Finance Matters

Archive for February 3rd, 2010

We applauded Yahoo for selling HotJobs to Monster for $225 million, even though that’s ~$200 million less than Yahoo paid for the company in 2002.

JP Morgan analyst Imran Kahn shares our enthusiasm. He writes:

We see this as a positive as the company increases its focus on core businesses. We believe that Yahoo! has been trying to sell this asset for awhile and are pleased to see this deal close so mgmt can focus more attention and investment on core business lines including content, display, and search.

The deal includes a multi-year traffic component. We see this as beneficial to both parties as Monster will capitalize on Yahoo!’s extensive reach while Yahoo! will continue to monetize its traffic and maintain the user experience.

Sale price indicates a loss on the investment. Yahoo! purchased HotJobs for ~$436M in equal parts cash and stock in 2002. We note that this is well above the current sale price of $225M.

However, the business has been declining. Given the macroeconomic environment and increased competition from CareerBuilder, Monster, and Dice among others, business has fallen off recently. According to comScore data Unique Users to the site were down 32% Y/Y in December.

See which other Yahoo properties were for sale starting last Fall →

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See Also:

• Monster Buys Yahoo HotJobs For $225 Million In Cash
• Ticketmaster And Live Nation Get Approval As One Giant Music Monster
• In Live Nation Deal, Ticketmaster Must Sell Ticketing Services Software To Comcast, AEG

Since 1995, when Amazon first launched as an online bookstore, e-commerce sales have grown consistently as a percentage of total US retail sales, representing 3.8% of total US retail sales by the end of 2008.  The industry has experienced impressive growth, averaging 22% growth per year from 2000 to 2008 (versus about 4% for overall US retail growth).

Despite 2008 being one of the deepest recessions on record e-commerce managed to grow over 4%.  Industry revenue declined through the first half of 2009, but returned to growth during Q3 and Q4 driven by holiday shopping.  Most analysts expect e-commerce to return to double-digit growth in 2010.

Annual E-Commerce Revenue

Quarterly E-Commerce Revenue

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Tomorrow morning, on Feb. 3, Comcast chairman and CEO Brian Roberts and NBC Universal CEO Jeff Zucker will begin testifying before Congress about their big merger.

They will testify before the Subcommittee on Communications, Technology & the Internet in the morning and the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights in the afternoon.

David Cohen, Comcast’s executive vice president in public policy, writes on the company’s blog about what members of Congress have been asking them about during the past week. We can expect to hear about all of these issues tomorrow:

NBC News. “Because of our strong belief in the importance of broadcast news, on the day we announced this transaction, we pledged to enhance local news and other forms of local programming and to preserve the journalistic independence of NBC News. Expanding on those commitments in our Public Interest Statement last week, we promised to increase local news production by a total of 1,000 hours at the NBC owned and operated stations. We want to preserve the quality, and improve the quantity, of news and public affairs programming around the country – and we’re prepared to invest to do that.”

“There was a lot of speculation that we’d turn NBC and Telemundo into cable-only networks. We’ve pledged not to do that (specifically stating our goal to preserve free, over-the-air broadcast television). We want to preserve the local broadcast affiliate model and work with the affiliates of NBC and Telemundo to secure a viable future for the network and affiliates alike.”

Competition. “While Comcast may be the largest video provider, the next two largest providers are DirecTV and EchoStar – each of which has a nationwide footprint (we don’t) and both of which compete against us for nearly every customer we have. And Verizon and AT&T (both much larger than Comcast) are now aggressively overbuilding our cable systems all around the country. Even if competition itself wasn’t enough to protect consumers, there are specific FCC rules that require programming owned by a cable company to be shared with competitors, as well as rules that forbid any cable company from favoring programming it owns over other channels.” We’ll abide by them.

Video over Internet competition. While NBC Universal (through its 32 percent, minority, non-controlling interest in Hulu) and Comcast (through its entertainment and video site Fancast) both participate in this market, our combined share of the market is minuscule (today, that market is dominated by Google/YouTube and populated by dozens and dozens of other sites). We don’t view Hulu and Fancast as competitive – with each other or with our cable service – rather, they are both complementary services. And in any event, we play such a small role in this market (either as a content provider or as an Internet video competitor) that it just isn’t credible to conclude that we have any capacity to get in the way of the development of video over the Internet.

“We look forward to this chance to discuss the pro-consumer, pro-competitive, and strong public interest benefits of our proposed joint venture,” Cohen wrote.

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See Also:

• Cable Companies Tremble Under Threat Of Higher Fees For Sports
• Jeff Zucker’s NBCU-Comcast Email On ‘How To Win In The Future’
• Hulu’s Paywall On The Way After NBCU-Comcast Deal

(The following remarks were originally delivered at the author’s swearing-in ceremony today)

It is with considerable gratitude and not a little humility that I begin a second term as Chairman of the Board of Governors. I thank President Obama for the confidence he has shown in me by renominating me and the members of the Senate for confirming my nomination.

The past four years have been an extraordinary time. In many respects, this period has shown this institution at its finest, as we moved rapidly, forcefully, and creatively to confront the deepest financial crisis since the Great Depression and help prevent a looming economic collapse. This swift and effective response would not have been possible without the remarkable dedication, professionalism, and personal sacrifices of the Federal Reserve staff. I would like to express my deep appreciation to all of you for your creativity and hard work. America and the world owe you a debt of gratitude.

At the same time, this institution, like our country, faces enormous challenges, challenges that will demand continued commitment and professionalism from staff members in every division.

On the economic front, the resumption of growth in the nation’s output of goods and services is encouraging. But far too many people remain unemployed, foreclosures continue at record rates, and bank credit continues to contract. We at the Federal Reserve cannot hope to solve all these problems on our own–other policymakers and those in the private sector must do their part–but we must continue to do all that we can to ensure that our policies are helping to guide the country’s return to prosperity in an environment of price stability.

At the Federal Reserve and other agencies, the crisis revealed weaknesses and gaps in the regulation and supervision of financial institutions and financial markets. Working together, the Fed staff and the Board have made considerable progress in identifying problems and improving how we carry out our oversight responsibilities. We are restructuring our supervisory framework, for example, to incorporate a more systemic, multidisciplinary perspective. We are engaging with international colleagues to develop tough, comprehensive regulations to promote the safety and soundness of financial institutions, and we have developed and implemented strong new protections for consumers. We will continue to work with the Congress to develop an effective, comprehensive reform of financial regulation. As we move forward, we must continue to do all that can be done to ensure that our economy is never again devastated by a financial collapse.

The Federal Reserve has been granted, both in law and in political tradition, considerable independence and autonomy. That independence serves important public objectives. Critically, it allows the Federal Open Market Committee to make monetary policy in the longer-term economic interests of the American people, rather than in the service of short-term political imperatives. It also allows the Federal Reserve to make supervisory decisions based on the facts of each case and the need to preserve financial stability, not on the basis of political considerations. In the interest of maintaining public confidence and promoting economic and financial stability, we must continue to protect our independence.

At the same time, in a democratic society like our own, institutional independence brings with it fundamental obligations of transparency, responsiveness, and accountability. The Federal Reserve is already one of the most transparent and accountable central banks in the world, providing voluminous information and explanation concerning all of its activities. However, I believe that we should be prepared to do even more, to become even more transparent. It is essential that the public have the information it needs to understand and be assured of the integrity of all our operations, including all aspects of our balance sheet and our financial controls. We will continue to work with the Congress to ensure maximum transparency of America’s central bank, without compromising our ability to conduct policy in the public interest.

These are just some of the challenges that we will all face in the coming months and years. I thank you for the many expressions of support I received during the confirmation process, for your hard work and dedication, and for your service to your country. I look forward to continuing to work with all of you to strengthen our economy and to make the Federal Reserve as effective as it can possibly be in advancing the economic wellbeing of all Americans. Thank you.

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See Also:

• Geithner’s Claim To A Career In ‘Public Service’ Is A Joke
• Bernanke Gets The Roubini Endorsement
• Dems Ask: Is Ron Paul Running The GOP Now?

Apple isn’t the only tech company stuffed to the gills with cash.

Google and Apple each have more than $24 billion in cash and short term investments. Microsoft has billions more than either of them, with over $33 billion. Intel has $14 billion on hand, which, by these standards, is paltry.

As Microsoft, Apple, and Google go to war in mobile, search, and on the desktop, expect to see more of this cash deployed through acquisitions. (And one of these days, one of these companies may actually buy something big.)

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See Also:

• CHART OF THE DAY: AOL Ad Revenues Expected To Be Slightly Less Horrible
• CHART OF THE DAY: iPod Touch Is Apple’s Sleeper Hit
• CHART OF THE DAY: Microsoft’s Online Money Pit