Author: Joseph Tartakoff

With sales of traditional video games down, Electronic Arts (NSDQ: ERTS) continues to look (so far unsuccessfully) for its digital business to make up the gap. The video game giant said that its digital revenue reached an all-time high of $152 million during its third fiscal quarter, up 30 percent compared to the same period a year ago; mobile revenue was up 14 percent year-over-year to $57 million.

That growth, however, was unable to compensate for declining sales of the company’s traditional video games. Overall sales dropped 25 percent to $1.243 billion, while the company posted a loss per share of 25 cents. Both figures were slightly above analyst expectations, although those had been dropped after the company slashed its guidance last month, citing weakness in Europe. (The company did, however, manage to cut its net losses to $82 million from $641 million during the same period a year ago).

Unnerving for Wall Street apparently was the company’s outlook, which was below expectations (via Barrons). The company’s stock is down more than 7 percent in after-hours trading.

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Motorola (NYSE: MOT) Ventures is leading a round of funding in social music startup TuneWiki; HillsVen Capital, Novel TMT, Benchmark Capital and Intellect Capital Ventures (the venture fund of Nordic phone company TeliaSonera) also participated in the funding. TuneWiki, which started out as a desktop app and site nearly two years ago, has since also launched several mobile apps for Android, the iPhone, BlackBerry and Symbian, which have gained significant traction.

Last summer, the company said its app for the Blackberry—which lets user share their music selections on Facebook and Twitter, get track lyrics, and see what other people near them are listening to—was now the most-downloded app in the BlackBerry app store; TuneWiki’s Android app, which has similar features, was also a winner in the Android Developer Challenge.

TuneWiki says it will use the new cash to “expand and enhance its product offerings for leading mobile platforms and the internet.” It isn’t saying how much it raised, although it had previously raised $3.3 million in a first round of funding from Benchmark Capital.

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• TuneWiki Sings The BlackBerry’s Praises As It Tops The Apps Chart
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An obvious promise of mobile ads is that they can be location-aware; products can be pitched to people based on where they are. But Apple (NSDQ: AAPL) may have just limited that on the iPhone. In a short post on the iPhone developer blog, the company warns developers that if their app uses location-based information, that information must be put to “beneficial” use: “If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user’s location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store.”

Lots of questions here, including how Apple will enforce the policy. An app developer could plausibly argue that ads—especially when they are location-aware—are “beneficial.”  The conspiracy theories, by the way, are already on the rise. As ReadWriteWeb notes, “some people” hypothesize that Apple—which just entered the mobile ad market via its acquisition of Quattro Wireless—wants to have sole control of location-based ads on the iPhone.

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• Is Apple Buying Quattro Wireless?

Another media partnership for hot location-based social networking startup Foursquare. The company is partnering with Bravo TV so that viewers will get “badges” when they visit certain locations, corresponding to the cable network’s shows, according to the NYT. Bravo will also promote the partnership on air. That could be quite a boon, considering Bravo’s reach.

The announcement comes a week after Foursquare announced a deal with Canadian commuter daily Metro. Under that arrangement, Foursquare users in some Canadian cities who “follow” Metro get “tips” sent to their phones when they’re near restaurants that Metro has reviewed; Metro also plans to run ads that offer discounts to Foursquare users.

Definitely expect more of these deals ahead.

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• Video Interview From DLD: Dennis Crowley, CEO of Foursquare

Motorola’s stock is down more than 12 percent today, after the company’s quarterly results fell short of expectations. The company said its fourth quarter revenue dropped 20 percent to $5.7 billion, while earnings per share came in at 6 cents a share. Analysts on average had expected revenue of $5.94 billion and EPS of 8 cents—and there had been an expectation that Motorola (NYSE: MOT)—which is under intense pressure to turn around its businesses—would turn in a decent quarter partly on the strength of the Droid.

All three of the company’s business units once again posted declines in sales. Revenues at the company’s mobile devices segment dropped 22 percent to $1.8 billion, compared to the same period a year ago (That was an improvement, however, on the 46 percent plunge it reported last quarter and the company did manage to cut its operating losses to $132 million from $595 million). The company’s enterprise mobility solutions unit, meanwhile, posted a 12 percent drop in sales and a 21 percent decline in operating earnings. Sales at Motorola’s home and networks mobility segment were down 24 percent and operating earnings were off 65 percent.

During the earnings call, co-CEO Sanjay Jha did say that the company expected to finally see improvements in its financial performance by the second half of the year and added that he expected the mobile devices unit to be profitable during the fourth quarter, according to Dow Jones Newswires. He also said that the company would continue its smartphone push and expects to launch 20 new smartphones this year.

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• Motorola Should Meet Q4 Expectations Thanks To The Droid, But Not Cliq
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Apparently unable to nail down a deal to sell itself to Google (NSDQ: GOOG) for upwards of $500 million, Yelp is taking more venture capital cash instead. The local reviews site has raised $25 million in a fifth round of funding from Elevation Partners; Elevation has also agreed to invest up to an additional $75 million in Yelp by buying up shares from employees and other shareholders.

The new funding comes just a month after late-stage acquisiton talks between Google and Yelp broke down. In the aftermath of those failed talks, there were several reports that Yelp was looking to raise additional funding.

Despite the entrance of several new competitors to the market, Yelp has continued to grow quickly. The company says that it had more than 26 million unique visitors in December (No comparable figure provided) and that the amount of review content on the site doubled last year. Rivals, however, are not giving up on a market that promises to be increasingly lucrative as local businesses shift their ad spending to online. Just today, AT&T (NYSE: T) said it would launch a reviews site of its own called Buzz.com.

The new cash means Yelp will have now raised $56 million to date, including $15 million in a fourth round in February 2008. Yelp says the cash will be used to “deepen its market leadership position throughout the US, accelerate growth in Canada and throughout Western Europe, and continue the development of innovative mobile applications.” Here’s the release.

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Good Technology has made its second purchase in less than a year, buying up mobile device management company CloudSync. Good Technology—which helps enterprises manage their mobile devices and also provides mobile messaging and collaboration tools—says the purchase “furthers (its) mission of enabling device choice in the enterprise by providing enhanced device management for the broadest range of devices, including laptops, tablets, ruggedized handhelds, and leading smartphone platforms” via CloudSync’s web-based service.

Mobile e-mail provider Visto purchased Good Technology last February from Motorola (NYSE: MOT) and took on the Good Technology name. Since then, the company has made one other purchase, buying up Intercasting Corp. last May to expand aggressively into mobile social networking. Terms of the CloudSync acquisition were not disclosed. More in the release.

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• Good Technology Buys Mobile Social Networking Aggregator Intercasting Corp.
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Following in the steps of Google, print directory publishers, and a host of startups, AT&T (NYSE: T) is trying to challenge Yelp’s dominance of the local business reviews space—and the ad dollars that come with it. The company is launching Buzz.com, a site that promises to help users find the “best places to go or businesses to call” and which will be a companion to AT&T’s existing YellowPages.com site. According to a report in Forbes, users will be able to write up short, positive comments about businesses and share their recommendations.

The pitch appears to be that Buzz will specialize in personalizing its business recommendations by letting users “tap (their) social net for business recommendations from the people you trust most—your friends and family.” (That sounds similar conceptually to ALikeList, another Yelp wannabe that raised venture capital funding recently and which is also trying to differentiate itself from the competition with its more personal reviews).

AT&T says it’s launching the site in order to attract more ad dollars by making its local business searches “deeper and more relevant.” You have to ask, though, if AT&T wouldn’t just be better off buying Yelp instead of trying to replicate its success—something which won’t be easy. Yelp, after all, has indicated it is open to selling out, seriously entertaining a $500 million buyout offer from Google (NSDQ: GOOG) just a month ago. With $6 billion in the bank, AT&T could easily top that.

Yelp, though, is now rumored to be in the midst of raising a big funding round. That, however, doesn’t necessarily rule out a sale. Mint.com, after all, raised a $14 million round last August—and then turned around and sold itself to Intuit a month later.

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Google (NSDQ: GOOG) isn’t waiting for the result of the FCC’s investigation into why Apple (NSDQ: AAPL) rejected a Google Voice app for the iPhone and is instead going ahead and launching a workaround for iPhone users.

iPhone owners will now be able to use a web-based version of the Google Voice app, which seemingly has all the features a native mobile app would have. It works for the Palm (NSDQ: PALM) Pre too. (See a video here).

The web-based version had been rumored to be in the works for months. A week after Apple rejected the Google Voice app—spurring the FCC to launch its investigation—the NYT reported that a web-based replacement was being designed. The FCC inquiry, meanwhile, is apparently still pending.

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Only positive comments from CEO Eric Schmidt who led off his company’s earnings call by saying that Google (NSDQ: GOOG) had “performed well across the board” and by praising the company’s decision last quarter to once again ramp up its spending. “We’re back in business full blast,” he said, referring to the company’s strong quarterly results. Schmidt said Google would continue to invest in hiring (the company’s headcount was up for the first time in three quarters), technology, and in acquisitions. Some highlights:

—Mobile: No comments on the revenue being driven by the company’s mobile business but executives said they were seeing “strong growth there” as advertisers figured out “what kind of ads work on mobile devices” Schmidt also commented on Google’s relationship with Apple (NSDQ: AAPL), saying that as a former board member he had a “special spot for Apple in my heart” and that it was a “very well run company.” He acknowledged, however, that Google is a competitor in some areas but said the relationship between the two companies remains “stable.” According to recent reports, Apple is in talks with Microsoft (NSDQ: MSFT) to replace Google with Bing as the default search engine on the iPhone.

On the new Nexus One—which competes directly with the iPhone—Schmidt described the device as “really about a new way to buy a phone” and said it did not exclude more traditional models.

—China: Asked about yet another very hot topic—the company’s threat to withdraw from China—Schmidt didn’t say much new, although he did say that for now the company’s business there has not changed. “In a reasonably short time from now we’ll be making some changes there,” he said.

—Acquisitions: Google has been on a shopping spree, and Schmidt said that would continue. He said the company would continue on its pace to purchase one company each month, including “some big” ones but mostly “small ones.” He acknowledged that many of the company’s recent purchases—including its buy of VOIP startup Gizmo5—were designed to add new talent to the company.

—YouTube: Oh, YouTube (where this call is being broadcast, by the way). No word on whether it’s profitable, but SVP Jonathan Rosenberg said it was “monetizing well” and other executives said it was now an “essential part” of any big ad campaign.

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Nokia (NYSE: NOK) CEO Olli-Pekka Kallasvuo used his speech at the Consumer Electronics Show to say that the company was positioned to take advantage of “staggering” growth in developing markets. “In China, in India, in Vietnam there are huge opportunities to accelerate development” especially as smartphone features come to standard handsets, he said. While users in Western markets, for instance, are already tied to their e-mail accounts, most of the world is not, something he said Nokia was trying to change with its mobile services. In its first year on the market, the company’s Ovi e-mail service—which is designed for first time e-mail users—has already signed up five million accounts.

Throughout, Kallasvuo framed the company’s efforts as being about “doing good”—saying that the there was an opportunity to “do good business and do good at the same time.” (There was even a groanworthy introduction by Lonely Planet reporter Frances Linzee Gordon who talked about the innumerable benefits of cell phones including that they can “save lives” and “overcome environmental difficulties.” A bit much, perhaps? Her project on the “benefits of mobility” had been sponsored by the company).

It was mostly talk but Nokia did announce one bit of news: The company is setting up a competition to “encourage innovators to create a mobile product or service that raises the standard of living or enhances the lives of those in growth economies.” The winning entrant will get a $1 million prize.

Google’s latest move in its mobile push: The company told AdWords advertisers this week that it would display their business phone numbers in ads that show up on some smartphones—and then charge advertisers when users click on the number in order to call them. SearchEngineLand—which first reported the news—says that Google (NSDQ: GOOG) will charge advertisers the same amount for a call as for a visit to their site (advertisers can opt-out).

It’s not clear how extensive the initiative is for now since Google says it only applies to unspecified “high-end mobile devices” but it’s easy to see how this could become an important revenue stream, as the adoption of smartphones grows. As Broadpoint AmTech analyst Ben Schachter writes in a report, since the main use of phones remains making calls, it’s very possible that there will be higher “call-through rates” than click through rates for the standard web links on mobile ads.

Apple (NSDQ: AAPL) has finally confirmed rampant reports that it is buying up mobile ad network Quattro Wireless. In a short blog post, Quattro CEO Andy Miller says that—for now—the company’s offerings won’t change and its “client and support teams” will remain the same. Miller is joining Apple as VP of mobile advertising.

By picking up Quattro, Apple is positioning itself to make money from the many ad-supported apps on the iPhone and iPod—and gets to counter Google’s recent $750 million purchase of AdMob. No word (at least yet) on how much Apple is paying. Our source puts the price at $270 million.

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RealNetworks (NSDQ: RNWK) has made a small acquisition, buying up mobile phone startup Varia Mobile, we have confirmed with the company; TechFlash broke the news earlier today. Varia says its technology “provides immediate publishing, integration and deployment of Web 2.0 desktop services directly to mobile devices.” As an example, it says it can be used to wirelessly sync content, like music, with a media service or storefront so that a user does not have to sync their phone directly with their PC.

RealNetworks isn’t saying exactly how it plans to incorporate Varia. However, Varia president John McQueen will report to Hank Skorny, who RealNetworks hired earlier this year as part of an effort to create products and services that “leverage cloud computing to make digital media available to consumers whenever and wherever they want.” Varia’s technology was also behind the ibiza Rhapsody MP3 player, which was made by Haier and integrated RealNetworks’ Rhapsody music service. That product was pulled from the market this summer.

No financial terms are being disclosed. Varia was spun off from Tegic Communications in September 2007 after that firm was sold by AOL (NYSE: AOL) to Nuance Communications.

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Mobile search firm ChaCha—which lets users call or text message a query and receive an answer shortly afterwards—has raised another $7 million in funding, according to an SEC filing. The round comes five months after ChaCha disclosed a $4 million round—and ten months after it raised $12 million. The latest filing lists past backers, including former Compaq CEO Ron Canion, as directors. A company representative, however, would not say who provided the cash, which brings the startup’s total backing to more than $40 million. He did, however, happily provide figures detailing the company’s growth, including that the number of questions the service has answered is up 191 percent this year.

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»  Analysts discuss the impact that BlackBerry’s second outage in a week will have on the company’s reputation. [WSJ]

»  What are Sprint, LG, and Microsoft set to announce at their joint event at CES? [InformationWeek]

»  An examination of how HTC is outmaneuvering its rivals in the smartphone wars. [Wired]

»  Game publisher Hands-On Mobile is announcing four new titles generated through its developers network. [FierceWireless]

»  The newly-independent Photobucket releases its first Android app. [Photobucket]

Telefonica (NYSE: TEF) is buying up VOIP provider Jajah for $206 million in cash. The company—which had raised $35 million in venture capital funding—had been up for sale for more than a month now and several companies, including Microsoft (NSDQ: MSFT) and Cisco (NSDQ: CSCO) had also been said to be interested. In recent days, however, there were reports that Telefonica had beat out those two companies in the bidding.

Telefonica says that it will offer Jajah’s services to “customers wishing to extend their communication experience”—beginning in Europe, where the carrier operates under the name O2. It will keep the Jajah brand. Jajah, which claims 25 million customers, is the latest VOIP provider to be bought up; last month Google purchased Gizmo5 for a reported $30 million. Here’s the release.