I was at the local coffee shop the other day and while waiting for my drink, I browsed through a full stack of New York Times. It got me to thinking, when was the last time I actually bought a newspaper? This isn't a commentary on whether newspaper companies are dying (they are) but the curious observation that I actually don't read printed newspapers any more. I used to have a subscription to the San Francisco Chronicle but canceled that around 2003 once I realized that everything I was reading was old news. I had already gotten the sports scores from Sportscenter and ESPN.com, stock quotes and business articles from Yahoo Finance, even local news from SFGate.com. It just got to the point where I was tired of paying for stuff I had already read (plus having to take a sack of newspapers to the recycling bin each week).
 
Nationally recognized publications like the New York Times and Wall Street Journal might still have a printed news audience but eventually, I just can't see how even they can keep up with the increasingly real-time demand of content. To be fair, most newspaper companies have a website but when will the cost and inefficiency of printing newspapers outstrip the newspaper subscription fees generated, if it hasn't already? I'm sure there's a demographic of folks who enjoy sitting down with a nice cup of coffee and the paper (I used to be one of them), but those folks are dwindling in number.

AllThingsD is reporting that Carol Bartz (previously CEO of Autodesk) has accepted the Yahoo CEO position. Good move for her as there are only a handful of companies with iconic status in Silicon Valley (if not the country). It's interesting how CEOs tend to reflect the state of where a company is and will most likely go. When Koogle was CEO, he was basically brought in as the adult to mind the store the kids built. His tenure was marked by impressive growth but not really sure if he was the driving force behind that or more just the conductor of the train already on track to do what it was going to do. Next was Semel who was brought in because Yahoo no longer wanted to be a tech company but a mass media player with its hands in Hollywood, Madison Ave, etc. Yang's short tenure saw Yahoo try to get back to its tech roots, albeit with little or no success. What will the Bartz era bring? Probably sound management with a focus on maximizing profits and shareholder value. Whether that means trimming more fat or selling off a business unit for a pretty penny (perhaps Search to one S. Ballmer?), I'm not really sure. One thing that's certain is that Bartz is a very capable business manager, often compared to Mark Hurd over at HP. I hear he's done an ok job.
 
Of bigger concern to me is the fact that in a way, Yahoo was able to get an insider without getting an insider. In my opinion, the whole point of a new CEO was to inject new life into the company - get an outside perspective because the inside one was not working. Bartz has had a prior relationship with both Yang and Decker (sits on Cisco board with Yang, Intel board with Decker) and are good friends. Let's hope that their prior relationship doesn't prevent Bartz from doing what needs to be done.

As reported by the Wall Street Journal, Facebook has pulled its planned employee stock sale. This would have allowed the 800+ employees of Facebook to sell a portion of their stock to private investors - supposedly $900,000 worth or 10% of vested shares, whichever is less. Reasons that some outlets are stating was that Facebook couldn't find any private investors who wanted to buy the stock at a company valuation of $4 billion - a far cry from the $15 billion valuation Microsoft got for its $240 million investment.
 
I'm not really shocked that there were no takers at $4 billion. At the time of the original Microsoft investment, I thought Facebook's value was somewhere around $7 - $8 billion. Then when Techcrunch got a hold of some internal financials, I did a back of the envelope recalculation and stated that they should be valued at $4.5 - $5.25 billion which is 15 times projected 2008 revenues. Contrast that with Yahoo or Google which are valued at 2.19 and 4.13, respectively. These have gone down some recently but even if you calculate at January 2008 share prices, Yahoo and Google would still only trade at 4.44 and 10.91 times revenue, respectively. You can make the argument that these are more mature, slower growing companies but these are also PROFITABLE companies - in the case of Google, VERY PROFITABLE. Facebook, on the other hand has huge capital expenditures for servers/bandwidth ($200 million according to Techcrunch) and a hard to monetize audience. They may be GAAP profitable or break-even but most definitely not cash flow positive. Given the eventual slowdown in the online advertising market, I don't think it will get easier for them to squeeze more revenue from their users. However, the cost to support their growing legion of users is going to grow as they'll need more servers and bandwidth.
 
With that said, my new calculation of Facebook's value would only be at best 5 times revenue or $1.5 - $1.75 billion. Of course if they had allowed the employee sale to reset the value of their company, I doubt they'd raise enough through an eventual IPO to cover their growing capital expenditures. The more important question is, how much of the $516 million that they've raised is still there? My guess is that if they can't raise another $100+ million round soon, Facebook could be in for some tough times.