Newly independent Aol is still struggling with the fate of Bebo, the social network they acquired for $850 million in 2008.
No one argues that Aol underpaid for Bebo. And the social network has fallen from 22 million monthly unique visitors when it was acquired to just 14.6 million today (Comscore worldwide). But even so, Bebo clearly has some value on the open market.
Despite that value, Aol’s best financial option for Bebo will likely be to abandon it rather than sell it, say corporate tax experts we’ve spoken with.
Here’s why – complicated corporate tax rules will let Aol write off the full purchase price of Bebo if they declare it worthless and abandon the asset. With Aol’s effective tax rate of around 45%, that’s $380 million and change in their pocket in taxes that they’d be able to avoid.
A sale of Bebo would almost certainly be less attractive. If someone were to pay them $100 million for the service, which is optimistic, Aol could still offset the remaining $750 million as a tax loss. But it could only apply against long term capital gains, and Aol doesn’t have any to offset against. They’d have to carry that loss forward and hope for future gains to offset it against.
One corporate tax attorney we spoke with wouldn’t discuss Aol specifically, but did confirm the logic of the approach. Bryan Smith, a partner at Perkins Coie, says “Without getting into any specific facts or companies, it will often be more attractive for a U.S. corporation to simply shut down a subsidiary and claim a deduction for the worthlessness of the stock against ordinary income instead of selling the stock at a distressed price and taking a capital loss, which may only offset capital gains.”
If Aol were to abandon Bebo they couldn’t pull any of the assets of the company back into Aol, say the experts we’ve spoken with. Otherwise it becomes a non-taxable liquidation. If Aol had debt or preferred stock on the books with Bebo, though, they could pull out assets to offset that liability.
Acer’s on a hot streak, and iSuppli’s PC market report has the numbers to prove it. Unfortunately, those same numbers paint a somewhat gloomier picture for Dell, which is now close to losing its status as the world’s number two computer maker.
Hewlett-Packard is still by far the world’s biggest computer manufacturer, pushing out some 59.6 million units in 2009, for a market share of 18.6 percent. Title of number two, long held by Dell, now looks up for grabs. Acer shipped 38.5 million units in 2009, for a market share of 12.7%. Dell shipped 38.9 million units, for a market share of 12.9 percent. Dell’s 2009 performance was down 9.9 percent from 2008, while Acer’s was up 21 percent.
Dell held on to number two, but not by much. And it's on a downward trend, which could mean number two won't be Dell's for long.
Acer’s performance was built on notebooks. Acer is putting a lot of emphasis on its notebook line, on the belief that notebooks presage the future of computing--which Acer founder Stan Shih says is toward lower-priced computers. Eighty percent of Acer’s shipments in 2009 were notebooks.
Acer is betting that the desktop is dying, and that manufacturers paying too much attention to them, like Dell, are in for a world of hurt. Says Shih, “U.S. computer brands may disappear over the next 20 years, just like what happened to U.S. television brands.”
Image Credit: iSuppli
Semtech (SMTC), which makes analog and mixed-signal chips, reported revenue for its fiscal fourth quarter ended January 31 of $85 million, well ahead of the Street at $71.9 million. Non-GAAP EPS was 30 cents, beating the Street at 22 cents.
For Q1, the company sees revenue up 7%-13% sequentially, which implies $91 million to $96 million, ahead of the Street at $79.6 million. SMTC sees profits for the quarter of 27-30 cents non-GAAP, above the Street at 21 cents.
SMTC in late trading is up 80 cents, or 4.6%, to $18.15.
Rovi (ROVI) this afternoon said it plans to sell $400 million of convertible senior notes due 2040 to qualified investors in a Rule 144A offering. The notes would be redeemable on February 29, 2015.
Rovi will use $159.6 million in proceeds to pay down its senior secured credit facility, up to $100 million to repurchase common shares and up to $75 million to buy back 2.625% convertible senior notes due 2011.
ROVI in late trading is unchanged at $37.
In another bit of EMI news, less vital to the company’s future than today’s latest change at the top, OK Go and Capitol Records have parted ways after nine years through mutual agreement. OK Go asked; EMI agreed. OK Go is best known for its viral videos—and was touted by previous EMI management as an example for the digital age—but that success hasn’t been reflected in sales. According to a source, their latest video (embedded below) had roughly 7 million views last week but they sold only 3,000 units of their new release Of The Blue Colour Of The Sky.
EMI has taken a lot of heat—much of it from the band—for refusing to allow embedding of the band’s videos for the new album, a policy that’s linked to YouTube’s own policy for major label music videos.
OK Go manager Jamie Kitman announced the separation via e-mail to industry observer Bob Lefsetz last night: “we secured ok go’s release from capitol—two weeks before the current video (up to 6.6 million hits in under a week)—came out. we’re living in the future, about 15 minutes earlier than we’d expected, and loving it.”
EMI confirmed with a mutual statement full of fun for reading between the lines:
OK Go singer Damian Kulash: “We’d like to thank the people at EMI Music who have worked so hard on our behalf.” Translation: those of you didn’t do anything for us get nothing.
EMI Music said: “We’ve really enjoyed our relationship with OK Go. They’ve always pushed creative boundaries and have broken new ground, particularly with their videos. We wish them the greatest success for the future.” Translation: Way cool videos without sales to match. Buh bye.
OK Go has set up its own label Paracadute Recording and is taking over the distribution and marketing of the new album. Expect lots of embedding; sample below.
ReneSola (SOL), a China-based solar wafer manufacturer, this morning reported Q4 revenue of $179.9 million, ahead of the Street consensus at $166.6 million. Adjusted loss per share of 3 cents a share was ahead of the Street by a nickel a share. Shipments in the quarter were 202.9 MW.
The company sees Q1 revenue ranging between $195 million and $205 million, with shipments of 215 million to 230 MW. The company said it has been seeing “stabilizing polysilicon prices and increased wafer spot pricing.” In the second half, the company expects wafer pricing to drop 10%-15% due to increased competition and subsidy cuts in Germany and elsewhere; the company maintains its forecast for full year shipments of 900 to 950 MW, with gross margin of 17%-20%.
SOL this morning is down 11 cents, or 2.1%, to $5.15.
Mobile connections in Latin America surpassed half a billion in Q4 2009, according to 3G Americas. Unsurprisingly, the GSM-HSPA technology is leading the way with 91% market share and 464 million connections reported at year-end 2009. Of that number, 64 million were added during 2009 (28 million in Brazil alone), of which 9.4 million were 3G connections.
As for North America, GSM-HSPA operators added 13.6 million new connections last year, 8 million in the last quarter alone.
In total, at the end of 2009, GSM-HSPA networks accounted for 73% of all mobile subscriptions, up from 70% a year before.
In the Western Hemisphere, UMTS-HSPA (3G) connections were up 136%, totaling more than 64 million at the end of 2009.
Finally, on the global scale, GSM-HSPA technologies reached 4.17 billion subscriptions across 345 commercial networks in 139 countries worldwide. In other words, that’s 89% of the market. And of that number [4.17 billion], more than 450 million people connect on UMTS-HSPA based 3G networks.
[Via: CellularNews]
Related News from IntoMobile:
TellaPal, a new social network and recommendation engine in one, has raised $1.6 million of a targeted $5 million round of equity, according to a filing with the SEC. Based in San Francisco, the startup allows users to write recommendations for products or services, and then share their comments virally via instant message, e-mail, blogs and social networking sites (like Facebook, hi5, MaySpace) all at once. TellaPal allows users to include special offers with their recommendations, so their personal networks can benefit from the service. At the same time, recommenders can earn rewards for evangelizing for various products and services.
TellaPal previously raised $750 million in a seed round in April 2009. The company is backed by a handful of angel investors, including Joshua Stylman and Peter Hershberg, co-founders of social marketing agency Reprise Media.
Companies: TellaPal
People: Joshua Stylman, Peter Hershberg
Payfone Inc., a New York-based company that allows users to pay for online goods by using mobile credit, has secured $6 million of a $10 million funding round, according to a regulatory filing.
Bob Borchers, a partner with Opus Capital, is listed as a new board director. The company previously raised around $1.6 million in a round led by RRE Ventures. www.payfone.com
TiVo can’t catch a break. The company just rolled out its next-gen platform and then finally ended a long court battle with Dish Network, causing its stock to surge to new heights. This all happened within the last two weeks. But then last night the company announced its sad Q4 2009 financials.
You already know the problem. TiVo is having a real tough time signing up new customers and retaining current ones as content providers keep pushing their low-price DVR options. The company only managed to net 46k new subscriptions in the last months of 2009, bringing the total headcount to roughly 2.6 million. That’s down from the 4.36 million subs TiVo had in January 2006. TiVo ended up losing $10.2 million during the fourth quarter even though revenue improved 16% to $68.5 million.
It’s sort of sad, actually. DVRs have lost their magic the last 10 years as cable companies offer cheap alternatives with smaller feature sets and none of the trademark TiVo charm. But TiVo can’t die yet. I’m not ready to live in a TiVo-less world. The company must work on these three items in order to survive the next decade.
It’s hard to describe why TiVo is better than your average cable DVR. You have to use it to really appreciate the differences, but that shouldn’t stop the company from advertising. When was the last time you saw a TiVo ad on TV? Or a celebrity plug it on a talk show? The last plug I can remember was way back when Rosie O’Donnell used to talk about it on her show.
Get TiVo in the public view. Have demos on Best Buy and Sears end caps. Get it it into Walmart so Jim Bob and Lucy can experience the difference. People need to see and feel the DVR, which is something you can’t do via the Internet.
I can tell you from my Circuit City days that many people already think they have TiVo. But they don’t. They have a cable companies DVR. It’s just like Xerox and Kleenex. TiVo needs to do a better job educating while demonstrating its product.
Did you know that Comcast offers TiVos in some markets? It’s on Comcast-owned equipment, but it runs the TiVo software. Subscribers pay a slight premium, but they get all the joy of a TiVo along with the content from Comcast’s OnDemand without the traditional up-front cost. This is a win-win-win.
But what happened to DirecTV? TiVo used to be the only DVR option for the satellite provider and consumers still want it. It’s rare that someone doesn’t leave a comment on one of our TiVo posts inquiring when the new DirecTV TiVo is coming out.
The Conax deal is a prime example of this. It will increase brand recognition while showing consumers what makes TiVo special. Of course content companies might not want to pay the premium involved, but the recent Dish Network ruling might make them think twice.
Currently you either have the option of buying a $299 or $499 TiVo and then deciding whether you want to pay $12.95 monthly or $299 for the life of the box. That’s fine, the company needs the revenue from these subs while covering the cost of the equipment. But why not offer pricing a like cell phone companies do, by having in-contract and out-of-contract prices.
The in-contract price would give customers a lower upfront cost but require them to pay the $12.95 monthly fee. There could even be an ETF involved to ensure that the company doesn’t lose money on hardware. (I know, I’m evil) But the TiVo Premiere XL could be offered for $299 with a one-year contract or $199 with a two-year contract. Consumers are used to this type of pricing strategy anyways. Cell phone companies have been doing this for years.
The out of contract price could be the current prices with the standard Premiere going for $299 and the XL for $499. But then customers wouldn’t be tied down with a contract and free to cancel anytime. The lower in-contract price would no doubt open the DVR up to new markets and get it into more homes. That’s the goal, right?
Don’t count TiVo out just yet. I don’t even think the company deserves to be kept on deathwatch. The new Premiere hardware is fine even though it’s nowhere near as good as it could and should have been. It still has the tools and magic to get the job done. There are plenty of new markets and areas where TiVo can expand and grow. But the key is getting TiVo in back in the public’s eye and showing them why it costs a lot more than their cable-provided DVR. Show them why TiVo is TiVo.
Team Europe Ventures, the Berlin-based VC firm, has launched a new €6 million fund for early stage startups in the Internet and mobile Internet space. The fund is mainly targeting companies in Germany and Europe, but also in the USA, and the focus will be on the seed stage, with 4-5 startups being invested in per-year for a maximum of €500K per company.
This is bound to be good news for startups in Europe, and particularly in Germany where seed funding is seen to be a problem for early stage companies in the Internet space.
Autoquake, an online used car retailer in the UK, has raised another £6 million round of venture capital and venture debt financing from existing investors Accel Partners and Highland Capital Partners. The debt is being provided by Kreos Capital. This is after raising £4m from Accel and Highland only last year. That takes its total funding so far to £20 million. The money will be used to expand internationally.
Autoquake’s plan is to disrupt the car retail industry by selling quality used cars on behalf of large corporate fleets and leasing companies direct to consumers via virtual showrooms. High quality pictures of the actual cars on sale appear instead of the usual fuzzy pictures on the average second hand advert.
eXo, provider of services that accelerate Java web sites and applications in cloud environments, has brought in $6 million in a first round of funding. Based in San Francisco, Calif., the company is backed by Auriga Partners and XAnge Capital. It plans to use the new financing to expand its sales and marketing operations in North America. It already has a strong-presence in France.
Companies: Auriga Partners, eXo, XAnge Capital
TiVo is looking to choke one of the more important features from other DVRs on the market and has recently unveiled new Premiere DVRs that are interesting. However, the company is not doing well financially and posted a large loss for Q4 reports the Wall Street Journal. TiVo shares grew after it won an appeal on a patent for some of its software last week, but that wasn’t enough to help its Q4 earnings.
TiVo attributes the loss for its Q4 ending January 31 of $10.2 million to cancellations of existing subscriptions for its monthly service required with all TiVo DVRs and to slowing new subscriber additions. The $10.2 million figure works out to a loss of 9 cents per share. The same quarter of the previous year TiVo posted a loss of $3.6 million.
While TiVo posted a large loss, its revenue grew by 16% to $68.5 million for the quarter. The $10.2 million loss for the quarter is better than the loss of $13 to $15 million TiVo had projected in November.
Relevant Entries on SlashGear
OkCupid, a free online dating site, has raised $6 million from a group of angels. Yagan, who’s led two companies before but never taken venture capital, attested he talked to 20 different VC firms last year and received a number of term sheets, but didn’t like the proposed equity distribution. Instead, he went with collecting checks from five angels, whom he says he’s not disclosing because we’ve never heard of them.
- Mitchell TsaiYagan previously led two immensely popular consumer internet products, with varying levels of corporate success: SparkNotes, the online alternative to Cliffs Notes that was bought by Barnes & Noble in 2001, and eDonkey, the peer-to-peer file-sharing application that shut down under pressure from the RIAA.
- Mitchell Tsai
We've remarked in the past that TiVo is slowly dying and the latest numbers from the company aren't making us any more optimistic:
For the quarter ended Jan. 31, TiVo posted a loss of $10.2 million, or 9 cents a share, compared with a year-earlier loss of $3.6 million, or 4 cents a share.
Youch. Doesn't help that the company is struggling more and more to even find any new subscribers. [WSJ]
Blackboard (BBBB) this morning said it has agreed to buy privately held Saf-T-Net, a Raleigh, N.C.-based, provider of AlertNow, a messaging and notification service for the K-12 market, for $33 million in cash.
The company also repeated its previous Q1 revenue forecast of $98.6 million to $102.6 million, with non-GAAP EPS 36-43 cents.
Blackboard expects $5.5 million in revenue from Saf-T-Net in 2010; the deal is expected to be dilutive by about 9 cents a share GAAP, and 5 cents non-GAAP. That includes a Q2 hit of 4 cents a share non-GAAP. For the year, the company sees revenue of $429.5 million to $445.5 million, and non-GAAP profits of $1.60-$1.89 a share.
BBBB is off 7 cents, at $42.48.
February 2009 was not the greatest month for Mac sales. They were down 16 percent year over year and 10 percent from January. And while that may have been unfortunate at the time, it’s good news for Apple (AAPL) and its investors today, because it provides a particularly soft number with which to compare Mac sales for February 2010.
That soft January 2009 growth rate comp helped January 2010 Mac sales grow an astonishing 36 percent year over year, Piper Jaffray analyst Gene Munster observes in a research brief this morning. It’s likely, then, that an even softer February 2009 growth rate comp will do the same for February 2010.
“The month of Feb-09 was -16% y/y, the softest Mac comp we’ve seen since we began tracking the data 5 years ago,” Munster writes. “We expect the strong y/y growth in NPD data that we saw in Jan. to continue in the month of Feb.”
Munster continues to expect Mac sales in a range of 2.6 million to 2.8 million in first quarter of calendar 2010. That’s an 18 percent to 26 percent increase over the same period in 2009, which was down one percent year-over-year.
Why AOL May Just Abandon Bebo Rather Than Sell It
- felixWhy AOL May Just Abandon Bebo Rather Than Sell It
- Sarah Perez