Amazon.com’s “Brand” is Important

Internet Retailer magazine, is reporting that Amazon is one of the most trafficked Internet sites this holiday season. The site is referencing a research study done by Majestic Research holiday shopping survey. Amazon is still proving its power as the gateway to e-Commerce transactions much like Expedia is to online travel, Google is to online search, eBay is to finding value on the web, and Yahoo is to portal like services (personals, email, news, finance, gaming, etc.). Amazon’s huge selection, innovative technology, low prices, free shipping, and easy to navigate website combine to create a brand that has been unappreciated. What I mean is “brands” are huge on the Internet and are often ignored in analysis of barriers to entry. This is one reason why Amazon (and the other names mentioned above) will have staying power over the next 10 years while competition in online retail gets hotter. See the text from the article:

Amazon, Best Buy, Wal-mart, eBay and Target were among the web sites most often visited by consumers during the holiday shopping season, according to Majestic Research Corp.’s Holiday Shopping Survey released yesterday.

More than 50% of the 300 consumers surveyed by Majestic reported visiting Amazon.com, regardless of whether they made a purchase. More than 45% said they had visited eBay, Wal-Mart and Best Buy.

85% of visitors to Amazon and eBay said they went directly to the sites, while 82% of visitors to Victoria’s Secret and Target said they went directly to those sites, according to Majestic.

More than 50% of visitors to eBay and Amazon said they had completed at least one transaction since the beginning of the holiday season, compared to the average 22% among all web sites included, according to the survey. Among those responding to the survey, only 10% of eBay’s and 17% of Amazon’s customers were first-time buyers.

The survey also found that shoppers who were aware of shipping discounts on a site were more likely to make purchases at the site. While 54% of Amazon.com visitors made holiday purchases at the site, 70% of visitors who were aware of shipping discounts completed at least one purchase. At Overstock.com, the proportion of visitors making purchases rose to 41% from 23% among those who were aware of shipping discounts, Majestic said.

Shipping promotions on Amazon.com were the most commonly noticed, with 63% of visitors saying they were aware of shipping promotions on the site. 47% of Overstock visitors indicated they were aware of shipping discounts—which were as low $1—at the site.

eBay EachNet Offers “Free” Listings

In what some say is a response to heightened competition, eBay EachNet has eliminated Fees on stores and inventory listings.

Those listings will now show up in search results after auction and Buy-it-Now items. In addition, eBay EachNet will waive fees for a seller’s first three listings each month and will waive the final value fee for any transaction that uses PayPal or eBay’s escrow system Au Fu Tong.

Wonder if eBay EachNet will eliminate fees entirely and head towards a paid listings model?

Google Cubes; Akamai Drops 5%

Bear Stearns Internet analyst Robert Peck published a report and held a conference call on Google Cubes, which is both a new and interesting idea about Google creating mini networks in the home. The call caused the stock of Akamai to fall 5%, after the guest speaker (Robert X. Cringely) stated that Akamai is in “big trouble” ahead when Google enters its space. He also stated that Apple is developing a comparable service and will drop Akamai as a partner. Read more for exerts on the report.

Here are some parts from his report. It's quite interesting, if true.

GOOGLE, THE HARDWARE COMPANY. In a recent conversation with renown technology pundit, Robert X. Cringely, we discussed some very intriguing potential hardware moves by Google that could have a profound implication on not only Google, but potentially the Internet and media in general. We particularly find these potential products interesting, as most investors think of Google as a software / programming company, and little discussion has taken place on Wall Street regarding Google as also a hardware company. Should these potential products from Google materialize, this will change.

GOOGLE DATA CENTER CONTAINERS – At Google’s investor conference earlier in the year, we had a chance to ask Eric Schmidt about Google’s job posting for someone to help in purchasing dark fiber. Many investors were unclear as to why Google would need dark fiber, but the obvious answer was Google was looking to connect its data centers cheaply. This made sense, but we were left wondering if there was more to the job search. Since then Google has been very active buying up fiber, and Mr. Cringely has hypothesized (http://www.pbs.org/cringely/pulpit/pulpit20051117.html) what Google may be experimenting with: building a data center that fit with in a standard shipping container. The 20’ x 40’ container could be packed with almost 5000 Opteron processors and over 3.5 petabytes of disk storage. While this packs a lot of power, it wouldn’t outsize any of Google’s current 64 data centers (up from just one only 2 data centers 2 years ago). So what would make these data center containers so special? They could be dropped off literally overnight to any of the 300 Internet peering points globally. Many may wonder what benefit so many access points would bring to Google besides redundancy. The answer is speed – or reduced latency. Google could be closer to the end user than anyone ever was before. There are many applications that would benefit from this: Google Videos and IPTV sitting just a hop or two from the user, virtual office applications with robust features (i.e. running desktop applications on the Internet itself with very fast interactive features like interactive 3D maps), servers would never “go down”, and data would never get “lost”. In essence, the company could build its own Google Net, which would sit right on top of today’s Internet. Google would basically have an access point in every major city which would add two other benefits: 1) it could prioritize its own VOIP, for premier telephony experience; 2) it would reduce Google’s dependence on other 3rd parties for trunking or access. But could Google afford it? To build and operate the containers annually, it would only cost about $2-3B, readily done with over $7B of cash on the balance sheet, (and still plenty of room even if Google invests in AOL for $1B (see below)).

GOOGLE CUBES: THE LAST MILE – In our conversations with Mr. Cringely, it appears that this may not be all that Google has up its sleeve on hardware. While Google is potentially thinking “big”, it may also be thinking “small”, “very small”. Through our conversations, we have learned that Google may be considering developing Google Cubes (we have dubbed them this, as we are not sure what they could be called). Basically the device would be a small box with many connections ports on it, in addition to wireless (Bluetooth / WiFi). Its potential purpose: it could connect to your TV or PC, or PVR, or stereo. As long as one of them is connected to a broadband connection, the Cubes could form a mini mesh home network. What could this enable? Many things – the obvious applications would include: enabling IPTV to easily connect from the web to your TV and enabling the transfer of video downloads from the computer to the TV, enabling easy transferal of MP3s on your computer to your stereo (or vice versa), and VOIP connection to all existing phones in your home. However, the cubes could potentially work with your home security or even your home climate controls (imagine turning your air conditioning on in your home right before you leave work so that your house is cooler when you arrive, and you didn’t waste money cooling it all day). Now imagine that you live in an apartment complex and the neighbors wanted to share 1 broadband connection – all the neighbors cubes could “talk” to each other (if desired). However, should this be in Google’s plans, it would take a lot of network support – enter another role of the widely distributed data center containers. One could even fathom the cubes (or one main cube) talking directly to a nearby data center container, which could eliminate the “last mile” problem completely. The idea sounds intriguing but what would it cost? The cubes would be designed to be as “dumb” as possible (which is the whole point of making the network the computer), and Google would probably subsidize them so that they cost <$20 or maybe even free (like AOL CDs).

HARDWARE CONCLUSION: We underscore to investors that for now, any potential development by Google of data center shipping containers and Google Cubes has not been confirmed. However, one could see how these ideas could prove interesting to Google, should they be feasible. Further, we think that at minimum investors should takeaway from this that Google is not just a software / programming company. In fact, Google could over time become more of a hardware company than anything else. At the very least, we think investors should at least consider these possibilities.

Answers.com on the rise

I’ve been taking a look at Answers.com (ANSW) (http://www.answers.com/) over the past few weeks and I am starting to warm up to the story. For those of you who haven’t heard of it, Answers.com is an answers and reference based search engine.

Recent wins with the NY Public library and FireFox increase my conviction that this company can one day rise from relative obscurity. The acquisition of Brainboost should help the business model evolve. I assume the NY Public library win will encourage other public library systems across the country to work with the company. Answers.com has an unofficial relationship with Google, which I think may lead to a formal relationship or an acquisition down the road. The stock has been somewhat volatile, trading between 9 and 14 over the past few months. But I think with the recent news there will be more stability in the stock price. Over the next year, the stock will trade largely on catalysts instead of fundamentals. After that I think that fundamentals will start to drive the stock as the rapid revenue growth, which I think looks sustainable, will start to add to the bottom line. Keep this stock on your radar.

3Q Results are highlighted below:

In the third quarter, the company generated $563,576, compared to $424,552 in the second quarter of 2005, or 33% sequential growth, and compared with $53,163, for the corresponding quarter a year earlier. The net loss in the third quarter of 2005 was $1,090,355, compared to a net loss of $1,601,986, for the second quarter of 2005, and compared to a net loss in the corresponding period of 2004 of $2,168,527. Management expects fourth quarter 2005 revenues to climb sequentially by 42% - 55% from the third quarter of 2005 to approximately $800,000 to $875,000. Of this, over 95% will be from Answers.com proprietary traffic and distribution channels. The remainder will be from subscriptions previously sold and other income. Further, the company expects to increase its operating expenses relating to growing its business and internal operations and therefore anticipates the fourth quarter net operating loss to approximate or be moderately higher than the third quarter.

eBay Admits Growing Fraud Problems

The Designtechnica News has a good artilce on the growing fraud problem on the eBay U.K. site. Even as eBay touts celebrities using its service this holiday season, the company is facing growing online fraud and complaints of foot-dragging. advertising The end-of-year holidays are important for Internet retailers, and eBay definitely wants access to the spending frenzy as it issues press releases touting celebrities' successful purchases, including consumer electronics grabs by Jessica Simpson, Sela Ward, and Eva Longoria. However, a less pleasant side of eBay is emerging: strong increases in hijacked member accounts, auction fraud, and counterfeit goods being sold over the service. According to the BBC, eBay's director of trust and safety Gareth Griffiths admitted to "extreme growth" in the number of account hijacking and fraud incidents during 2005, and another company spokesperson refused to deny that the number of compromised and hijacked accounts might number in the tens of thousands. Naturally enough, the BBC's reporting focuses on the U.K., reporting that eBay is drawing the ire of both brand manufacturers and law enforcement officials for the amount of fraud on the site and the amount of time eBay takes to respond to requests for information or reports of criminal activity. For instance, Adidas told the BBC up to 40 percent of 12,000 auctions for its goods the company monitored were selling counterfeit items, and clothing brand Ben Sherman said eBay took five days to close a series of counterfeit auctions, by which time many of the items had been sold. Law enforcement officials have reportedly characterize eBay's slow response times as "obstructive;" North Yorkshire Trading Standards claimed eBay took two months to provide information on suspects. Some of the problems faced by eBay are created by criminal enterprises and fraudsters, rather than by eBay itself. So-called "phishing" schemes trick eBay members into revealing their account information, and eBay in part characterizes the growing problem as external to the site and the fault of its users for responding to schemes and not maintaining up-to-date security software. "Phishing" attempts usually take place via email purporting to be from eBay, requiring users to update their account details. However, the links embedded in the message take the user to a site controlled by the fraudsters, who collect the requested account information and use it to take over the user's legitimate eBay account, or sell the information to those who will. (And these phishing email messages are very common: my personal spam folder contains more than 600 such messages I've received since July, 2005—and those are just the ones the spam filtering on the mail servers didn't block outright.) These people then use hijacked accounts to sell counterfeit materials or commit other forms of online fraud. Other legitimate eBay account holders may have their account information compromised by keystroke monitoring programs or other spyware on their computers which relay the details back to fraudsters. Still other accounts may be accessed fraudulently because of weak, easily-guessed passwords. For its part, while admitting fraud problems are increasing, eBay claims to have food relationships with major retail brands and describes law enforcement as very satisfied with the company's level of cooperation. eBay maintains an online security center with tips on how to protect information and accounts, along with means to report fraudulent auctions, suspected scams, and spoof email messages. The security center also features a members forum where security issues—and the BBC's reporting—can be discussed.

Google Wins

The Wall Street Journal and the New York Times reported that Google has won the race to partner with AOL. Google has reportedly agreed to invest $1 billion dollars for a 5% stake in AOL. The transaction values the entire AOL unit at $20 billion. Google will promote AOL's Web properties among the sponsored links in its search results, and will include AOL's collection of online videos among its search results. Google's arrangement to provide search technology for AOL, which was set to expire at the end of next year, would be extended for five years. The transaction should be finalized at the board meeting on Wednesday.

The Knot (KNOT), one of my favorite content stocks was mentioned in the Business Week article as a possible takeover candidate by the likes of a Target. While this falls within my thinking that the Big Six Internet players will continue to dominate (Google, Yahoo!, Amazon, eBay, IAC, Expedia) everything online, it would be nice to see some of the smaller players rise to huge prominence as the aforementioned companies. So I wonder if every new entrepreneur creates/innovates with the hopes of being acquired. This I believe distracts from the competitive spirit. Also, it makes the bigger companies lazy on the innovative front as they think that they can acquire new technologies and business models rather than build in-house. Capitalism at its best. I guess.

The full article is listed below:

NEWS ANALYSIS By Steve Rosenbush

Internet Mergers: Who's Next?

As the Web matures, the pace of deals is picking up again, spurred by reasonable price tags on some of the smaller outfits

Dealmaking has returned to the Internet sector with an intensity not seen in years. Web companies have shaken off the stigma associated with the Nasdaq crash of 2000 and are attracting big buyers from both the on- and offline worlds. In the past year, News Corp. (NWS ) has announced plans to buy Intermix (MIX ), parent of social-networking site Myspace.com, for $580 million in cash. New York Times Co. (NYT ) purchased search site About.com for $410 million in cash. And Dow Jones (DJ ) bought news site Marketwatch.com for $519 million in cash. But the acquisitions may have only just begun. One media executive says investment bankers are making the rounds with a list of potential targets that includes a dozen or more Internet companies. BIG FISH SNAPPING. One possibility: Theknot.com, (KNOT), a wedding-planning site, which is on the block and has held talks with a number of potential suitors, BusinessWeek Online has learned. The leading potential buyer is retailer Target (TGT ), according to one company insider. While no one knows for sure whether they'll combine, the companies have had a business partnership since April, cooperating on a bridal registry service. Both declined comment for this story. Such a deal would follow a recent pattern of large, traditionally bricks-and-mortar companies snatching up small and midsize Internet outfits. Of course, Web giants like Yahoo! (YHOO ) and Google (GOOG ), with market caps of $48 billion and $80 billion, respectively, would cost far too much to acquire -- but other, smaller candidates abound. Theknot.com, for one, has existed since the 1990s and posts a net profit. But it's a relative bargain, with a market cap of $230 million -- a pittance compared with Target, worth nearly $50 billion. THE PRICE IS RIGHT. "There has been a real bifurcation of value among Internet companies. The big ones are out of reach, and some of the smaller ones look cheap. That tends to drive activity," says D. Jonathan Merriman, CEO of investment bank Merriman Curhan Ford. While the bank has worked with Theknot.com in the past, Merriman says he had no knowledge of its immediate plans and declined to comment on whether it was on the block. The hottest targets tend to have valuations well under $1 billion. Although it's known that news site CNET (CNET) is up for sale, with a valuation of $1.9 billion, it has had little luck finding a buyer. The same holds true for gaming site IGN (see BW Online, 8/22/05, "IGN Entertainment: Where the Boys Are"). The privately held company is looking to get close to $1 billion. With no takers in sight, it may head for an IPO. But the price of many well-regarded sites is just right. With a valuation of $440 million, the women's-oriented media site ivillage.com will likely find a buyer, investment bankers say. One possible outcome: a merger with rival Lifetime Entertainment, a venture of Disney (DIS ) and Hearst. LESS STIGMA. Industry watchers consider privately held movie-listing service Fandango.com a logical partner for AOL's Moviefone.com. "But the buyers are almost never who you expect them to be," cautions Jack Flanagan, senior vice-president at Internet researcher comScore Networks. "They tend to come out of the blue, like New York Times and About.com." The current round of M&A activity dates back all the way to October, 2003, when Time Warner's AOL (TWX) said it would buy Advertising.com for $435 million. The deal signaled that Time Warner had recovered its equilibrium after combining with AOL in a merger sometimes derided as the worst of all time. The AOL-Advertising.com deal anticipated a huge runup in the online ad business. And a clear trend has emerged: The Web is drawing ad dollars from traditional media. Global online-ad revenue is expected to rise nearly 40% this year, to $13 billion, from $9.6 billion in 2004, according to Ken Marlin, managing partner of Marlin & Associates, an investment bank and adviser to media companies. That's more than five times the pace of growth in most traditional categories. REGARD WITH SUSPICION. Global growth is driving Internet M&A, too. China ranks as particularly important. The IPO of China-based search company Baidu.com (BIDU ) earlier in August drew attention to the sector (see BW Online, 8/22/05, "There's More Where Baidu Came From "). Yahoo has made an investment in China's Alibaba.com. "We have held Chinese Internet companies for a long time. They are an important source of future growth," says Ryan Jacob, CEO of the Jacob Internet Fund, which has $70 million invested in Internet companies. Jacob regards China's Sohu.com as a likely target because of its search technology. And he considers its price reasonable. From a strategic point of view, he likes instant-messaging site Tencent.com. He says an IM deal won't arouse the ire of regulators in the Middle Kingdom, who tend to regard with suspicion Western-owned news and media ventures. And IM can be used as a platform for all sorts of services that generate ad revenue. FAR MORE BUZZ. Across the Pacific and U.S., big media companies are waking up to the fact that the Internet is evolving into a mainstream form of distribution for news and entertainment. The Live 8 fund-raising concerts generated far more buzz on AOL than they did on cable TV. Hence MTV is planning to broadcast its next award show on its Web site. All in all, the environment is light-years away from that of the recent past, when Internet deals hinged on a hope and a prayer. The values of Net companies then were based on page views and other assorted metrics. Now the froth has been skimmed. The survivors are generating ad revenue. "Now it's about money," Merriman says. And that's why this boom looks as if it's going to be around for a while.

I am back

I've been traveling for a while now. I am back and will provide daily commentary on Internet stocks. During my hiatus, Google has added close to $80 billion in market cap, eBay has rebounded and has purchased Shopping.com, Amazon.com has also rebounded, and IAC made a bid for Ask Jeeves and has monetized its VUE stake. Also, other media stocks such as Scripps are buying growth with the purchase of Shopzilla and FindWhat changed its name to Miva. The Internet is dynamic and forever changing. In fact, at the Bear Stearns Technology conference, eBay’s CFO stated that the biggest challenge that eBay faces today is the rapidly changing and evolving Internet space. He thinks that there will be more changing in the Internet space in the next three years than has changed in the past 10 years. I think he is right. So lets sit back, enjoy the ride and try to make money.

U.S. Internet Companies Face Challenges Abroad

(Dow Jones)--Companies looking to boost their online business by expanding abroad need to be realistic about the challenges they face, including brand translation, marketing and costs, according to independent research firm Forrester Research Inc. (FORR).

With online sales in the U.S. maturing, retailers are looking to other parts of the world for some of their growth, said Forrester Research analyst Carrie Johnson in a recent report about companies taking their online sales abroad.

While U.S. online sales should have a compounded annual growth rate of 14% during the next five years, those sales in Europe will have a growth rate of 33%, Forrester said.

European retailers are looking to get their share of customers in the U.S. because European consumers are slower to adopt online shopping compared with their U.S. counterparts, the company said. That's led U.S. retailers to feelhey need to be global.

Having online sales is also a cheaper avenue for establishing a brand presence compared with building a store, and it's a good way to test a country's interest, the report said.

Regions that have potential include Asia, Latin America, Eastern Europe and India, the Forrester report said. Expanding abroad, however, isn't without hurdles. Branding and marketing are "hands down" the biggest challenges, Johnson said. "It's not a technology issue or a management issue, but whether your brand translates there and how much it costs," she said.

Retailers, especially those without the brand recognition and worldwide presence of the most well-known companies, need to evaluate existing brand awareness and the competition before going into new markets, Forrester's report said. U.S. companies spend millions in online marketing as well as existing channels and brand strength to fuel their online sales, the report said. Those companiesalso need to have big budgets when they go abroad.

For online jeweler Blue Nile Inc. (NILE), the costliest aspect of doing business outside the U.S. is technology, Chief Executive Mark Vadon said. "When you look at moving from a single Web site to multiple sites with local content, you have those multiple sites running off a single platform," he said. "You need some local presence, you need fulfillment, but a significant piece of the cost is technology." Blue Nile had been selling items to Canadians from its U.S. Web site for a couple years but launched a stand-alone site for Canada in January. It launched a site in the U.K. last fall without any marketing muscle to see what interest the site would garner. Sales are doing well enough that Blue Nile plans to havea full site in the U.K. by the fourth quarter, Vadon said.

There are other challenges for companies beyond brand translation and costs. One is language. When eBay Inc. (EBAY) launches a site in another country, it has to make sure the language on that site is "contextually correct," spokesman Henry Gomez said.

"There are local people doing the translating because there are nuances to any language," Gomez said. "EBay is instantly local, so much of that issue is solved by users when they list items on the site, but we need to make sure thenavigation and the words we use are appropriate for the market."

EBay has local sites in several countries, including Germany, India, Italy and South Korea, as well as the U.K. Retailers also need to be aware of differences in taxes, duties, accounting, legal issues and shipping regulations. In addition, companies need to know local customs and traditions, Blue Nile's Vadon said.

eBay Says Patent Office Revokes MercExchange Patent

Reuters) - eBay Inc. EBAY said

on Tuesday that the U.S. Patent and Trademark Office has

preliminarily revoked a patent that is the basis for a $25

million patent-infringement judgment against the Web

marketplace.

EBay said the decision from the patent office covers the

entirety of the consignment fixed-price patent numbered

5,845,265, which is owned by Thomas Woolston, principal of

MercExchange.

MercExchange, a tiny e-commerce technology developer that

has been locked in a multiyear patent battle with eBay, will

have an opportunity to respond to the initial ruling out of the

patent office.

The patent examiner handling this MerchExchange patent

could not immediately be reached for comment.

A federal judge in 2003 ordered eBay to pay Virginia-based

MercExchange $29.5 million for infringing e-commerce patents

that MercExchange charged were key to eBay's "Buy it Now"

feature. Buy it Now accounted for about 31 percent of the total

value of goods sold on eBay in the fourth quarter of last

year.

The U.S. Court of Appeals for the Federal Circuit earlier

this month upheld the $25 million damage judgment against eBay

related to the above-mentioned patent and cleared the way for a

permanent injunction related to the dispute.

"These rejections are a major new factor that the court

will have to consider," said Jay Monahan, eBay's vice president

of intellectual property, referring to the initial decision out

of the patent office.

Woolston said in a statement that MercExchange still plans

to seek an injunction against eBay and added that he remains

confident that MercExchange will prevail.

"We will deal with this office action, like all previous

office actions during the prosecution of our patents, in the

ordinary course," Woolston added.

EBay previously has said that an injunction would not have

an impact on its business because of changes it has made during

the course of the litigation.

Shares of eBay were up 16 cents, to $36.07, in late

afternoon trade on the Nasdaq.

((Reporting by Lisa Baertlein, editing by Martin Golan;

Reuters Messaging: lisa.baertlein.reuters.com@reuters.net; +1

415-677-2549))

Chinese Internet Stocks Impacted by Shanda’s Move

(From THE ASIAN WALL STREET JOURNAL)

By Rebecca Buckman

Hong Kong -- SEVERAL CHINESE Internet stocks have taken off in recent weeks

following news that online-gaming giant Shanda Interactive Entertainment could

make a play for Chinese Web portal Sina.

Now, some investors reckon other companies, including portals Netease.com and

Sohu.com, could be takeover targets as well.

But don't bet on it. While some analysts tout Netease's prospects, others say

the best buys in the Chinese Internet business right now might be Web outfits

that don't figure into takeover talk and whose shares haven't gotten a lift

lately -- including smaller companies that provide entertainment and other

services to mobile-phone users.

Among such companies are Beijing-based Tom Online, backed by Hong Kong tycoon

Li Ka-shing, and Linktone, headquartered in Shanghai and run by Silicon

Valley-trained entrepreneur Raymond Yang.

The wireless-Internet sector in China has been extremely risky, and some big

investors still won't touch it. The main damper has been a continued regulatory

crackdown by the Chinese government, which has been trying for nearly a year to

stamp unethical marketing and billing practices in the industry.

One bad practice, for example, involves making it difficult for users to halt

subscriptions to certain mobile services, such as special "ring tones," or even

horoscopes delivered to wireless phones. (Some people unwittingly signed up for

the services after receiving "spam" e-mail on their phones, and then had no

idea how to cancel them.) The government crackdown has dented profits at

several mobile-content companies.

But much of the cleanup is now done, and China's wireless market remains huge,

with more than 330 million subscribers. While the market has been volatile for

some of the stocks, "things will stabilize," predicts William Bao Bean, an

analyst with Deutsche Bank in Hong Kong. "The underlying point is that demand

for these services is still quite strong."

Indeed, Tom Online, a company that derives about 92% of its revenue from

wireless services, earlier this month reported a 73% profit increase for 2004,

despite the regulatory clampdown. Linktone recently said profit for the quarter

ended Dec. 31 more than doubled from a year earlier.

In a research note in February, analysts Safa Rashtchy and Aaron M. Kessler of

U.S. investment bank Piper Jaffray called Tom Online "one of the most

undervalued stocks in our China universe." At the time, the stock was trading

at about 14 times calendar year 2005 earnings, compared with 45 times 2005

earnings for Shanda and 20 times for Sohu. China's wireless sector remains "a

major opportunity," the analysts wrote.

Since mid-February -- when Shanda unexpectedly said it had taken a 19.5% stake

in Sina and might try to take a controlling interest in the company -- shares

of both Linktone and Tom Online have stayed roughly flat.

Meanwhile, shares of Netease.com, which is a Web portal like Sina, have surged

15% and Sohu.com's stock price has climbed nearly 14% -- driven higher partly

by investor speculation that the companies could be takeover targets.

Still, many analysts are taking a wait-and-see attitude on Sohu.com's

prospects. Since early 2004, the company has lost some top executives including

its chief financial officer and Victor Koo, its president and chief operating

officer. In November, Sohu.com said that Mr. Koo would leave his post by the

end of this month, although he will stay on temporarily as a consultant. A

company spokeswoman says Sohu.com has managed "smooth transitions" through the

departures and has capable and experienced managers at lower levels.

But Sohu.com, the No. 2 portal player behind Sina, also has struggled to build

top-notch search and online-games businesses, says Duncan Clark, a partner with

consulting firm BDA China Ltd. in Beijing. The company needs to rebuild its

management ranks and refocus is strategy -- or else "look at a partnership or

be sold," he says.

Mr. Clark and some investors don't think Sohu.com's founder and chairman,

Charles Zhang, will ever sell out. Mr. Zhang still owns 25% of the company and

Sohu.com has had a "poison pill" takeover-defense plan in place for years. "I'm

not sure they're going to be taken over," says Jerry Zhang, an analyst with

Evergreen Investments in Boston who is no relation to the Sohu.com chairman.

Indeed, in an interview, Charles Zhang said he, "the management, and the board

are very unified to . . . remain independent." Netease.com, too, is still

controlled by its founder, board member William Ding.

Analysts say founder control means a suitor isn't likely to snap up

Netease.com anytime soon, either. But unlike Sohu.com, Netease is excelling in

the hot area of creating online games and could be a good buy all by itself. In

2005, revenue from games could provide 80% of company sales, according to Piper

Jaffray.

J.P.Morgan has an "overweight" rating on Netease.com while Piper Jaffray rates

it "outperform" with a US$63 price target. Last Thursday, in their latest

trading, Netease.com's American depositary receipts closed at $45.50.

Some analysts say smaller Chinese Internet players shouldn't be overlooked,

either. Tom Online, with backing from companies controlled by Hong Kong tycoon

Mr. Li, could turn into an acquirer and build itself into a bigger, more

diverse Internet player. It recently bought 80% of Indian mobile-gaming company

Indiagames Ltd.

Linktone, while it remains relatively small, saw its sales triple during 2004

to reach $50 million The company is also moving into new types of wireless

businesses that haven't been targeted as much by regulators from the Chinese

government.

Indeed, despite changes in the regulatory environment, wireless content

remains "a profitable, sustainable business model" in phone-happy China, says

Wang Lei Lei, Tom Online's CEO.

(END) Dow Jones Newswires

Google Buys Urchin Software

Google Inc.

(NASDAQ:GOOG) today announced it has agreed to acquire Urchin Software

Corporation, a San Diego, California based web analytics company.

Financial terms of the deal were not disclosed.

Urchin is a web site analytics solution used by web site owners and marketers

to better understand their users' experiences, optimize content and track

marketing performance. Urchin tools are available as a hosted service, a

software product and through large web hosting providers. These products are

used by thousands of popular sites on the Internet.

Google plans to make these tools available to web site owners and marketers to

better enable them to increase their advertising return on investment and make

their web sites more effective.

"We want to provide web site owners and marketers with the information they

need to optimize their users' experience and generate a higher

return-on-investment from their advertising spending," said Jonathan Rosenberg,

vice president of product management, Google. "This technology will be a

valuable addition to Google's suite of advertising and publishing products."

The acquisition is subject to customary closing conditions. Google anticipates

that the acquisition will close before the end of April.

Web Analytics Sold to Private Equity Fund

(Reuters) - NetIQ Corp. NTIQ said

on Monday it inked a deal to sell WebTrends, its Web analytics

business, to Francisco Partners for about $94 million in cash.

The sale is expected to close by June 30.

Francisco Partners, a private equity fund, said it will run

WebTrends as a stand-alone company.

WebTrends supplies technology and services to measure and

improve the performance of Web marketing campaigns such as those

run on Internet search providers Google Inc. GOOG and Yahoo

Inc. YHOO.

Greg Drew, WebTrends' general manager, will become president

and chief executive of WebTrends after the sale.

Software maker NetIQ said it is selling WebTrends because it

is not part of its system and security management strategy.

Shares of NetIQ closed down 15 cents to $10.85 on the Nasdaq.

NetFlix Has More Than 3M Subs

(Reuters) - Netflix Inc. NFLX said on Monday it has more than 3 million subscribers to its online DVD rental service, with over 400,000 signing up so far this year and putting it on track to reach its target of 4 million by year-end. Shares of Netflix rose 6.8 percent, or 61 cents, to $9.64 on Nasdaq early Monday afternoon. The Los Gatos, California-based company is in the midst of a marketing drive to protect its dominant market share in the face of competition. Its larger rival Blockbuster Inc. BBI entered the market in August, while Amazon.com Inc. AMZN launched its service in the United Kingdom in December. Netflix Chief Executive Reed Hastings said late last year the marketing strategy was aimed at countering a potential bid by Amazon in the U.S. market. Netflix, which offered the first online subscriber rental service in 1999, reached one million subscribers in February 2003 and surpassed 2 million in May 2004. Blockbuster reported 750,000 U.S. online subscribers earlier this month. ((Reporting by Gina Keating, editing by Richard Chang; Reuters Messaging: gina.keating.reuters.com@reuters.net; 1 213 380 2014))

"How InfoSpace Took Investors for a Ride"

The Seattle Times has a series of in-depth articles on InfoSpace titled “How InfoSpace Took Investors For A Ride”. http://seattletimes.nwsource.com/news/business/infospace/

Ousted InfoSpace Founder in Cohorts with InfoSpace

The Seattle Times is reporting that fired InfoSpace founder and ex-CEO Naveen Jain is reportedly working with his previous company. The article states that Jain’s new company Intelius provides background checks for InfoSpace. InfoSpace had sued Jain and alleged that he misappropriated InfoSpace’s technology after he was ousted from the company. Here is the article from the Seatle Times: InfoSpace has deal with fired founder's new firm By Sharon Pian Chan Seattle Times staff reporter After firing founder Naveen Jain, suing him and alleging he misappropriated InfoSpace's technology, InfoSpace is now doing business with Jain's new company, Intelius. The Internet companies, which sit across the street from each other in Bellevue, have signed a three-year exclusive contract. Jain, who founded InfoSpace in 1996 and Intelius in 2003, confirmed the deal Wednesday. But both he and an InfoSpace spokeswoman declined to discuss the value of the deal or how it will work. When someone requests a background search on InfoSpace.com, the person is connected to the Intelius Web site. The contract marks a new chapter in the hot-cold relationship Jain has had with InfoSpace. The board of directors fired him in 2002. InfoSpace has repeated over and over again that Jain is ancient history to the company, no longer part of InfoSpace. "There's been a line drawn and there's new stuff going on," Jim Voelker, the current chief executive, said last year. A Seattle Times investigation published earlier this week found that in 2000 Jain and other InfoSpace executives boosted the company's stock value with accounting tricks and dubious deals, concealing revenue shortfalls and making "lazy Susan" deals, in which company officials invested in other firms that, in turn, sent money back that InfoSpace could count as revenue. Between 1996 and 2000, Jain had turned the tiny startup, an online directory of e-mail addresses, into the Northwest's largest Internet company, eclipsing even Boeing's stock value. It then took a nose dive with the dot-com collapse. While Jain sold more than $400 million in InfoSpace stock, faithful investors lost billions of dollars. Voelker said the company has new managers and a new direction. In late 2002, InfoSpace's board of directors fired Jain as chief executive officer when he refused to hire Voelker to replace him. Right before he left, Jain sent an e-mail to the entire staff saying he was "disgusted" with the management and board. In the e-mail, Jain called Voelker "unqualified," writing that Voelker had been "out of a job for the last 2 years" and that "his last job was to take nextlink in to bankruptcy." (Voelker left Nextlink, now XO Communications, several years before it filed for bankruptcy.) In the e-mail, Jain also accused a director of insider trading. Three weeks later, Jain started Intelius with several other former InfoSpace employees. He called it a homeland-security and personal-safety company. The Web site sells personal background checks collected from public-records databases. Soon after Intelius was founded, InfoSpace sued Jain and another former InfoSpace employee in King County Superior Court, accusing them of violating contracts that barred them from competing against InfoSpace for two years after they left the company. InfoSpace accused Jain of boasting that he intended for Intelius to replace InfoSpace as an online White Pages service. Jain, in return, claimed that InfoSpace had tried to hack into Intelius' Web site to learn its business plans, and that it was "pounding" the Intelius server with repeated requests in order to crash Intelius' Web site. The judge ruled against shutting down Intelius, and the parties settled the case in December, along with other shareholder litigation. Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com.

Online Casino 888.com Seeks Float in U.K

Reuters reported that online casino 888.com is considering a float in the U.K. at a valuation of $1.6B with CSFB as the banker. The U.K. is reportedly friendlier to online gambling whereas online gambling is strictly forbidden in the U.S.

Blue Nile Facing New Competition

Novori.com has officially launched its website after 8 months of development selling all kinds of diamond jewelry providing fresh competition to Blue Nile (NILE). No doubt there will be new entrants as more and more diamond sales move online but we are unsure what competitive advantage this company has over the more established pure online players such as Ice.com. Don't forget OverStock.

See this write-up about sales of diamonds online http://www.techuncovered.com/diamonds01.html

Top Chinese Online Search Firm, Baidu, Prepares for IPO

RED HERRING indicated in an article that Baidu, the leading online search engine in China is preparing for an IPO on the Nasdaq market this fall. The company has reportedly retained the services of Goldman Sachs and has entered a silent period. The article states that Baidu is seeking a $1B market cap but Goldman Sachs thinks the true valuation is much less. Who can blame management for seeking top dollar given the recent success of Google’s IPO. According to iResearch, Baidu has a 44.7% share of the online search space in China and Google has a 30.1% share. Yahoo! is also a major player in the market with its purchase of 3721.com. Together, the three firms account for 85% of online searches in China. Sohu.com also promises to become a major player in the market and has recently updated its search services. Baidu is reportedly profitable (we will see when the filing comes out) and supposedly charges the equivalent of $0.04 cents per click on its paid search model which accounts for 70% of total revenues. The remaining 30% is split 15-20% for non-query-sensitive text links with enterprise search accounting for the balance. No doubt in my opinion that this IPO will ignite a frenzy when and if it is announced likely enticing other private Chinese Internet firms to IPO. Time will tell but many structural issues remain in the Chinese market that are currently making many of their equities unattractive at the moment following extreme investor interest over the past years. Maybe Baidu can revive interest.

Google CEO on AOL Partnership

At the Bear Stearns media conference, CEO Eric Schmidt stated that the AOL partnership was critical to the success of Google to date and they consider AOL an extremely valuable partner. Given those statements, the CEO just brought to light one of the biggest risks in Google’s business models given that AOL represents about 15% of the companies revenues and that AOL has been extremely active in building out its search verticals, without Google I might add. The decision for AOL would center on whether the present value of the 20 cents they would gain from building and operating their own search engine is greater than the cost of operating the search engine i.e. computing power and salaries to math and engineering PhDs.

Blockbuster To Increase Spend on Onlne DVD Rentals

Blockbuster Inc. BBI, posted better-than-expected quarterly operating profit on Wednesday, and signaled it would pour more cash into an online DVD rental service aimed at battling Nexflix Inc. NFLX.

The top U.S. movie rental chain said declines in rental revenue eased in the fourth quarter as customers reacted favorably to its newly launched online service.

Blockbuster, which recently decided to scrap late fees, said its efforts to attract more customers put it on course to improve profitability and fend off competition from Netflix and other rivals.

The company's stock rose 8 percent on signs that its appears to now be reversing a slide in rental revenues at stores open at least a year.

Even so, Stacey Widlitz, an analyst at Fulcrum Global Partners, said the movie rental business continued to face pressure from retailers, like Wal-Mart Stores Inc. WMT, who are selling cut-price DVDs to prospective movie renters.

To fight that competition, the company said it would spend $120 million on incentives and other promotions to add more online renters this year, more than doubling spending from year-earlier levels.

"It's a fight to the death with Netflix," said Michael Pachter, a Wedbush Morgan Securities analyst, who has a "buy" rating on Blockbuster. Commenting on the results he said: "All the metrics are good."

Excluding special items, Blockbuster posted a profit of 7 cents per share for the fourth quarter, 3 cents better than the average estimate among analysts polled by Reuters Estimates. A year earlier, operating profit was 32 cents a share.

John Antioco, Blockbuster chief executive officer, said the company's recently launched online movie rental service had helped stabilize rental demand as more people signed up to use the service.

Blockbuster, he said, would spend $120 million, more than double what it spent last year, on incentives and other promotions to add more online renters this year.

"Based on the strong results we are seeing and the significant profit opportunities we believe await us, we're going to accelerate our subscriber acquisition investment in Blockbuster Online," he told analysts in a conference call.

The online service launched in mid-August to go head-to-head with online renting pioneer Netflix Inc. NFLX, and other copy-cat subscription services, including one from Wal-Mart.

According to Antioco, online users now number more than 750,000 subscribers, prompting the company to aim for more than 2 million subscribers by the end of the first quarter of 2006.

At noon, shares of Dallas-based Blockbuster were up 50 cents at $9.22 on the New York Stock Exchange, where they scored their biggest single-day percentage gain in 4 months.

Same-store rental revenue fell 2.9 percent in the fourth quarter, a much smaller decline than in the third quarter or the year-earlier fourth quarter, according to the company.

Commenting on its bid for Hollywood, it said it had extended its offers for Hollywood shares and notes through March 24 to allow authorities more time to vet the bid, competes with an already agreed merger deal between Hollywood and Movie Gallery Entertainment Corp. MOVI.

Antioco told Reuters in an interview that Blockbuster would be open to any reasonable resolution to get the deal cleared, but declined to say if that could include shedding stores that antitrust authorities found problematic. Blockbuster expected antitrust regulators to rule on its bid by March 21, he added.

On Friday, the regulators said they needed Blockbuster to provide more information about the bid. Quarterly revenue rose 6.3 percent, to $1.72 billion and rental revenue totaled $1.15 billion, little changed from a year ago.

(Additional reporting by Gina Keating)

GuruNet Latest AdSense Partner

GuruNet Corporation (AMEX: GRU), a leading provider of integrated online reference information, announced today that it has signed an agreement with Google Inc. to include Google's contextual AdSense advertising on its information pages, as well as the integration of Google search into its Answers.com product. "Our revenue stream is based on including advertising alongside the million topics in our library," explained Bob Rosenschein, CEO of GuruNet. "We are pleased to be working with the industry leader and leveraging their broad ad inventory and strong technology."

As a result of the agreement, when Answers.com's visitors require information beyond the site's selected reference content, Answers.com now offers a co-branded, integrated and monetized version of Google's search functionality, allowing users to remain in one place for more of their information needs.

About GuruNet

GuruNet Corporation (AMEX:GRU) operates a leading reference engine, www.answers.com. Founded in 1999 by Bob Rosenschein, GuruNet Corporation (www.gurunet.com) provides patented technology and software tools to access concise information on demand. For additional information, visit www.gurunet.com.

eBay's CFO Has Upbeat Tone at Conference

From Reuters - EBay Inc.'s EBAY Web marketplace business in China is off to a good start this year and the company's overall ability to generate healthy operating margins is "completely intact" despite big investments, eBay's chief financial officer said on Tuesday.

CFO Rajiv Dutta repeated the company's 2005 financial targets set in January and said eBay had 10 million registered users in China.

"(It's been a) strong start to 2005," he said at a Lehman Brothers conference in Half Moon Bay, California, south of San Francisco, which was monitored by Webcast.

San Jose, California-based eBay also said in January it would increase its 2005 investments in key areas, particularly China and its online payment service known as PayPal, from $200 million to $300 million, and would sacrifice some short-term earnings growth to bolster long-term growth strategy.

Of that amount, $100 million -- about 2 percent of eBay's expected global revenue -- is earmarked for China, which eBay expects to be one of its biggest markets in coming years with a population of more than 1 billion that continues to see purchasing power rise as the economy develops.

EBay, which has users of its online buying and selling service in about 150 countries, started making investments in China about 2 1/2 years ago, Dutta said.

Dutta said operating margins, a key measure of profitability, were holding up despite the big investments.

"There is no doubt in my mind that the margin generating capability of this business is completely intact," he said, adding eBay would continue to generate cash flow from its businesses.

Financial analysts who cover eBay have voiced concern over the company's continued ability to grow the online bazaar at a fast pace.

Dutta repeated the company's full-year 2005 outlook provided in January that called for revenue of $4.25 billion to $4.35 billion and earnings, excluding items, of $1.48 to $1.52 a share. An eBay spokesman later said there was nothing new to the company's financial outlook.

EBay's stock traded down about 60 cents, or 1.4 percent, at $41.29 on the Nasdaq in afternoon trading.

Dutta said eBay was positioned for long-term growth and would not be confined to the twists and turns of

quarter-to-quarter financial reporting.

"It's not about the year, not about the quarter ... We have chosen the long term," he said.

eBay (EBAY) Launches Classifieds Web Sites

eBay (Nasdaq:EBAY), the World's Online Marketplace, today announced its launch of online classifieds Web sites in select international markets. Launched on February 28 under the brand Kijiji, the Web sites give people living and working in the same city a convenient, fun and free way to meet, share ideas, trade goods, and find information or things they want locally.

Kijiji is currently available in more than 50 cities in Canada, China, France, Germany, Italy, and Japan. From building friendships and trading large appliances to chatting about the city's best restaurants or looking for a babysitter, Kijiji is designed to help people find what they need. Based on both personal connections and commerce, individuals can list and find items on Kijiji free of charge.

Kijiji is a start-up within eBay created by a small team of entrepreneurial employees. eBay endorsed the experiment late last year. Alex Kazim, senior vice president of new ventures at eBay, is responsible for the Kijiji initiative.

"Kijiji builds local communities online, giving neighbors a way to come together around local needs and interests," said Kazim. "We're excited about making Kijiji the online neighborhood meeting place for local residents in cities around the world."

The launch of Kijiji will not have a material impact on 2005 revenues and is incorporated in eBay's financial guidance as issued in connection with its fourth quarter earnings announcement on January 19, 2005.

Google Takes Wraps off Desktop Search

Google Inc. (NASDAQ:GOOG) today announced the formal launch of Google Desktop Search, a free downloadable application which enables users to search for information on their own computers. Previously in beta, today's 1.0 release adds search over the full text of PDFs and the meta-information stored with music, image and video files. Additional enhancements include support for the Firefox and Netscape browsers, Thunderbird and Netscape email clients and new Chinese and Korean language interfaces.

"Google Desktop Search brings the power of Google search to information on the computer hard drive," said Jonathan Rosenberg, vice president of Product Management at Google. "It's like having a photographic memory of everything you've seen with your computer, right at your fingertips. We're proud to take Google Desktop Search out of beta, and we will continue to extend the utility of desktop search for users worldwide."

In addition to searching a wide range of computer files and email, Google is the first desktop search tool to access the full text of web page history and the only one to search AOL instant messages. Google Desktop Search can also be used to recover accidentally deleted or misplaced information. For instance, a user who unintentionally deletes a Word document or PowerPoint presentation can use the tool to find the text stored in Google Desktop Search. All results are accompanied by cached snapshots of each web page and document so users can access information even if they're not connected to the web or if a document has been deleted.

Google Desktop Search will also provide application programming interfaces (APIs) that enable software developers to create new and innovative applications using the desktop search product. Plug-ins developed with these APIs will be made available for download at http://desktop.google.com/plugins, enabling users to search new content types such as Trillian chats and the full-text of scanned images, such as faxes. More information on the Desktop Search APIs can be found on the web at http://desktop.google.com/apis.

Additional enhancements to Google Desktop 1.0 include a free-standing search box that users can place anywhere on their desktop; making access to desktop and web information faster and easier than before. In addition to enabling users to block HTTPS web pages, Google Desktop Search now also excludes all password-protected documents from Microsoft Word and Excel.

Google Desktop Search is available at http://desktop.google.com. It is currently available for Windows XP and Windows 2000 Service Pack 3 and above. It requires 500MB of disk space, a minimum of 128MB of RAM, and a 400MHz (or faster) Pentium processor is recommended.

Kanoodle Releases Local Target

Privately held Kanoodle said on Monday it released LocalTarget, a Web search advertising product that targets ads to city-specific or local content pages.

The move comes amid massive investments in the local search market by Web search companies like market leader Google Inc. GOOG and its rival Yahoo Inc. <>

Local search tools aim to help Web searchers find information about nearby businesses, both large and small. Local advertising tools aim to help business owners attract potential customers.

"The majority of buying and selling happens locally. As a result, both national and local businesses spend close to $100 million annually trying to reach consumers in specific markets," said Greg Sterling, an analyst at The Kelsey Group.

((Reporting by Lisa Baertlein; Editing by David Gregorio; Reuters Messaging: lisa.baertlein.reuters.com@reuters.net; +1 415-677-2549))

UBS upgrades Yahoo & Google

UBS upgrades Yahoo (YHOO) to buy from neutral with a $41 target, citing valuation made more attractive by "unfounded" search pricing concerns, solid fundamentals, and near-term catalysts. The broker expects YHOO to aggressively expand its Content Match product to compete with Google's (GOOG) AdSense, sees continued strength in branded advertising, expects new distribution and content partnerships, and a ramp in international growth. UBS also upgrades GOOG to neutral from sell on growth in Google.com sites and slower than expected hiring and capex. It says Google.com strength trumps other concerns and shares are fairly valued. UBS has a $190 target.

BofA Supports Yahoo

Banc of America backs its buy rating on Yahoo (YHOO) and says concerns surrounding the 1Q pricing environment are overblown. "Our recent conversations with online advertising buyers coupled with comments from the recent Search Engine Strategies conference in New York reinforce our view that the online ad market, particularly within sponsored search, remains robust," BofA says. YHOO up 2.4% to $33.12. (JHS)

Analyst Says Yahoo to Build/Buy Blog

Internet media company Yahoo Inc. YHOO is likely to build and buy tools that help its users create, publish and search blogs, Susquehanna Financial Group Marianne Wolk said in a note on Friday.

Wolk also said she also expects the company to expand into social networking software, which lets users share and organize content.

Yahoo recently integrated RSS feeds into its MyYahoo home page. RSS, or really simple syndication, allows users to receive content from sources such as news organizations and Web blogs. It also is a way for Web publishers to syndicate their content.

"We believe Yahoo is likely to continue to invest in the blogosphere; we see Yahoo building and buying blog tools and RSS search capabilities to complement MyYahoo's

readership/aggregation service," Wolk wrote in her note.

Wolk added that she expects a potential new advertising market to grow around blog content.

A Yahoo spokeswoman declined to comment.

Google Inc. GOOG, Microsoft Corp. MSFT Web unit MSN, Time Warner Inc.'s TWX AOL and Ask Jeeves Inc. ASKJ each have invested in blogging tools.

Ask Jeeves acquired search capabilities through its Bloglines acquisition in February.

((Reporting by Lisa Baertlein; Editing by Jan Paschal;

Reuters Messaging:

rm:// lisa.baertlein.reuters.com@reuters.net;

E-mail: lisa.baertlein@reuters.com; Tel: +1 415 677 2549))

eBay Accused of Wrongfully Cancelling Options

From Dow Jones--EBay Inc. (EBAY) is being accused in a lawsuit of wrongfully canceling the stock options for employees of its former Butterfields Auctioneers Corp. unit.

EBay, which sold the Butterfields unit in July 2002, was not immediately available to comment on the class-action suit.

In a press release Thursday, the law firms involved in the case said eight plaintiffs filed the suit in San Francisco Superior Court on behalf of all Butterfields employees whose options were canceled, a group of more than 100 people.

The plaintiffs are also alleging that EBay accelerated the final date Butterfields' employees could exercise their stock options.

The plaintiffs are seeking relief, an injunction allowing plaintiffs to continue vesting in the stock options, punitive and other damages and attorneys' fees and costs.

According to the lawsuit, EBay's stock option contracts don't contain a provision allowing EBay to cancel previously granted stock options upon the sale of a unit. The plaintiffs allege EBay knew as early as December 2001 that it was going to sell Butterfields, but continued to grant new stock options to employees, trying to entice them to join Butterfields or stay at the unit.

Shares of EBay were trading down 2%, or 86 cents, at $41.21, in composite activity Thursday afternoon.

The plaintiffs are represented by the law firms of Goldstein Demchak Baller Borgen & Dardarian, Ackermann & Tilajef and Yablonski, Both & Edelman.

-Geoffrey Rogow; Dow Jones Newswires; 201-938-5400; AskNewswires@dowjones.com

Become.com Launches

The founders of product search engine MySimon launched Become.com in beta hopping to attract users with reviews, ratings, and price comparisons. The founders of MySimon,Michael Yang and Yeogirl Yun, sold MySimon to CNET in 1998 for $700M.

Lycos Selects Ask Jeeves for Search

Ask Jeeves(R), Inc. (Nasdaq: ASKJ) and Lycos, Inc., today announced that Lycos has selected Ask Jeeves' algorithmic search technology to power search on Lycos.com. Effective immediately, the syndication agreement will bring Ask Jeeves search to millions of Lycos users.

"The Lycos brand is known for search and we're committed to re-establishing Lycos.com as a leading search site," said Adam Soroca, general manager of search services at Lycos, Inc. "Ask Jeeves' Teoma search technology will deliver outstanding results to users of our new search-centric experience at Lycos.com."

Ask Jeeves, Inc. also syndicates its search technologies and advertising products to other leading websites, including, InfoSpace, BellSouth, Mamma.com and CNET Networks.

"Lycos is a great addition to the list of sites powered by Ask Jeeves, and we look forward to bringing our differentiated search technology to millions of Lycos users each month," said Jim Lanzone, senior vice president of search properties at Ask Jeeves.

ValueClick Search division has released a free XML-based system

ValueClick, Inc. (NASDAQ:VCLK) today announced that its ValueClick Search division has released a free XML-based system that enables clients to use automated bid management platforms to manage pay-per-click campaigns on Search123 (http://www.search123.com) and Simpli (http://www.simpli.com).

The Client Optimization Agent (COA) enables advertisers and their agencies to access campaign management features on Search123 and Simpli using proprietary or third-party bid management platforms that optimize paid search campaigns. The real-time system, available without charge, enables clients to access their performance metrics and manage their titles and descriptions, tracking URLs and keywords through a back-end interface.

Built on ValueClick's core network infrastructure, the COA system is customizable for each client's specific data requirements and is highly scalable to meet the needs of even the largest keyword search campaigns. In addition to the technology, ValueClick Search has a team of account managers dedicated to providing clients with assistance in the configuration and ongoing use of their COA accounts.

"We are pleased to provide both the technology and the service to support clients seeking to automatically manage their Search123 and Simpli keyword campaigns," said James Beriker, general manager of ValueClick Search. "The COA is the first in a series of new tools and enhancements designed to significantly improve our clients' management of their keyword campaigns within their return-on-investment and other key performance metrics."

The announcement of the COA follows yesterday's announcement of the re-branding of ValueClick's paid search business as ValueClick Search, and the introduction of Simpli.

Netflix (NFLX) is prepared to sacrifice profits

From Reuters - Online DVD rental leader Netflix Inc. NFLX is prepared to sacrifice profits for as long as five years in order to win up to 20 million U.S. Subscribers and fend off major rivals such as Blockbuster BBI and Amazon.com AMZN, its CEO said.

Chief Executive Reed Hastings said Netflix, the pioneer of online DVD rental, could capture as much as 20 percent of the U.S. market by extending the strategy it embarked on in October to run at breakeven while spending heavily on marketing.

"Correct," Hastings said when asked if he was prepared to sacrifice profitability for as much as five years in order to reach 20 million customers, up from 2.6 million currently. "That's true. We haven't given any guidance on it so therefore it's possible," he said.

Hastings was speaking to a roomful of reporters at the Reuters Technology Summit in San Francisco.

China’s net users to grow 30% to 134 million by end of 2005.

This is according to research firm Analysis International. The firm pegs China’s Internet users at 103 million at the end of 2004 versus 94 million estimated by the China Internet Network Information Center. The CINIC has been the most widely followed source for Chinese Internet usage trends. Nonetheless, the forecast will solidify China’s position as the second most populous Internet nation. No wonder why eBay, Amazon, IAC/InterActiveCorp, Google, and Yahoo!, in addition to other major offline U.S. companies are racing to gain a foothold in this market. All prudent moves in my view as long as structural and payment issues subside in the coming years. Plus remember that the Chinese government has full authority to close any firm it thinks violates Chinese policies and standards, especially companies that control mediums – hint, hint, Yahoo and Google.

Amazon.com (AMZN) Extends Web Services to Canada and France

Web developers can now develop applications for all of Amazon’s six worldwide branded sites.

Baazee to be fully integrated into the eBay (EBAY) Platform by June

Avnish Bajaj, co-CEO of Baazee.com stated that he expects Baazee to be integrated into eBay by the end of the second quarter [http://www.zdnetindia.com].

Integration into eBay exposes Indian sellers to more buyers, allowing for increased trading velocity. At eBay’s most recent analyst day, Meg Whitman stated that India is not a priority at the moment as is the case with eBay EachNet in China. She gave the impression that no significant capex would be outlayed for operations in India.

Yahoo! (YHOO) Expands Image Search Index with 1.5 Billion Images

Yahoo! also added new features such as transformed queries. See the full article here:

http://www.searchenginejournal.com/index.php?p=1332

MSN Expands Image Search with PicSearch

MSN beefs up its sub-par image search feature with PicSearch’s image database.

MSN Search is catching up with Yahoo! and Google one step (search vertical) at a time.

Daum to Buy Online Auctioneer Onket

Daum communications corp., S. Korea’s second largest Internet portal said Thursday that it plans to acquire online auctioneer Onket for 4.25B won ($US4.2M) in an apparent move to become more competitive with eBay’s Internet Auction which has 10M users in a market with 36M Internet users. Daum will acquire a 90% stake in Onket from Inicis.

FindWhat (FWHT)? Finds a disappointment for Q1 and FY2005

Search firm FindWhat.com (ticker: FWHT) announced Q4 results that matched the consensus EPS estimate but missed the consensus revenue estimate. FWHT also provided guidance below consensus revenue and earnings estimates for 2005. The stock got swiped by 23% in subsequent trading. Details and comments:

Q4 Results (all percentage changes and comparisons are year on year, unless stated otherwise)

• Revenue up 179% to $59 million (including acquisitions), versus consensus of $63 million.
• Organic revenue growth was 14%.
• FWHT claimed that it eliminated traffic that would have generated over $70,000 of pay-per-click revenue per day due to its low quality. The company is positioning itself as a guarantor of traffic quality to merchants.
• Paid click-throughs were 251 million, up 12% from 224 million in Q3.
• Espotting, the European contextual advertising business that FindWhat acquired in July '04, contributed $29 million of revenu, up only $1 million from Q3.
• Espotting EBITDA margin was 14.5%.
• EBITDA of $11.5 million up 94%.
• GAAP-basis EPS was $0.16 excluding charges and tax benefit, in-line with consensus of $0.16.
• Balance sheet: cash and equivalents at end-quarter were $54 million.

Q1 Guidance

• Revenue of $55 - $59 million versus consensus of $63 million.
• GAAP-basis EPS $0.08 - $0.11 versus consensus of $0.20.
• EBITDA of $8 - $10 million.

Full Year 2005 Guidance

• Revenue of $250 - $270 million, versus current consensus of $277 million.
• GAAP-basis EPS of $0.53 - $0.69 (mid-point $0.61) versus consensus of $0.81.
• EBITDA of $45 - $54 million.

BlowSearch Hires Kanoodle Exec.

Metasearch engine BowSearch (www.blowsearch.com) hired a former Kanoodle business development executive, Joseph Holcomb, to help grow their business. In his role at Kanoodle, he established a network of over 700 B2B referral partnerships, which supplied thousands of advertisers to Kanoodle, according to press reports.

Here is a description of this upcoming search engine from their wesbite:

BlowSearch has been a concept that has started back in 1999 to only recently be realized. Our mission is to offer you a one-stop location for your entire search needs. No longer will you need to research several search engines. Simply use our engine, and let us pull data from some of the top search engines across the Internet and provide you with a simple and concise report with all of your results. When you click on one of the results we open a new window for you to maintain your report so that if the first one you clicked on was not correct you can close that window and select another result quickly without wasting any time. We will consistently add more features and data to our engine to help improve results. We have purposefully kept the graphics small on our site so that the page loads fast; after all, you want data, not graphics.

We consider ourselves a "Super-Meta PPC" search engine. Other meta engines only pull from four or five engines due to programming limitations. Simply put, the more engines you pull from, the longer it takes. Through our extensive infrastructure and technology, we are able to pull from many engines simultaneously, infact we currently pull from around 20 engines and offer a blended result based on relevancy giving our visitors the best results the internet has to offer.

We hope you enjoy our engine, if you have any suggestions, please email our Webmaster at webmaster@blowsearch.com