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Oonagh Reidy

Yelp: Is This Dot Com Bubble Part Deux?

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Beyond 2000: Facebook. Twitter. Yelp. Spotify. Notice something about these names?


Click to enlarge

Well apart from the fact these internet firms currently hold million, and in some cases, billion dollar valuations, they all have one other massive commonality. 

Five years ago no one had heard of these newbie internet companies. Today, they have the likes of Google and Microsoft vying for them. They are also attracting the attention of investors keen to jump on the internet gravy train. 

A total of about $7 billion in orders for Facebook shares poured in, when the social network’s share sale was first announced by Goldman Sachs in January last, according to sources close to the deal.  And this was just from outside the US alone.

Since it is still owned by private investors, its profit numbers are not well known although some analysts believe Mark Zuckerberg’s company revenue “could be as much as $2 billion, fueled by advertising growth” for last year according to the Wall Street Journal. 

Facebook, which has been associated with a $60 billion market valuation figure has 600 million users and growing.

Twitter, in a similar vein, has some market analysts suggesting a $10bn price although it has yet to even turn a profit and turned commercial in just April last year, has apparently received backing of $360 million from private investors. 

LinkedIn, the work networking site announced its intention for an initial public offering (IPO) in January, set to happen in the coming months. 

LinkedIn which has 90 million users, turned a modest profit of USD$1.85 million on revenue of $161m in the first 9 months of 2010.  

All are showing relatively small profits considering the current values being placed on them by investors.  Even if Facebook did make $2bn in revenue its market valuation is 25 times that, which seems extremely high, leading to some wondering if a social bubble, built on the back of these much loved sites is on the way?

 

Jeremy Stoppelman, CEO of Yelp, a global reviews site and internet star performer, beleives this might be the case. 

“In 1999 and 2000, those were early stage companies with small teams, which had an idea which they were trying to execute on, yet they were getting multimillion-dollar valuations.

“That’s clearly not happening now. The companies getting huge valuations pre-IPO do have revenues.

But are the valuations high? There’s no question.” 

“If we’re in a bubble, we’re at the beginning of it,” Stoppelman told The Times.    

However, some fund managers with knowledge of the bottom line at some of the leading Silicon Valley tech houses feel differently and reject talk of a bubble.

“It is night and day compared to 10 years ago,” says Barry Mills, the manager of the $400 million Dreyfus Technology Growth fund. 

 

“These business models are real. The revenues are real, and the cash flows are real,” he insists.

Vodafone Profit Up Despite Network Scandal

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VHA out of the red as earnings rise 171.6% as mobile base grows.

Profit for 2010 also leapt out of loss making territory, turning to positive growth of $73.4 million.

This a major change from this time last year when Australia’s third biggest Telco posted a loss of $119.6 million.

The strong results were “based on strong growth in postpaid customers and service revenue” said Hutchinson Telecoms Australia (HTA) on Friday. 

This compensated for heavy losses experienced in their broadband subscriber growth figures, which slumped to 142,000 new additions in the second half of 2010 compared with 539,000 for H1.

Earnings as a percentage of service revenue has risen 12.3 percentage points to 21.6%.

Late last year VHA was besieged by continuous issues with their network which affected mobile services, including call failures, slow data speeds and poor reception. 

Vodafone recently apologised to customers for the service disruptions and said they added staff into the customer care division and in coming months users will be able to contact Vodafone at any time they wish.

However, despite the strife, their customer base grew “strongly” in 2010 with 681,000 new customers joining the network – a jump of an increase of 9.9% from this time last year.

VHA now has a total customer base of 7.58 million customers.  

 

Its postpaid customer growth grew 11.5% (excluding wholesale customers).

And more than 3 million customers are using mobile 3G broadband via devices like USBs and pocket WiFi.

 “2010 was a good year with solid profitable growth underpinned by strong postpaid handset performance,” said Vodafone Hutchison Australia Chief Nigel Dews. 

VHA is expected to remain profitable in 2011 and is on track to achieve merger synergies with a net present value of $2 billion, says HTA. 

Recently Vodafone announced improved service network with new upgrades in the form of their new 850MHz network, including a new quad band mobile broadband modem launched last week.

HTA’s share of VHA’s pre tax earnings improved 171.6% to $475.8 million, driven by margin growth and reduction in operating costs since mergering, they said. 

 

“We are pleased with VHA’s performance, profitability and continued growth in service revenues in the first full year since the merger” according to Chairman of HT Canning Fok.  

VHA is a 50:50 joint venture between Hutchison Telecoms and Vodafone Group.

Fujitsu Launches Oz Cloud Network

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Australia has become the first region outside Japan to roll out Fujitsu’s standardised Cloud offering.

The premium Cloud service is based in Tier III data centres located in every major geographic region including Australia, Singapore, USA, UK and Germany. 

The service is to provide single point of contact for the management of all infrastructure through its self-service Cloud services portal, that allows customers to adjust services, and change capacity and usage in real time.

Its ‘IaaS,’ infrastructure components can be dragged and dropped into immediate action, and 4-6 week network connections happen in seconds. 

The service is a “fully flexible model for IT infrastructure, platforms and applications” and can change to suit business needs, they said at yesterday’s launch at the Gold Coast. 

“The offering is also differentiated by providing the highest levels of availability, depending on customer requirements, and its highly sophisticated self-service portal.”

This project is the result of 14 months of development by Fujitsu.

 “We are shaping the future with our customers…delivering to local enterprises fully featured, high efficiency
services, from a global network, to facilitate their expansion into the
international marketplace,” said Cameron McNaught, Group Director – Solutions and Cloud Services.

 

“Fujitsu’s genuine Cloud offering has become a real alternative to traditional IT consumption models. Twelve months ago Cloud was niche.

We’re seeing customers moving key, mainstream business applications to the Cloud,” McNaught said.

Fujitsu ANZ’s Infrastructure-as-a-Service (IaaS) already has customers like IT company CA Technologies, as well high profile Toyota Australia and Frucor.

The expansion of these Cloud Services will see a range of offerings rolled out this year such as a SaaS suite including messaging, CRM and unified technologies later in 2011, says Fujitsu.

David Jones Sales Cool As Tougher Trading Hits

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Intense competition, bad weather and flooding makes for lower footfall across the retailer’s stores.

Retailing giant David Jones has released sales figures for Q2 covering October to January last, revealing a drop in sales and a relatively flat outlook for future growth. 

Sales revenue of $617.6 million was recorded for Q2 2011 – a fall of 2.7 percent compared to the previous year’s figures for the same period, although this falls to 1.1 percent when the calendar is adjusted.           

Sales for the Q1 of this financial year were $466.6m – a rise of 3.2 percent on the previous year. 

No breakdown in the sales figures were given, although its electrical appliances division was also likely to be a casualty of falling figures considering the increasing use of online stores among consumers.

The company described consumer spending as “patchy”, citing heavy pre-Christmas discounting by retailers leading to “a very competitive retail environment, ” as well as the losses incurred by the Queensland floods among the mitigating factors. 

However, guidance profit after tax for the first half of this year (H1) is still predicted to rise 5 percent and likewise predictions for H2 set for between 5-10 percent, but are now likely to “be at the lower end of this range,” DJ said in a statement.  

However, the outlook remains somewhat gloomy at the retail giant, predicting future growth in sales this year to be flat. 

“We experienced a challenging second quarter with wetter and cooler weather,  decline in customer sentiment and significant discounting in the lead up to Christmas and the impact of the Queensland floods on six of our stores,” according to DJ CEO David Zahra. 

 

“Consumer shopping behaviour continued to be patchy throughout 2Q11 and we have seen no material signs that this is changing.”  

“Despite in 2Q11 with heavy promotional activity by retailers,we have managed our cost position well and I am pleased to report that we have also effectively managed our Gross Profit Margin and Inventory,”  he said.

Expansion of its Perth Claremont Quarter with 85 percent more selling space, its Bourke Street Mall outlet in Melbourne CBD  and the new Westfield Sydney centre were all cited as strong performers.  

No Turning Back: Borders Debts Pile

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Failed book retailer had only $1m in the bank as administration loomed.

This is despite owing staff $7.8m in wages and other entitlements, a creditors meeting for Borders Australian business heard this morning.

Mr Steve Sherman of Ferrier Hodgson, who is acting as the administrator said REDgroup, owner of Borders and Angus & Robertson, had total cash of $6.4 million and debt of at least $118 million. Its creditors are owed a bill to the tune of $44 million. 

Last month Borders, which has struggled with the long-term shift towards digital sales against rivals like Amazon, admitted it was on the brink of bankrupcy after failing to reach a deal with bankers over liabilities of more than $1bn. 

Several stores are to be closed completely and staff will be informed in the next 72 hours which ones will be affected. 

It is unlikely to be handed back to its private equity owners under a deed of administration, said Mr Sherman.  

Founded in 1971 by two Michigan brothers, Tom and Louis Borders, the group is said to have missed payments to landlords and publishers.

Foxtel Eyes Up Pay-TV Austar For Takeover Bid?

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Rumour has it a takeover could be on the cards. Foxtel shareholders which includes Telstra, Consolidated Media and Rupert Murdoch’s News Ltd are said to be mulling over a possible deal and may be “getting closer to agreeing on a potential bid price,” according to the Australian, owned by News Ltd.
This is not the first time a takeover deal has been played out for the regional pay TV outfit, however.

Both News Ltd and Consolidated attempted to get deals up in 2005 and 2007 which was subsequently rejected by 50 per cent shareholder Telstra.

Austar CEO, John Porter has gone on record as voicing his support for the deal, declaring there was “so much compelling industrial logic” to a merger deal with Foxtel.

However, he insisted his company “has not received any offer” to date. 

However, Porter has just jumped on a plane bound for the US accompanied by Foxtel CEO Kim Williams, which indicates talks with Austar’s main shareholder Liberty Global, which owns 55, percent are underway.  

Austar, which also has a mobile and broadband division, has 760,000 subscribers and is the largest pay television operator in regional Australia.

 

Established in 1995, its service includes over 180 channels, 13 HD Channels, a near video-on-demand service, as well as box office movies, Sports Active and SKY News Active.

Telstra: From Service Nightmare To Personal Shoppers

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They used to be lambasted for their consumer service, or lack of it. But now Telstra have turned to personal shoppers, pledging to give consumers their “undivided service” when they come through their doors.Telstra is offering the “exciting” new personalised service for its Launceston store, where customers can “book an appointment online ahead of time and get personal, undivided service when they arrive in store”.

This is part of the telco’s $1 billion makeover plan, Telstra New, its bid to win back customer support for its often loathed service.
 
Initial customer feedback has been very positive, they said in a statement today.

Personal shopping will enhance the customer’s shopping experience, says Telstra Manager for Northern Tasmania, Michael Patterson. 

“Personal Shopping is a great in-store premium service we’re trialling. It’s designed to allow us to differentiate ourselves and provide better experiences for our customers,” Mr Patterson said.

It will also provide customers with a more targeted, streamlined and convenient shopping experience, say the telco. 

“There are also customers who prefer to talk to their partner or have a think about a purchase, so booking a personal shopping appointment means they can return to the store later and pick up right where they left off,” Mr Patterson said.

 

 “One of the advantages of personal shopping appointments is it gives stores the ability to manage traffic without damaging the customer experience,” he said.             

The Telstra Shop in Launceston is located at Shop 3, 136-142 Brisbane St.

Google Offer Free Sites To OZ Biz

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Internet powerhousemake a bid for Aussie businesses through new scheme.
‘Getting Aussie Business Online’ is a collaboration between the giant and software company MYOB, offering companies a free website and Australian domain for 2 years and other perks such as $75 for Google’s Ad words advertising service.

It also offers advice and education for small operators seeking to gain online presence and are aiming to get 50,000 businesses online in the first year alone.

The service will help with building pages with the help of a MYOB site map.

“A website today is like a phone – every business needs one. If you don’t have one, now is the perfect time to Web Up,” the promo says.

“We’re taking the time, hassle and cost out of getting a website so that you can get on with running your business.”

The move will pose as a threat to domain hosting companies like Melbourne IT and Net Registry, given that it is offering services free of charge, initially. After two years a $30 fee will apply for services.

Tim Reed, CEO of MYOB, said, “Our initial goal is to get at least 50,000 businesses set up with a free website this year. We’re thrilled to be collaborating with Google on this initiative.”

The new online venture follows a similar project in the UK last year.

Nine Sells Carsales.com Stake To Mystery Buyer

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Nine Entertainment’s equity owner CVC Asia Pacific sells its stake in online car seller.Nine subsidiary, ACP Magazines have just announced the sale of 49.1 per cent share in the car dealer by equity owner CVC, to a “broad range of sophisticated and institutional investors at $4.92 a share”, ACP Director Patrick O’Sullivan it said this morning in a statement. 

The deal said to be worth $565 million could affect the timing of Nine’s $5bn IPO.

Strong results from the online car dealer coupled with solid price performance were the driving factors in the sale, according to reports. 

Shares in the company have spiked more than 50 per cent since 2009.  

Nine chief David Gyngell and CVC’s Adrian MacKenzie as well as Graham Brooke have resigned from the board.   

The sale was carried out by UBS AG, Australia. 

CONFIRMED: Murdoch To Takeover Sky As UK Media Cries Monopoly

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Media mogul Rupert Murdoch has been given the go ahead to take over BSkyB by the UK government.

However, there has been an outcry of protests from British MPs who are outraged his News Corp, who already has a stranglehold of British media interests, will now control one of the biggest broadcasters in the country.

British culture secretary, Jeremy Hunt MP, who announced the decision yesterday, said the deal included safeguards ensuring editorial independence, which would limit the monopoly type effect many fear the buyout will bring, with Murdoch undertaking to establish Sky as an independent entity.  

The decision to allows News Corp who already owns 39.1 per cent, purchase the remaining 60.9 per cent stake in the satallite broadcaster, will be followed by a period of consultation. 

“I am consulting on proposed undertakings from News Corporation. Informed by advice from the regulators, I believe that these will address concerns about media plurality should the proposed News Corporation/BSkyB merger go ahead,” said Hunt. 

Communications watchdog Ofcom pointed to the problems with media
plurality a buyout would bring, in a report published last year. 
However, the body gave their seal of approval to the deal following the
undertaking by News. 

“The process has been completely fair, completely impartial and completely above board,” he insisted. 

The deal, said to be worth $14bn is the largest in News Corp history, and will also require approval from BSkyB shareholders who are seeking a higher bid than the GBP 700 pence per share offer currently on the table. 

Opposition MPs, who are vociferous opponents to the takeover plan and
their contempt for Australian born Murdoch, have called on Hunt to refer
the case to the Competition Authority because “nobody believes these undertakings agreed to by Murdoch will be adhered to in the long term”.

The decision marked a “disastrous day for democracy,” declared another fellow Labour MP.

A fully owned News Corp owned BSkyB, (the giant currently owns 39.1 per cent) will be renamed Newsco and governed by an impartial board of directors, chairman and editorial committee who have no vested interests in the media powerhouse . 

News Corp, who already owns The Times, The Sun, and the Wall Street Journal as well as holding various interests in Australian print and broadcast media including a 25 per cent stake in pay TV broadcaster Foxtel, means the decision may have implications here also. 

BSkyB is also shareholder with the Seven Network and Nine Entertainment Company in Sky News Australia, one of Foxtel’s anchor stations. News Corp has pledged to forfeit ownership of its flagship news channel as part of the takeover deal.

This week it also emerged Foxtel is in talks with regional pay TV player Austar, in what is rumoured to be a $2bn deal.

And this decision from the UK has not been without controversy.

Last year UK Business Secretary, Vince Cable, who rejected the idea of a News Corp takeover of Sky, after declaring “war”on the Murdoch empire, was quickly ejected from responsibility for the decision by Prime Minister David Cameron, with the Culture Secretary given the job. 

British media are also furious at the decision by the Conservative MP,
with a media alliance made up of other major players there including BT,
Guardian Media Group, Associated Newspapers, Trinity Mirror,
Northcliffe Media declaring:

 

 “We deeply regret the fact that the Secretary of State is minded to
clear the deal. The proposed undertaking is pure window-dressing … We
shall be vigorously contesting this whitewash of a proposal during the
consultation period, as well examining all legal options.”

Hunt was said to be a supporter of News Corp takeover as is his ruling Conservative party.