Tuesday, June 16, 2009

MySpace Axes 30% of Staff [News Corp (NWS)]

It is not a huge number of people but it is remarkable that such a prodigy of the internet is cutting 30% of its staff; granted they now have corporate owners in News Corp (NWS) and Facebook has taken away some of their user base - but still! I guess the half life of dominant internet franchises not named Google are measured in 2-3 year increments. Than you are ... well just another struggling business tarnished by the suffering advertising market.
  • News Corp.’s MySpace social- networking unit fired almost 30 percent of its staff to save money in response to falling advertising sales and user gains by larger rival Facebook Inc. The cuts lower U.S. staffing at Los Angeles-based MySpace to 1,000, according to a statement today.
  • U.S. marketers will spend an estimated $495 million this year at MySpace, a 15 percent drop from 2008, according to estimates from researcher eMarketer.
  • Fox Interactive’s revenue declined 11 percent to $187 million in the quarter ended March 31 from a year earlier, primarily because of a 16 drop in advertising, while costs rose. A $300 million annual advertising agreement with Google Inc. expires next year. Renewal is unlikely to be “anywhere near” the current deal’s size and “dramatic” job cuts are needed to help reduce costs and spur growth, Richard Greenfield, a New York-based analyst with Pali Capital, wrote in a June 10 research note.
  • Facebook has 850 employees. The Palo Alto, California-based company, already the social-networking leader worldwide, surpassed MySpace in the U.S. last month, according to ComScore Inc. Facebook’s advertising sales are expected to rise 20 percent to $300 million this year, New York-based eMarketer said in a May report.
So 3/5ths of MySpace's ad revenue is with Google, and this renewal won't be anything like the old one. I wonder if young Mr Zuckerberg is having second thoughts about not selling Facebook say 1-2 years ago.

For those who don't know, Mark Cuban (who owns the Dallas Mavericks among other things) sold Broadcast.com to Yahoo (YHOO) a decade ago for $5 Billion. (that used to be a lot of money before bailout nation) If my memory serves the ticker was BCST - I used to trade that sucker every day.

How many times have you gone to Broadcast.com? Hold on ... let me ask this cricket that is chirping. You get the picture - bubbles are wonderful... when you are inside one & then get out at the right time. It's all relative, even a $300M payout for Zuckerburg would be more than most will ever dream of in 10 lifetimes... but then again at the age of mid 20s with a few billion he would probably be bored.

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