January 28, 2009
Yahoo posted a large $303 million fourth quarter loss Tuesday as revenue slid 1 percent.
The popular Internet portal also offered a weak first-quarter outlook with sales and profits below last year’s results.
Search advertising grew as display fell
But the fourth-quarter results were better than what Wall Street expected and there were signs of strength in Yahoo’s beleaguered search operations.
Search revenue grew 11 percent (18 percent in the U.S.) while display advertising fell 2 percent. The shift from display, or brand, advertising to search began in the third quarter as companies stressed “performance” ads over brand awareness, said CFO Blake Jorgensen.
Advertisers are now cutting budgets and consolidating ad buys, he said.
Internet campaigns will hold up better during the downturn than off-line spending, but “online advertising has felt the same pressures,” Jorgensen said.
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Posted by Mark Boslet
January 24, 2009
Venture capital investing collapsed in the fourth quarter with spending on startups falling 45 percent from a year ago.
According to a report released Saturday morning, only 818 deals were done during the volatile three months and $5.4 billion invested, the lowest amount since the first quarter of 2005.
For all of 2008, VC’s placed $28.3 billion, 8 percent less than 2007 and the annual decline since 2003, said the report from the National Venture Capital Association, PricewaterhouseCoopers and Thomson Reuters.
The findings parallel a similar study released a week ago by Dow Jones VentureSource.
The reports suggest that as the financial crisis gripped Wall Street and corporate product demand began to unravel, VCs sharply slowed their activity in face of market uncertainty.
There are few signs of a dramatic reversal ahead.
The fourth-quarter dip hit most industries, from life sciences to software to Internet companies. In software, VCs funded the fewest number of companies since 1997. Internet investing fell 26 percent,
Even investments in clean-tech startups dropped 14 percent to $909 million. Sixty-two deals were funded.
1 Comment | life-science, news, software, startups, venture capital, web 2.0 | Tagged: economy, Fourth Quarter, Investments, National Venture Capital Assocation, PricewaterhouseCoopers, Thomson Reuters, venture capital | Permalink
Posted by Mark Boslet
January 20, 2009
Efficient Frontier told The Wall Street Journal on Monday that search advertising spending in the fourth quarter fell 8 percent.
Here’s some additional material from the research firm’s report:
“Google has maintained its hold on the search advertising market with 76 percent market share, and Yahoo continued to increase its presence, gaining 3 percent market share” in 2008.
Yahoo increased its market share by 1.9 percent in third quarter and added another 0.5 percent in the fourth quarter to finish the year with a 3 percent gain, or 20 percent market share. Microsoft’s Live Search makes up 4.2 percent of search ad spending.
Small companies made the largest cuts in search ad spending in the fourth quarter:
“Small advertisers in the U.S. accounted for a greater decrease in search advertising spend(ing) than larger, more established brands. Advertisers spending less than $50,000 per month cut spending by 23 percent year-over-year, with many of the cuts coming between (the third and fourth quarters) of 2008. Companies that spent more than $200,000 per month only reduced spending by 9 percent over the same time period.”
At the same time, ad prices fell in the fourth quarter:
“Overall search cost-per-click (was) down 5 percent year-over-year. In the last quarter of 2008, Google Search’s (cost per click) declined by 8 percent, while Microsoft Live Search declined by 3 percent and Yahoo Search declined by 1 percent. Microsoft Live Search has consistently maintained a higher (cost per click) than all other search engines, indicating that advertisers are willing to pay a premium for a high quality, albeit smaller audience.”
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Posted by Mark Boslet
January 19, 2009
Venture capital fundraising fell 71 percent in the fourth quarter as activity in the industry essentially came to a halt amid the financial turmoil that unnerved the nation’s banking system and public stock markets.
Source: NVCA, Thomson Reuters
Only 43 firms raised funds compared with 84 in the fourth quarter of 2007, according to the National Venture Capital Association and Thomson Reuters.
In total, the funds raised $3.4 billion, down from $11.7 billion a year ago. The quarterly fundraising was off an equally significant 60 percent from the third quarter of 2008, when $8.4 billion was raised.
The dismal quarter brings to a close a difficult year for venture funds. With the number of IPOs down for the year and M&A activity proceeding at a slow pace, venture firms raised $28 billion in the last 12 months, a decline of 21 percent from 2007.
The NVCA tried to put a brave face on the drop. “The market uncertainty has compelled firms that were planning to raise a fund in late 2008 or early 2009 to hold back on fundraising efforts,” said Mark Heesen, president. “Second, and less obvious…is that many venture capital firms raised money in the last two years and are focused on deploying those funds.”
The slow pace is expected to continue into 2009, he said.
Accel Partners raised two of the three largest funds in the quarter: Accel London III, a $525 million early-stage fund; and Accel Growth Fund, a $480 million early-stage fund.
VantagePoint raised the second largest fund, its CleanTech Partners II at $435.3 million.
1 Comment | Alternative Energy, Clean Tech, news, startups, venture capital | Tagged: 2009, accel, Fourth Quarter, Fundraising, National Venture Capital Association, Thomson Reuters, VantagePoint, venture capital | Permalink
Posted by Mark Boslet
January 17, 2009
Venture-capital investing sunk to lows not seen since 2005 in the fourth quarter with information-technology startups hit particularly hard.
According to report by Dow Jones VentureSource, funding for information-technology companies posted its weakest quarter since 1998, with just $2.2 billion invested – a 39 percent decline from the final quarter of 2007.
Investing falls to 2005 levels
The data confirm the widely held belief that venture capitalists have been consumed with their existing portfolios, weeding out companies they no longer want to support and setting aside money for the ones they hope can survive a prolonged downturn.
“Many venture capital firms are circling the wagons to weather the downturn,” said Jessica Canning, director of global research at VentureSource.
For the quarter, VCs put $5.5 billion into 554 deals, a total that fell 30 percent from a year ago. Within the information-technology industry, investments in software startups plummeted 54 percent, spending on electronics and computer hardware companies toppled 67 percent and money handed to Web-centric companies fell 31 percent.
Investments in healthcare businesses, including biotech startups, dropped 42 percent. Biopharmaceutical funding slumped to its lowest level since 2003.
The one bright spot was energy and alternative-energy investments, which were up 140 percent in the quarter.
Showing venture capitalist’s interest in their existing companies, 55 percent of quarterly money went into later-stage deals, compared with 50 percent last year. First-time funding for startups dropped to 18 percent of the total, down from 22 percent a year ago.
1 Comment | Alternative Energy, Clean Tech, communications, computers, economy, hardware, life-science, news, software, startups, venture capital, web 2.0 | Tagged: Alternative Energy, Fourth Quarter, Information Technology, software, startups, Venture Capital Investing | Permalink
Posted by Mark Boslet
January 15, 2009
The economic crunch is having its way with Intel’s finances. Net income was down 90 percent in the fourth quarter and revenue tumbled 23 percent from last year.
Paul Otellini shows of 32-nanometer chips, which are being protected from spending cuts
“The pace of revenue decline in the quarter was dramatic,” CEO Paul Otellini said Thursday. “We understand the absolute need for fiscal discipline.”
For this year, spending will drop 700 million and factory production is being reduced because of the slack demand. The company’s key capital spending account will be the same as in 2008 or slightly lower.
But spared the broad paring are expenses on new 32-nanometer production technology, which will allow Intel to make smaller, more energy-efficient chips, said CFO Stacy Smith on a conference call.
Just as in 2001, Intel is making a big bet on the future by roaring ahead with the latest high-tech gear and developing the most advanced factories it can get its hands on.
When 32-nanometer production gets up to speed in 2010, the company will have lower production costs and make chips that run faster, Smith said. It also will manufacture chips that run on less power, permitting it to branch into new markets.
“In this environment, we plan on protecting that investment stream,” he said.
Leave a Comment » | chips, economy, news | Tagged: 2009 Capital Spending, 32 nanometers, Demand, Economic Downturn, Fourth Quarter, Intel, New Technology, Spending Cuts | Permalink
Posted by Mark Boslet
January 15, 2009
Intel vowed to make sharp cuts to factory production in the first quarter after market demand plummeted at the end of last year.
Intel plans sharp production cutbacks in the first quarter
But the chip giant said Thursday the quarter was likely the “trough” of its retrenchment and more normal production levels should return by the second half of the year.
The somewhat upbeat outlook for chip production came as Intel reported dismal fourth-quarter results, reflecting what it said was a steep drop in business that accelerated in the second half of the fourth quarter.
As a result, revenue fell from the third to the fourth quarters for only the second time in 20 years, said CEO Paul Otellini. The first time was in 2000 and the slump wasn’t as severe as the current 19 percent quarterly decline.
The worldwide economic situation is creating a high degree of uncertainty about demand,” said CFO Stacy Smith. As a result, Intel said dramatic cuts in production began in the fourth quarter and would increase in the first. “It’s absolutely significant what we are doing here.”
The cuts will help reduce chip inventories at computer makers and at Intel.
After hitting a production “trough” in the first quarter, more normal levels would return by the second half of the year, Smith said.
Leave a Comment » | chips, economy, news | Tagged: Downturn, Factory Production, Financial Results, First Quarter, Fourth Quarter, Intel, Paul Otellini | Permalink
Posted by Mark Boslet
January 14, 2009
Xilinx projected sales in its current fourth quarter would decline 18 percent to 28 percent, a relatively benign outlook given the pressures on technology companies.
The chip maker announced third-quarter results late Wednesday with sales down 3 percent from last year. It had warned of the shortfall in December.
Sales in the North America and Euope were weak
Sales in December were particularly weak as the recession slashed demand in most markets. Only sales to the military and for the build out of 3G networks in China stood out as relatively strong
But the San Jose company suggested it might weather the difficult worldwide economic environment better than other semiconductor manufacturers. It said fourth-quarter sales would fall 15 percent to 25 percent from the third quarter – or 18 percent to 28 percent year over year.
That is noticeably better than Linear Technology’s forecast yesterday for a 29 percent to 32 percent decline.
Xilinx said on Wednesday its third-quarter gross margin was 63.9 percent, the best in four years, as its hot-sellilng programmable chip Virtex-5 did well during the three months.
“As the economy recovers and Xilinx executes on its product roadmap, we’ll come out of this economic downturn better positioned,” said CEO Moshe Gavrielov on a conference call.
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Posted by Mark Boslet
January 14, 2009
Despite an anticipated pickup from holiday buying, the personal computer market collapsed in the fourth quarter, IDC said Wednesday.
Shipments fell 0.4 percent ending six years of growth, the last five with average increases of 15 percent.
Popular low-cost netbooks and vendor discounting weren’t enough to overcome a deteriorating economy, IDC said.
Notebook growth was almost cut in half from earlier this year to nearly 20% and the number of desktop PCs shipped fell roughly 16% from last year.
Mini notebooks did relatively well, accounting for 5 million units and bringing the total for 2008 to 10 million, or about 7 percent of portables.
“The market has taken a serious hit and the competitive environment along with a race to low-cost portables could easily undermine profits from mobile computing,” said Program Director Loren Loverde. “I won’t be surprised if recovery gets pushed further in 2010 as this crisis unfolds.”
Leading PC vendors by market share in the fourth quarter
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Posted by Mark Boslet
January 9, 2009
Private-equity fundraising, including venture-capital additions, fell by more than 50 percent in the fourth quarter to 43 billion, according to Dow Jones Private Equity Analyst.
Annual VC funding down
The period is a noticeable reversal from the first three quarters of the year, when the pace of new fundraising was better than in 2007.
For all of 2008, money raised by the industry rose 18 percent from a year ago to $266 billion.
During last year, venture-capital funds raised $25 billion, down 24 percent, while buyout and corporate finance funds rose $181 billion, down 26 percent, the Private Equity Analyst report said.
Only mezzanine funds financing late-stage companies saw an increase – to $40 billion, up 351 percent. Clearly investors are hoping to snap up bargain, money-starved companies as attractive prices.
7 Comments | news, startups, venture capital | Tagged: Fourth Quarter, Fundraising, Private Equity, startups, venture capital | Permalink
Posted by Mark Boslet
