New York Court Upholds Sales Tax for Online Retailers

Story originally appeared on the New York Times.

New York’s highest court rejected arguments Thursday by two Internet retailers that they should be exempt from collecting state sales tax.

Amazon.com, the biggest online store, and its much smaller competitor Overstock.com had separately sued to challenge a 2008 state law that required online retailers to collect sales taxes on purchases made by New York residents. That served effectively to raise prices on the sites by nearly 10 percent, reducing their competitive advantage against brick-and-mortar retailers.

In a statement, Amazon denounced the New York Court of Appeals ruling as conflicting with precedents by the United States Supreme Court and decisions by other state courts. Overstock said it was considering appealing to the federal Supreme Court.

Central to the dispute was the question of affiliates, which are independent sites that link to a retailer in return for a commission. Thousands of Amazon affiliates are based in New York.

“The bottom line is that if a vendor is paying New York residents to actively solicit business in this state, there is no reason why that vendor should not shoulder the appropriate tax burden,” the appeals court wrote in its decision. The suits had been dismissed by lower courts.

The struggle over Internet taxes has intensified in the last few years. Brick-and-mortar retailers have been increasingly insistent that Amazon in particular was unfairly avoiding its responsibility to make sure its customers paid sales taxes. Other states began debating measures like New York’s.

In response, Amazon struck deals in California, New Jersey and a few other states to build warehouses in exchange for finally agreeing to collect taxes. In states where it does not need warehouses, Amazon has generally refused to budge.

The retailer says it supports a national solution rather than a state-by-state effort. After many years of inactivity, progress is being made on that front, with a majority of United States senators indicating this month that they would support an Internet tax measure.

Anonymous strikes back after feds shut down piracy hub Megaupload

Story originally appeared on CNN.

NEW YORK (CNNMoney) -- In one of the U.S. government's largest anti-piracy crackdowns ever, federal agents on Thursday arrested the leaders of and shut down Megaupload.com, a popular hub for illegal media downloads.

Hours later, Megaupload's fans turned the table on the feds. "Hacktivist" collective Anonymous said it set its sights on the U.S. Department of Justice and apparently knocked the agency's website offline.

"We are having website problems, but we're not sure what it's from," a DOJ spokeswoman told CNNMoney.

The DOJ website glitches came soon after various Twitter accounts associated with Anonymous took aim at the agency.

Anonymous's favorite weapon for these attacks is what's called a "distributed denial of service" (DDoS) attack, which directs a flood of traffic to a website and temporarily crashes it by overwhelming its servers. It doesn't actually involve any hacking or security breaches.

"One thing is certain: EXPECT US! #Megaupload" read one tweet from AnonOps that went out mid-afternoon.

One hour later, the same account tweeted a victory message: "Tango down! http://universalmusic.com & http://www.justice.gov// #Megaupload"

It was the largest attack ever by Anonymous, according to an Anonymous representative, with 5,635 people using a networking tool called a "low orbit ion cannon." A LOIC is software tool that aims a massive flood of traffic at a targeted site.

Universal Music's website also went down Thursday afternoon. The music company had been locked in a legal battle with Megaupload over a YouTube video that featured many of Universal Music's signed artists promoting Megaupload's site.

The websites of the Recording Industry Association of America and Motion Picture Association of America went down Thursday afternoon as well. On Twitter, AnonOps -- one of the main communications channels for the leaderless Anonymous collective -- took credit for the crashes.

An RIAA spokesman confirmed that the organization's website was intermittently offline. But he cast the attack as a minor hiccup.

"The fact that a couple of sites might have been taken down is really ancillary to the significant news today that the Justice Department brought down one of the world's most notorious file sharing hubs," he said.

By Friday morning, all but one of the subjects of Anonymous' attack were back online -- including the FBI's website, Warner Music Group and the U.S. Copyright Office. Only Universal Music remained unavailable, as the company took the site down for "maintenance."

A piracy crackdown: The Anonymous attack came soon after the DOJ announced the indictment of seven individuals connected to Megaupload for allegedly operating an "international organized criminal enterprise responsible for massive worldwide online piracy of copyrighted works."

Authorities said the operation had generated more than $175 million in illegal profits through advertising revenue and the sale of premium memberships.

According to the indictment, Megaupload, which launched in 2005, was once the 13th most visited website on the Internet, serving as a hub for distribution of copyrighted television shows, images, computer software and video games.

The site's popular MegaVideo subsidiary was widely known in tech circles for its copious selection of pirated content, including recent movies and episodes of hit TV shows.

Four of those indicted were arrested Thursday in Auckland, New Zealand, at the request of the U.S. Three others remain at large.

The individuals indicted are citizens of New Zealand, Germany, Slovakia and the Netherlands. No U.S. citizens were named. However, Megaupload has servers in Ashburn, Va., and Washington D.C., which prompted the Virginia-based investigation.

To shut down Megaupload, federal authorities executed 20 search warrants in eight countries, seizing 18 domain names and $50 million worth of assets, including servers located in Virginia, Washington, the Netherlands and Canada.

The news comes as lawmakers have turned their attention to anti-piracy legislation. Protests erupted both online and offline this week against two bills currently under consideration in Congress: the House's Stop Online Piracy Act (SOPA) and the Senate's Protect IP Act (PIPA).

The bills are aimed at cracking down on copyright infringement by restricting access to sites that host or facilitate the trading of pirated content. But the legislation has created a divide between tech giants, who say the language is too broad, and large media companies, who say they are losing millions each year to rampant online piracy.

Major banks hit with biggest cyberattacks in history

Story originally appeared on CNN.

There's a good chance your bank's website was attacked over the past week.

Since Sept. 19, the websites of Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500), U.S. Bank (USB, Fortune 500) and PNC Bank have all suffered day-long slowdowns and been sporadically unreachable for many customers. The attackers, who took aim at Bank of America first, went after their targets in sequence. Thursday's victim, PNC's website, was inaccessible at the time this article was published.

Security experts say the outages stem from one of the biggest cyberattacks they've ever seen. These "denial of service" attacks -- huge amounts of traffic directed at a website to make it crash -- were the largest ever recorded by a wide margin, according to two researchers.

Banks get hit by cyberattackers all the time and typically have some of the best defenses against them. This time, they were outgunned.

"The volume of traffic sent to these sites is frankly unprecedented," said Dmitri Alperovitch, co-founder of CrowdStrike, a security firm that has been investigating the attacks. "It's 10 to 20 times the volume that we normally see, and twice the previous record for a denial of service attack."

To carry out the cyberattacks, the attackers got hold of thousands of high-powered application servers and pointed them all at the targeted banks. That overwhelmed Bank of America and Chase's Web servers on Sept. 19, Wells Fargo and U.S. Bank on Wednesday and PNC on Thursday. Fred Solomon, a spokesman for PNC, confirmed that a high volume of traffic on Thursday was affecting users' ability to access the website, but he declined to go into more detail.

Denial of service attacks are an effective but unsophisticated tool that doesn't involve any actual hacking. No data was stolen from the banks, and their transactional systems -- like their ATM networks -- remained unaffected. The aim of the attacks was simply to temporarily knock down the banks' public-facing websites.

To get hold of all the servers necessary to launch such huge attacks, the organizers needed to plan for months, Alperovitch said. The servers had to be compromised and linked together into a network called a "botnet."

That level of pre-planning is a deviation from the kinds of denial of service attacks launched at banks in the past by so-called "hacktivists." Typically, hacktivists use home PCs infected with malware to amass their botnets. Attacks on this scale would be impossible to carry out with home PCs -- users too frequently turn them off or disconnect them from the Internet.

The Islamist group Izz ad-Din al-Qassam Cyber Fighters publicly claimed responsibility for the attacks in what it called "Operation Ababil," but researchers are divided about how seriously to take their claims. The group has launched attacks in the past, but those have been far less coordinated than the recent batch.

Sen. Joe Lieberman, an Independent from Connecticut, said in a C-SPAN interview on Wednesday that he believed the attacks were launched by Iran.

"I don't believe these were just hackers who were skilled enough to cause disruption of the websites," he said. "I think this was done by Iran ... and I believe it was a response to the increasingly strong economic sanctions that the United States and our European allies have put on Iranian financial institutions."

A call requesting comment from the Department of Homeland Security's cybersecurity office was not immediately returned.

A cybersecurity firm following the attacks also expressed doubt about the connections between the Cyber Fighters and the bank attacks. On social networks and chat forums, the group urged its followers to use a mobile "low orbit ion cannon" -- a software tool typically used by Anonymous and other hacktivist groups to direct a massive flood of traffic at a targeted site.

That tool was not used in the attack, according to Ronen Kenig, director of security products at network security firm Radware.

"Supporters of this group didn't join in the attack at all, or they joined in but didn't use that tool," said Kenig. "The attack used a botnet instead." He doesn't think the Cyber Fighters would have access to a botnet as advanced as the one used by the attackers.

But CrowdStrike's Alperovitch said he is "quite confident" the perpetrator was the Izz ad-Din al-Qassam Cyber Fighters, since they announced each attack well before it was carried out, and the attack wasn't that sophisticated -- it just took significant planning. PNC was the last target on the lists the Cyber Fighters have circulated, but more attacks could still be coming.

Both researchers agree that the controversial anti-Muslim YouTube video was not the initial impetus for the attacks, as the Cyber Fighters claimed in messages recruiting volunteers to join in. Before the video was even released, the group claimed responsibility for similar attacks.

"The video is simply an excuse," Alperovitch said. "It's a red herring."

Google’s Schmidt: I Was Late to Social Media Revolution

Story originally appeared on CNBC.

Eric Schmidt, the executive chairman of Google, said he regrets coming to the social media revolution late during his ten years as the company's CEO.

Schmidt, who stepped down as CEO in 2011, said he was proud of Google's achievements in the past decade.

"The source of pride for me personally is the power of information is so dramatic, that you really do touch people's lives when you give them the answers to the things they care about," Schmidt said in an interview with CNBC-TV 18 in India. "I can't think of a better way to spend a decade."

He added that his biggest mistake, however, was not seeing the social media revolution soon enough, something he took personal responsibility for. However, he said, that with Google Plus the company was well in touch.

While he admitted Google's late arrival on the social media stage meant Facebook and others had a clear head-start, Google Plus was ready to compete.

"The Google Plus link craft, the people you interact with, is an important future signal in our search ranking," he said. "I think it's important that Google be a player in all of the internet technologies."

The "Big Four"—of Google, Facebook, Amazon and Apple—compete all the time, Schmidt said.

Apple is threatened by Android, Amazon has rivals in the e-commerce space, Google has to fight off Microsoft and now Facebook has to battle with Google Plus, he added.

"The key thing for each of these companies is the rate at which they can continue to innovate to solve problems that really matter to the end-user," he said.

"It used to be that the industry was largely driven by the Microsoft monopoly structure in terms of PC hardware manufacturers, but that's completely broken down now by this new immersion of tablets and phones with many, many different choices. I think it's great," he added.

Discussing Google's future, Schmidt maintained his commitment to the importance of an open and accessible Internet, subtly referencing his recent trip to North Korea.

"It's natural for a politician to only want good coverage of himself or herself," Schmidt said. "What the Internet says is that you have to run your government more [openly]. You need to be honest; you need to tell people what you're doing; and you need to develop a trust through all the media which includes the Internet. The politicians that do that will do just fine. The politicians that try to shut down criticism will ultimately be booted out of office, at least in a democracy."

For Google, the future is bright due to two factors: Android and Google Glass — glasses that project information onto an eye lens, Schmidt said.

He said he was currently unsure what people would use the Lens for exactly.

"But we know that it will unleash a whole new set of applications for human behavior of one kind or another," Schmidt said.

http://video.cnbc.com/gallery/?video=3000155787

The Yellow Pages: Bankrupt but Not Gone

Story originally appeared on Bloomberg Businessweek

Two of the country’s largest yellow pages companies filed for prepackaged Chapter 11 bankruptcy today, hoping to emerge as a single company by July. The two companies, SuperMedia and Dex One , announced their merger plans last summer and hope to save as much as $175 million a year as a result of combining their operations.

As anachronistic as a paper directory may seem in these days of Google and Yelp, the yellow pages are still active businesses. As I previously reported, publishers distributed 422 million directories in 2011. And despite their long decline, yellow pages still generate enough cash to entice some private equity and hedge fund investors. John Paulson’s hedge fund is one of the largest investors in SuperMedia, and AT&T last year sold a stake in its directory business—named simply Yellow Pages—to Cerberus Capital Management in a deal that values the unit at $1.4 billion.

That’s not to say there’s no risk in the companies, particularly for creditors. Both Dex and SuperMedia are quite familiar with bankruptcy. In 2009, Dex One, which was created out of the businesses of Sprint and the old Qwest Communications, went through bankruptcy to halve its $12 billion in debt. And SuperMedia was formed out of the 2009 bankruptcy of the directory business Verizon Communications spun off in 2006. That spinoff is still subject to litigation by creditors.

Matthew Stover, SuperMedia’s chief marketing officer, last year told me that “to be successful, anybody who has been in yellow pages needs to be in the local media business now.” That means transforming into a digital ad company that sells marketing services to small and medium-size business owners, helping them manage tasks like search engine optimization, and maintaining a presence on social networks. “If I am a heating and air condition person, when do I have time to do all of this?” Stover said. Directory companies have increased their digital revenue, but not quickly enough to counteract declining print sales. To expand the digital side, they’ll need to make some investments, from developing new technologies to training staff in social media marketing. Even for a leaner company emerging fresh from bankruptcy proceedings, those pressures and challenges aren’t going away.

Florida legislature moves to ban internet cafes following arrests

Story originally appeared on Reuters

(Reuters) - The resignation of Florida's lieutenant governor, Jennifer Carroll, and the arrests of 57 people charged with money laundering and racketeering has sparked a stampede in the state legislature to shut down hundreds of "internet cafes," whose online gambling operations have been allowed to skirt the law for several years.

While they try to distance themselves from the storefront sweepstakes, political leaders are also trying to scrub their campaign-finance reports of any contributions from companies associated with Allied Veterans of the World, the non-profit operation at the center of a massive fraud investigation.

Carroll's public relations company worked with Allied Veterans when she was a House member in 2009-10. She resigned Tuesday after being questioned by the Florida Department of Law Enforcement, though she has not been charged.

Internet cafes sell phone cards or internet access that customers can use on-premises, often to gamble online, playing electronic slot machines or poker, among other games. Winnings and losses are recorded on an access card, which can be cashed out when a player leaves an establishment.

Many city and county governments, including sheriffs, have called them "storefront casinos," but pleas for statewide regulation have gone unheeded.

That changed on Wednesday when Republican leaders, including Senate President Don Gaetz and House Speaker Will Weatherford, rushed to add internet cafe bills to the top of committee agendas.

Law enforcement officials alleged that Allied Veterans earned about $300 million over a four-year period while it served as a front for illegal gambling. The Oklahoma-based organization spent around $2 million on political donations over the same period.

Police shuttered 49 cafes in the sweep of arrests on Tuesday.

Republican Senator John Thrasher has already proposed a bill that would have stopped licensing of any more internet cafes. It is set for a hearing on Monday in the Senate Gaming Committee and is expected to be amended before then to outlaw the cafes.

"Even the internet cafes that are operating with the best of intentions are operating within a gray area of the law," said Adam Putnam, commissioner of agriculture and consumer services. "That should be resolved and, given the widespread nature of the corruption, I think it's best for the state of Florida to err on the side of a total elimination."

After announcing Carroll's resignation Wednesday, Governor Rick Scott ordered a thorough inspection of his own campaign-finance records to see if he has received any contributions from companies associated with Allied Veterans. Such funds will be donated to charity, he said.

On Thursday, Republican Party of Florida Chairman Lenny Curry of Jacksonville took the same action.

"In light of recent developments, RPOF is examining financial contributions that may be connected to any entities affiliated with the investigation and we are reviewing the most appropriate options," he said.

At least nine lobbyists and legislative advisers withdrew from representing International Internet Technologies, an internet cafe company investigators said provided technology to Allied Veterans to run the online games.

Tallahassee public relations woman Sarah Bascom said IIT was part of the Coalition of Florida's Internet Cafes, which her firm represented. She said the internet cafe lobbying "team" felt misled by the company.

"We had no knowledge of any of this until Tuesday, when the media reports started coming out (about arrests), and we terminated our representation of them immediately," she said.

Thomson Reuters employee indicted for aiding hackers -court filing

Story originally appeared on Reuters

SAN FRANCISCO (Reuters) - A federal grand jury indicted Matthew Keys, deputy social media editor at Reuters.com, of aiding the group Anonymous to hack into Tribune Co computers. The incident occurred prior to his employment by Thomson Reuters Corp, the indictment filed on Thursday indicated.

The indictment charged Keys with three criminal counts, including conspiracy to transmit information to damage a protected computer. The indictment alleged that other hacking targets were the Fox 40 television station in Sacramento, Calif. and the Los Angeles Times, both owned by Tribune.

Keys could not immediately be reached for comment. A Thomson Reuters spokesman said the company is aware of the indictment and added, "Any legal violations, or failures to comply with the company's own strict set of principles and standards, can result in disciplinary action. We would also observe the indictment alleges the conduct occurred in December 2010; Mr. Keys joined Reuters in 2012, and while investigations continue we will have no further comment." The company didn't specify whether any disciplinary action has been taken against Keys. A Tribune Co spokesman declined to comment.

In December 2010, members of Anonymous had a conversation online in which one expressed a desire to gain unauthorized access to Fox computer systems, the indictment says.

Keys, who once worked for KTXL Fox 40 as a web producer, identified himself as a former employee and gave them a username and password, according to the indictment.
Someone then used the information to log on to servers for Tribune Co, which is Fox 40's corporate parent. Shortly after, the indictment alleges, a member of the conspiracy altered content on a Los Angeles Times news story on the paper's website.

When Keys learned that the hacker had changed the Times story, Keys responded "nice," according to the indictment.

Keys is scheduled to be arraigned on April 12 in Sacramento, according to the court docket.

The case in U.S. District Court, Eastern District of California, is United States of America v. Matthew Keys, 13-82.

Raising Morale is Goal of Yahoo's New Policy

Story first appeared on The New York Times -

When Marissa Mayer took over as chief executive at Yahoo last summer, she confronted a Silicon Valley campus that was very different from the one she had left at Google.

Parking lots and entire floors of cubicles were nearly empty because some employees were working as little as possible and leaving early.

Then there were the 200 or so people who had work-at-home arrangements. Although they collected Yahoo paychecks, some did little work for the company and a few had even begun their own start-ups on the side.

These were among the factors that led Ms. Mayer to announce last week that she was abolishing Yahoo’s work-from-home policy, saying that to create a new culture of innovation and collaboration at the company, employees had to report to work.

The announcement ignited a national debate over workplace flexibility — and within Yahoo has inspired much water cooler conversation and some concern.

But former and current Yahoo employees said that Ms. Mayer made the decision not as a referendum on working remotely, but to address problems particular to Yahoo. They painted a picture of a company where employees were aimless and morale was low, and a bloated bureaucracy had taken Yahoo out of competition with its more nimble rivals.

“In the tech world it was such a bummer to say you worked for Yahoo,” said a former senior employee who, like many Yahoo insiders, would speak only anonymously to preserve professional relationships. The employee added, “I’ve heard she wants to make Yahoo young and cool.”

Restoring Yahoo’s cool — from revitalizing behind-the-times products to reversing deteriorating morale and culture — is hard to do if people are not there, Ms. Mayer concluded. That view was reflected in Yahoo’s only statement on the work-at-home policy change: “This isn’t a broad industry view on working from home. This is about what is right for Yahoo, right now.”

Yahoo declined to comment further.

On Monday, another ailing company, Best Buy, announced that it, too, would no longer permit employees to work remotely, reversing one of the most permissive flexible workplace policies in the business world.

Inside Yahoo, there has been mixed reaction to the policy change. Some employees said that they were able to be highly productive by working remotely, and that it helped them concentrate on work instead of the chaos inside Yahoo.

Brandon Holley, former editor of Shine, Yahoo’s women’s site, said she built the site and signed on big-name advertisers while she and most of her team worked from homes across the country.

“It grew very rapidly,” said Ms. Holley, who is now editor of Lucky, Condé Nast’s shopping magazine. “A lot of that had to do with the lack of distraction in a very distracted company.”

The change to the work-at-home policy initially angered some employees who had such arrangements, and worried others who occasionally stayed home to care for a sick child or receive a delivery. Reports that Ms. Mayer built a nursery for her young son next to her office made parents working at Yahoo even angrier.

This week, the policy continued to be the topic of much discussion at the company, as people wondered aloud whether they would lose that flexibility, said employees who spoke anonymously because they were not authorized to speak to the media.

But for the most part, those employees said, those concerns have been eased by managers who assured them that the real targets of Yahoo’s memo were the approximately 200 employees who work from home full time.

One manager said he told his employees, “Be here when you can. Use your best judgment. But if you have to stay home for the cable guy or because your kid is sick, do it.”

Many of Yahoo’s problems are visible to people outside the company. It missed the two biggest trends on the Internet — social networking and mobile. Its home page and e-mail services had become relics used by people who had never bothered to change their habits. It ceded its crown as the biggest seller of display ads to Facebook and Google. Its stock price was plummeting.

Inside the company, though, there were deeper cultural issues invisible from the outside. For Ms. Mayer’s ambitious plans to turn around the company to work, employees briefed on her strategy said, she believed Yahoo needed “all hands on deck.”

Jackie Reses, Yahoo’s director of human resources and the author of the new policy, is an extreme example of this philosophy. She commutes to Yahoo’s campus in Sunnyvale, Calif., from her home in New York, where she lives with her children.

“Morale was terrible because the company was thought to be dying,” said a former manager at Yahoo, who would speak only anonymously to preserve business relationships. “When you have those root issues, an employee work force that is not terribly motivated, it built bad habits over years.”

Yahoo has withstood many changes over the years, starting with a turnover of six chief executives in five years, each with his or her own deputies and missions for the company. This led to confusion among the work force about the company’s goals and frustration that projects would be pulled midstream by a new chief executive.

The company had hired many managers to oversee new tech products, but the extra levels of management slowed product development, former employees said.

“Where Yahoo competes, with companies like Facebook churning out a new release every single day, there was a lot of bloat slowing down product decisions,” the former manager said.

The new policy is the first unpopular big move Ms. Mayer has made. Yahoo insiders said they did not expect the employee and media outcry that followed.

Employees said that unlike previous chief executives, who focused outside Yahoo, she has prioritized fixing the company internally and motivating employees.

She introduced free food in the cafeterias, swapped employees’ BlackBerrys for iPhones and Android phones and started a Friday all-employee meeting where executives take questions and speak candidly.

A recent internal employee survey found that 95 percent of employees were optimistic about the company’s future, a 32 percent bump from the previous survey, Ms. Mayer said in a call with analysts in January.

Résumés have begun arriving from employees at competitors like Facebook and Google, which rarely happened in the past, according to one person briefed on Yahoo hiring.

Since Ms. Mayer made food free, there are now crowds in the cafeterias, lingering to talk about new ideas, employees say — exactly what she wants to encourage by requiring people to work in the office.

“I understand why Marissa Mayer would want to call everybody back into work,” Ms. Holley said. “It’s kind of a necessary step.”

Germany passes "Re-publishing" Bill

Story first appeared on Ars Technica -

Google can post "short excerpts" freely—but what that means, nobody knows.

The lower house of the German parliament, known as the Bundestag, has approved a new bill that would require search engines to pay a license fee for re-publishing content longer than "individual words or short excerpts." The bill passed by a vote of 293 to 243, with three abstentions.

However, the law does not define exactly what such a “snippet” would entail. For the law to take effect, it would need to be ratified by the upper house of the German parliament, the Bundesrat. By all accounts, this bill is a watered-down version of what had originally been lobbied for by the German publishing and media industry.

Not surprisingly, Google has opposed this law and proposals like it in neighboring France.

“As a result of today’s vote, ancillary copyright in its most damaging form has been stopped,” Google said in a statement. “However, the best outcome for Germany would be no new legislation because it threatens innovation, particularly for start-ups. It’s also not necessary because publishers and Internet companies can innovate together, just as Google has done in many other countries.”

Still, the publishing industry seems to be fairly satisfied that they managed to get something passed through the Bundestag.

“With the right legal conditions and the technical tools provided by the Linked Content Coalition, it will be easy to access and use content legally,” the European Publishers Council said in a statement (PDF) on Friday. “This will mean that publishers will have the incentive to continue to populate the internet with high-quality, authoritative, diverse content and to support new, innovative business models for online content.”

Groupon Shares Climb After CEO Andrew Mason Fired

Story first appeared on CNBC -

Groupon CEO Andrew Mason was handed a pink slip Thursday, fired after the company reported disappointing fourth-quarter results along with a dim outlook.

"After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding – I was fired today," Mason said in an email to employees announcing his departure.

"If you're wondering why… you haven't been paying attention," he added. (Read the full text of the email below.) Groupon shares shot up more than 10 percent following the news.

The stock has fallen more than 75 percent since its November 2011 IPO. In regular trading Thursday, the stock fell 25 percent after the disappointing fourth-quarter results came out late Wednesday.

The results revealed that the company has had to slash its fees from merchants to grow its business and that its new Groupon Goods business would decline in the first quarter. Mason was so confident on the earnings call, he drew criticism of being entirely out of touch. Twenty-four hours later the guillotine fell.

Groupon has not yet announced his successor but said Executive Chairman Eric Lefkofksy and Vice Chairman Ted Leonsis would serve as co-CEOs until one is found.

"This company outgrew Andrew, his vision notwithstanding. The company has different challenges now. It's in a different stage of its life and requires a different team," said Stern Agee Analyst Arvind Bhatia, who has a rare "buy" rating on the stock.

"For a company that's doing $5 billion in billings, they're not generating that much profit and I think there's an opportunity for somebody to come in and improve their margins over time," Bhatia said.

Here is the full text of Mason's email to Groupon employees:

People of Groupon,

After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding – I was fired today. If you're wondering why… you haven't been paying attention. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that's hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.

You are doing amazing things at Groupon, and you deserve the outside world to give you a second chance. I'm getting in the way of that. A fresh CEO earns you that chance. The board is aligned behind the strategy we've shared over the last few months, and I've never seen you working together more effectively as a global company – it's time to give Groupon a relief valve from the public noise.

For those who are concerned about me, please don't be – I love Groupon, and I'm terribly proud of what we've created. I'm OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I'll now take some time to decompress (FYI I'm looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I'll figure out how to channel this experience into something productive.

If there's one piece of wisdom that this simple pilgrim would like to impart upon you: have the courage to start with the customer. My biggest regrets are the moments that I let a lack of data override my intuition on what's best for our customers. This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness – don't waste the opportunity!

I will miss you terribly.

Love,

Andrew

'New, More Modern' Yahoo Being Introduced

Story first appeared on Business Insider -

Yahoo CEO Marissa Mayer just put up a blog post announcing a "new, more modern" Yahoo.

It's her long-expected, this-time-it's-official update to the Yahoo homepage  She says the page is more personal.

Features:

• "A newsfeed with infinite scroll."
• "You can log in with your Yahoo! or Facebook ID to get articles from thousands of news sources as well as those shared by your friends."
• New applications, like a list of your Facebook friends' birthdays.
• Refreshed "Yahoo! editorial features."
• The list of popular searches of the moment has a "refreshed" look.
• It's faster.
• It's optimized for tablets and smartphones.
• The business goal for the new homepage is simple: Yahoo needs to grow its userbase, and it needs all of it users to spend more time on the site.

At a Goldman Sach's conference in San Francisco last week, Mayer put it this way: "I'm not confused, our biggest problem right now is impressions. We're growing prices, we need to grow usage."

Here is Mayer's entire blog post:

Yahoo! first began as Jerry and Dave’s Guide to the World Wide Web, a directory of links created to help organize the Internet during its very early days. That simple directory evolved through the years into the Yahoo! we know today -- a starting point for your daily habits. Whether checking the latest news, sports scores, or just searching, Yahoo! has always been about bringing you the very best of the web. And, today, we’re introducing a new, more modern experience to do just that.

Designed to be more intuitive and personal, the new Yahoo! experience is all about your interests and preferences. Since streams of information have become the paradigm of choice on the web, we’re introducing a newsfeed with infinite scroll, letting you experience a virtually endless feed of news articles. Whether you are a sports fanatic or entertainment buff, you can easily customize your newsfeed to your interests. And, to make Yahoo! even more social, you can log in with your Yahoo! or Facebook ID to get articles from thousands of news sources as well as those shared by your friends.

Because you come to Yahoo! everyday for must-know information, we’ve also introduced newly designed applications. From your local weather forecast to Facebook friends’ birthdays, you’ll always have the information you need. We’ve also refreshed some of what you love most -- including our Yahoo! editorial features, and the daily snapshot into popular trending web searches.

The new Yahoo! experience works well on the go -- we’ve optimized it for smartphones and tablets. And, thanks to some under-the-hood improvements, Yahoo! is also faster.

Over the next few days, our U.S. users will begin to see the new Yahoo! experience and we’re excited to see the response. Over the coming months, we’ll continue to make changes and improvements, so today is just the beginning.

Here's a more detailed blog post from Mike Kearns, Yahoo VP of product::

If you’ve had a chance to visit Yahoo! today, you may have noticed a few changes. We’ve launched a fresh, dynamic and personalized Yahoo! experience that brings you relevant content even faster. It’s now easier for you to get your daily dose of weather, stock quotes, sports scores, and more. These changes are just the first step in making Yahoo! personalized, and the more you visit Yahoo!, the better it will become. Below are a few top tips on how to get the most out of the new Yahoo!.

Get personal, sign-in
To view more personally relevant content in the newsfeed, just sign in with your Yahoo! or Facebook ID in the upper right corner of your screen.

Filter your newsfeed.
The newsfeed defaults to a "blend" of story types, but also allows you to filter your view through a handful of popular categories, such as news, local, entertainment and sports. For additional choices in the newsfeed filter, just click the “More” button to choose from other categories that interest you like business, technology, politics or science. If you want to see fewer stories about a particular topic in the future, hover your cursor to the right of the story and click on the “X” button. And remember, the more feedback you provide, the more personalized and relevant your experience will be.

Share your favorite content from Yahoo!.
In addition to seeing news stories that your friends have read and shared, you can easily share with them. When you come across a news item that you’d like to share, hover over it to view a button that allows you to share the story via email, Facebook, or Twitter.

Reach the bottom of the page? Quickly navigate back up to the top.
If you’ve scrolled far down and want to head back to the top, click on the handy back-to-top arrow in the lower right-hand corner of your screen to be taken back to the top of your Yahoo!.

Check out weather, sports, stocks and more with new applications.
There are seven new applications on the right side of the screen to connect you with information you view everyday, like weather, stocks, sports, friends’ birthdays, horoscopes, Flickr photos and popular videos from Yahoo!. To personalize the applications, simply hover over the upper right side to click on the gears icon. For example, getting ready for March Madness? Add your favorite teams to the Sports application to catch up on the latest scores. Keeping an eye on your investments? To view stock quotes, click on the gears icon in the Quotes application to integrate your portfolio, look up quotes, or add new stocks. Travel often? Add as many cities as you’d like to the Weather application.

Customize your applications.
To remove a particular application, click the “x” button in the upper right corner of the application box. Change your mind? You can add them all back by selecting “Restore all” in the area where the applications used to be displayed.

Never forget a birthday.
If you’ve signed into Yahoo! via Facebook, the Birthday application offers an easy way to be reminded of upcoming birthdays from your circle of friends.

View the latest Flickr photos.
If you love photos, you can customize the Flickr application to display photos taken by the people you’re following. If you don’t have a Flickr account or if you’re not signed into Yahoo!, you’ll be shown some of the most recent and most interesting photos on Flickr.

On an iOS or Android device? Try swiping.
Simply visit yahoo.com on your tablet or mobile device, swipe through the “Today” stories to browse the freshest content. As you scroll down the newsfeed you can swipe left to take action on content. Find a story you like? Swipe left to share it. You also can swipe left to experience the different applications.

The best way to learn your way around the new Yahoo! is by checking it out yourself. Visit Yahoo! today to see what’s new!

The New Yahoo.com Homepage

Story first appeared on Business Insider -

Marissa Mayer made her fame and fortune at Google, where she was responsible for the original design of Google.com. And now, two months after becoming Yahoo CEO, she has updated Yahoo.com. A new version is slowly being rolled out into the wild, and we've got a screen-grab that a source close to Yahoo tells us is authentic.

Yahoo.com is Yahoo's most important product. ComScore says 170 million people visit Yahoo sites everyday, and a huge percentage of them are funneled to this page. Its ad units are perhaps the most valuable on the Internet. Sources tell us more changes are on the way. The page is going to get more personalized and customizable, we hear.

• The search bar is now centered, and is part of a darker toolbar that is fixed to the top of the page as the user scrolls down.
• The Yahoo! logo is smaller, and no longer purple.
• The word "search" has been replaced with a magnifying glass icon.
• There are far fewer links to Yahoo Sites on the left side. Losers are: Dating, Flickr, Games, Jobs, Messenger, Music, My Yahoo!, and TV.
• Local weather has its own module.
• What's trending has been de-emphasized and moved to the left column.
• There is now a second large story tout below the top stories.
• Instead of just headlines, the news river has story summaries.
• Astrology has its own module.

AOL and Huffington Post Finally Reporting Revenue

Story first appeared on USA Today -

Two years after it acquired the Huffington Post, AOL still faces challenges in courting consumers and advertisers — but it is beginning to show progress.

While scheduling a business lunch in late 2010, Huffington Post co-founder Arianna Huffington and AOL CEO Tim Armstrong each had a question for the other.

Huffington, who was hosting the meal at her home, asked whether there was anything he didn't eat. (The answer: mushrooms.)

Armstrong asked whether he could bring along his chief financial officer. That made the AOL honcho's intentions clear, and he swiftly expressed them when the group gathered.

"Up front, before the first course was served, he said he wanted to buy The Huffington Post," Huffington said in an interview at her New York office this week.

Soon after that meeting — during halftime at Super Bowl XLV in Dallas — the deal was signed. AOL paid $315 million for the site.

Together, the companies would create "a digital destination that delivers unmatched experiences for both consumers and advertisers," Armstrong said when the deal was announced.

Two years after that acquisition, and nearly four years after Armstrong took the helm, AOL still faces challenges in courting consumers and advertisers. But it is finally showing progress.

On Friday, AOL reported its first increase in quarterly revenue in eight years. Revenue rose 4%, to $599 million, in the fourth quarter. Net income, bolstered by a $16.8 million gain from the sale of overseas assets, was $35.7 million, or 41 cents a share. In 2011, AOL earned $22.8 million, or 23 cents a share.

"We have walked through the valley of the turnaround and have gotten to growth," Armstrong said during Friday's earnings call.

Managing an evolution

Created as a Web portal and Internet access provider, AOL today has evolved into an ad-supported technology and media giant.

To achieve its goals, AOL cut costs, while ramping up consumer- and advertiser-friendly content such as video and apps. Ad revenue for the company hit $411 million in the fourth quarter, up 13% from the same period in 2011. Full-year ad revenue was up 2.8% to $1.3 billion.

The Huffington Post acquisition has helped power its growth.

Across AOL's properties, the level of monthly U.S. unique visitors was 110 million in December, up from 107 million in December 2011, but down from the 112 million in December 2010, according to tracker comScore. The Huffington Post's U.S. monthly unique viewership has steadily grown — to 46 million in December from 25 million two years earlier, according to comScore figures provided by Huffington Post.

AOL doesn't break out profit on The Huffington Post or other media divisions, but for the first time on Friday, it disclosed results of a "brand group" category that includes The Huffington Post, AOL.com, TechCrunch, local-news provider Patch and other content-focused assets.

That group's revenue grew 4% to $213 million for the fourth quarter. Adjusted operating income before depreciation and amortization was down 34% to $8.8 million for the quarter. The drop-off was primarily the result of increased investment in editorial staff and sales representatives and higher marketing expenses, AOL said.

Despite its recent revenue growth, AOL still faces hurdles. It lost share in the overall U.S. digital ad market in recent years, according to industry tracker eMarketer. AOL had a 2.5% share of all U.S. digital ad revenue in 2012, down from 2.8% in 2011 and 3.3% in 2010.

U.S. digital ad spending grew 14.9% in the fourth quarter to $10.58 billion, according to eMarketer estimates. Google has the biggest share — with more than 41% of all digital ad revenue in the U.S. Yahoo has the second-biggest share.

A well-known personality

Like other top media executives, Arianna Huffington is a frequent attendee at advertising and technology events. But the Huffington Post Media Group editor-in-chief is well-known outside the industry. She is present at major political outings and featured in society pages. Her Greek accent and outgoing personality are so familiar that she is sometimes impersonated on NBC's Saturday Night Live.

Unlike AOL, which had a "stodgy and old" image in recent years, Huffington and the company she co-founded are more current and cutting edge, says Robert Passikoff, president of brand loyalty consulting firm Brand Keys.

Passikoff likens AOL to "a kid in high school who isn't cool anymore." But by aligning with The Huffington Post, the AOL brand acquires some rub-off hipness. "There is a halo effect," he says.

The Huffington Post brand, as well as sibling unit TechCrunch, also tend to attract more tech-savvy users than the traditional AOL brand, notes Ben Schachter, an analyst at Macquarie Securities.

TechCunch and The Huffington Post help AOL draw consumers who aren't tethered to laptops, but use mobile devices such as tablets and smartphones, and will view alternative ad-supported content such as videos, he says.

Armstrong told USA TODAY that The Huffington Post's strong brand awareness, as well as its focus on innovation, gives Huffington Post "game-changing global potential."

Huffington: 'Best of both worlds'

Asked if she would want to buy her company back, Huffington says that "there is no reason to even contemplate anything like that."

"We have the best of both worlds," she adds. "We are a stand-alone entity within a great parent company that is very supportive of our big dreams."

But for The Huffington Post to keep its relevancy, she says, "it has to keep growing and evolving and engaging readers in new ways."

To that end, Huffington Post is:

• Extending global reach. Last year, The Huffington Post launched six international editions. It's now in the UK, Canada, France, Spain and Italy. Next up are areas in Germany, Africa and Asia. "We're going to go from international to global," says Huffington Post Media Group CEO Jimmy Maymann.

• Adding more videos. Video network Huff Post Live launched in August. It provides 12 hours of content, such as interviews with well-known personalities, on weekdays.

• Going mobile. Last year, The Huffington Post introduced an iPad app for HuffPost Live and an app for an iPad magazine. It also launched a wellness-focused "GPS for the Soul" iPhone app this year.

• Increasing lifestyle content: The site will bolster its coverage of personal topics such as divorce, weddings, books and travel.

LinkedIn Earnings - Soaring Higher than Forecasted

Story first appeared on USA Today -

Online professional-networking service LinkedIn's fourth-quarter performance added another line to its sterling resume as a public company.

LinkedIn's fourth quarter earnings came in far above Street expectations, boosting the stock in after-hours trading.

The results announced Thursday extended LinkedIn's uninterrupted streak of exceeding analysts' projections for both earnings and revenue. It marked the seventh consecutive quarter since LinkedIn's May 2011 IPO that the company has pulled that off, to the delight of investors.

The run of pleasant surprises is one of the reasons that LinkedIn's stock has tripled from its initial public offering price of $45. The shares surged $12.11, or nearly 10%, to $136.20 in extended trading after the numbers came out.

Wall Street's embrace of LinkedIn contrasts with the cold response given to other Internet services that have gone public during the past few years. Most of them are trading below their IPO prices. The most notable is Facebook, whose stock is worth about 25% less than it was when it made its market debut in May.

Although both run websites devoted to connecting people with common interests, LinkedIn and Facebook are targeting different audiences. Facebook focuses mostly on letting friends and family share good times and swap stories, while LinkedIn concentrates on helping people advance their careers and helping companies fill jobs.

Facebook, which is based in Menlo Park, is the larger of the two services, with more than 1 billion active users and $5.1 billion in revenue last year. LinkedIn, which is based in Mountain View, California, has 20 million account holders and revenue of $972 million in 2012.

But LinkedIn is growing more quickly, partly because it's less dependent on advertising than Facebook and most Internet services. In the fourth quarter, advertising accounted for 27% of its revenue. The remainder comes from various tools that it sells to help recruit workers and glean more insights from the information that its users post on its website.

LinkedIn earned $11.5 million, or 10 cents per share, during the final three months of last year. That marked a 66% increase from $6.9 million, or 6 cents per share, a year earlier.

If not for the costs of employee stock compensation and certain other charges, LinkedIn said it would have earned 35 cents per share. That was far above the average estimates of 19 cents per share among analysts surveyed by FactSet. Analysts excluded certain items from their calculations.

Revenue soared 81% from the previous year to $304 million — about $24 million above analyst forecasts.

LinkedIn's revenue outlook for the current quarter and all of 2013 were roughly in line with analyst estimates, setting the stage for the company to clear those financial bars once again.