Internet News and Analysis in Brief (BIDU, EBAY, GOOG, ODMO, SHOP, TOMO, WSSI, YHOO)

by: David Jackson
  • Piper Jaffray Internet analyst Safa Rashtchy initiated coverage on WebSideStory (ticker: WSSI) with an "Outperform" rating and $22 price target. He argued that WSSI "has a number of attractive investment characteristics including a strong market position in Web analytics, a highly predictable revenue model, increasing operating margins, and an expanding addressable market in site search, bid management, and content management."
  • Yahoo (ticker: YHOO) CEO Terry Semel explained in an interview with Bambi Francisco why Yahoo acquired a stake in Chinese search company Alibaba instead of in Baidu (ticker: BIDU): "Alibaba brought [commerce] to the equation. Yahoo's going to bring communication and search. Technology in search will be a big factor down the road for the new entity". But when asked explicitly whether he tried to negotiate with Baidu, he said "Over the last year, we met with many different companies".
  • Google (ticker: GOOG) purchased ad space in various print magazines to resell to its advertiser customers, in a move to become a one-stop-shop for both online and offline advertising. Forbes commented: "...Schmidt's firm [Google] said, "This limited test is part of Google's continuing effort to develop new ways to provide effective and useful advertising to advertisers, publishers and users." One translation of this statement might be: The firm doesn't wish to be seen as vulnerable to fluctuations in Internet advertising."
  • Meanwhile, Google is facing challenges managing ads billed on a page-view basis (rather than a per click basis), according to Marketing Vox.
  • Online jewelry retailer Odimo (ticker: ODMO) switched auditors. Switching auditors used to ring alarm bells for investors, but small publicly-traded companies are increasingly finding the costs of Sarbanes-Oxley and the higher fees of the largest accounting firms too much to bear. Odimo filed a letter from its outgoing auditor stating that there had been no disagreements with the firm. That followed the example of another small, publicly-traded Internet company, Hollywood Media (ticker: HOLL).
  • eBay (ticker: EBAY) closed its acquisition of comparison shopping site (ticker: ODMO). eBay paid $21 per share in cash, totalling $634 million. Since had $148 million of cash, the net acquisition price was $486 million.
  • Chinese Internet company Tom Online (ticker: TOMO) announced a partnership with (privately-held) instant messaging and voice-over-IP company Skype. More on this later. Skype CEO Niklas Zennstrom meanwhile denied a report that Hutchison Whampoa had acquired a 5% stake in his company.

Full disclosure: at the time of writing I'm long HOLL.