Verizon to buy Yahoo's core business for $4.8 billion in digital ad push

NEW YORK Verizon Communications Inc said on Monday it would buy Yahoo Inc's core internet properties for $4.83 billion in cash, marking the end of the line for a storied Web pioneer and setting the stage for a big new internet push by the telecom giant.Verizon (VZ.N) will combine Yahoo's (YHOO.O) search, email and messenger assets as well as advertising technology tools with its AOL unit, which it bought last year for $4.4 billion. Verizon, the No. 1 U.S. wireless operator, has been looking to mobile video and advertising for new sources of revenue outside the oversaturated wireless market.The deal came after activist investors led by Starboard Value LP lost faith in Yahoo Chief Executive Officer Marissa Mayer, who was hired in 2012, and forced what became a protracted sale process.Yahoo, founded in 1994, was a dominant player in the early days of the internet, but has long lost its leadership position in internet search and advertising to Google (GOOGL.O>, Facebook (FB.O) and others.Mayer said on a conference call with investors that she planned to stay at Yahoo through the deal's close. Marni Walden, head of product innovation and new business at Verizon, will head the combined internet unit and said no decisions had yet been made on the management team.Verizon could combine data from AOL and Yahoo users in addition to its more than 100 million wireless customers to help advertisers target users based on online behavior and preferences."Yahoo gives us scale that is what is most critical here," said Walden, adding that the company's audience will go from the millions to the billions. "We want to compete and that is the place we need to be."Mayer, in an interview with Reuters, said she still saw a "path to growth" for Yahoo, especially in mobile. "What's exciting about the Verizon transaction is that it brings us back to growth sooner," she said. She said she was "open-minded" about a possible role with the combined companies. Yahoo is still one of the largest properties on the internet, with hundreds of millions of customers using its email, finance and fantasy sports offerings, among others, and a heavily trafficked home page.But Google has a stranglehold on the internet search business and built an industry-leading email service, while Facebook dominates in mobile and social media. Meanwhile, traditional web banner advertising, long Yahoo's strength, has become much less lucrative in the age of mobile and video."It's a decade of mismanagement that has finally ended for Yahoo," said Recon Analytics analyst Roger Entner. "It's the continuation of an extension of Verizon's strategy toward becoming a wireless internet player and a move away from (telecom) regulation for Verizon into an unregulated growth industry."Shares of Verizon dipped 0.4 percent to $55.88, Yahoo fell 2.6 percent to $38.37. FAR BEHIND GOOGLE, FACEBOOKThe integration of Yahoo will not come without challenges. In its latest results, it reported a second-quarter net loss of $439.9 million as it wrote down the value of Tumblr, the microblogging and social media service it acquired in 2013 for $1.1 billion.With AOL and Yahoo, Verizon would still be far behind juggernauts Google and Facebook (FB.O). According to market research firm eMarketer, Yahoo is expected to generate $2.32 billion in net U.S. digital ad sales, while AOL is expected to make $1.3 billion in 2016. Facebook and Google are forecast to deliver sales of $10.3 billion and $24.63 billion, respectively, by the end of this year, according to eMarketer. The Verizon deal would transform Yahoo into a holding company, with a 15 percent stake in Chinese e-commerce company Alibaba Group Holding Ltd (BABA.N) and a 35.5 percent interest in Yahoo Japan Corp (4689.T) as well as Yahoo's convertible notes, certain minority investments and its noncore patents.Yahoo executives said the remaining company is structured to "indefinitely" hold its Yahoo Japan and Alibaba stakes. They are worth about $40 billion based on their market capitalizations, while Yahoo had a market value of about $37.4 billion at Friday's close.Yahoo will continue as an independent company until the deal receives shareholder and regulatory approvals, the companies said. It is expected to close in early 2017. It plans to change its name and become a publicly traded investment company.Yahoo currently has $7.7 billion in cash, in addition to the $4.8 billion it will receive at the close of the deal, which it plans to return to shareholders, Yahoo executives said on the call.Verizon prevailed over rival bidders, including AT&T Inc (T.N); a group led by Quicken Loans founder Dan Gilbert and backed by billionaire Warren Buffett; private equity firm TPG Capital Management LP [TPG.UL]; and a consortium of buyout firms Vector Capital and Sycamore Partners.Under pressure from Starboard, Yahoo launched an auction of its core business in February after shelving plans to spin off its stake in Alibaba. (Additional reporting by Anya George Tharakan in Bengaluru and Deb Todd in San Francisco; Writing by Jonathan Weber; Editing by Bernadette Baum and Jeffrey Benkoe) Read more

Success of Pokemon GO adds impetus for change at Nintendo

TOKYO/SINGAPORE The phenomenal success of Pokemon GO and the surge in Nintendo Co's (7974.T) market value by $17 billion in just over a week has been seized upon by one of its most vocal investors to press for a change of strategy at the company.Until Pokemon GO, a mobile game, was launched just over a week ago, Nintendo had taken every opportunity to say its main focus was still gaming consoles, and games for smartphones were just a means to lure more people to them.But the success of Pokemon GO - unforseen even by its creators - has shown the potential for augmented reality and for Nintendo to capitalize on a line-up of popular characters ranging from Zelda to Super Mario.Seth Fischer, founder and chief investment officer at Oasis Management, is one of Asia's best known hedge fund managers and has long been a small but loud shareholder. Encouraged by the success of mobile games like "Candy Crush", he has campaigned for years for the Japanese console maker to develop and sell games for platforms run by Apple (AAPL.O) and Google (GOOGL.O)."I hope they will now understand the power of smartphones," Fischer told Reuters. "And as a result, I hope this means there is a whole change in strategy." "My next focus with Nintendo is for them to focus on monetizing the rest of their 4,000 patents for mobile gaming, multi-player gaming, et cetera. I think they could be making 30 to 60 billion yen ($290 million to $570 million) annually from licensing." Fischer has described Oasis as an advisor to entities that own Nintendo shares and a shareholder. The fund's direct holding is not listed among the company's largest investors.Nintendo President Satoru Iwata last year cautioned against hoping for too much change at the company. The expansion into smartphone games was "not because we have lost our enthusiasm or prospects for the console business", he said at the time. A Nintendo spokesman, asked about its mobile strategy, said last week there were three main objectives: "To maximize exposure of Nintendo's intellectual properties to consumers, to make profits on mobile devices, and to create synergies with the console business." He did not comment further on Pokemon GO."JUNK FOOD"Serkan Toto, founder of Tokyo-based game industry consultancy Kantan Games, said Nintendo still saw itself as a console maker."When you sell $400 dedicated devices and you sell the gamer boxed software for $60 a piece - for them this is the gold standard," he said. "For them, mobile is the junk food: enjoy while you wait for the bus. It's not something that Nintendo sees for itself." Pokemon GO, however, has been a runaway success, marrying a classic 20-year old franchise with augmented reality. Players walk around their neighborhoods in real life, search out and capture Pokemon cartoon characters on their smartphones.The game was created by Nintendo, Google-spinoff Niantic, and Pokemon Company. Nintendo owns a third of Pokemon Company and both have undisclosed stakes in Niantic.Nintendo has not commented on next steps, which many speculate could now involve other favorite characters.The hardware-focused group had planned to introduce a device called Pokemon GO Plus, which could allow it to piggyback on the success of the mobile game. The device vibrates when a Pokemon character is nearby, enabling players to catch them without constant monitoring. Pokemon GO is on track to be the first mobile game to break the $4 billion-per-year wall, beating out Candy Crush Saga and Supercell's Clash of Clans, according to Macquarie Research. But the impact to Nintendo's bottom line could be minimal because of shared ownership, as little as 3 percent of net profit in the year to next March.Niantic declined to comment on the future of its relationship with Nintendo, although it credited Pokemon's unique appeal for the game's success. "It's been wonderful to be able to combine our philosophy for these kinds of games with the powerful affinity that people have for Pokemon," Niantic CEO John Hanke told Reuters.But analysts say the craze signals the vast money-making opportunities available for Kyoto-based Nintendo - when it eventually brings out more serious hits. "Over the last decade they never compromised on the software side. That's why they'll blow everybody out of the water once they start take iOS and Android more seriously than they do now," Toto said. "The successes of Pokemon Go will open the eyes of executives in Kyoto. This is unprecedented."There are no signs, however, that will happen soon.Of the four mobile games that Nintendo has promised to launch this financial year through March, two are set to be Animal Crossing and Fire Emblem - no sign of Mario nor Donkey Kong, at least not yet. (Additional reporting by Yoshiyasu Shida; Writing by Ritsuko Ando and Miyoung Kim; Editing by Raju Gopalakrishnan) Read more

Solar plane leaves Seville on penultimate leg of round-the-world flight

SEVILLE, Spain An airplane powered solely by energy from the sun took off from southern Spain early on Monday on the penultimate leg of the first ever fuel-free round-the-world flight.The single-seat Solar Impulse 2 lifted off from Seville at 0420 GMT (12:20 a.m. EDT) en route for Cairo, a trip expected to take 50 hours and 30 minutes.The plane has more than 17,0000 solar cells built in to its wings and travels at a cruising speed of around 70 km per hour (43 mph). On its journey, which began in Abu Dhabi and is due to end there, it has been piloted in turns by Swiss aviators Andre Borschberg and Bertrand Piccard. Borschberg is taking this run, the 16th leg, over the Mediterranean Sea, crossing through the airspace of Tunisia, Algeria, Malta, Italy and Greece before ending in Egypt. (Reporting by Marcelo Pozo; Writing by Paul Day; editing by John Stonestreet) Read more

Samsung Electronics set for best quarter in over two years on second-quarter smartphone boost

SEOUL Tech giant Samsung Electronics Co Ltd is poised to issue guidance for its best quarterly profit in more than two years, propelled by a surge in mobile earnings on the back of robust sales of its flagship Galaxy S7 smartphones. The South Korean giant will disclose its estimates for second-quarter earnings on Thursday, with analysts predicting a strong mobile division contributed to a 13 percent jump in operating profit from the same period a year earlier. The average forecast from a Thomson Reuters survey of 16 analysts tips Samsung to report April-June operating profit of 7.8 trillion won ($6.8 billion), the highest since an 8.5 trillion won profit in January-March of 2014. The mobile division of the world's top maker of smartphones and memory chips was likely its top earner for the second straight quarter with a 4.3 trillion won profit, according to the survey. Samsung surprised many with better-than-expected first-quarter earnings, and issued guidance for a further pickup in April-June."Galaxy S7 sales are better than expected in the first half, and the semiconductor business is also outperforming rivals," said KTB Asset Management's Lee Jin-woo. The fund manager estimated the firm's quarterly operating profit would also stay strong in both the third and fourth quarters at between 7 trillion won and 8 trillion won in each. Samsung's smartphone business had been squeezed before the start of this year between Apple Inc, at the high end of the market, and Chinese rivals like Huawei Technologies [HWT.UL] in the budget segment. But the Galaxy S7 has provided a catalyst for the earnings rebound, likely putting the mobile business on track to record its first annual profit growth in three years.Some analysts say Samsung shipped around 16 million Galaxy S7s in April-June, with a higher-priced curved-screen version outselling its flat-screen counterpart and boosting margins. Lackluster sales of offerings from rivals such as Apple and LG Electronics also helped reduced marketing expenses, they said. "While operating profit margins for the mobile phone business will decline in the third and fourth quarters as the Galaxy S7 effect fades, operating profit will continue to grow on an annual basis," Korea Investment & Securities said in a report. As its smartphones thrive, Samsung's chip business - last year's key profit driver - probably saw quarterly profit sink to its lowest in nearly two years due to weak demand from makers of other smartphones and personal computers. But signs of some price recovery for DRAM chips starting last month and Samsung's dominance in the premium solid-state disc drive market with its 3D NAND chip production technology suggest a pickup in coming months, analysts said. (Reporting by Se Young Lee; Editing by Tony Munroe and Kenneth Maxwell) Read more

Google beats children's web privacy appeal, Viacom to face one claim

Google and Viacom on Monday defeated an appeal in a nationwide class action lawsuit by parents who claimed the companies illegally tracked the online activity of children under the age of 13 who watched videos and played video games on Nickelodeon's website.By a 3-0 vote, the 3rd U.S. Circuit Court of Appeals in Philadelphia said Google, a unit of Alphabet Inc, and Viacom Inc were not liable under several federal and state laws for planting "cookies" on boys' and girls' computers, to gather data that advertisers could use to send targeted ads.The court also revived one state law privacy claim against Viacom, claiming that it promised on the Nick.com website not to collect children's personal information, but did so anyway.Monday's decision largely upheld a January 2015 ruling by U.S. District Judge Stanley Chesler in Newark, New Jersey. It returned the surviving claim to him.Jay Barnes, a lawyer for the parents, declined to comment.Viacom spokesman Jeremy Zweig said the company is pleased with the dismissals and confident it will prevail on the remaining claim. "Nickelodeon is proud of its record on children's privacy issues and strongly committed to the best practices in the industry," he added. Google did not immediately respond to a request for comment.Monday's decision is a fresh setback for computer users, after the same appeals court last November 10 said Google was not liable under federal privacy laws for bypassing cookie blockers on Apple Inc's Safari browser and Microsoft Corp's Internet Explorer browser.Circuit Judge Julio Fuentes, who wrote both decisions, said that ruling doomed many of the parents' claims against Mountain View, California-based Google and New York-based Viacom. He also rejected the parents' claims under the Video Privacy Protection Act, a 1988 law adopted a year after a newspaper wrote about movies rented by failed Supreme Court nominee Robert Bork, based on a list provided by a video store.Fuentes said the law was meant to thwart the collection of data to help monitor people's video-watching behavior.He said Congress, despite amending the law in 2013, never updated it to cover the collection of data such as users' IP addresses, browser settings and operating settings, and reflect a "contemporary understanding" of Internet privacy. "Some disclosures predicated on new technology, such as the dissemination of precise GPS coordinates or customer ID numbers, may suffice," Fuentes wrote. "But others--including the kinds of disclosures described by the plaintiffs here--are simply too far afield from the circumstances that motivated the act's passage to trigger liability."The revived privacy claim accused Viacom of reneging on a promise on Nick.com that said: "HEY GROWN-UPS: We don't collect ANY personal information about your kids. Which means we couldn't share it even if we wanted to!"Fuentes said a reasonable jury might find Viacom liable for "intrusion upon seclusion" if it found its alleged privacy intrusion "highly offensive to the ordinary reasonable man."The case is In re: Nickelodeon Consumer Privacy Litigation, 3rd U.S. Circuit Court of Appeals, No. 15-1441. (Reporting by Jonathan Stempel in New York; Editing by David Gregorio; Editing by David Gregorio) Read more

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