In a company-wide memo sent to Yahoo staff yesterday, Yahoo co-founder and CEO Jerry Yang indicated that about 10 percent (about 1,500) of the company’s workforce would be cut. Unfortunately, those affected won’t know they’ll be out the door for several weeks.

How bad is it at Yahoo? Well, revenue for the last quarter has barely grown since last year, rising just 1 percent from $1.77 billion last year to $1.79 billion this year and net revenue - which excludes commissions paid to advertising partners - was $1.32 billion, compared with $1.28 billion a year ago.
This constitutes just a 3 percent increase.

Meanwhile, net income for the quarter is down by about a third. Highlighting the need for cost cuts, it was just $54 million for the last quarter, compared with $151 million a year before. That being so, Yahoo is aiming to cut $400 million in costs by the end of the year.

Miguel Helft, “Yahoo to Cut About 10% of Workers”, The New York Times, October 21, 2008

Google has begun testing video ads aimed at specific YouTube searches.

Much like how Google AdWords serves up ads based on search phrases, Google wants to serve up video ads that match the search phrases typed into YouTube’s search box.

The idea is that when someone types in a phrase, up will come a video ad, along with the search results. The ad will, for example, link to the advertiser’s YouTube channel.

YouTube spokesman Aaron Zamost says Google is currently testing “a wide range of options to find the right advertising format, for the right content.”

Source: Miguel Helft, “Search Ads Come to YouTube”, The New York Times, October 13, 2008

comScore’s expanded search query report for August indicates that YouTube, not Yahoo, is the second most popular ’search engine’.

In August 2008, web users conducted 2.5 billion searches on YouTube, compared with 2.4 billion on Yahoo.

Source: Miguel Helft, “Search Ads Come to YouTube”, The New York Times, October 13, 2008

Google has unveiled a new type of ecommerce ad on YouTube. The ad allows YouTube viewers to buy digital goods from Apple’s iTunes or Amazon.com with just one click.

Basically, when someone watches a YouTube video containing a music track they will be able to click on an icon to download the relevant song from either iTunes or Amazon.com’s music store.

Source: Miguel Helft, “Google Puts Tunes From YouTube a Click Away”, The New York Times, October 7, 2008

It was Google’s 10th birthday last week. The company applied to incorporate on September 4, 1998 and its application was accepted on September 7, 1998.

Wow. To see a company grow from being nothing more than an idea for a better Internet search engine shared by two Stanford University students… to being one of the biggest companies in the United States based on market capitalization… in JUST 10 YEARS!

Has there ever been another company that has grown this fast? Is there another company that has even come close? Hmmm… Microsoft comes to mind as a company that grew to dominate software in a matter of years.

Funny that. The New York Times published an interesting article last week comparing Google and Microsoft. I’ve played around with some of the numbers to draw out a few more distinctions. Consider the following:

• Google’s age: 10
• Microsoft’s age: 33

• Google’s revenue in the last 4 quarters: $19.6 billion
• Microsoft’s revenue in the last 4 quarters: $60.4 billion
• Microsoft’s revenue at age 10: $140 million ($279 million in today’s dollars)

• Google’s net income in the last 4 quarters: $4.85 billion
• Microsoft’s net income in the last 4 quarters: $17.6 billion

• Google’s net profit margin: 25 percent
• Microsoft’s net profit margin: 29 percent

• Google’s employees, as at June 30: 19,604
• Microsoft’s employees, as at May 31: 89,809

• Google’s revenue per employee: $1 million
• Microsoft’s revenue per employee: $672,000

• Google’s net income per employee: $247,398
• Microsoft’s net income per employee: $195,971

• Google’s market value: $142 billion
• Microsoft’s market value: $241 billion

My hit prediction: if Google ends up displacing the operating system (with Chrome or otherwise), it won’t be long before it beats Microsoft on a number of fronts. Suggestion for Microsoft: be the one to displace the operating system first.

Source: Miguel Helft, “Google at Age 10″, The New York Times, September 4, 2008

Google has started scanning microfilm from various newspapers’ historic archives to make them searchable online.

Currently, Google News users can search the archives of major newspapers and magazines, including The New York Times, The Washington Post and Time, that were already available in digital form. Now readers will also be able to search much older editions and view articles as they originally appeared in print form.

Source: Miguel Helft, “Google to Digitize Newspaper Archives”, The New York Times, September 8, 2008

A mobile phone made by HTC and powered by Google’s Android software is expected to launch in the United States by Christmas, possibly as early as October.

T-Mobile will be the first carrier to offer the high-end phone, which will match many of the capabilities of Apple’s iPhone, including providing Internet access and performing computer-like functions.

Just as the success of Apple’s iPhone has largely been due to enabling users to download any number of applications to their phones and individualizing their phone’s functions, phones using Google’s software will also offer similar functionality.

Google is making the Android operating system software available free to a group of companies, including cellphone carriers and manufacturers, who have agreed to provide devices which will enable users to choose which applications run on them.

Source: Laura M. Holson and Miguel Helft, “T-Mobile to Offer First Phone With Google Software”, The New York Times, August 14, 2008

Yahoo held its long anticipated board meeting last Friday.

Carl Icahn decided not to go… Time Warner blocked the board appointment of Jon Miller (former AOL CEO) because it breached a non-compete agreement… and board chairman Ray Bostock reiterated the board’s confidence in current Yahoo CEO, Jerry Yang.

And none of that is likely to appease Yahoo’s shareholders, who are probably fed up with Yahoo’s apparent failure to compete with Google, its refusal in May to sell to Microsoft (the merger negotiations costing Yahoo investors nearly $20 billion), and its lackluster share price performance (the stock is trading at around $20, far below the $33 per share offered by Microsoft).

Sources: Peter Kafka, “Time Warner (TWX) Killed Jon Miller/Yahoo (YHOO) Board Deal”, Silicon Alley Insider, August 1, 2008, Miguel Helft, “Yahoo Is Still Searching for, Well, Yahoo”, The New York Times, August 3, 2008

Monday July 28 saw the release of Cuil (pronounced “cool”), a new search engine launched by a group of ex-Google employees including Anna Patterson and her husband Tim Costello.

According to Cuil’s founders, Cuil is more comprehensive - with an index of 120 billion web pages, more than any other search engine - and delivers more relevant search results than Google’s search engine.

Despite the pedigree of Cuil’s founders and team, many commentators - myself included - were rather unimpressed when giving Cuil a spin. I found it slow, the layout confusing (no clear order and a strange use of images alongside unrelated webpages) and the results to be less relevant than those generated by Google.

It also lacks any kind of unique selling point. As an up and coming search engine it has nothing like the “wow” factor of, say, SearchMe and isn’t based on any markedly different technology as is Powerset (which uses semantic or “natural language” technology).

Rather it’s main selling proposition seems to hinge on being better than Google i.e “we’re bigger and more relevant, therefore we’re better”. Yet, as Google has indicated, bigger is not necessarily better (given all the crap on the Internet!) and Cuil has a way to go before it delivers more relevant search results.

Of course, it’s early days and Cuil may still become cool. Who knows, Microsoft might buy it.

Sources: Miguel Helft, “Former Employees of Google Prepare Rival Search Engine”, The New York Times, July 28, 2008, Frederic Lardinois, “Cuil: Good, But Not Great”, Read Write Web, July 28, 2008, Michael Arrington, “Google Beats Cuil Hands Down In Size And Relevance, But That Isn’t The Whole Story”, July 27, 2008

Yahoo has little reason to smile. While its revenue was up 6 percent in the second quarter compared with that a year ago, its net income was down by nearly 19 percent.

The company’s revenue was $1.8 billion, compared with $1.7 billion in the same quarter in 2007. Meanwhile, net revenue - excluding commissions to advertising partners - was $1.35 billion, just 8 percent above the $1.24 billion achieved 12 months ago.

Wall Street analysts expected Yahoo to deliver net income for the quarter of $161 million or 11 cents a share. However, the search company reported net income for the quarter of $131 million, or 9 cents a share.

Yahoo was, however, satisfied with the results, noting that profit had been hit by $22 million in costs related to negotiating with Microsoft, the proxy fight with Carl C. Icahn, and related lawsuits.

Despite the poor results, no one, it seems, was all that surprised. Yahoo’s share price increased to $21.89 in after-hours trading after releasing these results.

Source: Miguel Helft, “Yahoo’s Revenue Rises a Bit, but Profit Falls 18%”, July 23, 2008