VentureBeat

Microsoft has just revealed the details of its online office and security offering, Equipt (previously code-named Albany), which will bundle together Microsoft Office, security service Windows Live OneCare and other products for a $69.99 annual subscription.

Product Manager Bryson Gordon told the IDG News Service that Equipt isn’t really meant to be a competitor to Google Docs and other free or low-cost office products. Instead, he said, it’s a way to convince people who are buying or upgrading their security software to get the latest version of Microsoft Office, too. And it’s true that regardless of what Google is doing, this seems like a good move. Equipt’s online subscription model offers Microsoft a much steadier revenue stream. I mean, does anyone shell out for each new version of Office? Heck, just the idea of buying software out of a box seems incredibly weird to me now. By bundling with Office, it also helps Windows Live OneCare stand out against competitors like Norton 360 or McAfee.

And it could tempt people away from Google Docs. After banging my head against the wall trying to make headers work in Google Docs, $69.99 seems like a small price to pay for decent word processing software.

There is, however, one rather baffling part of the announcement — starting on July 15, Equipt will be offered exclusively through Circuit City. Hopefully, Microsoft will follow through on its promise to make the product available through other channels ASAP, but this just sends the wrong message. If you’re trying to make a serious move into a new distribution model, why would you partner with a company that epitomizes the old model? Even Blockbuster has figured out that teaming up with Circuit City is a dumb move.

Blockbuster today issued a one paragraph statement to announce it was withdrawing its proposal to purchase electronic retailer Circuit City. This is the way a takeover bid ends. Not with a bang, but with a whimper.

Citing “market conditions,” Blockbuster determined it wasn’t in its best interest to purchase the struggling chain. Those market conditions likely being that both companies stocks are in the tank.

When Blockbuster made its initial bid in April, Circuit City’s stock was around $4-a-share. Immediately after the proposal was announced, it jumped to $5-a-share. Now it’s around $2.50-a-share, almost exactly even with Blockbuster’s stock price as they race each other to the bottom.

Blockbuster is also claiming to have done its “initial due diligence process,” which perhaps means little more than listening to any expert, advisor or analyst who had no idea why it was doing this deal.

The deal was a $6 to $8-a-share cash offer, which could have been worth as much as $1.3 billion. For the deal to work, Blockbuster would have had to borrow quite a bit of money. That would have been risky, especially in this economic climate.

What Blockbuster needs is actual strategy for how it’s going to remain a business going forward. The move to digital distribution is already beginning, and Blockbuster, having slept through most of the DVD rental-by-mail period where Netflix ate its lunch, needs an answer. An answer better than in-store kiosks.

“We continue to believe in the strategic merits of a consumer retail proposition that would bring media content and electronic devices together under one brand. We will pursue this strategy through our Blockbuster stores as a way to diversify the business and better serve the entertainment retail segment,” Blockbuster chief executive Jim Keyes wrote today.

Yeah, good luck with that.

Blockbuster’s largest shareholder happens to be none other than the resident thorn-in-Yahoo’s-side, Carl Icahn. He indicated in the past that if Blockbuster couldn’t do this deal with Circuit City, he may just take the electronics chain over. I don’t know about you, but I’m going to be reading The Icahn Report, Icahn’s blog, tomorrow.

[photo: flickr/RocketRaccoon]

While nearly everyone and their mother is getting in to the digital movie distribution business, one name still notably absent is Blockbuster. Despite being nearly synonymous with movie rentals for the past twenty years, and buying the digital download service Movielink last year, Blockbuster still has not been able to get its act together in the digital world.

Today, at its annual shareholder meeting, the company showed off yet another direction it is attempting to take on the road to digital: kiosks.

I find this interesting and somewhat humorous. After all, to use a kiosks you have to be, you know, at a kiosk. Considering you are probably not going to have one of these in your home, doesn’t this negate one of the major advantages of digital distribution: instant access?

These machines, which should begin to roll out to select Blockbuster stores in the next three weeks are being developed by NCR Corp, according to the Associated Press. For the pilot tests, the kiosks will only work with the Archos portable media player, however the company says compatibility with a wide range of devices will eventually follow. No word on if that includes a certain device that begins with a lower-case “i”, but seeing as those only sync with iTunes, I wouldn’t count on it.

Considering how many people watch digital movies on portable devices and then subtracting all those who do so on iPods, you have to wonder why exactly Blockbuster is wasting its time on such an endeavor. Blockbuster undoubtedly thinks this will be a big trend in the future, but if such activity does catch on, it’ll probably be on advanced cell phones like the iPhone, probably not stand alone devices like the Archos. Eventually, this activity will take place wirelessly over the Internet as well. I just don’t get it.

Perhaps Blockbuster is stalling. All of its main rivals have major digital distribution options now while it does not. While digital movie distribution is not a huge business yet, it will be, and the longer Blockbuster waits to get into it, the less likely it is to be a leader in the field.

It’s also noteworthy that during the meeting the company barely mentioned its proposed takeover of electronics chain Circuit City — another less than stellar idea in my book. Absent from the meeting was Blockbuster’s largest shareholder, Carl Icahn. Icahn has said he will simply buy Circuit City if Blockbuster can’t for whatever reason. You may recall that Icahn is also taking hostile actions to take over Yahoo.

No word on if he’ll buy either Circuit City or Yahoo from a kiosk.

[photo: flickr/goldberg]

Blockbuster was once a name synonymous with movie rentals. Then Netflix, the online DVD mailing service, came along and stole some of that luster. Recently, as the transition to digital distribution for home movie rentals/purchases has begun, Blockbuster has seemed almost comically behind. That reputation could get worse with the company’s offer today to buy number two electronics retailer Circuit City.

The $6 to $8 a share dollar cash offer, which could be worth as much as $1.3 billion, simply does not make a lot of sense. Blockbuster notes that the combination would make an $18 billion global enterprise, but a lot of companies can be crammed together and a big number thrown out there; it doesn’t mean they should be.

Both Blockbuster and Circuit City have been struggling amid strong competition from the likes of Netflix and Best Buy respectively. Both have stocks that have been bottoming out recently — Circuit City’s stock was trading at just under $4-a-share before the deal, Blockbuster’s was even worse, closer to $3. If stock prices are any indication, investors don’t understand this deal either — at least for Blockbuster. While Circuit City is soaring, up nearly 30 percent on the news, Blockbuster is tanking, down almost 13 percent right now.

Both companies had some positive news recently. Blockbuster finally appeared ready to take digital distribution seriously with talk about entering the the living room set top box game and saw profit climb on some cost-cutting the company has been doing. Circuit City also cut costs last quarter and pulled in a profit. This deal looks to negate these slight turnarounds.

A private offer is said to have been made before Blockbuster took a page from Microsoft’s book in its pursuit of Yahoo and took the deal public. Now, Circuit City seems just as confused as all of the analysts about the deal. Circuit City has issued a statement questioning if Blockbuster could even finance such a deal:

Among those questions are whether the proposed acquisition would require a refinancing of the existing Blockbuster debt, and if so, what would be the terms and structure of any new debt; how large a rights offering would be required to fund the transaction and what steps Blockbuster has taken to provide a backstop to ensure successful execution of the rights offering contemplated; and what precise internal and external approvals Blockbuster anticipates for a proposed transaction, including approval of the contemplated rights offering by Blockbuster shareholders and registration of the offering with the Securities and Exchange Commission.

Michael Pachter of Wedbush Morgan Securities also questions the financing of such a deal:

Our initial analysis of the deal leads us to tentatively conclude that Blockbuster intends to raise around $500 million through a rights offering, plus an additional $500 - 800 million in incremental debt. The combined company would have around $120 - 150 million of EBITDA before synergies, implying a debt to EBITDA ratio of 6 - 11x. It is not clear to us that Blockbuster will succeed in financing this transaction.

He goes on to note:

We think that Blockbuster’s move is premature, and borders on being reckless. Circuit City runs its business as a “big box” retailer, and its business is particularly challenged by a worsening economic environment, a well-run competitor, and a constantly changing product offering.

One major problem Blockbuster has had in the Netflix world is that its brick and mortar stores cost too much money to operate. That is exactly why it decided to close hundreds of them. Little did anyone know that the plan then included buying another company’s struggling brick and mortar stores.

[photo: flickr/Elise esq]

Here’s the latest action:

Cleantech investments laugh in the face of recession — Everyone knows the economy is in the dumps, right? (Heck, it even says so in The New York Times.) Well, no one told the VCs putting their money in cleantech. The Cleantech Group reports that cleantech investment reached a record high of $1.25 billion during the first quarter of 2008, with $195 million going to biofuels and $119 million going to solar. It doesn’t hurt that cleantech projects can take so long that we’ll probably go through several more boom-and-bust cycles before some investments start paying off.

Google opens marketplace for enterprise apps — Following Monday’s launch of the Google App Engine, the search giant is taking further steps to position itself as a developer’s best friend. It just opened the doors on Google Solutions Marketplace, a listing service for applications that enhance Google’s enterprise offerings.

Last.fm says giving music away pays off – The company’s free, full-track music service launched 12 weeks ago, and it says the songs are promoting real sales. The 119 percent increase in purchases through Last.fm’s click-through partnership with Amazon seems to back this up.

Yahoo exec joining OpenX, aka OpenAds – Kara Swisher reports that former Yahoo Senior Vice President of Search Tim Cadogan has joined OpenX, a startup that provides open source ad serving software. The company recently changed its name from OpenAds and is moving from London to Los Angeles.

Will Google App Engine compete with Facebook? – Speaking of the Google App Engine, Nate Westheimer argues that the tech media (including VentureBeat) got the story wrong — the app engine won’t compete with Amazon’s web services at all, Westheimer says, but rather with Facebook’s F8 Platform. Unfortunately, he fails to understand that two products can still compete, even if they’re somewhat different.

HD DVD owners get $50 back from Amazon — If you’re the less-than-proud owner of an HD DVD player, you’re probably feeling pretty bummed right now. But even though you were on the losing side of the format wars, Amazon is offering a consolation prize — $50 in store credit. Maybe you can help Blu-ray players get close to Sony’s hoped-for-but-unlikely 50 percent market penetration.

Vignette acquires white label video publisher Vidavee — The deal was for $6.6 million, less than the $8 million Vidavee has raised, according to Paidcontent.