By Scott Moritz

Comcast (CMCSA) has raised $2 billion through a bond sale as the company explores its wireless broadband options, among other things.

The Philadelphia cable giant was able to increase its planned debt offering of $1.5 billion to $2 billion on strong demand for the note, according to Bloomberg News. The news comes a day after the company posted solid first quarter earnings and said it was still planning to move ahead in wireless data.

On the earnings conference call with analysts, Comcast executives said they would take action to to preserve its credit rating.

“We are going to be very disciplined in our capital structures, and do things that make a lot of sense,” Comcast executives said Thursday.

As of March 31, Comcast’s total debt was $37.4 billion, according to a regulatory filing.

Some analysts says the financing move is a good sign that Comcast is getting closer to reaching some sort of agreement on a proposed WiMax joint venture between Sprint (S) and Clearwire (CLWR). Other players that have been involved in those discussions include Time Warner Cable (TWC), Intel (INTC) and Google (GOOG).

Comcast has a big role in the fate of a national WiMax network. If the joint venture fails to find enough funding or participants, the so-called 4G wireless technology faces falling behind the long term evolution or LTE technology that AT&T (T) and Verizon Wireless (VZ) have already committed to.

By Scott Moritz

AT&T’s (T) planned $200 subsidy on Apple’s (AAPL) iPhone could increase the sales of the new 3G model by 50%, according to one analyst.

Using a comparison to price cuts of Motorola’s (MOT) Razr — the 110-million-units-sold wonderphone from yesteryear — Bernstein analyst Toni Sacconaghi says its reasonable to expect that AT&T could more than double its iPhone sales, which currently account for half of all Apple’s iPhone numbers. He made the analysis after Fortune first reported the plan by the Apple’s exclusive iPhone partner to cut the price of the upcoming 3G version of the phone.

Sacconaghi sees a strong parallel in the scorching history of Motorola’s Razr phone. In 2005, Razr’s expensive ultrathin metal-clad design went from being the coveted phone of the moment to a pop culture sensation as the price fell.

“The Razr’s unit sales run-rate doubled when its price dropped from an initial $500 to $150, then doubled again when the price fell further to $100,” Sacconaghi wrote in an Apple research note Thursday.

“While offering the subsidy would cost AT&T $200 per iPhone user, we estimate the cost would be more than offset if the subsidy results in an increase in the iPhone subscriber base of around 100% - which appears to be a realistic assumption in light of the Razr’s experience,” he wrote.

Sacconaghi is an Apple analyst but he says he has not confirmed the price cut plan with Apple or AT&T.

Cell phone and smart phone subsidies are common throughout the U.S. and Europe. The iPhone was unusual in that it was sold at full price. Despite the hefty $400 price tag, Apple has sold 5.7 million iPhones, over half the way to its goal of 10 million for the year.

For AT&T, the phone is fantastic bait to reel in customers from rivals like Verizon Wireless (VZ), Sprint (S) and T-Mobile (DT), at a time when wireless growth is slowing. To date, AT&T says about 40% of iPhone customers are coming from other services. Not only does the iPhone lure customers, it brings in the type of customers that the industry cherishes: big spenders.

AT&T says it rakes in an average of $95 a month from each iPhone customer, nearly twice the average monthly bill of its conventional cell phone user. With faster 3G phones, it’s likely that iPhone fans will spend even more money time on the mobile Internet. AT&T has a revenue sharing agreement with Apple where it forks over as much as 25% of its iPhone customers’ monthly payments to the company.

The remaining take for AT&T is between $70 and $75 a month per iPhone user totaling more than $1,700 over the life of the two-year contract, wrote Sacconaghi.

AT&T plans to lock the subsidized iPhones so they can’t be used on other companies’ networks. That leaves it open to debate whether Apple will sell unlocked, unsubsidized phones at its stores. Sacconaghi says people might pay a premium for an unlocked iPhone, untethered as it would be from the AT&T service. “We believe the availability of factory-unlocked iPhones would further stimulate overall iPhone sales, though price may remain a barrier to truly mass market adoption.”

The mass market however, is a double-edged blade as Razr observers will note. Razr’s ride to popular glory was followed by a plunge into ignominy as the price of the phone went to zero, a precursor to the downfall of the Motorola’s mobile phone business. But that is one Razr parallel Apple fans aren’t likely to make.

By Michael V. Copeland

Web chat platform Meebo has landed $25 million in a venture funding from a group of investors including Time Warner Investments (TWX) (Fortune is owned by Time Warner), JAFCO Ventures and KTB Ventures. Existing investors Sequoia Capital and Draper Fisher Jurvetson also re-upped in the Series C round, which puts a valuation on the year-old Mountain View, Calif-based startup at an estimated $200 million before the additional money.

Meebo joins Web 2.0 startups Slide and Ning in recently closing massive rounds of venture capital funding (Slide, which creates widgets, raised $50 million at a $550 million valuation. Ning, a platform for creating social networks, raised $60 million at a $500 million valuation).

Ning investor and co-founder Marc Andreessen has explained his company’s Series D round as a way “to make sure we have plenty of firepower to survive the oncoming nuclear winter.” Other bellwether social media startups including music discovery site Imeem, and widget factory RockYou, are also rumored to be on the fund-raising trail, looking for equally large war chests and valuations to go along with them. They are being watched very closely as proxies for the rest of the Web 2.0 ecosystem.

With M&A seemingly drying up, many Web 2.0 startups are scrambling for another round of venture capital money so they can survive — most won’t. In the last few months, VCs and other private equity players have become reluctant to pour more cash into all but the most wildly successful Web 2.0 companies.

Meebo, with 30 million unique users in March, fits that bill in terms of growth for its instant messaging service and chat rooms, but it has very little revenue. Instant messaging has not been a place that companies have found easy to monetize, but Meebo thinks it may have landed on the right formula.

The startup has been testing forms of advertising on its service, including buddy icons and wallpapers sponsored by brands like Puma and featuring television shows from CBS.

The idea is to create advertising in forms that people will want to pass around to their friends, whether that is movie trailers, quizzes or buddy icons, says Meebo CEO and co-founder Seth Sternberg.

“Social media is all about sharing, it’s our job now to go out to the market and show that the units of advertising we create produce clicks,” Sternberg says. “So far the units we have been testing have been performing fantastically, but the next step is to really blow it out. Our two fundamental goals are to continue to grow and work in earnest on monetization.”

Sternberg acknowledges that this round of funding will ensure Meebo gets through any rocky economic period. “We wanted this to be a round that would carry Meebo very far,” he says. “It’s possible that the markets are going to become weak, but it’s a great time to build a business when times are rough and I think it’s wise to put yourself in a position so you can get through them and grow.”

By Scott Moritz, writer

AT&T (T) is planning to put some extra shine on the even sleeker new Apple (AAPL) iPhone.

When the 3G iPhone is introduced this summer, AT&T, the exclusive U.S. iPhone sales partner with Apple, will cut the price by as much as $200, according to a person familiar with the strategy.

AT&T is preparing to subsidize $200 of the cost of a new iPhone, bringing the price down to $199 for customers who sign two-year contracts, the source says. Apple is expected to have two versions of the new iPhone, an 8-gigabyte-memory and a 16-gigabyte-memory model with price tags widely expected to be $399 and $499.

AT&T and Apple declined to comment.

At $200, the iPhone would be within reach of a much wider consumer market and give AT&T a strong magnet to pull lucrative customers away from rivals like Verizon Wireless (VZ), Sprint (S) and T-Mobile (DT). The $200 rebate or subsidy would be limited to AT&T customers and not available through Apple’s stores. The new iPhone sold by AT&T will likely be locked or programmed so buyers can’t take the cheaper iPhone to another phone service.

Subsidies of $100 to $200 are common in the U.S. phone market, where people buy their phones from their carriers. Lowering the consumer cost of the phone to win two-year subscribers is considered a small investment with a quick payoff. The average monthly wireless bill is around $50, so a phone company can recoup the phone’s cost in a matter of months.

The average iPhone user however, runs up a $100 tab each month due to the higher priced data and calling plan. This would give AT&T an even quicker payback on its $200 outlay. But AT&T doesn’t get to keep all the money it collects from its iPhone users. Unlike most other phonemakers (but like BlackBerry maker Research in Motion (RIMM)) Apple has a revenue-sharing arrangement that requires telcos like AT&T to pay somewhere between 9% and 25% of the money collected each month from iPhone users.

The new iPhone is expected to be released on the one-year anniversary of the original iPhone debut June 27 or thereabouts. A few weeks prior to that launch, Apple is planning to stop supplies of the older model iPhone, according to the source. This will help clear out inventory and stir up demand for the new device. It will also attempt to avoid the public relations pratfall Apple made when it cut the price of the iPhone without warning last year. To soothe the ire among people who bought the iPhone just before the sudden markdown, Apple issued store credits.

A few details about the new iPhone have also been confirmed by the source. The new iPhone will be 2.5 mm thinner than the 11.7 mm original. The iPhone will also have a GPS chip for navigation and other location-based services.

By Scott Moritz, writer

Corning (GLW) is betting big that consumers around the world are about to develop a serious passion for high-priced television sets.

Buoyed by sustained demand for liquid crystal display, or LCD, televisions, Corning said Tuesday it will increase spending by about $400 million, or 44%, to boost LCD glass production this year. The glassmaking giant says it is also seeing strong demand for its scratch-resistant “Gorilla” LCD glass, which is used in touchscreen devices.

The news, announced shortly after Corning reported strong first-quarter results and raised targets for the second quarter, counters signs of a slowing U.S. economy and worries that a recession here would hamper global economic growth.

Corning’s strategy to zig while the rest of the market zags, isn’t new for the venerable tech pioneer. In early 2001, Corning predicted demand was still growing for its production of fiber-optic cables. Five months later, with the collapse of the Internet building boom in full swing, Corning reported an abrupt drop in businessand took a $4.8 billion writedown on its newly expanding fiber operations.

Corning, of course, thinks everything is different this time — and can point to several indicators showing strong LCD TV demand.

Inventory at its panel-making customers is low. “We don’t see any glass building up at the panel makers,” Corning executives said on the earnings conference call Tuesday. Corning supplies the flat glass that goes into the screen panels that are then supplied to TV makers. And Corning says TV sales are “ahead of what our expectations were.”

Healthy demand in stores is driving Corning’s decision to ramp up glass production. The production expansion plan is guided by “what we believe the end market will be,” CEO Wendall Weeks said on the call.

To back that up, Corning says LCD TVs comprise about 8% of the worldwide TV market. And with the rapid decline in conventional TVs made with cathode ray tubes, LCDs will presumably dominate the market.

Corning predicts households will soon have multiple LCD TVs, not just in living rooms and bedrooms but also kitchens and bathrooms. To illustrate this market opportunity, Flaws pointed to data indicating that China has a mere 1.1 TVs per home.

Once again, Corning is relying on rosy numbers to inform its bold decisions. Stay tuned to see if the company is right — this time.

Corning: TV sales over time

Thanks to Grand Theft Auto, PS3 and Xbox 360 are shifting into overdrive to sell more gaming machines. Courtesy of Take-Two

By Yi-Wyn Yen

Wall Street analysts predicts Grand Theft Auto IV will easily break video game sales records this week. But one question remains: Will fans buy the game for Sony’s PlayStation 3 or Microsoft’s Xbox 360?

Both Sony (SNE) and Microsoft (MSFT) are in a heated race to win over undecided gamers who must buy one of the two consoles to play the biggest game to be released this year. The popular franchise, from Take-Two Interactive (TTWO), is expected to surpass first-week sales of $400 million, which would top Halo 3’s record of $300 million, according to Evan Wilson, an analyst with Pacific Crest Securities. “Grand Theft Auto is clearly going to be a blockbuster game,” Wilson says.

GTA IV launches Tuesday, which should result in a big boost in monthly console sales for Sony and Microsoft. Both are a distant second to market leader Nintendo with its family-friendly Wii. Nintendo, which does not offer GTA IV, sold 721,00 Wiis in the United States in March, according to market research firm NPD. The Wii sold more than the PS3 — 257,000 units — and the Xbox — 262,000 console — combined. Analysts anticipate first-week sales of about six million copies for GTA IV, which retails for $60 or $90 for a special edition.

“It’s interesting that both Sony and Microsoft are spending a lot of money to align the game with their console,” says Sam Kennedy, the editorial director for gaming publication, 1 Up Network.

Neither Microsoft nor Sony will disclose how much they have spent to promote the game, though both were quick to promote their gaming machines as the best option for GTA IV fans. The Xbox 360, with a 20 gigabyte hard drive retails for $350 while the PS3, which features Blu-ray and twice the hard drive capacity, retails for $399.

“Grand Theft Auto is a premier brand that was really established on the PlayStation platform,” says Peter Dille, senior vice president for Sony’s PlayStation Network. “Guys who love the game grew up on PlayStation. We think that they’ll vote with their wallets for the PS3.”

The GTA franchise has sold more than 65 million copies worldwide in the last 11 years. Of the previous installments, only one was made available for the Xbox platform while all the games were playable on Playstations.

A Microsoft representative says gamers will side with the Xbox because Rockstar Games, the Take-Two game studio that developed GTA IV, is making exclusive add-ons for the console.

Rockstar will release two additional game plays for those who can’t get enough of the drug trade adventures of GTA hero Niko Bellic. The first will be made availabe this fall for the Xbox. “We absolutely believe having exclusive content will boost sales,” says Xbox spokesman David Dennis. “The Grand Theft Auto franchise may have been home to the PS2, but we believe PlayStation owners will stand up and upgrade to the Xbox for [GTA IV].”

Dennis says major retailers in Europe have informed Microsoft’s sales team that GTA pre-orders favored the Xbox over PS3 by 2 to 1. He argues that this is a “strong indication” that more gamers will purchase the Xbox for the month of April.

Other Xbox perks, like Xbox Live and online rewards for top gamers, will attract console converts, he contends. “The PS2 and PS3 has an online network that’s in the low single digits. Make sure you put that number next to ours,” Dennis says. PlayStation’s online network has 3.7 million users, and Xbox Live has more than 10 million.

PlayStation’s Dille was just as quick to diss the Xbox. “Microsoft had its moment with Halo, and that moment has past,” he says. “Sure they’re touting Grand Theft Auto, but you can play it on our platform too. You want to talk about exclusive content? Sony has a very deep lineup of exclusive games like Metal Gear Solid and Grand Turismo that has the industry buzzing. The PS3 has a more exciting story going on this year.”

The two rivals can continue to throw pot shots at each other until May 15, when NPD will name a console leader for April sales in the U.S. Consumers should be happy either way. GTA IV has received fierce reviews in the gaming community. “It’s quite an amazing experience,” Kennedy says. “I can’t imagine any game being bigger this year.”

By Scott Moritz, writer

Seeing no signs that the slowing economy is crimping consumer spending, Verizon (VZ) plans to raise prices on its nascent TV service.

The New York phone giant reported first quarter earnings that met Thomson Financial’s analyst estimate but missed the Bloomberg consensus by a penny Monday. On a conference call following the release, the company blamed the loss of a large former MCI business customer for some of the profit weakness.

The most striking news of all, however, was Verizon’s bullish take on consumer behavior. Verizon said it has been watching for warning signs, like increases in so-called uncollectible or deadbeat customers, but so far hasn’t seen anything to worry about. “I’ve seen no changes,” finance chief Doreen Toben told analysts on the call, referring to a spending slowdown.

Verizon is feeling so confident about paying subscribers that it plans a price hike.

“We will move up prices at the end of this quarter or next quarter,” Verizon executives said on the call. “We are very comfortable moving up the pricing at this point.”

The company said it probably won’t tamper with its $99-a-month promotional offer for its package of phone, Internet and TV services. Instead, officials said they’re looking to hike the price of the company’s a la carte TV service, which launched in 2005 and costs $48 a month.

Verizon has been winning business from cable companies like Comcast (CMCSA), Time Warner Cable (TWC) and Cablevision (CVC) as it pushes its Web video and TV strategy. On the flip side, as the cable companies have started selling phone services, telcos like AT&T (T) and Verizon have seen the decline in landline phone subscribers accelerate. In the first quarter, Verizon’s total phone line count dropped 8.2% from the prior year, a slight increase over the 8.1% pace for 2007. And residential lines fell by an eye-popping 10.9% from the same quarter a year ago.

Raising prices in the face of a economic slowdown is a bold move that borrows from the cable industry’s long-held strategy of continual rate hikes. Two things work in Verizon’s favor here, says one analyst: Phone and TV subscribers aren’t known to be the most vigilant consumers. They may not even notice they’re paying more.

Verizon’s about to find out.

By Yi-Wyn Yen

The deadline that Microsoft set three weeks ago for Yahoo (YHOO) to accept its buyout offer passed this weekend without either side making a move. While some analysts expect Microsoft to launch a hostile bid, it’s possible that CEO Steve Ballmer will follow through on his threat and walk away from the deal.

The three-month-old battle between Microsoft and Yahoo could come to a head fast. Yahoo has repeatedly rebuffed Microsoft and demanded a higher price - step that Ballmer has said he won’t take.

Earlier news reports indicated that Yahoo’s board of directors would meet on Sunday to consider their options, but there was no official confirmation of a meeting. The Wall Street Journal reported Monday that Microsoft and Yahoo did not have direct contact over the weekend. Microsoft could move as early as Tuesday, according to the Journal.

At stake is Microsoft and Yahoo’s ability to compete with Google as billions of advertising dollars continue to flood the Internet. As Google has risen to become the dominant online ad player, Microsoft and Yahoo have both struggled to gain traction. Most analysts think a merger is the best way for Microsoft and Yahoo to compete with Google.

Microsoft kicked off the battle in late January when it made an unsolicited cash-and-stock bid for Yahoo that was originally valued at $31 a share, or $45 billion. The deal’s value has since dropped to $29.64 as Microsoft’s shares have fallen.

While Microsoft and Yahoo executives have met to discuss the bid, Yahoo has so far spurned Microsoft. Yahoo CEO Jerry Yang has said he’s not opposed to a Microsoft buyout, but argues that the offer “substantially undervalues” Yahoo. To force Microsoft (MSFT) to up the ante, Yahoo has discussed a variety of tieups with Time Warner, News Corp. and Google in recent months.

“Our board and management team continue to be open to any and all alternatives, including a sale to Microsoft,” Yang said last week, when Yahoo reported first-quarter earnings that beat estimates.

Talks between Microsoft and Yahoo have been anything but friendly. Three weeks ago, Microsoft CEO Steve Ballmer issued the ultimatum that expired Saturday. On Thursday, when Microsoft also reported better-than-expected profits, chief financial officer Chris Liddell voiced his frustration with Yahoo’s recalcitrance - and suggested the company’s prepared to go to war or walk away.

“Unless we make progress with Yahoo towards an agreement by this weekend, we will reconsider our alternatives,” said Liddell, suggesting that Microsoft will makes its decision know next week. “The transaction has been anything but speedy as is being characterized by what would appear to be [Yahoo's] unrealistic expectations of value.”

Now that Yahoo has missed Microsoft’s deadline, one of the following three scenarios is likely:

• Microsoft turns up the heat and launches a proxy battle. The company has already hired a proxy firm and reportedly nominated candidates to an alternative board of directors. That slate would come up for a vote at Yahoo’s annual shareholder meeting, sometime before the end of July. (In an attempt to stymie Microsoft, Yahoo delayed its original March 14 shareholder meeting and has not yet announced a new date. According to Yahoo’s bylaws, however, the company must hold the meeting every 13 months, which means by the end of July.)
• Microsoft walks away. The Journalreported that this seems unlikely, although abandoning the bid could increase the pressure on Yahoo to come to the negotiating table. If Microsoft drops its bid for Yahoo, the company is likely to continue acquiring online ad companies. In the past 11 months, Microsoft has spent more than $6 billion to acquire aQuantive and Rapt.
• Status quo. Microsoft extends the proxy deadline while Yahoo tries to convince its shareholders that an alliance with Time Warner’s AOL or Google is more desirable.

Microsoft CEO Steve Ballmer doesn’t want to bid against himself by upping the original deal. Photo courtesy of Microsoft.

It’s not clear how much Microsoft could accomplish without Yahoo. Ballmer clearly sees Yahoo as the ammunition he needs to take on Google as online advertising spend skyrockets. According to eMarketer, advertisers worldwide spent $41 billion online in 2007 — a figure that is expected to double through 2011 as advertisers chase after consumers who are spending more time on the Web and less time watching TV, reading newspapers or listening to the radio. Google controls 40% of the overall market while Yahoo and Microsoft’s MSN have 15% and 5.2%, respectively. Google commands an even greater share in the lucrative search-ad business, with 58.7% of the market compared to 18.1% for Yahoo and 12% for MSN, according to the latest Nielsen data.

Microsoft fears that Google, with its March acquisition of DoubleClick, the world’s biggest online ad server company and big player in the increasingly lucrative market for online display ads, will seize an even bigger portion of the ad market as MSN falls further behind.

Microsoft isn’t the only one worried about Google. A number of media and Internet giants are now circling Yahoo — one of the last independent large-scale online players. “Microsoft’s forcing…everyone to make a move,” says Frank Addante, CEO of Rubicon Project, which helps publishers manage their online ad inventory.

Time Warner (TWX), which owns Fortune.com and CNNMoney, has pursued a deal that would fold AOL into Yahoo in exchange for a 20% stake. Along with aligning with AOL, Yahoo is also looking into outsourcing search advertising to market leader Google (GOOG). Last week Yahoo finished a two-week test that ran Google ads for searches on Yahoo’s homepage. The Justice Dept. is reportedly investigating the test for possible antitrust violations.

News Corp. has approached the deal from different angles. Yahoo and Rupert Murdoch’s News Corp. (NWS) held preliminary talks about a possible partnership after Yahoo rejected Microsoft’s bid. When those discussions stalled, News Corp. began talking with Microsoft about a three-way alliance that would combine News Corp.’s social networking site, MySpace, MSN and Yahoo.

Many analysts argue that ultimately a Microsoft-Yahoo combination is the best option for Yahoo shareholders — and for Microsoft in its war with Google. Wrote Bernstein Research analyst Jeffrey Lindsay in a note to investors on Friday: “We expect the acquisition scenario to play out before the end of July (the theoretical outer limit for the Yahoo! shareholder meeting) and think the outcome is very likely to be a sale to Microsoft at a slightly improved price.”

By Scott Moritz, writer

There may be more than money to consider in the Microsoft-Yahoo standoff.

Microsoft (MSFT) has given Yahoo a deadline of Saturday to accept its buyout offer (or, presumably, at least at start serious talks) or risk triggering a hostile takeover battle. Yahoo wants a higher offer — a demand that Microsoft has so far rebuffed.

But the focus on price may be missing a key subtlety behind the impasse.

One possible stumbling block might be Yahoo CEO and co-founder Jerry Yang’s role in a combined company. As displeased as Yang may be by the prospect of joining forces with Yahoo’s culturally-mismatched rival, some observers say he could be open to a leadership role in the merged Internet division.

“I’ve always believed Jerry Yang wants do something bigger with Yahoo,” as opposed to watching it dissolve into the works of a bigger company, says an analyst who has known Yang since Yahoo went public in 1996. ”He’s Jerry Yahoo, that’s really who he is.”

Yahoo has been exploring other options, including a possible tie up with the AOL division of Time Warner (TWX) and an advertising partnership with rival Google (GOOG) to help outsource some of its ads and trim costs. But almost any type of hookup between the No.1 and No.2 online ad giants seemed fraught with antitrust concerns.

Without a better offer in sight, Yang and the board will likely have to sit down with Microsoft over the weekend and negotiate. If Microsoft told Yang that he would play a top role in the combined company, it might sway the Yahoo founder, says the analyst, who did not want to be identified.

“He’s already a billionaire,” adds the analyst, referring to Yang. “What he wants is his brand to be massive. When the history of the Internet is written it will feature names like [Amazon (AMZN) chief Jeff] Bezos, [Google CEO] Schmidt, Page, [AOL founder Steve] Case. Yang wants to be there.”

Stay tuned.