EBay works to improve its focus on key areas

EBay Inc. said Thursday that it is focusing its efforts on business areas "where we can win," which include the company's core electronic commerce market but not the Internet telephony business the company paid a large sum to enter less than four years ago.

In a conference call with analysts, eBay also cautioned that it will face plenty of strong competition in the e-commerce market, where the company competes with dozens of smaller players as well as sector giant Amazon.com , which has been able to gain market share against eBay of late.

"We will continue to be one of the winners in a changing e-commerce landscape. It is not a winner-take-all," CEO John Donahoe said on the call, adding that the industry "will have multiple winners, each focused on target segments."

The call on Thursday morning came after the company announced plans to make a tender offer to buy a majority stake in Gmarket  , a Korean company that operates a large, fixed-price e-commerce site in that country. The purchase price could reach $1.2 billion if all the company's outstanding shares are tendered; eBay says it has already reached agreement with holders of 67% of the shares. 

Donahoe said the Gmarket purchase will strengthen the companies' presence in Korea and Asia. This, in turn, will help broaden the market for the company's PayPal business -- on which eBay is banking heavily for future growth.

"This business has tremendous potential, and we expect PayPal to approximately double over the next three years," Donahoe said.

EBay shares were trading up 0.4% to $14.38 by early Thursday afternoon.

Analysts liked the deal, overall. Colin Sebastian of Lazard Capital Markets called the move "a positive step" for eBay in establishing itself in the South Korean market and could be a stepping stone in the broader region.

"Historically, eBay had limited success in gaining a foothold in Asia, where local players tend to dominate online shopping," Sebastian wrote in a note to clients.

Justin Post of Bank of America said the deal will give eBay nearly 40% of the e-commerce market in South Korea. But he added that the deal looked expensive, with eBay paying about four times Gmarket's 2010 revenue estimate compared to its own current valuation of about two-times projected revenues.

"Despite synergies, it's possible deep value shareholders may have preferred cash repatriation and buybacks," Post wrote in his report.

Shedding Skype

The move to buy Gmarket came just a day after the company announced plans to eventually shed itself of Skype, the Internet telephony provider eBay acquired in 2005 for $2.6 billion.

EBay has struggled to fit Skype into its overall business. The unit brought in revenue of $551 million last year -- about 6% of eBay's total revenue base. Analysts have worried that running Skype distracts eBay from focusing on its core business, which has suffered over the past couple of years from slowing growth and heavier competition.

Late Tuesday, eBay announced that it plans to commence an initial public offering for sometime over the next 14 months or so, depending on market conditions. On the call Thursday, Donahoe left the door open to considering another type of deal, but maintained that the company eventually plans to completely separate Skype from the rest of the business.

"If we were to receive an unsolicited offer, naturally we would evaluate against what we believe can be achieved through a public offering," Donahoe said. "And we believe that an IPO during the first half of 2010 is very feasible, contingent upon market conditions."

Heath Terry of Friedman Billings Ramsey said a Skype IPO could fetch a valuation between $1.5 billion and $2.5 billion. In a report, he added that separating Skype "should allow management to resume returning capital to shareholders and focus on stabilizing the Marketplaces business."

In a much smaller deal, eBay also recently sold back StumbleUpon, a Web-based tool for locating media content, back to its original founders. Financial terms of that deal were not disclosed.

Microsoft backtracks, says Office 2010 beta will be public

Microsoft Thursday promised that it would provide at least one public beta to Office 2010, saying that its assertion to the contrary Wednesday was "the wrong impression."

"Although we are not disclosing a date for the public beta, there definitely will be one," a company spokesman said Thursday morning. "This development cycle for Office is no different than years past; technical preview is usually invite-only, but still goes out to hundreds of thousands of people, and there is a public beta cycle where millions can download and try Office."

On Wednesday, a different company spokesperson said that Microsoft had no plans to distribute a beta to the general public -- as it had done with Office 2007 -- but said that a closed test involving "thousands" would begin during the third quarter of 2009.

The spokesman Thursday declined to outline a timetable for Office 2010's public beta, to specify the number of betas Microsoft will produce and to say what it will be called. "We have not locked on that yet," he said, referring to the last of the three questions.

Microsoft delivered two public betas for Office 2007, the first in March 2006 and the second in September, dubbing the latter "Beta 2 Technical Refresh." In between the two dates, it let users try out the suite from within their browsers and charged US$1.50 to download the preview. The latter move, Microsoft said in July 2006, was because "the beta 2 downloads have exceeded our goals," prompting it to "implement a cost-recovery measure."

The spokesman Thursday said Microsoft had not decided whether it would mimic that for-a-fee scheme with Office 2010. "We are still working out the delivery options and will share additional details later this year," he said in a follow-up e-mail.

Microsoft first seeded a group of invitation-only testers with Office 2007 Beta 1 in November 2005.

If the company runs Office 2010 through testing at the same pace as it did Office 2007, it wouldn't release the new suite to manufacturing until the third quarter of 2010, with the first public beta in the November 2009-January 2010 time frame.

However, since Microsoft has pegged a final release of Office 2010 in the first half of 2010, assuming the same kind of schedule as three years ago and a ship date at the end of the six-month window, it could issue a beta as early as November 2009 and as late as April 2010.

DataSphere Launches SaaS Solutions

DataSphere, a Software as a Service (SaaS) Web technology company, today announced the availability of the DataSphere Web Suite (http://www.datasphere.com). Designed to provide companies of all sizes with the most functional, cost effective and rapidly deployable solutions to create and run Web sites based on extensive catalogs, media or other data, the DataSphere Web Suite is built on an infinitely scalable, multi-tenant SaaS platform.

The DataSphere Web Suite is already powering several Web sites including LandWatch.com, http://search.komonews.com and http://www.newhomelistings.com.

 

"We believe there is a tremendous opportunity in providing an affordable, world class consumer experience for Web sites," said DataSphere CEO Satbir Khanuja. "The DataSphere Web Suite is designed to enable Web sites with extensive product, media or other data catalogs to benefit from the latest advances in Internet technology. By reducing the cost and complexity, improving the user experience and speeding up deployment of these new technologies, we can help Web site owners to increase revenues and reduce expenses within weeks."

The DataSphere Web Suite is a comprehensive site creation, hosting and management solution that gives Web site owners access to a range of best in class capabilities for automatically attracting traffic from across the Web and delivering an outstanding in-site consumer experience. Based on decades of driving traffic and user experience at some of the world's foremost Web sites including Amazon.com and MSN.com, the DataSphere team has created a service that fuses the latest technologies with the best in user experience design and unlimited scalability.

The suite is comprised of a number of different services, each designed to satisfy the specific requirements of individual customers.

Google profit up but revenue drops for first time

Google reported a 9.2 percent rise in quarterly net profit, but the Internet search giant said revenue declined for the first time ever in consecutive quarters.

The Mountain View, California-based company reported a net profit for the first quarter of the year of 1.42 billion dollars compared with 1.31 billion dollars in the corresponding quarter last year.

Revenue was 5.51 billion dollars for the first quarter, up six percent from the same quarter a year ago but down three percent compared with the fourth quarter of last year, Google said in a statement.

Google, which makes 98 percent of its revenue from Web search advertising, reported earnings per share of 5.16 dollars, considerably better than the 4.93 dollars expected by Wall Street analysts.

The decline in revenue was the first ever for Google from one quarter to the next, but it did not appear to damage the confidence of investors.

Google shares were up 4.31 percent to 405.50 dollars in electronic after-hours trading in New York after gaining 2.43 percent during the day.

"Google had a good quarter given the depth of the recession -- while revenues were down quarter over quarter, they grew six percent year over year thanks to continued strong query growth," chief executive Eric Schmidt said.

"These results underline both the resilience of our business model and the ongoing potential of the Web as users and advertisers shift online," he said.

"Going forward, our priority remains investing for the long term to drive future growth in our core and emerging businesses," Schmidt said.

Speaking to analysts in a conference call following the release of the quarterly earnings figures, Schmidt said the economy was "basically still in unchartered territory."

"The economic environment remains tough," he said.

New chief financial officer Patrick Pichette said Google, which recently announced it was laying off 200 sales and marketing employees, was "still hiring but only in the critical areas."

Schmidt declined to comment on reports that Google had reached agreement with major Hollywood studios to show full-length films and television shows on YouTube, which Google purchased for 1.65 billion dollars in 2006.

Several leading technology blogs said Thursday that Google-owned YouTube had reached agreement with Sony Pictures and several other Hollywood studios to show full-length movies and television shows on the video-sharing website.

Google-owned sites brought in revenue of 3.70 billion dollars in the first quarter, up nine percent over a year ago but down three percent from the fourth quarter of 2008, the company said.

Partner sites generated revenue of 1.64 billion dollars, down three percent from both the first and fourth quarters of 2008.

Google, which controls 63.7 percent of the US search market according to the latest figures from comScore, said that revenue from outside the United States totaled 2.88 billion dollars in the first quarter, 52 percent of total revenue.

Google also said that "paid clicks" -- clicks by Internet users related to ads served on Google sites and the sites of its AdSense partners -- increased 17 percent in the first quarter over the same quarter of last year.

Google also announced on Thursday that Omid Kordestani, who has been responsible for global sales and partnership operations, had been named a "senior advisor" to Schmidt and Google founders Larry Page and Sergey Brin.

He was replaced by Nikesh Arora, currently president of international operations, and will take on the title of president, global sales operations and business development.