ImaginativePRO Blog

APPLE TO UNVEIL NEW iAD MOBILE AD PLATFORM, JOBS CALLS IT "NEW BIG THING"

Even as the buzz builds toward the April 3rd ship date of the iPad, Apple is preparing to announce its "next big thing" -- a new personalized, mobile advertising system that could well be called the "iAd" -- Online Media Daily has learned. The new ad platform, which will be officially unveiled to Madison Avenue on April 7th, has been described as "revolutionary" and "our next big thing" by Apple chief Steve Jobs, according to executives familiar with the plan.

Precise details of the system and its features could not be discerned at presstime (and calls to Apple had not been returned), but it is believed to have been built on top of Quattro, the mobile advertising developer Apple acquired in January for nearly $300 million, and it is expected to be the first real battle of a Silicon Valley Holy War between Apple and arch frenemy Google that is shifting its front line to Madison Avenue.

The war has been mounting ever since Google introduced its Android mobile operating system to compete with Apple's iPhone, and agreed to acquire mobile ad firm AdMob for $750 million, but it is expected to reach ballistic proportions following Apple's April 7th announcement, which insiders say will be every bit as important as other recent marketplace introductions, including the iPod, iTunes, iPhone and iPad launches.

Aside from the super egos involved -- Jobs vs. Google chief and former Apple board member Eric Schmidt -- the battle is key to the business imperatives of both companies, which have been racing to develop new revenue streams and models to expand beyond their core: in Apple's case, consumer gadgets; in Google's case, search advertising.

Apple appears to have been more successful in its revenue diversification, developing substantial software and service businesses, including iTunes downloads, iPhone wireless subscriptions, and App Store downloads. And while advertising has always loomed as a huge possibility for Apple, it had essentially been unexploited as a business model until Apple acquired Quattro.

Google, on the other hand, has made numerous investments to develop new advertising revenue models beyond its core search business, most of which have failed to yield much if any share of Madison Avenue's conventional media or online display advertising marketplace.

But the gold rush is on for mobile, which many see as Madison Avenue's next big frontier, even if it still is relatively miniscule compared to established media. According to the last mobile forecast from Interpublic's Magna unit, mobile ad spending is only expected to reach $331 million this year and $409 million in 2011. One of the obstacles to mobile's growth as an ad medium is the fact that there hasn't been any single organizing principle for agencies and advertisers to rally around. The Magna mobile advertising report describes it as "a highly fragmented group of divergent advertising models collectively organized around portable (and primarily cellular network-based) media, a wide variety of trends" that are converging to create an advertising marketplace.

But Apple has already captivated Madison Avenue's attention with the advertising possibilities of its App Store, and more recently, with the impending introduction of the iPad, and big agencies and advertisers have been lining up for opportunities to be the first -- and in some cases, exclusive -- sponsors of some of the earliest "tablet" editions of magazines and newspapers designed for the iPad.

While Apple clearly is accumulating gravitas in the ad community, agencies are generally still in the dark about the new mobile advertising system, though there already is plenty of speculation within the tech community.

One of popular scenarios is that Apple will offer a hypertargeting capability that would enable advertisers to target ads to consumers based on their geographic proximity, paving the way for a new generation of location-based advertising. But some observers believe that could be trouble for Apple, because Google recently won the patent for systems that serve ads dynamically based on a user's location, and given the current relationship between the two digital behemoths, such a move by Apple would likely invite litigation from Google.

Another potentially telling patent move is one that Apple registered for in 2008 that potentially could control ads served on virtually any screen connected to an operating system that would turn the content or application off if the user isn't paying attention to the ads.

Meanwhile, Madison Avenue will be waiting with bated breath to see what Apple actually unveils.

"Everyone will be following this very closely," says Josh Lovison, the mobile lead at Interpublic's Emerging Media Lab, adding: "Given the way that Apple is able to package things up, with very slick presentations, it will be interesting to see what they do with advertising."

COMMENTARY:  This has the signature of the one and only, the control freak of all control freaks, secretive, innovator, creator and visionary -- that's right, Steve Jobs.  He always does this to build excitement and buzz, hiding specific details about a new product, and making sure that any employee with knowledge of the new product, from saying anything.   I can hardly wait to find out what Steve Jobs has up his sleeve.  A new mobile, location-based advertisng technology with augmented reality.  Looking forward to the big day when the rumor becomes reality.

Courtesy of an article dated March 26, 2010 appearing in MediaPost Publications Online Media Daily 

FIRST WIND PLANS IPO, A TEST OF THE FUTURE OF WIND POWER

Maine's most prominent wind energy developer is attempting to go public and issue stock, aiming to fund aggressive growth plans.

Boston-based First Wind Holdings LLC is preparing an initial public offering, in which it hopes to list common stock on the Nasdaq market under the symbol WIND. The prospectus, which remains incomplete, doesn't specify the number of shares being offered or the price per share. Also missing is how much money the company hopes to raise.

The outcome of First Wind's effort could affect Maine's energy future and the public debate over how many wind turbines to erect and where to put them.

First Wind has benefited recently from hundreds of millions of dollars in federal stimulus money. Capital from private investors will improve its chances of carrying out its expansion plans, on a timetable that meets its financial objectives and complements government policies aimed at promoting wind power.

"It really will be a bellwether for how comfortable investors are with U.S. wind power investments," said Ethan Zindler, who heads North American research for Bloomberg New Energy Finance.

First Wind has three operating wind farms in Maine, at Mars Hill and a two-phase project at Stetson Mountain. It has at least two others pending - Rollins and Oakfield. Together they would comprise 157 turbines and have the capacity to generate 235 megawatts.

Maine lawmakers have set a goal of installing 2,000 megawatts of wind power capacity by 2015. But that policy has led to pushback from residents who don't want to live near the giant towers and activists who say wind doesn't produce enough power to justify hundreds of turbines along Maine's forested ridge lines. They also say wind energy will increase power bills.

"Ratepayers are going to pay for all the government mandates," said William Downes, a financial analyst in Cape Elizabeth who has been tracking First Wind's IPO. "The market isn't driving this. The government is driving this."

First Wind has declined to comment on any aspect of its initial public offering. But a review of its stock proposal offers a look at what role the company may play in the evolving dispute over wind power in Maine.

EXPANSIVE PLANS

First Wind has a high profile in Maine, which is the cornerstone of its Northeast operations. The company also is very active in the West and Hawaii. It plans to have projects with a total capacity rating of 1,000 megawatts operating or under construction by the end of next year, and more than 2,000 megawatts by the end of 2014.

Wind farms are expensive to build, roughly $2 million for every megawatt of capacity. As is typical in the industry, First Wind has raised money from investors, borrowed from banks and, most recently, won grants and been promised loan guarantees from the federal government.

First Wind Holdings has two equity partners, which have put up money in exchange for ownership shares and generous tax benefits. They are affiliates of big private equity investment firms, D.E. Shaw Group and Madison Dearborn Partners LLC. Those partners would own the overall balance of economic interests after the stock offering, documents indicate.

In recent months, First Wind has used money from federal stimulus grants to help pay down hundreds of millions of dollars in bank debt and construction loans. Maine's Stetson I project was among those sharing $235 million in stimulus cash.

"Had stimulus for wind not come along last year, a substantial amount of development wouldn't have been done," Zindler said. "It threw the industry a lifeline."

The wind power industry is in the midst of a massive global expansion, Zindler noted, backed by government policies aimed at reducing dependence on petroleum and the effects of climate change. Big players are dominating that expansion, including two that own assets in Maine - Iberdrola, the Spanish utility, and NextEra Energy, formerly Florida-based FPL Energy.

First Wind is unusual in the industry, Zindler said. It's an independent, New England company focused solely on wind development. For that reason, the company's pending stock offering will be an important market indicator.

First Wind prepared an IPO initially in September of 2008, hoping to raise $450 million. The offering coincided with the near- collapse of the financial markets, and the IPO was withdrawn.

The timing is much better now, Zindler said. The stock market is recovering and the federal government is strongly supporting renewable power development, with energy programs and stimulus funds.

UPFRONT ABOUT RISKS

Investing in any startup company is risky, though, especially one that relies on private investors and banks to grow in a capital- intensive industry. In its financial documents, First Wind details those risks, including:

• The eight-year-old company has $523 million in outstanding debt.
• It has substantial net losses from operations, totaling $191.2 million since it formed. Net losses and negative cash flows will grow as more development is done, although projects typically generate positive income after commercial operation, the company says.
• First Wind is heavily dependent on government policies, notably tax credits. Changes in such incentives would hurt the company's ability to get financing.
• Most of the company's revenue comes from the sale of electricity and renewable energy credits used to subsidize green power production. A significant, sustained decline in those prices could hurt project development.

First Wind has signed power purchase agreements, including a long- term contract with Harvard University for half the output from Stetson II. In southern California, it has a long-term agreement for electricity from its largest project, Milford I in Utah.

Downes is critical of the agreements, which he says will boost electricity prices for consumers. In Los Angeles, there's opposition to a proposed rate hike that would help the city get more of its electricity from wind and solar energy.

First Wind has 25 days after its initial public offering to issue stock and raise money, Downes said.

COMMENTARY:  I have been following the wind turbine industry for quite a while and First Wind in previous posts. Indeed, it will be interesting if First Wind files their S-1 to go public.

The wind turbine sector is maturing quickly, presents a very costly investment, and large wind farms like those First Wind builds is the only way to generate economies of scale and generate globs of electricity for the grid. 

The number of IPO's of all types nose-dived in 2009, but ever so slightly, showing signs of a rebound from 2009.  However, It is my personal opinion that the window for IPO's could be rapidly closing and that wind turbines could be squeezed out as money is poured into fuel cell technology, electric vehicles, advanced biofuels and nuclear.  That's right nuclear. 

Courtesy of an article dated March 30, 2010 appearing in RenewablesBiz    

STUDY: MORE CONSUMERS WILL BUY THE APPLE IPAD EBOOK READER THAN THE KINDLE IN 2010

A new survey predicts demand for the iPad as an e-book reader will outpace Amazon's category-leading Kindle over the next year. The study by comparison-shopping site PriceGrabber found that 20% of U.S. online consumers plan to buy the forthcoming Apple tablet in the next 12 months compared to 12% that plan to get the Kindle. Another 6% want to buy the Sony Reader, and 5%, Barnes & Noble's Nook.

An obvious advantage of the iPad borne out by the survey results is that it's more than a single-use device like the Kindle. Only 13% of 1,631 people interviewed by PriceGrabber in February said they would use the iPad primarily as an e-reader. Twenty percent would use it mainly as another "mobile productivity device," 19% as a replacement for a laptop or a netbook, and 10% as an entertainment device.

That such a small proportion see it as an entertainment device is surprising, given that much of the iPad's promise has been linked to its media-related capabilities. The finding of the PriceGrabber survey, however, also jibes with another recent consumer study by SyBase indicating that the biggest appeal of the iPad is work-related. It's also possible that people don't want to admit they would mainly use the device to play "Doodle Jump" or watch "The Hangover."

Focusing on the e-reader market, the PriceGrabber study found that four of five consumers want to pay less than $250 for such a device. Since that would rule out the iPad, which sells for $500 at the lowest price, either people aren't aware of what the Apple tablet costs or they are willing to pay more for its versatility. The average price of the top 10 eReaders on PriceGrabber.com is $241.

The iPad is expected to launch with most of the titles found on the Kindle and the Nook after striking deals with the major book publishers. Apple has agreed to sell most newly released fiction and non-fiction books for $12.99 to $14.99, a higher range than the $9.99 Amazon typically charges for Kindle e-books. But recent reports indicate that at least some digital bestsellers will be priced at $9.99 for the iPad.

COMMENTARY:   Looks like Steve Jobs, his great product design and engineering team, and legions of Apple evangelists are going to make iPad into a winner. 

When the iPad was first introduced I thought the product not much more than a larger iPhone, a "nice to have
product, not a "must have" product.  It now appears that iPad has the potential to become another blockbuster like the iPhone, and may become the industry standard for viewing digital content, from games to video to publications.

A lot of technology experts were predicting that the iPad would not be the success of the iPhone because of its shortcomings, but it seems that the iPad app developers have come to the rescue, as they did for the iPhone, and corrected those shortcomings.

Moral of this story.  Never bet against Steve Jobs.  The streak continues.   

Courtesy of an article dated March 31, 2010 appearing in MediaPost Publications Online Media Daily

WHAT SOCIAL MEDIA ADS WORK THE BEST? BANNER ADS WIN

As time spent on social networking sites increases, advertisers are funneling more ad dollars into campaigns targeting users on those platforms.

But what type of ads on Facebook,�or other social networks work the best? To find out, Psychster Inc. teamed up with Allrecipes to determine which kinds of ads are most effective�and whether the platforms advertisements appear on make a difference.

The study (embedded below) tested seven different types of ads on two different publisher websites, Facebook and Allrecipes. The ad types evaluated were: banner ads, newsletter subscription ads, corporate profiles with fans and logos, corporate profiles without fans or logos, get widgets, give widgets and sponsored content.

The Results

• While sponsored content provided the most user interaction (and was the least likely to be perceived as advertising), it also triggered the lowest level of purchase intent and the fewest viral recommendations.
• Corporate profiles are effective but they work better when users can become a fan of the profile and add a logo to their own page.
• More people engage with give/get widgets than with banner ads, however widgets do not increase purchase intent or viral recommendations.
• Regardless of format, the most effective advertisements were those that were related to the content on the publisher’s website (i.e. a soup advertisement on a cooking website).
• Of the seven advertising types, banner ads and newsletter links were the most successful at encouraging purchase intent.

Surprisingly, the study suggests that banner ads may be the best choice for advertisers that want to push a product. However, for campaigns that want to build engagement, corporate profiles or sponsored content is the better option.

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Report: Which Social media Ad Types Work Best?

COMMENTARY:�� Face it folks, banner ads are tried and true.� They provide a larger canvas to deliver your message.� With the advent of Flash, the ads can be very compelling and attention getting.��Relevancy and good targetting are important, but it is the content that matters.��Marketers have a platform that offers greater creativity and flexibility. Animation, sound and even video fit quite nicely into banner ads.

Banner ads are better for promotions and building brand awareness, and have less value for social networking and engagement.� Marketers want clickthroughs and revenues, that's where banner ads win�going away.

Courtesy of an article dated March 30, 2010 appearing in Mashable�

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FORECAST: WIND TURBINE INSTALLATIONS PREDICTED TO BE DOWN BY 20% IN 2010

Last year was a record for wind installations in the United States, with nearly 10,000 megawatts installed. But don't expect a repeat in 2010.

That's the word I heard from analyst Matt Kaplan when I spoke to him recently about the prospects for wind energy in 2010.  Kaplan, a senior analyst at Cambridge, Massachusetts-based Emerging Energy Research (EER), said new construction will still occur at a healthy rate, but the overall dynamics of the power market will dampen project development.

"Power prices have fallen over the past couple years, the price of natural gas has fallen (making wind energy less competitive), so utilities are not looking to lock into long-term power purchase agreements when pricing is faced with such uncertainty," Kaplan said.

Few projects were announced in early 2009 and the market really didn't recover until federal money from the American Recovery and Reinvestment Act began flowing to projects already in the development pipeline. "The results for 2009 were somewhat skewed because there was a carryover from projects that were started the year before," Kaplan said.

EER is expecting about a 20-percent drop from 2009 to 2010, with about 7,700 megawatts expected to be added this year. While project announcements have been relatively sparse - a lingering hangover from the financial crisis of the past two years - Kaplan expects activity to pick up later this year.

The project finance market is expected to loosen up some but there's an equally or more important reason for the timing. The popular cash grants in lieu of tax credits program, included in the 2009 federal stimulus package, will expire at the end of this year. Department of Treasury rules require a project to have had 5 percent of its expenditures made by December 31, 2009 to qualify for payment during the next fiscal year.

There are proposals to extend that program, but the fate of that legislation could be tied up with any overall energy legislation.

In the meantime, wind development, much like the power markets, will be looking for more signs of recovery as the year goes on.

COMMENTARY:  I recall that T. Boone Pickens, the former oil tycoon turned environmentalist clammoring for DOE funding for a huge wind farm.  Apparently Mr. Pickets did a 180, preferring to invest in Solar instead. That should've been a warning.

Courtesy of an article dated March 29, 2010 appearing in RenewablesBiz

BRAMMO ENERTIA GETS READY AS ELECTRIC MOTORBIKES SET TO TAKE OFF IN 2010

Note: Brammo held a contest for designers to solicit a new logo, so the above is my "unofficial" selection

Electric motorcycles are set to take off in 2010, and three West Coast startups are leading the pack. But will the macho motorcycle world accept bikes that run silently--and are sold and serviced at Best Buy?

The Brammo Enertia is green. Not just any shade, but one that is eye popping, verdant, almost alive. It's a sledgehammer of a color for a zero-emission motorcycle that walks the greenie talk even further with an outer shell made from recycled water bottles. 

Think the Toyota Prius is eco? There's a new category of even more environmentally friendly vehicles, and they're balancing on two wheels. Three West Coast startups are leading the way, and they're all making e-motorcycles for the same reasons major automakers are racing to bring plug-ins to market: There's no spewing of greenhouse gases while they're running. They don't use gasoline. They plug into conventional wall outlets and cost just pennies per mile to run. At current gas prices, an average American commuter could save $1,200 per year on fuel alone.

But unlike electric cars--which will take years to work their way through the pipeline and into drivers' hands--electric motorcycles are being sold now, and sold for relatively cheap. Most current models cost less than $10,000, and there are models in the works expected to sell soon for about $6,000.

They aren't selling all that fast--yet--but that's poised to change. The industry's independent entrepreneurs are expanding into fast-growing foreign markets, and the major manufacturers, such as Honda and Yamaha, have announced that they'll follow the independents with their own releases of electric motorcycles this year.

There is still something of an image problem to overcome: In the hyper-macho motorcycle world, electric bikes draw more laughs than lust. Enthusiasts of the internal combustion product see e-bikes as slow, silly excuses for a motorcycle, tortoises rather than hares. It doesn't help that most e-motorcycles aren't even sold at dealerships. The Zero is shipped through UPS and a flatbed rucking service. The Brammo is sold, and serviced, through Best Buy--like the rest of the chain's electronics and appliances.

But the e-bike is about to get some hair on its chest. Electric motorcycle racing comes to the U.S. for the first time this month, when the European TTXGP moves to Sonoma, Calif. And more significantly, Mission Motor Co. in San Francisco will roll out its Mission One next year. With its sport bike styling and copper-and-black paint job, Mission One is the Tesla of motorcycles: It set the land-speed record for an electric motorcycle, blazing across the Bonneville Salt Flats in Utah at 150 miles per hour in September. And Mission claims the bike can go 150 miles on a single charge--more than double the range of the other bikes on the market.

Will all of that--plus the burgeoning eco movement--help e-motorcycles turn the corner into the mainstream, or will they always be a world apart from Harley-Davidson and Ducati? This year will start to tell the story.
     
Leading the Pack

The walls at Brammo's Ashland, Ore., headquarters are painted the same chlorophyll color as its motorcycle. As of January, Brammo, which has received $15 million in venture capital since setting up shop in 2002, had sold just 100 of its $7,995 bikes through the six West Coast Best Buys that so far are carrying it. But CEO Craig Bramscher sees "a hunger and interest" for its products globally and is making plans to meet that demand. He's in the process of raising an additional $30 million, which will be used for R&D and to increase production as Brammo rolls out new models at additional Best Buy stores and in overseas markets. In the U.S., a 10 percent federal  tax credit for buyers of electric motorcycles will also help offset the sales price.

Brammo's headquarters are located just off the I-5 freeway next to a Holiday Inn Express and a Chevron gas station in a space once occupied by an electronics cable manufacturer. A black Harley-Davidson and racing-red Ducati are among the handful of traditional gas-guzzlers dotting the parking lot. The unassuming brick building is both office and production facility: On one side is the design team, whose pencil drawings and component prototypes line the walls and clutter the carpeted floor. Walk through the simple door separating the brains from the brawn of the operation, and there's an assembly line of builders transforming aluminum-frame carcasses into fully functioning vehicles, packing on batteries, electronics, brakes, shocks and bodywork, at a rate of about 10 bikes per day.

Bramscher says his 21,000-square-foot facility is capable of producing as many as 10,000 motorcycles a year. When operations expand to Europe and Asia later this year with additional final assembly plants, Bramscher places the company's annual production closer to 100,000--a number that puts Brammo on par with more established and better-known motorcycle manufacturers, such as BMW.

Initially funded with an $11.5-million investment, a portion of which came from Best Buy, Bramscher sees his product as "consumer electronics that you ride." That's why Brammo bikes aren't just sold at the electronics store, they're also serviced by its Geek Squad, a tech entity that usually fixes computers and installs home-theater systems. 

NOTE:  TO READ THE REMAINDER OF THIS ARTICLE CLICK ON THE LINK PROVIDED BELOW.

COMMENTARY:  I love these bikes, and I would buy one just for kicks.  At $6,000 to $10,000 for an eBike this is well within the budget of most bike enthusiasts.  

If gas goes to $5.00 a gallon in the forseeable future (a Chevron exec told me this), even macho riders who varooom across the landscape in a Harley-Davidson, will be fighting a path to get one of these eBikes.  With a top speed of 150 mph, and range of 150 miles on one charge, that's plenty of performance, if you ask me.  Who drives that fast, anyway?  First, it is illegal, and second, it is dangerous.

I like the fact that you can plug it into a regular 115/120 volt electrical outlet.  Brammo claims that you can drive their motorbikes for 15,000 miles at a cost of $85.00 worth of electricity. You can park a motorbike just about anywhere, not so with an automobile.  Electric cars need specialized charging stations, and there still are not enough of them.

Electric motorbike adoption is still very early in the product life cycle, but eventally I believe that electric motorbikes are going to be very popular, especially in urban areas where parking is at a premium, and costly too, as in San Francisco and New York, to name a few places.           

Electric motorbikes are the future, people.  Best Buy invested $11.5 million in Brammo, so they must believe this as well. I like Brammo's distribution strategy.  Best Buy's are everywhere.  Lots of foot traffic.  The company is really going green with its technological electronics products. 

China, electric bicycles are the rage.  Last time I looked, something like 15 million had been sold in China.  The Chinese must know something we don't. 

Courtesy of an article appearing in the April 2010 issue of Entrepreneur Magazine

FACEBOOK PARTNERS WITH BIGCOMMERCE TO ADD STORE FRONTS TO MEMBER PAGES

Online storefronts for retail goods are popping up all over Facebook, with the social network fast becoming a virtual shopping mall. We recently wrote about Payvment, a startup that implements PayPal’s Adaptive Payments API to let anyone set up a retail storefront on Facebook. Today, BigCommerce, a company that provides ecommerce software to online retailers and merchants, is adding the ability to create a storefront on Facebook pages.

Called SocialShop, the application allows merchants to display products on a Facebook Page. Merchants just have to add the application to their page, enter their store URL and then choose which products they want to display on the page. The retail platform will show up in a “Shop Now” tab on the page, and allows visitors to share products with their friends Facebook users can then click on a product to learn more but in order to buy the product they will be taken away from Facebook to the merchants store (which is also powered by BigCommerce).

The one drawback to BigCommerce’s application is that the actual transaction needs to take place on the merchant’s BigCommerce website instead of within Facebook. But Mitchell Harper, CEO of BigCommerce, says that this can also draw more traffic to the merchant’s main storefront.

BigCommerce helps small businesses power anything and everything related to an online storefront from search to inventory to online payments to marketing and SEO. And the price for the software is affordable for small businesses, with basic plans starting at $25 per month. The company is currently powering online storefronts for 4000 businesses and faces competition from Yahoo Stores and eBay’s ProStores.

COMMENTARY:  This is something that Twitter should be doing.

Courtesy of an article dated March 24, 2010 appearing in TechCrunch

BLOCKBUSTER'S FINANCIAL SITUATION WORSENS, BANKRUPTCY FILING VERY LIKELY

Blockbuster Inc. has only a matter of months to rearrange its debt and turnaround its shrinking video-rental business or it will be forced to file for bankruptcy protection.

The Dallas-based company has warned investors for the second year in a row that it may have to file for U.S.Chapter 11 bankruptcy protection in the face of declining sales and rising competition.

"It's unlikely we will be in the same position a year from now," Tom Casey, the chief financial officer and executive vice-president, said in an interview. "It's months or a few quarters. Certainly we have a number of alternatives that we are working on that we are pleased with."

Blockbuster is a victim of a massive inheritance of debt from its former parent company, new technology that is revolutionizing the market and its own sluggish strategy to counter the onslaught of new forms of competition in recent years.

“ When we look at alternatives for capital raising, Canada is a candidate for using its collateral to provide financing. ”— Tom Casey, Blockbuster chief financial officer and executive vice-president

Weakening financials and growing competition "raise substantial doubt about our ability to continue as a going concern," Blockbuster said in a filing with U.S. regulators late Tuesday. It used similar language a year earlier.

The company said it may try to strengthen its balance sheet by converting senior debt into common stock, thereby diluting current shareholders' holdings.

It also raised the possibility of using its Canadian assets as collateral on payments to the movie studios for its DVDs.

Blockbuster's Canadian operations remain debt-free and are one of the assets at the disposal of the parent company, Mr. Casey said. "When we look at alternatives for capital raising, Canada is a candidate for using its collateral to provide financing."

Blockbuster has a market value Wednesday of just $78-million (U.S.). The shares plummeted 29 per cent to 28 cents on the New York Stock Exchange yesterday. Five years ago they traded around $10.

Blockbuster has been losing business to a number of challengers, including Netflix Inc., which sells movie rental subscriptions in the U.S. by mail and online, and Coinstar Inc.'s Redbox, which rents films for $1 a night from vending machines located in U.S. grocery stores.

In addition, cable and satellite TV companies are offering on-demand movie services and Apple Inc. is selling movies and TV programs online.

Blockbuster has tried to replicate these business models without significant success to date. Its major rivals boast far more online subscribers and rental kiosks.

But Mr. Casey said he thinks Blockbuster is "uniquely positioned" to combine all the emerging movie distribution platforms under one brand.

The market, however, remains largely doubtful that the management team can pull things around at this late stage.

In one indication of how marginalized Blockbuster has become, shares of Netflix inched up just a fraction of a per cent Wednesday, rising 29 cents to $70.92 on the Nasdaq stock exchange, on the news of a possible bankruptcy filing by its rival.

California-based Netflix has been growing by nearly 20 per cent annually over the last few years and posted profit of $679.7-million last year on sales of $1.67-billion. In contrast, Blockbuster sales fell 20 per cent last year to $4.1-billion. Losses increased to $558.2-million, up from $374.1-million.

The company closed several hundred of its 6,500 stores last year as it moved to boost its online and kiosk-based sales. It reported a $300-million reduction in expenses last year and is targeting another $200-million in cuts this year.

But the belt-tightening may not be enough. Blockbusters' liabilities exceeded assets by $314-million at the end of the year. Part of the company's problems today stem from its former parent's decision to spin off the video-rental business.

Media giant Viacom Inc. shed its majority stake in Blockbuster in 2004, but not before Blockbuster committed to a special, one-time dividend payment of more than $900-million, a payout that saddled the video rental company with massive debt.

As of Jan. 3, the company reported debt of $975-million, almost half of which is due within three years or less. Last October it managed to rearrange some of its financing with a $675-million bond deal that offered a yield of 11.75 per cent.

On average, Blockbuster's same-store revenue decreased 13 per cent last year due to increased competition and lower store traffic.

The company owns and operates 459 stores in Canada, where sales fell to $399.1-million in 2009, down 17 per cent from $482.7-million a year earlier. Video-on-demand from cable and telecom companies has been largely responsible for that drop, Mr. Casey said.

And although Netflix doesn't operate in Canada, privately held Zip.ca Inc. operates a similar online subscription mail-order service here.

COMMENTARY:  I can remember going back three or four years, when Blockbuster's CEO said that he did not believe NetFlix present a serious competitive problem.  Flash foward to 2010 and NetFlix is profitable and stronger than ever.  About two years ago, Coinstar, began installing its RedBox movie kiosks at numerous food and drug store chains throughout the country,  These two companies have chipped away at Blockbuster's market share and now the company is in serious jeopardy of going out-of-business judging from its balance sheet (debts exceed assets by 2-to-1).  

I stated early last year, that I felt Blockbuster's days were numbered given the competition from NetFlix and RedBox and the shift from DVD to online movie streaming and downloads.  It is a pity that Blockbuster's management did not see this coming and reacted to these threats and technological shifts a lot sooner.  Had they consolidated a lot sooner, and developed their own online movie streaming service a lot sooner, they might not have placed themselves in such a dangerous situation. 

I have been where Blockbuster is, and I just do not see any other option except bankruptcy and liquidating the company.   Converting debt into stock is going to be of little good this late in the game, because this will not solve the technological shift that has occured and continue to impact their business.

Courtesy of an article dated March 19, 2010 appearing in The Globe and Mail   

THE PROBLEM OF TALKING TO VENTURE CAPITALISTS TOO SOON

I had coffee with an entrepreneur friend the other day who is in the early stages of putting a company together, and he recounted how his informal conversations with a venture capitalist had quickly escalated into a full partner pitch in just a few weeks. That situation sounds very positive in theory, but the problem is that this founder wasn’t ready for this interest and is trying to play catch up in other capital raising discussions (with both angels and VCs). He lamented that if the meetings with this venture firm soon led to a term sheet, he’ll be faced with a tough problem of a binary decision – take whatever they offer him (which was likely too much money for what the company needs now at not a great price) or risk losing any funding options. A high class problem, certainly, but one in which the entrepreneur could have easily avoided by generated alternative funding options and as a result, a better outcome. I’ve seen this scenario play out often; as VCs are aggressive in pursuing hot new companies and entrepreneur (especially first-timers) are flattered and eager conversations with VCs. Given this situation happening, I’ve even heard some people strictly advise entrepreneurs never ever to talk to VCs unless they absolutely need to… in order to raise money.

All of this led me to think about the question – when is a good time for an entrepreneur to talk to a venture capitalist?

At the recent March Web Innovators Group event, I invited a panel of serial entrepreneurs to talk about their founding stories, during which David Cancel said that “one of the most unproductive things new founders do is talk to investors too early… I test all my ideas on the web.” I completely agree that the best way to test market demand for a business is with customers, and spending too much time with investors early on can be unproductive. Recently Chris Dixon wrote that in developing new startup ideas that founders should be the “opposite of secretive” and talk about startups ideas with “every smart person you can get a meeting with”… including VCs. He continues “VCs are good at telling you about similar companies in the past and present and critiquing your idea in an 'MBA-like' way: will it scale? what are the economics? what is the best marketing strategy? I would listen to them on these topics but pretty much ignore whether they think your idea is good or bad.” Fair enough.

Like most things, knowing who, when, how much, about what, and how often to talk to VCs about your startup is not clear-cut. As a guiding principal, I believe there is a distinction between informal discussions with an individual venture capitalist and formal capital-raising with a venture capital firm. Of course, as an entrepreneur you’re always selling to all of your constituents, including (potential) investors. But I think there’s a bright line between socializing your startup with one person and formally presenting your startup to a firm’s partnership (or a subportion of it).

First, I thought I’d enumerate a quick list few reasons and benefits in talking with venture capitalist before you’re actually ready to raise institutional capital. I am sure there are additional ones. An early conversation with a VC is a great way to:

• Hear another smart person’s gut reaction opinion. Venture capitalists hear numerous startup ideas, benefit from the ability of pattern recognition, and can share that understanding. Of course, it’s important to incorporate knowledge of VCs’ biases into the feedback, but that’s true in any conversation you’re having about your startup.
• Learn a top-level perspective of what’s going on the market and how your idea fits into that space. Many VCs closely follow specific industries and subindustries, and have been for a while. Especially if it’s an entrepreneur is exploring in a somewhat unfamiliar territory, a VC conversation can help add to an entrepreneurs understanding of the market.
• Make connections to people who will be able to improve your business in some way. VCs spend a good portion of their time networking and interacting with a variety of people within the startup ecosystem. Chatting with a venture capitalist could lead to warm introductions to advisors, industry connections, other entrepreneurs who have worked on similar endeavors in the past, potential partners, etc. If a VC thinks an early-stage company has promise, he’ll want to help out in some way to prove his “value add” worth, and providing introductions is a easy one.
• Receive feedback on when or even if the company will be ready for institutional capital versus private angel investment. Many entrepreneurs I speak with who are starting a company don’t fully understand some of the differences between the capital sources, the ramifications of raising from either, and when (or even if) in a company’s life-cycle it is appropriate for venture capital. Having one or two early discussions with VCs can help clarify those scenarios.
• Obtain important value-creation milestones from an investor point of view. Similarly, an experienced venture investor can share valuable thoughts what achievements and traction points a startup must reach before it becomes attractive to an institutional investor.
• Establish a relationship and assess fit. VCs like to fund people that they know, so if you can develop a real connection and dialog with him before you’re actually out fundraising, it definitely aids in that process. And more importantly, an entrepreneur can use (an) initial informal conversation(s) to get a sense of if there’s a match, both in investment profile and intangible interpersonal dynamics (i.e. personality fit).
• Demonstrate your ability to execute. The best way to sell a VC on your startup is to tell them what you want to do and how you’re going to do it - then actually go accomplish that plan. It’s much better for an investor to “see a movie rather than the picture” as a way for him to assess the capacity to perform. An early conversation empowers an entrepreneur to set goals and benefit from achieving them. VC deal with a lot of startups, so they are very aware that plans and timing do always change. Having a relationship with a VC allows him to understand why those changes happen to see (and get excited about) the accomplishments as they happen.

In many ways, the old adage is very true: the best way to receive funding is ask for advice, and best way receive advice is to ask for funding. So I do believe there are real benefits to informal conversations with VCs before you’re really fundraising – in moderation. After all, entrepreneurs ha ve a company to build. And venture investors are just one of the many many different constituents that are important to speak with early in a company’s lifecycle.

However, it’s important to realize that as soon as you present your idea to another person within the firm beyond your primary contact, you’re officially fundraising. This situation means that your best foot should be forward. At this point you’re not seeking feedback and help, but rather you’re seeking investment. And if you’re looking to optimize the outcome of a fundraise, you should be talking with more than one capital source.

Some would argue that if you’re talking with VCs that your company will develop a reputation in the marketplace of being “shopped around.” But again, I would draw a distinction between individual conversations and presenting to more than one person at the firm. Scuttlebutt in the marketplace is just that, and is a reflection on reality. If you really are actually fundraising for a long time then that reputation will indeed develop; but if you’re truly seeking open advice/feedback/input/connections, that will resonate instead especially if you set those expectations in the conversation.

So what is the entrepreneur at the beginning of the post doing facing his situation? He put the full partnership pitch on hold and is starting a real fundraising process when he is ready.

COMMENTARY:  Besides speaking with the startup founders, researching the industry and competitive environment, determining if the startup is filling a real market need, and obtaining proof-of-concept, I don't normally like contacting VC's for their advice about a particular idea or technology.  It is just too early.  I almost always prefer to do a conference call with the firm principals with the intent of performing a cursory due diligence and feeling out the team for competence, motivations, personality and committment to the venture. 

Courtesy of an article dated March 25, 2010 appearing in Genuine VC    

   

MICROSOFT INTEGRATES FOURSQUARE'S MOBILE LOCATION SERVICE INTO BING MAPS

Microsoft plans to deliver new tools in Bing Maps powered by mobile location service Foursquare. The Redmond, Wash. company's Silverlight technology will pull in the data.

Bing has begun to pay more attention to real-time, social and location-based data signals that can provide depth to search queries that serve up tips, comments and other information.

Enhanced location-based services and a variety of other features will become available during the next few months, as Microsoft continues to invest more in its mapping platform. Not just information from "maps" that show location, but a "canvas where you can visualize search data," Adam Sohn, Bing director for the Online Services Division, told MediaPost Thursday. "The concept is related to the notion that there's real data and information behind each search that often gets disaggregated from its physical context."

People searching for information on Bing will finally begin to see the fruits of labor from separate deals inked with Facebook and Twitter last year to deliver real-time data.

The ability to deliver real-time information based on a variety of signals means giving people who search for a particular news source, such as The New York Times, access to connect not only to the main site but to links of the most popular trending stories based on information shared across the Web. Sohn says it's a new way to generate traffic from the search engine to the publisher's site.

Microsoft also plans to enhance Quick Tabs on Bing, moving the tabs from the left rail to the top of the page. The feature aims to deliver results based on what the search engine believes represents the intent of the person searching on the query. The change also represents a new look for the user interface and hopefully a more intuitive way to search.

Bing's focus on "curating content," rather than "cataloging Web sites," supports Forrester Research Principal Analyst Shar VanBoskirk's vision for the future of search. "Think about a search engine as a concierge pointing you to answers you need, instead of presenting lists of sites that have content that matches your query," she says.

VanBoskirk points to the side and the top navigation capabilities. The features allow users to drill into categories of content related to their search without having to do a subsequent search, or click through to pages to see if the content matches their needs.

"I think the other enhancement that really illustrates this shift is the creation of comparison answers and domain task pages," VanBoskirk says. "These are literally aggregations of content, links, images, video specifically to answer the most commonly search goals associated with different topics. Instead of having to scout through multiple pages, content sources, using multiple queries, Bing curates all of what they think the searcher is after into one page."

Thursday marked the beginning of Bing's spring release. Microsoft will experiment, test and roll out these features during the next several months.

COMMENTARY:  Location-based services are really starting to catch on with users judging from the popularity of Foursquare.  When you combine this with "augmented reality", a location-based technology that allows you to take a picture of a product in a store window, and be pointed to other locations that sell the same or similar products within close proximity, it just makes you wonder where we will be in a couple of years.  You do have to opt-in to these location-based services, but this is what the world is coming to.     

Courtesy of an article dated March 26, 2010 appearing in MediaPost Publications Online Media Daily