The Wall Street Journal-20080214-The Evening Wrap- MySpace Is YourSpace- Online edition
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The Evening Wrap: MySpace Is YourSpace; Online edition
Full Text (1784 words)In its scramble to escape the clutches of Microsoft, Yahoo is now turning to News Corp.
Under a deal being discussed, News Corp. would swap some of its Web properties, including social-networking site MySpace, and some cash in exchange for a stake in Yahoo that could be more than 20%. The cash would put Yahoo in a better position to fend off Microsoft's unsolicited offer, which it has declared too low. Microsoft's cash- and-stock bid was initially valued at $44.6 billion. A cash infusion was also one of the rationales behind Yahoo's discussing an advertising tie-up with Google. The idea was that Yahoo would outsource at least part of its search-related advertising to Google in return for a majority of the revenue. However, the pact might give Google a larger slice of the online-advertising market than regulators could stomach and Google's enthusiasm for the pact has waned, people familiar with the matter say. And some of the details of the News Corp. talks also show how difficult it will be for Yahoo to find a sure defense against Microsoft's will and money.
For starters, News Corp.'s money and the access to MySpace's large online audience won't necessarily address Yahoo's core problems, including a declining share of Web searches. Secondly, the News Corp. and Yahoo have been discussing variations of this deal for the past 18 months without fruition. Those talks have apparently stumbled over putting a value on MySpace. News Corp., whose other properties include The Wall Street Journal, is likely to push for MySpace to be valued at between $6 billion and $10 billion, according to people familiar with the matter. While News Corp. would be glad to get such tangible value from its large investment in MySpace, Yahoo has some good reasons to be skeptical of that valuation. Social-networking sites boast a large number of users, a rapid pace of innovation, and endless think pieces on how they are changing relationships. But for all that, there are signs they are yielding advertising revenue slower than some Internet companies had hoped. News Corp. executives recently expressed satisfaction with revenue growth at MySpace's parent division. But Google, which sells advertising on MySpace.com, has hinted at dissatisfaction with the arrangement. "We have had a challenge with social networking inventory as a whole and some of the monetization work we were doing there didn't pan out as well as we had hoped," Google co-founder Sergey Brin recently told analysts.
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Retail Sales Post Surprise Jump. . .
Following some dismal January sales reports from big-chain retailers and a drop in December, economists were pleasantly surprised by a 0.3% jump in overall retail sales in January. Most were expecting another decline. However, demand for cars and rising gas prices propelled much of the increase.
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. . . And Lift Stocks
One of this year's most downtrodden stock-market sectors, technology, rode a rally fueled partly by upbeat economic data. The Dow Jones Industrial Average closed up 1.5%, or 178.83 points, at 12552.24. The Nasdaq Composite Index was the biggest winner in percentage terms among major stock yardsticks Wednesday, up 2.3%, or 53.89 points, at 2373.93. The Standard & Poor's 500 gained 1.4%, or 18.35 points, to 1367.21. Bonds were mixed. The two-year Treasury note gained, but the 10-year note fell to yield 3.692%. Crude-oil futures inched higher to close above $93 a barrel after new figures showed U.S. oil inventories had grown less than anticipated and supply concerns loomed. The retail data also allowed the dollar to rise against the euro and yen. Asian markets ended mixed, with Tokyo shares tracking Wall Street's overnight gains, while post-holiday Shanghai stocks declined sharply. European shares closed with modest gains, weighed down by losses from banks and miners.
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Stimulus Plans
Bush signed a $168 billion economic stimulus plan, calling it "a booster shot for our economy." That means $300 to $1,200 are to go out beginning in May to taxpayers and low-income people. Meanwhile, Democrat Barack Obama, coming off of more primary victories on Tuesday, said that as president he would spend $210 billion to create jobs in construction and environmental industries, as he tried to win over economically struggling voters.
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Clemens and Former Trainer Clash in Congress
Pitching great Roger Clemens and his former trainer, Brian McNamee, clashed under oath at a U.S. congressional hearing. Sitting together at a witness table and before a crush of cameras, Mr. Clemens again denied ever taking such substances and McNamee insisted he did.
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Rio Tinto Remains Defiant
Rio Tinto said that despite a 2% fall in full-year profit it is poised for significantly faster growth than rival miner BHP Billiton, whose $147.4 billion takeover offer it has rejected. Analysts said that while Rio Tinto's result featured strong earnings growth from the key iron-ore division, it would have little impact on the dynamics of the takeover tussle between Rio Tinto and BHP.
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Emerging Markets Lift Buoy Coke
Coca-Cola's fourth-quarter net income jumped 79% amid year-earlier charges, as the company continued to increase volume world-wide, with double-digit growth in emerging markets and modest gains in North America. Investors are monitoring Coke's volume for signs that its general turnaround is for real.
In other earnings news:
DirecTV's profit slipped as higher interest costs outpaced revenue and subscriber growth. However, the rate of customer defections dropped to the lowest level in eight years.
World-wide grain stockpiles are at some of the lowest levels in decades while prices for corn, wheat and soybeans are at or near record levels, plowing money into farmers' pockets globally. The resulting global agricultural boom lifted sales of Deere's iconic John Deere machinery and fueled a 55% rise in fiscal first-quarter net income.
Jones Apparel, the maker of Nine West shoes and Anne Klein clothes, narrowed its loss with fewer write-downs, but sales and margins reflected economic uncertainty. It also announced a deal to sell its l.e.i. brand at Wal-Mart stores.
French oil major Total said its fourth-quarter profit rose 62%, helped by rising production of oil and gas.
Vonage narrowed its quarterly loss as it scaled back marketing costs, but the Internet-phone provider continued to struggle to keep existing customers.
Strong sales growth helped biotech company Genzyme swing to profit in the fourth quarter.
Mortgage insurer MGIC swung to a fourth-quarter loss as it established a $1.2 billion reserve to cover future losses in the credit crisis.
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Bush Pushes Surveillance Bill
President Bush pressured the House to pass new rules for monitoring communications. Mr. Bush said he would not agree to give the House more time to debate a Senate-passed measure governing the government's ability to work with telecommunications companies to eavesdrop on phone calls and emails between suspected terrorists.
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Health Insurer Target of Pricing Probe
The New York attorney general said his office plans to sue UnitedHealth Group as part of a broader investigation into the way the health-insurance industry sets payment rates for hospitals and doctors outside of their networks.
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Mortgage Troubles Prompt Cuts at Morgan
Morgan Stanley will cut its U.S. residential mortgage operations and close its U.K.-based residential mortgage lending business, Advantage Home Loans, in response to continued deterioration of the mortgage markets. About 1,000 employees in the U.S. and U.K. will be affected by the changes, on top 1,000 layoffs set in motion several weeks ago.
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Men and Women Differ On Online Videos
In its first significant study of how people use online video, Nielsen Online has found that women tend to favor network television on the Web, while men are drawn to user-created content that appears on sites such as YouTube.
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ABB Chief Abruptly Departs
Swiss industrial giant ABB seemed set for a new round of takeovers after the surprise departure of Chief Executive Fred Kimble. ABB has been profiting from a global infrastructure boom. But Mr. Kindle was under pressure to be more aggressive with the resulting accumulation of cash on the company's books.
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CICC May Get New Chairman
China International Capital Corp. may be about to get a new chairman who would solidify the investment bank's role as China's leading underwriter of state firms. The lead candidate to replace Jesse Wang is Li Jiange, a vice ministerial rank in the Chinese government.
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Fujifilm Buys Drug Maker
Like Eastman Kodak, Fujifilm is looking to apply its expertise with images to any industry that doesn't involve film. Fujifilm Holdings said it would pay as much $1.44 billion to acquire midsize drug maker Toyama Chemical, part of its shift toward medical products, like endoscopes and digital X-ray systems, with an eye to extend its product mix to diagnostic and other drugs.
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China Blocks Hollywood Movie Shoot
China's sensitivities over Japan's invasion in the 1930s remain a stumbling block for Hollywood period movies. China has blocked and suggested changes to a Hollywood movie set in Japanese-occupied Shanghai that reportedly stars John Cusack and Gong Li. Director Ang Lee has also said he edited dialogue in his World-War-II era spy thriller "Lust Caution" so that the main character would appear less of a traitor to the Chinese cause.
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Tommorrowland, and Beyond
For 50 years, Disney has been struggling to get the future right. Half a century ago, Disneyland opened the "House of the Future," a Jetsons-style pod of a home, filled with such mind-blowing features as hands-free phones, wall-sized televisions, plastic chairs, and electric razors. Then there was the EPCOT Center, which started out as a series of pavillions sponsored by industrial giants, each one meant to showcase a technology of the future. Their visions didn't exactly inspire. "Every ride seems to begin with cavemen and end in a video game where a recorded voice asks you to face the challenges of tomorrow," wrote P.J. O'Rourke in 1983. Now comes Disneyland's Tomorrowland, a $15 million home built in collaboration with Microsoft, Hewlett-Packard, LifeWare and homebuilder Taylor Morrison set to open in May. Disappointingly, there will be no robot butlers. Visitors will follow actors using all the features of the house as they frantically pack for a trip to China, apparently the destination of the future. (How do Disney's theme parks come up with so many vapid jobs for actors?) Personalized images, music, and movies will follow the actors around the house. Touchpad software on the kitchen countertop will be able to identify groceries and produce recipes and meal suggestions. Closets will suggest clothing ensembles. It sounds good and sensible. But if Disney was daring, it would show what its "House of the Future" attraction will look like in the future. How will the people of 2100 imagine the world of 2200? That's what we want to know. ---
The Associated Press contributed to this column.
