By Karen Freifeld and Jonathan Stempel

Thu Feb 9, 2012 6:53pm EST

(Reuters) – Intel Corp agreed to pay just $6.5 million to resolve an antitrust lawsuit in which New York’s attorney general accused the world’s largest chipmaker of threatening computer makers and paying billions of dollars of kickbacks to maintain its market dominance.

The settlement ends a November 2009 Delaware case brought by Andrew Cuomo, then New York’s attorney general and now governor. Eric Schneiderman, the current attorney general, took over the case when he succeeded Cuomo in that position.

Intel’s $6.5 million payment represents less than five hours of profit for the Santa Clara, California-based company, based on reported net income of $12.94 billion for 2011.

Cuomo had accused Intel of violating state and federal antitrust law through a “systematic worldwide campaign” to bully customers into buying its personal computer chips, at the expense of rival Advanced Micro Devices Inc.

But the lawsuit lost much of its punch when U.S. District Judge Leonard Stark said the state could not seek triple damages, and was allowed to pursue claims over just three years of computer purchases, not four or six as it had sought.

Jennifer Givner, a spokeswoman for Schneiderman, said the state’s lawyers still believe their substantive claims have merit, but that “in light of the court’s decision believe that no purpose is served by pursuing the matter further.”

Intel said it was pleased to settle, and that the accord did not require it to admit to any allegations or violation of law, or make any changes to its business.

“We have always said that Intel’s business practices are lawful, pro-competitive and beneficial to consumers,” General Counsel Doug Melamed said in a statement.

Cuomo had contended that Intel bribed or coerced computer makers such as Dell Inc, Hewlett-Packard Co and International Business Machines Corp, and threatened retaliation.

Emails showed that top Intel officers including Chief Executive Paul Otellini were aware of some of the improper activity, Cuomo alleged.

Intel has long faced allegations of anticompetitive conduct, and is still appealing a 1.06 billion euro (now US$1.41 billion) fine imposed in 2009 by European regulators.

In 2010, the Federal Trade Commission settled a case in which it accused Intel of unlawfully stifling competition in microprocessors.

The same year, a different Delaware federal judge approved a settlement with shareholders that called for Intel to make more than 40 corporate governance changes, including the creation of a compliance committee to monitor antitrust litigation.

And in November 2009, barely a week after Cuomo sued, Intel agreed to pay AMD $1.25 billion to settle all outstanding legal disputes with its smaller rival.

Intel is incorporated in Delaware.

The case is New York v. Intel Corp, U.S. District Court, District of Delaware, No. 09-00827.

(Reporting By Karen Freifeld and Jonathan Stempel in New York; Editing by Richard Chang and Matthew Lewis)

Article source: http://feeds.reuters.com/~r/reuters/technologyNews/~3/_EEIclWtRa0/us-intel-antitrust-idUSTRE8182HX20120209

By Tim Kelly

TOKYO |
Thu Feb 9, 2012 10:19pm EST

TOKYO (Reuters) – Incoming CEO Kazuo Hirai aims to re-shape Sony Corp by linking hardware and software through online networks — a model he used at its PlayStation unit — dismissing any suggestion the battered brand would revert to a gadget-centered strategy under his management.

In the meantime, he said, he would focus on paring costs at its TV unit and look to squeeze expenses elsewhere to return Sony to profit.

The Sony Computer Entertainment model “is a bigger concept we can grow into a bigger space,” Hirai, 51, said in a group interview at the company’s Tokyo headquarters. “Hardware drives software and software drives hardware,” he added, referring to online sales of games and other content PlayStation owners.

Hirai oversaw the phenomenal rise of the PlayStation gaming system in the United States and since last March headed Sony’s consumer products and services business.

He didn’t say what changes the wider application of that strategy would have on Sony, which unlike its consumer electronics rivals such as Samsung Electronics and Apple Inc, owns significant content in movies, music and games software.

A more immediate task for Hirai, however, is to stem losses with cost savings that will add to cuts made by outgoing boss, Howard Stringer.

Hirai formally succeeds Stringer as CEO on April 1, with the once-stellar consumer electronics brand heading for what it warned last week would be a much bigger-than-expected $2.9 billion annual loss, its fourth in a row.

The surge of red ink has put Hirai under intense pressure from investors and ratings agencies to quickly staunch losses at the sprawling electronics group. Hirai pledged not to flinch from tough decisions to trim costs and renewed a promise to return the TV business to profit in two years.

“We have to make some hard decisions on where there are some redundancies and reduce the fixed costs in a variety of different areas,” he said, pointing to sales units in Japan, Europe and the United States, supply chains and Tokyo headquarters functions as areas where cuts could be made.

Credit rating agency Standard and Poor’s on Wednesday cut its long-term debt rating on Sony and warned it may drop it another notch within a year if Hirai fails to stem TV losses and deliver a significant boost to profitability. [ID:nL4E8D861P] Sony was also downgraded by Moody’s last month.

BIG BLEED

The TV division has lost more than $11 billion over eight fiscal years. Together, Sony, Panasonic and Sharp expect to lose $17 billion this year alone, highlighting the savaging of Japan’s electronics industry by foreign rivals led by Samsung, weak demand and a strong yen.

A goal for Sony to end that bleeding in two years was “tracking where we said it would be at the end of the year, or a little ahead of that,” Hirai said.

Better products would, he said, add as much as 40 billion yen ($520 million) in profit, with cost improvements adding another 50 billion yen, as part of a strategy he described as “defense and offense.”

As well as weak global TV demand, Sony has been hammered by last year’s flooding in Thailand that ruptured supply chains, a big one-off charge for exiting a flat-panel joint venture with Samsung, and smart competition from Apple and Samsung that has squeezed market share in TVs, smartphones and other gadgets.

Hirai predicted that LCD technology would remain the main battlefield in TVs for at least three years, before next generation technology takes hold.

STRATEGY ROLE

Hirai has yet to reveal his management line-up, naming only Tadashi Saito, a former Sony chief financial officer at Sony Electronics in the United States, as the company’s first chief strategy officer since 2005.

Saito will work with senior managers “to formulate strategies for group companies overall, as well as giving us a lot of input and advice on MA activity,” Hirai said.

Hiroshi Yoshioka, previously identified by Stringer as one of “Four Musketeers” who could succeed him, along with Hirai, will take Sony into the medical imaging business and head up the group’s innovation center, “seeking out new business opportunities,” Hirai said.

As of Thursday’s close, Sony shares had gained 13 percent to a 14-week high of 1,544 yen since Hirai was named as the next CEO, outperforming a 2.1 percent gain on the benchmark Nikkei average.

The stock, which slumped more than 60 percent during Stringer’s seven-year reign, was down 0.4 percent in early trading Friday.

A Sony veteran of 28 years, Hirai was credited with reviving the PlayStation gaming operations through aggressive cost-cutting, in competition with Nintendo’s Wii and Microsoft’s Xbox.

A year ago, Hirai, a fluent English speaker, was promoted to head the consumer products and services business, overseeing Sony’s network operations. He was also at the forefront of efforts to counter hackers who accessed Sony customers’ personal details.

He takes over after a period of cost-cutting by Stringer, a rare foreign CEO in Japan who sold off TV factories in Spain, Slovakia and Mexico and outsourced more than half of the group’s production to outside companies, including Hon Hai Precision Industry, a Taiwanese contract electronics maker whose key customer is Apple.

($1 = 76.8950 Japanese yen)

(Editing by Jeremy Wagstaff)

This story update corrects the share movement since Hirai’s appointment

Article source: http://feeds.reuters.com/~r/reuters/technologyNews/~3/F1978ESdK5Q/us-sony-hirai-idUSTRE81905C20120210

By Melanie Lee

SHANGHAI |
Wed Feb 8, 2012 6:54am EST

SHANGHAI (Reuters) – When it comes to China, Facebook should consider itself forewarned. Cracking the world’s biggest Internet population might seem an obvious ambition for the social networking giant as it trumpets its global growth before a $5 billion initial public offering, but the chances it will succeed look slim.

Facebook said last week it was contemplating re-entering China, the world’s second-biggest economy, after being blocked nearly three years ago.

But its offering would likely face intense competition, political meddling and little commercial success.

Few foreign Internet companies have succeeded in China. EBay Inc, Google Inc, Amazon.com Inc, Yahoo Inc and most recently Groupon Inc form the list of notable online players who have failed to gain traction in the fast-growing nation of 1.3 billion people.

“It’s actually a bit late for Facebook,” said Hong Kong-based CLSA analyst Elinor Leung, who added that the market was already quite saturated with local players such as Sina Corp, Renren Inc, Kaixinwang001 and Tencent Holdings.

Facebook first launched its Chinese interface in 2008 but was blocked by Beijing in mid-2009 following deadly riots in the western province of Xinjiang that authorities say were abetted by the social networking site.

“It will be very difficult for Facebook to introduce something that will allow them to differentiate themselves,” CLSA’s Leung said.

Almost half of China’s 500 million Internet users use social networking sites, government data showed in January.

The dominant players among China’s social networking sites (SNS) are Renren and Sina Corp, which is attempting to turn its highly popular microblogging service, Weibo, into a full-fledged social network.

WILL CHINA “LIKE” FACEBOOK?

Domestic sites have flourished into self-contained ecosystems with their own suite of apps, news portals, micro-currencies and e-commerce options, making it hard for Facebook, if it gained entry, to compete, industry players say.

“China’s SNS space is more crowded and competitive than the U.S. with multiple large and established players all investing for long-term growth,” said Joe Chen, chief executive of Renren, which would become a direct competitor with Facebook should the U.S. giant enter the market.

“Facebook will enter a much more competitive market with a significantly different culture, business environment and other characteristics than what it has previously experienced in the global market,” Chen added.

Analysts agreed.

“The Chinese have been social for years, and Facebook would be just one more option among many,” said Sam Flemming, founder of Shanghai-based social media consultancy, CIC.

“It certainly would have a certain amount of cache, especially among the more internationalized Chinese and foreigners living in China, but it would need a big push in awareness beyond this small group,” Flemming said.

Foreigners and Chinese citizens who want to access Facebook and other blocked sites must use special VPN software to get around China’s firewall to do so, meaning a very limited number of Chinese currently use it.

CHINA RELATIONSHIP: IT’S COMPLICATED

Facebook would face the same factors that have led to the failure of many foreign Internet companies in China: nimble local competition, murky government regulation and bureaucracy, and difficulty in adapting to local tastes.

Complying with Beijing’s regulations can also carry a cost in Facebook’s established Western markets — companies such as Google and Cisco Systems Inc have faced criticism at home over accusations of cooperating with the Chinese authorities’ efforts to control online content.

Google, considered the most successful foreign Internet company to make a foray into China, managed to secure only 30 percent of the Chinese search market before pulling out in early 2010, after a serious hacking episode and a reluctance to censor further in China.

It still maintains a presence in the country through a site hosted in Hong Kong.

“The way for Facebook to be in China would be for them to build or buy a local team and allow them to craft a product to suit the local market over the long run. Then they may have a decent chance to compete, not guaranteeing that they will win,” said Dominic Penaloza, chief executive of Chinese professional social-networking site, Ushi.cn.

Penaloza said many foreign Internet firms had failed in China because they were unwilling to give such autonomy to their local partners.

Early last year, Facebook was reportedly in exploratory talks with potential Chinese partners. Analysts said Facebook would have to manage and censor content heavily in order to gain Beijing’s blessing for entry.

Twitter and YouTube are also blocked in China, while domestic social networks have to heavily censor and weed out content that Beijing deems undesirable.

Facebook said in its IPO prospectus that the firm was evaluating entering China, but notes that the market has “substantial legal and regulatory complexities.”

A walled-off Facebook, or a heavily censored Facebook for China, may not be appealing to users as Facebook’s selling point is its sprawling international reach and open nature.

“Chinese consumers don’t ever want to have some second class offering or some dumbed-down offering,” said Duncan Clark, chairman of Beijing-based consultancy BDA China.

(Editing by Kazunori Takada and Alex Richardson)

Article source: http://feeds.reuters.com/~r/reuters/technologyNews/~3/z3n_Jf8u7o4/us-facebook-china-idUSTRE8170AE20120208

By Alistair Barr and Gerry Shih

Wed Feb 8, 2012 9:07pm EST

(Reuters) – Groupon Inc shares slumped Wednesday as the daily deal company’s first quarterly results since it went public stoked concern about limited disclosure and slowing growth.

Groupon reported an unexpected fourth-quarter loss from a huge tax bill, most of which will likely not be repeated.

While the tax bill caught Wall Street’s eye, analysts were more unsettled by signs that Groupon’s breakneck pace of growth from recent quarters may be slowing, especially in North America, its most mature market.

Groupon also did not disclose some metrics that the company had reported in filings last year for its initial public offering, some analysts noted.

“There weren’t a lot of details on metrics that Groupon provided in the past,” said Aaron Kessler, an analyst at Raymond James. “There may be some frustration with this. A lack of details is never a good thing.”

Groupon shares slumped 15 percent to $20.90 in after-hours trading following the results.

As a private company Groupon was one of the fastest-growing businesses in history. However, it was criticized for big losses, heavy marketing spending and aggressive accounting in the run-up to its IPO last year.

In early November, Groupon pulled off one of the largest Internet IPOs of the past decade, valuing the company well over $10 billion. But analysts and investors are still concerned that consumers may be getting tired of the company’s discount coupons and some merchants are not running more than one Groupon deal.

GROWTH CONCERN

On Wednesday, Groupon reported fourth-quarter gross billings of $1.25 billion. That was up about 8 percent from the third quarter.

In the third quarter, gross billings jumped 25 percent from the previous quarter to $1.16 billion. Gross billings is a closely watched measure of how much money Groupon collects from deals it runs, before the company shares a chunk of that cash with participating merchants.

“Billings were lighter than expected,” said Ken Sena, an analyst at Evercore Partners.

LESS DISCLOSURE

Kessler of Raymond James said Groupon used to break out gross billings for North America and International, but the company did not do so for the fourth quarter.

That made it difficult to gauge whether Groupon’s domestic business grew more slowly than its international operations, Kessler explained.

Kessler said previous disclosures on the number of Groupon coupons sold in a quarter and the number of merchants waiting to run deals were also not reported in the fourth-quarter results.

Groupon also changed a metric it had used to report user growth, introducing a new unit called “active customers,” which equals the number of users who have bought a coupon at least once in the past year.

In previous regulatory filings, Groupon had disclosed two distinct metrics: “cumulative customers” – the number of users who have used at least one coupon since the service began – and “subscribers,” the total number of users who receive Groupon’s emails.

A Groupon spokesman said Wednesday that the company no longer discloses its number of subscribers.

TAXING RESULTS

Groupon said its fourth-quarter net loss attributable to common stockholders was $42.7 million, or 8 cents a share. That compares with a loss of $378.6 million, or $1.08 a share, a year earlier.

On an adjusted basis, Groupon reported a fourth-quarter loss of 2 cents a share. Revenue was $506.5 million, up 194 percent from the final quarter of 2010.

Groupon was expected to make a profit of 3 cents a share on revenue of $475 million in the fourth quarter, according to Thomson Reuters I/B/E/S.

Groupon paid $35 million in taxes during the quarter, for an effective tax rate of 1,600 percent. That was driven by income generated in some countries outside the United States and tax provisions related to Groupon’s new international headquarters in Switzerland.

“This makes us a good corporate citizen,” said Chief Financial Officer Jason Child. But he added that the company’s tax rate in the future will likely be about 33 percent.

“One thing that stood out was the tax,” said Jeff Houston, an analyst Barrington Research Associated. “That raised my eyebrows.”

Such surprises may be a symptom Groupon’s youth, Houston said. The Chicago-based company was started in late 2008.

“It may take another quarter or two for investors to get more confidence and get more comfortable with management,” the analyst added. “The daily deal space is so new and the company is only 3 years old.”

POLE-DANCING DEALS

Groupon founder and Chief Executive Andrew Mason has defended his company vociferously against its many critics in recent months.

Plenty of analysts dialed in to hear how Mason, one of the industry’s more colorful CEOs, would fare on his first earnings call, a personal milestone for the 31-year old.

The call may have disappointed those familiar with the sight of an underwear-clad Mason doing yoga – there was a video floating on the Internet of just that last year. But the CEO still showed some of his usual sparkle.

Mason took most of the call in a flat tone as he plowed through financial results, talked up his company’s growth potential and soberly laid out Groupon’s plans to staff up on engineers.

Later on the call, Mason said Groupon is working on new features that will help customers personalize the offers they get and avoid coupons they don’t want.

“‘Please stop sending us pole-dancing deals,’” Mason said, deadpan. “That’s been a much requested feature.”

(Reporting by Alistair Barr and Gerry Shih in San Francisco, Edwin Chan in Los Angeles; Editing by Bernard Orr, Tim Dobbyn Andre Grenon, Matthew Lewis and Richard Chang)

Article source: http://feeds.reuters.com/~r/reuters/technologyNews/~3/kSU4fLEMW_s/us-groupon-idUSTRE81727B20120209

By Yinka Adegoke

Tue Feb 7, 2012 5:50pm EST

(Reuters) – Amazon.com Inc is about to announce a Web video deal with Viacom Inc in what sources said was one of the last steps in a plan to launch a standalone subscription service to compete with Netflix Inc.

The online retailer will unveil the deal as soon as this week, according to two people familiar with the discussions.

Viacom, which owns TV shows and movies from MTV Networks, Nickelodeon and Paramount Studios, would be the latest of several partners Amazon has made deals with for its Prime Instant Video service. So far, major studios such as CBS Corp, Time Warner Inc’s Warner Bros, News Corp’s Fox, Sony Corp, Comcast Corp’s NBC Universal and Walt Disney Co have licensed programming to the retailer.

Viacom Chief Executive Philippe Dauman told Wall Street analysts last week the company would be announcing a new online video deal this week, but did not name the partner. A Viacom spokesman declined to comment further.

To date, Amazon’s Prime Instant Video has primarily been an add-on feature for Amazon Prime members, who pay $79 a year for free shipping in the United States for most of what they buy.

But Amazon is keen to open up its licensed library of TV programs and movies as a standalone service for non-Prime members, and to use it to boost its Kindle Fire tablet, according to people who have spoken with Amazon executives. An Amazon spokeswoman did not respond to telephone calls seeking a comment.

Analysts estimate that Amazon sold about 5 million Kindle Fire tablets in the fourth quarter and the company may sell more than double that in 2012.

An essential part of Amazon’s strategy is to have lots of content, including video, music and apps, for its tablet users. The Android-based Fire comes with one free month of the Prime service, but it is not clear how many owners paid beyond the first month.

Amazon is negotiating with Hollywood studios to expand its existing rights beyond Prime, as well as bulking up its library, according to several sources.

In addition to Prime Instant, it also has an Amazon Instant Video download and rental service similar Apple Inc’s iTunes digital media store.

The retailer said last month the number of videos purchased or rented from Amazon Instant Video, as well as the number of customers, more than doubled in the fourth quarter from the year before. It also said the number of Prime Instant Video streams rose nearly 300 percent during the quarter.

The Web video market, currently dominated by Netflix, is set to become increasingly competitive over the next year as major players such as Amazon, Google Inc and Verizon Communications Inc launch so-called over-the-top services.

This week, Verizon said it formed a joint venture with Coinstar Inc’s Redbox video kiosk rental service that will offer video streaming and DVD rentals by the second half of the year.

(Reporting By Yinka Adegoke in New York; additional reporting by Alistair Barr in San Francisco; editing by Andre Grenon)

Article source: http://feeds.reuters.com/~r/reuters/technologyNews/~3/dzPrbEoCECQ/us-amazon-viacom-idUSTRE8162DE20120207