By Yi-Wyn Yen

For all the last-minute Christmas shoppers who can’t find a Wii, Nintendo (NTDOY) is offering gift certificates that guarantee you can pick one up in January. Consumers must pay the $249 for the sold-out video game console at a GameStop (GME) on Dec. 20 and 21 and will then receive an I.O.U. to pick up the Wii after the holidays.

“We expect this to be a great way to put something underneath the tree,’” Nintendo of America president Reggie Fils-Aime said during a conference call this morning. “GameStop will have many tens of thousands of rainchecks.”

Nintendo has underestimated the demand of the red-hot Wii since it launched in November 2006. The Kyoto-based company has sold more than 6 million Wiis in the U.S. since its release, and last month sold 981,000 units, more than doubling sales of the Sony (SNE) PlayStation 3 and outpacing the Microsoft (MSFT) Xbox 360 by 211,000, according to NPD Group. While Nintendo has increased production by 80 percent since the launch, Fils-Aime says they did not expect such a craze for the Wii.

“We went into the launch of the Wii with very high expectations. We had expected to be in the upper range of console launches,” Fils-Aime said. “But this is unheard of.”

Last holiday season, Nintendo faced a similar shortage problem with its handheld gaming system, Nintendo DS. Last month Nintendo sold a record 1.53 million units, and Fils-Aime says there will be enough of the portable consoles to go around this Christmas. “Any consumer who wants a DS this holiday will be able to find it,” he said.

While Nintendo’s raincheck system will appease some, thousands are still paying a premium on sites like eBay (EBAY), Amazon (AMZN) and boutique shops to get an actual Wii. Some retailers are packaging extra controllers and games to mark up the cost of the $249 console by more than $200-$300. “We are always disappointed if we see retailers pricing products above the MSRP,” Fils-Aime said. “The only way we can combat that type of activity is by not rewarding those retailers with excess supply of products.”

Nintendo says consoles will be available at six major retailers - Best Buy (BBY), Sears (SHLD), Target (TGT), Toys R US, Kmart, and Circuit City (CC) - this weekend.

By Yi-Wyn Yen

For a chief financial officer in Silicon Valley, Google’s Georges Reyes has had a smooth ride, what with the search giant’s sky-high stock, $13 billion in cash and $225 billion market cap.

Reyes announced in August that he would leave the company by year’s end. But Google’s quest for a new CFO — its most high-profile opening since it went public — hasn’t been easy. In fact, Google may not be ready to fill Reyes’ post by the time he departs.

A Google spokesperson says the company won’t comment on its hiring process and will make an announcement when it names a successor.

Google (GOOG) not only needs to find an experienced finance guru who can help the company expand into new growth areas like mobile communications, it must also recruit someone who understands the company’s quirks. (Among them: Its don’t-be-evil-mantra and a policy of letting employees spend part of their time pursuing their own projects.) “The old guard may have the skill set, but they may not be a good cultural fit,” says Bear Stearns analyst Robert Peck. “A lot of people have thrown their hat in the ring, but this is a difficult position to fill.”

Says Jenna Fisher, an executive recruiter with Russell Reynolds, whose firm consults for Google: “Right now there’s a lack of talent across the board for technology CFOs, especially for public companies. There’s a huge demand going around for CFOs, but not a big supply. I do about 15 CFO searches a year, and almost all my leading candidates have multiple offers elsewhere.”

Headhunter Russell Boyle of Egon Zehnder International, which is helping Google find a new CFO, disagrees that it’s “a problem search.” “This is a very smart group of people making this decision,” says Boyle. “They’re not being indecisive. They’re being thorough.”

No list of leading candidates to replace Reyes has emerged, according to industry insiders and analysts — a sign of how stealthily Google has conducted its search. One potential contender cited by several sources, however, is Google treasurer Brent Callinicos, who was hired in early 2007 from Microsoft (MSFT).

Analysts say Google needs a CFO that moves beyond balancing the books to being more involved with its rapidly expanding business plans. The company has made a number of aggressive moves this year to expand beyond paid search. Its $3.1 billion deal to purchase display advertising company DoubleClick is expected to be approved by the Federal Trade Commission at any time. Google has also made a much-publicized foray into the mobile business with its Android platform and plans to bid in an upcoming wireless spectrum auction.

“George was great for the initial years, but Google has grown so big and so fast that it now needs someone more substantial who has more experience,” Peck says. “Someone who’s willing to risk the big bets.”

Reyes, 53, announced on Aug. 28 that he was retiring but did not give a specific reason for leaving. According to regulatory filings, Reyes has sold more than $200 million of shares and his annual salary nearly doubled this year from $250,000 to $450,000.

His penchant for being plain-spoken landed him into hot water at times, most notably during a Merrill Lynch conference in February 2006. His comments that the company’s growth was unsustainable and that Google needed to find other ways to generate revenue sent shares plunging by more than 7%. Later that day, Google issued a statement suggesting that Reyes had misspoke.

Reyes and Google CEO Eric Schmidt had worked together at Sun Microsystems during the 1980s. Reyes held a number of accounting roles during his 13-year stint at Sun, including VP treasurer, audit director, and corporate controller. Prior to joining Google, Reyes had served as an interim CFO of ONI Systems.

By Josh Quittner

Is Net-based TV ready for its close-up? Television ratings are already starting to plummet, the ongoing writers’ strike shows no signs of ending, and the development schedule for next year’s programming is looking increasingly dicey. While one report suggests that ex-TV watchers are turning to books and magazines, some folks in the nascent Internet TV business say they’re enjoying a sudden uptick in audience.

“We are seeing increased viewership at our top video products - Ask A Ninja, Boing Boing TV and Webb Alert, ” says Chas Edwards, publisher of Sausalito, CA.-based Federated Media, which sells advertising for Web sites. “But it’s hard to say how much is organic growth (the latter two both launched in the past six months) versus the migration of TV viewers to online video.”

The new TV properties are each already serving up around a million streams a month, he said; Ask A Ninja is doing closer to 3 million. Ads for premium video tend to fetch revenue of 2 to 4-cents a stream, notes Edwards, meaning that the hottest sites are starting to show quit-your-day-job-type returns.

Tech pundit and entrepreneur Marc Andreessen, observing that television viewership “has been dropping as much as 10 percent a year over the last four years, especially among kids,” says that the writers’ strike simply adds fuel to the fire. “The Hollywood writer’s strike fiasco, which is just a huge mess, is killing an entire season of TV shows,” he says, “And quite possibly the next season as well. Which will drive even more people to the net, especially kids.”

Others agree. “We’ve definitely seen a marked increase in traffic over the past few weeks,” says Hayden Black, who produces the popular Net sitcoms, Goodnight Burbank and Abigail’s X-Rated Teen Diary. (Burbank is a fairly conventional, behind-the-scenes spoof of life at on a local TV news show; Abigail is a more cutting-edge comedy centered on Black, who plays a young girl afflicted with a fake disease that makes her look like a bearded, middle-aged man.) “Without any marketing at all, Abigail is doing about 10,000 streams a day,” Black says. The program, which launched two months ago, is now generating as much traffic as Burbank, which is a year old. Black, 34, who worked for years in network television writing promos, says he plans to keep his day job for now.

Edwards says that, while the near-term effect of the writers’ strike is hard to parse, he believes that in the coming months and years, Net TV will pay off - mainly because advertising dollars will increasingly flow there.

“Premium online video has always sold well,” he says. “Big brand advertisers for years haven’t been able to find enough video inventory that they consider ‘quality.’ I do think stumbling TV ratings (both from the Tivo effect and from the writers’ strike) will drive more video ad dollars online - it literally has to. Ratings that drop fast mean networks are giving advertisers part of their money back, and digital will benefit.”

He believes that much of the new media windfall will go—where else?—to Google. “The big digital video plays will win biggest: YouTube offers huge scale fast, they have moderately believable technologies to filter for scary content, and it’s becoming more than acceptable for brand advertisers to tell their bosses they bought YouTube.”

By Josh Quittner

Why did Penthouse Media Group plop down $500 million for a bunch of social networks owned by Various — including the X-rated AdultFriendFinder?Because it’s so “sticky,” Penthouse CEO Marc Bell told Fortune Wednesday. He wasn’t being gross.

We’ve been working on this transaction for about one year, he said, pointing out that AdultFriendFinder had been on Penthouse’s radar forever, but more prominently in recent years as it became the largest adult site in the world.”If you’re going to buy something, why not start with the largest?” he said.

A social networking site is a perfect complement to Penthouse’s content, he added, because, “you create a sense of online community. It’s much more sticky than just serving up content to people. With social networking you now have a user interaction that you can’t get otherwise.

Indeed, 1.2 million of AdultFriendFinder’s members pay on the order of $25 a month for “premium” services on the social network. The privately held company claimed $200 million in annual revenue and reportedly averaged 40 percent growth for the past decade. In all, Various will add $340 million in revenue to Penthouse, making it the largest porn company in the world.

The porn business has aways been at the forefront of the technology industry. So it’s not surprising then that AdultFriendFinder was launched 10 years ago by a Stanford-educated PhD in engineering named Andrew Conru — around the time that Facebook’s Mark Zuckerberg was in middle school. It was one of many social networks — including a religious dating site called bigchurch.com — that Conru built out, and collectively called Various.

Bell said that Penthouse plans to keep all of Various’s social networks intact. “We picked up a slew of traditional dating sites that have nothing to do with adults,” he said. “We’re not selling anything at this point.”That said, the acquisition of AdultFriendFinder will help Penthouse conquer what Bell calls the next great porn frontier: adult-oriented social networking on your cellphone. “We have some very interesting applications,” he chuckled, declining to elaborate.

By Michal Lev-Ram

These days, you’re lucky to get a free bag of peanuts on an airplane. But on Tuesday, low-cost airline JetBlue Airways began testing an in-flight Internet service that lets passengers check their e-mail for free.

I was on the maiden voyage — an Airbus A320 painted with the logos of JetBlue partners Yahoo and Blackberry maker Research in Motion (RIMM) that took off Tuesday morning from New York’s JFK airport bound for San Francisco. A few days earlier, JetBlue (JBLU) had invited a handful of reporters aboard the same plane, but this was the first commercial flight to offer Internet access within the United States.

Once the airplane reached an altitude of 10,000 feet, we were allowed to turn on our laptops and Wi-Fi enabled Blackberry smartphones and connect. It took me several tries, but a few minutes later I was able to log on to the simplified Yahoo Mail interface on my browser. After that, it was easy to send and receive e-mails.

The biggest drawback is that the service only lets passengers access Yahoo’s (YHOO) e-mail and instant messaging. Still, it’s hard to complain about a free service and many passengers aboard the flight tested the Internet service with their laptops or Blackberries.

David Kubersky, a tech consultant from New Jersey who flies JetBlue regularly to the San Francisco Bay Area, said the company’s Internet service was a little bit slow but most of his e-mails went through easily.

“Usually this is my time to catch up on TV,” said Kubersky, pointing at the small seatback screen in front of him. “But it’s nice to be able to have some form of communication back to the ground.”

Henry Harteveldt, an analyst with Forrester Research also aboard the inaugural flight, said he was optimistic about the service, which will eventually expand to include access to other e-mail services.

Then again, the current lack of full-blown Internet services (which translates to lower bandwidth needs) is partly how JetBlue is able to keep it free of charge to consumers. In the future, you can expect to see an ad-subsidized model and maybe a “premium” subscription that gives paying customers complete online access, said Mike Moeller, VP of spectrum services for LiveTV, a JetBlue subsidiary and the provider of the airline’s Internet service.

This isn’t the first — or the last — time an airline has attempted to offer Internet access from the friendly skies. Airplane maker Boeing (BA) took a stab at it for six years before folding its Connexion service in August 2006 on the grounds that the market had “not materialized as had been expected.”

But Harteveldt said Boeing’s failure was most likely due to pricing and timing issues. (Boeing used an expensive satellite system to deliver wireless Internet access and launched right before 9/11).

“Boeing builds great airplanes, but they’re not a marketing organization,” said Harteveldt.

JetBlue, meanwhile, is relying on about 100 cell towers across the country that communicate with radios onboard the plane (LiveTV paid $7 million for its own slice of wireless spectrum last year). The in-flight Wi-Fi network is activated by three wireless access points hidden in the roof of the plane.

LiveTV CEO Nate Quigley said that whatever evolutions the service goes through, there will always be a free component to the service.

“There have been a bunch of false starts, but the business model never worked” says Quigley. “You shouldn’t have to pay to send a message to your wife saying you’re going to be late because you’re circling the airport.”

Free e-mail access — however limited — isn’t bad for keeping in touch with work, family and friends while at 30,000 feet. That is, of course, if your hard drive doesn’t crash mid-flight, as mine did.

American, Virgin and Alaska Airlines have also said they would soon launch their own in-flight Internet service, though they have not disclosed details on pricing.

By Michael V. Copeland

Less than 18 months ago, LinkedIn was the only online business networking game in town. Then Facebook opened up to all comers, and things changed. Or more precisely, a wave of LinkedIn’s users began giving the fast-growing social network a whirl. Sure, Facebook was more about throwing chicken wings than getting a deal done, but some of the hardest charging dealmakers, including startup entrepreneurs, venture capitalists and sales pros began setting up camp at Mark Zuckerberg’s happy online party.

Say what you want about those annoying zombies (a Facebook widget that lets you turn your friends into zombies with a digital “bite”), but LinkedIn looked downright dowdy by comparison. And worse, as more professional types signed up for Facebook over the past year, it became clear that LinkedIn didn’t have a lock on being a no-nonsense business utility.

Now LinkedIn, which claims 17 million members, aims to bring all those wayward people — and then some –  back. Starting today, LinkedIn is rolling out a set of features that aim to make your LinkedIn network as appealing and sticky as any other social network out there, zombies be damned. (See my CNNMoney.com colleague Paul LaMonica’s take on the new LinkedIn here.)

The LinkedIn update includes a refresh of the service’s homepage and the addition of modules that make it easier find people to add to your network, review positions your colleagues are looking to fill, as well as see the questions your LinkedIn network is posing to the community.

The revamped site also features the launch of LinkedIn News, a set of headlines gathered from thousands of sites and blogs that are meant to be tailored to you specific company, industry and the people within your network. For example, when I log into LinkedIn now, the news it gathers up for me includes four stories related to the relaunch of Fortune.com and the latest highlights from the magazine. The LinkedIn News feature will be rolled out gradually to all members in early 2008.

What promises to bring the greatest changes to LinkedIn, however, is the announcement of “InApps,” the service’s version of a platform to allow hand-picked third party developers to add applications to LinkedIn that will operate within LinkedIn but also bring your LinkedIn network and some of its functionality to outside websites. For example, BusinessWeek.com has developed an application via InApps that links to people and companies in your network that are featured in a story. LinkedIn is also a member of Google’s OpenSocial, but that is a separate effort.

The other applications to come are yet to be revealed, but LinkedIn brass is making it clear that those widgets that will be strictly business. They seem to mean it. Jia Chen, founder of one of the most successful widget companies on the planet, RockYou (which brought the social networking world such apps as GlitterText, ShoutOuts and Facebook’s SuperWall) says he e-mailed LinkedIn’s founder Reid Hoffman to see if they could get on the “white list” of approved developers. “So far, I haven’t heard back,” Chen says. “But you’ll see us on LinkedIn some day.”

Let’s hope so. While LinkedIn positions itself as “a purpose-driven site, not a happy waste of time,” it would do well to supply its members with a little bit of fun and, dare we say “glitter.” Without it, the site runs the risk of becoming too much like, how to put this, work.

By Josh Quittner

Yesterday, I considered opting out of Beacon on my Facebook account. I pulled up the Privacy page, and looked at the tick box, which would turn off the controversial feature that broadcasts a user’s purchases at participating websites everywhere. But I didn’t pull the trigger. It was still on an open tab in my browser this morning.

Partly, I didn’t do it because I was too busy dealing with e-mail and phone calls from people about my recent Facebook rant. John Perry Barlow once said that “the media is a blunt instrument” — somehow my column was being used as a sledge hammer, and suddenly, I was the Jerry Lewis of the Facebook Hate-A-Thon. Nearly 200,000 people had swung by fortune.com to read that piece in the first day it was up. One of them was my colleague at Fortune, David Kirkpatrick, who, not surprisingly, wrote an excellent rebuttal. (I say “not surprisingly” because David wrote, as far back in October 2006, the first story I had read that convincingly explained why Facebook mattered.) With his counter-point now online, I also had to spend a part of the day yesterday fending off the excitable editors in New York who wanted me and David to argue our positions via video for the site. (One of them suggested I wear a luche libre suit.)

I am not that stupid. Nor do I look good in a Speedo. If I could do video, why would I waste my time with the other low-paid mutts in the print world? No, there is, sadly, a reason my medium is words. David is far better looking than me and infinitely more charming (though I think I have better legs.) And besides, the thing that had gotten me riled up in the first place — Facebook’s ongoing contempt for its users — had been addressed by the time David weighed in. Facebook CEO Mark Zuckerberg had issued a mea culpa and made it simple for anyone to opt out of Beacon.

But beyond all that, I didn’t want to be forced into the position of being a Facebook hater, mainly because I don’t hate it. I use the thing a dozen times a day to play Scrabulous, Texas Hold ‘Em, and to harry my daughters, wife and friends. And that’s why, in the end, I decided not to opt out of Beacon. Facebook is a great social experiment and I want to see how it turns out.

Besides, the idea of Beacon doesn’t really bug me. Reid Hoffman says that “privacy is an old man’s concern” and I tend to agree with him. I had reached the same conclusion when writing a cover story for Time about online privacy many years ago. The joy of a social network is the shared experience — the give and take among friends. I like the peripheral view I get of my friends when I log in, and I don’t mind publishing personal artifacts in exchange. Further, I’d argue that most of us get a kick out of sharing personal details within our networks. That’s what humans do in real life. It makes sense that we should crave it online, too.

What I adored about Facebook, and blathered on about endlessly, was that it gave us near-perfect control over our online relationships. (e.g. You can block jerks.) The few people I loathe, or who have spammed me, can no longer contact me on Facebook. The creation of the Innernet was an important step in the evolution of the social web: Now I can define not only who I am online, but who I want to hang out with. That’s why Facebook grew so quickly. At 50 million people, it’s about the size of South Korea and ought to overtake the UK in population within the year — if the current growth rate holds.

It won’t grow, though, if Facebook messes with its users’ right to control their social graph. It’s tough to build something this big and takes a fair amount of finesse. But it’s far easier to lose it all. Facebook’s response to the events of the past few weeks has mainly been, If you don’t like it, leave. That kind of customer service was also found on Delphi, Prodigy and AOL. If I were Zuck, I’d craft a simple Bill of Rights guaranteeing members that they own their own relationships. With Facebook’s users in control, the company is free to try anything it wants.

Well, I’m running out of time. Nurse is here for my shot, then it’s time for a nap. Have a nice weekend.

By Michal Lev-Ram

Shiny new cell phones might make for great stocking stuffers, but for every new mobile device purchased there’s an old phone that needs to be recycled. If you’re prone to hiding last year’s model in a desk drawer or, even worse, throwing it in the trash (a major environmental no-no), think again. This holiday season, you might consider swapping it for some cash.

You won’t make much, but companies like Flipswap and CellForCash.com will actually pay you for your old phone, which they then resell. Torrance, Calif.-based Flipswap offers its service to consumers on its site but also sells its software — sort of like a Kelley Blue Book for phones — to wireless distributors like Parrot Cellular and online phone retailer Wirefly. Flipswap’s proprietary, real-time pricing algorithms take into account your phone’s make and model, condition and market demand. A one-year-old Motorola Q from Verizon Wireless will fetch $54.50, for example, while the average payout for an old device is $30, says Flipswap CEO Sohrob Farudi. Then again, the company has also shelled out upwards of $300 for an “old” iPhone (which Farudi now uses).

Flipswap, which was launched in 2004, is already profitable, according to Farudi. He says more than 2,000 cell phones were traded in through Flipswap on Black Friday — the post-Thanksgiving start of the holiday shopping season. But it’s all pocket change compared to the more than 100 million phones discarded each year in the United States alone. To increase its reach, Farudi says his company is in talks with two of the major carriers.

December is the busiest season for cell phone sales: According to mobile research firm M:Metrics, an estimated 12 percent of U.S. consumers will buy new phones — a 40 percent spike above the monthly average rate. And this year, Farudi expects business to be especially good.

“I think we’re going to see a lot of activity this month,” says Farudi. “And that’s partly due to the iPhone.”

It won’t be just new iPhones that are taking the place of older devices. Other new touchscreen phones, such as Verizon Wireless’ Venus and Voyager, could mean more business for companies like Flipswap. Ocala, Florida-based CellForCash.com also takes in old cell phone in exchange for cash - their average payout is about $25, according to spokeswoman Linda Zimmerman.

And if you’re feeling generous, both companies also let people donate their cell phones to a variety of charities. Either way, it’s better than letting them non-biodegrade in the depth of your desk drawer.

By Yi-Wyn Yen

Google has made no secret that it wants to be more than just an online search advertising company. But the Internet giant is finding out how tough it is to break into into the old-media market.

The company’s attempt to roll its online advertising tools into a single, ad-buying and selling system to include TV, radio, and print is taking longer than anticipated. “The offline initiatives have been a real test for us,” said Tim Armstrong, Google’s president of advertising and commerce at a UBS Global Media Conference earlier this week. “We’re in the very, very early stages of connecting businesses. This is a 2, 3, 5-year product that we’re going to work on.”

Breaking into traditional media would be a major coup for Google (GOOG). UBS analyst Ben Schachter estimates that advertisers could spend $500 billion for centralized digital platforms that track both online and offline advertising by 2024. Microsoft (MSFT) and Yahoo (YHOO) are also working on creating similar software tools to integrate across-the-board buying efforts. “We believe that Google is intent on being the early front-runner,” Schachter wrote in a report. “First-mover advantages will be important for the long term.”

Google is dabbling in print and radio, and seems to be making the most headway in TV. In April, Google partnered with EchoStar Communications (DISH) to test selling ads to local advertisers in the San Francisco Bay Area. With the set-top boxes, Google is able to get “second-by-second ratings” and figure out what type of ads match with TV programs based on channel surfing behavior. “Doing better pieces of creative can lead to efficiencies in terms of how ads perform,” Armstrong said. “That feels very familiar to us at Google.”

Google may know how to rule the Internet with its AdWords system, but it faces different challenges on Madison Avenue. Among its biggest problems is learning how to deal with big brand advertisers who are wary about using a system that would give Google access to a lot of valuable data. Armstrong referred to the dilemma as a “process.”

“These are very big businesses. On a basic level, they are testing these platforms,” he said. “There’s a high level of interest, and a high level of work that needs to be done.”

While advertisers may be interested in spending less to sell more, Google still must convince the powerful ad agencies that a digital platform that measures the effectiveness of an ad campaign is a good idea.

Google’s quantitative approach to make agencies more efficient may not be something agencies necessarily want. Agencies creating big-budget campaigns for major advertisers often test new concepts to help build brand awareness. Google’s proposal to quantify that kind of squishy data could make advertisers question an agency’s relevance.

Armstrong criticized those pushing the public perception of Google as a “friend or foe.” He described the relationship between Google and agencies as the “largest friendship network.”

On Wednesday, Fortune’s David Kirkpatrick weighed in on the latest controversy surrounding Facebook and its new advertising system. While some critics in the media say the social networking site is doomed based on its own mistakes, Kirkpatrick argues that the site will not only survive concerns about violations of members’ privacy, but will continue to thrive. What do you think? Are you a Facebook fan or foe?