Add Technology – AP to My Yahoo!

By MICHAEL LIEDTKE, AP Business Writer

SAN FRANCISCO – Yahoo! Inc (NasdaqNM: YHOO -news ). on Monday snapped up Overture Services Inc. (NasdaqNM: OVER -news ), the pioneer of pay-for-placement online search results, in a $1.6 billion deal that fortifies the Internet powerhouse for a looming showdown with Google and Microsoft.

The cash-and-stock acquisition valued Overture at $24.82 per share — a 15 percent premium over the stock’s closing price last week. The price consists of $312 million in cash and 0.6108 Yahoo shares for each of Overture’s 65.7 million outstanding shares.

The deal’s value will fluctuate with Yahoo’s stock until its expected closing date in the fourth quarter.

Overture’s shares rose $2.54 to close at $24.05 Monday on the Nasdaq Stock Market, where Yahoo’s shares gained 1 cent to close at $32.20.

The acquisition continues a recent flurry of dealmaking in the lucrative business of online searching, a crucial axis on which much of the Internet’s utility depends.

By buying Pasadena, Calif.-based Overture, Yahoo gains control of one of its most important business partners and strikes a blow against Google and Microsoft.

A fierce rival of Google, which offers ad-based results distinct from its popularity-based search rankings, Overture now threatens to become more formidable by tapping into Yahoo’s greater resources, which included $1.1 billion in cash as of June 30.

Privately held Google, which provides some search results to Yahoo, declined to comment on Monday’s deal. Microsoft, whose MSN service, like Yahoo, has been collecting steady profits from Overture, was circumspect.

Lisa Gurry, MSN’s group product manager, said the software giant will make its next move after examining how Yahoo’s deal might affect its relationship with Overture.

Although Yahoo executives said they hope to maintain Overture’s existing alliances with partners such as MSN, it seems improbable that the rivals will want to subsidize each other, said Danny Sullivan, editor of the industry newsletter Search Engine Watch.

“This hurts MSN because Overture had been one of its best buddies,” Sullivan said.

MSN has been pouring more resources into online searching in an effort to become less reliant on services provided by outsiders. Besides relying on Overture for some of its search results, MSN also draws upon Inktomi, a search engine service that Yahoo acquired earlier this year for $279.5 million.

During the past 18 months, Overture has become increasingly valuable to Yahoo, prompting predictions that the two companies eventually would unite.

Overture has played a pivotal role in Yahoo’s recent financial revival, accounting for roughly 20 percent of Yahoo’s revenue of $604 million during the first half of this year.

Conceived by dot-com entrepreneur Bill Gross in 1997, Overture developed a search engine that sorts its results based on how much advertisers are willing to pay to be ranked under specific words.

Overture’s commercial database feeds search engines at popular Web sites such as Yahoo and MSN, which display the advertising links along with results generated by objective, algorithmic formulas.

Ridiculed just a few years ago, the so-called “pay-for-performance” concept has turned into an online gold mine. Pay-for-performance search is expected to generate $2 billion in revenue this year and U.S. Bancorp Piper Jaffray expects the lucrative niche will reach $5 billion in 2006.

Overture has cashed in on pay-for-perfmorance’s popularity, attracting 88,000 advertisers while generating earnings of $114 million since it first became profitable in the summer of 2001.

But the company’s success attracted more competition, most notably from Mountain View, Calif.-based Google, which has lured away pivotal partners such as AOL and EarthLink and spurred pricing concessions that have lowered Overture’s profit margins.

Although it followed in Overture’s footsteps, Google now has a slight edge over its rival in the United States. Domestically, Google’s network generated about 54 percent of all paid search results compared to 45 percent for Overture, according to market research compiled by comScore qSearch.

The competitive pressures prompted Overture’s management to lower its profit projections earlier this year and contributed to a downturn in the company’s stock, opening the door for Yahoo’s offer.

The deal supplements Yahoo’s recent acquisition of Inktomi with two other search engine services, AltaVista and Alltheweb.com, that Overture bought earlier this year for a total of $207 million.

Putting all those search engine tools under one roof is likely to create overlap, Sullivan said.

Yahoo executives believe all the services will help further its quest to overtake Google as the Web’s most popular search engine.

“We now own all the crucial elements of an end-to-end search offering,” Yahoo CEO Terry Semel said during an analyst call Monday.

Google continues to provide some of Yahoo’s search results. Semel declined to comment how the Overture acquisition will affect Yahoo’s relationship with Google. “I didn’t lay awake last night wondering about that,” Semel said in an interview Monday.

As a counter-punch to Yahoo’s moves, Microsoft seems more likely to acquire a search engine company, Sullivan said.

Potential candidates include Ask Jeeves Inc., FindWhat.com Inc. and, perhaps even Google.

MSN’s Gurry declined to comment on the company’s possible interest in Google.

-Ian.

—- http://story.news.yahoo.com/news?tmpl=story&u=/nm/20020524/wr_nm/tech_robot_ dc_2

New Robot Sings Baby Lullabies, Delivers Drinks Fri May 24, 4:36 PM ET

By Ben Berkowitz

LOS ANGELES (Reuters) – Imagine having your laptop fetch a beer from the refrigerator and then roll over to the baby’s room to sing a lullaby while e-mailing snapshots to grandma a thousand miles away.

Evolution Robotics, a start-up backed by Pasadena, California-based technology incubator Idealab, unveiled this week what it calls a “personal robot system” — essentially a robotic framework centered on a laptop computer.

The company’s ER1, which is able to perform the kinds of automated functions once considered science-fiction fantasy, retails for $499 in a do-it-yourself assembly kit or for $599 in a pre-built format.

Users can plug any laptop into the robot, though the current configuration does not power the computer from the robot’s battery. Planned future functions will allow for automatic recharging from standard electrical outlets, the company said.

“It’s sort of a young toddler of a robot,” Mike Dooley, a product manager for Evolution Robotics, told Reuters.

Evolution chose a unique place to unveil the device — the Electronic Entertainment Expo, the video game industry’s annual trade show concluding on Friday in Los Angeles.

The consumer model of the robot uses a basic visual training system. It has a Web camera, and using the included software, the owner can show the robot an item (examples used included a CD and a book) and then cue the robot to take action once it sees that item, in what the company described as an “if-then” arrangement.

Tucked away in a back corner of the main Convention Center hall, Evolution executives ran a demonstration in a mock livingroom where the ER1 was shown a Coke can, causing it to drive to a small refrigerator, identify the right can from a group of three lined up in front of the fridge, pick it up and deliver it to a recliner on the other side of the mock room.

The system was not without its bugs. The retriever arm dropped the soda can on the floor halfway to its destination. Dooley said the arm is still a prototype and will not be available until later this year.

He also conceded that, for the time being, the ER1 remains hobbyist’s device, made available to the public more as a proof-of-concept than as a candidate for hot toy of the year.

“This is really an early-adopter market,” he said.

The company plans to make money from selling the consumer kits, from selling advanced developer kits for potential manufacturers at prices up to $10,000 or more and from licensing its programming software to other robot manufacturers.

Besides Pasadena, California-based Idealab, whose chairman, Bill Gross, is also Evolution’s chairman, the company has an impressive list of backers, including its lead investor, former Compaq (news – web sites) Computer chairman Ben Rosen.

The company also has scientific advisers from such institutions as the California Institute of Technology and the Swedish Royal Institute of Technology.

———–

“If the startup fails, Bill Gross must prevail!” “If the stock don’t split, you must acquit!”

Er… That’s bad stuff, right there. Late in the day.

YES…

I remember I owe you two steak dinners @ Morton’s in San Francisco, Mike.

-Ian.

Even the CEO of an Internet Incubator should know that these are No-Nos.

Here’s hoping Bill gets his just desserts.

-Ian.

———–

http://latimes.com/business/la-000004752jan19.story?coll=la%2Dheadlines%2Dbu siness%2Dmanual

Investors Want Idealab Liquidated

Internet: Lawsuit against the Pasadena company’s founder claims Bill Gross mismanaged the incubator. The plaintiffs want the $500 million that remains. By KAREN KAPLAN TIMES STAFF WRITER

January 19 2002

A group of blue-chip investors who poured nearly $1 billion into the once-highflying Internet pioneer Idealab Inc. filed a lawsuit Friday demanding that founder Bill Gross liquidate the company and return the $500 million that’s left.

The suit alleges that Gross, Idealab’s chief executive, and his fiancee, company President Marcia Goodstein, badly mismanaged the company and have kept the enterprise alive simply to preserve their sumptuous lifestyle.

“In just two years, the defendants burned through more than $500 million,” the lawsuit says. “Idealab’s ‘incubator’ business, for all practical purposes, is nonexistent, and in fact, other ‘incubators’ are winding down, dissolving and refunding investor money.” Gross responded to the suit, saying it is “completely and totally baseless.”

“It’s just embarrassing that these people are so immature and crybaby that they want to take an investment that they made and carry it out this way,” he said after reading the allegations. “There’s a market downturn, but Idealab as a company is doing great.”

The filing of the lawsuit late Friday in Los Angeles Superior Court marks a grim milestone in the rise and fall of one of the most luminous stars of the so-called new economy.

With Pasadena-based Idealab, Gross invented the concept of an Internet “incubator” that turned inspirations into corporations in as little as three months. His strategy was widely copied as entrepreneurs and investors looked to cash in on the dot-com craze.

But the tech meltdown of the last two years has left 6-year-old Idealab a shadow of its former self.

Its most famous fledgling, online toy retailer EToys Inc., was once worth more than Toys R Us but shut down last year after burning through millions of dollars. Dozens of lesser-known firms also have been shuttered.

Idealab’s Web site lists 26 active companies, only one of which has been a big hit. Overture Services Inc., a pay-for-placement Internet search engine, has a market capitalization of $2.2 billion.

The investors suing Idealab–including Dell USA, T. Rowe Price Science & Technology fund and Moore Global Investments Ltd.–say there is little for the incubator to do and it could easily operate on a $1-million annual budget. Instead, Idealab maintains offices in Pasadena, Silicon Valley, Boston and London and recently doubled the salaries of Gross and Goodstein. The lawsuit has opened a can of worms, alleging a series of unseemly practices that occurred behind closed doors at the privately held company.

It accuses Gross and his associates of using Idealab’s resources to fund stock repurchases at inflated prices and collateralize personal loans, instead of looking out for the company’s investors. The plaintiffs said Idealab executives refused to hold shareholder meetings or provide access to the company’s financial records, in violation of California law.

The plaintiffs claim Gross has refused to liquidate Idealab because he is $40 million in debt and has a $50-million loan “he cannot possibly repay” without “accessing the assets of Idealab.” The suit also says six other executives and directors have borrowed a total of nearly $4.5 million from the company.

Gross said he borrowed $40 million from Bank of America so he could plow it back into the company, not spend it on personal items. “I invested in Idealab on the same terms as they did,” Gross said. “That money is in Idealab alongside theirs.”

The plaintiffs, including mutual funds and individuals, were the last major investors in Idealab. They put up $1 billion for a 10% share of the incubator, giving it a total valuation of $10 billion. The investment came in March 2000, just weeks before the dot-com bubble burst. Some of Idealab’s best-known start-ups began folding soon after.

Idealab and the plaintiffs have spent months trying to negotiate a deal that would allow the investors to recoup at least part of their massive cash influx. But the investors said Gross offered only 10 cents on the dollar. If Idealab were forced to divest its cash and liquidate assets, the investors could get 50 cents on the dollar, according to the suit.

The investors will probably seek an injunction to prevent Gross and other executives from frittering away Idealab’s remaining assets, said their attorney, Skip Miller, a partner with the Los Angeles firm Christensen, Miller.

They are seeking at least $500million in damages in addition to recovering the $500million remaining from their original investment.

Idealab President Goodstein said the suit came as a surprise. She said the company had little contact with its investors and there were no signs they were considering legal action.

“We’re scratching our heads,” she said.

—-

As usual..

Listbot was actually bought by LinkExchange which was then bought by MSFT… Banister created Listbot in his dorm room at UofI. I didn’t realize he had left Idealab! He and Bill Gross were a match made in heaven — both of them dinosaurs of dot com with no inkling how to create, manage, and operate successful companies in a real economy. At least Scott has an excuse — he’s 26 now and has had no hard lessons in real economics, and his bank account has taught him that fly-by-nite internet companies are in fact a path to success.

Eventually he’ll figure it out that in the long run it matters if those companies are still around to pay their employees once he’s extracted his gold. Or maybe, even now, it doesn’t?

-Ian.

-Ian.

http://www.inside.com/jcs/Story?article_id=18835&pod_id=10

Chris Rock Heaves a Big Suit Back at Z.com — and Idealab, Too Ben Berkowitz 12/20/2000 20:20

See what happens when you start throwing Rocks in court?

On Wednesday, one day after Z.com sued Chris Rock, the actor and comedian struck back with his own lawsuit against the online entertainment provider, as well as its parent company, Idealab.

Rock claims in his Los Angeles Superior Court complaint that Z.com and Idealab approached him in April to provide content to the site and use his celebrity name to promote it and attract other talent. In exchange, Rock claims he was granted the right to purchase 1.75 million shares of common stock in Z.com, at or after its IPO, at $.10 a share and Z.com is obligated to buy back all of the shares at $3-per-share at any time during the third year of the agreement, according to the suit.

”When plaintiff asked about the vulnerability of the ‘.com’ market and the failures of several such companies, defendants’ representatives insisted that Z.com was part of defendant Idealab! and that Idealab! would unconditionally guarantee Z.com’s buy back obligation under the agreement,” the suit states. ”Idealab!’s involvement and affirmative backing is what attracted plaintiff to Z.com and provided the motivation for plaintiff’s eventual execution of the agreement.” Idealab also incubated in GoTo.com, eToys, CitySearch, NetZero and Tickets.com.

When Rock was ready to purchase the 1.75 million shares, however, Z.com and Idealab first delayed discussions on an agreement, and then allegedly had their attorneys change ”certain essential tax language previously negotiated in the agreement,” the suit claims. Rock demanded to have the language changed back, but the defendants prolonged discussions in order to keep Rock’s famous name associated with the Web site as long as possible because the company was facing financial problems, the suit maintains. Indeed, in October, Idealab withdrew its IPO and shuttered two of its companies. As for Z.com, it laid off nearly half of its 100 employees in October.

Rock’s lawsuit claims intentional misrepresentation, breach of contract and other allegations. He is seeking $5,075,000 plus interest. He is being represented by attorneys Stanton L. Stein, and Sarah B. Takasugi of Alschuler Grossman Stein & Kahan.

”It should be … noted that Chris Rock provided Z.Com with his complaint yesterday morning in an attempt to give Z.Com another opportunity to comply with the agreement,” said a statement issued by Rock’s publicists late Wednesday. ”Instead, Z.com filed what Chris Rock regards as a baseless lawsuit to deflect attention away from Z.com’s previously reported financial difficulties.”

Joe DiNunzio, Z.com’s CEO hadn’t seen the suit and couldn’t comment on it specifically. He said, however: ”We believe it is in both parties interest to settle this. We have been disappointed in the inability to conclude these negotiations.” Calls to both internal and external spokespeople for Idealab were not immediately returned.

Z.com’s lawsuit against Rock claims it is owed more than $1 million in repayment of fees given to Rock for the content which was never developed. The first lawsuit, which also names Rock’s company, Chris Rock Enterprises, as a defendant, claims there was a preliminary agreement made on April 6 requiring Z.com to pay Rock $1,075,000, to be repaid within 45 days if a final agreement was not reached by June 30, as, apparently, it wasn’t.