so-called Web 2.0 companies were not funded by VCs, in other words, it does not take a great offer to entice the founder to sell. A company with no VC that sells for $10 million is a coup; a VC funded company that gets an offer of $10 million is not a coup.
That being said, history repeats itself, yes. But even if the market could be due for a correction, the bottom line is that people spend 25-35% of their time online yet advertisers spend at most 10% of their budgets online, this is a discrepancy that will continue to favor Web companies more over time than a one-time 25% correction. Also, no one is really going to convince me that we are set for a correction like that. Over time, I see the values of online business rise, I am not talking about the value of online applications and gadgets. In other words; props to Facebook for its growth, but it’s not a $1 billion business, let alone $2 billion, the figure that Business Week threw out this week.
My personal two cents: unless the offers are insane, Web entrepreneurs are foolish to sell if they can envision building a business model around their applications and properties. If they cannot envision and execute a successful business model, then sure, sell.
But when I see corporations like Viacom and News Corp. looking to consolidate the online marketplace by acquiring online brands and looking to cross-sell one with another in order to generate more revenues… I don’t know, I am not so sure. In my former life, I worked in banking for a few years and saw that cross-selling was more hype than substance. The few banks who can cross sell tend to create shareholder value, but, the simple fact is that there are more superbanks who cannot cross-sell effectively and end up not creating any shareholder value; they should be smaller and nimbler. Look at JP Morgan Chase’s stock or Citigroup’s stock.
The same applies to media conglomerates: Viacom was split up, AOL Time Warner was… well, you know that story. So why do we think that Web companies should be tied together. Some disclosure: I worked at an online publisher that was independent for 5 years; it got acquired by IGN, IGN got acquired by News Corp. As much as I was happy for everyone’s payout at every interval, I personally would have held out and build an empire with the assets they had at their disposal. Now, as much this year’s P&L might sugget it was a great idea and this year’s growth makes it look like a wise move, the truth is that the greater share of the Web story remains to be told.
If you ask me, Gestalt psychology might not hold up in this case, not yet anyway. Gestalt psychology being the theory maintaining that the whole is greater than the sum of its parts.
Consider the following:
News Corp. has also launched a “custom solutions team” to assist large advertisers who want to buy space across its Internet portfolio, which ranges from MySpace to FoxSports.com to AmericanIdol.com to gaming site IGN.com. The move could ignite ad buys on MySpace, since the sales force doing business with major advertisers for the Fox Sports or “American Idol” sites may be able to persuade them to experiment with MySpace.
You know what: if I’m an advertiser who wants to be on American Idol’s website, I’m not sure I want MySpace too. And if I want IGN, I’m not sure I want FoxSports shoved onto me. If a seller keeps shoving something else onto my space, I’ll go elsewhere where I get the same psychodemographics without the hassle. IGN is Gamespot; MySpace is Facebook, FoxSports is ESPN, American Idol is, well, there’s only one American Idol!
But you get my point, I personally / humbly believe that independently, IGN.com, AmericanIdol.com, FoxSports.com, MySpace.com etc. can sell more ad revenues separately than when bundled together. But then again, call me biased.
But hey, isn’t that what the banking and media mergers of yesteryear taught us.
Then again, who knows, maybe, just maybe, this time things are really different…
Yeah right!
According to Nielsen Net Ratings
Google Inc. garnered 48.5% of all searches conducted in February. Yahoo Inc. drew 22.5% of online searches, while Microsoft Corp.’s MSN accounted for 10.7%, AOL for 6.6% and My Way Search for 2.7%.
Should Bill listen to Jack? According to Jack Welch’s philosophy on only competing in an industry if you can be # 1 or # 2 in the sector, Microsoft should get out of the search wars. Fat chance. What’s noteworthy is that unless MSN can make some strides, AOL can technically catch MSN up… largely due to the fact that AOL’s video search is very good, relative to the others. AOL has a lot of licensed and proprietary video content and if more and more people turn to the Web for video content, MSN might need to look in its rear view mirror as it sets its sights on Yahoo! and Google atop the podium.
In a former life, I dreamt of being an M&A guy. So indulge me a bit please. Google intends on raising $2.1 billion this year, that’s $2.1 billion additional dollars, on top of its initial and secondary public offerings, add on the free cash flow it generates, the company has well over $10 billion of cash to play with. And, note that despite its lofty share price, many entrepreneurs would still consider accepting equity in potential deals.
I took a few minutes and listed potential fits, note that these are the respective market values of the firms, and not the enterprise values (cash on balance sheet, debt, etc). So technically, removing the cash on the books of some of these firms and throwing in equity in some deals, Google could technically gobble up some or all of these companies.
Note of course that this is strictly for entertainment purposes, I doubt Google would buy even (or consider buying 10% of these firms). Also, so you know, I own shares in most of these firms, I am certainly not encouraging you to buy or sell any of these…
Of course, none of these targets fit the mold; Google generally likes to buy companies that employ 50 or less employees, make a Web-based feature Google doesn’t have and desires to include in its tool box.
But, such acquisitions do not really make a big dent ASAP. Acquiring companies like Valueclick or 24/7 Realmedia would, since it would add tremendous reach for its AdSense program.
Considering Google is finally making inroads into digital music, it could make more sense for it to buy Real Networks or Napster… both? Hey, why not?
It can also, of course, buy a private company like Facebook… but at the $2 billion price tag it seems to be asking for, why not settle for CNET which has been around for 10 years and is worth that much on the Nasdaq? CNET would give Google much of what the 5% stake it bought in AOL gave it… but in a more focused way.
As the list goes on… Websense and Webex are cool interactive tools and softwares that only add to Google’s Microsoftian’s ambitions… Websense lets employers track employees online behavior, Webex is a cool conferencing tool Adding Websense is like adding Urchin… only that Websense seems to violate the Don’t do Evil mantra if you ask some people. Hey, I’m not knocking the company… but…
If Google wants to get serious about online advertising, the branding stuff, not the search keywords business, then aQuantive and or Digitas would be good tippy-toe moves in the space.
It could also play the online advertising space by getting into content and publishing: The Knot, Planetout.com, CNET’s numerous properties will all benefit in years to come from the continued shift of ad dollars to the Web.
Google could consolidate and add market share by gobbling up MIVA, Mamma, Infospace and Answers.com, (the latter whom it already features on its site). Apparently, Google’s year over year market share in search grew from the high 30%’s to the mid 40%s… can you imagine if it acquired those firms? Microsoft, Yahoo! and Barry Diller’s IAC - who now own Ask.com - would not like that. Of course, Google already gets exposure to most searches on Infospace, Mamma, Answers and Miva because the search industry is one incestuous sector… but alas… it’s not like anything we’re saying here should be taken seriously.
Who’s left on that list in this exercise in insanity?
Oh yeah, TIVO. As you can imagine, it’s not like Google isn’t doing enough to rattle people’s nerves in TV-land, so why not buy TIVO and totally become the pariah of the media space?
Ok, enough nonsense.
I think in the end, despite all of the bravado, Google is hoarding all of this cash to come across as ready to compete with Yahoo! and Microsoft in any potential M&A talks, if it moves, and it will, it will probably continue to gobble up small shops that add talent and are accretive to their tech tool arsenal, and not their income statements.
Anyway, back to work.
From TheStreet.com:
Motorola’s missing Q phone is starting to raise some questions.
Industry observers were expecting a big splash from Motorola at the CTIA wireless industry show in Las Vegas next week. The stage was set for an announcement that Verizon Wireless — a joint venture of Verizon and Vodafone — has stocked its shelves with Q phones.
But now, Verizon Wireless says the Q isn’t ready. And although phone delays are far from rare, the Q’s absence stands to add to an already long list of product problems for Motorola this year. Motorola didn’t reply to a request for comment.
Unlike market share leader Nokia, whose sales are spread across the globe and over dozens of models, Motorola’s fortunes ride on the success of the iconic Razr phone. But ever since the Razr rose to blockbuster success, investors have been waiting for another model to extend the No. 2 handset maker’s winning streak.
The Q phone, often called RazrBerry, had captured the eye of gadget fans looking for the next big thing. The smartphone is designed to rival top-tier models like Research In Motion’s BlackBerry and the popular Treo from Palm.
Read more.
Maybe I’m crazy, but until Sir Paul sold out to Fidelity, I would have sided with the Fab Four, now I think both sides are plain wrong.
Read more.
Smart phones like the Treo and BlackBerry are a lot of things—feature-packed, indispensable for business travelers—but cool ain’t one of them. Which is why Motorola’s Q has been so anticipated (including by us—in December we named it one of 2006’s most wanted gadgets). Now comes the announcement that the Q is finally ready to hit stores (look for it beginning next month at Verizon, and possibly others). And the good news is you won’t have to give up functionality for the sake of design.
Check it out.
I could do without the Web 2.0. moniker… but some of these companies are doing some interesting things.
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Wow, I didn’t feel very old last year when most websites started to celebrate their ten year old anniversaries, but now, for some reason, once I realized that the Palm Pilot was turning 10 years old, I felt old.
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It’s very interesting how everyone is tripping over one another to congratulate Steve Jobs’ for his remarkable turnaround at Apple… a turnaround that came by the company violating the agreement it signed with The Beatles originally agreeing not to enter the music market.
Oh well, it’s always great to have good lawyers.
Read more.
