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Online video search engine blinkx has sent a letter to digital advertising company MIVA, seeking to acquire it for $1.20 per share. Yesterday’s closing price for MIVA stock, which trades on the NASDAQ, was $0.78.

MIVA has certainly had its share of trouble of recent years. The company has gone through reorganizations and a management shakeup in the hopes of stabilizing the business, which includes a pay-per-click offering.

Here’s the full text of the letter for your consumption.

August 8, 2008

MIVA, Inc.
5220 Summerlin Commons Boulevard
Suite 500
Fort Myers, FL 33907
Attention: Peter Corrao, CEO
Larry Weber, Chairman
Members of the Board of Directors

Dear Ladies and Gentlemen,
Re: blinkx and MIVA Combination

I am writing on behalf of the board of directors of blinkx Plc to make a proposal for the business combination of blinkx and MIVA. Under our proposal, blinkx would acquire all of the outstanding shares of MIVA common stock for $1.20 in cash per share. Our proposal is not subject to any financing condition. The transaction would be funded from existing cash resources of the two companies.

Proposal. Our proposal represents a 54.0% premium above the closing price of MIVA common stock of $0.78 on August 7, 2008, and a 36% premium over the average closing price for the one month prior to August 7, 2008.

By whatever financial measure one might use, we believe this proposal represents a compelling value realization opportunity for your shareholders and the quickest and most secure way to see such value, particularly given the several challenges MIVA faces in the near term, including: risk and cost associated with the new technology platform, a deteriorating cash position, continued deterioration of the Media EU business and continued decline in revenue and profitability.

We believe that MIVA’s shareholders would not be well-served by any delay in negotiating or completing the merger process, and that time and/or another round of restructuring plans will not significantly increase MIVA’s valuation.

Background. Having worked together for a number of years you will be aware that blinkx is the world’s largest and most advanced video search engine. Founded in 2004 by Suranga Chandratillake, the company completed a successful IPO on the London Stock Exchange (AIM) in May 2007 and currently has a market capitalization of approximately $160 million, with headquarters in San Francisco, CA and the UK. With an index of over 26 million hours of searchable video and more than 350 media partnerships, including national broadcasters, commercial media giants, and private video libraries, blinkx has cemented its position as the premier destination for online TV. blinkx pioneered video search on the Internet, enhanced by $150 million in R&D over 12 years, and is now protected by 111 patents.

Rationale. blinkx believes that a combination of the two companies would be mutually beneficial to both companies’ shareholders, employees, and customers. blinkx and MIVA have complementary businesses that could benefit greatly from blinkx’s technology and MIVA’s distribution network.

blinkx has worked with MIVA as a customer and partner for a number of years and has a great deal of respect for MIVA’s success in building a global keyword advertising network and growing the MIVA Direct consumer offering. We believe, however, that with the Internet’s continued progression towards rich media and newer forms of advertising, more advanced technology will play a fundamental role in achieving success.

blinkx already has in place a proven and growing video-driven revenue engine, and enjoys an unrivalled technology portfolio which is applicable across many aspects of the online market. A combination of the two companies - fusing MIVA’s advertising network with blinkx’s ability to leverage its technology portfolio into the online market - presents an exciting and compelling opportunity.

Specifically, blinkx’s advanced and scalable matching technology will enable immediate platform improvements for MIVA. As a result large portions of relevant search traffic from MIVA’s search ad network will be monetizeable at higher rates through blinkx’s technology. Furthermore blinkx’s technology holds the potential to build on MIVA’s existing toolbar network, adding the latest functionality and an entirely new revenue stream. Finally, MIVA’s consumer sites and portals, that already attract large audiences, will immediately benefit from blinkx’s advanced video technology and AdHoc advertising platform.

Process and Employees. We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company. We believe that the management and employees of MIVA are critical to realizing a successful transition and foresee an important and central role for MIVA employees in the combined company.

Any acquisition of MIVA would be subject to the opportunity to conduct a limited confirmatory due diligence investigation, the negotiation of a definitive merger agreement containing customary terms and conditions, including customary conditions to closing; no material adverse change to MIVA’s business; appropriate shareholder approvals; and any regulatory requirements. Given our participation in the industry and MIVA’s public status, we envisage an efficient due diligence process appropriate to a public company. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.

Due to the importance of these discussions and the value represented by our proposal, we expect the MIVA Board to engage in a full review of our proposal and discussion of its contents with MIVA’s shareholders. We are prepared to meet at a time and location of your convenience to complete due diligence and commence definite agreement negotiations.

We believe this proposal represents a unique opportunity for MIVA’s shareholders to realize value, and the combined company will be well positioned for future growth. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favourable reply.

Yours sincerely,

Suranga Chandratillake

CEO and Founder

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The rumors of Microsoft still being open to a deal with Yahoo are true - with a caveat. The deal would have to be struck with a new board, not with Jerry Yang and his current set of cohorts. It could include a full acquisition or an alternative deal for just search. The software giant released the following statement:

“Despite working since January 31 of this year, as well as in the early part of last year, we have never been able to reach an agreement in a timely way on acceptable terms with the current management and Board of Directors at Yahoo!. We have concluded that we cannot reach an agreement with them. We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the “Search” function with large financial guarantees or, in the alternative, purchasing the whole company.”

Of course, it’s not just any new board. Microsoft’s Ballmer has been talking to Carl Icahn, who has put together a proxy board to take over Yahoo. The talks prompted Icahn to break out the quill, and compose his latest edition in his series of letter-writing expeditions:

Carl C. Icahn
ICAHN CAPITAL LP
767 Fifth Avenue, 47th Floor
New York, NY 10153

July 7, 2008

Dear Yahoo! Shareholders:

During the past week I have spoken frequently with Steve Ballmer, CEO of Microsoft. Several of our conversations have lasted as long as an hour. Also, a few of our discussions have taken place while other top executives, such as Kevin Johnson, participated. Our talks centered on the industry in general but, more importantly, on how Yahoo! and Microsoft can do a transaction together. Steve made it abundantly clear that, due to his experiences with Yahoo! during the past several months, he cannot negotiate any transaction with the current board. His logic is simple. If and when a transaction was consummated, Microsoft would be guaranteeing a great deal of capital at closing. However, a transaction could take at least nine months and perhaps longer to obtain regulatory clearance in the U.S., Europe, and elsewhere. During that period, if the current board and management team of Yahoo! mismanage the company (and their recent track record is far from reassuring), Microsoft would be putting its money at risk and a great deal could be lost.

For example, in a transaction to purchase the whole company, a very large amount of capital would be due at closing. Even in an “alternate” transaction, where just the “Search” assets were purchased, large guarantees would have to be made and, again, large sums could be lost if the company was mismanaged. Microsoft perceives this risk may be quite high with the current board and management in place. However, Steve made it clear to me that if a new board were elected, he would be interested in discussing a major transaction with Yahoo!, such as either a transaction to purchase the “Search” function with large financial guarantees or, in the alternative, purchasing the whole company. He stated that Microsoft would be willing to enter into discussion immediately if the new board that has been nominated were elected. While there can be no assurance of a future transaction, as many of you know, I have negotiated successfully a large number of transactions over the past years. If and when elected, I strongly believe that in very short order the new board would, subject to its fiduciary duties, be presenting to shareholders either a purchase offer for the whole company or a very attractive offer to purchase “Search” with large guarantees. I hope to continue to be speaking to Steve over the next few weeks; however, since I do not as yet represent the Yahoo! board, both Steve and I do not wish to get into details over price, or even which of these transactions makes the most sense.

Much has been said about how badly the Yahoo! board has “botched up” negotiations with Microsoft over the past months. There is no need to keep pointing out the mistakes I believe Yahoo! made by not immediately taking a $33 offer made by Microsoft. But one thing is clear — Jerry Yang and the current board of Yahoo! will not be able to “botch up” a negotiation with Microsoft again, simply because they will not have the opportunity.

Our company is now moving toward a precipice. It is currently losing market share in its “Search” function; our current Board has failed to bring in a talented and experienced CEO to replace Jerry Yang and return Jerry to his role as Chief Yahoo!, and currently it is witnessing a meaningful exodus of talent. It is no secret that Google (which hired a great operator as CEO) continues to dramatically outperform Yahoo!. According to publicly available information, Google’s income from operations grew 59% per year over the last two years while Yahoo!’s shrank 21% per year. However, none of the above has caused the Yahoo! board to hesitate in paying themselves $10,000 per week. IT IS TIME FOR A CHANGE.

If elected, I have little doubt that the new board, subject to its fiduciary duties, will do what the current board will not do, i.e.,

– Immediately start negotiation with Microsoft to sell the whole company or, in the alternative, sell “Search” with large guarantees.

– Move expeditiously to replace Jerry Yang with a new CEO with operating
experience.

Sincerely yours,

CARL C. ICAHN

Mike Moran is leaving IBM after 30 years to take a position in the newly created role of Chief Strategist at social media marketing agency, Converseon. Moran will be involved in the development of Conversation Miner as well as provide consulting to Converseon clients.

“We’re thrilled to have Mike join us,” said Rob Key, Converseon CEO. “He brings to the table the perfect combination of industry-leading expertise with hands-on knowledge of how to internally adopt and promote these practices within complex, enterprise environments. As we often say, social media can be technically relatively simple, but culturally quite difficult. His experience will be invaluable as we help leading brands develop and execute innovative social media campaigns. He will also play a key role in consolidating Converseon’s position as a leading social media marketing and consulting agency offering end-to-end services, from listening to engaging to measuring.”

While at IBM, Moran led several search technology projects including IBM’s OmniFind search and text analytics products, the first commercial linguistic search engine, and automatic categorization technology for business search at ibm.com. He has been granted multiple patents and is the author of Do It Wrong Quickly: How the Web Changes the Old Marketing Rules.

“With their focus on pushing the edges of innovation in reputation management, search marketing and social media, Converseon is the ideal fit for me,” said Mike Moran. “I look forward to working with their standout team and clients.”

Confirming recent rumors of another coming reorganization, Yahoo today announced its plans to centralize many of its product and engineering teams into one regional group in the U.S., rather than maintaining separate divisions for each set of products.

Yahoo is creating three new teams that will report to President Sue Decker:

1. An Audience Products Division will assume responsibility for companywide product strategy and product management. It will be led by Ash Patel who previously managed the company’s Platforms & Infrastructure group.
2. A U.S. region with accountability for all go-to-market activity in the U.S. will be led by Hilary Schneider, who previously headed the company’s Global Partner Solutions group.
3. An Insights Strategy team will assume responsibility for centralizing and executing a common strategy for the use of data and analysis across Yahoo. The company plans to name this group’s leader within the next few weeks.

According to Decker, these moves have been in the works for several months, and complement last year’s changes to centralize more of Yahoo’s business.

“The changes we’re making today will help deliver superior global products for users and enable faster and better decision-making,” Decker said in a statement. “This is a logical next step in light of our success last year in moving to a more centralized approach to developing world-class marketing products. We have planned these changes deliberately over the past several months to clarify responsibilities and to capitalize on the scale advantages while allowing for fine tuning to meet local market needs.”

Yahoo has restructured its search group, which recently lost SVP and General Manager of Search Vishal Makhijani to Russian search engine Yandex. Prabhakar Raghavan has been tapped to direct search strategy, and Tuoc Luong is the interim leader of the search product team. Both Prabhakar and Tuoc will also continue in their roles as the leaders of Yahoo! Research and Search Engineering respectively. In addition, David Ku will lead the Advertising Technology Group within Search.

Yahoo is also making changes to its technology organization, devoting resources to developing a cloud computing and storage infrastructure; moving more of Yahoo onto common platforms; and creating a stronger partnership between product and engineering teams.

The new Cloud Computing & Data Infrastructure Group will be charged with developing a computing infrastructure that balances scalability with cost effectiveness. It will also move all consumer-facing platform teams to the Audience Technology Group, led by Venkat Panchapakesan.

Paid search will take a lead role in online overtaking TV in the UK ad spending this year, according to Enders Analysis. Search ads are expected to surpass £2 billion, making up 60% of the online ad spend this year. The projections are in line with an e-Consultancy survey where 63% of companies said they planned to increase their paid search budget.

Google will see 80% of the search spend, possibly more with the recent announcement of an ad deal with Yahoo. 85% of search ads went to Google in the first quarter of 2008.

The total online ad spend is expected to reach £3.56 billion, while TV ad spend is expected to be £3.39 billion. Online ads will make up 19% of total advertising in the UK.

Last week, rumors were rampant that Yahoo’s Network Division Executive Vice President, Jeff Weiner, would be leaving the Sunnyvale search engine. The news is now official, with an announcement of Weiner’s new role as an Executive in Residence at Accel Partners and Greylock Partners, two venture capitalist firms.

Weiner will split his time evenly between the two firms, advising leadership on their existing tech portfolios as well as consulting on new investment opportunities.

“Jeff’s operational experience in scaling products, teams and revenue will help Greylock enhance our capabilities and add value to our investments,” said David Sze, General Partner at Greylock.

“We are thrilled to have access to Jeff’s perspective on web product strategy and operations,” said Theresia Ranzetta, General Partner at Accel. “Additionally, we look forward to leveraging Jeff’s expertise regarding the convergence of media and technology for existing and future Accel portfolio properties.”

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