Internet

Google’s hardware ambitions proving costly

18 Oct 2012

The search giant paid $12.5 bln for Motorola’s handset business. The division lost another $527 mln in Q3, and the mistaken early release of unexpectedly weak earnings knocked over $20 bln off Google’s market cap. A bigger concern is the risk of long-term management distraction.

Hot tech IPO a Frankenstein monster of governance

1 Oct 2012

What happens when a company takes Research In Motion’s two-headed CEO structure, bolts on Facebook’s feudal-class voting rights and injects News Corp’s nepotism worries? In the case of Workday, it creates an eye-popping $3.9 bln valuation for a software firm without any profit.

Pandora’s income stream on congressional playlist

1 Oct 2012

The online radio company is shackled by music royalties that lock up about half its revenue. Newly proposed U.S. legislation would cut those costs to as low as the 8 pct paid by rival Sirius XM. A Breakingviews calculator shows just how much value that would release for Pandora.

Real estate wave helps an IPO avoid tech wipeout

20 Sep 2012

Newly listed shares of Trulia, an online property listing service, popped by over 40 pct on their debut. That defies the dire dot-com market evidenced by the likes of Facebook and Groupon. The U.S. housing recovery is a good story but Trulia is also still hitched to the Web.

Obama may find an exceptional friend in Facebook

19 Sep 2012

The social network’s No. 2, Sheryl Sandberg, should be on the short list for a top economic job in a second Obama term. But she’d give up some $130 mln in unvested equity to leave. Current boss Mark Zuckerberg’s largess could bridge the gap. But it may cost Facebook shareholders.

Facebook’s stock slump could be self-reinforcing

12 Sep 2012

Founder Mark Zuckerberg now admits the social network’s IPO fiasco has hurt morale. No kidding. He hired nearly 60 pct of his 4,000 staff since the stock last traded as low as $18 a share on SecondMarket. That’s a lot of folks potentially poorer who thought they’d be rich by now.

Facebook crystallizes blundered IPO with buyback

5 Sep 2012

Mark Zuckerberg’s social network will essentially cut its outstanding share count by 101 mln by promising to use cash, rather than stock, to settle a tax obligation. Buying back stock four months after an IPO at half price looks cynical. In this case it’s just incompetence.

Pandora could be a Facebook friend with benefits

4 Sep 2012

The $2 bln internet radio service revealed steady strides in mobile advertising, which accounted for over half its revenue last quarter. Facebook, meanwhile, delivered fewer ads to users socializing by phone. That makes Pandora look an enticing, if pricey, companion to target.

Apple may bury hatchet with Google – just not yet

31 Aug 2012

It’s no shock their chiefs are talking. The iPhone maker’s sweeping U.S. patent win over Samsung and its Google-run devices is a blow to the search giant too. But the rivals’ clashing business models make peace difficult. Apple may first try to push its legal edge a bit further.

New NY Times boss should keep tight rein on cash

27 Aug 2012

The $300 mln sale price for About.com means Mark Thompson joins a Grey Lady which finally has net cash. But he should resist the temptation to splash out. Free cash flow is hardly stellar, the company still has a pension hole and it has yet to get a handle on its future.

Domestic challenger revives China’s search wars

27 Aug 2012

Shares in Baidu have fallen 13 percent since popular internet browser Qihoo launched its own search engine. The internet giant, which benefited from Google’s troubles in China, now has a more formidable rival. The new fight will make the country’s search industry less profitable.

News Corp’s UK tabloid exposes model weakness

24 Aug 2012

Britain’s best-selling newspaper has printed shots of Prince Harry in the buff. It also concedes that most readers will have seen the pictures on the internet, highlighting the main commercial problem facing the soon-to-be demerged News Corp newspapers. The Web.

Peter Thiel’s sale encapsulates Facebook folly

21 Aug 2012

The venture capitalist took the first opportunity to unload some $400 mln of shares from his initial $500,000 bet on the social network. His decision cements the idea that Facebook’s IPO was run by and for early backers. Thiel’s board seat is now a snub to new investors, too.

Assange asylum is a political freebie for Ecuador

17 Aug 2012

The country’s leftist government has annoyed the U.S. by granting asylum to the WikiLeaks founder. Given that its oil exports, mineral exploration and loan funding are increasingly dominated by China, which suggested Assange for the 2010 Nobel, it’s also not totally surprising.

Cisco’s attendance at fat camp pays off

16 Aug 2012

CEO John Chambers was forced to admit last year that the network giant’s quest for growth did little more than squander capital and leave it a bloated mess. Cisco has since shed excess weight and has just hiked its dividend. Now it needs to get fighting fit.

Groupon’s best days lie behind it

14 Aug 2012

The internet coupon company led by Andrew Mason lured investors into a $13 bln IPO by promising hyperbolic growth in daily deals. Less than a year later, its core business is in decline. The $4 bln company is now profitable. But there’s little assurance it will remain so.

Google searches for local edge with guidebook deal

13 Aug 2012

Frommer’s may be better known among frugal travelers with comfortable shoes than digital kids. Yet Google’s purchase of the publisher looks like a smart way to further its push into the booming local online ad market, building on last year’s purchase of Zagat.

Yahoo investors counting on Mayer burning cash

10 Aug 2012

The internet group led by Marissa Mayer says it may use much of the bounty from selling its Asian bits for acquisitions, rather than returning it to shareholders. That’s crummy, but already baked into Yahoo’s value. Investors seem resigned to Yahoo wasting a chunk of its cash.

Priceline books industry ticket back to reality

8 Aug 2012

The travel site’s strong growth and lock on small European hotels convinced investors it was worth as much as $38 bln. But disappointing second-quarter results from it and rival Orbitz have burst the bubble. And Priceline faces the added problem of growing competition.

Merger boost looks short-lived for China’s Youku

7 Aug 2012

Revenues at the leader in the Chinese internet video market almost doubled in the last quarter, but losses widened even more. The planned merger with smaller rival Tudou should help lower costs, but deep-pocketed diversified players are catching up. The pair looks vulnerable.