SlideShare, the PowerPoint social network backed by Dallas Mavericks owner Mark Cuban and others, has closed on a $3 million A round led by Venrock, the company announced Thursday.

David Siminoff, a general partner at Venrock, will get a seat on SlideShare’s board of directors in the wake of the funding.

SlideShare, which competes against document-sharing sites like Scribd, SplashCast and SlideBoom, said it plans to use the funding to expand its operations in San Francisco, develop new products and add customers.

The company, previously based in Mountain View, California, said more than 300,000 presentations have been posted on its site, which also accepts OpenOffice and PDF presentations.

In addition to the Venrock financing, the funding round includes angel investments from Friendster founder Jonathan Abrams, Hal Varian, chief economist at Google, and Mr. Cuban, who sold Broadcast.com to Yahoo in a $5 billion stock deal in 1999.

SlideShare’s advisory board includes: Guy Kawasaki, an early Apple employee and founder of Truemors; Ross Mayfield, co-founder of Socialtext and Mr. Varian.

“Millions of presentations are shared every day across the globe; presentations have become the primary way to illustrate your business idea,” SlideShare Chief Executive and co-founder Rashmi Sinha said in a statement. “The Web and rise of social networking has added new dimensions-–users now have the access and ability to share ideas on an enormous scale.”
 
Appropriately enough, a presentation was posted on the SlideShare blog explaining the funding (http://blog.slideshare.net/).

The participation of Google, Intel and three cable leaders in a $14.5 billion deal to deploy a high capacity wireless network in the U.S. will rejuvenate a technology that seemed to be losing steam, experts say.

<?xml:namespace prefix="o"?>The network which is based on WiMAX, a wireless broadband technology, will be co-owned by Sprint Nextel, Clearwire, Google, Intel, Comcast, Time Warner Cable, and Bright House Networks. (see Tech Consortium Bids $14.5B on WiMAX)

The deal brings Google a proponent of open mobile networks along with its Android mobile operating system, and its growing following of mobile application and device developers into the WiMAX sphere.

It also brings cable operators Comcast, Time Warner Cable, and Bright House – firms that have long sought differentiated wireless services to better compete with AT&T and Verizon.

“Everyone involved in this deal will have to stimulate innovation from the partner communities to make people want to use the network,” said Tim Farrar, president of Telecom Media and Finance Associates.

“Having more capacity than any other wireless network is only useful if you have the applications and the devices to make optimal use of it,” he said.

WiMAX offers higher bandwidth speeds at much longer distances than cellular data services deployed by both AT&T and Verizon. It in fact competes primarily with wireline services such as DSL and cable modems.

And both DSL and cable modems are very well entrenched and relatively inexpensive so Clearwire, the name inherited by the new WiMAX firm, will have to offer more than just bandwidth, Mr. Farrar said.

The cable operators have made a number of forays into the mobile world. They have purchased spectrum at auction, and done reseller deals with Sprint, but both efforts have remained in limbo. So the cable operators could be looking for video related wireless applications.

“This deal creates as many opportunities for the cable operators as it does for the WiMAX ecosystem, so it has major benefits both ways,” said Rehan Jalil, CEO of WiChorus, a San Jose-based maker of core WiMAX gear. “This influx of investment will spur innovation and opportunities for smaller vendors like us.”

To date a high percentage of WiMAX deployments have occurred in developing countries where the applications have been fairly basic focusing mainly on unvarnished connectivity.

But a major WiMAX network in the U.S. with significant financial backing from market leaders such as Intel, Google, Comcast, and Time Warner Cable could up the ante significantly.

“In many areas WiMAX has been a cost-effective substitute for basic wireline but the Clearwire deal will drive a far more sophisticated ecosystem of partners and differentiated applications,” said Danny Locklear, director of wireless business development for Nortel.

“We see a much more accelerated maturity level of devices that could be in anything from laptops to cars. This opens up the door for very innovative applications,” he said.

Old media is still having trouble dealing with the new era. That was the strongest message at the Argyle Executive Forum on Leadership in Media in New York Wednesday.  A stellar group of media executives mostly associated with “old media” lamented the end of the days of fat profits and the lack of a clear new business model in the age of the Internet.

 
Norman Pearlstine of the Carlyle Group told attendees that newspapers enjoyed a brief period of monopoly that attracted investors and convinced many families to take their businesses public. However, he said, for most of its history, the newspaper business did not enjoy the double-digit margins that characterized the 1980s and 1990s. “At the end of the 19th century there were 29 newspapers in Chicago,” he said.

Mr. Pearlstine said that profits soared when afternoon papers died off in the 1960s and 1970s as commuting and reading habits changed. Nowadays most cities have one newspaper, maybe  two, often operating under an agreement that lets them share resources like a printing plant.

But Mr. Pearlstine, a former editor-in-chief of Time Inc. and former executive editor of The Wall Street Journal, said he saw more hope in magazines, many of which continue to thrive. He noted that in a recent year, Time Inc.’s People magazine alone provided as much as 40 percent of the entire magazine division’s EBITDA. He said that new magazines continue to thrive in the UK, where five of the top ten circulation winners are less than 10 years old. He said one reason is that Brits (and most other Europeans as well) buy 90 percent of their magazines from newsstands, while in the U.S. most magazines are sold by subscription, making startup costs and test runs far more expensive.

Gordon Crovitz, a former publisher of The Wall Street Journal, reiterated a theme heard throughout the morning session that while readers were moving to the web, the ad revenues being generated online were just a fraction of what came out of the old media models. That raises a question bloggers and advocates of citizen journalism are loathe to answer. Who will pay for the investigative and international reporting that feeds the blogs and the “fair use” sites like Google?

Thomas Rubin, chief counsel for intellectual strategy at Microsoft, says nothing less than a change of attitude will create an environment where artists and producers are paid fairly for their work. Mr. Rubin dismissed web advocates who say content must be free. Citing examples of unhappiness with Internet distribution from web celebrity musician Robert Rich to Radiohead, Mr. Rubin said, “The facts suggest that the new ecosystem as presently configured is in fact, not able to adequately sustain grassroots creators.”

Mr. Rubin argues that Internet players must become stewards of intellectual content, “acting for the interests of the ecosystem as a whole rather than just our own narrow businesses.” In addition to supporting initiatives like Creative Commons, the non-profit licensing effort, he urged attendees to enforce copyright and find ways to reward creators of content or much of that content will dry up.

Playboy chairman and CEO Christie Hefner presented the most upbeat example of an old media company that has made the adjustment. Ms. Hefner says Playboy was the first magazine to go onto the Internet and that her company has worked consistently to keep up with technological change. Pointing to Playboy’s investments in television, Internet and now mobile distribution, she says it has enabled her company to keep the 50-year-old brand fresh and reach new generations of younger men and women.

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Microsoft's acquisition appetite is not limited to its $33 per share offer for Yahoo, a report says.

The software giant dispatched investment bankers to gauge whether Facebook would entertain an offer, according to Dow Jones’ AllThingsD web site.

Microsoft owns 1.6 percent of the site after its $240 million investment in 2007 put a $15 billion on the social networking site.

The report said no negotiations are now underway between the two companies. Microsoft’s online-offline strategy of letting users tap key data like contacts wherever they are leans heavily on a social networking component.

Microsoft broke off negotiations with Yahoo over the weekend after its stock and cash offer was rejected. The software company initially bid $31 per share, or $44.6 billion, when it went public with the offer in February.

Tel Aviv startup Prime Sense, maker of a system-on-a-chip that lets TVs or computers see and respond to users’ movement, has closed on a $20.4 million funding round, the company said.

The company’s second round of financing, which brings its total venture capital haul to $29.4 million, was led by Canaan Partners with participation from continuing investors Gemini Israel Funds and Genesis Partners.

The runaway popularity of Nintendo’s Wii game console, which uses motion-sensitive hand controllers and a balance board (to be released in the United States later this month), has helped fuel a move toward next-generation controllers. Among the companies vying to be the brains behind “Minority Report”-style computing are Israeli rival 3DV systems and Sunnyvale, California-based GestureTek.

Hrach Simonian, an investment analyst at Canaan Partners, said one theme the venture firm venture firm is pursuing is how to bring innovation on the input side to digital devices that have made advances elsewhere. Another Canaan portfolio company is N-trig, whose technology lets users manipulate images on a computer screen with gestures or a stylus.

“The Wii and [Apple’s] iPhone have been great marketing pushes for this space,” he said. “We’re really trying to lead the next-generation of user interface interaction,” he said.

Mr. Simonian said Prime Sense plans to sell its reference design, which includes patented algorithms, to companies that could incorporate them into game consoles, computers, medical devices and media control centers. Prime Sense has cut deals with major electronics firms with announcements expected in 2009.

Three-dimensional interaction between man and machine, demonstrated by Prime Sense, has been envisioned in science fiction, Mr. Simonian noted.

“If you’ve seen the movie “Minority Report,” it’s the kind of gestures Tom Cruise used to move things around the screen,” he said.

Prime Sense sees a broad range of potential uses for its technology, from helping a golfer fix a slice in his swing to letting a couch potato use a gesture to turn on the television to guiding the physical therapy of a patient.

Sprint Nextel and Clearwire on Wednesday announced the formation of a new wireless carrier that will be co-owned by a consortium of industry leaders including Google, Intel, Comcast, Time Warner Cable, and Bright House Networks.

<?xml:namespace prefix="o"?>The new carrier, which will inherit the Clearwire name, will take charge of a nationwide wireless broadband network based on WiMAX, a relatively untried wireless technology.

“This helps Sprint immensely because with the distraction of WiMAX out of the way, they can get back to focusing on their core business,” said Joe Nordgaard, director of wireless consulting firm Spectral Advantage. “But this is a home run for Craig McCaw and Clearwire.”

Craig McCaw, the wireless magnate who founded Clearwire, is expected to serve as the new Clearwire’s nonexecutive chairman of the board.

The new Clearwire will have a startup value of $14.5 billion. Sprint, the No. 3 U.S. mobile carrier, will contribute $7.4 billion worth of WiMAX-related assets and own 51 percent of the new Clearwire.

Clearwire will contribute the total value of its business, which is estimated at $3.9 billion. That translates into a 27 percent stake in the new Clearwire.

Both Sprint’s and Clearwire’s contributions are based on the new firm’s target share price of $20.

Comcast will invest $1.05 billion, while Intel Capital will invest $1.0 billion in addition to its previous investments made in Clearwire.

Time Warner Cable will invest $550 million, while Google will invest $500 million, and cable company Bright House Networks will invest $100 million.

The consortium’s total investment of $3.2 billion will give it a 22 percent stake in the new Clearwire.

It is unclear how much of Sprint’s WiMAX-related debt will be transferred to Clearwire.

The amount of debt Sprint gets rid of could affect its attractiveness as a takeover target. Rumors that German giant Deutsche Telekom is interested in acquiring Sprint surfaced earlier this week. (see Deutsche Telekom Eying Sprint Purchase)

The new Clearwire board will include Sprint CEO Dan Hesse, Comcast CEO Brian Roberts, and Time Warner Cable CEO Glenn Britt. 

Sprint and Clearwire have pursued slightly different WiMAX paths. Clearwire has a single gear supplier, Motorola, while Sprint has named Nokia, Motorola, Samsung, and Intel as its main suppliers. (see Sprint, Nokia Ink WiMAX Deal)

“From a standards perspective we were both headed in the same direction and we had one supplier (Motorola) in common,” said Atish Gude, Sprint’s senior vice president, mobile broadband. “As to what vendors we pick for our joint venture, that will have to be decided. I don’t think there will be a major reshuffling.”

Sprint’s WiMAX spectrum properties will account for about 70 percent of the network's coverage area, while Clearwire’s will account for about 30 percent.

“This shows the world that a very large, well-funded carrier has committed to WiMAX and will drive the standard and the ecosystem,” Mr. Gude said. “It expands the marketplace for infrastructure and chip set suppliers around the world.”

Speakers at a U.S. Federal Trade Commission hearing on Tuesday said it is difficult to pin liability for the worsening problem of text message spam on any particular group because of the number of third parties in the business.

<?xml:namespace prefix="o"?>“These affiliates could be 19-year-old kids in a garage in Paducah, and clearly you need to sue people that your resources can best impact the problem,” said William Haselden, Florida Assistant Attorney General.

The affiliates include aggregators that provide communications gateways between content providers and carriers, firms that provide billing systems, advertising networks, and content providers.

The Florida AG targeted the carriers initially because they get “the lion’s share of the revenues,” Mr. Haselden told an FTC town hall audience.

“But we have also looked at the aggregators, billing aggregators, and advertising networks,” he said. “But you need to deal with the people closest to the subscribers and the carriers are the ones that bill for this.”

Despite the lessons learned on the PC-based Internet, cell phone service subscribers are being bombarded with unsolicited ads for mortgages, erectile enhancers, cheap drugs, and adult content.

Short codes, an opt-in technique used by carriers to manage third party access to subscribers, is proving to be inadequate. Carriers lease the use of short codes for services such as ordering ringtones, TV lotteries, and voting etc. that require the subscribers’ assent.

Messages sent via short codes instead of complete telephone numbers are generally billed at a higher rate.

But the process which is normally handled by multiple specialists such as SMS aggregators, billing specialist, ad networks, and carriers can spring leaks in a number of places.

For instance the short codes can fall into the wrong hands, or the legitimate user of the short codes changes his or her approach, and the result in either case is frequently mobile spam.

“We regulate the process as much as we can but it is difficult for us to monitor changes made by the content provider subsequent to the launch of the campaign,” said Alykhan Govani, business development manager for MX Telecom, a New York City based SMS aggregator.

And many times the perpetrators of text spam are outside the U.S. and frequently out of the reach of carriers, aggregators, ad networks, and U.S. law enforcement.

“International cooperation is the hardest part. We have to convince other countries that text spam is not good for them or us,” Mr. Haselden said. “It is important that we get a handle on this.”

Microsoft is “moving on,” the software company’s Windows Live chief said Tuesday, but the failed Yahoo merger echoed through the media and equity markets as investors chided Yahoo Chief Executive Jerry Yang.

Shares of Yahoo remained buoyant Tuesday, climbing $1.27, or 5.2 percent, to $25.64 in late morning trading, suggesting that Wall Street believes a deal still could be revived. In negotiations that broke down Saturday, Microsoft had offered $33 per share for the Internet company, while Mr. Yang had staked out a $37 per share price.

Brian Hall, general manager of Microsoft’s Windows Live business group, acknowledged that a merger could have “accelerated” growth in Microsoft’s online businesses, but, “echoing the letter Microsoft Chief Executive Steve Ballmer sent to Mr. Yang Saturday ending talks, he said, “We’re moving on from the Yahoo discussion.”

Speaking at the Merrill Lynch Technology Conference in New York City, Mr. Hall declined to speculate on the possibility that Microsoft could shift its attention from Yahoo and make an offer for Time Warner’s AOL unit, but acknowledged that the firm’s e-mail, portal, and instant-messaging businesses retain strong customer bases.

After the merger breakdown, Mr. Yang drew a sharp rebuke from a top shareholder, according to a report in The New York Times. “I am extremely angry at Jerry Yang and at the so-called independent board,” said Gordon Crawford, portfolio manager for mutual fund firm Capital Research Global Investors. Capital Research has about 6 percent of shares outstanding, based on filings as of December 31.

Should Yahoo fail to reignite growth or complete a merger, Mr. Yang and fellow board members could come under intense questioning at the company’s annual meeting scheduled for July 3.

Microsoft first went public with an initial stock-and-cash offer valued at $31 per share, or $44.6 billion, February 1.

In remarks to investors, Mr. Hall said Microsoft is pursuing a vision of integrated computing where a user can move from a social network online to an Outlook email application offline or from a personal computer to a mobile phone and still have access to a unified address book and be able to respond to a message by typing or through voice.

German communications giant Deutsche Telekom is in preliminary talks to acquire Sprint Nextel, the No. 3 U.S. mobile carrier, according to published reports, but no formal offer has yet been made.

<?xml:namespace prefix="o"?>The talks, rumored to be taking place since March, have intensified, according to Monday’s Wall Street Journal.

The merger of T-Mobile USA, Deutsche Telekom’s U.S. unit, and Sprint Nextel would vault the merged entity into first place among U.S. mobile carriers, ahead of AT&T and Verizon Wireless.

While the number the No. 1 slot has immense competitive advantages, there are technical and regulatory problems that could dampen the German giant’s enthusiasm for the acquisition.

“You would be going from four players with 85 percent market share to three, and you would have a foreign buyer purchasing a very valuable U.S. property,” said Matthew Thornton, telecom analyst at Avian Securities LLC. “Those two things would draw regulatory attention.”

Sprint currently holds just over 20 percent subscriber market share while T-Mobile USA, the No. 4 carrier, has about 11 percent. The merged entity will own nearly 31 percent of the U.S. mobile subscriber base.

No. 1 AT&T would become the second largest in terms of subscriber totals with 28 percent market share, and Verizon Wireless would be third with 27 percent share.

Because Germany is a U.S. ally, the acquisition would not attract the kind of scrutiny perhaps a Chinese firm would draw, he said, but the issue could be a potential obstacle to the merger.

The technical problems would be far more difficult and expensive to solve than the regulatory problems, according to industry experts.

Sprint and T-Mobile have followed divergent technology and frequency paths, so the merged entity will have to manage an alphabet soup of disparate network technologies including GSM, GPRS, CDMA, iDEN, UMTS, and WiMAX.

“When Deutsche Telekom puts this disparity on the table and they add some of the debt issues, it will be difficult for their shareholders to swallow this proposal,” said Joe Nordgaard, director of wireless consulting firm Spectral Advantage.

Despite the obstacles, Mr. Nordgaard believes that Deutsche Telekom should pursue the acquisition because T-Mobile needs to close its growing technology and spectrum gap with AT&T and Verizon.

“In another few years most of the carriers will upgrade to LTE and the technical disparity will be less of an issue, but Deutsche Telekom will have to convince a lot of people of the short term wisdom of the purchase,” Mr. Nordgaard said.

Shares of Yahoo tumbled Monday after Chief Executive Jerry Yang fended off Microsoft’s three-month courtship of the company he co-founded.

In the aftermath, investors, employees and executives were left to consider an uncertain aftermath.

A research report from a team of UBS analysts concluded that:

    Google had triumphed because “its most threatening competitor,” Microsoft, had failed to achieve the scale it sought.

    Microsoft still needs Yahoo to compete against Google and could revisit the deal barring a serious search alliance between Google and Yahoo.

    Yahoo will face shareholder lawsuits and will have to drive initiatives to push up its stock price to placate skeptical investors.

    AOL hypothetically could become a smaller-scale merger partner for Microsoft, but the struggles of the Time Warner unit make any such deal in the near term unlikely.

In a letter to employees after Microsoft withdrew its offer, Mr. Yang sought to rally the troops, acknowledging that Yahoo would remain in the spotlight and revealing that he and Chief Financial Officer Susan Decker plan to tour company offices as the company refocuses on growth strategies.

In late morning trading on the Nasdaq, shares of Yahoo fell $4.14, or 14.4 percent, to $24.53, well above the $19.18 close before Microsoft announced its $44.6 billion stock and cash offer on February 1.

Fred Wilson, a blogger and venture capitalist at New York’s Union Square Ventures, polled readers on the likely closing price of Yahoo at the end of the trading day Monday. Their conclusion: $22.

Microsoft’s offer initially was valued at $31 per Yahoo share, but Microsoft Chief Executive Steve Ballmer raised the offer to $33 per share. Yahoo, however was holding out for about $37 per share.

In a letter to Mr. Yang, Mr. Ballmer said Microsoft decided not to stage a proxy fight because Yahoo had threatened, during the hostilities, to conclude an alliance with Google to outsource search advertising that would have made Yahoo an “undesirable” acquisition.

Such a move, Mr. Ballmer wrote, “would fundamentally undermine Yahoo’s own strategy and long-term viability” by sending advertisers to Google instead of Yahoo’s own Panama search system.

Though Microsoft could return to its previous strategy of growing its online business through partnerships and small acquisitions, the UBS analysts said such a “go-it-alone” program would allow Google to extend its lead.

Alternatively, Microsoft could borrow the strategy Oracle used in its successful hunt for BEA Systems by coming back to the deal at a later date. “We believe that the door is still open for a Microsoft and Yahoo tie-up barring any interference from Google,” the report said.

So Steve Ballmer finally said “no!”
It’s not the end of the story, to borrow a line from “The Matrix,” but just the beginning for both Microsoft and Yahoo. In the coming weeks, both companies will have to regroup and rethink their strategies for the long term. And you could argue that by deciding Saturday not to raise his final $33-a-share or $47.5 billion offer for Yahoo or pursue a hostile takeover, Mr. Ballmer has already reset his company’s path to the future.

Had he acquired Yahoo, Microsoft would have gained the 1.36 billion Internet searches conducted via Yahoo, a distant second to Google’s 4.5 billion, according to figures for February from Nielsen Online.  Add 860 million MSN searches, and a Microsoft-Yahoo deal would have cornered almost 29 percent of Internet searches vs. 58.7 percent for Google. Presumably, Yahoo’s other popular offerings, including its financial data services, would have given Microsoft some of the credibility it lacks as an Internet player and a vast increase in its online audience. Now Microsoft will have to either go it alone – or find another target to fill the considerable gaps in its armada.

Yahoo shareholders are likely to feel the pain of Mr. Ballmer’s decision in the coming days as its share price drops from the levels that anticipated a deal with Microsoft. For Yahoo CEO Jerry Yang and his management team, the only apparent new strategy is cooperation with Google, which dominates Internet advertising. Yahoo, which has struggled to earn as much revenue as Google from serving Internet ads, recently tested having Google handle some of the advertising. The results were apparently significant enough that the companies have extended the trial. But as Mr. Ballmer pointed out a letter to Mr. Yang Saturday, “..it would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. “

However, cooperation with Google may be limited by anti-trust concerns. A combination of Google and Yahoo searches would bring more than 80 percent of Internet searches under the control of one company. The U.S. Justice department has already queried both companies on their cooperation.

Then there’s AOL, for which Time-Warner is trying to find a new home. Yahoo talked to the media giant but discussions apparently did not get very far with Microsoft looming in the background.  If Yahoo’s shares drop, the two companies may find a deal that would combine Yahoo and AOL. However, AOL has suffered a sharp drop in online ads and is struggling to make the transition from a walled garden to an open Internet player.  Some experts think integrating the two companies would be even more difficult than a Microsoft-Yahoo combination.

There are probably a lot of people at Microsoft who are happy the Yahoo deal did not go through. But the company has not made much progress in denting Google's dominance of mindshare about the Web.  Maybe now the Microsoft will redouble its efforts to break away from its reflexive proprietary vision to one that embraces the openness and agnosticism of the Web. For a company that is the No. 1 seller of software in the world, that may be the most difficult deal of all to complete.

The clock ticked loudly for Microsoft and Yahoo Friday as the worlds of technology and finance waited for a denouement in their sometimes- stormy three-month courtship.

Both camps were silent, but based on strength in Yahoo shares, one analyst, based on admittedly back-of-the-napkin math, calculated that Wall Street gives a 61 percent chance that a deal will close at $33.

“Obviously, this is a simple model, but the market is treating Yahoo stock in an optimistic way,” said Robert Becker, an analyst with Argus Research.

Mr. Becker’s formula is based on a current price for Yahoo of $28 and a price, if no transaction takes place of $20.

Readers of tea leaves were busy trying to discern the silence from both camps after The Wall Street Journal reported that talks had “intensified” between the two companies in an effort to reach a deal. As of late Thursday, The Journal reported, Microsoft Chief Executive Steve Ballmer was “leaning toward” a proxy fight to seize Yahoo.

Wall Street took the silence as a bullish sign and pushed Yahoo’s shares up $1.08, or 4 percent, to $27.92 in afternoon trading. After languishing around $19 at the end of January, Yahoo stock has been buoyed by the Microsoft bid worth $31 a share, or $44.6 billion, when it was announced on February 1. Microsoft stock slipped $.24, or .8 percent, to $29.16.

Yahoo, led by co-founder and Chief Executive Jerry Yang, has consistently held that the cash and stock offer, now worth less than $30 per share, undervalues the company. In a bid to slip Microsoft’s grasp—or at least force it to raise its bid--Yahoo has cozied up to Internet rival Google, applying its advertising system to Yahoo’s Internet search as a way of squeezing out more revenue.

But Microsoft has used the takeover bid as a cudgel. By threatening to walk away from the deal, Microsoft is exerting pressure on Yahoo shareholders who could see the stock price tumble if the deal is abandoned.

Mr. Becker noted that even if Microsoft and Yahoo agree to the outlines of a deal, it could take some time to finalize it.

“It’s one thing to get together to hash out a price, but an actual contract, with all the stipulations that have to be addressed –that could take a long time,” he said. “How much time does it usually take to do due diligence? It typically takes longer than a Kentucky Derby weekend.”

In the equivalent of an online sale gone horribly wrong, mercantile giants eBay and craigslist are at each other’s throats in what promises to be a long-running legal drama.

The initial salvos include the airing of a public version of the lawsuit filed last week by eBay and postings on the craigslist blog.

Craigslist.org, the online classified site, is tied together with eBay, the giant online auctioneer, through an August 2004 investment in which eBay acquired 28.4 percent of the company’s outstanding stock. The other shareholders are founder and Chairman Craig Newmark and Chief Executive James Buckmaster.

Ties between the companies, however, began to fray in June 2007 when eBay launched Kijiji, an online classified site that until then had been limited to foreign markets—in the United States.

Within two weeks of the rollout, Mr. Buckmaster sent a letter to eBay Chief Executive Meg Whitman, saying “we are no longer comfortable having eBay as a shareholder.” In response, Ms. Whitman said eBay was not interested in selling out, but stood ready to buy the rest of craigslist.

In the fall of 2007, the lawsuit said, Mrs. Newmark and Buckmaster, comprising the entire board of directors, held a series of meetings to discuss the “potential threat of an unwelcome takeover” and adoption of a “poison pill” designed to make a hostile takeover excessively costly for a would-be acquirer. The poison pill and a stock issuance that diluted eBay’s interest to 24.85 percent of outstanding shares were approved in January, the lawsuit said.

Also approved was a right-of-first-refusal provision that eBay said would bar it from selling its stock to anyone not controlled by Mrs. Newmark and Buckmaster.

In a blog posting on Wednesday, meanwhile, craigslist portrayed eBay as a disgruntled stockholder.

“Sadly, we have an uncomfortably conflicted shareholder in our midst,” the blog said, “one that is obsessed with dominating online classifieds for the purpose of maximizing its own profits.”

In a blog post last week, the craigslist blog said that eBay has “absolutely no reason to feel threatened here—unless of course they’re contemplating a hostile takeover of craigslist, or the sale of eBay’s stake to to an unfriendly party. In which case, they’re out of luck.”

AT&T on Thursday announced that its long anticipated broadcast style mobile TV service will debut on Sunday on Qualcomm’s Media FLO USA network.

<?xml:namespace prefix="o"?>Programming on AT&T Mobile TV with FLO, which will cost subscribers $15 per month, will run the gamut from simulcast and time-shifted TV programs to news, movies, sports, and concerts.

But AT&T is entering a very disappointing market. Mobile TV has emerged very slowly all around the world, but particularly in the United States where just 2.1 million subscribers have tried it to date.

And AT&T did not seem to be in a hurry to launch the service. AT&T’s agreement to market the service on Media FLO was first announced in February 2007 with a launch planned for later that year.

But AT&T missed its deadline even as rival Verizon Wireless launched its own broadcast mobile TV service on Media FLO in March 2007.

“AT&T Mobile TV was a brand new service on a brand new network, [and] like with anything we do, we wanted to be sure that we delivered an unmatched, high-quality offering,” said AT&T spokeswoman Jenny Parker.

Media FLO has significantly expanded their network in the past year, she said, and AT&T is only now able to offer its service in 58 of its markets.

“The market has been so slow that AT&T clearly did not see any enormous urgency to match Verizon,” said Tim Farrar, president of Telecom Media and Finance Associates. “Skepticism about mobile TV is a lot more widespread now that a year ago, and the hype has cooled even among mobile TV vendors.”

Broadcast mobile TV, which involves over-the-air reception and channel changing, has attracted only 2.1 million subscribers out of a total of 226 million in the U.S., according to M:Metrics.

AT&T blames the slow adoption of mobile TV in part on the quality of the content that is being offered.

“Consumers just aren't watching re-hashed video content on mobile phones, PDAs, and laptops,” Ms. Parker said. “The entertainment industry is starting to create compelling programming specifically for the small screen. Consumer demand and industry supply are finally on the same page.”

AT&T introduced two handsets designed to maximize the quality of the broadcast. The LG Vu is available to subscribers for $299 after a $100 mail-in rebate, while the Samsung Access is available for $199 after a $100 mail-in rebate.

Billionaire investor Jeff Bezos is putting $3 million behind San Francisco-based Kongregate, an online casual games site that draws its content from Indie developers.

The investment brings Kongregate’s investment total to $9 million, with a $1 million angel round and a $5 million investment by Greylock Partners, a backer of Red Hat, Digg and Facebook.

The investment by Bezos, founder and chief executive of Amazon.com, comes through his person investment fund, Bezos Expeditions.

Kongregate competes with companies like Miniclip in trying to build large audiences for casual games offered through an Internet browser. Kongregate, founded in June 2006, offers more than 4,000 Flash and Shockwave games from more than 1,500 developers.

Kongregate Chief Executive Jim Greer likened the "super-angel" funding round to an insurance policy.

“This is a rainy-day recession fund,” he said, noting that the company still has more than half of the previously raised $6 million in the bank.

“Jeff approached us about it,” he added. “We were on Amazon’s radar.”

Kongregate’s business plan calls for Chief Revenue Officer Lee Uniacke, a recent hire from publisher Ziff-Davis Media and a veteran of Viacom’s MTV Networks, to build up a sales force that can draw advertising to the site.

Within a few weeks, Kongregate also plans to begin releasing games on Facebook.

“Our hope is we reach a new audience there,” Mr. Greer said. “Some play on Facebook, some play on Kongregate.com. If you play a game on Kongregate.com, it will notify your friends on Facebook.”

Kongregate is the first game company to get an investment from Bezos Expeditions, whose portfolio companies include: 37 Signals, a Web applications company; Linden Lab, creator of the Second Life virtual world, and MFG.com, an online marketplace for manufacturers.

Some choice jobs in digital media posted this week:

MySpace Music: VP of Sales
MTV Networks: Director, Vh1, Ad Sales Research
Time Inc: Business Development Director, CNNMoney.com
Dow Jones (NYSE: NWS) & Co.: Director of Marketing Operations and Analytics
Dailymotion: VP of Media Ad Sales
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Internet video company KIT Digital (fka Roo Group) has raised another $15 million from accredited institutional investors, including, but not limited to major shareholder KIT Capital—which controls the company. The investors bought in at a price of $.20 per KIT Digital share. Funding will go towards financing some of its recent deals, including interactive ad agency Sputnik and Swedish mobile video firm Kamera. This isn't the first time KIT has raised cash, but it says it will be the last time it goes to the well, as it expects the funding to last through profitability. Release.

Related

• Earnings: Roo Q4 Revs Up 4 Percent; Acquiring Rest Of Sputnik; Changing Name To KIT Digital
• Roo Group Plans To Acquire Swedish Mobile Video Firm Kamera

Several years ago, I had the memorable experience of listening to Bill Gates defend the structure of the company that he built. It was during the height of Microsoft's (NSDQ: MSFT) war with the Justice Department. Gates, facing a roomful of skeptics, argued forcefully that breaking up the company made no business sense. But having watched the failure of the company's $47.5 billion bid for Yahoo (NSDQ: YHOO), it's hard not to wonder: maybe the government had a point.

Microsoft is struggling to regain the initiative against Google (NSDQ: GOOG). Size is relative, but Google is the smaller and faster moving of the two giants. Google revenue soared 41 percent during the latest quarter, while Microsoft sales were nearly flat. Microsoft's answer to this dilemma: get even larger. Maybe it would make more sense to wage this battle by slimming down.

A Microsoft breakup might seem shocking, but it would be consistent with a broad movement toward corporate consolidation. More after the jump...

Time Warner (NYSE: TWX) is shedding its cable systems, and Barry Diller's IAC (NSDQ: IACI) is breaking into five pieces. There were calls in April for the breakup of GE, because the king of all conglomerates had a bad first quarter. And the calls for a breakup of the sprawling Yahoo empire, which go back years, have grown only louder since Microsoft's withdrawal.

Even after a breakup, Microsoft's enterprise software business would still be more than large enough to serve its clients. Oracle is just one third the size of Microsoft. SAP is less than one fourth of Microsoft's size. The big companies that buy Microsoft software don't really benefit from the fact that Microsoft sells the Xbox. And Zune users aren't about to download the latest SQL server.

Following the lines of the company's financial reporting structure, one could break the company into five units: operating systems, servers, business applications, online and entertainment and devices. Some of the pieces could be combined. All the software units have a similar financial profile, with strong cash flow and revenue growth in the mid-teens. And the online and entertainment units have (mostly) solid cash flow, but big operating losses tied to the investment cycle.

Breaking up the company would unlock a lot of value. The company lost $24 billion during the Yahoo episode, and has a current market cap of $272 billion, or $29 a share. Lehman Brothers expects the price to move to $34 over the next year. That's still well below Lehman's previous Microsoft target of $39, which implied a market cap of $319 billion. An uncertain online strategy—and the risk of huge deals—is depressing the stock. Nothing short of a breakup is likely to remove that overhang. It's far better to take action now, than to wait until the shareholder activists are at their door.

Inside The Deals is a weekly column about M&A in the media written by veteran business journalist Steve Rosenbush. Steve is based in New York, and previously was the finance writer for BusinessWeek.com, responsible for coverage of M&A. His interests include the evolving business of media. He can be reached at steve AT paidcontent.org.

No blockbusters, but a few worthwhile nuggets from Yahoo's (NSDQ: YHOO) latest 10-Q

-- Lawsuits: Now that Microsoft's (NSDQ: MSFT) bid is done for, Yahoo will keep getting fresh lawsuits, but through the end of the first quarter, there were already ten. Five were filed on the day of the Microsoft announcement, February 1, and another five were filed on February 11.

-- Growth ex-Acqs: Yahoo's revenue grew by 8.7 percent in the current quarter, but last year's revenue did have the benefit of three acquisitions: Zimbra, Blue Lithium and Right Media. Excluding those, the top-line would have only grown 6.6 percent.

-- Layoffs: The cost of laying off those Yahoos: "As of March 31, 2008, the Company incurred total pre-tax cash charges of approximately $29 million in severance pay expenses and related cash expenses in connection with the workforce realignment." For the current quarter, Yahoo expects to pay another $15 million.

-- Maven: The exact price of Yahoo's purchase of Maven was $163 million (it had previously said it was approximately $160 million). $141 million of that is upfront, with the rest to vest over the next four years. For the entire quarter, the company spent $166 million on acquisitions, though the rest came from asset purchases that didn't count as business combinations.

excerpt: “A behavioral targeting firm called Media6degrees said it’s engineered a workaround to the dual problems of data and relationship glut. Rather than look at a person’s friend list, the company uses a combination of cookies and ad server logs to pinpoint a person’s interests and generate anonymous profiles of her real friends… Media6degrees [...]