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Here's What Apple Will Say To Congress About Taxes Tomorrow (AAPL)
Apple CEO is testifying before Congress tomorrow about its offshore cash, and its tax practices.
Ahead of the actual testimony, Apple released what it's going to say.
We're reading it now, and we'll peel out the most interesting bits...
Apple starts by saying it pays all of its required taxes in the U.S. and abroad.
- "Apple pays all its required taxes, both in this country and abroad."
- "Apple welcomes an objective examination of the US corporate tax system, which has notkept pace with the advent of the digital age and the rapidly changing global economy."
- "Apple is likely the largest corporateincome tax payer in the US, having paid nearly $6 billion in taxes to the US Treasury in FY2012. These payments account for $1 in every $40 in corporate income tax the USTreasury collected last year."
- "The Company expects to pay over $7 billion in taxes tothe US Treasury in its current fiscal year."
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"Apple does not use tax gimmicks. Apple does not move its intellectual property into off shore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple’s revenuelast year and two-thirds of its revenue last quarter. These foreign earnings are taxed inthe jurisdiction where they are earned (“foreign, post-tax income").
- Apple has a lot of cash overseas. It's not going to bring it back to the U.S. because it will be lose 35% of the cash to taxes. It's smarter to just borrow cash than to repatriate it.
- "Apple supports comprehensive reform of the US corporate tax system. The Company supports a dramatic simplification of the corporate tax system that is revenueneutral, eliminates all tax expenditures, lowers tax rates and implements a reasonable taxon foreign earnings that allows free movement of capital back to the US. Apple believessuch comprehensive reform would stimulate economic growth. Apple supports this planeven though it would likely result in Apple paying more US corporate tax."
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Anyone Who Thinks Tumblr Is GeoCities Has Amnesia (Or Worse)
As everyone in the world weighs in on Yahoo's acquisition of Tumblr, some snarkers are dismissing the deal as just another GeoCities.
In early 1999, Yahoo bought a company called GeoCities.
Back in the 1990s, GeoCities was a popular site that allowed people to create their own web pages. GeoCities was a relatively big site in those days, and the Yahoo-GeoCities deal was a relatively big deal.
GeoCities' time in the sun came and went quickly, however. A few years after the acquisition, Yahoo shut down what was left of it, and most of the purchase price turned out to be wasted.
What those who are dismissing the Tumblr deal as "just another GeoCities" are forgetting (or ignoring), however, are the specifics of the respective companies and deals.
Specifically:
- Yahoo paid $3.5 billion for GeoCities--more than 3-times as much as the $1.1 billion it is paying for Tumblr.
- Tumblr is more than 15-times as big as GeoCities was when Yahoo bought it. Tumblr has 300 million global uniques. GeoCities had 19 million.
In other words, Yahoo is paying one-third the price for a company 15-times as big.Yes, it's true, Yahoo's Tumblr deal might end up flopping. That's a risk that goes with all acquisitions.But the above facts alone are a pretty good indication that the Tumblr deal, however it turns out, is not just "another GeoCities."SEE ALSO: Way To Go, Yahoo! Way To Throw The Long Ball!
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As If His Life Wasn't Insane Enough, John McAfee's Home In Belize Was Burned To The Ground
The drama in tech mogul John McAfee's life never seems to end.
The Belize compound where he lived before he snuck out of the country to avoid talking to police about a murder was burned to the ground last week.
No one was hurt.
Officials in Belize said the cause of the fire was burning brush nearby. McAfee, who is never one to shy away from a conspiracy theory, said on his blog and in interviews that he thinks it was arson.
The two main buildings that were destroyed had an estimated value of $250,000 apiece. On his blog, McAfee said that an investment firm was set to buy the property this week, but on a Q&A interview on Slashdot.org, he seemed to contradict himself, saying that, "That was my last property in Belize, went up in smoke. It's a very freeing sensation to have no burdensome taxes to pay or wages for upkeep and electricity and what have you. So they did me a favor."
McAfee, who founded the antivirus software company of the same name, was once among the super wealthy with a net worth of more than $100 million. But his personal fortune took a nose dive to about $4 million after the 2008 economic collapse, reported the New York Times in 2009.
McAfee's life in Belize became an epic tale late last year after his neighbor, an American citizen named Gregory Faull, was murdered. Police wanted to question McAfee about it. Instead, McAfee fled in James-Bond-like style: His escapade involved hiding in the jungle with one of his girlfriends, faking his own capture, faking a heart attack, all while blogging about it and taking along a journalist and camera crew, too.
In between, the details of his life in Belize leaked out which were equally bizarre. He lived with a "harem" of young women, from nine to a dozen, some of which he said were presented to him as 16-year-old prostitutes. There was also speculation that he used an odd drug called MDPV.
He eventually landed in Guatemala and was extradited to the United States. He lives in Oregon and was never charged with anything in connection with Faull's death.
SEE ALSO: 15 Enterprise Tech Rock Stars You've Never Heard Of But Should Know
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INFOGRAPHIC: Inside The Massive Mobile Video Ecosystem
Mobile video has begun to accumulate scale, and has also turned out to be one of the few types of mobile content — along with games — that monetizes reliably and drives premium ad rates.
That's reflected in the much higher prices that mobile publishers can command for mobile video ads, compared to standard mobile formats like banners. eMarketer estimates mobile video will account for $520 million in ad spending in the U.S. this year, or 13% of the digital video ad market.
In a new report, BI Intelligence breaks down the mobile video ecosystem, analyzing the behavior and devices behind the growth in consumption, and examining the demographics and behavior of mobile video consumers.
We specifically detail how mobile video monetization is booming, and look at the new video ecosystem that is taking shape, with mobile devices — rather than television — at the center.
Access The Full Report And Data By Signing Up For A Free Trial Today >>
Take look at this infographic from our report:
Thanks in large part to this growing ecosystem, brands and agencies are becoming more familiar with mobile video ad formats and in putting together mobile video ad campaigns. Thanks to technology and better know-how among ad platforms, mobile video ad units are easier to deploy across the mobile landscape than they were in the past.
As we detail in our report, tablet-specific ad units are beginning to proliferate, as are non-ad videos that brands push out on their own digital platforms. So are anecdotes about increased mobile video ad transaction volume:
- YuMe, a provider of brand video advertising services, saw its mobile video advertising revenue in France and the U.K. grow over 500 percent in 2012. Mobile video ad specialist AdColony also reported U.S. revenue growth above 500 percent in 2012.
- Michael Bayle, senior vice president of ESPN Mobile, says he sees the automotive industry diving quickly into mobile video as a complement to TV spending. "We see automotive highly skewing in favor of mobile," he told Business Insider. ESPN benefits because its audience is 85 percent men, and auto advertisers are often chasing male eyeballs.
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Now David Karp Has A Funny GIF About The Yahoo-Tumblr Deal (YHOO)
Marissa Mayer used a fun GIF in her announcement of Yahoo's purchase of Tumblr, and Tumblr founder David Karp is firing back with one of his own.
Here it is, playfully addressing her work-from-home controversy as well as Tumblr's alleged "porn problem."
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10 Wildly Successful People Who Dropped Out Of High School
Forget the college debate: The most driven people may not need their high school diplomas either.
Tumblr founder David Karp dropped out of high school at the age of 15 and now his New York startup is about to sell for $1.1 billion in cash to Yahoo.
Although his success proves that he didn't need the diploma to make it, Karp tells Forbes' Jeff Bercovici in an interview that he doesn't recommend kids today to drop out of high school, saying "There's a lot that I feel like I missed out on ... just a whole lot of normal, social, childhood kind of stuff that I definitely missed out on."
Karp — worth more than $200 million — isn't the only person to make it big without finishing high school. He belongs to a special breed, which includes Virgin's Richard Branson and Mike Hudack, founder of Blip.tv.
David Karp founded Tumblr and sold the blog-hosting company to Yahoo for $1.1 billion.
At the age of 15, Karp dropped out of an elite Bronx High School of Science and developed Tumblr, the blog-hosting and social network company, in 2007 in the "back bedroom of his mother's modest Manhattan apartment."
Richard Branson, CEO of Virgin, is an international powerhouse worth $4.6 billion.
Branson left school at the age of 16 and has spoken out against the university system on his blog. The billionaire is even richer this year after the recent sale of Virgin Media to Liberty Global and is ranked #272 on Forbes' World's Billionaires List.
Mike Hudack founded Blip.tv in 2005 and is currently a product manager at Facebook.
Hudack dropped out of high school and started working at a small internet security and privacy company in Connecticut at 16. He then moved to New York and worked as a consultant for Time Warner.
In 2005, he founded Blip.tv, a hosting platform for creators of digital video content. In 2012, he left his position as CEO to become Facebook's product manager.
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Tumblr Is The New York Area's Third Billion-Dollar Startup Exit In The Past 12 Months
New York startups are proving that Silicon Valley isn't the only place where monstrous tech companies can be made.
In the past twelve months, three tech companies in the New York area have exited for more than $1 billion.
Connecticut-based Indeed, a job search site with a big Manhattan presence, was acquired by Japanese company Recruit Co. Ltd. for an estimated $1 billion. Travel search site Kayak went public then was acquired by Priceline for $1.8 billion.
Now Tumblr, a true New York City company, has been acquired by Yahoo for $1.1 billion in an all-cash deal. It's staying in New York post-acquisition, so the talent won't be departing for Silicon Valley.
Other recent, sizeable New York exits include Buddy Media, which was acquired by Salesforce for ~ $690 million and OMGPOP, which Zynga purchased for a ~ $200 million.
The exits mean more capital to spawn companies and retain talent in New York. Tumblr was the result of an exit its founder, David Karp, was a part of in 2006. He was Head of Product for UrbanBaby when CNET acquired it and he used the capital to launch Davidville, a hub for his creative projects.
Tumblr won't be the last big exit New York sees either. Other valuable companies that are growing quickly include 3D printing company Makerbot and project funding site, Kickstarter.
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Look Inside The Offices Of $1.1 Billion Tumblr
Tumblr just sold to Yahoo for $1.1 billion. We visited their offices a while back to see how they do what they do and it was pretty impressive.
In light of the big news and since Tumblr said they aren't planning any major changes like a big office move, we thought you might want to take a look inside the office that just got Yahoo to shell out almost $1.1 billion in cash.
Tumblr recently sold to Yahoo for $1.1 billion. Marissa Mayer announced it (on her Tumblr) in classic Tumblr form.
The Tumblr office is on E 21 St. and that building in the background is actually home to Business Insider.
Tumblr splits its office between two floors. The top one is where most of the staff works.
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Dubai's Most Luxurious Hotel Is Giving Guests 24-Carat Gold iPads
Dubai's Burj Al Arab hotel, arguably the world's most luxurious hotel, just unveiled its newest luxury amenity: 24-carat gold iPads.
When guests check in, they'll be given their own gold iPads, which will serve as a "virtual concierge" that offers information on everything from the hotel's restaurant menus and spa treatments to housekeeping and butler services.
The gold iPads were custom created for the hotel by British brand Gold & Co.
The hotel already has an iMac in each of its 202 rooms, in addition to other luxury amenities, like walk-in showers and Jacuzzis, large plasma TVs, and private butler service.
This isn't the first time the hotel has introduced iPads in its rooms: In October 2012, the hotel showed off a 24-carat rose gold iPad in support of Breast Cancer Awareness Month, which was engraved with a pink ribbon and the hotel's logo.
Guests will be given the iPads just during the course of their stay at the hotel. If they want to take the luxury gadgets home with them, they'll have to buy it from the hotel's boutique.
The gold iPads may seem like an absurd and unnecessary extravagance, but when you're paying $1,500 per night (the starting rate for a double room), you expect the ultimate in luxury—and Burj Al Arab delivers.
SEE ALSO: The 25 Best Hotels In Asia >
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Behind The Scenes Of The Tumblr Deal, A $1.1 Billion Acquisition One Month In The Making
Today, Yahoo announced its $1.1 billion all-cash acquisition of social blogging platform, Tumblr.
How did the deal come to be? What happened during the Yahoo board meeting over the weekend that everyone's been talking about? We asked people familiar with the inner workings of the deal for the real story.
A few weeks ago, Tumblr and Yahoo began discussing the possibility of an acquisition. A source says it came together very quickly, and that the entire deal happened in under one month.
Throughout the month, Marissa Mayer spent a lot of time with Karp and worked on the acquisition late into numerous evenings. "Marissa was very personally engaged in this deal," says a source, who noted that Mayer had been looking broadly at other strategic acquisitions too. The amount of face time and care Mayer put into the deal was part of what compelled Karp to sell his company to her.
Marissa Mayer proposed the accepted deal, $1.1 billion in cash, to Karp. Karp didn't request an all-cash deal. Mayer simply didn't offer Yahoo shares, likely because she believes they're undervalued. The deal would have happened even if it hadn't been all cash, the source says.
Karp personally received some shares of Yahoo as part of his retention plan.
Facebook was close to making an offer too. "There was definitely interest expressed at a very senior level," says a source, who didn't comment on Tumblr and Facebook's price conversations.
On Friday, Tumblr held its weekly all-team meeting. It wasn't a special meeting to discuss the potential acquisition despite the breaking rumors. Acknowledging the deal to employees would have been a breach of confidentiality. There was no employee sign-off on the acquisition. Instead, employees were told earlier this morning about the acquisition during a 10 AM meeting and via email.
As for the board meeting Yahoo held over the weekend, a source says one happened, but it wasn't held to decide Tumblr's fate. Yahoo had already decided to buy Tumblr before the meeting, and the meeting was more of a formality.
With Tumblr's traffic flatlining over the past few months, was Yahoo smart to pay $1.1 billion for Karp's site?
"I think this is going to be a smart deal," a source says. "There's a huge amount of traffic Tumblr is monetizing very modestly. Assuming Yahoo manages this well and appropriately, I think there is a ton of upside, no different for Yahoo than YouTube was for Google."
SEE ALSO: The Fabulous Life Of David Karp, 26-Year-Old Founder Of The $1 Billion Tumblr Empire
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Apple Will Begin Production Of A Lighter, Thinner iPad In July, Says DigiTimes (AAPL)
Apple will begin production of a new, thinner, lighter version of the large iPad in July, according to Taiwanese paper DigiTimes, citing supply chain sources.
It says the new iPad, which will be the fifth version of the large model will be out in September. DigiTimes has a mixed track record on product news like this, but it's been improving lately.
The new version of the big iPad is expected to look like the iPad Mini. It's also expected to be 25%-33% lighter.
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Sony Pathetically Tries To Steal The Spotlight From Tomorrow's New Xbox Announcement (SNE)
Remember when Sony didn't show what its new PS4 video game console would like at its big event a few months ago?
Today, a day ahead of Microsoft's new Xbox announcement, Sony has released a teaser video that sort of shows the console's new design. Emphasis on sort of. It looks like Sony will show off the final hardware on June 10.
Meanwhile, we're almost positive Microsoft will show us what the new Xbox looks like tomorrow, along with all the other stuff it can do.
SEE ALSO: All The New Xbox Rumors You Need To Know About
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Why Cross-Screen Marketing Is Set To Explode
Mobile remains a fraction of ad spend for many large advertisers.
The question ad buyers have is whether advertising across screens can really help drive forward an overall campaign goal better than TV-only or traditional online campaigns.
A growing number of mobile ad industry companies are aruging that a cross-screen approach integrating mobile is more effective. They're betting that with an increasingly powerful cross-screen pitch they can sell marketers on mobile.
In a new report from BI Intelligence, we take stock of cross-screen marketing, analyze how audiences are becoming increasingly screen agnostic, examine how cross-screen advertising can be made effective, dig into the measurement and analytics problem, and offer a side-by-side comparison of the different mobile tracking technologies.
Access the Full Report By Signing Up For A Free Trial Today >>>
Here's a brief overview of why cross-screen marketing will be a game changer:
- It's where consumers are: Users consume the same content — perhaps presented in different manners — across screens.There are already contexts in which consumers are known to habitually use two devices simultaneously. For example, it has become a widespread habit to watch TV while using a tablet or smartphone. That behavior has translated to a growing spate of so-called second screen and social TV marketing campaigns. The opportunities for cross-screen marketers will multiply as we move across screens to accomplish tasks, or use them simultaneously.
- Cross-screen tactics are already achieving real results: AdColony, a mobile video ad company, employed a cross-screen marketing strategy for a client's consumer packaged goods brand. They targeted one set of users with just a TV ad about the brand, and another set of users with a combined TV, iPad, and iPhone campaign. Unaided brand recall was 43% for audiences who had been exposed to the cross-screen campaigns, and only 6% for the TV-only campaign. Purchase intent was 18% for the TV-only crowd, and 31% for the cross-screen campaign's audience.
- Cross-screen retargeting will become increasingly powerful: In cross-screen retargeting, users are tracked and presented ads from sites they have visited in the past. While this technique is now familiar on PCs, it's only recently that retargeting across screens has become feasible. Drawbridge, a startup that retargets from desktop to mobile, claims they have achieved a jump of 338% return on investment for certain clients when using cross-screen retargeting.
- As will frequency capping: Frequency capping, where an individual is only presented an ad a defined number of times in a time period to avoid overwhelming and desensitizing prospects, should help cross-screen marketing become more powerful as well.
In full, the report:
- Analyzes how audiences are becoming increasingly screen agnostic
- Examines how cross-screen advertising can be made effective
- Digs into the measurement and analytics problem
- Offers a side-by-side comparison of the different mobile tracking technologies
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The 10 Best Travel Sites On Tumblr
Reports this weekend from AllThingsD point to Tumblr being acquired by Yahoo for nearly $1.1 billion. Although popular, unlike Pinterest or Twitter it has yet to become a necessary part of any brand’s content strategy.
But that doesn’t mean people aren’t doing interesting things on the platform.
We looked at sites that are adding something new to the web or, if they’re curating something else they found, at least adding their own distinctive twist. It’s often used by bloggers looking for a fast way to share a distinctive, expert voice or brands looking to experiment under the radar. We’ve collected ten that tumbl travel well.
Tasmania Behind the Scenery
Tourism Tasmania uses its own photos and those of others from Tumblr and sources like Instagram to remind people why Tasmania's natural beauty is so impressive.
Click here to visit the Tumblr >
Reid on Travel
Ex-Lonely Planet U.S. editor Robert Reid shares his thoughts and videos, the latter being the most clever travel videos online.
Click here to visit the Tumblr >
The Looking Glass
A Disney-run blog that curates photography by shooters invited to Disney parks.
Click here to visit the Tumblr >
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Today In 1932...
We recently discovered the awesome Twitter feed of historian Michael Beschloss, which is mainly cool historical photos.
Last night, Michael tweeted a great photo of the New York skyline in 1947.
This morning, it's a picture of Amelia Earhart in 1932, just after she became the first woman to fly solo across the Atlantic. Beschloss says the picture was taken 81 years ago today, as Earhart was getting ready to leave Newfoundland.
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There Was A Mass Exodus From Tumblr Right As They Sealed The Deal With Yahoo
There were plenty of Tumblr users hinting at a possible revolt before the Yahoo deal went forward, and now it seems many have followed through.
In a blog post on his personal website, Matt Mullenweg — better known as the developer of the popular blogging platform Wordpress — revealed that blog imports from Tumblr over to Wordpress spiked on Sunday.
"Normally we import 400-600 posts an hour from Tumblr," he writes, "last hour it was over 72,000."
He cautioned in the bottom and in the comments of the post that this may be a simple emotional reaction by some, and it won't really affect the company in the long-term.
"Even if a million people left, that’s just about a week’s worth of signups," Mullenwag wrote.
Gizmodo also offered a good list of why leaving Tumblr at this point is rather stupid — writing that nothing else compares to the service, including Blogspot and Wordpress.
While many believe Tumblr will be monetizing through advertisements, Mullenwag also offered some interesting advice on how to make money through the site:
I believe there is also an even-larger-than-advertising opportunity around subscriptions and products. The big shift from older forms of media is that people aren’t just passively consuming as they might in front of a TV, they’re creating. It’s a hobby and a passion, not a vice. In that context I think subscriptions are more aligned with users than advertising, and that’s the direction Automattic is pointed in.
SEE ALSO: Yes, Yahoo Will Put More Ads On Tumblr >
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Marissa Mayer Just Bought A Ton Of Porn Blogs, But It's Not A Problem (YHOO)
Yes, Tumblr has porn.
While it hasn't said how much of its site is pornographic material, it's enough that just about every knucklehead on the Internet has commented about Tumblr's many porn blogs.
Tumblr's porn content makes some people think that Yahoo's $1.1 billion acquisition was a waste because premium advertisers don't want to advertise against pornographic content.
On today's call with analysts, Marissa Mayer was asked about Tumblr's porn. Sort of. An analyst said, how will you deal with content that is not "brand-safe," which is code for porn.
Her answer: Targeting. She hopes to use good targeting to keep ads away from NSFW content.
A Tumblr backer explained it further to Peter Kafka at All Things D saying, "Non-story. Tumblr is the Internet. It’s a dashboard follower model, opt-in."
In other words, just like all of the Internet has some porn, so too does Tumblr. There is plenty of advertising on the non-porn content of the web, and there will be advertising on Tumblr's non-porn content.
Also, Tumblr is an opt-in model. The user chooses who she is following, and what content is pumped into her Tumblr feed. Advertisers are advertising to users more than they are against content.
Yahoo will do its best to make sure ads don't follow porn, but if that were to happen it's more a statement on the user than it is on the content.
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11 Rumors About The Next Xbox (MSFT)
Microsoft will unveil its next Xbox gaming console May 21 at a big event at its Redmond, Washington headquarters.
Most of the details on the new console are shrouded in secrecy, but a few nuggets have leaked out in recent months. Here's everything we know about the next Xbox so far.
According to leaked hardware specs, the next Xbox will have: a Blu-Ray player, 8 GB of RAM, 8-core 1.6 GHz processor, at least a 50 GB hard drive, HDMI port for connecting to your TV, USB 3.0 ports for accessories, WiFi, and wireless controllers.
Microsoft has at least experimented with letting you stream games over the Web instead of using a regular disc. It's possible that feature will make it to the final console for some games.
Kinect, the motion-controlled accessory for the Xbox, will likely get an upgrade with better voice commands and greater motion sensitivity.
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Way To Go, Yahoo! Way To Throw The Long Ball!
Yahoo! announced this morning that it is buying social blogging company Tumblr for $1.1 billion in cash.Tumblr is a six-year-old company based in New York. It is run by a charismatic 26-year-old entrepreneur named David Karp, who will pocket hundreds of millions of dollars on the deal and has therefore become an object of fascination for the New York tabloids. ("WHO'S THIS YAHOO?")
Tumblr allows users to create simple blogs and share words, pictures, and videos. It is one of a handful of massive social publishing platforms created in the past decade — a group that also includes companies like Facebook, Twitter, Instagram, and Pinterest.
Tumblr's audience is massive. The company's blogs receive 300 million unique visitors per month, and a staggering 120,000 new blogs are created every day (not blog posts — blogs.). This mind-blowing traffic has made Tumblr one of the largest digital media companies in the world.
The Tumblr deal will vastly increase Yahoo's already huge global audience, expanding it to a staggering 1+ billion users a month. It will also bring a new, younger demographic to the company — a group of people who have been born and raised on digital and social media. And, as long as Tumblr continues to grow, it will provide a big new traffic growth engine for Yahoo.
Initial reactions to the deal have ranged from raves to pans, with most of the latter coming from the same vision-less pundits who reflexively trash most digital deals that seem expensive relative to historical financial performance.
And, certainly, relative to Tumblr's historical financial performance, the deal does initially seem expensive.
Tumblr generated about $13 million of revenue last year. It also, presumably, lost money. The same pundits who declared Twitter, Facebook, and Google worthless in their early days glance at these numbers and conclude that obviously the Tumblr deal is just yet another hallucination by idiot managers who don't understand that they're paying good money for nothing.
But these criticisms are silly.
Yahoo is not buying Tumblr's past financial performance. It is buying Tumblr's audience, demographic, and social and mobile expertise. It is buying a company that has the potential to make Yahoo a growing, relevant Internet behemoth again. It is buying a media property that will likely be able to increase the reach and value of Yahoo's own advertising solutions (namely, search). It is also buying Tumblr's future financial performance, which is expected to be a lot more impressive than it has been in the past.
Importantly, Tumblr has only recently focused on generating revenue. According to sources close to Tumblr, the company's revenue target for this year has been $100 million. If Tumblr generates anywhere near that much revenue this year, the price for the deal will start to look a lot more reasonable. And if Tumblr can do $75 million to $100 million this year, it can probably do $200 million next year. At that point, you're talking about 5X to 6X times revenue for a company that will likely be able to generate very high profit margins, because it has no content costs. With that performance, $1.1 billion would be perfectly reasonable price to pay, even if Yahoo gets no other benefits from the combination.
Is there a risk that Tumblr could now collapse like MySpace, Geocities, or some of the other deals that skeptics are now citing?
Of course there's a risk of that.
Many acquisitions fail, especially in the technology business.
That's why technology is considered a risky industry — because things change fast and red-hot companies can go stone-cold in a matter of months.
Tumblr's biggest risk is probably that its traffic has flatlined over the past 6-9 months. If Tumblr's audience has reached its peak, the company's future value will be a lot lower than it would be if the audience continues to grow.
Other Tumblr deal risks include integration, culture, and geographic distance.
But those who are saying that the existence of risk means that Yahoo buying Tumblr is obviously a stupid waste of money don't appear to understand that all deals have risk. They also don't appear to appreciate the situation Yahoo is in.
Yahoo ruled the Internet world in the 1990s. Since then, however, thanks in part to management turmoil, the company has missed out on several waves of industry development, from search to social to mobile. As a result, for the past decade, Yahoo has been in a slow state of decline. And now Yahoo has reached the point where it is largely irrelevant to the latest generation of Internet users, who have moved to Google, Facebook, Instagram, Twitter, Pinterest, Tumblr, and other companies.
Given this situation, Yahoo has two choices:
It can either give up and run itself for cash flow — creating value for shareholders by forgetting about growth, generating as much cash as possible (by cutting costs), and buying back stock.
Or it can be aggressive and try to rebuild and re-energize its business and create real value in the process.
For now, Yahoo has chosen the latter route. That's why it hired Marissa Mayer as CEO. It would be a waste of Marissa's time and Yahoo's time to give up, sit around, and just return cash to shareholders. And that's obviously not what Mayer and Yahoo are going to do.
Yahoo shareholders who just want cash and don't like Yahoo being aggressive are free to sell Yahoo's stock and buy Treasury bonds.
Yahoo shareholders who want Yahoo to take the risk of trying to repair itself, meanwhile, have to get comfortable with the fact that risk is just that — risk.
Yes, the Tumblr bet is risky.
Yes, it would be "safer" for Yahoo to hoard and fondle its $1.1 billion of cash, at least over the short term.
But when it's late in the fourth quarter and you're losing and you're about to get sacked in your own end zone, it's appropriate to take some risk.
Marissa Mayer and Yahoo are taking some risk. They're throwing the long ball.
Those who are quick to dismiss this move as idiocy should remember that this is exactly what Yahoo hired Marissa Mayer to do. They should also remember that, based on everything Mayer has done at the company so far, she's the kind of quarterback who is capable of not just throwing but completing the long ball ...
SEE ALSO: This Chart Shows The One Reason Yahoo-Tumblr Skeptics May Be Right
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Here's The Problem That Made The New Alleged Bitcoin Inventor A Mathematical Rock Star
This weekend, computer scientist Ted Nelson claimed that mathematician Shinichi Mochizuki was the man behind Bitcoin.
See, while the digital currency has moved markets and attracted major investors, nobody actually knows who came up with it.
The paper describing the system was published under a pseudonym, Satoshi Nakamoto, and people are clamoring to find out who the genius behind the Bitcoin system actually is.
And while there is a mountain of compelling evidence demonstrating that Mochizuki probably isn't Nakamoto, this is still an excellent opportunity to revisit why people are obsessed with the Japanese mathematician — namely, his rock-star status achieved after publishing a bold proof of one of the thorniest problems in Diophantine analysis: the abc conjecture.
In short, the abc conjecture explores the relationships between prime numbers.
It's been described as the most important unsolved problem in Diophantine Analysis.
Diophantine analysis is a branch of mathematics that works with some of the most simple number systems (like ax + by = 1 or xn + yn = zn) and in doing so explores some of the deepest relationships in math.
Some of the earliest work with mathematics — we're talking ancient Greek number-crunching here — was with prime numbers, especially the relationships and frequency between them.
The abc conjecture — a younger problem in the field, originally proposed in 1985 — is as follows.
Take three positive integers that have no common factor and where a + b = c. For instance, 5, 8, and 13.
Now take the distinct prime factors of these integers—in this case 2, 5, and 13—and multiply them to get a new number, d.
In most cases, like this one, d is larger than c. The conjecture states that in rare instances where d is smaller than c, it is usually very close to c. Most importantly, the conjecture also shows that there are a finite number of instances of a, b, and c where d is smaller than c.
Mochizuki claims to have cracked this conjecture in a 500-page proof.
Even if you didn't catch all of that, solving this would be the necessary missing link for a dozen different, more advanced problems in Diophantine Analysis, and is also linked to the legendary mathematical problem, Fermat's Last Theorem.
So it's not unreasonable to expect that Mochizuki — an exceedingly intelligent mathematician whom Nelson thinks had time to complete such an undertaking — has the brains to be the guy behind Bitcoin.
But even if the evidence doesn't come together, Mochizuki should still he hailed as the guy who potentially cracked one of the most difficult problems in his field, still a huge achievement.
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Apple Is Experimenting With 1.5-Inch Displays For The 'iWatch' (AAPL)
Apple is reportedly testing 1.5-inch OLED displays for its smartwatch, we learn from MacRumors.
OLED is the same display technology used in higher-end televisions and computer monitors.
These 1.5-inch displays come from a company called RiTdisplay.
Supposedly Foxconn is at work manufacturing 1,000 of the watches, enough for a quick trial run so Apple employees have plenty of devices to experiment with.
With this being an Apple product, we obviously have no idea on when (or even if) we'll see it arrive at market.
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These Are The 10 Most Popular Tumblr Blogs (YHOO)
Yahoo just snapped up microblogging site Tumblr for $1.1 billion.
In light of the news, we decided to take a look at some of the most popular Tumblr blogs out there.
It's worth noting that this list doesn't take into consideration Tumblr-hosted blogs that lack the .tumblr domain. So for example, even though MashableHQ.com is powered by Tumblr, it does not show up in Quantcast's data.
Here are the most visited Tumblr blogs worldwide, according to Quantcast:
- Mcupdate.tumblr.com (1.9 million unique monthly visitors): A blog dedicated to news about Minecraft, a game about blocks.
- comoeumesintoquando.tumblr.com (1.2 million unique monthly visitors): A collection of hilarious GIFs.
- dedalvs.tumblr.com (1.1 million unique monthly visitors): The personal blog of David J. Peterson, the guy who created the Dothraki and Valyrian languages for HBO's Game of Thrones.
- onenable.tumblr.com (715.6 thousand unique monthly visitors): A site dedicated to Korean comics.
- theworstroom.tumblr.com (707 thousand unique monthly visitors): A blog about the trials and tribulations of finding housing in New York City.
- publicshaming.tumblr.com (645.7 thousand unique monthly visitors): Created by producer Matt Binder, Public Shaming will call you out if you start tweeting hypocritical content.
- siriuslymeg.tumblr.com (606.3 thousand unique monthly visitors): A blog all about movie quotes and inside jokes.
- howdoiputthisgently.tumblr.com (525.3 thousand unique monthly visitors): A graduate student documents her life through GIFs.
- comedycentral.tumblr.com (490.7 thousand unique monthly visitors): Comedy Central's official blog.
- reasonsmysoniscrying.tumblr.com (449.7 thousand unique monthly visitors): A blog that documents all the reasons why children cry.
SEE ALSO: This Chart Shows The One Reason Yahoo-Tumblr Skeptics Might Be Right
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Yes, Yahoo Will Put More Ads On Tumblr (YHOO)
Tumblr CEO David Karp and Yahoo CEO Marissa Mayer both said the same thing in their blog announcements of the deal: We promise not to screw up Tumblr.
Clearly, that possibility is close to the top of their minds.
One reason that's so is because Yahoo! will likely bring more ads to Tumblr in one form or another. Mayer said as much in her statement:
The two companies will also work together to create advertising opportunities that are seamless and enhance user experience.
And she repeated it on her call with investors this morning, which we summarized:
Mayer says that Yahoo released "Yahoo Stream Ads" in May, which take text ads and put them in the news stream on Yahoo.com. She says you can expect more of that on Tumblr. On Tumblr, there is the dashboard, which is like Facebook's News Feed or inbox. Today, Tumblr does some advertising there. Yahoo would like to "introduce a very light ad load" there. Yahoo also might work with some bloggers who want ads on their blogs. That would only be done with permission.
Mayer says the ad units will be native and follow the form and function of Tumblr.
And then, of course, there is Wall Street. This is a big acquisition for Yahoo. Shareholders will want to see a return on the investment. There will be intense pressure on Mayer and Karp to deliver those numbers. As Zachary Reiss-Davis, an analyst at Forrester Research, told Bloomberg:
SEE ALSO: Why Yahoo Paid $1.1 Billion For Tumblr Even Though It Only Has $13 Million In Revenue
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The Social Media Advertising Ecosystem Explained
The media constellation has become increasingly fractured. The Web produced the initial fissure, but mobile created new cracks in the landscape. Today, no single medium earns more than 45% of our media consumption.How can you solve this problem? Social media offers a solution.
Social networks like Facebook and Twitter are daily destinations for millions of consumers. Increasingly, their ad products offer targeting according to specific demographics, social connections, interests, and habits.
In a new report from BI Intelligence, we analyze the state of social media advertising and where it is heading, offering a comprehensive guide and examination of the advertising ecosystems on Facebook and Twitter, offer a primer on Tumblr as an emerging ad medium, and detail how mobile is an important part of this story as mobile-friendly as native ad formats fuel growth in the market.
Access The Full Report And Data By Signing Up For A Free Trial Today >>
Here's an overview of some major players in the mobile advertising ecosystem:
- The lure of social media advertising is massive: As brands look across a fractured media landscape, social networks offer them an interesting proposition. Social networks have scale - enormous user bases and deep databases. They have high engagement - Americans were spending an average of 12 hours per month on social networks as of July 2012, with 18-24 year olds averaging 20 hours. And potentially, social media gives brands offer a uniquely captive audience for their content.
- Guaranteed placement is getting advertisers to pay up: Brands are paying to get their content or copy in front of a quantifiable audience, an increasingly rare feat in an era of scattered consumer attention. This desire for guaranteed attention also helps to explain social media's move away from traditional display ads — like Facebook's right-rail ads — and toward so-called native ads that surface in a user's stream, either as a tweet or a Facebook post. A consensus seems to be forming around in-stream advertising as the most promising social advertising format.
- Social media advertising is set to explode: Social media advertising is a young market and so far, it only represents 1% to 10% of ad budgets for a wide majority of advertisers. There's significant opportunity for that share to grow. BIA/Kelsey recently came out with a study that offers one view - forecasting $11 billion of social ad spend in 2017, up from $4.7 billion last year. That estimate is large - but still seems pessimistic, because...
- Increased mobile usage will be a huge growth driver: The BIA/Kelsey prediction calls for mobile to account for only $2.2 billion of that in 2017 - a 20% market share. This could easily be surpassed. Both Twitter and Facebook have passed the 50% mobile usage mark and, given the continued growth of mobile devices, it will only rise. Mobile accounted for 11% of Facebook's ad revenue last year even though it didn't release mobile ads until the tail end of the second quarter. By the fourth quarter, it was up to 23%. And now, Twitter is reporting that its mobile ad revenue now regularly outpaces its desktop ad revenue. Social media advertising is therefore uniquely positioned to grab an increasing share of the fast growing mobile advertising market.
In full, the report includes:
- The State Of Social Media Advertising And Where It's Headed
- A Guide To The Facebook Advertising Ecosystem
- A Guide To The Twitter Advertising Ecosystem
- A Primer On Tumblr's New Ad Products
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Marissa Mayer Just Explained Yahoo's $1.1 Billion Tumblr Buy In Detail – Here's What We Learned (YHOO)
At 9 A.M. eastern, Yahoo hosted a conference call to discuss its $1.1 billion acquisition of Tumblr.
Here's what we learned:
-Tumblr is going to run separately from Yahoo. CEO David Karp will report directly to Mayer. The brands will not co-mingle.
-Yahoo plans to retain all Tumblr employees. Yahoo will help it hire more engineers and ad sales people.
-Yahoo believe the deal pushes it over 1 billion users.
-The deal is $1.1 billion, payable almost all in cash. Karp will get some Yahoo stock.
-Yahoo does not expect Tumblr to materially contribute to its revenues until sometime in 2014.
-Mayer says that Tumblr is ahead of Yahoo in mobile.
-Mayer says Yahoo hopes to get search traffic from Tumblr users.
-Yahoo will feature Tumblr blogs on its media properties. She says this should boost Tumblr's traffic and make Yahoo's media properties more attractive to Tumblr's demographic.
-Karp missed the earnings call because he had to host an "all-team" meeting with employees. Mayer is going to start calling Yahoo all-employee meetings all-team meetings, too.
-Karp held a meeting with his senior staff on Friday night, and all of them "signed on" to the deal.
-Mayer isn't worried about all the NSFW content on Tumblr. "The width and breadth of content on Tumblr is what's exciting and has allowed it to reach more users."
-Yahoo will bring in-stream ads to the Tumblr dashboard, at some point. It will also help Tumblr bloggers sell ads, if they want to.
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