AOL CEO Tim Armstrong (right) speaks with Fortune's David Kirkpatrick at the Brainstorm: Tech conference on Thursday.
(Credit: Ina Fried/CNET)PASADENA, Calif.--The Tim Armstrong road show continued on Thursday, with the AOL chief executive dropping by the Fortune Brainstorm: Tech conference.
Armstrong made many of the same arguments he has been making--namely that the Internet is still in its infancy and that AOL represents one of the biggest opportunities and challenges in the Internet arena.
The former Google executive laid out the areas where AOL plans to focus--display advertising, content, messaging and local services, including the once-leading one--MapQuest. In that last area Armstrong acknowledged that the company has fallen behind.
"We probably missed a generation of technology which we are working on right now," he said.
Armstrong said that the company doesn't have to dominate these areas to be successful, but it does need to be one of the leaders. In addition to existing areas, Armstrong said there are significant "white spaces" on the Internet where AOL can build a business.
However, Armstrong was short on specifics on how the company will improve its existing businesses or which new areas it will tackle.
The company is looking at buying some businesses and selling others of its units. However, Armstrong said it isn't the same list of acquisition targets or divestitures that the company was planning when he arrived.
Armstrong said that some of the units that the company planned to get rid of are actually some of the areas he says have become key to its new strategy. He also said that on his first day there was a "$400 million check" that the company wanted him to sign; Armstrong said he didn't make that purchase.
The audience was asked to vote whether AOL would slowly run out of juice, stay profitable but not a leader, or return to health as a major Internet player. Nearly half of respondents chose "run out of juice" before Armstrong's talk and only about 30 percent said so after the panel wrapped up.
"So you are a good presenter," said moderator and Fortune writer David Kirkpatrick.
Updated at 3:47 p.m. PDT to include questions from audience.
CARLSBAD, Calif.--Yahoo's Jerry Yang and Sue Decker may have gotten a tough time from Walt Mossberg, but perhaps they should consider themselves lucky.
Next up at the D6 conference here was Time Warner CEO Jeff Bewkes. A humorous video poked plenty of fun at the executive culminating in a discussion of whether D host Kara Swisher would cut off Bewkes' genitalia.
Jeff Bewkes
(Credit: Time Warner)Clearly prepared, Bewkes came onstage covering his crotch.
Probably a good idea. In the first 30 seconds, Swisher fired off questions on everything from The Sopranos ending to, "Why the hell did you pay $850 million for Bebo?"
The grilling is continuing as I type this, and is now on to the AOL merger.
"Would you like to unload AOL?"
"No," Bewkes said.
Amid the thrashing, Bewkes said he knew what Swisher was really thinking, pointing to how the company had transitioned from a subscription to largely free ad-supported business still earning $2 billion a year.
"Yeah, no," Swisher said. "I'm thinking you missed a lot of great opportunities."
Swisher pointed specifically to social networking, saying it should have been AOL, not Facebook, that capitalized on that move.
"It is our fault," Bewkes said. "That's true."
The grilling didn't end with Swisher, however. When she opened it up to questions, the audience was hostile as well.
The first question was about why Time Warner gives an hour of air time to Lou Dobbs' views, drawing a smattering of applause from the crowd. Next up was a Yahoo executive, armed with ComScore numbers, taking issue with many of the categories in which Bewkes had claimed to be No. 1. Bewkes said he had meant to say No. 1, No. 2, or No. 3.
Swisher said the questions raised by the Yahoo executive were a bit like bringing a knife to a gun fight.
Click here for full coverage of the D: All Things Digital conference.
When Microsoft was threatening to go hostile in its Yahoo bid, Google appeared close to a deal. Now that Microsoft has pulled its offer, things appear to have cooled considerably.
While such a deal is apparently still simmering, it appears to be relegated to the back burner and indeed, may or may not ever boil. Although Yahoo had hoped to have a deal ready to announce this week, that now appears unlikely, according to Marketwatch.
Folks I talked to on Monday offered similar sentiment. One of the hurdles in any deal is trying to craft an agreement that offers enough benefit to Yahoo, without raising too many antitrust red flags.
Analysts have said that a broad search advertising outsourcing pact could generate a substantial boost in cash flow for Yahoo, but it's unclear how large a windfall Yahoo would get from a more narrow pact. Among the possibilities said to also be under consideration are ones that would focus on only a portion of search terms, operate for a limited time, as well as ones that only operated in specific regions. In addition, the companies are said to be exploring options that might open Yahoo's search advertising to other companies, in addition to Google.
Yahoo and Google representatives were not immediately available for comment.
Monday morning meant back to reality for both Microsoft and Yahoo, after talks between the two sides collapsed over the weekend.
Both companies have maintained they had a strategy independent of the other, but now the two sides will have to prove it. The companies are likely still in dealmaking mode--just not with each other. Yahoo is still pursuing deals with Google and AOL, a source tells CNET News.com, while Microsoft has indicated that it will also look at other business deals. AOL could be on Microsoft's short list as well.
Yahoo shares, meanwhile, got their expected pummeling, with many investors still shaking their heads over how Jerry Yang could "just say no."
So, what now?
Well, the decision to end talks is a full employment act for talking heads, including yours truly.
I recorded a video with News.com Editor in chief Dan Farber in which the two of us discuss the matter, while Stephen Shankland and I took up the same topic on Monday's News.com daily podcast. If you want still more, I'll be on the public radio show Marketplace Monday afternoon taking up the topic again.
As for the companies, it's time to move on to Plan B. I took a look at Microsoft's Plan B over the weekend, while Shankland did the same for Yahoo. But I'm curious to hear what others think. Was Jerry Yang crazy to say no? Should Steve Ballmer be thanking his lucky stars?
With Yahoo apparently off the table, it's time to see what Microsoft's back-up plan looks like.
Microsoft has said for some time that it has a strategy with or without Yahoo, but it's a strategy clearly in need of a jump-start.
In search, for example, Microsoft has been trying to take on Google for some time, but it remains a distant third in search queries and also has struggled in the all-important battle of monetizing each search query.
Microsoft outlined two key reasons for buying Yahoo--adding its talented engineers and getting the significant boost in scale that would come from buying the No. 2 player.
Clearly, Microsoft could use just a fraction of those billions and get a ton of engineering talent. The scale problem, however, is a more challenging one. As Microsoft CEO Steve Ballmer himself said in a meeting with employees on Thursday, there just aren't that many companies out there with any significant scale.
As for where else the company may look, Ballmer's recent comments to The Wall Street Journal offer a cheat sheet to the short list.
"There's really only five or six that really have any scale," Ballmer said in that interview. "Worldwide, you'd maybe get seven or eight."
Among those companies with scale that Ballmer named were Facebook, MySpace.com, and AOL, along with the Yahoo, Google, and Microsoft itself.
Although Facebook and MySpace have huge audiences, selling advertising against those sites has proved to be trickier than in search. Plus, Microsoft had to agree to a massive $15 billion valuation for Facebook just to get an ad deal and a small slice of the company. MySpace, meanwhile, has an add tie-up with Google. AOL is certainly seen as in play, having been a frequent rumor target as a potential partner for Yahoo.
Still, Ballmer said in his letter to Yang and in a public statement that he will look at other business moves and may expect other deals to follow.
"I wouldn't be surprised to see Microsoft going on a buying spree to buy some of the things they thought they might be getting from Yahoo," said Gartner analyst Allen Weiner. "I think they'll look seriously at some of the significant Web 2.0 companies and what they might add to the Microsoft label."
There's also the possibility that Microsoft makes another try at Yahoo once the dust settles a bit. I'll explore this in a follow-up piece.
News.com's Stephen Shankland contributed to this report.
This week is shaping up to be a big one in Microsoft's nearly 3-month-old effort to acquire Yahoo.
The software maker has set a Saturday deadline for Yahoo to come to the bargaining table or else face a proxy fight.
Coloring the state of things will be earnings reports from both Microsoft and Yahoo due this week. Yahoo reports Tuesday, while Microsoft is set to release quarterly numbers on Thursday.
Those reports are all the more significant in that Microsoft's bid (at least so far) is half stock. A good earnings report from Yahoo might put pressure on Microsoft to hike its bid, while a negative one might increase the heat on Yahoo to sell.
Other players remain in the discussion, with reports that Yahoo is still in talks about a partnership with AOL and continues an advertising test with Google. Meanwhile, Rupert Murdoch signaled Monday that he may not be totally against joining with Microsoft.
"Depends on the deal," he said at an event Monday, according to Reuters.
He indicated that joining with Microsoft is probably the only way News Corp. would be involved. "I certainly can't afford to bid against Microsoft (for Yahoo)," he said in a speech before the Atlantic Council.
- prev
- 1
- next
