DealBook: Resurgence in 0il and Gas Sector Spurs Merger Boom

Photo Operations in the Bakken shale formation could be ripe for acquisitions, analysts say.Credit Andrew Burton/Getty Images

The merger boom in the energy sector shows no signs of slowing.

As energy production in the United States rises substantially, pipeline and storage companies will look to expand capacity through acquisitions, industry analysts and investors forecast.

"Companies are lining up to take advantage of this production-growth story," said Quinn Kiley, a manager of energy infrastructure investment portfolios for Advisory Research Inc. "Companies have huge opportunity sets in front of them."

Figures from the federal Energy Information Administration highlight the extent of the growth. United States energy production has reversed decades of stagnant or falling output in recent years. Oil production has gained 49 percent and natural gas output has increased 28.5 percent, from their lows in the mid-2000s through 2013. Reserves that are economically viable to recover are up sharply, too, the agency's website says, providing energy companies a greater incentive to invest.

"As technology gets better, it makes production from some formations profitable and predictable and productive over a long period of time," Mr. Kiley said. "That leads to a changing dynamic for companies that transport and store this supply."

Merger activity has been strong this year in the energy sector in the United States, according to data from Thomson Reuters. About $123 billion in energy mergers were announced from January through July, up 47 percent from the period a year earlier, the data showed.

Many of the businesses involved in deals are energy infrastructure businesses, which tend to be set up as master limited partnerships, or M.L.P.s. These are tax-favored vehicles that in the early part of their lives are encouraged to expand as rapidly as possible for complicated reasons related to how they distribute income from their operations.

"You can't be an M.L.P. without being a bit of a deal junkie," said Deborah Byers, managing partner at Ernst & Young in Houston. "You have to grow your base constantly to pay the distribution."

M.L.P.s are likely to keep merging, even though a pioneer of the structure, Kinder Morgan, is abandoning it. Other potential buyers are expansion-minded pipeline companies, said Todd L. Williams, an energy analyst at Westwood Management. Even Kinder Morgan, the industry leader, with 80,000 miles of pipelines, has "holes in its asset footprint," he noted, particularly in the Marcellus shale formation in the Northeast and the Bakken deposits in Montana, North Dakota and adjoining parts of Canada.

Possible takeover targets that are pipeline operators for Kinder Morgan include Oneok Partners in the Bakken field and MarkWest Energy Partners and Williams Inc. in the Marcellus, he said. They are the right size in the right places, in his view.

"Kinder Morgan needs chunky acquisitions" worth above $5 billion each to have a meaningful effect on growth, Mr. Williams said. The entities he mentioned had market values of $13.5 billion to $44.2 billion as of Wednesday.

Mr. Kiley agreed that Kinder Morgan could pursue MarkWest. But he sees Williams, which has extensive assets throughout the country, as so big that a bid would run afoul of regulators.

A business that Mr. Kiley finds ripe for a Kinder Morgan-style consolidation is Energy Transfer Equity, an M.L.P. that controls four others involved in various activities. It recently announced plans to buy Susser Petroleum Partners, which operates gasoline stations, he noted.

It also may create a conventional corporation to hold some of its own equity and then have an initial public offering, he said, to attract investors for whom an M.L.P.'s tax breaks are wasted, such as holders of tax-free retirement accounts.

Ms. Byers of Ernst & Young considers the outlook for deals so extensive that certain companies could be either buyers or targets, including Anadarko Petroleum and Marathon Petroleum. Large foreign energy conglomerates, like Cnooc in China and Total in France, are also possible bidders, she said, adding that if foreign buyers are enticed into the market, they will have plenty of company.

"Everybody, whether big integrated players or independent upstream and midstream players, is making significant strategic bets," she said, referring to production and transportation companies. "I've been in this business 27 years, and I've never seen as many alternative paths as companies seem to take today."

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Second-Quarter G.D.P. Growth Revised Up to 4.2%

By REUTERS August 28, 2014

WASHINGTON — The U.S. economy rebounded more strongly than initially thought in the second quarter and details of a report on Thursday pointed to sustainable underlying strength.

Gross domestic product expanded at a 4.2 percent annual rate instead of the previously reported 4.0 percent pace, the Commerce Department said, reflecting upward revisions to business spending and exports.

It was the fastest pace since the third quarter of 2013.

The composition of growth in the second quarter was even more encouraging, with the sources of growth broad-based.

Domestic demand increased at a 3.1 percent rate, instead of the previously reported 2.8 percent pace. It was the fastest pace since the second quarter of 2010 and suggested the recovery was more durable after output slumped in the first quarter because of an unusually cold winter.

Economists polled by Reuters had expected the second-quarter GDP growth pace would be revised down to 3.9 percent. The economy contracted at a 2.1 percent pace in the first quarter.

Gross domestic income, which measures the income side of the growth ledger, surged at a 4.7 percent rate, consistent with strong job gains during the quarter. That was the largest increase since the first quarter of 2012.

This alternative growth measure decreased at a 0.8 percent pace in the first quarter.

Corporate profits rebounded from a decline that had been spurred by the expiration of a depreciation bonus.

Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, was unrevised at a 2.5 percent rate.

Businesses accumulated $83.9 billion worth of inventory in the second quarter, less than the initially reported $93.4 billion. That saw restocking contributing 1.39 percentage points to GDP growth rather than 1.66 percentage points.

The relatively smaller inventory build means less stock overhang, which bodes well for third-quarter GDP growth.

While trade was a drag for a second consecutive quarter, export growth was raised to a 10.1 percent pace from a 9.5 percent rate. Business spending on equipment and nonresidential structures, such as gas drilling, was revised higher.

Housing market-related spending was revised slightly down as was government spending.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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DealBook: Telefónica and Telecom 1talia Competing for Vivendi’s Brazilian Business

LONDON – A bidding war has broken out for Vivendi's telecommunications operations in Brazil as rivals Telefónica of Spain and Telecom Italia made competing offers for the business on Thursday.

Earlier this month, Telefónica offered to pay about $8.9 billion in cash and shares for Global Village Telecom with an eye toward combining it with its mobile and broadband operations in Brazil, which operate under the Vivo brand.

On Thursday, Telefónica sweetened its bid to about $9.8 billion after Telecom Italia, one of its main rivals in Brazil, offered to pay a combination of cash and shares that valued the business at 7 billion euros, or about $9.2 billion.

Telecom Italia wants to combine G.V.T. with TIM Participações, which it controls.

Vivendi's board will examine both offers later Thursday. Telefónica's sweetened offer expires on Friday.

The offers by Telefónica and Telecom Italia come a day after the Brazilian telecom provider Oi said that it had hired the investment bank Banco BTG Pactual to explore alternatives to acquire Telecom Italia's controlling stake in TMI.

"Oi will keep its shareholders and the market informed of any material events," the company said in a regulatory filing on Wednesday.

A deal for G.V.T. would be the latest in a wave of consolidation as Telefónica and other European carriers swap assets in hopes of attracting more customer dollars by offering bundled mobile, land-line, broadband and television services.

In July, European antitrust regulators signed off on Telefónica's long-awaited acquisition of Germany's smallest mobile operator, E-Plus.

That deal, worth €8.6 billion, would combine the third- and fourth-largest cellphone providers in Germany and create a rival on par with T-Mobile and Vodafone, which together control more than half of the mobile phone market in Germany.

As part of its sweetened proposal, Telefónica would pay €4.66 billion in cash and give Vivendi a 12 percent stake in its Brazilian operations. About one-third of those shares could be exchanged at Vivendi's discretion for 5.7 percent of the share capital and 8.3 percent of the voting rights of Telecom Italia.

Telefónica, based in Madrid, recently announced plans to sell convertible bonds in Telecom Italia worth about 750 million euros, or $1 billion, to reduce its stake in the Italian company and appease Brazilian competition regulators.

For its part, Telecom Italia has offered to pay €1.7 billion in cash and to give Vivendi a 15 percent stake in its Brazilian operations and a stake worth 16 percent of the share capital and 21.7 percent of the voting rights of the Italian company.

Telecom Italia would hold about 60 percent of the combined TIM and G.V.T. post merger. Its offer expires in September and would require shareholder approval.

Brazil is an important market for both companies.

Telefónica's Brazilian operations are a main driver of its business in Latin America, accounting for 42 percent of its revenue in the region last year. The company's Brazilian business posted revenue of €12.2 billion in 2013.

As of the end of June, Telefónica had about 95 million customer access accounts in Brazil, primarily driven by mobile customers.

Telecom Italia's Brazilian operations have more than 73.4 million customers and annual revenue of about €7 billion, the company said.

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Workers Win Supermarket President’s Job Back

By KATHARINE Q. SEELYE and MICHAEL J. de la MERCED August 27, 2014

After the intervention of two governors and an enormous public outcry, the chaos that has paralyzed the Market Basket supermarket chain ended Wednesday night with a deal between the two warring factions of the Demoulas family, the company said in a statement.

The deal approved by the chain's board essentially meets the sole demand of the workers who have been staging huge public rallies for six weeks: that Arthur T. Demoulas, who was president until June, be reinstated to lead the company.

His cousin, Arthur S. Demoulas, and his allies agreed to sell their 50.5 percent stake in the company to Arthur T. Demoulas and his allies, who own 49.5 percent, according to the statement.

The price was more than $1.6 billion, which puts the value of the chain at about $3.2 billion, according to a person with knowledge of the agreement, who was not authorized to speak about the terms of the transaction. That valuation may seem high given that the business has ground to a halt, but it reflects optimism that the employees can rebuild it.

As part of the deal, Arthur T. Demoulas will return immediately "with day-to-day operational authority," according to the statement. But he will not technically become chief executive until the deal is finalized over the next several months.

The current co-chief executives, Felicia Thornton and James Gooch, who were installed by Arthur S. Demoulas, will "remain in place" until the deal closes, the announcement said.

It was the firing of Arthur T. Demoulas and the installation of Ms. Thornton and Mr. Gooch that touched off protests by employees in mid-July. The deal includes a set of penalties and incentives intended to get Arthur T. Demoulas to finalize the transaction by the end of February.

The settlement would end one of the strangest labor actions in American business history, one that disrupted a low-price grocery chain that attracted two million shoppers in Massachusetts, New Hampshire and Maine. And perhaps most surprising, it ends with the sole demand of the workers, from top management to the lowliest clerks, being met.

"This show of group solidarity achieved what the employees and customers asked for," said Christopher Mackin, a lecturer at Rutgers School of Management and Labor Relations. "This is unheard-of in corporate America. It's like 1776 — we get to pick who governs us."

The protests left store shelves bare. Shoppers, in solidarity with employees, boycotted the chain. The company started losing millions of dollars a week, and analysts questioned whether it could be salvaged.

Arthur T. Demoulas, who long presented himself as an ally to workers, was elevated to cult status as employees carried posters with his picture, calling him "our one true leader" and demanding his reinstatement.

As employees and customers held ever bigger and more boisterous rallies, in the boardroom the family factions appeared stuck. As the stalemate continued, Gov. Deval Patrick of Massachusetts and Gov. Maggie Hassan of New Hampshire waded into the fight. Although Market Basket is a private company, they said a successful resolution was overwhelmingly in the public interest.

The buyout process was supervised by the three independent directors — Keith Cowan, Eric Gebaide and Ron Weiner — of Market Basket's seven-member board. Among the biggest issues was what role Arthur T. Demoulas would play after the announcement of a deal and before the actual closing, with a so-called interim operating agreement among the major sticking points.

Thomas A. Kochan, a professor of work and employment research at the Sloan School of Management at M.I.T., said the episode showed that "the employees are the most valuable asset in this business."

It showed, too, that the employee action resonated. "A lot of people could relate, and they applauded when they saw these employees standing up to save their business and save the business model," Professor Kochan said.

"Market Basket has done more to educate us on how to manage a business than any business case study that's been written to date," he said.

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DealBook: Mobile Sales Lift Alibaba Profit Nearly Threefold, Ahead of 1.P.0.

Credit Mike Clarke/Agence France-Presse — Getty Images Related Links

With less than a month before its initial public offering, the Alibaba Group is intent on showing just how profitable — and focused on mobile — it truly is.

The Chinese e-commerce behemoth disclosed on Wednesday that its profit nearly tripled in the quarter that ended June 30, to $2 billion. Its sales climbed 46 percent, to $2.5 billion.

With its latest performance figures, Alibaba is likely to continue to stoke interest in its hotly anticipated market debut. The stock sale is expected to be one of the biggest ever, raising perhaps $20 billion and signaling the coming-of-age of the Chinese Internet industry as a source of great potential wealth.

Along with the online media conglomerate Tencent and the search engine Baidu, Alibaba has come to dominate its home country's Internet landscape. Its power and formidable profit margins come from its two big e-commerce markets, Taobao and Tmall, as well as other services like online payments. In short, it is part eBay, part Amazon.com and part PayPal, with a hunger to invest in yet more up-and-coming industries.

Alibaba has enjoyed such great success that its own internal valuations of its shares have leapt enormously over the last three years. As of Wednesday, the company valued recent restricted stock grants at $59 a share, giving itself a value of more than $135 billion.

Analysts and people briefed on the matter have suggested that the coming I.P.O. might ultimately value the company at more than $150 billion.

The disclosure on Wednesday precedes the last part of the company's coming-out process. It is expected to announce a slate of important details on its I.P.O., including the expected price range of its shares and which existing investors plan to sell their holdings, as soon as Tuesday, according to people briefed on the matter.

Next will begin a two-week roadshow for prospective investors that will span the globe. That flurry of face-to-face meetings will begin in Asia with two teams of executives, eventually reaching the United States the week of Sept. 8.

Then, if all goes according to plan, it will price its offering and begin trading early in the week of Sept. 15. The company has already secured the ticker symbol BABA and will trade on the New York Stock Exchange.

Photo In China, workers making handbags to be sold on Alibaba's Taobao site.Credit Mark Ralston/Agence France-Presse — Getty Images

During their meetings with Alibaba executives, possible new shareholders are sure to ask more questions on the latest results, which reflect continued financial growth. Perhaps more important, however, the company will be more eager to promote the expansion of its mobile offerings.

Nearly a third of Alibaba's gross merchandise volume, or the value of goods sold on Alibaba's marketplaces, comes from mobile transactions, compared with just 12 percent a year ago. And the number of mobile monthly active users rose 15 percent compared with those in the period a year earlier, to 188 million.

In some ways, the shift represents a lesson learned from the last giant Internet I.P.O., that of Facebook. When it went public in the spring of 2012, analysts began to question whether the company was adequately preparing for the explosion in smartphones and tablets, while investors appeared lukewarm on the stock. After all, at the time of its market debut, the site had only just begun to show sponsored posts in users' mobile news feeds.

More recently, however, mobile ad revenue accounted for 62 percent of Facebook's total sales as of the second quarter of this year.

Not all the new numbers were rosy for Alibaba. It disclosed that its operating margin fell to 43.4 percent, from 50.3 percent in the quarter a year earlier. And stripping away one-time gains showed a much less drastic jump in operating income, which rose 26 percent, to $1.1 billion.

And Alibaba continued to emphasize that it would keep on spending money on acquisitions in burgeoning new businesses both in China and the United States. During the last year alone, it bought one of its home country's most successful soccer teams and a web browser. It has also invested in more than a half-dozen American start-ups, including the messaging service Tango and the car-ride app Lyft.

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Plugged-1n 0ver Preppy: Teenagers Favor Tech 0ver Clothes

Nicole Myers, 19, outside an Apple store in Midtown Manhattan, said a phone was "a better distraction than clothing." By ELIZABETH A. HARRIS and RACHEL ABRAMS August 27, 2014

For some teenagers, wearing last season's jeans will always be unthinkable.

But a growing number consider texting on a dated smartphone even worse.

For teenage apparel retailers, that screen-obsessed teenager poses a big threat in the still-important back-to-school sales season.

Muscle shirts and strategically ripped jeans no longer provide an assured spot for retailers like Hollister and American Eagle Outfitters in the marketplace of what's cool at an American high school. The social cachet these days involves waving the latest in hand-held technology.

Caitlin Haywood, left, 15, with Richard Reaves, 13, by a Hollister store in SoHo, said a phone lets you shop online. 

"Clothes aren't as important to me," said Olivia D'Amico, a 16-year-old from New York, as she shopped at Hollister with her sister and a friend. "Half the time I don't really buy any brands. I just bought a pair of fake Doc Martens because I don't really care."

She probably spends more on technology because she likes to "stay connected," she said.

"It's definitely more exciting for a lot of teenagers to have a new phone that can do lots of cool stuff than clothing," said Nicole Myers, 19, a model in New York who emerged from an Apple store on Monday with a new iPhone that cost about $200. "A phone keeps you much more entertained. It's a better distraction than clothing."

Analysts and trend-spotters agree that a major shift in teenage trends, and in teenage spending, is underway. John Morris, a retail analyst at BMO Capital Markets, says that his regular focus groups with teenagers about what trends they find most appealing often stray from clothing.

The teenage apparel sector of retailing, whose sales account for about 15 percent of all apparel sales, according to the NPD Group, is in a deep slump.

"You try to get them talking about what's the next look, what they're excited about purchasing in apparel, and the conversation always circles back to the iPhone 6," he said. "You get them talking about crop tops, you get a nice little debate about high-waist going, but the conversation keeps shifting back."

The teenage apparel sector of retailing, whose sales account for about 15 percent of all apparel sales, according to the NPD Group, is in a deep slump as sales have declined over the last several quarters. Aside from the attention given to tech items like phones, apps and accessories, some longstanding retailers have been hard hit by competition from fast-fashion stores like Forever 21 and H&M, which offer up-to-the-minute trends at low prices. Online shopping has also reduced mall traffic among teenage consumers, and the popularity of Instagram whips fads around so quickly that teenagers are not chasing one enduring fashion item.

Young shoppers are the first to point out the use of phones in e-commerce.

"You can shop online for clothes on your phone," Caitlin Haywood, 15, a high school sophomore from New York, said on her way into a Hollister in downtown Manhattan. A fan of the store's "California style," she also noted that she owned many decorative coverings so that she could accessorize her phone.

That's a fashion statement itself, she suggested. "When you take pictures, people see your case," she said.

In fact, accessories like crystal-studded phone cases or neon-colored headphones are high on a teenager's shopping list.

"Having a cool phone to show you're plugged in is a huge part of people's style, a huge part of life these days," said Eva Chen, editor in chief of Lucky Magazine, adding that teenagers used smartphones to signal status in the way men used to do with ornate watches.

A bright spot for teenage retailers might be the economics of the phone market, since most teenagers do not have the money to buy the newest iPhone or Samsung Galaxy the moment it is released.

Stephanie Wissink, a managing director at Piper Jaffray, said that after several years of strong growth, the percentage of money that teenagers spend on electronics appeared to have stabilized at around 8 or 9 percent. Cellphone penetration is high and children must generally wait for their next upgrade for their next device, she said.

But technology does seem to indirectly influence other spending habits, she said. For the first time, Piper Jaffray's semiannual survey of teenagers in the spring found that they spent more money on food — just barely topping clothing — than any other category.

"There's this magnetism to restaurant environments," Ms. Wissink said. "So we talked to teens about why, and it's the free Wi-Fi."

"I'm addicted to Instagram," said Ann Borrero, a 19-year-old who attends high school in Brooklyn and has a running list of the restaurants she often chooses to get Internet access. "I just usually know, like McDonald's always have Wi-Fi, little cafes always have Wi-Fi."

Top executives at traditional retailers have felt the strain of quarter after quarter of disappointing results, and many of those companies have undergone upheaval in their top ranks.

This month, the chief executive of Aéropostale, Thomas P. Johnson, agreed to step down and be succeeded by his predecessor, Julian R. Geiger. In January, the chief executive of American Eagle, Robert L. Hanson, left the company after only two years in the position. And that same month, Abercrombie & Fitch split the role of chairman and chief executive under pressure from investors.

In addition to changes in the teenage-specific landscape, retailers across a range of categories are learning how to manage a back-to-school season that has shifted significantly in recent years. While still a crucial season for retailers, its window has become less delineated, sometimes starting a bit later and often lasting past the beginning of the school year.

"The grave mistake was to annually assume that the back-to-school shopper was going to show up like clockwork in July and buy goods in that time frame," Mr. Morris of BMO said.

Analysts say that retailers appear to have learned that lesson, and have planned their inventory accordingly, often by ordering fewer items and focusing on their margins.

"Back-to-school is important, and people want to have it be successful, but each year, it seems it's a little bit harder to do as well as you did before," said Richard Jaffe, an analyst at Stifel. "The peak becomes less of a peak."

In recent days, executives at a variety of retailers, including Target, Macy's and American Eagle, have given some encouraging signals in their quarterly earnings calls that the back-to-school season is off to a good start. But many experts are calling for a lackluster period regardless.

"Back in the day, we ate three square meals a day, and now what's trending is grazing," Ms. Chen said. "I think shopping is kind of similar. You are constantly shopping throughout the year, and in smaller ways. But I think that's something that affects teens and women — it's a larger trend, period."

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Machine Learning: Bringing Tech Culture to the Staid College Quad

Video | Saving on College Textbooks There are cheaper ways to get your textbooks for college, they just involve being a better shopper. Sites like Chegg, Bookrenter and Packback allow you to digitally buy or rent books as you need them. August 27, 2014

Molly Wood

MACHINE LEARNING

COLLEGE has its problems. It's expensive, it has some outdated traditions and it has a tendency to produce graduates who struggle to find jobs in the rapidly changing economy.

In the parlance of the tech industry, higher education is ripe for disruption. And Silicon Valley loves to talk about the end of college as we know it, whether by turning everyone into a start-up founder or funneling future students through massive open online courses, or MOOCs.

Still, traditional colleges aren't going away anytime soon and tech entrepreneurs have realized this, too. There are several companies that let students take better advantage of the college education they are getting, instead of the education of the future.

"Learning has been an inefficient market," said Dan Rosensweig, the chief executive of Chegg, an education services company. "The price of books, the diversity of who you can learn from, the geography of where you can learn. It's now getting more and more efficient."

Textbooks have been a particularly ripe target. In a report last year, the Government Accountability Office said the price of new textbooks rose 82 percent from 2002 to 2012, only slightly less than the 89 percent rise in tuition and fees, and far higher than the 28 percent rise in overall consumer prices.

The average student now spends over $600 a year on textbooks and other course-related material, according to the National Association of College Stores. But savvier shopping can probably cut book costs significantly.

Federal law requires colleges to post lists of their required materials online before students arrive on campus. That allows for price comparisons with online stores, especially if the reading is novels or historical works. "Thus Spoke Zarathustra" by Friedrich Nietzsche was available at the University of California, Berkeley, bookstore for about $19 used, but another version was just $6 new at Amazon or free for the Kindle.

Some schools try to push students toward campus bookstores, and some financial aid vouchers are good only at campus stores. But students can and should seek other options when available. And don't forget about the library.

Sites like Chegg.com, Campusbooks.com and Packback offer price-comparison tools for finding better deals on specific textbooks. And there's the option to rent textbooks instead of buying them.

Some university bookstores, like Berkeley's, offer rentals and allow renters to highlight and write notes in the books. Chegg rents textbooks to students, as do sites like Campus Book Rentals and BookRenter.

Amazon offers some textbook rentals, although there are restrictions on what states books can be shipped to.

Packback is trying to improve on the textbook rental idea by offering on-demand digital book rentals for $3 to $5 day. The assumption is that students don't always need a textbook for an entire semester — they may need it only a few times a year.

Kasey Gandham started Packback in 2012 with Mike Shannon, a fellow graduate of Illinois State University, when they were still in college. "It's a no-brainer that textbooks were too expensive," Mr. Gandham said, "but no one was ever really addressing the problem of why they're so expensive to begin with."

Mr. Gandham said textbook prices had entered a vicious cycle: They're expensive, so students buy them used and then resell them as used books for someone else to buy. In those cases, publishers get no revenue and may need to raise prices of their new books to offset fewer sales.

"The solution," he said, "was the thing that was driving up prices."

If students rent digital textbooks through Packback, they can take notes and make highlights in the e-book reader the company created. If they return the books and rent them again, the notes will still be there. And if students find they're renting the book over and over, they can convert what they've already spent toward buying the book outright.

Other companies realize that the entire textbook may not be necessary. A site called Boundless is hoping to upend both books and teaching with a sort of open-sourced approach toward teaching materials. Boundless packages freely available information from public sources like Wikipedia or research papers and offers them as "alternative" textbooks (to the considerable ire of publishers). Students can buy the books for $20.

Boundless also hopes to be a teaching platform. Educators can get texts free, along with course material like quizzes, and then teach directly from these cheaper sources — a kind of disruption from the top down.

Tech entrepreneurs are also building services far beyond textbooks that are meant to help students be smarter college consumers.

One option already known to many students is Chegg, which is evolving from a textbook search and rental site into a full-fledged resource for digitally savvy students.

The company recently acquired InstaEDU, a tutoring service that helps students get immediate access to low-cost tutoring — "Uber for tutors," Mr. Rosensweig of Chegg calls it.

"It democratizes tutoring," he said. "You can get a tutor in any subject, any language, any time of day for as little as 40 cents a minute." And on the flip side, InstaEDU lets college students offer their own tutoring services for up to $20 an hour.

Chegg also offers an internship search engine that matches openings with students' disciplines, location and whether they want to get paid.

There's also a career search with job descriptions, salary ranges and videos of real people explaining what they actually do for a living.

"Less than 50 percent of all college students in this country use their career center, and less than 2 percent get a job from it," Mr. Rosensweig said. "When we launched our service, in six months almost 500,000 students used it."

And sites like Chegg help students keep student loans to a minimum by making it easier to search for grants and scholarships that can offset tuition costs. Such scholarships have always been available, but they're often hard to find, spread out across multiple sources, and the application process can be hard.

In addition to Chegg, Fastweb and StudentScholarshipSearch also centralize scholarships and can even match a user's personal data to the right options.

And in the end, isn't a lot of college about learning to choose the right options? If we're not going to remake college education tomorrow, it is surely worth making the most out of it now.

"Degrees are the currency in America; they're part of our history," says Kim Taylor, founder and chief executive of Ranku, a site that helps prospective students find online degree programs from accredited, nonprofit universities. "The biggest issues in schools is they're in denial that students are consumers."

Not only are students consumers, they're the generation of consumers that expect the web and modern technology to make their lives more efficient and connected. If higher education can't keep up, they'll find other options, and they've got an army of start-ups ready to help.

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