Posted by: Rob Hof on May 14
So corporate raider Carl Icahn will indeed launch a proxy fight against Yahoo and its board, according to Reuters and the Journal. No details at this point except that a slate of 12 directors might be announced tonight, a day before the deadline Yahoo set. For now, here's more on the implications from my blog post yesterday.
But the big question remains: What in this move will prod Microsoft, which declined to launch a proxy fight for fear of driving more talent out of Yahoo or driving Yahoo into the arms of Google or another partner distasteful to Microsoft, to get back in the game?
More thoughts after the jump:
Continue reading "Icahn's Going for It: Launches Proxy Fight Against Yahoo"
Posted by: Stephen Wildstrom on May 14
Earthlink's announcement that it was throwing in the towel on an ambitious plan to bring public Wi-Fi to the entire city of Philadelphia marks the end of a glorious, but doomed experiment. The promoters of free municipal Wi-Fi hoped that optimistic techno-utopianism would somehow trump engineering and economic realities. They were, of course, wrong.
On an engineering level, the pro0moters of muni Wi-Fi got into trouble because they tended to underestimate badly the number of access points they would need to provide acceptable coverage. As the density of access points rose, so did the equipment budget, the complexity of the mesh networks, and the backhaul costs. The marginal economics of the original plans quickly became completely untenable.
Wi-Fi just isn't a very good technology for this sort of wide-area coverage, especially in densely populated urban centers. It's easy enough to provide coverage outdoors, where no one really wants it, but very hard for the signal to penetrate masonry or reinforced concrete buildings to get inside where people could use it. With access points located relatively close to the ground on lampposts or utility poles, It also proved difficult to provide service above the first couple of floors of even medium-rise buildings.
Continue reading "RIP, Free Muni Wi-Fi"
Posted by: Spencer Ante on May 13
Looks like monetizing social networks is going to be harder than people thought, as we recently warned our readers.
Today, on May 13, research firm eMarketer lowered its forecast for advertising on U.S. social networking sites to $1.4 billion from $1.6 billion. That’s a 12.5% haircut—a significant reduction, especially since it’s coming from a research firm that has been pretty bullish on the prospects of running ads on social networking sites.
eMarketer senior analyst Debra Aho Williamson said the downturn in the economy was only partially responsible for the lower forecast. Just as important, marketers are cutting back on experimental advertising programs in favor of more known quantities. And Williamson says that social networks underestimated the difficulty of developing new advertising models and the time it would take to change the habits of marketers. “I think all of the challenges of reaching people in social environments are bigger than expected,” she said. “The growth is just slower than anyone expected.”
As part of its report, eMarketer also lowered forecasts for the two largest social networks, MySpace and Facebook. MySpace will generate $755 million in U.S. advertising revenues, down 11.2% from eMarketer’s previous forecast of $850 million. eMarketer now expects Facebook to produce $265 million in ad sales, down 12.9% from its previous forecast of $305 million.
Continue reading "It’s Even More Official: Social Networking is Hard to Monetize"
Posted by: Rob Hof on May 13
Ten days after escaping a bear hug from Microsoft, Yahoo hasn't completely won its independence yet. Billionaire financier Carl Icahn is looking at launching a proxy fight against Yahoo's board, according to a CNBC report. That's a fight that Microsoft, which dropped its unsolicited bid for Yahoo on May 3, was unwilling to take on.
Icahn reportedly has been accumulating as many as 50 million shares, or 2.5% of Yahoo's stock, which helps explain why Yahoo's stock has remained well above its pre-Microsoft bid of about $19 a share. Icahn could nominate a full slate or a "short slate" of three or four directors, which would be a minority of Yahoo's 10-member board. According to the Wall Street Journal, other investors, including Scott Galloway, founder of investment firm Firebrand Partners, also could get involved.
The sources are saying the notorious corporate raider's aim would not be to make a run at the company himself, but instead to try to force a sale to Microsoft. It's unclear whether Microsoft is still interested, however. Investors took the bait anyway, as Yahoo's stock rose 5% today, to $26.56 a share.
If not Microsoft, who? Icahn wouldn't appear to have many other ways to extract further value from a Yahoo stake. Various other possible deals, such as Yahoo alliances with Google on search ads or with Time Warner's AOL unit or News Corp.'s MySpace unit, haven't materialized yet. And analysts have indicated that none of those options would likely hike Yahoo's value to the $33-a-share level that Microsoft said was its last offer.
Although Microsoft CEO Steve Ballmer appeared to become less enamored of a Yahoo deal over his three-month-long pursuit, a number of analysts and others close to the companies think a deal still could happen. Some high-profile shareholders such as Capital Research's Gordon Crawford have expressed unusually public criticisms of Yahoo's failure, or unwillingness, to seal a deal with Microsoft.
Some shareholders are unhappy in particular with Yahoo CEO and cofounder Jerry Yang, whose apparent opposition to a deal was believed to be a key factor in Microsoft's decision to walk away. Although replacing Yang on the board might be seen by some shareholders as a drastic step, his board position presumably could be one of those targeted by Icahn. Potentially, the replacement of Yang, whose stake in Yahoo is only 3.9%, and other board members believed to be close to him, such as longtime Yahoo director Eric Hippeau, could help clear the way for a deal.
Icahn would have to act fast, however. The deadline for nominating Yahoo directors is end of day Thursday for shareholders to be able to vote on the board slate by the July 3 Yahoo board meeting.
Even then, a proxy fight wouldn't be an easy task to pull off successfully. According to one source close to the situation, Microsoft may have decided not to mount a proxy fight partly because it wasn't apparent that the majority of voting Yahoo shareholders would go along with its $33 bid.
One activist investor, Eric Jackson, has just ditched plans to mount a full alternate board. He told me Friday that the expense of up to $1 million likely would prove too much, and at the time, he didn't think any other groups would step up. "Even though some people are so upset and irate," he said, "to translate that anger into getting a group organized and a slate proposed is tough."
Icahn can be persuasive. He managed to get Oracle to come back to the bargaining table to buy BEA Systems after talks broke down. That deal, sealed in January, is expected to close later this year.
However, it's less clear how much of a success Icahn's investment in Motorola last year was, since Motorola's shares have dropped sharply since last November, so his record is mixed. If Icahn persuaded Microsoft and Yahoo to agree to a $33-a-share deal, that would represent a 24% premium to today's closing price.
Whatever happens, this saga clearly isn't over yet.
Posted by: Olga Kharif on May 13
The results are in. Google has published a list of 50 applications that a panel of some 100 judges selected out of some 1,800 entries from 75 countries. These applications are deigned to run on top of the new Android operating system for mobile phones, the first of which will debut in the second half of the year.
My personal favorite: Eco2Go, which helps users to reduce their carbon footprint by, for example, finding the quickest route to a destination. In the future, its developers may even allow users to offset their carbon footprint via payments through mobile phones, says Eric Chu, group marketing manager for Android platform at Google.
