The Wall Street Journal is now reporting that the rumored $1.1 billion cash acquisition deal for social blogging site Tumblr has been approved by Yahoo’s board of directors. The Tumblr acquisition was rumored last week, with a price tag reportedly north of $1 billion, which appears to be accurate if the WSJ’s sources are correct.
Tumblr would continue to be run as a separate business and independent property, the WSJ’s sources said, and we could see an official announcement as soon as Monday from one or both of the companies. Yahoo CEO Marissa Mayer become interested in the site only a couple months ago, but sees the Tumblr purchase as a way to big inroads into social media and boost revenue growth, according to one of the anonymous people who spoke to the WSJ. Yahoo already has an event scheduled for Monday in NYC, and the WSJ has learned it will deal with Flickr, something which we’ve also heard separately. The Tumblr deal might not have been on the docket initially, but if it’s all approved it’s highly likely we’ll see it mentioned tomorrow, too.
Recently, we’ve seen suggestions that there’s a vacuum developing at the top of Yahoo’s executive ladder, and there have been rumors recently of key people departing from the mobile team. It’s interesting that a lot of these departures are fairly recent, and could go some way to explaining why Tumblr may have been willing to accept the $1.1 billion offer when sources have told TechCrunch that the amount was seen as “too low” by some within the company. Our sources also suggested that Tumblr may be looking at a fast-depleting cash pile, which again gives it good reason to sell.
Some users on Twitter are threatening to depart Tumblr if the Yahoo deal goes through, as Ingrid reported on Saturday. Overall, as she noted, visitor growth to the site appears to be flat or declining slightly in 2013, so combined, those two facts might not bode well for Tumblr’s future user acquisition. But Instagram also faced an outcry of vocal users claiming they were going to shut down their accounts and depart the service for good when Facebook bought that company. In fact, users, engagement and reach for brands using Instagram have all gone up considerably since the acquisition.
Yahoo has been snapping up companies at a rapid pace this year, with what seems like new acquisitions every week over the past few months. One of the more high-profile purchases was the Summly buy, which brought the news summary startup into the Yahoo fold for a reported price of around $30 million. The company’s 17-year old founder arguably made more headlines than the company itself, and many debated the merits of the acquisition.
More recently, the companies on Yahoo’s shopping list have been more under the radar, and in general the pattern looks like a strategic hiring spree, rather than a bunch of additions to Yahoo’s product portfolio. Tumblr would likely buck this trend, as it has a massive built-in audience, a full-featured, mature product and targets a relatively young demographic that so far isn’t all that well-represented at Yahoo. There’s a certain amount of “cool” that’s attached to Tumblr, and Yahoo is desperate for exactly that.
The deal size is raising some eyebrows, since, as Fortune’s Dan Primack tweeted, Yahoo had only $1.2 billion cash on hand as of its most recent quarterly earnings, which makes an all-cash offer for Tumblr a lot more of a stretch than it would be for someone like Apple, or even Facebook, which acquired Instagram for $1 billion in a mix of both cash and stock. Yahoo’s purchase of Tumblr, if the terms are correct, is a strong indicator of just how badly it wants to expand into media-based social networking.
We’ve contacted both Yahoo and Tumblr for comment, and so far have only received a boilerplate “We don’t comment on rumors or speculation” from Yahoo. If Tumblr gets back to us, we’ll update this piece.
Samsung’s latest flagship smartphone, the Galaxy S4, is poised to pass 10 million shipments next week less than a month after the device launched, says co-CEO Shin Jong-kyun, according to the Korea Times. The S4′s international release took place on April 27, after the phone launched in Samsung’s home market on April 26.
“We are confident that we will pass more than 10 million sales of the S4 next week. It is selling much faster than the previous model S3,” Jong-kyun told reporters at an industry forum in Seoul yesterday the paper reports. “Samsung spent 50 days to pass the 10 million sales mark for the S3. The S4 will be Samsung’s first ’10 million seller’ device less than a month after its official debut.”
Earlier this week Samsung confirmed shipments of the S4 had passed 6 million, describing it as the fastest ever sell rate for a Galaxy S smartphone, or any other Samsung smartphone. Company officials pointed to increased marketing spending as a key accelerator, according to the Korea Times. Samsung’s smartphone marketing budget dwarfs the other Android OEMs. According to research from Kantar media, reported in the WSJ, the company spent $401m in 2012 advertising its phones in the U.S. alone vs Apple’s $333 million.
It’s worth flagging that shipments are not actual sales. Samsung does not report the latter, however channel shipments at least give an indication of how popular retailers believe a device is going to be.
Apple does report device sales but does not break this out for individual iPhone models, so it’s not possible to compare the like-for-like sales of the iPhone 5 with the Galaxy S4 shipments. That said, Apple did report the opening weekend of iPhone 5 sales — when it said it sold five million of the devices. Reporting its last earnings in April Apple also said it sold a total of 37.4 million iPhones in the quarter.
Dell shareholders Carl Icahn and Southeastern Asset Management have teamed up to propose an alternative offer to founder Michael Dell’s $24.4 billion leveraged buyout deal.
According to correspondence obtained by the Wall Street Journal, Icahn and Southeastern say they would give Dell shareholders the option to continue holding stock in the company and take an additional $12 a share in cash or stock.
Southeastern is Dell’s largest shareholder with a 8.5 percent stake. Icahn and Southeastern currently hold a combined 13 percent of Dell’s stock, while Michael Dell and his partners hold about 16 percent.
Carl Icahn has sought to overturn Michael Dell’s bid to take the company private since March. The activist investor, who owns a $1 billion stake in Dell, originally said he was open to a partnership with Blackstone Group after the private equity firm made its own separate bid for the PC maker. Blackstone Group backed away from its offers last month, however, citing Dell’s “deteriorating” business. Dell’s operating margins and sales have been hurt as demand for PCs drop.
Michael Dell and Silver Lake agreed in February to buy out shareholders at $13.65 a share. Icahn and Southeastern are among several major investors who say that Michael Dell and Silver Lake’s offer undervalues the company.
In the letter seen by WSJ, Icahn and Southeastern also brought up the possibility of replacing Michael Dell and other members of Dell’s board and management.
“You now have the opportunity to ameliorate the damage we believe you have caused to Dell and its shareholders by following the fair and reasonable path set forth in this letter,” wrote Icahn and Southeastern president G. Staley Cates.
Facebook has just posted its earnings for the quarter that ended March 31, 2013. Facebook hit $1.46 billion in revenue up 38% from Q1 2012, beating Wall Street estimates of sales of $1.44 billion. Facebook reported earnings of $1.06 billion for the same quarter a year ago. Earnings per shared missed estimates, staying flat at $0.12 (analysts had expected earnings per share of $0.13.
Net income was up 7% to $219 million, versus $205 million a year ago (GAAP figures).
While revenue only grew slightly, the amount of its 1.11 billion monthly users that returned daily, 665 million, was slightly better than last quarter. For more details on user growth, read our post by Drew Olanoff.
Facebook also noted in an SEC filing issued today that Chief Accounting Officer David Spillane is leaving the company. Spillane had been the company’s revenue controller since 2008, overseeing growth and IPO. He is getting replaced by Jas Athwal effective May 10.
Initial reactions from the stock market were mildly positive, with the Facebook’s share price increasing slightly in after-hours trading just after the earnings were released, though the price had fallen 1.22% and closed at $27.43.
The percentage of Facebook’s total ad revenue that came from mobile surged to 30%, up from 23% last quarter. Read more on Facebook’s mobile progress from Kim-Mai Cutler.
Last quarter, Facebook posted earnings of $1.59 billion, a rise of 40% year-over-year. Last quarter the company had 1.1 billion monthly users, 618 million daily users, and 680 mobile monthly million, up 57% year-over-year.
In the lead-up to today’s earnings, there were a lot of expectations about how Facebook would perform performing around some key metrics.
User numbers. As noted in the WSJ, one area where Facebook will be scrutinized will be in its proportion of daily to monthly active users. In Q4 the figure was 58.5% globally. Mark Mahaney of RBC Capital Markets told the newspaper that he expects that to go up to 59% but “anything less than 58% would be a negative for Facebook.” Elsewhere, there have been some reports of user attrition. However, Facebook hit a 60% daily to monthly users, showing slightly better engagement.
The fact that Facebook saw a higher DAU/MAU ratio means that Facebook was more engaging this quarter than last, a strong sign rebuking critics who claim people are using the site less. However, Facebook’s user growth is currently coming predominantly from developing markets that don’t earn it nearly as much money as users in first-world markets like the United States.
Advertising and payments. Last quarter Facebook’s ad revenue was $1.33 billion, up 41% on the year before, and payments revenue came in at $256 million. Facebook’s payments revenue in Q1 was $213 million, it’s biggest payment three-month quarter yet. [Correction: We original said payments revenue fell, but that's because Q4 2013 was a four-month quarter, irregularly boosting its revenue on the books.]
213M for 1Q13 payments. This was biggest payment quarter – there were four months included in 4Q revenue.
We talked about it on call but should have reminded people.
Mobile. Last quarter mobile revenues revenues grew to make up 23 percent of the company’s total sales. Mobile revenues effectively equals mobile advertising, since gifts, also sold on mobile, are negligible. Next quarter, however, Facebook will start making another revenue stream in mobile by way of Parse, the mobile development platform. Parse has around 60,000 developers, and offers a freemium model based on usage, with the cheapest paid version priced at around $199 per month. This was still a relatively small business when it was acquired last month for a price believed to be around $85 million so it’s not likely to grow and become a significant revenue source for another couple of years. Another specific area proving to be a significant driver within Facebook’s mobile ads business are app install ads, where app publishers pay a fee for an add to appear in a person’s mobile news feed.
Facebook Home; Graph Search. This past quarter saw the launch of two major initiatives for the company, Facebook Home on mobile and Graph Search, the “third pillar” after News Feed and Timeline, according to CEO Mark Zuckerberg. Facebook Home saw a little surge of interest with 500,000 downloads in its first five days across a limited amount of devices that currently support it.
The earnings call is at 2pm PT; we’ll be listening in and reporting on that.
Pouring $586 million in Sina Weibo gives Alibaba Group several perks, including an inroad into social media and access to the microblogging platform’s data. Not only that, but its new 18 percent stake in Sina Weibo may also give Alibaba Group a leg-up as it seeks to promote its own smartphone operating system Alibaba Mobile OS (AMOS) as a rival to Android.
As the Wall Street Journal writes, Alibaba Group’s investment in Sina Weibo means that it now has access to data generated by the platform’s 46.2 million daily users. This is on top of the 500 million registered users on Taobao, one of Alibaba Group’s e-commerce sites.
“If you are a big Internet company and you are ambitious enough in the mobile space, you have to do more than apps. Otherwise, you are just a small species in an ecosystem controlled by others,” Alibaba chief strategy officer Zeng Ming told WSJ.
Zeng said that Alibaba Group’s target for AMOS is to power 10 percent of all smartphones shipped in China, an ambitious goal considering that AMOS currently only has 1 percent market share. According to IDC data, Android currently holds an 80 percent chunk of the market, while iOS accounts for 10 percent. Though seven Chinese smartphone makers — KONKA, ZOPO, Amoi, G’Five, Little Pepper, Haier, and Beijing Tianyu–have pledged to launch AMOS phones, none of them are major players.
Obstacles standing in Alibaba Group’s way include Google, which in September objected to Acer’s plan to sell an AMOS-powered smartphone because Acer is part of the Google-led Open Handset Alliance. Google said that Acer could not work with a “noncompatible” version of Android and, even though Alibaba insisted that its OS is not an Android variant, the Acer phone was shelved. But Alibaba Group seems optimistic that it will ll be able to get around the Open Handset Alliance. Zeng told WSJ “if quite a few handset companies decide to choose Alibaba’s OS, Google will have to be careful in how far they want to push it.”
Alibaba Group recently held a press conference in which it outlined its plans to leverage its e-commerce properties to get support from device makers, telecom carriers, and software developers as it creates an ecosystem for AMOS.
Steps Alibaba Group is taking to promote AMOS include subsidies for smartphone makers and a 1 billion RMB ($162 million) funding program for app developers. The company is also striking deals with telecom operators that would allow customers to purchase AMOS smartphones without deposits or down payments by determining their creditworthiness based on transactions on Alibaba Group’s e-commerce sites.
Furthermore, AMOS may stand to benefit from the Chinese government’s push to promote operating systems developed within that country, which has included attacks on foreign developers. For example, in March China’s Ministry of Industry and Information Technology issued a white paper that criticized the country’s dependency on Android, while Apple issued an apology earlier this month after a series of attacks by state-run media. Other OSes currently being developed by Chinese companies include Smartisan and Ubuntu Kylin.
