Yahoo Down YoY, Flat From Q2, Search Ad Revs Down 19 Percent
Yahoo just announced quarterly revenues of $1.575 million, which represents a 12 percent decline from the third quarter of 2008 and is basically flat vs last quarter. However the company saw a 19 percent decline in search ad revenue YoY but flat sequentially.
Yahoo CEO Carol Bartz characterized Q3 as “solid” in the press release and [...]
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A Billion Reasons for Twitter to be Happy
So it looks like Twitter has entered some rarefied air for sure. According to ReadWriteWeb and TechCrunch the micro-blogging juggernaut is moving into an exclusive club by securing a new round of funding ($50 million) based on a valuation of $1 billion (yup, it’s a b). No doubt, this will begin to stir the supporters and detractors alike. Unless we have ridiculously short memories or just think that this time will be different one has to wonder how a company that no one can figure out revenue wise can be valued at that much.
While I am not an analyst I did think about staying at a Holiday Inn Express over the past year so I qualify for jumping into the fray, right? Let’s hear what the RWW folks had to say first though.
While it’s unlikely that Twitter CEO Evan Williams was wearing a Dr. Evil costume when he delivered the news, he had the pleasure of announcing his company’s $1 billion dollar valuation today at an all hands meeting. According to TechCrunch, the company has raised a $50 million dollar funding round and the money will be in the bank shortly. Given the fact that Twitter turned down an offer to be purchased by Facebook earlier in the year, it appears the two are about to tango.
So of course, this conversation wouldn’t be nearly as much fun without bringing Facebook into the mix. Facebook is starting to look almost like IBM compared to Twitter. What with actual revenue generation plans and actually having the audacity to be cash flow positive one begins to wonder if Facebook is going to actually merit its own valuation. As we mentioned yesterday, Master of the Universe, Mark Zuckerberg, has something to say in the Facebook blog.
We’re also succeeding at building Facebook in a sustainable way. Earlier this year, we said we expected to be cash flow positive sometime in 2010, and I’m pleased to share that we achieved this milestone last quarter. This is important to us because it sets Facebook up to be a strong independent service for the long term.
So is Twitter in for the long term? They certainly still have the buzz going and now there appears to be a a real Facebook faceoff looming for the foreseeable future.
In the past, ReadWriteWeb has looked at Twitter’s platform potential. The service has already been used to create meme trackers, emergency alert services, news feeds and brand monitoring tools. As the infrastructure and search have improved, Twitter has become the go-to site for real time media. But can the company make a Facebook-like leap?
Facebook has added Twitter like features so why not? So what’s your take? I bet there at least a billion opinions on this one.
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Facebook Hits 300 Million–and Cash Positive
Facebook is still growing. They’re now at 300 million members—you know, roughly the population of the US. But unlike the US, Facebook has also entered the world of “free cash flow positive.”
In his post announcing the milestones, CEO Mark Zuckerberg says that they’d hoped to reach cash positive sometime next year—but, happily, they made enough to cover their operating expenses starting last quarter.
It’s been a while since we’ve heard financial news from Facebook—and the last reports weren’t so good. Almost a year ago, many were speculating whether Facebook was headed for financial ruin, and their ad rates had fallen. And less than six months ago, there were some reports that Facebook was snubbing a $4B valuation despite needing the cash the sale would have given them. (A far cry from $15B, eh?)
Up to this point, it seemed that Facebook was struggling to monetize itself enough to cover its costs. But according to Zuckerberg, their finances are better than fine. One recent effort that may have helped (but, let’s be honest, is so new that it probably hasn’t made a whole lot of money yet) was opening the gift shop to developers. Inside Facebook notes a few other potentially contributing efforts:
What’s driving Facebook’s revenue growth? A combination of revenue streams: Facebook’s self-service ad business has been very strong lately, it continues to invest heavily in brand advertising efforts, and it also continues to release many experimental expansions to its virtual goods and virtual currency business, Facebook Credits. The company is also still deriving revenue from its advertising deal with Microsoft, signed when Microsoft invested in Facebook in 2007.
If Facebook is a microcosm of the Internet, and they make money off serving ads that lead to other parts of their site (driving up time onsite and possible ad rates), perhaps this is a good sign for the Internet at large.
What do you think? Is Facebook’s cash positive status a sign of a turn around? Or are clever new monetization strategies keeping Facebook ahead of the curve?
Another Epic Decline for Microsoft’s Revenue
If you were hoping Microsoft would rebound from its poor 3rd quarter earnings, you may wish to sit down.
Yesterday, the software company reported its first year-over-year revenue and sales drop ever–which will compliment nicely the quarterly drop from Q3.
According to the WSJ:
…Microsoft said net income for the period ended in June fell to $3.05 billion, or 34 cents a share, from $4.3 billion, or 46 cents a share, in the same period a year earlier. Revenue fell 17% to $13.1 billion.
Breaking it down, Microsoft’s online services unit continues to struggle–posting a $732 million loss. Its online advertising revenue faired slightly better than last quarter’s 16% drop, seeing a mildly improved 14% decline–the equivalent of telling a teenager on prom night that the humongous zit on their chin looks "less pussy today." 
There is some good news. At least if you believe the words that come from any company executive following a disastrous quarter. Microsoft Chief Financial Officer Chris Liddell stated during the conference call that "there are some signs that we’ve seen the worst" and that "the spending environment is stabilizing on a sequential basis."
That seems to back up what Liddell said last quarter: “We expect the weakness to continue through at least the next quarter.”
We shall see.
Apple Has Best Non-Holiday Quarter Ever
While it should come as no surprise, Apple is doing very well, thank you. Amidst all of the gloom and doom, the hand wringing and the concern over the future, Apple is simply rolling along as if to say “What recession?” In what will likely be a classic case study in business schools for the future, Apple has taken an approach to the market that is so revolutionary that it has to be examined. You see, they are providing high quality products that fill needs for their customers. In the process they have even created even more need due to the nature of their products and the possibilities they offer. That is just brilliant.
In case you missed it, that was sarcasm. Apple is simply doing what every other company strives for but doesn’t have the chops to pull off in most instances. For years Apple has been the cool company always lurking on the periphery with the best gadgets and toys. For a variety of reasons they were usually very successful but the ups and downs of sales of their computers made life difficult at times.
Enter the iPhone. Apple’s market changer has done just as advertised. It has been so successful that wannabes like the BlackBerry Storm pale in comparison. If it weren’t for the AT&T drawback there would probably be twice as many iPhones in the world as there are now.
As it is Apple is having trouble keeping up with demand for the product so maybe the whole AT&T thing has its benefits. TechCrunch reports that the performance of the company in Q2 was stellar
The quarterly numbers are in for Apple. And once again they’re very good. It was another non-holiday record quarter in terms of revenues and earnings. But the real number that jumps off the page is the iPhone sales. Let’s just say it: The iPhone looks well on its way to being Apple’s primary business.
Last quarter, Apple sold 5.2 million iPhones. That’s a colossal 626 percent growth over the year ago period, when Apple sold 717,000 iPhones. Now, it’s important to note that the iPhone 3G wasn’t released last year until July, while the new iPhone 3GS dropped in June this year. But still, the difference is huge.
What is more amazing is the new economy that has been created due to the iPhone. Development of iPhone apps is occurring at a dizzying pace and appears o be gaining speed. The money that is available to many through this can make one wonder since there are now over 50,000 apps in the AppStore and there have been approximately 1.5 billion (with a b) downloads. While many of those are free more and more are 99 cents and when you do that math it can be astounding. Latest numbers put the money spent monthly on iPhone apps at around $82 million and that will only continue to grow.
If there is a downside, iPod sales are moving in the other direction but that seems natural considering the functionality of the iPhone. When the iPod touch with a camera is introduced in the coming months there will likely be a rebound there as well. Also, the folks at Apple were being very cryptic about specifics on sales of the $99 iPhone which led to some speculation.
So aside from distractions like Steve Jobs health issues there is nothing in the way of Apple moving full steam ahead and maybe even becoming more of the norm. Wouldn’t that be interesting.
Google Earnings: Not All Good News?
Last week, we highlighted the good news from Google’s Q2 earnings report—they beat expectations and they expect YouTube to be profitable soon. But there was more to the full report, as Econsultancy points out today.
In the paid search arena, Google’s bread and butter, the results weren’t as bright as the hope that YouTube will be in the black soon. Overall paid clicks were down 2% from Q109, and down 13% YOY.
Efficient Frontier agreed, according to Econsultancy.
According to Efficient Frontier, Q2 saw a 20-31% decline in CPCs amongst the advertisers in its Customer Index. Google CPCs dropped 31% while CPCs on Bing and Yahoo dropped 30% and 20%, respectively.
EF says that advertisers benefited the most. In the UK, for example, advertisers “were able to cut their spend 11% year-over-year while boosting ROI by 2%. Across the pond in the US, advertisers fared even better. They were able to reduce spend 21% year-over-year while boosting ROI by a whopping 29%.” With lower CPCs, says EF, now is a good time for advertisers to reevaluated their paid campaigns.
However, Efficient Frontier has been wrong before (like, say, last quarter when it said something very similar). What do you think? Is Google falling off, or is Efficient Frontier way off? Will you be taking a look at your paid campaigns?
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Facebook Triples Advertiser Base
I know you’re tired of hearing the same old “the economy is going down the tubes” sob story, so I brought you something different today—a company that’s actually increasing its advertiser base. And not just any company—a social media company (and you know how tough it is to really make money there—you know, other thank from VCs).
Facebook has tripled its advertiser base in the last year. Yes, tripled. Bloomberg reports on the uptick (comparing it to Google’s first sequential drop in quarterly sales last quarter), speaking with Tim Kendall, Facebook’s director of product marketing for monetization.
In case you’re wondering, the specific advertising product that’s garnered so much popularity was first unveiled in 2007. Bloomberg describes it thusly:
The automated ad system . . . lets companies make small edits to their ads during campaigns and suggests words for advertisers to target users. The ads, which appear on users’ Facebook home pages, allow 25 characters in the title and as many as 135 characters in the body of the text and an optional photo.
And it turns out that Facebook is employing a revolutionary idea to get these and other ad formats (such as their “Engagement ads”) out there.
Wait for it.
Wait for it.
A sales staff. I know, seriously, can you believe it?! Aside from selling advertising inventory, this staff also:
The company also has been helping advertisers target users when they become fans of certain products or brands. Users can visit fan pages where they learn more about the products and connect with others.
And if their advertiser base has tripled YOY, it sounds like they’re doing their job—especially in light of recent reports of rampant click fraud on the social network’s ads.
eMarket Analyst Debra Aho Williamson told Bloomberg, “Everything is starting to solidify for [Facebook]. They’re definitely getting the hang of it.”
What do you think—is Facebook hitting its stride or does it have a long way to go to catch up?
