Cashing Out: Week of April 22nd – 28th 2012 in Online Marketing News

Facebook buys 650 of Microsoft’s AOL patents

650 of the 925 patents Microsoft bought from AOL two weeks ago have already been sold, Econsultancy reported April 23.

Microsoft, which bought the patents and patent applications for a reported. $1.1 billion, has now sold a good portion of them to Facebook, to the tune of $550 million.

Presumably, the patents will help bolster Facebook’s portfolio as its patent dispute with Yahoo continues. “After all, Yahoo must be infringing upon one of the thousands of patents Facebook has either bought or licensed, right?” Econsultancy writes.

As part of the deal, Microsoft gets to retain its license to the patents sold, while Facebook gets a license for the 275 AOL patents it didn’t buy from Microsoft.

On Microsoft’s end, the deal will help the company cover the expense of their recent splurge, with TechCrunch quoting Microsoft Executive VP and general counsel Brad Smith as saying:

“Today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction […] As we said earlier this month, we had submitted the winning AOL bid in order to obtain a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

Add to that the fact that Microsoft is a Facebook shareholder, and the deal sounds pretty sweet on either side.

Nexus tax ruled “unconstitutional” in Illinois

AffiliateTip reported April 26 that nexus tax legislation passed last year in Illinois has been ruled unconstitutional by Judge Robert Lopez Cepero of that state.

Judge Cepero reportedly said of the bill – which would require out of state retailers to charge sales tax on goods sold online in Illinois – that it “violates commerce clause of the U.S. Constitution.”

Since HB 3659 came into law March of last year, the ruling “could set the stage for affiliate marketers to get back to business in Illinois,” says AffiliateTip.

CISPA passes in the House

April 26, the House of Representatives gave their definitive say on The Cyber Intelligence Sharing and Protection Act (CISPA), passing the controversial cybersecurity bill, after some amendments, in a vote of 248 to 268.

Much of the controversy surrounding the legislation concerns the threat some say it poses to individuals’ privacy. As quoted by TechCrunch, Rep. Jared Polis said  the bill would “waive every single privacy law ever enacted in the name of cybersecurity. Allowing the military and NSA to spy on Americans on American soil goes against every principle this country was founded on.”

Though CISPA has been passed in the House, it is expected to meet with opposition in the Senate, which is the next step in trying to pass it. And even if it does make it through, says TechCrunch, it still may not ever become law:

“The White House issued a statement condemning the bill and on Wednesday, President Obama threatened to veto the legislation because it ‘fails to provide authorities to ensure that the nation’s core critical infrastructure is protected while repealing important provisions’ of long-established privacy law.”

Amazon, Texas make tax collection agreement

TechFlash reported April 27 that Amazon and the state of Texas have worked out an agreement by which the retailer will begin to collect and remit sales taxes on July 1, a conclusive resolution of all of Amazon’s sales tax issues with the state. The comptroller’s office had previously assessed that Amazon’s uncollected sales taxes between 2005 and 2009 amounted to $269 million.

Meanwhile, Amazon has agreed to invest some $200 million in the state and plans to create about 2,500 jobs there over the next four years.

TechFlash says that both Amazon and Susan Combs, the Texas Comptroller of Public Accounts who signed the agreement, are in favor of developing nationwide legislation dealing with similar sales tax problems. In a joint statement from Combs and Amazon VP of Global Public Policy Paul Misener, Misener said:

“We strongly support the creation of a simplified and equitable federal framework, because Congressional action will protect states’ rights, level the playing field for all sellers, and give states like Texas the ability to obtain all the sales tax revenue that is already due.”

The quarterly reports from Facebook, Apple, Amazon, and Netflix:

More quarterly reports from leading tech and internet companies were released this week. The following is an overview of their performance.

Netflix’s Q1 better than expected

After a tough year, Netflix emerged from their first quarter more or less no worse for wear.

Their Q1 2012 earnings report managed to beat the estimates from analysts, with losses of just $0.08 per share on $870 million in revenue, rather than the predicted loss of $0.27 on $866 million.

All in all, Netflix’s net loss amounts to $5 million for the quarter, though the company reported they’d gained “nearly 3 million” new subscribers, says TechCrunch.

Facebook’s Q1 sees 12 percent fall in profit

How’d that happen?

As The New York Times (NYT) reported, with the release of Facebook’s Q1 report for 2012, the company disclosed a drop in profits of 12 percent, roughly equal to $205 million. However, as the NYT pointed out “its revenue exceeded $1 billion for the second consecutive quarter.”

According to the NYT, it’s Facebook’s rapid and large-scale growth that’s costing the company in terms of profit:

“Its marketing costs more than doubled, to $159 million in the quarter, while its research and development nearly tripled, to $153 million.”

Pre-IPO, a drop in profits like this isn’t the greatest news, but the company has taken the angle that “the slowdown in revenue growth was because ad revenue was strong toward the end of a calendar year and then trailed off in the next quarter,” says the NYT.

In the filing, Facebook said the revenue slowdown was due to “seasonality in advertising spending [which] affects our quarterly results.”

Amazon profits down, net sales up

Though its Q1 report for 2012 showed a 35 percent drop in net income $130 million, Amazon still beat analysts’ expectations, with net sales increasing by 34 percent, to $13.2 billion.

That strength was certainly well received by investors, as Amazon’s stock price rose 12 percent to $220 per share in after-hours trading following the news, says TechFlash.

Apple profits almost double in Q2

Though expectations were naturally high, Apple nonetheless beat analyst estimates with the release of its Q2 report this week.

In the second quarter alone, the company’s profit almost doubled “ jumping 93 percent to $11.6 billion, or $12.30 per share,” writes TechFlash.

Furthermore, as TechCrunch notes, the company “now has an even stronger cash position than it did before : $110 billion in the six months ended March 31, 2012 versus $81.5 billion in the six months ended September 24, 2011.”

This week in marketing studies and reports:

In UK, 25 percent of disposable income spent online

According to a WorldPay report, cited by Econsultancy, consumers in the UK spend exactly a quarter of their disposable income online.

The UK represents the highest percentage of disposable income spent online for any European nation, and the figure is 2 percent higher than the average consumer in the US.

The report found that the top three categories for online spending by UK consumers were clothing (36 percent), food (33 percent), and department stores (33 percent.)

Kindle Fire nabs over half the Android tablet market

According to a new report from comScore, 54.4 percent of the Android tablet market has been taken over by the Kindle Fire. The market share of the inexpensive device has nearly doubled over the past two months, says Mashable.

Majority of tablet owners surf the web and watch TV at the same time

The second part of a Nielsen report on prime time TV viewers in the US found that 69 percent of tablet owners use their tablet while watching TV “at least several times a week.” And 45 percent say they do daily, while just 12 percent say they never do.

Social networks and mobile games tied for time spent on Android and iOS

According to a report from Flurry, cited by TechCrunch, the amount of time spent via Android and iOS on Social Networks has caught up with the amount of time spent on mobile games. So, though game apps have traditionally been more popular, Flurry VP of Marketing Peter Farago believes they’re petering out as interest in social networking  increases:

“We take the rise in Social Networking apps as a signal of maturation for the platform […] As game demand may be hitting its saturation point, consumers are also discovering other apps, namely Social Networking.”

About Emily Wilkinson

Emily Wilkinson is a Montreal writer and editor who recently joined Her experience comes largely from her work at print publications like La Scena Musicale, where she alternated between positions as content manager, copy editor and journalist.
She believes in the importance of strong writing, be it in journalism or in other media, like blogging or even social networking. Her prerogative: though language will and ought to evolve, a good writer need never sacrifice the communicative power of text that is written with thought and care, whatever the venue.
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