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Google Slashes Costs Boosts Profits; Microsoft Fires And Yahoo Freezes

Microsoft still interested in Yahoo!: Ballmer
Microsoft chief executive Steve Ballmer said Thursday that the US software giant remains interested in a search business partnership with Yahoo! and welcomed the appointment of new CEO Carol Bartz. "I've been quite public about the fact that there are advantages for advertisers and consumers, for Microsoft and for Yahoo! through a search partnership, and we'd like to do one," Ballmer said. Speaking at a conference call with reporters and analysts after Microsoft released its quarterly earnings, Ballmer welcomed the recent nomination of former Autodesk executive Bartz to head Yahoo! "I know Carol Bartz well from Autodesk days, and I like to see her at the helm of Yahoo!" he said. "If it's appropriate I'm sure we'll have the right discussions." Yahoo co-founder and chief executive Jerry Yang earlier this year rejected a 47.5-billion-dollar bid by Microsoft for his company, earning the disapproval of many shareholders. Ballmer last month said Microsoft remained interested in acquiring Yahoo!'s search business and would rather see a deal done "sooner than later." Google dominates online search with more than 60 percent of the market. Yahoo has around 20 percent while Microsoft is a distant third with under 10 percent.
by Staff Writers
San Francisco (AFP) Jan 22, 2009
Google on Thursday trumped expectations and reported a net profit of 382 million dollars for the final three months of 2008 despite a billion dollars vanishing in sinking investments.

Fourth-quarter earnings per share of 1.21 dollars fell far short of the 3.79 dollars per share posted during the same quarter in 2007 but they were hamstrung by one-time charges related to Clearwire and America On Line (AOL).

Google reported revenue for the recently-ended quarter of 5.7 billion dollars, an 18 percent rise from the same period a year earlier.

"Google performed well in the fourth quarter, despite an increasingly difficult economic environment," said Google chief executive Eric Schmidt.

"It's unclear how long the global downturn will last, but our focus remains on the long term, and we'll continue to invest in Google's core search and ads business as well as in strategic growth areas such as display, mobile, and enterprise."

Google said revenue rose in almost every online search category.

Google's stock price gained more than two percent to 313.21 dollars per share in after-hours trading that followed the release of the Mountain View, California, firm's earnings figures.

"We saw strong search query growth year-on-year; revenue up, and tight control on costs -- something that has eluded us in the past but we think we have the formula down now," Schmidt said during an earnings conference call.

Google has curtailed hiring, and even eliminated 100 recruiting jobs.

Google's sales force went out and told customers that targeted online advertising is key to making money, especially in dismal economic times, according to Schmidt.

"It is absolutely true the people are shifting to the Web and advertising is going online; and that is good for Google," Schmidt said. "We are optimistic about Google and its future."

Google sees "huge" untapped potential in online search and advertising arenas and is investing in improving query results and the relevance of associated ads, according to executives.

"Wouldn't it be nice if Google understood the meaning of your search phrase instead of just the words," Schmidt said. "We have things we are going to be rolling out."

Schmidt confirmed reports that Google is readying a way for owners of films, television shows and other "commercial video" that pops up on YouTube to add advertising, even if users of the website post content without permission.

"There are deals on their way," Schmidt replied when asked about barriers to making advertising money from video posted at Google-owned YouTube.

"It is fair to say we haven't found a single solution that drives revenue wildly and we are working on that."

Google also announced a plan to let employees trade-in stock options that are "under water" because they entitle holders to buy shares at formerly discounted prices that are now higher than those in the sagging open market.

Workers can opt to exchange stock options for replacements more in tune with the stock market, but must wait an additional year before they can exercise them.

Google said half of its revenue came from outside the United States, but revenues from Britain, a key market, dropped some 90 million dollars from the prior quarter and exchange rates worked to its disadvantage.

Google took 726 million dollars in charges related to its investment in Time Warner-owned AOL and another 355 million dollars in charges related to its investment in Clearwire, a firm building a network for wireless devices.

Microsoft to cut up to 5,000 jobs as earnings fall
US software giant Microsoft announced the most sweeping job cuts in its history on Thursday as a worsening economy and weak spending on technology sent quarterly profit sharply lower.

Releasing its results for the second quarter of its fiscal year, Microsoft said it was cutting up to 5,000 jobs, or 5.5 percent of its workforce, over the next 18 months.

The Redmond, Washington-based company said net profit fell by 11 percent in the quarter from a year ago to 4.17 billion dollars on a revenue of 16.63 billion dollars, a two percent rise from a year ago.

It said earnings per share were 47 cents for the quarter that ended on December 31, less than the 49 cents per share forecast by analysts.

"While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach," Microsoft chief executive Steve Ballmer said in a statement.

"We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today."

Ballmer's reassuring words failed to prevent Microsoft's shares from plunging on Wall Street, where they lost 11.71 percent to close at 17.11 dollars.

"In light of the further deterioration of global economic conditions," Microsoft said it was eliminating "up to 5,000 jobs in R&D (research and development), marketing, sales, finance, legal, HR (human resources), and IT (information technology) over the next 18 months, including 1,400 jobs today."

Microsoft employs some 91,000 people and rumors of job cuts at the world's biggest software firm had been circulating for weeks.

The company said the move was among various steps designed to manage costs, "including the reduction of headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing."

"These initiatives will reduce the company's annual operating expense run rate by approximately 1.5 billion dollars and reduce fiscal year 2009 capital expenditures by 700 million dollars," Microsoft said.

Global consulting firm Challenger, Gray & Christmas said Microsoft's move "is further evidence of the recession's increasing impact on the technology sector, which first appeared less susceptible to the weakened economy.

"However, Microsoft's announcement is particularly remarkable in that it is the first layoff event of this size and scope in the company's history," it added.

Ballmer, in a memorandum to employees obtained by the AllThingsDigital technology blog, said "consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.

"Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs," he said, adding that "the decision to eliminate jobs is a very difficult one."

In a conference call with reporters and analysts, Ballmer said he does not expect a "quick rebound" for the economy. "The economy shrinks and then it grows from a lower base. So no, I'm not expecting a bounce," he said.

The company founded by Bill Gates declined to release an outlook for the remainder of the fiscal year, citing the "volatility of market conditions going forward."

"Economic activity and IT spend slowed beyond our expectations in the quarter, and we acted quickly to reduce our cost structure and mitigate its impact," said Microsoft chief financial officer Chris Liddell.

"We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year."

Reflecting the overall weakness in personal computer sales, Microsoft said revenue from software sales fell eight percent to 3.98 billion dollars in the quarter.

Revenue from the server and tools sector grew 15 percent, the company said, while revenue from the entertainment and devices division rose three percent, driven by strong holiday demand for Xbox 360 consoles, which sold a record six million units in the quarter.

Yahoo! freezes employee salaries
Yahoo! said Thursday it is freezing employee pay as it works to curtail costs and improve the pioneering Internet firm's fortunes.

The news comes five days before Yahoo! announces its earnings for the final quarter of 2008.

"The executive team decided that providing annual salary increases would not be in the best interests of the company or shareholders," said Yahoo! spokeswoman Kim Rubey.

Some analysts are predicting that newly-appointed chief executive Carol Bartz will shake-up Yahoo!.

Veteran Silicon Valley executive Bartz took over the helm of Yahoo! last week, vowing to revive the ailing Internet giant and calling on critics to give it room to breathe.

Bartz, 60, replaces Yahoo! founder Jerry Yang, who stepped down on November 18 after a rocky tenure as chief executive of the Sunnyvale, California, firm that lasted a little over a year.

Yang, who founded Yahoo! in 1994 with Stanford University classmate David Filo, will remain at Yahoo! and the board said his "iconic stature in the industry makes him an invaluable resource."

Yahoo! has been outshined by Internet-search star Google and stumbling in the wake of a failed courtship with Microsoft, which offered last year to buy Yahoo! for nearly 47 billion dollars.

Yang's rejection of Microsoft's 33-dollar-a-share takeover bid was met with disapproval by many share-holders including billionaire investor Carl Icahn, who led a revolt against Yang and was eventually named to Yahoo!'s board.

Microsoft chief executive Steve Ballmer said Thursday that the US software giant remains interested in a search business partnership with Yahoo! and welcomed the appointment of Bartz.

"I've been quite public about the fact that there are advantages for advertisers and consumers, for Microsoft and for Yahoo! through a search partnership, and we'd like to do one," Ballmer said.

"I know Carol Bartz well from Autodesk days, and I like to see her at the helm of Yahoo!. If it's appropriate I'm sure we'll have the right discussions."

Google dominates online search with more than 60 percent of the market. Yahoo! has around 20 percent while Microsoft is a distant third with under 10 percent.

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China wary about the power of netizens in 2009: analysts
Beijing (AFP) Jan 14, 2009
China is casting an increasingly wary eye over the Internet and its 50 million bloggers amid a year of sensitive anniversaries and job losses that could trigger unrest, analysts and rights groups said.







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