Earlier this morning, Rich Greenfield, the scary smart media analyst at Pali Capital, slashed his price target on News Corp to $20 from $27, citing big concerns over slowing advertising revenues for newspaper and television stations. And since this is a global problem, there is little room for News Corp to hide.

He is forecasting a 1.5 percent decline in revenues for News Corp.’s newspaper business, a 9.5 percent decline in its TV revenues and a 7.8 percent decline in revenues at its filmed entertainment division. Greenfield cut his earnings and overall revenue estimates on the media behemoth as well. The good news? Rupert Murdoch is sitting on $6 billion in cash, which means he could grow revenues through acquisitions. Cash, if not king, is indeed a king-maker.

Since he didn’t offer an analysis of the Internet part of News Corp.’s business, especially MySpace, I emailed him to find out what he thought about that. He didn’t go into much detail but he did say, “MySpace is one of their BEST-performing assets right now…MySpace is doing great.” Last year Murdoch said he expected MySpace to bring in about $750 million in revenue for its fiscal year ended in June, the lion’s share of the $1 billion in revenue forecast to come from the company’s Fox Interactive division. If the big shift from old media to online accelerates, Rupert’s kingdom does have enough assets to capitalize on that shift. But then, I wouldn’t count on any ad dollars just yet.

Photo courtesy of Pinar Ozger via Flickr.

EQO Communications, a communications company based in Richmond, British Columbia (just outside of Vancouver), that made waves at Demo 2006 and raised a total of $13 million in two rounds of funding from GrowthWorks, BDC Capital and Ventures West, is rumored to have cut nearly 65 percent of its work force — reducing the number of employees from 35 to 12. The news was reported by Techvibes, a Canadian startup-related publication. I have called their marketing manager for a comment but had not heard back as of press time.

When it launched, we were intrigued by EQO because it was one of the first clients out there that allowed you to make Skype calls from a regular phone. Making Skype mobile was an opportunity that slipped away from EQO mostly because competitor iSkoot was better funded and had a better execution strategy. In August 2006, EQO got into a bit of a tiff with Skype. The company then refocused on social networks, but it seems even that strategy didn’t go anywhere. EQO raised another $9 million in August 2007.

Funny thing about these rumored job cuts is that the company has been supporting more and more mobile phones and was supporting all high-growth devices. The job cuts, if true, don’t bode well for the long-term health of the company. VoIP as an industry has proved to be hard nut to crack for startups, especially those aiming for the consumer market. Jangl and TalkPlus were two startups that hit the deck earlier this year. We are going to see more of these “save money on LD” phone apps with no discernible business model and relatively little traction or loyalty to follow suit. 

* Approximately

It has been a summer of discontent for publicly traded Internet companies, whose shares have nosedived in tandem with the broader market. And the group — led by Google and Yahoo, both of which saw double-digit declines in the last month — is not going to be dancing in the streets any time soon.

Or at least that is what Ben Schachter, Internet analyst with UBS, thinks. In an astoundingly sobering note to his clients this morning, he cut his estimates on his entire portfolio of coverage:

we are also lowering our estimates and price targets across the board to reflect a deteriorating macro-economic environment that we expect will inevitably impact the online advertising market and consumer spending, likely continued unfavorable foreign currency fluctuations (at least in the near-term), as well as other company-specific factors.

In a rather brutal assessment, he wrote, “[W]e see no business model based on advertising or consumer spending that will be immune to a downturn. Specifically for the advertising names, as corporate profit forecasts come down, we expect planned advertising spending will be delayed and/or cut.”

UBS also had the following thoughts on the third quarter of 2008:

• September was difficult.
• Google held up better than others, though Schachter still thinks that results might be below expectations.
• Stronger dollar is going to cause issues for guys like Google.
• More cautious on 3Q results from Yahoo and ValueClick

Looking beyond to the fourth quarter of 2008 and 2009, UBS noted more optimistically, “[W]e think that the continuing shift to online will be somewhat accelerated by the macro weakness.”

Now here we are talking long term, and even as I trust Ben’s analysis, I am one of those folks who is assuming the absolute worse. Why? Because these are irrational times. Guys, General Motors has a market valuation that is lower than its value in 1930. Yahoo is a company that is likely to hit a massive air pocket, because it is highly exposed to financial- and automobile-related advertising.

Regardless, Schachter sees no near-term bottom in sight for the Internet stocks and is advising that people don’t try and catch a falling knife. In particular he was sour on ValueClick, an online advertising network. I think this is a bad sign for all advertising networks out there, especially the startups that are trying to get traction in this market. He did point out that Google will get beefier and bigger in these lean times.

Updated with the Sequoia powerpoint: Last night I reported on a special meeting held by Sequoia Capital for its portfolio companies, warning them about the fiscal hurricane that was going to hit them, and how they’d better figure out ways to survive what could be a big downturn.

There were some gaps in the details about that meeting, but I have since been able to piece together the minutes and what folks there essentially said. Since these are second-sourced details, I cannot say they are a 100 percent accurate, so please view them with a degree of skepticism. Nevertheless, I still feel confident enough to share them.

These were the four speakers:

Mike Moritz, General Partner, Sequoia Capital, who moderated the speakers. The speakers were Eric Upin, Partner, Sequoia Capital, who until recently ran the $26-billion Stanford Endowment Fund, and Michael Partner, Sequoia Capital, who was Sequoia’s very first hedge fund manager and worked at Maverick Capital and Robertson Stephens. The last speaker was, as I mentioned before, Doug Leone, General Partner, Sequoia Capital.

Moritz Musings

Mike Mortiz kicked off the proceedings by saying that these are drastic times and that means drastic measures must be taken to survive. His message to companies was don’t worry about getting ahead, instead, “We’re talking survive. Get this point into your heads.” He warned that companies need to be cash-flow positive, and if they are not, then they need to get there now, because raising capital without being cash-flow positive is going to be tough. He was warning that there will be a price to pay for those who hesitate to act.

Upin Says

Upin, who knows a thing or two about money and markets, told the room that we are in the beginning of a long cycle, what he called a “secular bear market.” This could be a 15-year problem, he said. This comment was accompanied by many slides that showed historical charts of previous recessions averaging 17-year cycles. He pointed out that the issue here is not the equity markets but the credit market, and that will take a long time to recover. He was ominous in warning the startups that this is a global issue, it is not a normal time, and is a significant risk not just to growth but to personal wealth.

He advised startups to make drastic changes, to cut expenses and to cut deep, but to still keep marching. “You can’t be a general if you turn back,” he apparently said. The point he hammered on was that since you can’t manage the economy, manage everything else, including your business. He had some interesting advice for startups.

• Cut spending. Cut fat. Preserve capital.
• Throw out the models and spreadsheets, because all assumptions will be wrong.
• Focus on quality.
• Reduce risk.

Michael Beckwith

Michael Beckwith’s presentation had lots of charts and data and he pointed out that the V-shaped recovery is unlikely. He also said that the cuts in spending will accelerate in the fourth quarter and the first quarter of 2009, and pointed to eBay as an example.

Leone’s lessons

Doug Leone told the group that this downturn was a different animal and one from which it would take “years to recover.” He was clear in pointing out that:

• Unprofitable companies would have a tough time raising cash, so get cash-flow positive as soon as possible.
• Go on the offensive and pound on your competitors’ shortcomings.
• Be aggressive with your messaging and be out there. In a downturn, aggressive PR and communications strategy is key.
• Decline in M&A will mean that only lean companies with sales models that work will get bought.
• When it comes to deciding between capital preservation and grabbing market share, he advised that everyone should be preserving capital.

Leone’s other tips for companies, especially the Sequoia portfolio companies, were something like this:

• Start with zero-based budgeting.
• Cutting deeper is the formula to survive, and this is an era of survival of the quickest.
• Make sure you have one year’s worth of cash.
• If you have a product, reduce expenses around it and boost sales. If the product is ready, cut the number of engineers.
• Focus on building the absolutely essential features in your product.
• Be brutal when it comes to marketing — anything that isn’t working, cut it.
• Don’t burn through your cash, for cash is king.
• Cut base salaries on sales people and leverage them with upside.
• Most importantly, be true to yourself.

Amazon announced today that it will cut prices for its Amazon S3 (Simple Storage Service) offering on Nov. 1. The company is essentially offering people who use more storage significant volume discounts. For folks using up to 50 terabytes of storage, the price cuts don’t make much of a difference. In the U.S. they pay 15 cents per gigabyte; in Europe, 18 cents. If you go above 50 terabytes, the price declines by a penny and if you cross the 100-terabyte mark, you see another penny-per-gigabyte decline. After 500 terabytes your price is going to be 12 cents a gigabyte in the U.S. and 15 cents in Europe.

At present you pay 15 cents per GB/month of storage used, regardless of the amount of storage consumed. The current cuts don’t impact the pricing for data transfers and requests made to the Amazon S3 system. Nevertheless, this is still going to save some dollars for startups that are using the S3 service. Amazon, in making the announcement, gave some interesting data points:

* Currently there are over 29 billion objects stored in Amazon S3 vs. 22 billion at the end of Q2 2008. That is sequential growth of 32 percent.
*On Oct. 1, the service peaked at over 70,000 requests per second to store, retrieve, or delete an object.
* Over 400,000 developers have registered to use Amazon Web Service.

What I was most amazed by was the sheer variety of companies that are using the S3 offering. For instance:

* National Geographic’s topo.com uses S3 to sell maps, download updated trail and trip information and even create trip maps to share with their friends.
* Sonian uses it for large-scale content archiving for things like email compliance.
*Indycar.com and indy500.com utilize Amazon Web Services for web hosting, live video streaming, and live timing and scoring applications.

Want to know more about the rapidly changing Cloud Computing landscape? Preview our Cloud Computing Briefing or purchase the full version.

Updated: Sequoia Capital, arguably the smartest venture capital investor in business, is sounding the alarm and asking its portfolio companies to buckle down for what could be the worst economic downturn of their relatively short lives.

The fund organized a meeting yesterday where it invited entreprenuers/CEOs from its portfolio companies. The attendees were greeted by a cute image of a Grave Stone, with a message: R.I.P.: Good Times, my sources tell me.

I was able to confirm this with at least two sources. I am currently trying to nail down more details. Sequoia Capital declined to comment on the news. 

The gathering was addressed by at least four speakers, including a brief introduction by Mike Moritiz. Doug Leone was another speaker. I am still trying to nail down more details of the two other speakers. A person who handles Sequoia’s public market investments is said to have talked to the startups. The message delivered to those in attendance was that things could get a lot worse than people think, and it will be a more protracted downturn. To give a historical perspective, Sequoia had a similar meeting back before the last bubble unraveled burst. We know how that turned out.

They want the companies to cut costs, to figure out way to survive and emerge at the other end of this downturn, which could last years. The speakers went through each functional area of the business and told the companies how to cut costs. By holding this special meeting, Sequoia is telling its companies to put survival strategies in place and figure out ways to outlast the broader market troubles. 

Uber-investor Mike Moritiz told The Financial Times earlier this week: “It’s pretty clear that demand is going to soften across the board for every company - it doesn’t matter if you’re selling to consumers or companies.” Moritiz isn’t one to mince words, and is one of those few people who likes to get ahead of the fire and not fight it from behind. 

Sequoia isn’t the only one advising its startups to tighten their fiscal belts and prepare for a gut-wrenching ride. Ron Conway, a well-known angel investor in the Valley who has invested in companies like Google, offered very sobering advice to his companies via an email earlier today.

Raising capital will be much more difficult now. You should lower your “burn rate” to raise at least 3-6 months or more of funding via cost reductions, even if it means staff reductions and reduced marketing and G&A expenses. This is the equivalent to “raising an internal round” through cost reductions to buy you more time until you need to raise money again; hopefully when fund raising is more feasible.

Letting go of staff is hard and often gut-wrenching.  A re-evaluation of timelines and re-focus on milestones with an eye to doing more with less will allow you to live many more days, and the name of the game in this environment in some respects is survival — survival until conditions change. If you are in a funding cycle, you should raise your funding as soon as possible and raise as much as possible but face the fact that if you can’t raise money now you must cut costs.

Folks this is bad news for Silicon Valley, which has been living in a bubble, assuming that it is going to weather the global economic storm without being impacted. We have been following this story since last year, pointing out that the tech is not an island.

Many of us who live in Silicon Valley pay no heed to decidedly unsexy materials such as aluminum. Of course, they’ve long been integral to our economy — just look at the world’s largest aluminum company, Alcoa. It turned 120 years old on Oct. 1.

A week later, however, the Pittsburgh-based company slashed its growth forecast and suspended its stock repurchasing program, battening down the hatches as the global credit crunch continues to hurt demand. As CEO Klaus Kleinfeld said:

Given the sharp decline in metal prices and increasingly soft demand in our key markets, we are stopping all non-critical capital projects, making targeted reductions to match market conditions, and are adjusting our manufacturing capacity to meet demand in rapidly changing upstream and downstream markets. We are halting production at our smelter in Rockdale, Texas, adjusting alumina capacity accordingly, and are continually reviewing under-performing assets throughout our portfolio. And, we are suspending our share buy-back program.

Why does this matter to Silicon Valley? After all, aluminum is used to make things like airplanes and cars. True, but that’s not all. As a quick visit to Alcoa’s web site will reveal, aluminum is also used to make displays, mobile phones, notebook computers and whole slew of tech-related things. Alcoa even sets up a booth at the annual Consumer Electronics Show.

And now the company says demand in North America is going to decline 10 percent this year. Meanwhile, it expects growth in China to only rise 15 percent compared with an earlier forecast for a 22-percent rise.

And guess where major electronics items are made? China, after which they are sold in North America. My feeling is that aluminum is the canary in the coal mine and is foretelling tough times ahead for both the consumer electronics and computer hardware sectors. We’re already seeing a slowdown in the sales of LCDs TVs — the makers of which are big buyers of aluminum.

There is a good chance the tech malaise is going to spread to the likes of Apple, which uses a ton of aluminum to make their products. Aluminum is also a key ingredient in mobile phones, another area where demand for devices is going to slump, especially for the more profitable, high-end devices. Keep an eye on Nokia and listen for its forecasts.

The automobile industry – a major consumer of aluminum – is already in a deep abyss, with monthly sales plummeting. Automakers are big consumers of technology and have put a whole lot of electronics (including chips) — $113 billion in 2008 — from companies that include chip makers like Freescale, Infineon and STMicroelectronics into cars to power everything from the GPS to the powertrain.

Any slowdown there is going to eventually move up the food chain and hurt these chipmakers. Strategy Analytics recently forecast a $1.1 billion decline in sales of automotive chips for engines in the U.S. alone.

Whichever way you look at it, the credit crunch is going to crimp consumer demand, which will in turn lead to a clampdown on ad spending, including on the web.

And you thought aluminum was boring!

Almost a year after we first reported about Google’s desire to bring AdSense to online games and ultimately dominate the game-related advertising business, the company today announced AdSense for Games. We had thought that the advertising for games would go live in November 2007, but apparently even Google can’t move that fast. Google first started talking about AdSense for Games at industry events last summer.

Google has roped in game developers and publishers including Konami, Playfish, Zynga, Demand Media, and games network Mochi Media. They have also signed on beta advertisers such as Esurance, Sprint, and Sony Pictures. Essentially this new program would allow social games and flash-based web games to have video, text and image ads integrated into them.

AdSense for Games delivers video ads based on intended placements, as well as image or text ads based on contextual targeting with keywords and tags supplied by developers and publishers. Advertisers are charged on a cost-per-impression or cost-per-click basis, and ad revenue is split between Google and game developers or publishers.

Google, using comScore estimates, in a press release said that every week, more than 25 percent of Internet users worldwide play online games, which amounts to more than 200 million people. This number is growing at a rate of almost 17 percent each year. The casual gaming business has been on an upswing for some time now, and with AdSense for Games, you can bet many more people are going to try their hand at social and web games.

Lijit, a two-year-old startup based in Boulder, Colo., today launched the beta version of its publisher advertising network, which will allow the company to sell contextual advertising against search conducted on blogs that use Lijit’s white-label search solution.

In the future the company says it will allow publishers – mostly bloggers – to sell their own keyword-based contextual ads against their search results using Lijit ad-serving technology. Todd Vernon, CEO of the company, talked about this new network last month when he stopped by our offices.

The launch of the network comes at an awkward time – as the global economy is being tossed around like cans on a string attached to a car driving down a country lane. We talked about some of those issues when I had dinner last night in Boulder with Todd and his COO, Walter Knapp.

Like almost anyone whose business is dependent on the constant flow of dollars to online advertising, Vernon and Knapp are nervous. But they feel that they have a better mousetrap, one that will make them more valuable to discerning advertisers.

Vernon repeated the argument that because they have better knowledge of a weblog’s content (and its relevance) they serve up more effective advertising. It is one of the reasons why they go on to claim that they get a “search results to ad click-through rates ratio” of 3.7 percent; in some cases that number is as high as 7.8 percent. This is higher than typical contextual advertising rates. And while those are compelling numbers, I am hard-pressed to feel too optimistic about the immediate future of online advertising networks, though clearly the long-term trends favor folks like Lijit.

Verizon Wireless and its partner Vodafone Group will soon start selling the BlackBerry Storm, a touch screen smartphone, to customers in the U.S., Europe, India, Australia and New Zealand, the companies announced today. While they didn’t announce a specific date and talked about making it available in “fall,” it shouldn’t come as a surprise if the device hits the market really soon. Verizon is getting clobbered by the iPhone, according to some estimates. Vodafone felt so envious that it straight up copied iPhone screenshots and pasted them onto the Storm’s body, indicating that they still don’t have a clue on what iPhone is all about. (Photos below the fold.)

The Verizon Wireless version of the device will work on the Verizon’s EVDO Rev A 3G Network and (2100Mhz) UMTS/HSPA 3G along with older technologies such as GSM, GPRS and EDGE, making it capable of receiving emails and phone calls around the planet. The Vodafone version will have the same features minus the support for CDMA and EVDO networks.

One of the reasons why Blackberry Storm has gained so much attention is because it has a touch screen that actually depresses, giving users the feeling that the screen is being pressed and released with a gentle “click” — just like on a regular keyboard. RIM is betting that this is going to help them stop the Apple iPhone juggernaut which is slowly but surely rolling towards the Canadian device maker.

The new device does indeed have clever features, such as a 3.2-Megapixel camera, a better browser with built-in RSS support and 1 GB of on-board memory. The screen has 480×360 resolution at 184 ppi and the phone itself has battery life that allows approximately six hours of talk time on 3G networks and 15 days of standby time. Of course, once you start using the device, the battery will drain faster than sea water off a schooner’s deck. This seems to be enticing enough to try out — if nothing else then comparing how well it stands up against my iPhone. Why there is a good chance they will offer Mac support. 

(*) Launches but is not on sale just yet.

From left: StumbleUpon Backers Brad O'Neill and Ron Conway with founder Garrett Camp. (Photo: Om Malik.)

Over the past few weeks, speculation has surfaced that StumbleUpon, a social media utility that was acquired by eBay in April 2007 for around $75 million, was back on the market. But as TechCrunch, which first reported the story citing an unnamed source “with knowledge of the sale process,” noted late last week, eBay isn’t willing to lose money on its purchase of the toolbar maker that enables the collaborative discovery and recommendation of web sites.

From what I’ve been able to glean from various sources, it’s safe to assume that StumbleUpon is making between $5 million and $7.5 million in annual revenues, and there maybe some profits involved. A sale at $75 million values StumbleUpon at 10 to 15 times those revenues, not such an outrageous amount in normal times.

But these are not normal times. In this current economic climate, eBay is going to have a tough time finding a buyer, never mind one that would be willing to pay such a price. Barry Diller’s IAC has been floated as a possible acquirer, but that is little more than a highly unlikely suggestion.

While I wanted to hound StumbleUpon founder Garrett Camp for information when I attended his big birthday bash in San Francisco, he (understandably) had other things on his mind. Nevertheless, seeing him got me thinking about how, when it comes to StumbleUpon, eBay could have its cake and eat it, too.

The way to do that is simple — by selling it to Digg in exchange for equity in the combined entity. Before you call me crazy, hear me out.

Despite all the hoopla around social media, only Digg and StumbleUpon have been breakout hits. A combination of the two would create a social media powerhouse that would be hard to beat. With its ability to find and curate some of the most popular online content into various categories, Digg has a presence on the web that few can match. The problem with Digg is that despite its efforts to expand into other verticals (such as politics), it is still too technology-centric. And the most popular stories don’t necessarily mean the best or most relevant content.

Small but Smart

In sharp contrast, StumbleUpon, thanks to its toolbar, has better content from many different verticals. Sure it has a smaller footprint, but experts believe that StumbleUpon visitors have a higher degree of intent when compared to other social media sites, as evidenced by their constant curation of content.

As far as StumbleUpon users are concerned, its toolbar provides more useful and productive results than even Google. That’s one of the main reasons why eBay’s tiny division is able to generate revenues by embedding ads between the various pages it serves up. (StumbleUpon embeds sponsor sites into some of its search results, which provides better returns for advertisers since it lands on a sponsor’s page instead of users having to click on an ad, be it a banner or a link.)

Is 1+1 = 11?

The combination of the two companies would allow them to put together an enviable index of the web, which when married to a smart contextual advertising system could prove to be an effective ad channel.

More importantly, we are living in the age of information excess. To date, search engines have crawled the web, sifted through the data and served up search results. Google, thanks to its black-box formula, has done a good job of this.

Of course, that takes a lot of computing horsepower and (nearly all of) the world’s search scientists. Even that is not enough, because we are creating more information than ever before. Muddying the waters is the emergence of video, and here traditional search doesn’t quite work. Digg and StumbleUpon both recognize this, and have applied large-scale human intervention in order to get a better handle on video content.

Alistair Croll, who writes for us on a regular basis, in a recent email to me pointed out that one of the reasons why Google launched a browser (in addition to a toolbar) is because “…the Achilles heel of search engines is their inability to see an increasingly dynamic, increasingly personal, increasingly secured, increasingly transient web without piggybacking on end users.” A Digg-StumbleUpon combo would have that edge over traditional search engines, making the combined company a likely buyout candidate.

Can the deal be done?

Digg’s current valuation, after a recent recent $28 million round of funding, is rumored to be around $175 million. From that perspective, the deal looks expensive and unlikely; it would make the current Digg investors hesitant when it comes to giving up a big portion of their company. They might want to reconsider their conservatism, however, for the combined entity would be attractive to any company looking to get a piece of the search-advertising market — starting with Microsoft. Barring that, however, it could build a strong ad-based business on its own.

Digg CEO Jay Adelson should pick up the phone and call eBay!

Sure it’s not like back in the early 2000s, when those crooks from Enron were driving the prices of bandwidth down into the ground, but even today prices on Internet bandwidth continue to fall. If you are a consumer, however, there’s a good chance you’re wondering what I’m talking about — after all, broadband service providers like Comcast and Time Warner are talking about putting the meter on the bandwidth they serve up to residential subscribers.

What I’m talking about is wholesale Internet bandwidth that is sold to Internet services providers (ISPs) and content companies like Yahoo and Google. This is called IP Transit and it is sold at a rate of “per megabit per second per month” and often requires a monthly bandwidth commitment. Cogent Communications, Level 3 Communications, Tata Communications, Global Crossing and AT&T are some of the more well-known IP Transit providers.

Today research firm Telegeography came out with a report that shows the price of wholesale Internet access (IP transit), while varied around the globe, are still in decline. Here are some facts.

• GigE port prices in major U.S. cities fell 30-40 percent between Q2 2007 and Q2 2008. Median monthly IP transit prices for 1,000 Mbps Gigabit Ethernet (GigE) ports in major U.S. and European cities ranged from $10-$14 per Mbps in Q2 2008.
• GigE port prices in Latin American cities declined a more modest 15-20 percent for the same period. Median GigE port prices range from $73 per month in Buenos Aires to $86 per month in Santiago.
• Prices for GigE ports in major Asian cities in Q2 2008 ranged from $30 per Mbps month in Seoul to $45 per Mbps per month in Tokyo, higher than the U.S. or Europe. The price declines were around 30 percent.

From time to time, I have shared with you the steps we’re taking to build Giga Omni Media, the 27-month-old company behind this and the other publications that make up the GigaOM network. Today, I am thrilled to announce the start of our company’s next phase.

We have just raised $4.5 million, led by new investor Alloy Ventures, an early-stage venture capital firm with over $1 billion under management. True Ventures, our primary investors thus far, also participated in the round. The round was blessed by our angel investors, Rakesh Mathur, Venky Harinarayan and Anand Rajaraman as well. As part of the funding, Alloy Ventures general partner Ammar Hanafi will join the Giga Omni Media board.

We are going to use this new investment prudently, to enhance our technology platform and content offerings, add to our current portfolio of publications and expand our Events and Briefings businesses. We are in investing for the long-term — in ourselves.

I got to know Ammar when he was heading up corporate business development at Cisco Systems (read: V-P of the merger & acquisitions business.) As part of my job as a telecom reporter for Red Herring, I would hound him for information, often when there was none to be had. We stayed in touch periodically as our careers progressed before eventually losing touch.

Then earlier this summer, we reconnected through CEO Paul Walborsky. Our conversation quickly turned once again to my quest for clear and accurate information, but this time in relation to how I had made it the core quality around which our online media company was built. Soon we were discussing the possibility of Alloy becoming an investor.

The shift of audiences and ad dollars to online media from more traditional mediums has been significant on many levels, not least of which has been how it’s created opportunities for new models such as ours. What hasn’t changed is a desire on the part of business and technology audiences for in-depth, insightful coverage, which is what we are committed to providing.

Macro trends of our industry aside, the reason Alloy Ventures and True Ventures invested in our company is because there are lots of little things that need to happen before crazy ideas become a living, growing business. Sure we didn’t have an auspicious start to 2008, but we together overcame that little hiccup and my team has achieved a huge amount this year, among them:

• We are now providing content to a number of prominent media sites, including CNNMoney.com, Businessweek.com and NYTimes.com.
• We hosted two sold-out conferences, Structure and Mobilize. (And we are getting ready for NewTeeVee Live for 2008.)
• We acquired jkOntheRun.
• We acquired TheAppleBlog.
• We appointed Paul Walborsky CEO of the company.
• We named Carolyn Pritchard as the managing editor of our network. Our network now has seven sites: GigaOM, WebWorkerDaily, NewTeeVee, OStatic, Earth2Tech, jkOnTheRun and TheAppleBlog.
• We have doubled the number of visitors to our sites. We launched two experiments –- NewTeeVee Station and GigaOM Daily.

As the company grows, I try to reflect on the job done so far and the road ahead. We have come so far on so little, mostly by being frugal and having a realist’s view of the world. The whiplash-inducing bad winds that are plaguing the overall economy will cast a pall on Silicon Valley in general and online media as well. So it’s nice to have the ability to grow even in the face of adversity, whether organically or through acquisitions. Before I go back to work, please join me in welcoming Ammar to our family.

More importantly, dear readers, please accept my extreme gratitude for your support — through good times and bad times, for without you it would not have been possible. Thank you.

I am pretty sure at some point we have all done this — gone on a shopping spree to mask the feelings that come after a cataclysmic event. It doesn’t make our problems go away but somehow it helps us feel better for a few hours. It is good to see that large, lumbering tech giants have a similar approach to business life.

eBay, a San Jose, Calif.-based company today announced that it was cutting 10 percent of its workforce, about 1,000 jobs, in addition to getting rid of several hundred temps. These cuts will cost them between $70 million and $80 million and will be predominantly recorded in the fourth quarter of 2008. I am told the majority of the blood letting has been in the Marketplaces part of the business.

The company also spent $1.21 billion buying up two companies.

• U.S.-based online payments business Bill Me Later for approximately $820 million in cash and approximately $125 million in outstanding options. Bill Me Later had raised a total of $200 million in funding from Amazon along with several others. It was spun out of Nortel in 2001.
• Denmark’s leading online classifieds site dba.dk and vehicles site bilbasen.dk for approximately $390 million in cash.

These are two major moves by new CEO John Donahoe, who replaced Meg Whitman in January 2008.

Both acquisitions are smart and make strategic sense for eBay, though the company has some serious challenges in its core marketplace business. The CEO of eBay Marketplace Operations, Lorrie Norrington, who was named to the job in July and was recently named to Fortune’s 50 Most Powerful Women list, has been looking to transform the business, which is in serious trouble.

How bad? The sellers — aka the customers of eBay — are so mad that they are putting out statements publicly denouncing the company. Professional eBay Sellers Alliance (PESA) on its web site wrote:

In the first nine months of 2008, we have observed a substantial deterioration in the value of the marketplace for merchants. Broader e-commerce growth is in the high teens while eBay’s GMV has increased at low single digit rates; a clear sign that eBay is losing wallet share among online shoppers.

Today eBay merchants have an increased level of business uncertainty due to eBay’s poor execution of changes in many areas including seller performance measurement, fees, site search, buyer activity, and seller communication. The result is that merchants are changing their behavior in ways that we believe is not beneficial to the eBay marketplace.

Merchants are pursuing alternate channels for their businesses which are more economical, including launching their own website, participating in other third-party channels such as Amazon and Overstock, and even opening brick and mortar stores.

Whichever way you look at it, that is a big fat F for the company. I think buying new companies might give eBay a near-term lift, but the business is a bureaucratic mess and as a company eBay has had trouble coming to terms with the future. It has failed the innovation test — a metric almost every Silicon Valley company should be judged by — and all it has done is use its monopolistic position to paper over its shortcomings.

Given the poor performance of that stock — down almost 50 percent over the past 12 months — the investors seen to be in agreement with my F-rating on the company. I hope new deals are a new start for the company, and to them I say good luck! They are going to need it.

Photo courtesy of eBay Inc.

Earlier this week, Profy.com’s Svetlana Gladkova sent an email reminding me that Google’s Chrome Browser was one month old. How time flies, and how quickly we forget: or at least I did. After my initial few posts and thoughts, Google Chrome has fallen off my attention radar since it is not available for my preferred computing platform – OSX X. I typically divide my browsing time between Safari and Camino.

I have checked it out occasionally by booting it up on Windows running via Parallels on my MacBook. Apparently, I am part of the median: Svetlana has been tracking the usage using Google Analytics, Clicky and Net Applications has seen a gradual decline in the usage. Gone is the download Chrome link from the Google home page. She points out that there are some fixes the browser needs and as a result Google might be quietly taking a step back. (Related Post: Why Chrome isn’t a killer browser just yet.)

Svetlana is right in being cautious on the chances of the Google browser, though I am not sure how to view the fact that it now accounts for about 5.6% of the traffic to GigaOM and now ranks as the fourth most usage browser. Across our network, here Chrome’s share of total visits by site: 6.13% (jkOnTheRun), 5.78% (OStatic), 5.06% (WebWorkerDaily), 3.09% (NewTeeVee), 2.43% (Earth2Tech) and 2.24% (TheAppleblog). [If you want to share information about your website/service in comments, it would be pretty cool.]

Those numbers can of course mean many things, like I have a lot of readers at Google. Of course, they remind me that I need to use Windows more often. Jokes aside, I think Google isn’t likely to give up on this browser for anytime soon. There are many reasons why they won’t let it become their Waterloo.

Google has realized that web is no more a mere collection of plain web pages or simple interface to databases. If not today then sometime in the near future we would expect equality in the experience (if not feature parity) between desktop and web applications. It is a future where browsers can’t be just html renderers but containers for a runtime environment. Anyway follow Svetlana – I have a sneaky suspicion she would be following Chrome’s progress (or lack of it) for a while.

The post Big-Dig Boston is actually a pretty and lovely town – I walked around in what could best be described as weepy October rain, looking at some of the older buildings and near empty streets. Unlike New York or London or New Delhi, Boston doesn’t pulsate with energy; instead you can feel the weight of its history.

There were a lot of fantastic people I met on this trip, reminding me why I got into this business in the first place: people. Of course, it was also a great refresher in the economic reality of our times. When you walk around the Boston financial district and find two people sitting in a massive Starbucks and no one waiting to pick up their coffee, you know there is an economic slowdown happening. Out here in the SF Bay Area we are living in a cocoon and don’t really have a grasp on the magnitude of the problem.

It was a refreshing trip, reminding me that we need to build a presence in Boston and bring better stories from that part of the world. Meanwhile, if you want to keep in touch with what is going on in the Boston area, I would recommend reading Jeff Bennett, who is the founder of NameMedia. He was one of the five panelists on the panel put together by Charles River Ventures. Thank you guys for inviting me to your event and being great hosts, and hopefully I will see you soon.

Looking back, the short enjoyable visit brought home the message – flying cross-country on a Red Eye is not an option for me. It was a good reminder why the doctors have me on a strict travel diet and I need to conserve my and our planet’s energy.

Of course, you can’t blame me from getting out of Beantown as quickly as I wanted to – after all the marauding Red Sox keep reminding me of the feckless 2008 Yankees. They are crushing the LA Angels, a team that has tormented the Yankees forever.

Now if the Tampa Bay Rays win (and they should), it would be a great American League championship game. An ideal end to the 2008 Baseball season – Manny versus Red Sox in the World Series with Joe Torre’s Dodgers emerging victors. Even FOX can’t write a better script that that.

Anyway the trip left little time for me to catch up with my web reading. Regardless, here is an absolute gem from David Galbraith, one of my absolutely favorite people/thinkers. On the current economic meltdown, he argues that sending CEOs of errant banks to the jail makes absolute sense and keeps the shareholders of the newly nationalized banking system happy.

In addition, when you effectively nationalize banking, the shareholders are the country’s voters and they need to be kept happy. Creating a mechanism to put people like Wachovia’s Robert Steel in jail makes both good business sense and keeps the shareholders in a country happy.

Of course, David is a Scotsman and hence he was born with the gene for irony. Too bad he doesn’t write more often – he is missing his true calling.

Photo courtesy of Danielle Walquist via Flickr