Wednesday, July 29, 2009
After a year and a half of dealing, the tech giants reach a deal to take on Google, which holds a 65% market share in online search.
NEW YORK (CNNMoney.com) -- Microsoft and Yahoo reached a long-awaited partnership Wednesday in a bid to challenge Google's dominance in online search.
Under the 10-year deal, searches on Yahoo.com will be powered by Microsoft's new Bing search engine. Yahoo, in turn, will be responsible for attracting premium advertisers.
Microsoft will pay Yahoo 88% of the revenue it gains from searches on Yahoo's sites. Microsoft will also have the rights to integrate Yahoo search technology into its own existing Web search platforms.
Yahoo said the revenue sharing agreement will increase its operating income by about $500 million annually.
According to Microsoft Chief Executive Steve Ballmer, the deal will allow Microsoft to "create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company."
And in a dig against search market leader Google (GOOG, Fortune 500), the companies said in a joint statement that "advertisers no longer have to rely on one company that dominates more than 70% of all search."
An 18-month odyssey. It was a partnership that was a long time in the making. Microsoft's (MSFT, Fortune 500) search market share has been slipping for more than two years, and the company has struggled to make its online advertising unit profitable. Meanwhile, Yahoo (YHOO, Fortune 500), once the search market leader, dropped to a distant second place behind leader Google (GOOG, Fortune 500) by 2007.
The dealings between the two companies began Feb. 1, 2008, when Microsoft made an unsolicited $44.6 billion cash and stock bid for Yahoo. A week later, Yahoo rejected the bid, saying the $31 per share offer "massively undervalues" the company, despite the fact that the bid represented a 62% premium over Yahoo's $19.18 closing stock price a day before the announcement.
In an attempt to fend off Microsoft, Yahoo launched a two-week trial partnership with rival Google on April 10, 2008. That involved outsourcing advertising space to Google as part of a short-term agreement that could eventually lead to a bigger partnership.
Microsoft threatened to take its bid to Yahoo's shareholders by the end of April if a deal could not be reached, and even sweetened the pot to $33 per share. In a turnaround move, Microsoft opted to avoid a hostile takeover and simply dropped the bid for Yahoo altogether on May 5 of last year. Microsoft CEO Ballmer cited the economics of the deal as well as Yahoo's interest in a long-term Google partnership as reasons.
Almost as soon as the deal seemingly died, signs of life re-emerged. First, activist investor Carl Icahn threatened Yahoo's board with a proxy battle if the company's executives didn't return to the bargaining table with Microsoft. Then, shares of Yahoo rocketed higher on May 19, 2008, when rumors circulated that Microsoft was interested in Yahoo's search advertisement business.
On June 12 of last year, however, Yahoo announced that discussions with Microsoft had ended without a pact. The same day, Yahoo turned around and announced a deal with Google to put Google ads on Yahoo's search pages. That tie-up was later nixed after a Justice Department antitrust investigation prompted Google to end the partnership. Icahn and Yahoo reached a truce in late July of last year.
The situation at Yahoo took a turn for the worse after the credit crisis erupted in October. Yahoo announced it would lay off 10% of its workforce in late October, shares slipped below $9 in November and Chief Executive Jerry Yang announced his resignation.
When Carol Bartz came on as Yahoo's new CEO in January 2009, she said she would not sell the company outright, but appeared to be more open to a sale of the company's search business.
Rumors of a possible deal were reignited when Bartz acknowledged at the All Things Digital conference on May 27 that Yahoo and Microsoft had been talking "a little bit," and said outright that Yahoo's search business was for sale, albeit for "boatloads" of money.
The next day, Ballmer unveiled Microsoft's new Bing search engine. Reports began to circulate in mid-June that Bing was a success, growing Microsoft's beaten-down search market share and eating into Yahoo's, and Ballmer reiterated to Fortune's Patricia Sellers that Microsoft "remains open to a partnership with Yahoo."
Tuesday, July 28, 2009
At the end of 2005, Google made an interesting investment: $1 billion dollars for 5% of AOL. The move made sense for AOL – it provided it with a ton of new advertising, search, and revenue opportunities via a strong partnership with Google. Google, in return, got a 5-year deal to be AOL’s default search engine.
But the value of that deal has only dropped like a rock in a lake since then. AOL has continued to deteriorate, despite highlights like the acquisitions of Bebo and Socialthing. Thus, Google’s decided to cut its losses and has sold back its AOL stake for $283 million.
According to Business Insider, Time Warner (AOL’s parent company) has made a regulatory filing with the SEC to confirm the transaction. On top of the sale, it was also revealed this afternoon that Time Warner has filed to make AOL its own company – an expected move. According to MarketWatch, the new company will be AOL Inc.
The sale means that Google, in total, lost $717 million as a pure investment. This doesn’t include the value it generated in its search partnership, but we’re willing to bet it wasn’t worth more than $700 million. It also places AOL at a valuation of $5.7 billion, a far cry from its peak during the first dot com boom, when everyone had an AOL account.
Continuity is the watchword these days at Google Inc.'s two metro Detroit offices, each of which has a recently installed leader.
“You're going to see a lot of the same. We remain strongly committed to the community with our involvement in programs like AdWords in the Curriculum,” said Mike Miller, the new head of operations for Google's 250-person operation in downtown Ann Arbor that services more than 10,000 Michigan businesses.
The curriculum program pairs Google Grant recipients — usually nonprofits — with students who run their online AdWords program.
Miller and Michelle Morris, Google's new automotive national sales manager, who's based in Birmingham, were made available to reporters Thursday.
Miller, a Grosse Pointe Farms native, returns to Michigan after two and a half years at the Mountain View, Calif.-based search engine giant's corporate headquarters. He also spent six years at Cisco Systems in San Jose.
He replaced Grady Burnett, who led Google Inc.'s advertising operation in Ann Arbor until being poached recently by Palo Alto, Calif.-based social media giant Facebook.com to run its global online and inside sales.
The Ann Arbor office is one of several AdWords operations around the world. It opened three years ago to much fanfare and promises of 1,000 new jobs within five years, but the economic slowdown has stalled that.
“We don't make forward-looking statements. We remain committed to (Ann Arbor). Our business will grow as the AdWords grows and as Google grows overall. Our hiring has never been linear. So we do see fluctuations. Our hope is that the business continues to grow and we grow with that,” Miller said.
Google received an estimated $38 million, 20-year Single Business Tax abatement from the Michigan Economic Development Corp. in return for creating 1,000 jobs over five years.
Failure to reach the hiring target means Google will earn less of the incentive.
AdWords is the pay-per-click search term-based advertising system that accounted for about 95 percent of Google's $21 billion in 2008 revenue.
The company didn't offer a specific number but said that it has “hundreds of thousands” of AdWords users.
Although publicly held, the company doesn't divulge how much of its revenue is generated by specific offices or what it calls verticals, such as automotive or retail clients.
“(Ann Arbor) is one of our critical operations. This is one of our biggest (AdWords) operations,” Miller said. “It continues to be a healthy office and a healthy business for us.”
Net income the first three months of this year was $1.42 billion on revenue of $5.51 billion, an increase of 8 percent profit and 6 percent revenue growth over the same quarter of 2008.
The Ann Arbor office operates out of leased space on two floors of the McKinley Towne Centre on East Liberty Street at Division Street, and there are no plans to build a permanent Google-only office.
Morris, who took over as head of auto sales six weeks ago after previously running just the Midwest division, said Google believes automotive is a growth sector despite the industry's downturn.
The search engine, which previously ran its auto operations out of New York and maintains 65 percent of the total online search market, works directly with the Detroit 3 and their advertising and digital marketing agencies, and all of them invest heavily in the analytics that measure the effectiveness of their Google campaigns, she said.
Thursday, July 16, 2009
The littlest consumer is one of the best consumers.
While parents may scrimp on their own clothing allowances during the recession, they are less likely to do so on their baby's, making basic infant and organic toddler clothing one of the most resilient discretionary consumer categories in the economic downturn, several industry watchers said.
Carter's Inc. and Gap Inc. saw good numbers in the natural baby clothes business in the first three months of the year, and market watchers and retailers expect the trend to continue when second-quarter results are issued later this month and next.
Young parents are more willing to sacrifice extra little luxuries for themselves to dress their little ones appealing natural and organic kids clothing. Grandparents are also big spenders on babies. Additionally, babies grow quickly, so the turnaround rate of natural and organic baby clothes is faster than for kids and adults, giving baby-product makers better immunity to the economic downturn.
Research firm IBISWorld Inc. says the current recession will have a moderately negative impact on the industry, with price-conscious parents and other consumers cutting back on their spending for children's clothing only a little.
Revenue from infants' and children's apparel in the U.S. stood at $10.5 billion in 2007, falling only 1.8% in 2008, according to IBISWorld senior analyst George Van Horn. While IBISWorld projects a 0.9% drop this year, the research firm sees a 2.5% rebound in 2010. By comparison, the overall apparel market, which includes accessories and footwear, stood at $322.5 billion in 2007, and fell about 2.3% in 2008 to $315.1 billion.
"Kids' clothing is less responsive to economic conditions than men's and women's clothing...as children are growing and parents find it difficult to cut back on spending for their kids," IBISWorld said in a research report.
Adult clothes aren't really necessities in an economic crisis, said Julie Hennessy, a consumer behavior and marketing strategy professor at Kellogg School of Management at Northwestern University, adding that Carter's and OshKosh should do well during the economic downturn because they are "fairly basic brands in infant wear."
"You can wear what you've worn last year, but babies cannot," she said. "Parents, especially parents expecting their first child, are extremely emotionally involved in what they buy their children." Carter's "Just One Year" line sold exclusively at Target Corp. has seen strong sales, said Target spokeswoman Jana O'Leary, who declined to give specific sales numbers for baby apparel, adding only that "baby apparel sales are performing well."
Carter's is also seeing better sales in its once high-flying OshKosh B'Gosh line. The toddler apparel brand, which sustained losses for the company in 2007 and early 2008, recently has seen strong demand from parents despite the deepest recession in decades.
Scott Krasik, an analyst from C.L. King & Associates, raised Carter's fiscal 2009 estimate to $1.73 per share from $1.58 per share and reiterated his "strong buy" rating on the stock recently, increasing his price target to $30 from $26.
"With the OshKosh turnaround on track and the opportunity to exceed expectations over the next few quarters, we believe a premium multiple for [the stock price] is warranted," Mr. Krasik said.
During a conference call in June, Carter's said it has seen over the past 18 months an increase in coupon use and better response to its sales. While parents are purchasing more basic clothing items, they are cutting back on the special occasion outfits. Thrift consumers are also asking for more durable clothes. Carter's has introduced more mix-and-match products that can be worn for different occasions and matched with other outfits.
At Gap, Evan Price, vice president of investor relations, said in a conference call in June that "on a comp basis by division, baby performed better than kids and adults" in April and May.
More than a dozen TV networks -- including broadcaster CBS Corp. -- agreed to join Comcast Corp.'s nationwide test of an online-video subscription offering, as companies seek additional revenue streams amid the advertising slump.
Comcast's "On Demand Online" will offer a Web authentication system that will allow 5,000 Comcast customers in markets across the country to verify their cable-TV subscription in order to access programming online at Comcast's Fancast.com and Comcast.net sites at no extra cost.
Financial details of the agreement weren't disclosed.
Broadcasters have been putting popular TV content online free on ad-supported Web sites like Hulu. Unlike their cable counterparts, broadcast networks depend mostly on ad revenue and have little incentive to limit access to content to help pay-TV distributors preserve their business.
Hulu is a joint venture of media companies, including News Corp., which owns The Wall Street Journal.
CBS's participation in the trial could signal a willingness to work more closely with distributors as ad markets suffer through the recession and Web players such as Google Inc. steal market share.
"Today's announcement highlights the industry's growing interest to bring long-form content to consumers via a secure and easy-to-use online platform," said Matt Bond, executive vice president of content acquisition with Comcast.
The agreements signal that a critical mass of major players in the TV business are lining up behind a concept championed by Time Warner Inc. Chief Executive Jeff Bewkes known as "TV Everywhere." Mr. Bewkes has said he envisions an industrywide authentication platform that will allow subscribers to any pay-TV service to access programming online on PCs and mobile devices.
CBS has made many of its TV series available on numerous Web sites, including CBS.com and its own video site, TV.com. But the company has made progress recently in increasing carriage fees that it gets from distributors to complement its ad revenue. CBS does not plan to stop streaming shows it has available on its own Web site and may add series from its pay cable network Showtime down the line, said Quincy Smith, CEO of CBS Interactive.
In addition to CBS, the other networks include cable network AMC, owned by Cablevision Systems Corp.; the Food Network, owned by Scripps Networks Interactive Inc.; and BBC America, owned by the BBC. Along with others, they joined Time Warner's HBO and Turner networks as well as Liberty Media Corp.'s Starz.
The trial will provide online access for Comcast's TV subscribers to some of TV's most popular programming, including HBO shows such as "Entourage" and "True Blood" and TNT's "The Closer." AMC's "Mad Men" and "Breaking Bad" are expected to be included later this summer, and the offering will also include major Hollywood films like "The Dark Knight" and "Juno."
Other broadcast giants such as News Corp., Walt Disney Co. and NBC Universal have yet to participate, although A&E Television Networks, which is participating, is part-owned by Disney and NBC Universal. Comcast, however, is still holding talks with most TV companies to bring more in.
Comcast and Time Warner recently agreed on a framework for putting programming from cable networks online to satisfy consumer demand while still requiring customers to subscribe to a TV service in order to prevent an erosion in their revenue base.
By The Wall Street Journal
AUSTIN, Tex. -- Dell Inc. executives said world-wide technology spending is weak and likely will remain so for the near future as companies delay computer purchases and consumers gravitate to low-cost devices.
"We're going to run the business assuming relatively weak demand continues," said Dell Chief Financial Officer Brian Gladden, speaking at the Round Rock, Texas, company's annual conference for Wall Street analysts.
Chief Executive Michael Dell added that big customers are delaying new technology purchases during the recession and are "elongating the life cycle" of personal computers, notebooks, laptops and refurbished computers. He said spending should pick up next year.
The remarks came a day after Dell said its profit margins are shrinking because of high component prices and other factors, which Mr. Dell said the company didn't see coming. The computer maker has been trying to turn itself around amid a weak market, but progress has been slow. In 4 p.m. composite trading Tuesday on the Nasdaq Stock Market, Dell shares were down $1.05, or 8.1%, to $11.97.
At the conference, Dell executives outlined their latest strategy to revive profit growth. They said Dell is cutting costs to expand profit margins and likely will acquire other companies, but they provided little specific information on future plans.
"I think investors were hoping to hear more," said Shaw Wu, an analyst with Kaufman Bros. In a report Tuesday, Mr. Wu lowered his revenue and profit predictions for Dell's current fiscal year and said Dell's problems seem to be "company-specific," since the overall PC industry is improving.
Dell has been struggling to grow since 2006, when its direct-sales model faltered and it lost market share to Hewlett-Packard Co. H-P eventually toppled Dell as the world's largest PC maker by units and revenue. Company founder Mr. Dell returned as CEO in 2007 and promised a turnaround staked on cutting costs and expanding in areas like consumer sales.
Dell's consumer division accounts for only about 20% of company revenue, and its operating-profit margin of 2.4% last fiscal year is lower than other Dell businesses. Dell's consumer chief, Ron Garriques, on Tuesday said consumer operating margins should reach the "mid-single digits" in two or three years.
Mr. Garriques said he is trying to sell more devices through cellular carriers. Dell already sells netbooks -- mini-PCs that cost less than $500 -- through carriers, which subsidize devices for consumers, who then use the netbooks to access the Internet over the wireless networks.
But Mr. Garriques declined to say whether those other devices would be cellphones or other machines. People briefed on the matter say Dell has been developing phones and a hand-held Internet device.
Mr. Gladden added that Dell could face some repercussions from the struggles of CIT Group Inc. The struggling lender works with Dell to finance computer purchases from businesses. "It's a critical partner," Mr. Gladden said, adding that if CIT folds, Dell would have to find new financing partners. He said Dell also has $35 million in "accounts receivable" from CIT.
Levi Strauss & Co. swung to a loss during its fiscal second quarter on a 3% sales drop as executives brushed off the chance of an initial public offering of stock.
While other retailers are consolidating in the ailing economy, San Francisco-based Levi's said it is expanding its footprint.
"Retail continues to be an important part of our growth strategy," said Robert Hanson, president of Levi Strauss Americas. "It really allows us to showcase our product offering."
This week, Levi's completed the purchase of 73 Levi's and Dockers outlets for $72 million from Anchor Blue Retail Group Inc. Levi's also opened more than 30 new stores world-wide during the quarter, in part by taking advantage of other casualties of the recession, including the closure of small, individual stores.
However, company executives dismissed the likelihood of a near-term IPO. Levi's recently hired Blake Jorgensen, a former chief financial officer of Yahoo Inc., as its financial chief, fueling speculation of a public offering for the closely held company.
"I do have some of that experience in my background, but I think more important, I saw this as an incredible brand and a unique opportunity," Mr. Jorgensen said in a telephone interview. He declined to comment further.
When asked if he would say Mr. Jorgensen's hiring increased the possibility of an IPO, Chief Executive John Anderson replied, "I would not."
Levi's reported a net loss of $4.13 million for the quarter ended May 31, compared with $701,000 in net income a year earlier. Revenue fell 3.4% to $904.5 million. Levi's attributed the revenue decline to currency-exchange rates. On a constant-currency basis, the company said net revenue increased 5% for the quarter.
The Americas was the strongest region for the company, with revenue up 8% to $518 million despite adverse currency effects. Europe and Asia Pacific revenues declined 17% and 13%, respectively. Asian sales were hurt by slowing wholesale orders in Japan.
Mr. Anderson said the company is seeing slim fits and skinny jeans as among its strongest sellers world-wide. The two most popular washes are very dark or the distressed-look.
New York Times Co. agreed to sell its New York City radio-station license to Univision Communications Inc., in a deal that will net the publisher $45 million as it seeks to stabilize its finances.
The spot on the dial will be converted from a classical-music station to Spanish-language programming, but under a three-way transaction, the classical format will continue, further up the dial under public-radio ownership.
Under the terms of the deal, announced Tuesday, Univision Radio will pay Times Co. $33.5 million for the Federal Communications Commission license, equipment and signal of WQXR-FM, its classical music station in New York. As part of the deal, Univision will give Times Co. the license and transmitting equipment for a less powerful station, which Times Co. will then sell -- with the QXR call letters and brand -- to WNYC Radio for $11.5 million.
Univision Radio will move its WCAA station to the stronger signal in a deal Univision executives said will allow it to expand its coverage of New York's Hispanic population.
The transaction, expected to close by year's end, continues Times Co.'s efforts to shed non-core assets at a time when steep declines in advertising have squeezed the New York Times's profit and hampered the company in managing its long-term debt.
WQXR's classical format will find a new home on public radio, but with its new, weaker signal, many fans might not be able to hear it. The signal won't be as strong as it is at present in parts of Long Island and New Jersey, for example.
WQXR, which has broadcast classical music for 73 years, "is the nation's pre-eminent classical music station," said Janet Robinson, president and chief executive of Times Co., in a statement. "We are very pleased that this transaction will preserve WQXR's ability to serve New York City's classical music audience and its cultural institutions as a public radio station."
Just 275 of the nation's 13,000 radio stations carry classical music, but their listeners tend to be well-educated, relatively wealthy and loyal. When Washington, D.C.. public-radio station WETA dropped the classical format for news and talk in 2005, its ratings dropped. It returned to classical music in 2007.
Public radio organizations are building up networks of stations, realizing many of the same efficiencies as commercial radio station groups, such as the ability to cross-sell on-air sponsorship slots. American Public Media's Minnesota Public Radio is perhaps the best-known example, operating a network of 38 stations in the region. WNYC works with New York Times Co. and other partners on the public radio morning news show "The Takeaway," which will be unaffected by the sale of WQXR.
Times Co. posted a loss of $74.5 million for the first quarter as advertising revenue fell 27% from a year earlier. The company had over $1 billion in debt and $33.6 million in cash at the end of the quarter.
In March, Times Co. sold the TimesDaily, an Alabama newspaper that is part of the company's Regional Media Group, for $11.5 million. Currently it is shopping the Boston Globe as well as Times Co.'s nearly 18% stake in the holding company of the Boston Red Sox.
General Motors Corp. said Tuesday that former Chairman and Chief Executive Rick Wagoner will receive an annual salary of $74,030 for his lifetime and annual benefits of $1.6 million for five years.
Mr. Wagoner's benefits are reduced in line with cuts given other retired GM executives earlier this year. His pension was worth $20 million at the end of 2008, according to regulatory filings.
The Obama administration demanded Mr. Wagoner step down in March because GM wasn't making enough progress in demonstrating it would be viable. He remained on the payroll at $1 a year.
In a filing, GM said Mr. Wagoner will retire effective Aug. 1 and receive benefits based on his 32 years at the auto maker. He will continue to receive liability insurance at a level similar to other retired executives until Jan. 1, 2010. He also will receive company-paid life insurance or its cash value, currently $2.6 million.
GM filed for bankruptcy June 1 and emerged Friday, with the U.S. government owning a 60% stake.
By The Wall Street Journal
The deep discounts that restaurant chains have been offering to lure cash-strapped customers out of their kitchens are coming back to bite them.
Restaurant chains ranging from Denny's to Applebee's this year have been giving away food or offering deals to boost traffic slowed by the recession.
But as several chains prepare to report second quarter earnings in coming weeks, Wall Street is bracing for news that price cuts not only ate into profits but failed to bring in as many customers as hoped.
Yum Brands Inc., whose Taco Bell and Pizza Hut brands have been emphasizing low-priced fare, reported Tuesday that earnings in its fiscal second-quarter ended June 13 rose 10%, excluding an acquisition-related gain. But same-store sales in the U.S. declined 1% due to an 8% decline at Pizza Hut, which has been offering discounts for online pizza orders and other deals.
"We've been hearing from a lot of restaurant management teams that discounting wasn't driving the traffic they hoped for," said Jeffrey Bernstein, an analyst at Barclays Capital.
Despite heavy discounts across the retail industry -- prices have been slashed on everything from food to clothing -- consumers have been stubbornly reluctant to open their wallets.
Some bigger chains including McDonald's Corp. and Starbucks Corp. have avoided offering deep price cuts. But even they are boosting promotions. Starbucks has lowered prices on some drinks and McDonald's on Monday began a promotion called "Mocha Mondays," in which customers can get a free sample of iced or hot mocha from 7 a.m. to 7 p.m. every Monday until Aug. 3.
When Darden Restaurants Inc. reported earnings last month, the owner of Red Lobster, Olive Garden and The Capital Grille said it avoided the kinds of discounts and giveaways that many of its peers were engaging in.
"We don't know that a lot of folks who did discounting got much for it from a traffic perspective," Darden Chief Executive Clarence Otis then said.
Some chains have tried to turn up the heat in the price wars but have failed to win over franchisees, who see the discounts hurting their profit margins.
Burger King Holdings Inc. wanted to sell its double cheeseburger nationally for $1 for a four-month period, but franchisees last Wednesday voted down the proposal. Prices vary by city, but at a Chicago Burger King, the double cheeseburger sells for $2.69. The chain instead proposed offering the $1 offer for just six weeks, but franchisees on Friday rejected that idea, too.
On Tuesday, the chain said it would mail coupons to 80 million households allowing them to buy the sandwich for $1.
Quiznos has taken a different approach. Rather than just cutting prices of existing menu items, the Denver-based sandwich chain has designed new, lower-priced menu items.
In March, Quiznos introduced the Toasty Torpedo, a 13-inch sandwich on ciabatta bread, for $4. After hearing from consumers who liked it but didn't want so much sandwich, Quiznos on Monday introduced an 8-inch version called the Toasty Bullet, for $3.
In the second week of the Torpedo's launch, sales increased 26%. It will remain on the menu.
"It was a product designed to be sold at $4, which is different than taking an existing menu item and discounting it down," Quiznos Chief Executive Rick Schaden said in an interview. "Discounting items that weren't designed to be sold at lower prices isn't sustainable and will hurt earnings."
by Wall Street Journal
Intel Corp. provided fresh evidence that PC sales are rebounding for some vendors, though the company's second-quarter results were marred by a rare loss due to a $1.45 billion antitrust fine.
The Silicon Valley chip giant posted revenue and profit margins for the period ended June 29 that were much stronger than the first quarter.
"While the global economic environment is still recovering, our customers signaled increased confidence" with their ordering patterns, said Intel Chief Executive Paul Otellini during a conference call Tuesday.
Intel projected that revenue would expand further in the current period, with additional improvements in profit margins. The company's stock jumped 7% in after-hours trading following the news to $18.02. It finished the 4 p.m. Nasdaq Stock Market session at $16.83.
"These results really do show that the worst is behind for Intel," said Doug Freedman, an analyst at Broadpoint AmTech.
The company declared in April that the PC market had bottomed out, and suggested that revenue would be flat with the $7.1 billion reported in the first period. Analysts were expecting slightly better than that.
Instead, Intel reported second-quarter revenue of $8.02 billion, up 13% from the first quarter though still 15% below year-earlier levels.
The improvement in profitability was more dramatic; Intel in April projected a gross margin percentage for the second quarter in the "mid-40s," but Tuesday reported 50.8%.
The company's remarks contrast sharply with those of Dell Inc., which is second to Hewlett-Packard Co. in global PC sales. Dell on Monday projected shrinking profit margins, and on Tuesday told analysts that companies continue to put off purchases of computers, laptops, notebooks, servers, and refurbished Dell computers.
But Intel's sales lately have been much more closely tied to spending by consumers -- particularly for laptop computers -- while most of Dell's sales go to businesses.
Mr. Otellini said Intel had a strong rebound in shipments of microprocessors for laptop computers, though he said sales of chips for server systems also were surprisingly strong because of demand spurred by a new chip family dubbed Nehalem, which offers a big leap in computing performance.
Stacy Smith, Intel's chief financial officer, added that the company reduced inventories and headcount. "We have a nice tailwind going into the third quarter," he said in an interview.
Not that all is rosy. Intel, which helped push for cheap laptops called netbooks, faces analyst fears that the low-priced chip called Atom used in those products will steal sales from more profitable products. Intel said that its average sales prices declined from the first quarter, even excluding Atom.
Then there is the fine from the European Union, which in May found that the company had abused its dominant position in competing against Advanced Micro Devices Inc.
Because of the fine, Intel swung to a loss of $398 million, or seven cents a share, from a profit in the year-earlier period of $1.6 billion, or 28 cents a share.
Intel, which is appealing the EU ruling, had not posted a quarterly loss since the mid-1980s.
Tuesday, July 7, 2009
Story from Pittsburgh Post-Gazette
There were no parades or fireworks Wednesday, but July 1 was the independence day that so many nurses and hospital caregivers had hoped and battled for. Among those many was Lois Cusick of Mt. Lebanon, who has worked at UPMC's Western Psychiatric Institute & Clinic for 26 years.
She, and all other nurses and caregivers in the state, are now largely immune from management requests to work "mandatory overtime," the extra hours, nurses say, that frequently were tacked on the end of already long hospital shifts, jeopardizing patient care and making it tough to keep quality nurses.
"This is a huge win. I've been a nurse for 30 years. I raised three children doing in-patient nursing," Ms. Cusick said. "There were so many times I couldn't go home at the end of my work shift."
Every year, the unpredictable overtime hours, compounded by lack of staffing, are high on the list of issues that push nurses out of the health-care industry
For much of the decade, nurses and the Service Employees International Union, and overtime lawyer have been lobbying for a change in state law that would restrict hospitals' ability to force nurses and support staff to work overtime hours. Fourteen other states have similar laws and regulations on the books.
Pennsylvania's law was signed by the governor last fall, and went into effect on Wednesday. "Seven years we've been fighting for this," said Deb Bonn, director of the Nurse Alliance of SEIU Pennsylvania
Now, "when they go to work in the morning, they know what time they are getting out."
It's not just a vague quality-of-life issue -- uncertainty over hours is a major reason that nurses leave the field, many say. In Pennsylvania, nurses must re-register for nursing licenses every two years, and each time they do so, they must fill out a survey that asks about job satisfaction (and dissatisfaction). Every year, the unpredictable overtime hours, compounded by lack of staffing, are high on the list of issues that push nurses out of the health-care industry.
"It's critical," said Cathy Stoddard, a longtime nurse at Allegheny General Hospital, which hasn't imposed mandatory overtime upon its union workforce for six years. "You don't want the person taking care of you to be so exhausted that they're making mistakes."
Even though the SEIU was one of the groups pushing hardest for this change, the new law actually may have a greater effect on non-union personnel. That's because, in some cases across the state, nurses and other support staff already represented by unions have negotiated limits on the number of overtime mandates that can be issued each month.
Non-union nurses and support staff -- including nursing home workers, radiology aides, lab workers, phlebotomists, surgical technicians -- are more likely to see an immediate change in the workplace.
The new overtime law doesn't mean that nurses and caregivers will never work any overtime. They can still volunteer for extra hours, for example. And there are certain "last resort" events that would trigger a hospital's ability to require its employees to work overtime -- a major accident, or a natural disaster, or any other national, state or municipal emergency.
Chronic understaffing is not considered an "unforeseeable emergent circumstance" by the law, and thus isn't a circumstance that would allow for mandatory overtime.
The state Department of Labor and Industry is charged with making sure hospitals and other care institutions are meeting the new guidelines, and seeing to it that "an employer [does] not retaliate against an employee who refuses to work overtime."
If that happens, hospitals may be subject to fines or other corrective measures for any facility that breaks the law, known as Act 102.
What will hospitals and care homes do now that the state has put the kibosh on forced overtime? Hire more nurses and support staff, for one thing. Employers also can borrow nurses from employee banks.
Story from Las Vegas Sun
Nevada’s minimum wage increased this month, entitling workers to receive at least $5.85 per hour, or $7.55 for workers whose employers don’t offer health insurance plans that qualify under state law.
That is, unless you drive a limo or taxi.
A federal judge last month issued a ruling in a landmark class action lawsuit filed by drivers at Nevada’s largest limo company, Bell Trans, that sounds, to the thousands of people who work in Nevada’s tourism-based transportation industry, like a bad joke: Not only can drivers not sue for minimum wages under state law, but the constitutional amendment to raise the state’s minimum wage, approved by voters in 2006, wasn’t intended to remove preexisting minimum wage exemptions, built into state law, for drivers like them.
The order, signed by U.S. District Judge Robert C. Jones, states that voters likely didn’t intend to remove the exemption when they voted for the amendment, which aimed to increase the minimum wage rate and doesn’t mention exemptions or how to handle them.
When business was flush, drivers didn’t think about minimum wage laws. In the recession, with rides and tips harder to come by, limo and taxi drivers say they’ve fallen to the bottom of the labor pyramid — working overtime, in some cases, just to scrape together a couple of hundred bucks a week. Limo and cab companies, new to minimum wage complaints, have fought them.
The companies say state law acknowledges that drivers, like, say, independent sales reps, should be compensated based on productivity (drivers share the money they collect from passengers with their employers) rather than receiving a guaranteed hourly wage, like most workers. Drivers say they’re entitled to the same safety net most other workers have. Waiting in a cab line for a ride that may or may not materialize when business is slow is work nonetheless, just like sitting in an office, they say.
Although he told the limo drivers they don’t qualify under state minimum-wage laws, Judge Jones has allowed the Bell Trans drivers to pursue federal minimum wage and overtime claims.
Bell Trans, through the company’s Las Vegas overtime lawyer declined to comment.
The limo drivers are seeking approval from Judge Jones to appeal the order to the 9th Circuit Court of Appeals in San Francisco and, should that fail, a request that the Nevada Supreme Court decide the matter of whether the constitutional amendment removed the minimum wage exemption for drivers.
Federal minimum-wage law, unlike state law, allows employers to include tips in their calculation of minimum wages — a rule that will prevent many drivers from receiving minimum wage. Federal overtime law, which entitles workers to overtime for more than 40 hours worked in a week, is also less favorable for hospitality workers than Nevada’s overtime law, which requires employers to pay overtime for each hour over eight worked in a day, regardless of whether the weekly total worked adds up to 40 hours.
At first glance, the court order seems unfair to drivers, who have a valid argument, said Bryan Cohen, a labor attorney who wasn’t involved in the case. In fact, Cohen said, it’s a well-intentioned and unbiased, though perhaps unpopular, decision that attempts, for the first time, to clarify Nevada’s needlessly complicated minimum wage law.
“The amendment could have been written more clearly to say that the exemption for drivers is removed — or that it stays. But it didn’t,” said Cohen, a senior associate with Kamer Zucker Abbott. “Neither side stepped up, and they allowed a constitutional amendment to pass that was ambiguous and difficult to interpret.”
Service Currently Available Only to Australia
As Google is trying to become everything for everyone, it is, yet again, set to raise a few concerns from the established businesses. In its latest move, the company added real-estate information to Google Maps linking potential buyers and renters to real-estate agents. The feature was developed at Google's Sydney offices and launched in Australia for now but it will be introduced to other markets including the US soon.
“Today we're adding a feature to Google Maps in Australia that we think will make Maps an even more invaluable resource to Aussies as they go about their busy lives. Increasingly, people are heading online when looking for a new house to rent or buy, and from today, we're adding the ability to search for properties on Google Maps. We've worked with partners across the real estate industry to provide up-to-date listings, which you can search for directly from the Google Maps search box,” Andrew Foster, product manager, wrote on Google's Official Australian blog.
The new feature will provide free listing for real-estate agents or publishers in Google Maps, very similar to the functionality already provided by the company to local businesses in several products. The aim is to provide users with a lot more choices and a better view of the market but also of the place they are looking to buy or rent. All the listings in an area will show up as markers in Google Maps and should provide a very intuitive and simple way for finding how well the location is situated when it comes to the proximity of schools or other facilities for example.
For now it is only available Down Under but there are plans to make it available worldwide. While it could prove very valuable for users and should help real-estate agents get better coverage, real-estate publishers are bound to be less than happy with the move as it comes as the business is going through some its worst periods.
Press Release From PR Web
Jacksonville, FL -- The Mobile Flyer, a Jacksonville-based mobile marketing and technology firm, has announced its entrance into the Real Estate solutions market with the launch of its mobile messaging service for Real Estate Agents and Brokers. Founded by Real Estate technology veterans and dedicated to 'Expanding the Reach of Real Estate', The Mobile Flyer has combined proven mobile messaging technologies with a suite of consultative services to help Agents connect more effectively with potential buyers.
The case for mobile marketing is more compelling than ever. According to Pew Internet and American Life Project, cell phone usage is now outpacing land line usage, and according to OMMA, SMS message usage is now outpacing regular cell phone call usage in the U.S. The Mobile Flyer enters this market as the mobile messaging explosion begins to revolutionize the way companies in all industries interact with their customers.
"It's easy to see the impact that mobile messaging technology is having on marketing communications in dozens of industries, so it seemed like an obvious gap in adoption of the technology by the Real Estate market," said Nick Trautman, President and CTO of The Mobile Flyer. "We founded The Mobile Flyer to provide Real Estate Agents and Brokers with the tools and consultative advice they need to modernize their market approach and drive more real-time leads."
Through comprehensive industry research, The Mobile Flyer's founders learned that the market wanted more than a simple SMS communications platform. The Mobile Flyer is positioned to solve the unique needs of today's Real Estate professionals through cutting-edge technology, efficient processes, and a staff of experienced Real Estate marketing consultants.
Scott Vierling, Director of Sales and Marketing for The Mobile Flyer, says, "We partner with clients to ensure that their mobile marketing solutions align with the individual needs and goals of their businesses, whether they are Independent Agents, Brokers or Real Estate Corporations. Instead of offering one-size-fits-all tools, we build lasting relationships that truly differentiate our clients from their competition."
Mobile Flyer can service any U.S. Real Estate Agency, Including:
Apex Real Estate Agency
Cary Real Estate Agency
Chapel Hill Real Estate Agency
Chatham County Real Estate Agency
Clayton Real Estate Agency
Durham Real Estate Agency
Durham County Real Estate Agency
Fuquay-Varina Real Estate Agency
Garner Real Estate Agency
Hillsborough Real Estate Agency
Holly Springs Real Estate Agency
Johnston County Real Estate Agency
Knightdale Real Estate Agency
Orange County Real Estate Agency
Raleigh Real Estate Agency
Wake County Real Estate Agency
Wake Forest Real Estate Agency
Wendell Real Estate Agency
Zebulon Real Estate Agency
In addition to offering easy-to-use mobile messaging technology, The Mobile Flyer also leverages signage provider partnerships, a proprietary lead capture system, and MLS integrations to increase the return on investment for clients. More information about The Mobile Flyer can be found online at www.TheMobileFlyer.com.
About The Mobile Flyer
The Mobile Flyer is dedicated to 'Expanding the Reach of Real Estate'. As the partner of choice in providing mobile marketing solutions for Real Estate Agents, Brokers, and Corporations, The Mobile Flyer combines cutting-edge mobile communications technology with a suite of consultative services to enable client success. Learn more about our SMS messaging and lead capture technologies, our signage solutions, and our world-class consultative service at www.TheMobileFlyer.com.
Monday, July 6, 2009
Story from the Abilene Reporter News
An Abilene man distraught over his next $610 monthly student loan payment made a call in recent weeks to Stephen Brower, assistant director of financial aid at Hardin-Simmons University.
By the end of the conversation, the man was “squealing like a third-grade school girl,” thanks to a new federal law that went into effect this week.
The law allows people to adjust student loan payments based on their income. With Brower’s help, the man filled his information into the loan calculator like the one at www.ibrinfo.org and was amazed his loan payment was cut to $311.
Brower said numerous people have inquired about this new repayment option.
“For him, it made the difference between having to default and being able to make his payments,” he said.
Anyone with federal student loans, even if they are administered through a private bank, can apply for the income-based repayment, or IBR, program by the U.S. Department of Education.
Payments are determined by a person’s income and loan size, meaning young college graduates at entry-level jobs can get a break.
Loan recipients submit their tax returns each year, so lenders can recalculate monthly payments based on borrowers’ income changes, according to the Chronicle of Higher Education.
“This is without any question the best program the feds have invented,” Brower said. The repayment program is also good for students who have received a federal student loan consolidation.
The implications are good for Abilene, full of graduates still making payments to the city’s three private colleges.
About 62 percent of HSU students pay for school with federal loans, as opposed to private student loans, and 72 percent of students at Abilene Christian University have federal debt.
Many of these graduates go into professions like teaching or non-profit work, which means with IBR, they could have their debt forgiven in 10 years.
Private sector workers can have their debt forgiven in 25 years, although most would pay their loans off by then.
ACU’s Career Center has put out the word about the income-based payments on its Facebook page, through Twitter updates and in workshops with graduating seniors.
For many students, student loans loom like a dark cloud on the horizon, Brower said.
“This new program is taking things, in my opinion, a quantum leap down the road,” he said. “In many instances it will cut the monthly payment in half.”
Interest will continue to accrue as borrowers take longer to pay back loans, but the program comes at a time when students are getting all-time low interest rates, which the Chronicle of Higher Education reports dropped again last week.
“A year ago, students were getting loans in the 6 to 9 percent range,” Brower attests. “Now, they’re getting 2 to 3 percent. It’s huge. While the economy is not great, and there are a lot of things that have gone south, there are some things about school finance that have gotten better for students.”
Jocelyn Nederhoff recently came from Albuquerque, N.M., to orientation for her freshman year at Abilene Christian University. She got a $5,500 Stafford loan for her first year at a good interest rate and may need more before she graduates.
Her father went to medical school, and while that means her parents are no strangers to student loans, they have different opinions on the new income-based payment plans.
“I’d rather get it over with as soon as possible,” said her father, Randy Nederhoff. “It’s better to just face the music and pay it.”
However, her mother, Collette Nederhoff, said, “I’m just glad she’ll have some options when she graduates, no matter what (salary) she ends up making at first.”
With income-based payments, lower interest rates and the Free Application for Federal Student Aid (FAFSA) easier than ever, will this make it too easy for students to rack up big debt?
Brower doesn’t think so.
“My experience is that students don’t go into more debt than they need,” he said, adding only about 2 percent of HSU graduates with federal loans default. “It is rare to see crazy spenders. The overwhelming sentiment among students is still that debt should be avoided at all cost.”
Saturday, July 4, 2009
Story from Newsweek
Imagine if automakers got together and started measuring the gas mileage of new cars with a cool test of their own making—one in which the cars were rolling downhill with their engines idling. Suddenly you'd have some pretty amazing claims: Why, that three-ton SUV gets 300 miles per gallon! This subcompact gets 500! In tiny print at the bottom of the window sticker you'd find a disclaimer saying that, well, um, you know, your mileage may vary.
Crazy, right? Yet that's more or less what's happening with laptop computers and their battery lives. Right now, I'm looking at a Best Buy flier touting a $599 Dell laptop that gets "up to 5 hours and 40 minutes of battery life." Down in the fine print comes a disclaimer explaining that "battery life will vary" based on a bunch of factors. Translation: you ain't gonna get five hours and 40 minutes, bub. Not ever. Not even close.
So how can Dell and Best Buy make that claim? These battery-life numbers are based on a benchmark test called MobileMark 2007 (MM07). The test was created by a consortium called BAPCo (Business Application Performance Corp.), whose members are—you guessed it—computer makers and other tech companies. AMD, the No. 2 maker of microprocessors, is a member of BAPCo, but now has become a whistle-blower. AMD says PC makers know full well that the new tests produce misleading numbers, but they are touting them anyway.
Laptops score big numbers because they're tested with screens dimmed to 20 to 30 percent of full brightness, the Wi-Fi turned off and the main processor chip running at 7.5 percent of capacity—just like those cars idling downhill. Techies and industry insiders have long known that official battery-life claims are pretty much worthless. But regular folks don't. As a result, some are getting pushed toward pricier machines by sales reps who tell them they'll get an extra hour of battery life. Those customers may be paying a premium and getting nothing. "There's only three endings to this story," says Patrick Moorhead, a marketing vice president at AMD. "Either the industry regulates itself, or the FTC steps in and regulates us, or we get hit with a class-action lawsuit. I suggest the industry go with the first option."
AMD is recommending computer makers adopt a new way of measuring battery life, using two states: "active time" and "resting time," similar to the way cell-phone makers describe the "talk time" and "standby time" of a phone. A Dell executive says that approach makes sense, and that the company is considering providing customers with information beyond the MM07 scores. "Customers expect the advertised battery life to reflect the way they really use the product," says Ketan Pandya, head of AMD-based products at Dell.
AMD isn't leading this crusade out of a sense of altruism. Its real gripe is that MM07 gives Intel, its archrival, an unfair advantage. AMD claims MM07 was created in Intel's labs and rigged so that Intel chips would outscore AMD chips, since AMD chips draw more power when idle. (AMD says that in real-life usage, laptops using its chips perform comparably to Intel's.) AMD also points out that the president of BAPCo happens to be the head of performance benchmarking at Intel.
Intel says this is all hogwash. An Intel spokeswoman says that just because the consortium's president is an Intel exec doesn't mean Intel has special influence. Meanwhile, she can't resist taking a crack at AMD: "You will often find that companies who are behind in performance sometimes challenge independent and standards-based benchmarks," she says via e-mail.
Intel and AMD are the Bickersons of the computer industry, with AMD always complaining that Intel is cheating, and Intel always responding that AMD should quit being such a crybaby. But lately AMD has been landing some punches. In May, European antitrust regulators smacked Intel with a $1.45 billion fine, claiming Intel used unfair tactics to bully AMD. (Intel plans to appeal.)
Meanwhile, out in the marketplace, the crazy battery claims persist. Dell says its $2,000 Adamo notebook will run for more than five hours, but The Wall Street Journal got only two hours and 44 minutes. Apple claims eight hours of battery life for its $2,800 17-inch MacBook Pro, but CNET got only four hours and 14 minutes. This stuff is so pervasive that professional reviewers see company-generated battery-life claims as a joke. "The rule of thumb is that in real-world use you get about 50 percent of rated battery life," says Mark Wilson, associate editor at Gizmodo. "It's not that companies are lying, but they're stacking the deck in their favor. [Their claims] are misleading to the general public." That's something to keep in mind next time you're out shopping for a laptop.
Story from the Mirror UK
Almost 7,000 British Airways staff have applied for voluntary pay cuts, including 800 who said they will work unpaid for up to a month, the airline announced today.
Of the 40,000-strong workforce, 6,940 employees had volunteered for unpaid leave, part-time working or unpaid work by June 24, which the company said will save up to £10 million.
Chief executive Willie Walsh, who has already announced that he will work unpaid for the month of July, said: "This is a fantastic first response. I want to thank everyone who has volunteered to help us pull through this difficult period.
"This response clearly shows the significant difference individuals can make."
Options offered to staff included volunteering for between one and four weeks' unpaid leave or unpaid work, with the pay deduction spread over three or six months.
Story from Reuters
NEW YORK (Reuters) - MySpace, the social network owned by Rupert Murdoch's News Corp, said it will cut 30 percent of its staff to lower costs as it struggles to stay popular in the face of rising competition.
MySpace will be left with about 1,000 employees, it said in a statement released on Tuesday. The company declined to say how many people work at the service, but the percentage suggests that about 400 people will lose their jobs.
The cuts, which were presaged in several blog reports in recent weeks, are the biggest move so far by new management at the social network and an attempt, it said, to return the service to a "start-up culture."
"Simply put, our staffing levels were bloated and hindered by our ability to be an efficient and nimble team-oriented company," MySpace's new chief executive, Owen Van Natta, said in the statement.
"I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace."
News Corp named Van Natta as CEO in April. He replaced Chris DeWolfe, one of MySpace's co-founders.
News Corp's new digital media chief, Jonathan Miller, said MySpace "grew too big considering the realities of today's marketplace."
The layoffs will happen across MySpace's operations, though many of its employees are based in Los Angeles. A company spokeswoman declined to say when employees will learn that they are losing their jobs.
MySpace is facing increasing competition from social network Facebook. Facebook and Twitter, a website that lets people tell others what they're doing, are surpassing MySpace in buzz and popularity in the technology and media worlds.
The job cuts came the same week as the number of Facebook users in the United States surpassed those of MySpace for the first time, according to Web measurement company comScore.
Facebook's edge was narrow, with 70,278,000 unique visitors to its website in May versus MySpace's 70,237,000. Still, the change marks a key triumph for Facebook. MySpace's U.S. user numbers have fallen since October 2008.
Worldwide, Facebook had more than 307 million unique visitors in April, according to comScore, the latest month for which data was available. MySpace had more than 123 million.
MySpace forms a large part of Fox Interactive Media, a News Corp unit that houses several of the company's digital operations. The unit, which people in the media business call "FIM," recently called off a move into a large office building in Playa Vista in Los Angeles.
MySpace also is facing the likelihood that an advertising deal with Google Inc that brought it $300 million a year over three years will be renegotiated on terms that will be far less lucrative to the social network when the original contract expires in 2010.
News Corp shares fell 41 cents, or 4.2 percent, to $9.41 on the Nasdaq stock market.
Story from Tech Crunch
MySpace is planning to lay off 300 of its 450 non-U.S. employees, it announced this morning, confirming our earlier report. Just one person in three gets to keep his or her job. The company has now announced that over 700 of it’s 1,800 total employees have been or will be laid off - 30% of U.S. staff last week, and 66% of non-U.S. staff today.
The company will not confirm whether Managing Director Travis Katz is still with the company (we reported earlier this evening that he has left the company). Update: sources at MySpace are saying that Katz will remain with MySpace and that “his role hasn’t changed.” The company will still not respond to an on-the-record request for comment about Katz.
TechCrunch Europe has the press release and email from MySpace CEO Owen Van Natta to what’s left of staff.
The company also says that it will close “at least 4 of its offices outside the United States,” adding “Upon completion of the proposed plan, London, Berlin, and Sydney would become the primary regional hubs for MySpace’s international operations. Under the proposed plan, MySpace would place all existing offices in Argentina, Brazil, Canada, France, India, Italy, Mexico, Russia, Sweden, and Spain under review for possible restructure. MySpace China, a locally owned, operated, and managed company, and MySpace’s joint venture in Japan would not be affected by the proposed plan.”
The email to employees notes that the “restructuring steps we have taken have laid the groundwork for an exciting new chapter of innovation for MySpace”. He also says “I look forward to working with you all and speaking with you in the coming days.”
From: Owen Van Natta To: FIM MySpace All Subject: IMPORTANT: PROPOSED INTERNATIONAL RESTRUCTURE Importance: High
Last week we made a number of changes to MySpace’s domestic structure in order to create a leaner, more nimble organization. Today, we are announcing the next step in our overall restructuring effort - a proposal to streamline our operations abroad.
Unlike our recent domestic restructuring announcement, what we are announcing today is a formal proposal we intend to implement, rather than an executed plan. As required by laws in countries where we operate, we will not implement the plan until we have consulted with potentially affected employees. As a result, even though the plan we are proposing today would apply to all international divisions of the company, a finalized international restructuring will be put into action over a period of days.
Similar to our domestic restructuring, our international plan is designed to rein in growth in staff and expenses that we cannot sustain. Our proposal would reduce MySpace’s international staff from 450 employees to approximately 150 employees and close at least 4 of our offices outside the United States.
Upon completion of the proposed plan, London, Berlin, and Sydney would become the primary regional hubs for MySpace’s international operations. Under the proposed plan, MySpace would place all existing offices in Argentina, Brazil, Canada, France, India, Italy, Mexico, Russia, Sweden, and Spain under review for possible restructure. MySpace China, a locally owned, operated, and managed company, and MySpace’s joint venture in Japan would not be affected by the proposed plan.
We are focusing on London, Berlin, and Sydney for two very simple reasons: (1) these are markets where we have a lot of MySpace users as well as the resources to allow us to compete effectively and (2) these are major international commerce centers where a robust MySpace presence can help our company develop new and innovative business partnerships.
As with the domestic changes we made last week, these proposed international reductions and eliminations will be extremely challenging – professionally and personally. These are difficult decisions and they are essential to our financial well-being and the re-establishment of our overall growth strategy.
Our goal to tap into as many international markets as possible drove us to create too many offices around the globe, and with them came inefficiencies. Under the new plan, we will refocus our efforts on regional business partnerships and integration in a smaller number of territories, while retaining a robust international presence. We remain steadfast in our commitment to reaching a global audience.
The last two weeks have been tough for everyone. The employees who leave us played an important role in the successes of MySpace in these international markets, and I thank them for their hard and dedicated work. The restructuring steps we have taken have laid the groundwork for an exciting new chapter of innovation for MySpace. I look forward to working with you all and speaking with you in the coming days.
Friday, July 3, 2009
Story from New York State Insurance Department
The former chief underwriting officer of a Monticello insurance company was sentenced to 10 years and one month in federal prison Thursday for selling $535 million in fraudulent surety bonds and stealing $22.5 million in premiums instead of turning the money over to insurers.
Judge Marcia Morales Howard handed down the sentence in U.S. District Court in Florida against William Raymond Miller, 37, who pleaded guilty to mail and wire fraud in December. The court also ordered a personal money judgment of $22 million against him.
Miller, of Clarksville, MD, has already forfeited $22.5 million to the government, along with real estate in Maryland and Florida.
The sentencing climaxed a case begun when investigators in New York and other states looked into surety bonds Miller sold between 2005 and April 2008. Miller was accused of forging documents and pocketing premiums instead of turning the money over to insurers to issue the bonds for construction projects throughout the United States.
Under a plea agreement with federal authorities, Miller admitted using the names of several corporations to sell the worthless bonds. He made it appear that he was issuing the bonds in the names of legitimate insurers.
The New York State Insurance Department's Frauds Bureau began investigating Miller in early 2008 after he was fired by the Upper Hudson National Insurance Company in Monticello, where he was the company's chief underwriting officer.
The insurer fired Miller and contacted authorities after learning that he had sold a worthless $38 million performance bond purportedly authorized by Upper Hudson. He was accused of keeping the $1.9 million in premiums paid for the bond by a construction company engaged in a project in Nebraska.
Besides the New York investigation, Miller was also investigated by state authorities in Maryland and Florida and the FBI. The New York portion of the investigation also involved the U.S. Postal Service's Inspection Service in Albany.
Assistant U.S. Attorneys Russell C. Stoddard and Bonnie A. Glober prosecuted the case.
Story from Guide2.co.nz
Wellington, July 1 NZPA - New Zealand companies wanting to sell their goods and services to United States authorities received a welcome boost today.
Finance Minister Bill English announced the Export Credit Office's United States Surety Bonds programme would be extended from $75 million to $100m.
The United States government requires any company supplying it to have a bond with a registered US company for the total amount of its contract.
The bond ensures the US government will get its money back if a company fails to deliver. The bond companies will not usually provide bonds directly to New Zealand companies.
The surety bonds programme underwrites the bonds, allowing New Zealand companies to trade with the United States government.
Mr English said the $25m boost was a "lifeline to several more exporters".
Without the bond programme many New Zealand companies "would have been unable to tender and win multi-million dollar contracts".
Auckland baggage-handling systems operator Glidepath and Christchurch real-time public transport information company Connexionz have both made use of the programme.
Last week, the Government announced an extension of the short-term Export Trade Credit Guarantee.
The $150m scheme provides insurance for exporters whose banks require it.
Increasing exports is one of the best ways to support jobs and help New Zealand out of the recession, Mr English said.
Thursday, July 2, 2009
Story from the Wall Street Journal
Oracle Corp. posted a revenue decline for the first time since 2002, hurt by a strong dollar and companies' continued reluctance to spend on new technology projects.
Oracle, a huge provider of software for businesses, is the first large technology company to report results that include the month of May, and investors were looking for signs that the recession is easing. In April and May, tech companies such as Cisco Systems Inc. and Intel Corp. said orders were leveling off and the worst of the recession might be over.
For the fiscal fourth quarter ended May 31, Oracle's profit dropped 7.2% to $1.89 billion and revenue fell 5.2% to $6.86 billion during what is seasonally one of the company's strongest quarters as it offers discounts to close deals before the end of the fiscal year. It was Oracle's largest earnings drop in three years.
Over the quarter, Oracle, which does about half its business overseas, was hit hard by a strong U.S. dollar. In constant currency, its revenue climbed 4%, and income was up 5%.
Sales of new software dropped 13%, or 4% in constant currency, as businesses held off making large tech purchases in the midst of a recession.
"Oracle isn't just competing against SAP, they're competing against companies delaying purchases," said David Rutchik, a consultant with Pace Harmon LLC, which helps companies negotiate deals with Oracle and other large software companies. Mr. Rutchik said that sales of Oracle's software take a long time to complete and that companies budgeted for many of the purchases made earlier this year before the stock market collapsed in October.
But the software maker, based in Redwood Shores, Calif., gave upbeat guidance for the current quarter, reassuring investors that it was well positioned despite the shortfall. For the current quarter, Oracle forecast that its revenue would decline 1% to 4% from a year earlier. The company also forecast that its operating earnings per share for the current quarter would be between 29 cents and 31 cents at the current exchange rate.
Oracle has weathered the recession better than many rivals, in part because about half of its revenue comes from support payments for past sales. Oracle has also gained market share against other software companies over the last year, analysts said.
"When you look at the results in the face of this economic headwind it's pretty impressive," said Brent Thill, an analyst at Citigroup Inc.
The company also said Tuesday it reported its highest margins ever, which it attributed to the ongoing support payments.
Several months ago customers "didn't feel good about spending money," said Oracle President Charles Phillips on a conference call to discuss results Tuesday. "It doesn't feel that way any more."
Oracle executives said they expect to close their $7.4 billion acquisition of Sun Microsystems Inc. in the current quarter. Sun shareholders are scheduled to vote on the sale July 16. Oracle didn't include revenue from Sun in its guidance. It has said it expects Sun to add $1.5 billion to Oracle's operating profit in the first year after the deal closes.
Oracle's shares, which are up about 50% from their March low, closed down 10 cents to $19.87 in 4 p.m. trading on the Nasdaq Stock Market.
Google Invests $2.6 Million In Genetics Company
Story from the Wall Street Journal
SAN FRANCISCO -- Google Inc. said Thursday that it has invested an additional $2.6 million in 23andMe Inc., a biotech startup launched by Google co-founder Sergey Brin's wife.
Google's initial $3.9 million investment in the personal genetics company sparked controversy in May 2007 for the manner in which it blurred the line between personal and corporate property.
Mr. Brin disclosed last year that he has a gene that increases his likelihood of developing Parkinson's disease -- a mutation he found out about through DNA analysis by 23andMe.
The biotech group, which helps consumers make sense of their genetic information, was co-founded by Anne Wojcicki, whom Mr. Brin married about two years ago.
Google said its investment in 23andMe was consistent with the Internet search company's goal of organizing the world's information. "We believed 23andMe's technology had promise the first time we invested and we continue to believe that now," said Google spokeswoman Jane Penner.
Google said in a filing with the Securities and Exchange Commission that it continues to hold a minority interest in 23andMe as a result of its latest investment. Other investors included venture capital firm New Enterprise Associates.
Google said Mr. Brin holds about 38% of Google's Class B common stock, and prior to Google's investment in 23andMe, he invested $10 million in 23andMe's convertible debt financing, which was converted into Series B preferred stock as part of this financing transaction.
The funds from Google's first investment in the biotech group were used in part to repay a loan of approximately $2.6 million that Brin had earlier provided to 23andMe. Google in late 2007 bought additional shares of 23andMe held by an investor for about $500,000.
Google also said Thursday that it has entered into a lease agreement with 23andMe -- but provided no further details -- other than the lease was reviewed by an independent real estate appraiser.
Google shares closed Thursday at $414.06, down $1.10.
Story from Business Week
The new owner of the swashbuckling Swedish peer-to-peer outfit will bundle up the collective Internet bandwidth of its users and resell it to ISPs
When the founders of file-sharing Web site Pirate Bay were given a year's prison sentence in April for allowing users to illegally swap copyrighted content, many thought the swashbuckling Swedish-based Internet company was finished. Not so. On June 30, Sweden's Global Gaming Factory (GGF.ST), which runs cyber cafés and sells gaming software, announced it would buy Pirate Bay for $7.9 million—a hefty sum for a Web site that became the poster child for unlawful downloads on the Internet.
What does Hans Pandeya, Global Gaming Factory's chief executive, plan to do with his new acquisition? The answer is complicated and controversial. In an interview with BusinessWeek, Pandeya said he first intends to go legal by paying royalties for online content to media companies such as Warner Brothers (TWX), Sony BMG (SNE), and Vivendi Universal (VIV.PA). He didn't say how much he'll pay—and concedes he hasn't yet entered into discussions with any music and movie companies. Analysts estimate that up to 90% of downloads from Pirate Bay's 20 million users currently are illegal.
But Pandeya's ambitions for Pirate Bay 2.0 are much greater. He has hatched a novel scheme to bundle together the collective Internet bandwidth of Pirate Bay's users into a giant new peer-to-peer network. Then, he'll resell that broadband capacity on an ad hoc basis to Internet service providers—companies like Comcast (CMCSA) or AT&T (T)—that are in need of a quick injection of cheap bandwidth. Pirate Bay aims to split the revenue with its users, who will be financially compensated for sharing their connections. Pandeya declined to say how much users could pocket.
Cheaper Data Traffic
"The technology will use the community of file-sharers to cut costs of data traffic for ISPs by more than a half," says Pandeya. "Users will earn money by joining, which can be spent on Pirate Bay's other services [such as an expected online music store] or transferred to their bank accounts."
It's an intriguing notion, though not unprecedented. Other global peer-to-peer (P2P) networks have similarly used the collective computing and network capacity of participants—ranging from the Skype (EBAY) free Internet phone-calling service to massive research projects that distribute number-crunching work to millions of PCs.
Perhaps the best known among these is SETI@Home, based at the University of California at Berkeley, which has used P2P technology for more than a decade to speed the search for extraterrestrial intelligence. SETI participants allow access to their computers via the Net when they're not in use, creating a giant pool of processing power—a "virtual supercomputer"—that analyzes radio telescope data for signs of life from outer space. The technology also is being used by researchers to probe diseases such as Alzheimer's and Parkinson's.
Pirate Bay's plans aren't quite as philanthropic—and some analysts say pooling bandwidth for resale to ISPs won't be a slam dunk. Mark Mulligan, research director at consultancy Forrester Research (FORR), warns that Pirate Bay could face mass defections by its existing users, who might look elsewhere if the Web site swears off illegal content.
That, in turn, could make it hard to build a peer-to-peer community large enough to generate excess bandwidth to sell to ISPs.
Banking On Lucrative Ads
"This doesn't appear financially viable," Mulligan cautions, noting that ISPs already are active in trading bandwidth among themselves and may not want to embrace an upstart with a shady past. What's more, many may balk at what amounts to buying back network capacity from their own customers.
Even the legality of Pirate Bay's new concept isn't entirely clear. Users who have paid for broadband from an ISP could profit by selling some of it back to Pirate Bay. That might violate the terms of service laid down by some providers, says Tony Ballard, a London partner at media law firm Harbottle & Lewis, although in principle, he says, "there's no obvious reason why network operators could object."
Aside from the peer-to-peer bandwidth strategy, Pirate Bay also hopes to make as much as €40 million ($56 million) per month from running ads on its legal content portal. Yet Forrester's Mulligan reckons the plan also embodies significant risk—and thinks the €40 million figure is "crazy."
Why? With 16.1 million unique visitors in May—the latest figures available from researcher comScore (SCOR)—the old Pirate Bay had enough scale to attract major advertisers. But blue chip companies like Wal-Mart (WMT) or Coca-Cola (KO) wouldn't go anywhere near a site associated with illegal downloads. Now, if Pirate Bay goes legit, those concerns should ease, but the site also risks losing millions of users and becoming less desirable for advertisers. "There's a fundamental flaw in [Pandeya's] belief in transforming it into an advertising business model," Mulligan concludes. Indeed, to date no illegal music downloading sites—including such pioneers as Napster and KaZaA—have successfully made the transition to a paid service.
Global Gaming Factory expects to complete its Pirate Bay acquisition by the end of August, so it has a couple of months to iron out the details. But Pandeya is convinced he has a great opportunity in hand. "Content is just one revenue source," he says. "Data transport, that's where the money is."