Yahoo Vexed by Weak Sales

Story first appeared in the Wall Street Journal.

As Yahoo Inc. shops itself to potential buyers, its core advertising business is weakening. That trend is evident through Craig Atkinson's ad agency.

Yahoo's core advertising business is weakening -- the company in some cases has cut prices 5% to 15% -- a complication as Yahoo shops itself to potential buyers. Amir Efrati has details on The News Hub.

Mr. Atkinson is president of ad giant Omnicom Media Group's PHD unit, which oversees annual ad spending of $4 billion to $5 billion for companies including Starbucks Corp. and Gap Inc. Over the past year, he said, the agency's ad spending on Yahoo properties is flat to slightly down.

And in the past few weeks, since Carol Bartz was fired as Yahoo chief executive, Yahoo's Americas-region chief Ross Levinsohn and others have been on a "barnstorming tour" to meet with him and his peers, he said. "They're saying, 'We're willing to do what we have to do to win the business,'" Mr. Atkinson said, adding that while his advertiser clients still view Yahoo as a way to reach and target "enormous audiences," it's no longer a "must-buy."

Mr. Atkinson's experience is troublesome for Yahoo, which reports third-quarter results Tuesday. Following Ms. Bartz's firing, Yahoo's board has been looking at potentially selling off all or parts of the onetime highflying Internet company, people familiar with the matter have said.

One of the company's key assets is the heavy traffic to its Yahoo.com home page and its news, entertainment and other websites—and the strong online display-ad business those sites have sustained.

Any weakening in Yahoo's $4 billion annual ad business—a figure that excludes commission payments to Yahoo's business partners—may have implications for how attractive the company is to suitors. Yahoo's display-ad business, including graphical, interactive and video ads, generates 40% of the company's overall revenue but only grew 5% year over year in the last reported quarter—a sharp slowdown from double-digit growth rates in prior quarters.

Analysts expect Yahoo's display-ad sales to be flat or slightly higher than a year ago in the third quarter. By contrast, the overall U.S. online-ad industry has increased more than 20% so far this year.

Yahoo's Web-search partnership with Microsoft Corp. has been a drag on search-ad revenue, which accounts for one-third of overall revenue. And decline in the average amount of time people spend on Yahoo sites every month is now beginning to show up in the company's financial figures.

"The eroding ad business weakens the resolve of Yahoo's board to remain an independent company, increasing the chances of an outright sale," said Jordan Rohan an analyst at Stifel Nicolaus & Co. As long as Yahoo on Tuesday reports that quarterly revenue isn't more than 10% below the $1.2 billion to $1.26 billion range it previously projected for the quarter, potential buyers of the company "will be able to overlook it," he said.

A Yahoo spokeswoman said the company is in a "quiet period" before Tuesday's earnings and can't comment on sales and revenue.

Reuters

To reverse its fortunes, Yahoo has been bending over backwards to please its largest ad clients, according to ad executives. In recent weeks and months, the company in some cases has cut ad prices 5% to 15%, including for its Yahoo.com home page and Yahoo Mail log-in page, and included features such as custom animation, said ad executives. The home page commands the highest prices for ad units on Yahoo, running anywhere from $200,000 to $850,000 for a full day.

Yahoo also changed the look of the Yahoo! logo on its home page for the launch of Walt Disney Co.'s most recent Pirates of the Caribbean film earlier this year, something the company had never done before for an advertiser, a Yahoo spokeswoman said.

In addition, when Yahoo and ad agencies disagree on how many people viewed a particular ad on its sites, Yahoo has been willing to bill the agency based on the agency's numbers rather than its own—something it seldom did before, according to agency executives. "Historically Yahoo was a company of 'No's' and they are slowly becoming a company of 'Yes we can,' which is very refreshing," said David Cohen, an executive vice president at Universal McCann, a media-buying agency owned by Interpublic Group of Cos.

Mr. Cohen, PHD's Mr. Atkinson and other advertisers said they are also encouraged by some other Yahoo moves. For instance, Yahoo has created an "agency development team" of more than 20 salespeople dedicated to each of the major ad agencies. Yahoo can now also propose large-scale display-ad campaigns on its websites within a week or two of being approached, down from four to six weeks previously.

Yahoo is also more proactive with its largest advertisers, agency executives said. In prior years, ad agency executives said, Yahoo billed itself as the best place to reach a wide audience and often waited on advertisers to call, a tactic that became less effective as Internet users began to spend less time on Yahoo sites, including Yahoo Mail, the company's biggest source of ad space.

Following an overhaul of its sales leadership that started last year, Yahoo has reached out to advertisers to work on large-scale campaigns surrounding "anchors," or annual events such as the Super Bowl and the Oscars, and "tent-poles," or less-frequent events such as the recent British royal wedding.

Such efforts have borne some fruit. Yahoo recently reached a deal with Procter & Gamble Co. for a display-ad campaign during the summer Olympics next year, worth tens of millions of dollars, said people familiar with the matter. Spokeswomen for Yahoo and P&G declined to comment about the deal.

Still, ad agency executives said Yahoo faces an uphill climb. Rishad Tobaccowala, chief strategy and innovation officer at VivaKi, an agency that oversees $7 billion to $10 billion in digital-ad spending for clients such as General Motors Co. and Coca-Cola Co., said the average rate for ads on Yahoo sites has fallen 10% to 15% annually over the past two to three years.

That trend is due partly to the growing availability of cheaper ways for advertisers to reach large audiences on the Web, thanks to technology from companies such as Facebook Inc. and Google Inc., which places ads on thousands of sites through its automated DoubleClick ad exchange.

Yahoo's ad prices have also been pressured by the growing amount of articles and videos on the Web, including "premium" content from media companies such as Walt Disney, Viacom Inc., and video site Hulu LLC, which is worth more than content generated by Yahoo. "Yahoo doesn't have the technology that Facebook and Google has, and it doesn't have the quality of content that other players have," said Mr. Tobaccowala, whose agency is part of ad giant Publicis Groupe SA. To remedy the content-quality gap, Yahoo has begun to form partnerships with leaders in various categories. Two weeks ago it announced the first such deal, which puts ABC News video content on Yahoo sites. The companies split revenue from ads sold against the content.

To better compete with technology rivals, Yahoo is teaming up with AOL and Microsoft to combine the supply, or inventory, of lower-priced ads that the companies sell on their respective sites into one marketplace where advertisers can buy it, people familiar with the plan said. The move theoretically could boost the ads' value. Spokeswomen for the companies previously stated they were working on partnerships but didn't elaborate.

Customers are supportive of the moves. "What you're seeing now is innovation to create more relevance for advertisers," said Adam Shlachter, director for digital in the U.S. for MEC, the global media-buying agency that is part of WPP PLC."We've heard a lot more from them [Yahoo] of late. There's more regular dialogue, lower prices and new opportunities," he said.

Police Knew Job’s Death Was Pending Inimate

Story first appeared in the Chronicle with Bloomberg.

Apple Inc. security officials met with police in Palo Alto, California, this week to notify them that Steve Jobs was close to death, a spokeswoman with the police department said.

Following the meeting, the police devised a plan to put patrols in the area around the former Apple chief executive officer's Palo Alto home once they heard from the company that he had died, according to the spokeswoman.

The Apple representatives told the police department there was a possibility that it could happen this week, and that it's common sense for us to work together.  Apple added that if you think about who he was and his contribution to the world, people might come out in masses.

Jobs, who resigned as Apple's CEO on Aug. 24, died Oct. 5, the Cupertino, California-based company said. Jobs, 56, had been diagnosed in 2003 with a neuroendocrine tumor, a rare form of pancreatic cancer, and underwent a liver transplant in 2009. Apple unveiled the latest version of its iPhone, the product that accounts for almost half of the company's sales, on Oct. 4, the day before his death.

Jobs lived in a home that was modest, for a person of his means, on a public street open to pedestrians and traffic. The extra patrols were necessary for safety reasons.

'Compounds and Walls'

One person said there are other people here in town, they have compounds and walls, but Jobs didn't want to have security around.

Apple was supposed to inform the police of Jobs's death before making a public announcement so the department could prepare. Instead, police learned he had died when the company issued a press release at about 4:30 p.m. local time on Oct. 5.

As it turned out,  only about 40 people showed up around Jobs's home that day.

Mourners gathered at Apple stores around the world and took to the Internet and social media to express their grief.

5 Universities Collaborate to Install Supercomputers

Story first appeared on the Associated Press.

At a gritty industrial site occupied a century ago by a textile mill, five universities are collaborating to install supercomputers that will recreate the start of the universe and perform other research.

The developers of the Massachusetts Green High Performance Computing Center, which is being built and is expected to be operating by the end of next year, were drawn to Holyoke for the same reason industrialists flocked to the city in the 19th century: cheap water power from the Connecticut River.

Boston University, Harvard University, the Massachusetts Institute of Technology, Northeastern University and the University of Massachusetts formed the venture to boost academic research in protein structure, fluid flows, the dynamics of the earth's atmosphere, human social interaction, the evolution of the galaxy and other issues. The universities are each spending $10 million, the state of Massachusetts has committed $25 million and technology companies EMC Corp. and Cisco Systems Inc. are contributing $2.5 million apiece.

The universities will pool resources by using the 90,000-square-foot building, which will be larger than anything they could operate on their own, said Jim Kurose, executive associate dean of the College of Natural Sciences at UMass-Amherst.

Only about of dozen employees will work at the computing center, with the bulk of the research being done remotely from the campuses. The people who work at the center will include administrators responsible for finances and use of the center, security personnel and employees who oversee the building's operations and grounds.

With no employment boom at the computing center, Holyoke officials and its promoters say the center's real attraction for the area will be its ability to draw research companies and other businesses looking to establish a high-tech footprint in western Massachusetts.

The nearly 9-acre site that will house the supercomputing center is now a construction zone with open pits, a stream of heavy equipment and piles of bricks that once formed the walls of the mill and will be used as fill. Signs of Holyoke's past are evident everywhere - in the obvious, such as a wire manufacturing plant nearby - or harder to see, a crumbling tar surface that exposes early 20th-century brick beneath.

City officials and others are trying to reclaim Holyoke's history as an industrial powerhouse in the 19th century and early 20th century that drew top entrepreneurs and immigrants seeking work. It suffered "some disinvestment over the years" as paper manufacturers left, Anderson said. And many mills changed hands, were retooled for new types of business or shut down.

Holyoke's backers have high hopes for a modern resurgence. They're using waste heat from the center's computers for greenhouse and building heating systems and capitalizing on a proposed high-speed rail line to draw more business.

John Aubin is one of Holyoke's more passionate supporters. The owner and developer of Open Square, a residential and commercial center in what was Holyoke's first mill, said the computing center being built in his neighborhood will be a boon to Holyoke. The city's proximity to the University of Massachusetts at Amherst and Mount Holyoke College in South Hadley guarantees a well-educated work force, he said.

Holyoke's hydropower generated by the falls over Connecticut River's 57-foot drop is a strong attraction, say Goodhue and others involved in planning the computing center, which has a generator on site that draws water power from a canal more than 100 years old. Holyoke's water power accounts for about two-thirds of locally generated electricity.

The relatively cheap electricity is particularly important for the computing center, which is expected to be able to use at any time up to 15 megawatts, the equivalent of powering as many as 15,000 homes.

The center helps meet a growing a demand for more powerful computers to do wider-ranging research, said Thom Dunning, director of the National Center for Supercomputing Applications at the University of Illinois.

He cited molecular-level research, weather and climate change and health issues such as viruses and how infectious diseases affect populations. For example, researchers in Los Angeles are using a supercomputer to model the impact of an earthquake to help the city prepare for one, Dunning said.

In addition, rapidly increasing computing power opens a whole new range of problem" that could not be solved by previous generations of computers.

Goodhue said the Holyoke computing center is intended to capitalize on the real tectonic shift in the amount of computing power available for academic research.

Botched Internet Upgrade Puts Bank of America In Hot Water

This story first appeared in the Wall Street Journal.

A botched technology upgrade was responsible for online banking problems that spilled into a sixth day at Bank of America Corp., inconveniencing customers and handing the biggest U.S. bank by assets fresh image problems.
In an interview with The Wall Street Journal late Wednesday, the bank's head of online and mobile banking blamed the glitches on heavy customer traffic amid a continuing effort to upgrade Web capabilities.
The problems hit the most-trafficked U.S. bank website at a time when Bank of America, under pressure from investors because of weak revenue and high expenses, has been promoting Internet banking services in a bid to cut costs. The problems also come on the heels of an unpopular $5 fee the bank unveiled last week on purchases made using debit cards.
Until Wednesday afternoon, the bank hadn't said what was behind the outages, leaving customers exasperated and inconvenienced. At one point the bank urged them to avoid using the website during heavy-usage periods—typically during daylight hours on weekdays.
B of A said the website has had full accessibility since Monday. But the Charlotte, N.C., company warned users in a message on its site Wednesday that pages would be slow to load, and customers have had intermittent trouble accessing online banking services since late last week.
If you're a Bank of America customer and don't like paying a $5 a month for a debit card, you have three options.
A former chief risk officer at Citigroup Inc.'s global transactions-services unit, said clients had called with concerns that Bank of America was under attack.
But he said he has seen no evidence of an attack and called the site's problems shocking because of the bank's strong reputation in information technology. The bank has said it hasn't been hit by attacks from computer hackers who seek to steal customer data, or by denial-of-service attacks that render sites inoperable by flooding computers with communications requests.
BofA shares have dropped 6% over the past week, a period that includes the debit-card fee announcement and the start of the online troubles. That compares with no change in the Keefe, Bruyette & Woods index of big bank stocks, and a drop of less than 1% in the Dow Jones Industrial Average. Bank of America shares rose a penny to $5.77 in 4 p.m. New York Stock Exchange composite trading Wednesday.

Some local lenders have said they have seen an uptick in new accounts in recent days. Arizona State Credit Union, for example, has seen a 20% increase in account openings. Many of the new customers have complained about debit-card fees recently announced by Bank of America and Wells Fargo & Co., an executive said, and a few have cited BofA's recent Web outages.
Wells Fargo is testing a $3 monthly fee in five states, though Arizona isn't one of them. A Wells Fargo spokeswoman declined to comment about customer reaction.
For the first time, they are seeing consumers…taking action on feelings they have had for a long time. Some call the new debit-card fees "the straw that broke the camel's back."
To be sure, Bank of America isn't alone among banks in suffering a widespread Internet problems. Customers of J.P. Morgan Chase were hit by service interruptions for about three consecutive days in September 2010, resulting in a backlash for the company, which had provided few details about the disruption.
The New York-based bank ultimately disclosed that the outage occurred because a vendor's database software corrupted the log-in process. It said no customer data was at risk, but the episode forced Chief Executive James Dimon to apologize, and prompted the bank to make whole customers who may have incurred late payment fees because of the site's issues.
Bank of America has recently reshuffled checking-account offerings, including a push to get its customers to use an account that is free as long as the customer doesn't visit a teller. The bank charges $8.95 a month if the customer visits a teller.
A spokeswoman said the bank would work with any customers who accumulated fees on an individual basis amid the website problems.