Online holiday sales fall 3 percent

Online sales over the holiday period fell a worse-than-expected 3 percent compared with the same period last year, tracking firm comScore Inc said on Tuesday.


Online spending reached $25.5 billion between November 1 and December 23, the company said, noting this was below its expectations for flat sales on the same period a year ago.

Apple Inc and Amazon.com were among the top traffic gainers in an overall bleak period, comScore said.

Apple sites attracted 35 million visitors between December 1 and December 24, up 19 percent from a year ago, while Amazon sites drew 76.2 million visitors over the same period, 7 percent more than a year ago. Wal-Mart also saw its website traffic rise by 4 percent to a total of 51.5 million visitors.

Online auction site eBay Inc was the most visited retail site with 85.4 million visitors but its traffic declined 4 percent.

Electronics retailer Circuit City, which filed for bankruptcy, saw traffic fall off by 21 percent to 15.5 visitors.

A combination of five fewer shopping days between Thanksgiving and Christmas and the recession made the season particularly tough for retailers, Gian Fulgoni, comScore chairman, said in a statement Tuesday.

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Online retailer Amazon.com Inc increase sales at this holiday season

Online retailer Amazon.com Inc. called this holiday season its "best ever," saying Friday that it saw a 17 percent increase in orders on its busiest day — a rare piece of good news in a season that has been far from merry for most retailers, including online businesses.


Amazon customers ordered more than 6.3 million items on Dec. 15, compared with roughly 5.4 million on its peak day last year, the company said. It shipped more than 5.6 million products on its best day, a 44 percent rise over 2007, when it shipped about 3.9 million on its busiest day.

The company did not provide dollar figures and wouldn't say whether the average value of orders had changed, and the jumps it reported Friday are in line with increases Amazon has seen since it started releasing the figures in 2002.

Amazon's best-sellers included the Nintendo Wii game console, Samsung's 52-inch LCD HDTV and Apple Inc.'s iPod touch.

Analysts agreed Amazon's report was good news for the online shopping giant, but they were divided over whether the results indicate strength in online commerce in general.

Forrester Research analyst Sucharita Mulpuru said Amazon's experience shows the current economy is favoring discount retailers, both online and offline.

"The Amazon story doesn't surprise me because Amazon has always traditionally been a leader on price, and they're one of the first places consumers go when they're looking for things online," Mulpuru said. "In many ways they're like the Wal-Mart of the online world."

Wal-Mart is one of very few traditional retailers where revenue has risen this holiday season over last.

Holiday sales typically account for 30 percent to 50 percent of a retailer's annual total, but rising unemployment, home foreclosures, the stock market decline and other economic worries led many shoppers to slash their shopping budgets this year.


SpendingPulse — a division of MasterCard Advisors — said its preliminary data show that online sales fell 2.3 percent compared with the 2007 holiday season, while retail sales overall fell 5.5 percent to 8 percent, including sales of cars and gasoline. The decline was 2 percent to 4 percent when auto and gas sales are excluded.

Online shopping may have gotten a boost from winter storms during last two weeks before Christmas, which made travel to brick-and-mortar stores more difficult.

And, although Amazon's orders rose, the company didn't say whether orders were, on average, worth more or less than last year. Spokeswoman Sally Fouts said the company would release revenue results in its fourth-quarter earnings report, due in about a month.

But she said this was Amazon's "best season ever."

Orders to Amazon on the peak day of its holiday season have jumped in the double-digit percentage range for at least the past 5 years, according to data released by the Seattle, Wash.-based company since 2002. Last year, Amazon's orders spiked 35 percent to 5.4 million at their peak, from 4 million in 2006.

Stifel Nicolaus & Co. analyst Scott Devitt said online retailers' sales tend to grow much faster than those of brick-and-mortar retailers, but he said that difference narrowed this year. That's in part because shoppers tend to go to stores for necessities and online for discretionary purchases, he said. And in an economic downturn, consumers focus on their most-needed purchases and cut back on more frivolous items.


Devitt said Amazon benefited from a vast infrastructure that allows for faster, more reliable shipping than most of its online peers offer. He called Amazon's announcement an "extremely positive data point" and said the company is "uniquely positioned to do well in an environment like this."

That environment has left many retailers in a tough position. NPD Group senior retail analyst Marshal Cohen said they will be forced in coming weeks to take still more drastic measures to drive sales and raise whatever cash flow they can.

Shirtless images of Obama cause stir online

Forget Barack Obama's staff making contact with a governor charged with corruption. What's got everyone talking is the president-elect's fine first form.


"FIT FOR OFFICE: Buff Bam is Hawaii hunk," the New York Post gushed on its cover Tuesday above a photo of the future president strolling without a shirt in Hawaii. The Drudge Report called him "President Beefcake" while TMZ said the president-elect is "still humble enough to do laundry — ON HIS ABS!"

The photos were distributed by Bauer-Griffin, a photo agency more typically found on the corners of Hollywood. Photographer Chris Behnke simply strolled along the beach to get the shot, said agency co-owner Frank Griffin.

Obama "wasn't hiding. He was completely out in the open," Griffin said. "We didn't by any stretch of the imagination expect to get the images we got."

Griffin said Behnke had gone to the beach to get general views of the estate where Obama is vacationing, but instead found easy access to a view of the first family hitting the beach. "We use the expression, 'He gave it up,' " Griffin said.

Members of the press corps traveling with Obama have been careful to respect his privacy. A spokesman traveling with Obama in Hawaii did not have immediate comment.

Griffin said he doesn't expect his agency to stake out Washington on a regular basis, but added that Obama is "now the world's biggest celebrity, just after Angelina and Brad. I guess they're neck and neck right now."

The celebrity description is apt, even if Obama faces a plummeting economy and two wars upon entering office. He's seen as often on "Access Hollywood" as on the nightly news, and appears in "Us Weekly" with the regularity of a Jennifer Aniston.

And should we really be surprised?

When John F. Kennedy was pictured shirtless, there were media accounts fretting about the threshold we had crossed as a country, said David Greenberg, a professor at Rutgers University who is working on a history of political spin.


"There was John F. Kennedy by the beach, shirt off, this young, glamorous president," Greenberg said. "So in a way this is 48 years old now that we're having this."

Since then we've had Lyndon B. Johnson lifting his shirt to show reporters his surgery scar and pictures of Ronald Reagan and Bill Clinton in swim trunks.

"It was kind of an erosion of what had been boundaries of formality between the president and the public," Greenberg said. "We've had 'boxers and briefs' and a real acquaintanceship with a personal side, an uninhibited side, an unclothed side of the president."

Obama's physique has been well-exposed; photographers snapped him body surfing in Hawaii during the campaign. He was on the November cover of Men's Health and detailed his workouts for the magazine: 45 minutes, six days a week, alternating weights and cardio.

Peter Moore, editor of Men's Health, called Obama focused and disciplined about his workouts and what he eats. "I'd say he has a four-pack, rather than a six-pack, but most of us are working with a full keg," he said.

He said Obama has buffed up since his days on the road during the campaign: "It's heavy lifting to form your Cabinet, that's for sure."

Combine the increased interest in a president's personal life with an increasing hunger for celebrity photos and a chiseled presidential body, and Obama becomes an obvious target for paparazzi. Apparently the Obama Girl isn't the only one with a crush.

"Comments have been 95 percent positive, everything from 'helllooo president' to a 65-year-old lady who said she had to wait this long to find a president who she finds attractive," Griffin said.

Earlier on his vacation, Obama was cranky as reporters snapped pictures through a chain-link fence and bushes, asking "OK, guys. Come on. ... How many shots do you need?"


But such personal shots — dropping the girls off at school, hitting the gym, practicing his golf swing — also serve to humanize the president. Greenberg can see why Obama might allow the beach photos to be taken.

"I'm sure if he didn't do it on purpose, he's not exactly crying in his coffee about it," he said. "I don't see any downside."

Well, maybe one: Might world leaders take the president less seriously if they can picture him in his underwear?

Fortunately, French President Nicolas Sarkozy beat him to it with stripped-down beach photos. Russian Prime Minister Vladimir Putin was pictured shirtless on a fishing expedition.

"In some ways we're entering a more casual international environment, too," Greenberg said. "But if he's sitting down with Putin, he has to project gravitas."

Griffin has submitted his photo agency for credentials for Obama's inauguration on Jan. 20. He said it's too soon to estimate how much Bauer-Griffin will earn from the beach photos "within tens of thousands or hundreds of thousands."

"I have a feeling that the president-elect kind of accepts this, that it goes with the territory," Griffin said. "He's become a celebrity. I think the pictures humanize him and show that he's just like the rest of us."

Only with tighter abs.

Yahoo to shorten logs of user activity

Yahoo Inc. said Wednesday that it will shorten the amount of time that it retains data about its users' online behavior — including Internet search records — to three months from 13 months and expand the range of data that it "anonymizes" after that period.


The company's new privacy policy comes amid mounting concerns among regulators and lawmakers from Washington to Europe about how much data big Internet companies are collecting on their users and how that information is being used. Yahoo's announcement also ratchets up the pressure on rivals Google Inc. and Microsoft Corp. to follow its lead.

In September, Google said it would "anonymize," or mask, the numeric Internet Protocol (IP) addresses on its server logs after nine months, down from a previous period of 18 months. And Microsoft, which keeps user data for 18 months, said last week it would support an industry standard of six months.

Under Yahoo's new policy, the company will strip out portions of users' IP addresses, alter small tracking files known as "cookies" and delete other potential personally identifiable information after 90 days in most cases. In cases involving fraud and data security, the company will anonymize the data after six months.

Sunnyvale, Calif.-based Yahoo also said it will expand the scope of data that it anonymizes to encompass not only search engine logs, but also page views, page clicks, ad views and ad clicks. That information is used to personalize online content and advertising.

Yahoo will begin implementing the new policy next month and says it will be effective across all the company's services by mid-2010.

Anne Toth, vice president of policy and head of privacy for Yahoo, said the company is adopting the new policy to build trust with users and differentiate it from its competitors. Yahoo also hopes to take the issue of data retention "off the table" by showing that Internet companies can regulate themselves, Toth said.


European Union regulators have pressured Yahoo, Google and Microsoft over the past year to shorten the amount of time that they hold onto user data. And Congress has begun asking questions about the extent to which Internet and telecommunications companies track where their users go online and use that information to target personalized advertising.

Edward Markey, D-Mass., chairman of the House Energy and Commerce Subcommittee on Telecommunications and the Internet, praised Yahoo for setting a new standard on privacy protection and said Google, Microsoft and other companies will now be compared against that standard.

Ari Schwartz, vice president of the Center for Democracy & Technology, a civil liberties group, agreed that Yahoo's new policy is "step in the right direction." He added, however, that he would like to see more clarity — and more standardization — from the industry about what it does with Internet users' data. He noted, for instance, that while some companies delete full IP addresses, other delete only parts of IP addresses or simply encrypt them.

Indeed, Redmond, Wash.-based Microsoft said in a statement that the method of anonymization is more important than how long records are logged. It called on the entire industry to adopt a "high standard."


For its part, Mountain View, Calif.-based Google said it takes privacy seriously and strives to strike "the appropriate balance between protecting our users' privacy and offering them benefits of data retention, such as better security measures and new innovations." Google did not address, however, whether it would be open to further reductions in the time it maintains user logs.

Australia agree Facebook for serving lien notice

CANBERRA, Australia – You've been "superpoked" — and served. A court in Australia has approved the use of Facebook, a popular social networking Web site, to notify a couple that they lost their home after defaulting on a loan.



The Australian Capital Territory Supreme Court last Friday approved lawyer Mark McCormack's application to use Facebook to serve the legally binding documents after several failed attempts to contact the couple at the house and by e-mail.

Australian courts have given permission in the past for people to be served via e-mail and text messages when it was not possible to serve them in person.

McCormack, a lawyer for the lender the couple borrowed from, said that by the time he got the documents approved by the court late Tuesday for transmission, Facebook profiles for the couple had disappeared from public view.

The page was apparently either closed or secured for privacy, following publicity about the court order.

"It's somewhat novel, however we do see it as a valid method of bringing the matter to the attention of the defendant," McCormack said.


Despite the setback, McCormack said the Facebook attempt would help his client's case that all reasonable steps had been taken to serve the couple. A court is expected to settle the matter as early as next week.

Facebook has become a wildly popular online hangout, attracting more than 140 million users worldwide since it launched in 2004. Facebook friends can "poke" or "superpoke" each other — terms for giving someone a playful nudge.

Lawyer and computer forensic expert Seamus Byrne said he was aware of only one similar case in Australia. A Queensland state District Court judge ruled in April against documents being served by Facebook because the option of contacting a person via a post office box had not yet been exhausted.

In the latest ruling, Master David Harper insisted that the documents be attached to a private e-mail sent via Facebook that could not be seen by others visiting the pages.

McCormack said he and a colleague found the woman's Facebook page using personal details that she had given the lender including her birth date and e-mail address. The man was listed on her page as a friend. Prior to Tuesday, neither had imposed security options that deny strangers access to their pages.



McCormack said he did not bother searching for the couple through any other social networking sites.

"It's one of those occasions where you feel most at home with what you know and I myself have a Facebook account," McCormack said.

Microsoft releases its first iPhone application

Engineers in the company's Live Labs have released the company's first application for Apple's popular smartphone--even before making it available on Microsoft's own mobile platform. Seadragon Mobile, which was added to Apple's App Store on Saturday, is a free image-browsing app that allows users to quickly "deep zoom" images while online and is intended to demonstrate what is possible with a mobile platform.



Is it possible some at Microsoft find the iPhone a more attractive platform than the software giant's own Windows Mobile?

Seadragon is the backbone for Microsoft's Photosynth, which allows users to take a grouping of photographs and stitch them together into a faux 3D environment.

Other iPhone apps are reportedly in development in Redmond; Microsoft's Tellme unit was expected to release the company's first iPhone app in the form of a voice-activated search for a variety of phones, including iPhone and BlackBerry. A Microsoft representative told my colleague Ina Fried in September that a public version of that program would likely be released in a few months.

So where's the Windows Mobile version of Seadragon?

"The iPhone is the most widely distributed phone with a (graphics processing unit)," Alex Daley, group product manager for Microsoft Live Labs, told TechFlash. "Most phones out today don't have accelerated graphics in them. The iPhone does and so it enabled us to do something that has been previously difficult to do."

Google releases finished version of Chrome browser

Google yanked the "beta" test label off Chrome, quickly putting a stamp of approval on its Web browser released in a direct challenge to Microsoft's ubiquitous Internet Explorer.

The California online search titan -- known for leaving new software offerings in beta, or test, modes for what seems like ages -- says Chrome proved its merits, and in a relatively brief 100 days.

Google's free web-based Gmail service still bears a "beta" label even though it was launched nearly five years ago.

Chrome has gone through 15 iterations since its launch with fixes and modifications engineered based on feedback from some of the more than 10 million people worldwide that have started using the browser.

"We're excited to announce that with today's 50th release we are taking off the 'beta' label," Google engineering director Linus Upson and product management vice president Sundar Pichai wrote in an online posting.

"We have removed the beta label as our goals for stability and performance have been met but our work is far from done."

Improvements which users called for, and reportedly got, include better video viewing, faster data loading, and strict privacy and security controls.

Google and Microsoft have been in an escalating war, with the Redmond, Washington-based software goliath striving to unseat Google as king of Internet search and advertising.

Google, meanwhile, is striking at the heart of Microsoft's empire by offering software free online as services supported by advertising.

Another Yahoo investor seeks Microsoft search deal

A large Yahoo Inc. shareholder has joined a growing chorus urging the beleaguered Internet company to set aside its past differences with Microsoft Corp. and renew negotiations to sell its search operations to the spurned suitor.


In a letter sent Wednesday to Yahoo's board, Ivory Investment Management called upon the directors to make amends for "acting unreasonably" in their earlier talks with Microsoft by quickly closing a deal with the software maker now.

Ivory Investment, which owns a 1.5 percent stake in Yahoo, reasoned the Sunnyvale, Calif.-based company could persuade Microsoft to pay $15 billion for its search operations and still emerge with more earning power than it currently has.

The net result: Yahoo could nearly double its current stock price to at least $24, based on the financial assumptions made in Ivory's analysis.

Some of Ivory's math is debatable, but there is little doubt left on Wall Street that a search deal with Microsoft now appears to be Yahoo's best bet, said Stanford Group analyst Clayton Moran.

"It's a very reasonable question for Yahoo shareholders be asking right now: why the company isn't talking to Microsoft right now," Moran said. "The pressure should be mounting for them to talk because there is no good explanation for them not to be doing so at this point."


Investors reacted as if Ivory's cajoling will help bring Yahoo and Microsoft back to the bargaining table. Yahoo shares surged $1.21, or 10 percent, to close at $13.40 while Microsoft shares rose 1 cent to $20.61.

Yahoo spokesman Brad Williams declined to comment on Ivory's letter.

Redmond, Wash.-based Microsoft didn't immediately respond to a request for comment, but Chief Executive Steve Ballmer reiterated last week that he remains interested in exploring a search deal with Yahoo as he tries to come up with a way to undercut Google Inc.'s dominance of the online advertising market.

Although it trails Google by a wide margin, Yahoo's search engine is the Internet's second most popular, with a U.S. market share of about 20 percent, according to comScore Inc. Microsoft's search engine ranks third at 8.5 percent.

Ballmer has maintained that Microsoft no longer is willing to buy Yahoo in its entirety — an option that was pulled off the table seven months ago when Ballmer withdrew a takeover offer of $47.5 billion, or $33 per share. Yahoo CEO Jerry Yang was holding out for $37 per share.

With Yahoo's stock in the doldrums, other shareholders besides Ivory Investment already have been lobbying for the company to reconcile with Microsoft.



Yahoo director Carl Icahn, who owns 5.5 percent of the company, has been leading the charge, and others, like Mithras Capital, also have thrown their support behind a Microsoft deal.

Last month, Yang said he is ready to talk if Microsoft wants. He made the comments shortly after Google scrapped a planned advertising partnership that Yang had been counting on to boost Yahoo's revenue by as much as $800 million annually.

Yahoo is now searching for a new CEO to replace Yang, who co-founded the company 13 years ago.

As his 18-month stint as CEO winds down, Yang is overseeing layoffs of about 1,500 employees as part of an effort to lower Yahoo's annual expenses by $400 million. Yahoo handed out pink slips to most of the affected U.S. employees Wednesday. The company also might close some of its unprofitable products during the next few weeks and shift other, less popular services into "maintenance mode," Williams said.

Yahoo also has been talking to Time Warner Inc. about a possible purchase of AOL — an idea that Ivory Investment adamantly opposed in its letter.

Ivory Investment, a hedge fund run by Curtis Macnguyen, devoted most of its letter to a detailed breakdown attempting to justify why a $15 billion sale of Yahoo's search engine to Microsoft would pay off for both sides.



The firm estimates Yahoo would lose more than $2 billion of annual revenue from the sale but would gain about $1.6 billion a year in commissions. The analysis assumes Microsoft would be able to leverage the additional search market share it would pick up from Yahoo to boost its Internet revenue by about $1 billion annually.

Yahoo Could Open Access to Flickr, Other Technologies

Yahoo might open access to a broader range of technologies beyond just search, a company executive said.

Earlier this year the company launched BOSS (Build Your Own Search Service) program, that offered third parties its search infrastructure and algorithms to set up their own specialized search services. Similar models could potentially be tried with Yahoo's other technologies and products such as Flickr, its photo sharing service, and social networking, said Andrei Z. Broder, research fellow and vice president for computational advertising at Yahoo, on Thursday. He added that the list of which technologies Yahoo might open to others is speculative at the moment.



Yahoo hopes that opening its search technology to other companies will help attract startups with new ideas, Broder said. It wants to allow small companies to figure out better ways of doing something, without having to invest in search infrastructure and algorithms.

As the second player in the search market after Google, Yahoo has an interest in opening up the market, and letting a lot more ideas in, Broder added.

Earlier this year the company released the beta version of an API (application programming interface) that web sites can use to build the search services.


The "monetization platform" for this strategy is likely to be announced soon, and is more likely to be based on sharing of revenue for advertisements that Yahoo places on these sites, Broder said.

Some of Yahoo's technologies in the areas of information extraction will be made available to web sites participating in the BOSS program.

Will Mac Become a Virus Trap?

Apple has backed off its suggestion that Macs require antivirus software. Yesterday, the computer maker suffered a public relations nightmare after an article was discovered on the company's site encouraging Mac users to install antivirus software. Less than 24 hours later, Apple has quietly removed this recommendation from its KnowledgeBase. Turns out the article, which the BBC says was posted on November 21, was simply an update to a 2007 entry. In response to the firestorm of comments, Apple spokesperson Bill Evans said, "We have removed the KnowledgeBase article because it was old and inaccurate. The Mac is designed with built-in technologies
that provide protection against malicious software and security threats right out of the box." Apple has repeatedly claimed that Macs, while not completely immune to viruses and spyware, are far safer than Windows computers. In fact some ads have subtly suggested that Macs are completely safe from viruses. After discovering the KnowledgeBase article, tech bloggers the world over excoriated Apple accusing the company of backing off its anti-antivirus stance. But is Apple projecting a false sense of security just to save face? Many experts repeatedly warn that all operating systems are susceptible to viruses, and as the Mac becomes more popular OS X will inevitably become a bigger target for malicious attacks. Regardless, many Mac users don't bother to purchase the memory sucking software that ties up their Windows counterparts. That may change in the event of a widespread attack, but for the moment Mac users aren't buying.

Yahoo shares climb on hopes for $30B

SAN FRANCISCO - Yahoo Inc.'s stock rallied Tuesday on a report that AOL's former chief executive believes he can raise enough money in a worsening recession to buy the struggling Internet company for as much as $30 billion.

The Wall Street Journal raised investor hopes with a story that said Jonathan Miller, who stepped down as AOL's top exec two years ago, is trying to secure financing to make a bid for Yahoo at $20 to $22 per share, or $28 billion to $30 billion.

The story posted on the Journal's Web site cited unnamed people familiar with the matter.

Branding the report a "rumor," Yahoo spokeswoman Tracy Schmaler declined to comment. Miller didn't immediately respond to interview requests.

Yahoo shares rose 76 cents, or more than 7 percent, to close at $11.50, reflecting hopes that a new suitor may emerge for the Sunnyvale-based company. The surge left Yahoo with a market value of just under $16 billion.

Given his past experience running AOL, Miller has the connections and savvy needed to turn around Yahoo, said Standard & Poor's Internet analyst Scott Kessler.

But Miller faces a huge hurdle: A credit crunch and the prospect of the deepest recession in a generation has spooked lenders and investment funds so badly that they have shown little interest in making big bets on risky propositions like this.

Miller "has a strong reputation and an expansive Rolodex, but ($30 billion) is a lot of money to raise in an environment when deals are falling apart and companies are going out of business just about every day," Kessler said.

Speculation about Yahoo's future has intensified since rival Google Inc. pulled out of a proposed advertising partnership a month ago. Yahoo had been counting on the alliance to boost its profits and placate shareholders incensed about the company's rebuff of a $47.5 billion takeover bid from Microsoft Corp.

The guessing game took a new turn two weeks ago when Yahoo founder Jerry Yang revealed his plans to step down as CEO as soon as a replacement can be found.

Yang, who became CEO in June 2007, didn't want to sell to Microsoft because he believed he had charted a strategy that would prove the company was worth more than the software maker was willing to pay.

Most industry analysts believe Microsoft eventually will return to the bargaining table and buy Yahoo's search engine — a concept that has been embraced by Yahoo's most outspoken board member, Carl Icahn. Microsoft CEO Steve Ballmer also has said he remains open to that idea.

The Times of London tantalized investors during Thanksgiving weekend with a report that Microsoft was preparing to buy Yahoo's search operations for $20 billion in a complex deal involving Miller and his current partner, former News Corp. executive Ross Levinsohn. But representatives from both Yahoo and Microsoft have since denied any discussions along these lines are taking place.