Dell Will Soon Close Perot Deal

Information Week

Computer maker Dell said it successfully completed its tender offer for Perot Systems' shares and is close to completing its acquisition of the Texas-based outsourcer.

The offer gives Dell more than 90% of Perot's outstanding shares. The company announced its intention to acquire Perot for $3.9 billion in September.

It said Tuesday it expects to close the deal "promptly." Dell plans to launch a new unit, Dell Services, into which it will integrate Perot's tech and business services offerings.

The merger could be a boon for enterprises looking to implement new architectures like virtualization and cloud computing—but those benefits will only be realized if Dell can successfully manage the integration challenges that will arise upon the deal's closure.

Dell has the hardware and, to a lesser extent, software needed to form the bedrock of advanced data center implementations.

The company recently partnered with VMware to bundle VMware's View virtualization offering on its Latitude and Optiplex client machines and on PowerEdge servers. It's also customized a line of servers to run Microsoft's cloud-based Azure operating system.

Perot, meanwhile, has expertise around integration, deployment, and management. In September it launched a cloud integration service under which it advises customers on cloud computing architectures, combines offerings from different vendors, and hosts and manages cloud solutions from its data centers.

The question is whether Dell can smoothly integrate a business from a market where it's had little experience. That aside, many observers believe Dell had little choice but to diversify given its falling hardware revenues.

Dell plans to bolt on other acquisitions to enhance Perot's global footprint. To date, Perot has mainly been a player in the U.S. market.

Current Perot Systems CEO Peter Altabef is expected to continue leading the operation. Plans also call for Perot chairman Ross Perot Jr. to join Dell's board. Dell said it believes the acquisition will contribute positively to earnings by 2012.

Stimulus Analysis Offers Up Confusing Numbers

USA Today

The federal government sent Bob Bray $26,174 in stimulus aid to fix a fence and replace the roofs on public Dallas apartments near Blooming Grove, Texas, a town of fewer than 900 people outside Dallas. He hired five roofers and an inspector to do the job.

But the number of jobs he reported to the government looked very different — 450 jobs.

"Oh, no," said Bray, who runs the local public housing authority part-time with his wife, Linda, when asked about the discrepancy. He said that he told the government that he had created six jobs but that a federal official told him that wasn't right. So he reported the number of hours the roofers worked instead. The Department of Housing and Urban Development caught the mistake, but he couldn't fix it before the jobs figures were published. "The money was great, but the reports are really confusing," he said. "I've been fighting with it for over a month and a half."

The administration reported Friday that stimulus recipients reported having created or saved 640,329 jobs this year, a figure it said buttressed its contention that the $787 billion package has had a significant economic impact. The jobs total is based on reports of more than 130,000 recipients of stimulus grants and contracts filed with the federal government.

Obama's senior adviser for the stimulus, Ed DeSeve, said last week that officials had "scrubbed" those reports for three weeks before they were released Friday, though he said some would still have errors.

USA TODAY reviewed the reports to determine the number of jobs created or saved per stimulus dollar. The review found 14 recipients that reported saving or creating more than 100 jobs for less than $1,500 per job — suggesting they overreported the number of jobs. Those included:

•The police department in Plymouth, Conn., claimed in its report that a $15,355 grant used to buy new computers had created or saved 108 jobs. The department had 22 law enforcement officers last year, according to the FBI. Mayor Vincent Festa said that the town has resorted to "counting paper clips" to save money but that it had no plans to lay off any of its police officers, even without the stimulus. He said he could not explain the report, and the town's police chief did not return telephone calls Monday.

•The Southwest Georgia Community Action Council, which employs about 500 people in its Head Start preschool program, reported creating or saving 935 jobs with about $1.3 million in funding. Beverly Wise, the group's fiscal officer, said she followed the advice of federal officials to come up with the number. "I thought it was high," Wise said of the number she reported, adding that the process was confusing. The group is using its stimulus money to give a 1.84% pay raise to its employees and pay for other needs such as playground equipment and training for the teachers who serve 2,300 low-income children.

•Teach for America, which helps place recent graduates in teaching jobs in urban and rural districts, reported that a $2 million grant created or saved 1,425 jobs. Spokeswoman Kerci Marcello Stroud said officials used that money to pay part of the salaries of 125 employees; a separate $6 million allowed it to expand the training program to include 1,300 more graduates.

Liz Oxhorn, a spokeswoman for the White House stimulus effort, said the reports give "the American people one of the best looks ever at real-time information about a major initiative" and the reporting "allows people to find any mistakes, as it should — which will help us correct them promptly."

Microsoft Announces 800 Layoffs

CNN Money

Microsoft Corp. will eliminate 800 more positions from its workforce, the company announced Wednesday.

The company said the job cuts will be spread across multiple businesses and locations across the globe, but Microsoft would not specify when the layoffs would occur.

Those job cuts come on top of the 5,000 jobs the company said it was slashing earlier this year, in what was Microsoft's first mass job cut announcement in its 34-year history as a public company.

The company also confirmed that it has completed those layoffs ahead of schedule. Microsoft initially said the 5,000 job cuts would be done by June 2010.

"We continue to hire in priority areas, but also understand that continuing to manage our businesses closely, as we always do, can mean additional headcount adjustments," said a Microsoft spokesman.

Cost-cutting helped the company impress investors late last month, when the Redmond, Wash.-based software giant reported quarterly sales and profit that easily beat Wall Street's forecasts.

Microsoft's headcount was down 4% in the past quarter from the same period year ago -- the largest yearly staffing decline in the company's history. Microsoft employs some 90,000 people worldwide.

Another Motorcycle Study Shows A Helmet Is Healthier

from Pittsburgh Tribune

A leading trauma center in Pittsburgh says greater numbers of motorcyclists with more serious facial and head injuries are seeking emergency medical treatment since Pennsylvania repealed its helmet law.

The volume of patients brought to Allegheny General Hospital for treatment of facial injuries after motorcycle crashes nearly doubled in the past five years, doctors there say.

An increasing number of cyclists require care and sometimes lengthy hospital stays for facial trauma, including bone fractures. AGH reports the number of riders without helmets brought in for motorcycle-related facial injuries was 122 from September 2003 to August 2008, up from 10 from 1998 to September 2003.

"Riding a motorcycle without a helmet is just risky behavior," said Dr. Joseph E. Cillo, an AGH oral and maxillofacial surgeon.

Pennsylvania repealed its universal motorcycle helmet law in 2003. Only motorcyclists under 21 and riders with less than two years of experience who have not taken a safety course are required to wear helmets.

Cillo and three other AGH physicians authored a review detailing the spike and presented it last month during the American Association of Oral and Maxillofacial Surgeons' annual meeting in Toronto.

Mick Morrow, president of the Pittsburgh-based War Dogs Motorcycle Club, said his group supports riders' rights to choose whether to wear motorcycle helmets. He doesn't think helmets are always effective in preventing injuries. A helmet's weight can add pressure to the neck if the head is hit a certain way, he said, and helmets can restrict some riders' vision and limit their ability to turn their heads - especially full-face motorcycle helmets.

"The rider is unable to see potential problems as quickly as they might without the helmet," Morrow said. "A split-second can make the difference between an accident and avoiding an accident."

The Pennsylvania chapters of the Alliance of Bikers Aimed Toward Education, or ABATE, helped persuade lawmakers to change the restriction. David Tuschel, spokesman for ABATE's Pittsburgh chapter, said riders should be free to decide whether to go helmetless, but he conceded safety instruction can be improved.

"More emphasis needs to be more on avoiding crashes than on injuries and on who's wearing what," Tuschel said.

Last year, 239 motorcyclists in Pennsylvania were killed in crashes, up from 158 in 2004, the first full year of the repeal, according to the National Highway Transportation Safety Administration. Of those who died last year, 113 were wearing helmets, compared with 117 who were not.

In 2003, 153 people died in motorcycle accidents. Of them, 121 wore helmets and 29 did not. Authorities were unsure if the others had head gear. Hospital officials say helmetless riders usually require medical helicopter flights from crash scenes because their injuries are more severe than those riding with helmets.

State officials said they are studying exactly how much treatment for such head injuries has impacted public health costs since 2003.

Mom and Pop Vying For Holiday Shoppers

Wall Street Journal

Small brick-and-mortar shops that rely on seasonal sales are seeking creative ways to avoid last year's bloodbath of discounting, as cash-strapped consumers are expected to gravitate toward big-box and discount retailers.

Toy and gift shop Groovy dc rolled out its holiday merchandise in early October—a full month earlier than usual—advertising chess sets and custom chess pieces. "Because of the economy we said, let's get the inventory out while there's money available," says co-owner Manuel Cortes, who says holiday sales account for upward of 25% of the Washington, D.C., store's annual revenue. "It's a way of enticing and saying 'hey, come and get it,'" he adds.

Wonder Works, a specialty toy store with two locations in Charleston and Mount Pleasant, S.C., set up its Christmas windows in mid-September, a month and half earlier than usual, and began offering layaway weeks earlier than usual. Owner Christine Osborne says 45% of business comes between October and the end of the year. Her strategy seems to be already working—September sales at the toy stores were up 8.5% from last year. "People are anxious and want to secure items and budget out their money," she says.

Even more than in previous years, small shops have to worry that penny-pinching consumers will go elsewhere, experts say. Customers have "shifted a lot of their spending away from the specialty retailers and moved toward mass value centers like Wal-Mart," says Frank Badillo, senior economist at Retail Forward, a research and consulting firm specializing in the retail industry.

The big retailers are stepping up to the plate this year with more than the usual low-cost holiday gift offerings. Wal-Mart Stores' holiday selection features 100 toys for $10, up from 10 toys last year. The promotion includes brands like Lego, Barbie and Vtech. Target says its "aggressive" discounts this year include as much as 50% off on some best-selling toys ahead of the holiday season. And it's not just toys - the big box stores are able to offer jewelry such as Elaine Miller and Plumeria jewelry, and durable holiday goods like Christmas Tree Storage Bags.

Customers have "shifted a lot of their spending away from the specialty retailers and moved toward mass value centers like Wal-Mart,"

Ellen Davis, vice president of the National Retail Federation, says small businesses and specialty stores stand to be passed over this holiday season. "When price becomes a priority, other factors take a backseat," she says. "A consumer might be less concerned with quality, service or convenience than they were in better times."

To divert traffic from mass retailers, some brick-and-mortar shops are tapping into online comparison-shopping sites. Jack Parish, chief executive of The Doll Hospital and Toy Soldier Shop, a specialty toy store in Detroit, uploaded more than 15,000 toys into Google's free product search, Google Base, over the span of two days in October.

Given the weak job market in Detroit, Mr. Parish felt a need to diversify the markets he reached out to this Christmas. "Comparison shopping has become extremely important and definitely an area we want to expand into," says Mr. Parish, whose online sales in the first half of October were up 15% from a year earlier. He has also included a section on the site that compares the cost of items with gift wrapping, taxes and shipping to major competitors, as a way to edge out some of the big-box competition.

Retailers, small and large alike, are also being smarter about their inventory so they don't get stuck heavily discounting leftover merchandise like they did last Christmas. NPD Group's annual holiday spending survey found that 30% of respondents plan to spend less this holiday. The order of the day will be practical items and durable goods such as tree storage bags and other home necessities. Shoppers are not expected to spend as much on specialty items like tournament chess boards.

With average consumers turning to programs offering cash for gold, merchandisers find themselves fighting for every customer nickel this year.

After over-ordering by at least 20% last year and having to discount items as much as 80% off retail, Mickey Gee, owner of Pants Store, a small chain of four stores in Alabama, reevaluated his merchandise this year, taking a closer look at his customers' demographics to ensure that any new inventory would tap into their needs. For example, he ordered more Columbia, Levi and Wrangler brands for his store in Leeds, Ala., a rural market where those brands sell well.

Mr. Gee also invested in systems to help identify lucrative vendors and ones that were falling flat in different markets.

"It was a matter of survival last year—we had to get rid of inventory and move on," he says of being caught off guard by a shift in consumer spending. "This year we are buying accordingly."

Cheap Jewelry Imports, Forgeries Vexing Southwest Artisans

from the Wall Street Journal

SANTA FE, N.M. -- A tsunami of cheap imported jewelry -- designed to look like authentic Native American art -- is flooding the Southwest U.S., bamboozling tourists, irking law-enforcement officials and infuriating real Indian artists.

Phony Indian crafts have been around for decades, but recently both the quantity and the quality of the fakes have soared, according to Native American artists, veteran retailers and state prosecutors.

The problem appears to be especially acute in tourist towns like this one, which are loaded with jewelry shops and galleries.

The Indian Arts and Crafts Association, a trade group, estimates that nationally, as much as 75% of the roughly $1 billion of jewelry, pottery, rugs and other merchandise sold every year as authentic is not. In the jewelry business, as many as 90% of pieces held out as examples of Native American craftsmanship are fake, according to the New Mexico attorney general's consumer-protection division, which is trying to police the trade along with federal authorities.

But it is extremely hard to tell the genuine goods from the faux artifacts, artists and experts say.

"I'm going for the cheap stuff, because I can't tell the difference."

Some of the imported jewelry is exquisite, studded with real gems and painstakingly crafted -- only, it is made by Chinese or Thai or Filipino workers abroad, not by Native American artisans. Other pieces are mass-produced with polished bits of plastic that look uncannily like real jewels.

The phony jewelry may be stamped with the forged signature of a well-known Native American artist. It may even be priced like a genuine piece -- hundreds or thousands of dollars for a silver-and-turquoise bracelet, a carved fetish necklace, or drop earrings inlaid with a floral design.

"It's virtually indistinguishable," said Shane Hendren, a vice president of the Indian Arts and Crafts Association. The fakes, he said, "have definitely gotten more sophisticated" and now dominate the Native American crafts industry.

Judy Charley, a Navajo silversmith, said the fakers "are ripping off my people."

Ms. Charley sells her jewelry outside the Palace of The Governors, a state history museum here, under a program that requires vendors to prove their Native American ancestry and demonstrate how they make their wares -- by slicing, drilling, grinding and polishing gems from lumps of raw stone. She and others in the program say the flood of fakes deprives them of income, tramples on their culture and cheapens their reputations.

Importers "stamp my name on jewelry that I've never seen or touched," said Calvin Begay, a noted Native American artist.

Another Native American jewelry designer, who goes by the name Chimney Butte, said of the fakery that "Tourists fall for it, hook, line and sinker. It breaks your heart."

It isn't illegal to copy Native American motifs, for example by manufacturing Navajo-style earrings in Thailand. But by federal law, imported items that "could possibly be mistaken for arts and crafts made by Native Americans" must be marked with the country of origin, so customers aren't fooled. Some states, including New Mexico, also have their own laws against misrepresenting products as Native American craftsmanship.

Bill Keller, who heads the New Mexico attorney general's anticounterfeiting effort, said he was trying to step up enforcement with undercover stings here and in other New Mexico cities.

He has also asked the legislature to bump up penalties; he would like to be able to charge unscrupulous vendors with felonies. "That's the way to get their attention," he said.

This past summer, Mr. Keller settled cases against two retailers in Santa Fe with consent decrees. They didn't admit wrongdoing but agreed to better label their merchandise and pay fines of $10,000 apiece. Attorneys for both retailers said their clients didn't know the jewelry in question was fake.

Authenticity of fine jewelry is crucial to some shoppers, who say they want to support Native American culture and tradition.

But Evie Ausley, a tourist from Los Angeles searching for dolphin jewelry, said she couldn't care less.

"I'm going for the cheap stuff," Ms. Ausley said, "because I can't tell the difference."

Getting The Right Stuff

Experts in Native American art offer several tips for shoppers seeking authentic jewelry:

    * Ask the seller about an item's origin, using specific terms. "Native American hand-made" means that an artist fabricated the entire piece from raw materials; "hand-crafted" means the artist put it together using imported or mass-produced parts.
 

    * Inquire about the materials used. Turquoise is labeled "natural" if it has not been treated beyond a polish; that's typically the most expensive. Lesser-grade stones are often oiled or dyed to deepen their color. If a gem is described as "stabilized" turquoise, it has been blended with plastics.

    * Request a written affidavit about a piece's origin and materials – and save it, along with the receipt. If the item later turns out to be fake, the paperwork will be the key to getting a refund or prosecuting the fraud.
 

    * If you're visiting a pueblo or reservation, don't assume every item for sale is hand-made. Some Native Americans import plastic beads and other lower-quality materials, then hire workers to assemble them into jewelry.
 

    * Consult guides produced by experts. Brochures on distinguishing the genuine from the phony are available from the U.S. Department of Interior's Indian Arts and Crafts Board and from the Council for Indigenous Arts and Culture.

The Hits Keep Coming: Google Unveils 'Google Commerce Search'

LA Times

Just in time for the holidays, Google Inc. took the wraps off a new business, one designed to help big online retailers make their websites easier to search.

With Google Commerce Search -- a service that will cost retailers $50,000 or more for an annual subscription -- the Internet giant will set up a search function on an online retailer's website, which Google says will dramatically improve user experience and drive sales. The product represents a challenge to Google's archrival Microsoft Corp., as well as to Oracle Corp., Endeca Technologies Inc. and other firms that run retailers' websites.

The main selling points are that everything that has made Google a dominant company -- vast computing resources, algorithms that provide right results, and even the ability to fix your typos and find what you're looking for -- will help people navigate clunky retail websites that cause a major stumbling block to sales.

"Search was the most important aspect of an e-commerce experience," said Nitin Mangtani, a lead product manager at Google. People go to a website looking to buy, say, a laptop, and they search the site for the item they want. "If the users are able to find that laptop easily, they are more likely to buy the product," Mangtani said. "If it takes them eight to 10 seconds, and they can't find it easily, they leave the website."

Whereas people have high expectations, websites weren't delivering, so Google saw an opportunity, the company said.

Search engine analyst and Google SEO expert Greg Sterling said that when Google rolls out new ventures, they typically work for the company on several levels, and this sounds like it's no exception.

It gives the company a toehold into software for big business, which it has been trying to do for awhile. The new service helps Google diversify its revenue base. Despite Google's many sidelines, such as YouTube and desktop applications, its main source of income remains organic search marketing and advertising. And it could give the company more data about consumer behavior, something Google always craves. "Google has always got multiple angles that they’re working," Sterling said.

But Google has to be careful, Sterling warned, because of some companies' growing fear that Google is becoming too powerful. "With every product Google rolls out now, they have this other burden: the shadow that they cast, the big footprint, their dominance in the market," Sterling said. "I don't know how merchants will react. Some may be cautious because they don’t want to be dependent on Google because of this concern."

"I think the new Commerce Search will be sought after by larger companies who understand that an easily navigable site translates into customer purchases," adds search analyist Brett Boulder. "If you are looking for Christmas tree storage bags, you want to find them quickly and not be all day about it."

Google has already dipped its toe in the online retail world with something called Google Product Search. That's free to companies who give Google the data about what they're selling so that Google can serve it up in a neat package on its own search page. If you've ever searched for a product and seen a box that says "shopping results" for the item you sought, that's Google Product Search. Google Commerce Search basically takes that formula to the next level, putting it on a company's site -- without the Google name or Google ads.

Shoppers Returning To Mall, But With New Spending Habits

The Economist

FOR over a year retailers have been cowering in their high-street redoubts as recession replaced the longest consumer-spending spree in recent times. Good news appeared this week, and a hint that the economy may be in less-dire shape than third-quarter GDP figures suggest. Sales recovered sharply in early October—particularly in food and footwear, but also in clothing and furniture—according to a survey released by the Confederation of British Industry. The outlook for November is even better, though with the looming uncertainties of Christmas and a return to higher VAT in January.

But the pattern is patchy. London shops have defied the recession better than those elsewhere, bolstered by tourism and the weak pound, and by the spending power of local residents. The divide between “have” and “have-not” shoppers across Britain has widened, according to the Retail Think Tank, an expert panel. The “haves” make fewer shopping trips but buy what they want; the “have-nots” are making more trips but buying less. Cash for gold is the new watchword.

At Westfield London (pictured above), a year-old giant mall, there is a throng of people but few are carrying bags. Some say Westfield has taken volume from the West End and nearby Ealing. But business is not brisk at the branch of De Beers, the diamond seller.

Sentiment is upbeat in Leeds, dubbed the Knightsbridge of the North. Leeds has just endured ten days of its annual Shopping Week, with a plethora of retail goings-on. The Victoria Quarter, the heart of smart shopping in the city, says 9,000 people came to its opening event and spent 25% more than in 2008. Land Securities, which deferred for a year the development of Trinity, a shopping and leisure space that is to cover 1m square feet, is now going ahead and hopes to complete it in the autumn of 2012. (Eastgate Quarters, a huge shopping project led by another property company, Hammerson, is on hold.)

Land Securities is bullish on retail rents in general, and has said that it will do no more of the “soft” letting deals that tenants demanded in the recession. But experts looking for shopping patterns are flummoxed, says Tim Denison at Synovate, a research firm. “It depends on the store level and the catchment area,” he says. Retailers with nationwide operations are having to make decisions at a local level.

Prime retail space in lively high streets and shopping centres—especially big inner-city ones, such as St David’s 2, which opened in Cardiff on October 22nd—is in great demand. Because these centres have a single landlord they get a good mix of tenants. High streets with many owners quickly look desolate if there are too many vacant shops, charity stores and mobile-phone outlets. The picture is mixed, though. A quarterly “health” index reflecting the views of Retail Think Tank showed its first forecast uptick, for the last three months of 2009, after ten consecutive falls. Yet visits to shops (other than those in out-of-town retail parks) are still trending lower than last year, according to Experian FootFall, a market-research firm.

Whether or not retailers are climbing out of recession, there seems to be an irreversible decline in small, independent stores in favour of branded chains—and these are migrating to bigger spaces. The shoppers at Westfield are cocooned in a retail paradise, sheltered from the weather, with a score of cafés and restaurants to choose among and—soon—a multi-screen cinema. To lure some of them back to smaller precincts and high streets, local authorities will have to revisit their policies on parking and the mix of commercial and residential properties, says Mr Denison. That is the challenge for the next decade—if they do not want shopping cocoons to go on emptying high streets and suburbs.

Warren's Been Working On The Railroad

Business Week

With his $34 billion purchase of Burlington Northern, is Buffett signaling confidence in an upturn—or just rebalancing his portfolio?

Berkshire Hathaway (BRKA) CEO and value investing demigod Warren Buffett has been hinting for some time that he was looking for a large company to buy with Berkshire's huge cash hoard, which stood at about $21 billion at the end of the second quarter. Last year he described his likely targets as "big ones, elephants." On Nov. 3, Buffett bagged a good-sized pachyderm, paying $34 billion—$44 billion, including debt—for sole ownership of Fort Worth (Tex.)-based Burlington Northern Santa Fe Corp. (BNI), the second-largest U.S. railroad.

The deal is the biggest acquisition in Berkshire's history and, in Buffett's words, "an all-in wager on the economic future of the United States." In a statement, Burlington Northern CEO Matthew Rose added: "We admire Warren's leadership philosophy supporting long-term investment that will allow BNSF to focus on the future needs of our railroad." Pending an antitrust review by the Justice Dept. because Berkshire has smaller stakes in other railroads, the deal is expected to close early next year.

Berkshire has been eyeing freight trains for some time. In 2006, the company bought a 10.9% stake in Burlington Northern, later increasing its holding to 22%. On Tuesday Berkshire bought the rest of the company for $100 a share in cash and newly issued Berkshire Hathaway stock. About $16 billion of the purchase price is in cash, half of it coming from Berkshire's coffers and the other half borrowed from banks. The price represents a roughly 30% premium over Burlington Northern's New York Stock Exchange closing price on Monday. Berkshire also agreed to assume $10 billion in outstanding Burlington Northern debt.
Buffett holdings: "a tick better?"

As with every Buffett move, the deal is being examined for signs and portents about the U.S. economy. Is Buffett calling a bottom in the recession? Is Buffett firing the starting gun for a mergers-and-acquisitions resurgence? The simplest interpretation is that if Buffett—the most ardent devotee of the "intrinsic value" school of equity analysis propounded by his late mentor Ben Graham—thinks Burlington Northern is worth buying now, he simply thinks it's a good business at a cheap price. Burlington Northern's results for the third quarter, which it reported on Oct. 22, showed an earnings decline of roughly 30%—$1.42 per share, compared with $1.99 for the same period in 2008. While the company said it had improved productivity and cut costs, it also noted that this year's third-quarter revenues from carrying freight had dropped $1.28 billion, or 27%, compared with last year.

The question is when might the economy start to perk up and fire demand for goods hauled by rail? Buffett has always been far too canny to publicly make that kind of short-term forecast. He told CNBC on Tuesday that he was confident the U.S. economy would recover, although he had no idea whether it would be this month, this year, or next year. He also said that he had seen no big bounce at any of Berkshire's portfolio companies, although he said "they might be doing just a tick better" than they were six months ago.

Berkshire's purchase has also widely been interpreted as a bet on coal. About a quarter of Burlington Northern's revenues come from hauling coal along its routes throughout the U.S., Canada, and Mexico. There are currently 25 coal-fired power plants under construction in the U.S. Berkshire owns coal plants through its portfolio company MidAmerican Energy, which is not only Iowa's largest utility, but also serves other midwestern states. The company's CEO, David Sokol, has frequently been mentioned as possible successor to Buffett, 79.
Is Buffett really just diversifying?

There's another way to look at the Burlington Northern deal, says hedge fund manager Doug Kass of Palm Beach (Fla.)-based Seabreeze Partners Management. Kass, who earlier this year shorted Berkshire Hathaway stock—he says he has no position in the stock now—doesn't think the Burlington Northern purchase was a Ben Graham-style value purchase. Berkshire, after all, bought Burlington Northern at a premium to its stock price, not a discount.

Kass thinks the purchase represents a move by Buffett to rebalance a portfolio that has become overweighted in stocks with heavy exposure to the financial sector, among them General Electric (GE), Swiss Re, and Goldman Sachs (GS). Berkshire Hathaway has also recently been shrinking its holdings in ratings agency Moody's. Says Kass: "I think the real headline here is 'Buffett Diversifies.'"

Autodesk Poised For Recovery

from The Street

Autodesk's AutoCAD is the dominant software brand for architetural CAD drafting and building design, with over 9 million users of its flagship software.

Over the last decade, the San Rafael, Calif., company has virtually vanquished its competitors in this market, and in Autodesk training, including privately held Bentley Systems.

Autodesk was founded in 1982 by John Walker, one of the authors of AutoCAD. Together, with a band of co-founders who helped commercialize the product, Autodesk became the leading PC-based application for architectural drawings. The company came public in 1985, offering 1.6 million shares at $11 per share.

Best known for its AutoCAD software package, Autodesk's applications stretch across building design. Civil engineering accounts for an estimated 55% of sales, mechanical product design as much as 25% of revenue, and video editing and animation for the entertainment and video game markets, the remaining 20% of sales.

We have been concerned for some time about Autodesk's exposure to the architecture, engineering and construction (AEC) sectors, which have dramatically reined in their spending on automation and IT services in the last year.

However, company revenue appears to have stabilized at an annual clip of about $1.6 billion, down from the $2.3 billion that it recorded in calendar 2008. While we are not predicting a quick snapback to previous revenue levels, the company is poised to participate in a global recovery, should there be a pickup in software spending and Autodesk education in the economically sensitive customer segments that it serves.

Most of Autodesk's revenue stems from PC-based software, and the company should be a beneficiary of the Microsoft Windows 7 upgrade cycle. Microsoft's(MSFT Quote) long-awaited new operating system, Windows 7, addresses many of the shortcomings of Microsoft's Vista, which was its first operating system debacle in many years.

Our view is that pent-up demand exists for Windows 7, because many businesses have delayed purchases of new computers and software, due to Vista's shortcomings, as well as the general economic malaise. The Windows upgrade cycle should drive an upgrade cycle for PC software developers, such as Autodesk, whose products run on Windows 7. Autodesk recently announced that nine of its products, including its mainstream AEC and mechanical desktop products, now support Windows 7.

Finally, a weak dollar will benefit Autodesk because over 60% of its sales come from outside of the U.S. Recent surveys also show that home and kitchen remodeling are experiencing a boom.

While it will be several quarters before Autodesk begins to show growth, revenue has stabilized, the company has exposure to the Windows 7 upgrade cycle and derives more than half of its revenue from overseas markets ---all of which bodes well for the future.

Facebook Wins $700M Decision Over Spammer

Information Week

Facebook has won yet another massive judgment against a spammer who already owes $234 million to MySpace.

A California federal judge on Thursday granted Facebook's request for a default judgment against Sanford Wallace, who is known to have been involved with spamming since the mid-1990s and with junk faxing before that.

Court documents indicate that Wallace and an associate who was later dropped from the case spammed Facebook users with phishing messages. Those who clicked on the links and submitted login information to phishing sites allowed Wallace and his associate to then spam the phishing victim's friends, in turn generating more potential phishing victims. Facebook claims that Wallace also received payment for redirecting some spam recipients to Web sites that pay for referrals.

Facebook sought damages of more than $7 billion dollars, as allowed under the CAN-SPAM Act and the California business code.

Expressing skepticism in his ruling that such a figure would be proportionate to Wallace's offences, Judge Jeremy Fogel instead awarded Facebook $710,737,650.

"The record demonstrates that Wallace willfully violated the statutes in question with blatant disregard for the rights of Facebook and the thousands of Facebook users whose accounts were compromised by his conduct," Fogel said in his ruling.

Fogel also said that because of Wallace's willful violation of a temporary restraining order and injunction, the Court has referred the case to the U.S. Attorney's Office with a request that Wallace be prosecuted for criminal contempt.

Facebook won't have an easy time collecting its award. Wallace already owes MySpace $234 million from a judgment rendered in May, 2008.

Last November, Facebook won $873 million in damages -- the largest award to date under the 2003 Can-Spam Act -- from spammer Adam Guerbuez and his company, Atlantis Blue Capital.

Asked to specify how much of that award Facebook has been able to collect, a company spokesperson responded, "We continue to work on collecting as much as possible from Guerbuez and Atlantis Blue (likely far less than the full amount) and have hired a firm to help with this."

Field Of Internet Search Exploding With Innovation

Mercury News

It's a global battle whose foot soldiers will be engineering teams working inside a few square miles of Sunnyvale and Mountain View, with billions of dollars in advertising at stake.

Almost a decade after Google became a household name, Microsoft's launch of its Bing search engine, followed by Microsoft and Yahoo's deal to collaborate on search, could give the world's dominant Internet search engine its first serious challenge in years, as search becomes a key front in the looming competition between Google and Microsoft.

But regardless of who wins this competition, the beneficiaries are everyone who uses search engines, as quickening innovation improves the quality of information and delivers it in more useful packets. This year for the first time, a majority of the roughly 180 million U.S. adult Internet users typed a query into a search engine on a typical day, and search is gaining on e-mail as the most common online task.

Thanks to new technology, users will get their answers faster, from more than just text, and if the companies are successful, may find search engines are better at understanding what they are looking for.

"Search is going to change more in the next year than it has in the past five years," said Ben Schachter, an analyst with Broadpoint AmTech, who believes the pace of search innovation is the greatest in at least a decade.

Deluge of innovation

The pace of new features rolled out by Google, Yahoo and Microsoft has been furious in recent weeks.

At the Oct. 20-22 Web 2.0 industry conference in San Francisco, Microsoft announced a deal that allows Bing to search up-to-the-minute postings on Twitter, with much of the software engineering done at Microsoft's Mountain View campus. Google scrambled to announce its own real-time search deal with Twitter several hours later.

Not to be outdone, Google last week unveiled a new service that allows people to search for a specific song title and see a link to that song on MySpace or Lala in their search results — a service Google described as yet another way to speed users to results.

Within minutes of Google's music launch, Yahoo posted a company blog reminding that its search engine has had the ability to show links to free audio files in a partnership with Rhapsody since 2008.

Google has been unveiling so many search changes — even tweaking the size of the search box on its sacrosanct home page and pinching advertising on the results page slightly toward its center— that it has begun a "This Week in Search" item on its company blog to track new features.

Yahoo, which has been working aggressively to make sure the look and feel of its search engine remains distinct, even though its underlying results eventually will be generated by Bing, announced a new "Search Experience" in September. Among the changes: Yahoo allows users to bundle their search results from an array of topical providers they can select. A search for a restaurant would allow a user to click on a link to Yelp results; a sports search would offer bundles of results from ESPN, or a local newspaper.

"Now the real competitors have emerged, and it's mainly Google and Microsoft, with Yahoo in there because of its brand identity," said Greg Sterling, principal of Sterling Market Intelligence.

Beyond the blue links

On each of the three biggest search sites, the basic 10 blue hyperlinks that have been the essential product of an Internet search are rapidly being augmented or replaced by deeper, richer and more detailed nuggets of data — for example, a map, photos, restaurant reviews embedded in Yahoo search results for "San Jose sushi," not just the basic links to restaurant Web sites.

Since Microsoft launched Bing in June — calling it a "decision engine" for its ability to filter out unimportant information — the new search engine has gained more than 156 million monthly searches, while Google has seen a slight decline, according to comScore.

While Google and Yahoo say Bing is not driving the innovation surge, some analysts are not convinced. "I do think Bing has put some pressure on Google," Sterling said.

Microsoft, Yahoo and Google say they are innovating because people's expectations for a search engine are far higher than they were even five years ago. People no longer search for a Web site; now they expect to find a specific piece of information, like the cheapest airfare to Chicago. This represents a whole new set of challenges and opportunities in organic website optimization.

"We increasingly find that people think about search the way they think about a public utility," said Susannah Fox of the Pew Internet & American Life Project, which compiled the search data. "When you turn on a tap you expect clean water to come out, and when you do a search you expect good information to come out."

The big three search engines also search more than words. Bing offers visual searches, allowing users to browse and filter images of politicians, celebrities, album covers, or even yoga poses, as they search for information.

Clicks that count

Increasingly, a successful search is about an engine's ability to reveal a "Web of objects" — images, videos, audio files, or blog posts — rather than just a web of pages, said Larry Cornett, Yahoo's vice president for consumer products and search.

"We kicked off this huge innovation in search engines well over a year ago," Cornett said, "before anyone was doing anything else but the 10 blue links."

The new Yahoo page offers a "Search Pad" where users can note their searches. In an effort to make the results more relevant to an individual by tracking their search history, Yahoo is reading it, too.

"Every search engine looks at clicks," Cornett said. "We tried to be very open about that and say, not only is that going on, but, hey, do you want to use this for your benefit?"

At Google, speed remains king, said Johanna Wright, Google's director of product management for search.

In a recent experiment, it slowed its Web site by 0.4 seconds. The result, Wright said: People searched less.

Among the changes Google rolled out in the past three weeks are a "Jump to" link in the search results that allow a user to go directly to a keyword buried deep within a document, saving the user time, like the music search Google rolled out this week.

"Speed is something we take almost manically seriously," said Jack Menzel, group product manager for search. "We obsess about tens of milliseconds."

Microsoft, which has its Search Technology Center in Mountain View, says its philosophy boils down to helping people make a choice, sometimes limiting results when Bing decides a person knows what he is looking for.

A search for "UPS", for example, produces little on the results page but a box to enter your package tracking number, and the customer service number for UPS.

"What it amounts to is trying to build a mind-reader, to understand people," said Qi Lu, head of online services for Microsoft.

Microsoft also realized that its old search identity, called "Live Search,'' wasn't exactly hip, said Stefan Weitz, director of Bing SEO Search.

"We wanted to make sure you could use it as a verb," Weitz said. "You want people to be able to say, 'I Binged that.' "