Will upgrading your home help you sell it?

If you're putting your home on the market anytime soon, you may want to rethink those plans to bump out the kitchen or add an extra bath.

During the housing boom, such ambitious projects would recoup as much as 90 cents on the dollar. Not today. The resale value of improvements in general is sliding, according to experts. In a departure from recent trends, homeowners are getting the best payback from relatively mundane improvements, such as sprucing up the exterior of their house or putting in new windows.

After spending $400,000 remodeling the suburban East Greenwich, R.I., home he bought for $820,000 in 2002, Jonathan Salinger learned he probably couldn't sell it for more than $1.1 million in today's market. That's after posh additions that included landscaping, a pool, an outdoor kitchen, first-floor laundry and mud rooms, and custom cabinetry. As a result, the 45-year-old district manager for a mortgage lender recently decided not to list his house for sale and scratched plans to move the family closer to his children's private school in Providence.

The slumping housing market has made remodeling much trickier. When house prices were climbing ever higher, buyers knew they could spend big bucks to expand their homes and still make a profit when it came time to sell. But today, a buyer who spends unwisely on remodeling may be simply digging a deeper hole when it comes time to move.

Further complicating the equation: Even though housing prices are slumping, construction prices have continued to climb. That means adding that new bath will cost more, even as it contributes less to the resale value.

Homeowners have taken note. Remodeling activity peaked in 2006 before slowing last year. And it is expected to fall 4.8 percent this year, according to a report by the Harvard Joint Center for Housing Studies released last month.

Since many homeowners remodel using borrowed money, tighter credit means it's also harder for many homeowners to afford big projects. Still, American homeowners will spend an estimated $166 billion on remodeling this year, according to the Harvard housing center.

Nationally, returns for all major home-improvement projects are fetching 70 cents on the dollar, according to a Remodeling magazine survey of real-estate professionals conducted late last year. That's down from 80 cents in 2004. Back then, a minor kitchen remodel cost an average $15,300 and recovered an estimated 93 percent if the home was resold within a year. Today, a similar remodel costs $21,100 and would recoup only about 83 percent.

This doesn't mean all remodeling is a waste of money. Home improvements that help a property stand out in a glut of newly built houses and foreclosed properties are most likely to pay off now, as are those that make a house lower-maintenance or more energy-efficient.

"Make the outside of the house look really great so that people fall in love between getting out of the car and the front door. That is money that is worth spending," says Diane Saatchi, senior vice president at the Corcoran Group real-estate agency, who sells high-end properties in the Hamptons of New York's Long Island.

Freshly painted trim and new hardware also help a home show well, says Ms. Saatchi. And landscaping, including well-manicured trees and shrubs, can help older homes compete against new ones that lack mature vegetation, she says.

New windows and doors and siding help homes look well-tended and spiffy from the street. They also help make houses more energy-efficient, which increasingly matters to buyers grappling with rising fuel and air-conditioning costs, experts say.

Some elaborate remodels, though, may actually make your home harder to sell, says New Mexico builder Lonny Rutherford. He notes that lenders are nixing higher-than-normal appraisals, and that many buyers are looking for a deal. Even if someone wanted to pay extra, they "would have a hard time financing the house unless they have a lot of cash," he says.

Inferior remodeling work may be worse than none at all. Cheap cabinets and poor workmanship won't fool buyers as they might have a few years ago, when many had to make snap decisions about buying a house, says Anslie Stokes, a real-estate agent in Washington, D.C.

"Buyers can spot shoddy renovations, and they aren't willing to pay for it anymore," Ms. Stokes says.

Some improvements have regional appeal. Backup power generators bring greater returns in the West and Southwest, following several seasons of extreme weather that can knock out electrical power, than in New England. Steel replacement roofs bring greater returns in wildfire-prone California than in Iowa or Minnesota, according to the Remodeling magazine survey. As for interior amenities, home buyers in some high-tech-focused cities find "wired" homes very desirable, but they aren't in demand everywhere.

"People are looking for broadband access and alarm systems," says Jim Amorin, a real-estate appraiser in Austin, Texas. "That is almost getting to be a necessity in my market." He says barbecues, pools and other home-entertaining amenities are also in demand in his part of the country. "In downward-trending economies, people spend more time at home, so they like things that make that more enjoyable."

Despite the real-estate meltdown, some homeowners are still putting their faith in renovations. Susie Hastings, a 61-year-old homemaker, recently spent $60,000 upgrading her mother's 1948 four-bedroom house in Farmington, N.M., for possible resale or rental. Ms. Hastings replaced all the windows and doors with double-paned energy-efficient ones, redid the stucco exterior and added a high-efficiency boiler to slice the utility bill. Now she hopes the house will sell for more than its previous appraised value of $220,000.

"It has made a big difference in the look," she says.

By: M.P McQueen
Wall Street Journal; May 16, 2008

Nurses Unions Square Off Over Workers

Two of the nation's biggest nurses' unions are engaged in a slugfest over workers, seeking to spoil each others' organizing drives with tactics normally used against employers, including ad campaigns, lawsuits and infiltrating job sites.

The fight between the giant Service Employees International Union and a smaller union, the California Nurses Association, began in Ohio and has spread in recent weeks to Texas, Nevada and New York. Last week, SEIU filed suit against CNA in Iowa District Court in Johnson County, alleging that CNA illegally acquired a confidential mailing list of SEIU members it used to send promotional flyers critical of SEIU.

Both unions are trying to boost membership in a fast-growing sector of the economy. Last year, 7.5% of the private-sector work force belonged to unions, down from 17% 25 years ago, according to the Labor Department.

CNA says nurses would be better represented by a registered-nurses-only union that could focus on issues including nurse-to-patient staffing ratios. The union represents 80,000 registered nurses, mostly in California, but also in Maine, Illinois and Nevada.

SEIU, which represents 85,000 registered nurses out of its 1.7 million members, says nurses are better off in a bigger union that would also fight for other hospital workers and improve hospital-wide standards.

In Ohio, SEIU spent three years trying to organize 8,000 nurses at a Catholic health-care system and was hoping to use the Ohio union as a springboard to organize Catholic hospitals in other states. Before a mid-March SEIU vote, CNA sent representatives to Ohio hospitals to distribute promotional flyers saying SEIU had reached a back-door deal with the employer.

Susan Horne, 48 years old, a registered nurse in Cincinnati, said CNA organizers posed as Pizza Hut delivery workers to gain access to her nurse's unit. Ms. Horne, an SEIU supporter, said, "I told them, 'You have not been here for three years yet you come here five days before the election and try to sabotage our vote.' "

CNA's interference incensed SEIU, and the vote was canceled. "Their distortions and holier-than-thou statements are nothing more than a flimsy cover for out-and-out union busting," said SEIU President Andy Stern.

Orest Holubec, spokesman for Catholic Healthcare Partners, said management agreed to the election and a two-week period without pressure from SEIU or management so that employees could choose whether they wanted to join the union. He said CNA organizers entered restricted areas in hospitals and "engaged in the exact type of tactics we were trying to avoid." He said the health-care system, which employs 37,000 people in Ohio and four other states, won't agree to another vote "until the unions work out their turf wars."

Rose Ann DeMoro, the head of CNA, argues that while SEIU and the employer reached an agreement to hold the election, nurses didn't widely support SEIU. "Nurses didn't really have a choice," she said. She called allegations that CNA organizers posed as delivery workers "outrageous lies."

A month after the Ohio election was scuttled, SEIU sent six busloads of organizers to a labor conference where Ms. DeMoro was scheduled to speak. A scuffle broke out. An SEIU protester had a heart attack on the scene and later died. Another attendee went to the hospital for stitches. The action was broadly criticized within the labor movement. CNA has since boosted security at its headquarters, Ms. DeMoro said, installing security cameras and posting guards.

Mr. Stern has urged John Sweeney, the head of the AFL-CIO, to condemn CNA, which belongs to the federation, saying it is flouting AFL-CIO antiraiding rules.

Instead Mr. Sweeney asked Mr. Stern and Ms. DeMoro to resolve their dispute through mediation, to avoid damaging labor's influence during the presidential campaign. Unions "simply cannot afford to see their political, legislative and policy agendas derailed by the escalation of these disputes," Mr. Sweeney wrote to Mr. Stern recently.

Both unions have run ads attacking each other on progressive sites such as Daily Kos and Talking Points Memo. CNA sent mailers to SEIU members, which included a form to decertify the SEIU, while SEIU hired a company to poll CNA members. In an audio recording of a 13-minute call reviewed by The Wall Street Journal, the person conducting the poll asks a CNA member to respond to statements, including CNA is "wasting members' dues" and "acting like CEO union-busters."

Meanwhile, students earning their nursing degrees, health-care employers and their consultants are watching from the sidelines. "We love it," says Bill Adams, a labor-relations consultant in Fort Wright, Ky., who works with hospitals but isn't involved in the Ohio dispute. "You're guided by the principle, 'The enemy of my enemy is my friend.' "

By: Kris Maher
Wall Street Journal; May 19, 2008

Icahn, Microsoft merger maven?

Billionaire investor Carl iCahn has a bone to pick with Yahoo's board of directors for not accepting Microsoft's buyout offer.

The notorious shareholder activist Carl Icahn formally announced that he is launching a proxy fight. He has formed a 10-member slate in an effort to unseat Yahoo's current board at the company's annual shareholder meeting on July 3.

Icahn, who stated that he has acquired roughly 59 million shares of Yahoo, has also sought antitrust clearance from the Federal Trade Commission to acquire up to another $2.5 billion in Yahoo shares.

Icahn is leaning on such high-profile tech names as Mark Cuban in his efforts to unseat Yahoo's current board at its annual shareholder meeting and to pave the way for a Microsoft-Yahoo merger. Cuban, owner of the Dallas Mavericks and chairman of HDNet, ironically sold Broadcast.com to Yahoo for $5.04 billion in 1999.

Icahn has been making his mark in the tech industry of late, most notably in the last year or so, with his actions regarding Motorola and BEA Systems. Over the past 13 years, he's logged more wins than losses in his proxy fights, according to FactSet SharkWatch.

Microsoft earlier this month walked away from its multibillion-dollar bid to buy Yahoo when the two companies failed to come to agreement over the purchase price.

Some CNET News.com readers were suspicious of Icahn's motives.

"Icahn specializes in what's best for him," one reader wrote in the TalkBack forum. "Is he in this for the long haul? Or just the short-term profit?"

On the other side of the merger manners meter, Hewlett-Packard proved that friendly blockbuster deals could still be done today.

HP plans to acquire computer services firm EDS for $13.9 billion in a deal intended to boost HP's services revenue. HP expects that the addition of EDS will more than double HP's services revenue of $16.6 billion in fiscal 2007.

But the sheer size of the deal is more than a bit daunting. The deal represents the combination of the largest number of people that the IT services sector has seen, Gartner analyst Ben Pring said, and HP faces serious challenges when it comes to integrating two vastly different companies. The track record of deals like this is "pretty spotty," Pring said, and IBM's purchase of PricewaterhouseCoopers demonstrated that the transition can be tough.

In other merger news, CBS has agreed to acquire CNET Networks, the publisher of News.com, in a deal valued at $1.8 billion. The acquisition will make CBS one of the 10 most popular Internet companies in the United States, with a combined 54 million unique users per month and about 200 million users worldwide, the companies said.

Google wants to make friends
Google has unveiled a preview of Friend Connect, a way to add social features to a Web site without programming. Meanwhile, Facebook has announced its own Facebook Connect, in which members will be able to use their Facebook identities across the Web--profile photos, names, photos, friends, groups, events, and other information. Facebook profile content, for example, could appear on other social sites, and Facebook event listings could theoretically connect with external event and invitation services.

It's a big move for Facebook. Until this point, the social network has had a reputation for keeping its cards close to its chest--even banning the account of popular blogger Robert Scoble when he used a script to export his Facebook contact list to Plaxo. But Facebook has a representative in the Data Portability Workgroup, and executives have said Facebook has wanted to bring its information outside the site eventually.

Google Friend Connect, on the other hand, employs several more-or-less standard networking technologies--OpenSocial as a foundation for richer Web applications; OpenID to handle login chores; and OAuth to let users approve the grafting of new branches onto their existing social networks.

It's yet another option in the complicated and fast-changing set of alliances and standards efforts in the social-networking domain. When Friend Connect was first announced, Google engineers explained that it would take advantage of other social-networking sites' APIs to enrich the program--including Facebook's.

However, a post on Facebook's developer blog explains that the social network has suspended Google Friend Connect's access to its API, citing a violation of its internal terms of service. Facebook contends that while its users would manually opt in to Friend Connect, they would not have control over the third-party sites that would then use Friend Connect through Google's API.

Meanwhile, Comcast is adding a social dimension to its services through the acquisition of Plaxo. Terms of the deal were not disclosed, but the purchase price is thought to be in the $150 million to $170 million range. The acquisition is a big win for Plaxo, whose Pulse social-networking service, with 1.5 million active monthly users, has been overshadowed by the likes of Facebook and MySpace.

Web surf's up on street, stars
Google is gathering 3D data along with the photographs it takes for its online Street View service, a potential boon for those of us who fantasize about flying like Superman through urban landscapes--at least virtually.

"The imaging technology includes lasers that collect 3D geometry data," the company said in a statement. However, for now, at least, the 3D information is just experimental, Google said.

Savvy observers, looking at Flickr pictures of Google Street View cars gathering images in Milan, had identified the 3D laser scanners in April. At the time, Google didn't comment, but it now has confirmed the scanners, as well as the expansion of Google Street View to Europe.

Google Maps now can also show real-estate listings, presenting pushpins that show houses for sale. To show real-estate results, click "Show search options," then select "Real Estate" from the drop-down list. The Web site then shows a list of properties for sale on the left tied to pushpins on the map on the right.

Search results can be refined by specifying price range or number of bedrooms and bathrooms. In addition, there's a text mode that will be more familiar to the classified-ad crowd. (Huh? Text mode for a mapping site? There's still a small map visible.)

But soon you will be seeing less from Google's Street View; the company has begun testing face-blurring technology, responding to privacy concerns from the search giant's all-seeing digital-camera eye. The technology uses a computer algorithm to scour Google's image database for faces, then blurs them, said John Hanke, director of Google Earth and Google Maps.

He likened the issues some have with Street View to the ones that took place when Google introduced aerial views to Google Maps. It took time for the public, regulators, and Google to get comfortable with the feature, but "it needs that debate. We see that and try to let it play out."

Meanwhile, Microsoft launched its WorldWide Telescope, a free Web-based program that allows Web surfers to explore galaxies, star systems, and distant planets. The program, which was developed by Microsoft's research arm, weds images from the Hubble Space Telescope, the Chandra X-Ray Observatory Center, the Sloan Digital Sky Survey, and others.

Microsoft said WorldWide Telescope will be made available for free as a tribute to Jim Gray, a Microsoft researcher who disappeared off the California coast while sailing last year.


By Steven Musil
Staff Writer, CNET News.com; May 16, 2008

Mexican Cruises Still Worth Your While (And Your Money)

With the current U.S economic situation, it may be harder to take the vacation you want to. However, cruises to Mexico should not be forgotten. Cheap Mexican cruises allow you to visit beautiful places such as Los Cabos (see below).

One of Mexico's most scenic wonders, Los Cabos ("the Capes") is many things to many people: a desert oasis, a hot spot for night life, a traditional village, and an award-winning resort destination. EI Arco, a natural stone arch formed where the Sea of Cortes meets the Pacific Ocean, stands as a monument to the area's breathtaking contrasts.

Los Cabos is made up of two distinctly alluring small towns-San Jose del Cabo to the northeast and Cabo San Lucas at the southern tip. Picturesque San Jose del Cabo, a sleepy 18th-century mission town, appeals to those in search of more than the wiles of modern resorts. The town is home to many artists, whose wares are often on display and for sale in the village square. Twenty miles down the coast, Cabo San Lucas pulses with shops, restaurants, and nightclubs. Those in search of lively beaches, kayak excursions, dancing to the wee hours, sunset cruises, and such will find Cabo San Lucas just their speed. Connecting the two towns is a coastal "corridor," along which lie resorts both grand and intimate and many famous golf courses. One side of the corridor offers endless views of sand and sea, while along the other side is the quiet desert, with the majestic mountains beyond.

Foodies and fun-lovers are invited to experience the gastronomic brilliance of Los Cabos at the annual Festival of Rhythm, Color & Flavor, a celebration of area restaurants and chefs, featuring signature dishes, live music, and more.

Book your cheap mexican cruise now!

Irvine Robbins: He Helped Concoct 31 Flavors Policy And Sold Fun Along With Ice Cream

While delivering one of his customary stemwinders in 1967, Fidel Castro announced that customers at Havana's ice-cream parlors would soon be able to choose from among 42 flavors, up from 26. The smorgasbord would "put U.S. ice-cream producers to shame," the bearded dictator told a cheering group of steelworkers.

Possibly incensed but more likely grabbing some free publicity, Irvine Robbins called Cuba's minister of industry and informed him that while BaskinRobbins Ice Cream offered only 31 flavors at a time, it boasted a total arsenal of some 290 flavors. The revolution had a ways
to go.

Mr. Robbins, who died May 5, at age 90, was half of the Baskin-Robbins ice-cream chain, which he co-founded with his brother-in-law, Burt Baskin, in reading "Super Banana Treat" 1948.

Declaring "We sell fun, not of ice cream, a slice of banana, just ice cream," Mr. Robbins's company offered offbeat choices such as Navy Grog Ice, a Cocoa a Go-Go and Lunar Cheesecake, inspired by the moon shots.

Baskin-Robbins early to franchising and grew rapidly from its Southern California base, where it prospered as a dessert stop alongside such midcentury burger successes as McDonald's and Carl's Jr. The timing was ideal as the nation let out its waistline after the war. In 1946, the ice-cream industry had its first billion-gallon year.

The son of Eastern European immigrants, Mr. Robbins grew up working in his father's Tacoma, Wash., dairy store, where ice cream was sold alongside milk and sandwiches. He showed an early knack for marketing, doubling sales for one sundae by substituting a sign reading "Super Banana Treat" for one that read "three scoops of ice cream, a slice of banana, two kinds of topping." When he got out of the Army after World War II, he resolved to have a store of his own.

At a time when most people's experience with ice cream was vanilla, chocolate, or strawberry, dipped at the local drug store, it was Mr. Robbins's brainchild to open a store devoted solely to the treat. Inspireed by a trip to Minsky's Burlesque in Chicago, where 21 girls were on display, he put up a big sign proclaiming "21 Flavors 21" at his Glendale, Calif. shop.

With his father's backing, he opened more outlets, each name Snowbird Ice Cream. Meanwhile, Mr. Baskin opened his own ice-cream parlors, starting in nearby Pomona. In 1948, Messrs. Baskin and Robbins became partners, settling on the order of their names with the flip of a coin.

Among the early flavors Mr. Robbins developed were Rocky Road and Chocolate Mint, a forerunner of mint chocolate chip. With eight stores between them, the two men decided they would rather concentrate on their Burbank icecream-manufacturing business than on parlors, so they sold their stores to the managers. "Without realizing it, we were in the franchising business before it was popular," Mr. Robbins told the New York Times in 1976.

With an advertising agency's help, they standardized the brand and settled on the trademarked 31 rotating-flavors policy. (In reality, it was 34 flavors, with the addition of the vanillachocolate-strawberry standbys.) Customers could sample as many as they liked off the company's trademark pink spoons. A clown-like pink and brown polka-dot design scheme was standard across the chain. By 1960, there were 400 Baskin-Robbins ice-cream parlors, most of them in Western states.

While Mr. Baskin concentrated on sales, Mr. Robbins saw to real-estate, marketing and new flavors. He used his family to test flavors, sometimes hitching names to current events. Baseball Nut welcomed the Dodgers to Los Angeles. Beatie Nut welcomed the Fab Four. Valley Forge Fudge marked the nation's Bicentennial. The company resisted the urge to create ImPeachment during the Watergate hearings.

With the successes came the occasional flops, among them Grape Britain, Ketchup, Tomato Sherbet and Lox 'n' Bagels.

In 1967, the partners sold out to United Fruit Co. Mr. Baskin died of a heart attack later the same year. Mr. Robbins stayed on for another decade as chairman.

After retirement, Mr. Robbins spent his final decades sailing his boat, dubbed The 32nd Flavor, and playing golf at Rancho Mirage, Calif. He occasionally acted as an international ambassador for Baskin-Robbins. The company, now a unit of closely held Dunkin' Brands Inc., has 5,800 stores in 34 countries.1t boasts a library of more than 1,000 flavors, although more-recent names are less gimmicky than in Mr. Robbins's day.

Politically conservative and with a strong belief in hard work, Mr. Robbins liked to play, as well. His Encino home famously included a cone-shaped pool that airline pilots were fond of pointing out to passengers headed to Los Angeles.
"If I had a larger Property, I'd have had a double-scoop pool," Mr. Robbins told United Press International in 1972.

His daughter, Marsha Veit, says he continued to eat several scoops daily.

By: Stephen Miller
Wall Street Journal; May 10-11, 2008

Big Tech Firms to Invest in Wireless

Sprint, Comcast, Google, Time Warner and Intel Join Forces in New Broadband Joint Venture

The race to bring consumers ultra-fast wireless Internet service is on.

As early as today, an unlikely alliance of titans from the cable, Internet and chip industries disclose they are investing $3.2 billion a company that will deliver Web access for cellphones laptops at speeds much faster than what's available today using a technology called WiMax.

Analysts say the venture, valued at more than $12 billion, will have a two year head-start on Verizon Wireless and AT&T Inc., which are just beginning to out plans for their next-generation wireless networks. The venture includes wireless provider Sprint Nextel Corp. and Clearwire Corp., a startup company backed cellphone pioneer Craig McCaw. Other big-name backers include cable-TV giants Comcast Corp. and Time Warner Cable Inc., Internet giant Google Inc., and chip-=maker Intel Corp.

The deal gives the cable operators and Google prominent roles in shaping the future of mobile Internet and a new outlet as growth begins to slow in their traditional content businesses. Intel gains new support for WiMax, a technology standard the company has championed and will be used in the venture's high-speed network. The venture must still be approved by federal regulators.

The deal is most of all a coup for Sprint CEO Dan Hesse, who four months ago as charged with rescuing Sprint near-disaster. This alliance resolves one of the major issues that confronted him and now allows him to put full attention on problems in Sprint'S cellphone business, which has hemorrhaging Nextel customers for a year and a half. Mr. Hesse next must consider a spin-off or sale of Nextel, acquired just three years ago.

A mild-mannered 54-year-old, Mr. Hesse served as CEO of AT&T Wireless in the late 1990s and more recently as chief executive of regional phone company Embarq Corp. before joining Sprint in December. It was a job that other industry veterans saw as a dead end. Its former CEO, Gary Forsee, had been forced out as Sprint's market shar~ collapsed. Despite his own reservations, Mr. Hesse saw the job as an opportunity to turn around a high-profile public company with a rich history dating back to its roots as the Brown Telephone Co. at the turn of the 20th century.

Often invoking the words of George Carlin and Yogi Berra to leaven tense meetings, Mr. Hesse has been cheerleader-in-chief in Sprint's time of distress. He appeared in a recent TV commercial to help sell a new monthly service plan that offers unlimited data services. And he can be blunt about Sprint's challenges. Asked at an employee meeting in the company's Overland Park, Kan. auditorium why he hadn't yet done a management reorganization to clarify executive responsibilities, Mr. Hesse responded that he had higher priorities, like the company's grave customer service problems:

"It's sort of like, 'Dan, you haven't vacuumed the bedroom,'" Mr. Hesse said. "Well, that's because the house is on fire. I will get around to it later."

Mr. Hesse was under pressure to find partners to help defray costs of the company's $5 billion bet on WiMax. He early on identified Clearwire as a potential ally and sought to involve the cable operators and Google. But the cable companies were skeptical, because a prior cellphone partnership with Sprint, called Pivot, was a failure and essentially dissolved last year.

Last January, Mr. Hesse called Comcast Chief Executive Brian L. Roberts to explore a deal. Mr. Roberts was receptive partly because he thought the new Sprint CEO might be easier to work with, and partly because he was beginning to see WiMax as an opportunity to confront his own strategic dilemma. Phone companies such as Verizon anc AT&T are encroaching on cable companies' turf by offering video, data, and voice services. Their abilility to bundle these services with wireless phone service is seen as a key advantage, and cable companies had struggled to respond with their own wireless strategy.

In early February, Mr. Roberts took a trip out to Portland, Ore., to test Clearwire's nascent WiMax service there and meet with Mr. McCaw. He
came away impressed with the technology, say people familiar with the meeting leaned on Roberts to round up other cable operators, including Time Warner Cable and a regional provider Bright House. In late February, the two executives orchestrated a meeting of all the principals at the Time Warner building in Manyhatten. The cable executives raise several concerns, people familiar with the meeting say. The most pressing issue: they wanted to make sure the new company would be able to use Sprint's existing "third-generation" broadband network until the WiMax network is nationwide, which could take a few years. That would require complex pricing negotations, but Mr. Hesse and the cable consortium agreed to move forward.

Reeling in Google proved especially difficult. The Internet company wanted an easier way to distribute its software on mobile devices, but wasn't convinces the WiMax partnership was the right move. Google CEO Eric Schmidt wouldn't return Mr. Hess's phone calls. Mr. Roberts, who had developed a close relationship with the Google CEO, stepped in. He made a pitch on Mr. Hesse's behalf, then connected the two via email to get a discussion going, according to people familiar with the matter. Mr. Hesse promised to make Google the preferred software developer on the WiMaz network, meaning its search service would be the default on new mobile devices. He also agreeed to put Google's mobile operating system, Android, in some Sprint phones.

All the while, negotiators from the various companies - flanked by a throng of lawyers, bankers, and advisers - were locking horns over issues ranging from the new company's tax structure to what kinds of veto rights the minority investors should have. At times, the sessions got heated. At one meeting in the New York offices of law firm Kirkland & Ellis, Clearwire Chief Executive Ben Wolff was so frustrated with the lack of progress that he pulled his team from the room, shouting "That's it, the deal's off," according to a person at the meeting.

By mid-March, the outlines of a deal were in place, though it would take another two months to iron out details. The new company secured $1.05 billion from Comcast, $1 billion from Intel, $500 million from Google, $550 million from Time Warner and $100 million from Bright House. Sprint will hold a majority stake in the new venture. But to appease concerns that Sprint might try to quash the new company's ability to compete with Sprint, Mr. Hesse agreed to give up day-to-day control to Clearwire's Mr. Wolff, who is slated to be CEO. Mr. McCaw is expected to be named chairman. The new company will take on Clearwire's name.

There are still big hurdles ahead. WiMax is a new technology that hasn't been tested on the scale propbsed. Diverging corporate interests pose an
other set of challenges. Few big technology collaborations deliver on their founders' goals.

But neither Mr. Hesse nor Mr. McCaw are allowing any doubts. During an April phone meeting the two marveled at their accomplishment, particularly their Brian L. Roberts agreement to pool their vast radio-spectrum resources. "Has any company ever had a spectrum position like this? It's absolutely perfect for this technology," raved Mr. Hesse, according to a person familiar with the call.

By: Amol Sharma & Vishesh Kumar
Wall Street Journal; May 7, 2008

Jerry Yang's Scorched Earth

Congratulations to Steve Ballmer. Not many CEOs would have the nerve – humility, cold-bloodedness, whatever – to float a gotta-have takeover offer, then back away over the difference between $33 and $37 a share.

Not many CEOs would have been willing nakedly to advertise strategic vulnerability and faulty execution vis-a-vis a rival like Google, then fail to consummate the deal marketed to investors as the remedy for that vulnerability and faulty execution.

Even more so because of Mr. Ballmer's Murdochian approach: He came at Yahoo with a rich 62% premium designed to foreclose a rival suitor and confront the Yahoo board with a choice of accepting Microsoft's terms or serving up a big ugly stock price drop to Yahoo's suffering shareholders. By laying such a dramatic premium on the table, he also sent a message to his own Microsoft shareholders that said: "This is the only way I see forward."

But Mr. Ballmer didn't count on Jerry Yang, whose idea of what his company was worth became inflated by the perception that Microsoft needed it so much. When Mr. Yang said Microsoft's offer "undervalued" Yahoo, he meant it underestimated Yahoo's value to Microsoft, not to anybody else.

In a fashion, he outsmarted not only Mr. Ballmer but his own Yahoo shareholders and board. Having discovered how much Yahoo was worth to Redmond (and no one else), he set about destroying that unique value by ceding Yahoo's position in search to Google through an outsourcing deal.

All this so Jerry Yang can fulfill his dream of having an independent Yahoo whose halls he can continue to walk as the revered "founder."

Luckily for him, the media are too busy obsessing about the severance dished out to various Wall Street executives to make him the new poster boy for high-handed, unaccountable CEOs.

For his part, Mr. Ballmer's retreat was a rarer sort of act. Yahoo's value to Microsoft, after all, was as a weapon to impede Google's assault on Microsoft's core business, for which Microsoft could afford to pay almost any price.

A Yahoo acquisition would have allowed Microsoft to buy a position in Web eyeballs with which to attack Google's margins if not Google's market share. In turn, Google would have to think twice about throwing money regardless of potential return (as Microsoft itself was known to do) at undermining a rival's business model.

It was a plausible strategy. Then again, Microsoft might have ended up spending years and billions to build a Maginot Line.

Post-Yahoo, Mr. Ballmer says his company's counter-Google strategy remains intact; it will just be slower-going without Yahoo. But Microsoft here is perhaps showing too little imagination – or throwing up a smokescreen.

The alternative? The bravest would be to spin off Windows. Vista, its latest output, was not a triumph, even if Microsoft claims to be content with sales of the new operating system sold so far. InfoWorld, a magazine of corporate technology managers, has collected thousands of online signatures begging Microsoft to delay retiring its previous Windows version, XP, without which they'll be forced to upgrade and buy expensive new computers they don't want.

A liberated Windows unit could concentrate on developing the more streamlined and diverse operating system products the market wants (some of which could be supported by advertising), and it would still be a fabulous business for Microsoft shareholders. Meanwhile, the other Microsoft could devote itself wholeheartedly to building application businesses for the Web age, even an Office-based network for delivering ads and other services in competition with Google. With its $26 billion cash pile, Microsoft could set itself up as the host for an array of cutting-edge Web services being created by new start-ups, rather than trying to outgoogle Google in the search market.

Moral victories don't count for much with the stock market, but let's give Mr. Ballmer his moral victory. Big Yahoo investors like Capital Research's Gordon Crawford are slinging spitballs at Mr. Yang. Mr. Yang, in legal jeopardy, is spinning a tale about how Microsoft was the one that botched a deal. Yahoo's future as an "independent" company would seem to mean vassalhood to Google.

But "I told you so" doesn't brace up the Windows/Office fortress or throw a banana peel under an advancing Google. More interesting than Yahoo's fade to irrelevance (see you in Delaware Chancery Court!) will be Mr. Ballmer's Plan B.


By: Holman Jenkins, Jr.
Wall Street Journal; May 7, 2008

Slowdown's Side Effect: More Nurses

Economy's Woes Prod many Who Left Field to Return; Brushing Up on Anatomy

The ailing economy is helping to ease the nursing shortage.

With house prices falling and the cost of gasoline and food rising, many nurses are going back to work, in some cases to make up for the income of a spouse who has lost a job. Hospitals say part-time nurses are taking on extra shifts. And nursing schools are seeing an increase in people applying for refresher courses on the ins and outs of modern hospitals. Some older nurses are putting off a planned retirement.

"We are seeing a temporary lessening of the nursing shortage," says Jane Llewellyn, vice president of clinical nursing affairs at Rush University Medical Center in Chicago. But, she says, "as soon as the economy turns up we'll see them staying home again."

It's a familiar pattern during economic slowdowns. For years, the high demand for nurses has allowed them to design work schedules that suit their financial and family needs. Many start off working full time on difficult shifts and then reduce their hours when they have a family -- the profession is more than 90% female -- or as they approach retirement. But when the economy goes sour, many nurses go back to work full time.

Dana Goodin, a nurse at Chicago's Rush University, worked three evening shifts a week for nearly two decades, giving her time to raise her four children. But after her husband, a carpenter, was laid off late last year, Ms. Goodin began working four days a week to boost the family's income and to qualify for cheaper health benefits. Although her husband has since found a new job at a retail warehouse, he makes just half of his former salary, and Ms. Goodin is looking for another shift to push her above full time.

The nursing profession also is attracting greater interest among new recruits, drawn by expanding job opportunities and rising wages in some places. Nursing school enrollment surged in the wake of the Sept. 11, 2001, terrorist attacks and the economic slowdown that followed. Enrollment continues to grow apace, though at a reduced rate, and schools are turning away thousands of qualified applicants for lack of faculty. Even so, nursing experts predict shortages will grow in future years as demand for nursing services outpaces the number of professionals entering the field.

For hospitals, the renewed interest in nursing is a relief. Shawn Tyrrell, chief nursing officer at Rush-Copley Medical Center in Aurora, Ill., says that until last year the hospital used outside employment agencies when it didn't have enough nurses to cover the shifts. Now, despite an increase in patient volume, the hospital's own nurses want extra hours, so it doesn't need the agencies. "We've been able to handle that volume increase through our own staff members," she says.

The nursing shortage began in the 1990s as older nurses started retiring and there were fewer newcomers to take their place. The crunch got worse as baby boomers got older and demand for health care increased. By 2001, there were 126,000 vacant nursing positions in the U.S., according to the American Hospital Association. That means about 13% of all nursing jobs were unfilled.

Beefing Up Recruiting

To attract nurses, hospitals have increased wages and beefed up recruiting, including from overseas, and have offered potential hires signing bonuses of cash or even new cars. Hospitals have also taken steps to keep older nurses in the work force by making their jobs easier, including replacing hand cranks used to lift beds with automated lift devices, bringing in lift teams so nurses don't strain themselves picking up patients, or putting supplies closer to patients' rooms to cut down on walking. By the end of 2006, the nurse vacancy rate had fallen to 8.1%.

Of course, nurses who haven't been working for some time can't just jump back into the job. Nurse-education requirements vary from state to state, but in general the longer the nurse has been out of the work force the more likely it is he or she will have to complete a refresher course to be relicensed. The Mount Carmel College of Nursing in Columbus, Ohio, for instance, offers a refresher program for $700 plus the cost of textbooks that includes 230 hours of online courses, covering such topics as anatomy, new medications and privacy regulations. Students also log 100 hours working in a clinical setting such as a nursing home or a hospital.

Economic Indicator

For the past few decades, nursing has been a kind of reverse economic indicator. In periods of economic weakness or recession -- including in the early 1980s, the early 1990s and earlier this decade following the technology-company bust and the Sept. 11 attacks -- the number of full-time nurses grew at an average annual rate of 3.5%. By contrast, in times of healthy economic expansion, the increase has averaged just 2.4%, according to an analysis of government data in "The Future of the Nursing Workforce in the U.S.," a book by Peter Buerhaus, director of the Center for Interdisciplinary Health Workforce Studies at Vanderbilt University Medical Center, Douglas Staiger, a Dartmouth College economics professor, and David Auerbach, a principal analyst in the Health and Human Resources Division of the Congressional Budget Office.

Last year, there was a net increase of about 113,000 nurses in the work force, the largest increase since 2002, and most of the added nurses were over 50 years old, according to the Census Bureau. The pattern has continued this year. Although the U.S. economy lost 20,000 jobs in April, the fourth monthly decline in a row, health-care employment rose by 37,000 and is up 365,000 jobs over the past 12 months, according to Labor Department data released last week.

"In bust periods, unemployment is rising, which means there is a lot of pressure on married RNs to be working," says Mr. Buerhaus.

Jennifer Schlesser, a 57-year-old Ellicott City, Md., resident, says she worked as a nurse for 27 years before leaving the profession a decade ago, feeling overworked and underpaid. She went to work in the mortgage-lending industry, but the housing slowdown has forced her to change employers and has cut into her commissions.

Refresher Courses

Ms. Schlesser is currently enrolled in an online refresher course for nursing and she expects to be relicensed by next month. She plans to work part time in both nursing and mortgage lending. "Whatever works out best," she says.

But over the long term the nursing shortage is expected to continue and eventually worsen, as retiring baby boomers ramp up demand for care. In their book, Messrs. Buerhaus, Staiger and Auerbach use Census data to project that the nursing work force will plateau in 2015. By 2025, they estimate there will be a shortage of almost 500,000 nurses, representing a vacancy rate of 40% or higher.

By: Conor Dougherty
Wall Street Journal; May 7, 2008

Is Jerry Yang Capable of Running Yahoo?

Yahoo shareholders frustrated seeking change at the top

Here's a couple of insights from the Deal Journal, part of Wall Street Journal:



Yahoo Investors Could Get Antsy

KeepingtheCrowdHappy: Generous Share Buyback, A Nice Dividend, Perhaps

Since Yahoo isn't going to accept Microsoft's $33-ashare offer, it will have to do something for shareholders quickly as they continue to suffer from the stock's 15% slide Monday.

About 279.07 million Yahoo shares traded hands Monday, compared with average daily volume of26.83 million. As Jones Day partner Robert Profusek pointed out, buyers in such numbers can't all be looking to be long-term shareholders in Yahoo, putting their faith in the company's three-year plan.

A big share buyback or a special dividend are just two options to assuage those holders; who apparently see shortterm gain in Yahoo's stock, according to Mr. Profusek. Legg Mason's Bill Miller, for one, has said he wants Yahoo to take the pain offunding a buyback, even at a lower price than the Microsoft offer.

Despite Yahoo Chief Executive Jerry Yang's apparent insistence on $37 a share for his company, it seems a little difficult to believe institutional Yahoo shareholders would have held out for that much money. Mr., Millerwho supported Yahoo's resistance against Microsoft before-groused in an interview Monday that he would have supported a deal at $35.

Yahoo can head off incensed shareholders at the pass if stockholders try to stage a coup. If Yahoo decides this week to announce the date of its annual meeting, shareholders may not have enough time to nominate new directors. According to Yahoo's bylaws, shareholders can propose a "short slate" of directors. But those bylaws require advance notice of any new candidates by 10 days after the public announcement of the annual meeting.

And a proxy fight would be difficult without wide and vocal support from Yahoo's heretofore silent shareholders. A lot of Yahoo's stock is concentrated in Microsoft-hating hands for a proxy fight to really be worth it for the Redmond, Wash., software giant: Insiders hold 18% of Yahoo's stock, according to Thomson Reuters data.

We hear shareholders are trying to encourage Microsoft to enter the fray again. But now, as always, there is a limit to how much Microsoft can do without Yahoo's help.

By: Heidi Moore


Jerry Yang, Meet the Shift Key

In an email message sent to employees on Saturday after Microsoft rescinded its $33-per-share offer for Yahoo, its chief executive Jerry Yang urged “yahoos” (as he referred to his employees) to remain focused on their work, expressed relief that the “distraction” of the bid had been removed and applauded the company’s “uniquely yahoo!” culture. One thing he didn’t do: capitalize a single letter.
Shift Key

In February, Mr. Yang sent a letter to Secretary of State Condoleezza Rice that would make any grammarian proud. But Mr. Yang is much better known for his cap-free, easy-breezy, Silicon Valley-style emails. Certainly, the tone of Saturday’s email indicated a Yahoo posture of “No deal? No big deal” (or rather, no deal no big deal). Yet Mr. Yang presumably understood that the email would leak and attract readership beyond rank-and-file employees. Early this morning, shareholders weren’t feeling as blasé about the whole matter; shares were trading at $23.03 — down nearly 20% from Friday’s closing price of $28.67.

Vogue’s editor in chief, Anna Wintour, once wrote, “When a woman has to do something important or she wants to be heard, she puts on a suit.” (Clearly Gerald Levin — the former chairman of Time Warner, who showed up to the announcement of the AOL-Time Warner merger sans tie — was not a regular reader of the fashion bible.) Similarly, some argue that when a CEO has an important message to convey to shareholders, he employs proper grammar. Or at least he should. “For an important communication that will reach shareholders, a well-crafted and appropriately capitalized and punctuated message is important,” according to JoAnne Yates, deputy dean of MIT’s Sloan School of Management — and a professor of management who has studied communication and technology in business. In an email that was perfectly capitalized and punctuated, Ms. Yates continued, “Although young employees may find the casual style attractive, more mature stockholders could interpret it as not taking the offer and their concerns seriously enough. Thus, it could increase shareholder unhappiness over his refusal of the offer.”

Emily Post, the etiquette doyenne, wrote that old-school correspondents tried to “express themselves the very best they knew how [but] to-day people don’t care a bit whether they write well or ill. Mental effort is one thing that the younger generation of the ’smart world’ seems to consider it unreasonable to ask.” However, she wrote that in the 1920s, and her opinions can be, like, totally analog. Still, as he faces shareholders, Mr. Yang might consider making the extra effort. We would suggest that Mr. Yang rustle up a “yahoo” to show him how to make a little “y” big. But we’re certain he knows the location of the “shift” key — it must be struck in order to render an exclamation point, which, in Saturday’s email, Mr. Yang did five times.

By: Katherine Rosman
Wall Street Journal; May 5, 2008

'Telepresence' Is Taking Hold

Improved Technology, High Gas Prices Draw Smaller Companies In


Executives at One Communications Corp. found they had a hard time shuttling between new offices in Wisconsin, West Virginia and New York after the small telephone company merged with two other businesses.

The Marlboro, Mass.-based company tried to link remote offices using videoconferencing systems, but the meetings were plagued with frequent outages and poor audio quality. In response, executives decided to spend about $500,000 to outfit two large conference rooms and four smaller rooms with "telepresence" technology, a high-definition videoconference system that simulates face-to-face meetings between users.


"The technology has come so far so fast that it's very easy for anyone to run it," says Russell Oliver, the company's vice president of strategy. Mr. Oliver says the company's six videoconferencing rooms, which use a system designed by Norway's Tandberg ASA, are fully booked on most weekdays.

With prices of most systems ranging from $200,000 to $500,000 a room depending on the number of screens, telepresence has widely been considered a niche technology for multinational corporations. But high gas and travel prices, as well as improving video technology, are causing smaller firms to reconsider the high-end systems.

Suppliers of the technology are trying to encourage the shift, which could expand their market beyond the multinational corporations they have courted in the past. In December, for example, start-up LifeSize Communications Inc. introduced a $6,000 videoconferencing system aimed at small-business users that don't need high-end video or audio. Meanwhile, Hewlett-Packard Co. recently introduced a $120,000 telepresence system that can accommodate just two participants but costs about a third of the price of its larger systems.

H-P has also announced a partnership with Marriott International Inc. to install videoconferencing systems at hotel locations for use by small- and midsize business travelers. Cisco Systems Inc. last year announced a similar partnership, joining with office-space provider Regus Group PLC to offer video systems in 50 locations.

Thus far, standard videoconferencing systems remain a much bigger business. Despite these efforts, only about 1,000 of the 176,000 videoconferencing systems sold world-wide in 2007 were telepresence systems, estimates market researcher TeleSpan Publishing Corp. But unit sales of the high-end systems were up five-fold from the 200 sold in 2006, and the number should triple to 3,000 in 2008, TeleSpan estimates.

Traditional videoconferencing setups are essentially a monitor, camera and microphone, placed in a conventional conference room. Telepresence systems, by contrast, require specially designed rooms with multiple cameras, sound-damping equipment and high-definition video screens. They simulate the sensation of two groups of people at identical tables facing each other through windows.

Participants appear life-sized and move smoothly -- not like small, herky-jerky figures on a TV screen. The sound quality is high; there is little lag or audio distortion. The systems are also designed to allow groups of workers to share documents, such as engineering drawings or marketing plans, or perform product demonstrations. Also, people in more than two locations can participate in the same meeting.

The telepresence market was pioneered by companies that include Teliris Inc., a New York company founded in 2001. In late 2005, H-P introduced its Halo system, which was developed with help from the film studio DreamWorks Animation SKG. The next year, Cisco followed with its offering.

Until such systems came out, videoconferencing was "a backwater" of the IT world, says Ira Weinstein, an analyst with Wainhouse Research, a market-research firm based in Duxbury, Mass. Mr. Weinstein says the heavy marketing by tech powerhouses Cisco and H-P are helping to grow the market.

Cisco also is a heavy user of its own technology, with 200 systems installed. The network-equipment maker says its workers have conducted 97,000 meetings using the technology, 16,000 of which spared them the traveling, saving about $70 million in travel expenses.

To be sure, companies adopting telepresence face high hurdles -- including the stiff upfront prices for the equipment. Many users also have to make costly upgrades to their communications facilities to transmit high-definition video and audio. Some telepresence makers charge $4,000 to $22,000 a month to run the conferencing systems.

"Pricing has to definitely go down to allow for greater adoption," says Rich Costello, an analyst with research firm Gartner Inc.

There's also a compatibility issue. Many systems don't communicate easily with each other. For example, H-P's Halo users can't have a telepresence-style meeting with users of a Cisco system. Alok Das, a senior scientist at the Air Force Research Laboratory in Dayton, Ohio, selected H-P for four telepresence rooms last year. Mr. Das says the poor quality of previous videoconferencing systems pushed him to upgrade to a higher-quality system. Before turning to H-P, he says, "people basically tuned themselves out" during meetings because the quality was so poor.

The Air Force lab recently held an annual process meeting over video for the first time, says Mr. Das. Rather than fly in researchers from around the country, the 20 participants sat in Halo rooms for two days. Since then, the rooms have been in daily demand, he says; "the use has really picked up."

By: Justin Scheck & Bobby White
Wall Street Journal; May 6, 2008

The War for the Web

Microsoft was smart to walk away (for now) from its $44 billion bid for Yahoo. It's never good to overpay. But the software giant – whose stock has flatlined for eight years – was onto the right strategy in looking to the Web for growth.

Can't Microsoft build something on its own? Why the rush to pay billions for Yahoo? The simple (and wrong) answer was that adding Yahoo's 20% Web search market share to Microsoft's 10% meant that it could compete against Google's 60% share. Technology changes too fast for that to make sense except on paper. Programs run anywhere these days – on your desktop computer, on servers in data centers, on your iPod, cellphone, GPS, video game console, digital camera and on and on. It's not just about beating Google at search, it's about tying all these devices together in a new end-to-end computing framework.

With the Microsoft/Yahoo deal breakdown, everyone assumes Google walks away with the prize. Not so fast. This contest is just starting. For Microsoft or Google or anyone else to win, they need four key elements of an end-to-end strategy:

- The Cloud. The desktop computer isn't going away. But as bandwidth speeds increase, more and more computing can be done in the network of computers sitting in data centers – aka the "cloud."

There, search results can be calculated, companies' payrolls processed, even the complex graphics for video games can be drawn. But it's not cheap. These clouds are multibillion-dollar investments. Google spent $842 million in the last three months on servers, data centers and fiber optics.

Today, there are several major clouds: Google, Yahoo, Microsoft, Amazon and smaller players IBM and Sun. Can there be more? Sure, but it would require a business model that could not only pay for it, but could rip it out every few years and modernize it. Google's $20 billion Web advertising business gives it the cash flow to do so. Advantage Google.

- The Edge. The cloud is nothing without devices, browsers and users to feed it. Book buyers are basically paying for Amazon's data centers. Yahoo is a favorite for finance and sports enthusiasts, who pay for its data centers. Google worked its way into the toolbars of Firefox, and even Microsoft's browser.

And Microsoft? It was stripped of its ability to control Windows desktop real estate during the late '90s Netscape feud. Accused of using its overwhelmingly popular Windows operating system to unfairly dominate other new markets, Microsoft settled the dispute with the Justice Department in 2001.

Now Microsoft scrambles for other advantages. One lies in smart mobile devices, which is the fastest-growing location to launch search requests. Microsoft software runs on about 20% of smart phones in the U.S.

Don't underestimate the value of Microsoft's other market stronghold, its X-Box video game platform. Now you know why Google is scrambling to plant a flag in the cellphone business with its Android technology and bids for wireless spectrum. So far, advantage Microsoft.

- Speed. Once you build the cloud, it's all about network operations. Whoever can deliver search results faster, wins. Users only realize this subconsciously, but it's true: Google's dominant share is as much about speed as it is for relevant results. Compare it to Microsoft or Yahoo and you'll see. Google built data centers next to waterfalls so electricity could be cheap enough to help it win the speed war.

New cloud applications appear every day – backing up files, managing your money, editing photos, running the back end of multiplayer games like World of Warcraft. Now corporate America is evaluating moving its accounting, scheduling, order management and the like into the cloud, and speed will be a top priority. Advantage Google.

- Platform. Yahoo's mistake was relying on expensive workers to update Web pages and sell ads, and especially to run Yahoo Finance, Sports, HotJobs and Travel. Google hates using people for these tasks. The company may love programmers and probably customers as well, but it tries to put absolutely no one in between them. Google's genius was to automate all its Web page creation and to have a market set prices for ads.

But even though Google has more than 10,000 employees, the company doesn't have a lock on brain power – especially since its stock is not climbing as fast as it once did, and with young coders setting their eyes on the next big startup.

Having a fast cloud is nothing if you keep it closed. The trick is to open it up as a platform for every new business idea to run on, charging appropriate fees as necessary.

Microsoft knows this. I sat through a keynote speech by Bill Gates maybe 15 years ago. Asked why Microsoft makes all the money in the software business, he snapped: We don't make all the money. Actually, we only make money because we are a platform for others to use our software to make money themselves.

Only by opening up system internals to thousands of hungry developers can anyone truly create an operating system in the cloud. Google has made open announcements but is still quite closed. Advantage Microsoft.

So with the failure of the Yahoo bid, where does that leave Microsoft? The answer is found in Microsoft's mantra: embrace, extend and innovate. Made famous in a 1994 Microsoft executive memo, this mantra has worked again and again: Windows dominated Apple for decades, the Excel spreadsheet bypassed Lotus 1-2-3, and the Internet Explorer browser destroyed Netscape.

Of course, Microsoft could come back and bid again for Yahoo at $25. But there is a go-it-alone strategy: Embrace the Web search and advertising business. Maybe even do what Craigslist did to newspaper want ads, devaluing search advertising by offering the same thing for free, or really cheap.

The trick is to then extend and innovate. Run code that figures out what users are looking for, not just on servers, but on X-Boxes, Zune music devices and even Apple iPhones. Some of the new markets aren't even twinkles in developers' eyes.

At the moment, neither Google nor Microsoft, or anyone else, has nailed down cloud, edge, speed and platform. All the loosely coupled electronic devices in our pockets need to work together seamlessly with Facebook applications in the cloud. Who will do it? Unclear.

The continuing battle between Microsoft and Google will mean fierce competition – adding features, building data centers, cutting deals and spending money on speed and customer convenience. That's the way to move technology forward. It's great to see Microsoft with some fight left in it. Not only hasn't the Internet yet matured, it's becoming an ever-more high stakes game.

By: Andy Kessler
Wall Street Journal; May 6, 2008

Web Start-Ups Seek New Ways to Click

Social, Video Sites Duck Some Old-Style Pitches And Go for Interactivity

As concerns mount that the slowing economy may hurt the online-ad market, Silicon Valley Web start-ups are developing new approaches. Companies such as online-software venture Slide and video and social-networking site Bebo are trying to run ads that appeal to a younger audience -- one that often turns up its nose at old-fashioned online ads, such as traditional "banners" trying to promote brands.

When a user clicks on a small version of this ad on Meebo, it expands and plays a snippet from the television show "Dexter". That footage also can be shared with friends.

Worries about a slowdown in Internet ad growth have added urgency to the push for advertising models that can reach this audience more effectively. Consumers are flocking to social-networking sites like Facebook and Meebo, but many still aren't clicking on the ads that such companies are banking on to generate revenue. Start-ups that have raised cash from venture capitalists but haven't produced much revenue yet -- let alone profit -- are hurrying to develop ads that are more interactive.

Some efforts show early signs of working. Slide, which sells programs that people can use to decorate their pages on sites such as Facebook, has launched campaigns with advertisers including Energy Brands' Glaceau Vitaminwater and Estée Lauder.

One campaign lets Slide users send virtual representations of different-flavored bottles of Vitaminwater to friends online through an application called "Top Friends." In eight days, Slide says, users sent 10 million "bottles" of Vitaminwater.

Meebo, which offers instant messaging and chat rooms, announced last week that it had raised $25 million in financing. To generate more revenue, the company will start selling ads this quarter that users can forward to friends or even shut off, unlike traditional ads that stay on the computer screen. Some spots may contain movie trailers or computer games, which can be enlarged on screen and shared with friends.

The new Meebo ads can also be used to customize a user's Meebo page -- by substituting a photo of a movie star or a new CD cover for one's own "buddy icon" on the site, for instance. The company says that in trials, the spots have had much higher "click-through" rates -- the percentage of users who see the ad who actually click on it -- than traditional, more-static display ads.

For social sites like Meebo, "it's very clear that regular display ads are not the answer" to making money, says Martin Green, Meebo's vice president for business. Users accustomed to interactive content online -- chatting with friends, or sharing photos on Google's YouTube -- will respond better to more interactive ads, Mr. Green says.

Social-networking sites have to work harder than Web-search sites to make money from advertising. Unlike people visiting a Google or Yahoo search page, users of social-networking sites aren't there to seek out other sites or to buy things, which might make them more receptive to ads. And because many of these people construct elaborate personal home pages on sites like Facebook and News Corp.'s MySpace, they may not want ads encroaching on their space. At the same time, some marketers have been hesitant to advertise alongside unpredictable or racy content posted by users.

The economy isn't helping. Though online advertising has been growing rapidly over the last few years, some investors predict growth will slow as big companies start cutting their ad budgets in the face of a possible recession.

Jim Breyer, a venture capitalist with Accel Partners, which backed Facebook, said he would be "absolutely shocked" if some of the companies he's funded don't see slower growth in online-ad revenue soon. "Companies that aren't experimenting will be left far behind," he says.

Slide is also worried about how advertisers will respond to the likely recession; it also faces the obstacle of competing with huge sites like Google and Yahoo for ad business. As well as testing more-creative touches like the Vitaminwater ad, it is trying to come up with other ways to make money from customers, such as subscription fees.

Bebo, which Time Warner's AOL recently agreed to purchase, is also trying out new ad models, including more-sophisticated product placements inside video dramas running on the site, such as the popular series "KateModern." MySpace and Facebook are trying to tailor ads to people based on interests they highlight in their online profiles; someone who expresses an interest in cars might see an ad from Toyota Motor, for instance.

Other Web start-ups are using video-ad technology developed by fellow start-up VideoEgg. To promote its Office products, Microsoft has tested new VideoEgg technology that places ads containing videos or online games on a network of social-media and gaming sites. It says it is pleased with the results.

Not all these efforts work. Facebook stumbled badly last year when it introduced a program called Beacon, which allowed users to track their friends' activities on other Web sites. The service, which was designed partly to highlight brands and products that Facebook users were buying, was criticized as too intrusive, and Facebook Chief Executive Mark Zuckerberg later publicly apologized for problems the new system had caused.

By: Rebecca Buckman and Emily Steel
Wall Street Journal; May 5, 2008