SPOT TEK AND FUN

More pain for Nokia, RIM seen as smartphones get cheaper

2011-06-21T16:41:00.000-07:00

(Reuters) - Credit Suisse said competitive pressure in the smartphone industry was likely to increase over the next 12-18 months as a wave of low-end Android phones hits the market and Apple is seen releasing a cheaper iPhone in 2012.

The brokerage, however, said the overall market for mobile phones would continue to grow as low-end smartphones phase out feature phones, a term used to describe phones with less computing power.

Credit Suisse said Apple and Samsung Electronics would be the biggest gainers in the smartphone market and sees increasing signs of vulnerability for BlackBerry-maker Research in Motion, Nokia and Motorola Mobility.

The brokerage downgraded Motorola Mobility by two notches to "underperform." Shares of the company, which was spun off from Motorola Inc in January, were down more than 3 percent in morning trade on the New York Stock Exchange.

While the growth momentum for phones based on Google's Android operating system is expected to continue, the brokerage said Motorola Mobility could lose out because of limited exposure to the lower and mid-end of the smartphone market.

An onslaught from rival Android phone makers, such as Samsung and HTC, could also hurt Motorola Mobility's market share in the United States.

LOW-END SMARTPHONES TO HURT RIM, NOKIA

The brokerage said there was a high likelihood of Apple introducing a low-end iPhone in 2012, but added that "the precise timing is difficult to predict."

Credit Suisse cut Research in Motion to "neutral" and maintained Nokia at "underperform," saying a cheaper iPhone could further erode their market share.

Nokia, on Tuesday, released its latest smartphone running on a brand new operating system, which the company eventually plans to ditch, a move that analysts expect could condemn the device to obscurity.

Nokia plans to eventually migrate to Microsoft's Windows Phone 7 mobile OS.

"While the shift toward Microsoft is probably the right strategy, we believe that the transition will continue to be difficult, especially as smartphone competition increases," the brokerage said.

Credit Suisse said RIM's transition to the new QNX operating system will be slow, with significant competition in all price segments, but added that the Canadian company's shares remained inexpensive.

The BlackBerry maker's dismal results and failure to deliver exciting new devices have sent its shares plummeting below $26, hitting the lowest level in almost five years.

Last week, RIM admitted delays in revamping an aging smartphone lineup and slashed what most analysts viewed as an unattainable full year earnings outlook. It also said it planned to cut an unspecified number of jobs.

(Reporting by Mary Meyase and Himank Sharma in Bangalore; Editing by Roshni Menon, Saumyadeb Chakrabarty)
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Ericsson to buy Telcordia for $1.15 billion cash

2011-06-14T17:10:00.000-07:00

By Patrick Lannin and Georgina Prodhan

STOCKHOLM/LONDON (Reuters) - Mobile network gear maker Ericsson is to spend $1.15 billion in cash to buy U.S. group Telcordia to help it manage an explosion in data and services and fend off tough competition.

Ericsson Chief Executive Hans Vestberg has said he expects 50 billion devices to be connected to the Internet by 2020, bringing a huge challenge for operators and systems providers.

Ericsson said in a statement on Tuesday that the agreement to buy the Piscataway, N.J. company would lead to 2,600 employees being transferred to it. Telcordia is being sold by Providence Equity Partners, LLC and Warburg Pincus.

"We will definitely be a leader in many of the different domains here," Vestberg told Reuters, adding that the market where Telcordia was active was very fragmented.

"We see this as one of the areas which has portfolio momentum," he added. Ericsson shares were up 1.7 percent at 88.70 crowns after the news.

The Swedish group said the market for software and systems integration was valued at about $35 billion and was expected to show a compound annual growth rate of between 6 to 8 percent between 2010 and 2013.

"The importance of operations and business support systems will continue to grow as more and more devices are connected, services become mobile and new business models for mobile broadband are introduced," Vestberg said in the statement.

"In this context, Telcordia brings very skilled people and knowledge, a large business in North America and other markets, as well as a good multi-vendor product portfolio."

Ericsson said it expected the transaction to close in the fourth quarter of this year with full effect from the first quarter of next year.

It expected the transaction to be accretive to Ericsson earnings per share within 12 months after closing.

"It should help boost the attractiveness of their services offering and make it more difficult for the likes of Huawei or ZTE to break in. Ericsson is looking increasingly strong in this area," said Richard Windsor, global technology specialist, at investment bank Nomura.

"The big question is whether or not Ericsson has overpaid. They have a history of doing so, for example in the cases of Marconi and Redback," he added.

Evercore Partners advised Ericsson in the deal and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as their legal adviser. Credit Suisse was the financial adviser to Telcordia and Willkie Farr & Gallagher LLP was their legal counsel.

(Additional reporting by Nadia Damouni in New York; Editing by Mike Nesbit, Bernard Orr)
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Samsung, Apple to end Nokia's smartphone reign

2011-06-13T13:39:00.001-07:00

By Tarmo Virki, European Technology Correspondent

HELSINKI (Reuters) - Samsung Electronics Co Ltd will become the world's largest smartphone maker this quarter, overtaking struggling Nokia Oyj which has lead the market since 1996, Nomura said on Monday.

In the next quarter Nomura sees Apple Inc also overtaking Nokia, pushing the Finnish company to No. 3 in the rankings.

"Nokia looks set to relinquish its smartphone crown to Samsung and Apple," Nomura analysts said in a research note. "Further emphasizing the shift in power to Asia is our forecast for HTC to almost match Nokia during 2012."

Research firms Gartner and Canalys both said they saw Nokia -- which created the smartphone market with its 1996 launch of the Communicator model -- losing smartphone volume leadership later this year.

"If Nokia's new phones are not well received in the third quarter and with the Galaxy S2 ramping up, Samsung might overtake them and become the smartphone leader in Q3," said Gartner analyst Carolina Milanesi.

On Monday Kantar Worldpanel ComTech's survey showed Nokia's share of the British smartphone market -- seen as a key indicator for trends in Europe -- had dropped to 10.6 percent in 12-weeks to mid-May from 31 percent in the same period a year earlier.

Nokia has lost initiative in the smartphone market to Apple's iPhone and Google Inc's Android devices, and at the lower end to more nimble Asian rivals.

"There is certainly a very close three-way battle going on for top spot in global smartphone volumes between Nokia, Apple and Samsung during the second quarter," said Neil Mawston, analyst at Strategy Analytics.

"With Symbian demand crashing, there is growing opportunity for Samsung or Apple to grab the lead," said Mawston, but said he still expects Nokia to stay ahead in the ongoing quarter.

Overall, Nokia still makes more cellphones than Samsung due to its strong position in basic cellphones and its wider distribution network in emerging countries.

The company is switching to Microsoft Corp's software from its own Symbian platform as part of an overhaul of its phone business set out in February by new Chief Executive Stephen Elop.

On May 31 Nokia abandoned hope of meeting key targets just weeks after setting them, raising questions over whether its new boss can deliver on the turnaround he promised.

Shares in Nokia closed 0.1 percent lower in Helsinki, at 4.33 euros, in line with a slightly softer technology sector.

(Editing by David Holmes and Jon Loades-Carter)
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Facebook looking at IPO in first quarter

2011-06-13T13:19:00.001-07:00

NEW YORK (Reuters) - Facebook is preparing to file for an initial public offering as early as October or November that could value the popular social networking site at more than $100 billion, financial news channel CNBC reported on Monday.

Goldman Sachs is leading the chase to manage the lucrative offering, which could come in the first quarter of 2012, CNBC said.

With more than 500 million users, Facebook is the world's most popular Internet social network and one of the most hotly-anticipated initial public offerings on Wall Street.

Facebook, whose chief operating officer last month told Reuters that an IPO was "inevitable," declined to comment on the latest report about its timing for an offering.

Anticipation about a Facebook's future plans comes at a time of heightened investor appetite for shares of fast-growing social networking companies.

Professional networking site LinkedIn Corp launched its own IPO last month, valuing the company at about $7 billion.

Earlier this month, daily deals site Groupon Inc filed to raise up to $750 million in an IPO, fueling speculation that Internet valuations have become too rich.

Founded in a Harvard dorm room in 2004 by the now 27-year-old Mark Zuckerberg, Facebook threatens Internet companies like Google Inc and Yahoo Inc as it becomes a popular online destination for Web surfers and an important marketing channel for advertisers.

Facebook was valued at $50 billion earlier this year when Goldman Sachs invested in the company.

Recent transactions of Facebook shares on the secondary market have valued the company between $78 billion and $81 billion, according to information on the website of Sharespost, an exchange for trading shares in private companies.

Facebook is expected to generate roughly $4 billion in advertising revenue in 2011, up from $1.86 billion a year earlier, according to market research firm eMarketer.

(Editing by Steve Orlofsky, Gerald E. McCormick and Bernard Orr)
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Apple, Google cloud can help curb online piracy: U.S.

2011-06-08T20:07:00.001-07:00

By Foo Yun Chee

BRUSSELS (Reuters) - Services developed by Apple Inc and Google for people to store photos, music and data online may do more to combat online piracy than regulation can, a U.S. official said on Wednesday.

Victoria Espinel, the coordinator of U.S. intellectual property enforcement, said corporate innovation was often more effective than law enforcement or other rules, which are sometimes applied inappropriately.

"The U.S. government doesn't need to pick winners and losers and the last thing we should think about doing is messing up the Internet with inappropriate regulation," she told the World Copyright Summit in Brussels.

"In order for the Internet to be as productive and compelling as possible, we need to have active engagement from companies that interact with and benefit from Internet commerce," she said.

Amazon, Google and Apple have announced music and other services that are downloadable from the 'cloud' -- a form of computing where data and software are stored on servers which users can access with smartphones or PCs via the Internet.

Such innovations give those companies an advantage in developing more secure systems.

"If it is possible to construct it so that it cannot be compromised, it may have the effect of reducing piracy by giving value to consumers -- the ability to own forever and access almost anywhere -- that cannot be obtained with illegal copies," Espinel said.

"The flexibility of the cloud may help spur the development of compelling legal alternatives."

Apple on Monday unveiled remote computing services, giving it a lead over rivals Google and Amazon, which recently moved into music storage and streaming.

Espinel said she was already working closely with major corporations to develop more security for online pharmacies, and holding meetings with Google, GoDaddy, Microsoft, MasterCard, Yahoo!, American Express, eNom, PayPal, Discover and Visa.

Espinel said she would be meeting with European Commission officials to exchange views on intellectual property rights.

Last month, the European Union executive set out proposals to overhaul the legal framework for intellectual property rights in the 27-country bloc. These will need approval from the European Parliament and EU countries.

(Editing by David Cowell)
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FT launches Web-based app to work on all tablets

2011-06-07T16:28:00.000-07:00

By Georgina Prodhan

LONDON (Reuters) - The Financial Times is launching a new, Web-based version of its mobile app, the first of its kind by a major publisher, that will allow it to adapt quickly to new tablet PCs and reduce its dependence on Apple Inc.

Until now, news publishers have tended to custom-design their tablet offerings for Apple's iPad -- which has opened a new and potentially profitable market for them as print sales decline, and offers a glitch-free experience for users.

Rupert Murdoch's News Corp, for example, recently launched a new digital newspaper, The Daily, initially just for iPad users in the United States.

But an explosion in the variety of tablet computers means designing so-called native mobile apps for each device will soon be too costly and slow, and will delay new apps getting to market.

John Ridding, chief executive of the FT -- which is part of British publishing group Pearson Plc -- said the FT aimed to make it easy for customers to read the newspaper on any phone or computer through a single subscription.

"We are determined to make it as accessible as possible for the user," he told Reuters by telephone. "Readers will be able to get our journalism through whatever device or channel they may choose."

The new app, available from app.ft.com, launches on Tuesday for the iPad and iPhone, with a week's free access. Versions optimized for the Samsung Electronics Co Ltd Galaxy, Motorola Mobility Holdings Inc Xoom and Research In Motion Ltd BlackBerry PlayBook are planned soon.

Tweaks for particular devices will now take weeks, not months, and FT.com's managing director Rob Grimshaw said the FT would be encouraging users to migrate to the Web app, which would generally deliver a better experience than native apps.

APP-LIKE EXPERIENCE

The move will also free the FT from the confines of Apple's App Store. Apple charges 30 percent of revenues and is trying to enforce a rule that subscribers must sign up through the App Store rather than directly with publishers.

The FT, however, is determined to maintain a direct connection to its readers, which it says is fundamental to understanding the way they consume FT content.

"Working through the browser means we can maintain a direct relationship with the customer. That's been central to our business model," Grimshaw said.

The new app is based on HTML5, the latest version of the HTML standard Web language that can be read by any browser. Grimshaw said it took five to six months of development in partnership with software designer Assanka.

"We've had this in mind since probably the middle of last year when we first started to realize how much would be involved ... if we had to write them all with native code," Grimshaw said.

"At that point nobody had done anything like that, so it really wasn't clear you could produce an app-like experience using HTML5."

Using the Web rather than an app store also means users will be able to get automatic software updates without having to download them.

Benedict Evans, an analyst with London-based research firm Enders Analysis, said: "On a purely technical level, it's very impressive. You can occasionally notice it's not quite as fluid as a native app, but most of the time it performs just as well."

Evans said the FT was in a different position from most news publishers, who had yet to develop a mature online business.

FT.com has more than 224,000 paying online subscribers, and digital revenues grew 47 percent last year, accounting for 24 percent of the FT's total sales. Its mobile and tablet apps have been downloaded more than 1 million times.

"For those other publishers, the point of the iPad is that it offers a great experience qualitatively different from what you can get on the Web," said Evans. "If you're The Daily or The Times, it's a great way to capture customers. The FT doesn't need the App Store as an acquisition tool in quite the same way."

(Editing by Andre Grenon)
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All aboard the privacy-breach gravy train

2011-06-01T16:21:00.000-07:00

NEW YORK (Reuters) - The hacking of a Sony Corp customer database this spring has attracted class-action lawyers and consumers eager to cash in on the high-profile privacy breach.

At least 40 lawsuits have been filed in federal courts -- including at least two this week -- on behalf of millions of Sony PlayStation users, according to Westlaw data. The suits accuse Sony of failing to protect gamers' personal data and credit card information from hackers. The pattern is a common one: Details of a privacy breach become public, which triggers a wave of suits, which lead to oft-costly settlements as companies try to hold onto the trust of their customers.

Who benefits the most from the suits? Not the plaintiffs. In privacy cases, it is both difficult to prove economic damage and to divvy up a settlement among classes that can number in the millions or even tens of millions. While a handful of lead plaintiffs might receive a nominal fee, the parties can also agree to distribute any settlement payout to nonprofit organizations that promote the privacy interests of the class.

The lawyers, in contrast, walk away with a chunk of change that can range from tens of thousands to millions of dollars. Critics say these settlements deprive the victims of any meaningful benefit and invite conflicts of interest by allowing defendants and plaintiffs' lawyers to choose their pet organizations.

For a look at some of the most notable privacy settlements from recent years, and what the settlements were worth to the lawyers and plaintiffs, click on http://link.reuters.com/qud89r

(Reporting by Terry Baynes; Editing by Eileen Daspin)
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Nokia drops targets and shares slump to 13-year low

2011-05-31T13:15:00.000-07:00

By Ritsuko Ando

HELSINKI (Reuters) - Mobile phone maker Nokia Oyj abandoned hope of meeting key targets just weeks after setting them, raising questions over whether its new boss can deliver on the turnaround he promised in February.

Its shares tumbled 18 percent to their lowest in 13 years, wiping some 3.8 billion euros ($5.5 billion) off its market value as investors worried the company, once the leading force in its industry, was losing so much market share it may never regain its footing.

Nokia has been losing ground in the smartphone market to Apple Inc's iPhone and Google Inc's Android devices, and at the lower end, to more nimble Asian rivals.

The company is switching to Microsoft Corp's software from its own Symbian platform as part of an overhaul of its phone business set out three months ago by new Chief Executive Stephen Elop.

But it continues to suffer from mounting competition and warned on Tuesday it expects net sales from its devices and services business in the second quarter to be "substantially below" its previous forecast, set in April, of between 6.1 billion euros ($8.7 billion) and 6.6 billion.

Elop, brought in last year to help revive Finland's flagship technology company, blamed both weak sales and price cuts, noting competition was particularly tough in Europe.

"Android is gaining strength. Apple is Apple, of course," he told analysts on a conference call. He also said management issues had also hurt business in China, where Nokia faces challenges from the likes of ZTE Corp.

"Given the unexpected change in our outlook for the second quarter, Nokia believes it is no longer appropriate to provide annual targets for 2011," the company said, though it would still provide quarterly updates.

Nokia forecast its non-IFRS operating margin for devices and services to be around break-even in the second quarter, rather than previously expected range of 6 percent to 9 percent.

STARTING TO LOOK DANGEROUS

The new outlook implies a loss is likely for third quarter, analysts said. They also said the warning showed Nokia's market position worsening much faster than expected, with lower-priced Asian rivals grabbing a bigger chunk of markets such as China.

"What does strike us as quite surprising is the level to which the markets have dropped, we're talking about break even now, which is quite a slide," said Lee Simpson, an analyst at Jefferies & Co.

"I think this level of shareholder destruction is now starting to look dangerous. What can these guys do to reverse this?"

Nokia shares closed at 4.75 euros, having briefly fallen as low as 4.716 euros, their lowest in more than 13 years and compared with a peak around 65 euros set in 2000.

"Given the internal turmoil that will be generated by this news, it is increasingly difficult to see that Nokia can leapfrog one handset generation and be on par with the competition in early 2012," said WestLB analyst Thomas Langer.

In February, Elop had compared Nokia with a burning platform in a widely leaked memo when he unveiled a shift in strategy in smartphones by choosing Microsoft's unproven software over its own.

Elop said he had greater confidence in shipping the first Windows-based Nokia phones in the fourth quarter. Some analysts and investors, however, are worried a comeback could be difficult.

"The market share has kept sliding and that's never a good sign," said Hakim Kriout, portfolio manager at Grigsby & Associates in New York, who dumped Nokia shares earlier this year. "They were in a leadership position for a long time and once you lose that position, chances are you'll never regain it."

However, Kriout also said Nokia's business may not be as bad as the latest sell-off suggests. "Traders are looking for a bottom. If you look at the shares now, and if you think it goes back to 8, then that's a pretty good return. It's really about when we're going to see things stabilize."

Tuesday's warning comes a month after Nokia said it would cut 7,000 jobs and outsource its Symbian software development unit to cut costs.

Elop is the first non-Finn to run the company, which evolved from a rubber boots-to-TVs conglomerate into a global mobile phone maker in the 1990s.

(Additional reporting by Jussi Rosendahl in Helsinki; Niklas Pollard and Patrick Lannin in Stockholm; Editing by Andrew Callus and David Holmes)
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California may review AT&T/T-Mobile USA deal

2011-05-27T15:25:00.000-07:00

NEW YORK (Reuters) - California regulators may open a formal examination of AT&T Inc's proposed $39 billion purchase of T-Mobile USA, a move that could delay or add conditions to approval of the deal.

If successful, the deal would create the largest U.S. mobile phone service.

To complete the deal, which many consumers and rivals including Sprint Nextel are opposing, AT&T needs approval from the U.S. Department of Justice and the U.S. Federal Communications Commission, the telecommunications regulator. State regulators can block a merger within their state.

The California Public Utilities Commission told its staff, in a meeting on Thursday, to open a proceeding to gather information about the merger for the state regulator to consider at its next voting meeting on June 9.

The commission said it wants information about the merger proposal "in light of relevant state law and public policies."

State regulators can block a merger but more typically, they tend to impose conditions for approval that are specific to the needs of that state, experts said.

Because California is such a large state, a rejection there "would sabotage the deal to a large extent," according to Bert Foer, head of the American Antitrust Institute but he added that it was more typical for states to negotiate with the federal regulators.

State reviews could also affect the timing of a deal as a merger would not close until all the reviews were competed, according Stifel Nicolaus analyst Rebecca Arbogast.

AT&T has notified California, Arizona, Hawaii, West Virginia and Louisiana about the deal. Louisiana has already said it would investigate. Sprint had asked West Virginia, California and Louisiana to review the deal.

Sprint and Leap Wireless say the deal would make the U.S. wireless industry less competitive while consumers have told the FCC that they are worried the deal will result in higher prices.

AT&T has argued that the acquisition of T-Mobile USA, a unit of Deutsche Telekom, would help it to provide a better service by allowing it to expand its network in states like California more quickly than it could have otherwise.

AT&T notified the California commission about the proposed deal on May 3 and the deal would have been deemed approved if the regulator had taken no action 30 days later.

Lane Kasselman, a spokesman for AT&T said the company

is "confident in the merits of this deal and that regulatory approvals will be obtained" after the reviews.

The top executives from AT&T, T-Mobile USA and Deutsche Telekom have defended the deal at Senate and House hearings where Republicans and Democrats expressed skepticism about the benefits of the deal to consumers.

(Reporting by Sinead Carew in New York, Diane Bartz in Washington and Poormina Gupta in San Francisco; editing by Derek Caney)
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Lockheed network suffers major disruption

2011-05-26T16:25:00.000-07:00

By Andrea Shalal-Esa and Jim Finkle

WASHINGTON/BOSTON (Reuters) - Lockheed Martin Corp, the Pentagon's No. 1 supplier, is experiencing a major disruption to its computer systems that could be related to a problem with network security, two sources familiar with the issue said on Thursday.

Lockheed, the biggest provider of information technology to the U.S. government, is grappling with "major internal computer network problems," said one of the sources who was not authorized to publicly discuss the matter.

A second source, who also asked not to be identified, said the issue was "affecting a lot of people" at Lockheed, maker of the stealthy F-22 and F-35 fighter planes and other critical weapons systems.

Lockheed, which employs 133,000 people worldwide and had $45.8 billion in revenues last year, said it does not discuss specific threats or responses as a matter of principle, but regularly took actions to counter threats and ensure security.

"We have policies and procedures in place to mitigate the cyber threats to our business, and we remain confident in the integrity of our robust, multilayered information systems security," said spokesman Jeffery Adams.

Big corporations -- especially government contractors -- keep matters of internal security secret and rarely publicly disclose problems in securing their networks.

Yet companies do occasionally reveal such attacks, sometimes forced by financial disclosure laws or by the large impact on customers.

Sony Corp, for example, last month disclosed that hackers had accessed personal data of some 100 million customers and was forced to shut down its PlayStation Network online gaming system.

The sources said Lockheed employees were still able to use mobile devices to access their company email accounts.

The slowdown began on Sunday after security experts for the company detected an intrusion to the network, according to technology blogger Robert Cringely. He said it involved the use of SecurID tokens that employees use to access Lockheed's internal network from outside its firewall,

A spokesman for EMC Corp, whose RSA division makes the tokens, declined to comment, saying it is company policy to never discuss security issues affecting specific customers.

EMC disclosed in March that hackers had broken into its network and stolen some information related to its SecurIDs. It said that the information could potentially be used to reduce the effectiveness of those devices in securing a customer's network.

Steve Winterfeld, cyber technical lead at TASC, an advanced systems company spun off from Northrop Grumman Corp, said RSA had not provided any details of how hackers broke into its network, which meant the hackers could have used the same method to attack other corporations.

He said TASC and other companies were extremely concerned about the breach, which meant that the SecurID tokens could no longer be viewed as completely secure.

"You have no idea how many people are freaked out right now," Winterfeld told Reuters. "TASC is no longer treating the RSA device as if it were as secure as it was beforehand."

MONITORING CENTER

Loren Thompson, chief operating officer of the Lexington Institute, and a consultant to Lockheed, said the company monitored every node on its vast global computer network from a large operations center in a Maryland suburb near Washington, D.C.

"If it sees signs that the network is being compromised by outsiders it will shut down whole sectors of the network to protect information," Thompson said.

He said Lockheed had advanced networking monitoring tools that gave it a "much better understanding of their systems' status than most other organizations, including the Department of Defense."

He said the incident underscored massive challenges faced by corporate and government computer networks in "an age where everybody has access to ubiquitous digital communications."

Lockheed has been a frequent target of cyber attacks by individual hackers and foreign governments, said one industry executive, who was not authorized to speak publicly. "The Chinese had been after them forever," this executive said.

Winterfeld noted that both China and Russia had developed stealthy fighter jets sooner than expected, raising questions about whether those countries had penetrated U.S. networks involved with development of U.S. stealth technology.

Lockheed teamed up this month with Carnegie Mellon University to open a new cyber laboratory in Pittsburgh.

At the time, Rick Ambrose, president of Lockheed's information systems division, said potential cyber attackers were "getting smarter, faster, and more sophisticated every day."

The company has been working to help accelerate response times, protect smartphones, and pinpoint potential vulnerabilities in government and corporate networks.

(Reporting by Jim Finkle and Andrea Shalal-Esa; Editing by Tim Dobbyn)
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Apple fights fake anti-virus software vendors

2011-05-25T16:34:00.000-07:00

BOSTON (Reuters) - Apple Inc is fighting what security experts say may be the most pernicious types of computer virus to ever target its line of Mac computers.

The company has issued a security advisory warning to customers about a recent scam that infects Macs with malicious software that wrongly tells them their computer is infected with a virus. The ultimate goal is to get credit card numbers and other valuable personal information.

It is one of the first major campaigns that cyber crooks have launched against Mac users. To date, criminals have focused on writing malicious software for machines running Microsoft Corp's Windows operating system, which inhabits more than nine of every 10 personal computers.

But as Macs have grown in number, they have become more attractive targets.

The fake anti-virus malware is downloaded when people click on links from tainted search engine results for popular queries, according to anti-virus software maker McAfee Inc. It also spreads when users click on links to malicious sites that might be included in emails, Tweets or Facebook messages.

Apple said it will issue an update for its Mac operating system "in the coming days" that will automatically find and remove malicious fake anti-virus software. It will also warn Mac users when they download such programs.

In the meantime, Apple has issued advice on how users can clean up machines that have been infected by the malicious software, which goes by names including MacDefender, MacProtector and MacSecurity. (http://support.apple.com/kb/HT4650)

(Reporting by Jim Finkle; Editing by Richard Chang)
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Exclusive: SEC wasted $1 million on data storage, watchdog says

2011-05-24T16:06:00.000-07:00

By Sarah N. Lynch

WASHINGTON (Reuters) -The Securities and Exchange Commission wasted $1 million on virtual data storage it bought in 2008, the agency's internal watchdog said, part of a series of investigations into the agency's procurement practices.

SEC Inspector General David Kotz is also expected to unveil soon the findings of a probe into the SEC's leasing process, after the agency was forced to renege on a plan to rent 900,000 square feet of office space because it failed to secure additional funding from Congress.

The findings could provide ammunition to some Republican lawmakers seeking to deny extra money for the SEC in an effort to starve regulators of funding to implement the Dodd-Frank financial overhaul law.

The SEC has asked Congress to boost its budget by $222 million, or 16 percent, to $1.407 billion for fiscal 2012 that begins Oct 1.

In the December report, Kotz investigated the SEC's acquisition of data storage technology, which included items from Apple Inc. and virtual storage provided by a firm called Cloverleaf Communications, later acquired in 2010 by Dot Hill Systems.

The report, dated December 14, 2010, was obtained by Reuters through a Freedom of Information Act request.

Kotz uncovered numerous problems, from the equipment itself to the procurement process, which occurred in the summer of 2008, before Mary Schapiro became chairman of the SEC.

According to the investigation, an Apple salesman convinced the agency that Cloverleaf could provide a cheaper solution to the agency's data storage and backup woes.

Although there were other companies that offered similar products, Kotz said the SEC violated federal contracting procedures by securing a no-bid contract with Cloverleaf, a company with which the SEC had no experience. Kotz said the contract actually proved "to be more expensive than other, better-known and less risky alternatives."

He also found the SEC improperly shared budget information with Apple and went ahead with purchases before getting proper approval and before performing reviews.

In a statement, SEC spokesman John Nester said the agency agrees with Kotz's findings and is "taking steps to improve our policies and controls over purchases of information technology solutions, including pre-purchase review by management's technology and business oversight committees."

Representatives of Dot Hill and Apple did not respond to requests for comment.

The SEC was later beset with problems when it tried to actually use the equipment, Kotz said, adding that "bugs" in the installation were not worked out and the project "quickly went downhill from there."

Later, when some SEC staff sought to bring the problems to the attention of a supervisor, staff told Kotz the supervisor told them "this information doesn't leave this room" and then got up and left the room.

(Reporting by Sarah N. Lynch; Editing by Tim Dobbyn)
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Analysis: Sony's breach a hiccup to online game phenomenon

2011-05-24T04:46:00.000-07:00

By Liana B. Baker

NEW YORK (Reuters) - When service was finally restored to Sony Corp's PlayStation Network earlier this month, millions of customers rushed back to it, impatient to get back to battling friends in sports or shooter games.

It was hardly the response many had expected after a major security breach, one that shut down Sony's games network for nearly a month in the United States and exposed the personal information of more than 100 million customers.

While the Sony incident has made headlines and produced lawsuits, it has also made clear that security worries are not about to derail the up-and-coming online gaming industry.

"Some gamers are more concerned about the lack of online access than a personal information breach," said Ted Pollak, portfolio manager of the video game industry focused Electronic Entertainment Fund.

Pollak said that for many online gamers their connection to the multiplayer experience, playing games with friends over the Internet, is a significant part of their life and having it taken away is no small matter. It is analogous to a sports fan not being able to watch sports on television.

To tap into that passion, video game publishers are pouring millions of dollars into their online offerings. Some virtual worlds, such as World of Warcraft, are already teeming with 12 million players.

"Online gaming is still in the hyper-growth phase," said Sterne Agee analyst Arvind Bhatia. "Even if Sony's breach makes online gaming suffer a bit from this, we won't notice it because growth rates are so strong."

Sony estimated on Monday that the outage caused by hackers who broke into the system and stole personal information from users will cost the company $170 million in profit this year. The network is still offline in some markets.

But Sony's financial pain is small compared to what the video game publishers are raking in from online games. Activision Blizzard said its revenue from digital channels reached $428 million last quarter while Electronic Arts reported its digital revenue was $211 million last quarter and should increase by 20 percent next year.

UNFAZED BY HACKERS

Sony is far from the only games service to deal with security problems.

In 2007, Microsoft Xbox Live Service faced criticism for being a hotbed for phishing attacks, which occur when users fraudulently pose as players' friends to extract sensitive information from them. Microsoft now lists guidelines for its users to follow, including common sense tips such as not sharing passwords and keeping physical addresses private. (Read them here: http://bit.ly/jHCLfG )

More recently, Square Enix, which makes popular online game "Final Fantasy," said in May that websites for one of its units, Eidos Montreal, had been attacked by hackers. More than 25,000 email addresses were stolen along with 350 resumes of job applicants.

Online gaming has taken measures to protect customers -- particularly their credit card information. Microsoft and Sony both sell prepaid cards for their online networks at stores such as GameStop Corp.

The cards were introduced so parents could let their children play games online without having them put their credit card information on the Internet. Today, they create a measure of protection for all users.

Nexon, a privately held company that specializes in online games, said it introduced prepaid cards in 2007, and saw a "gigantic lift" in sales.

"Our philosophy on payments is that we want you to pay the way that feels natural for you," said Min Kim, Nexon's vice president of marketing.

Kim said that people scared of fraud are more likely to turn to prepaid cards, which are sold in stores such as Target and Rite Aid.

"Sony's incident is unfortunate, but it's not going to stop people from going online," Kim said.

GameStop, the world's largest retailer for video game producers, still expects digital content to be one of its fastest-growing sales areas, company president Tony Bartel said in a recent interview.

While some gamers might think twice before heading online again, Sony's public struggles with security on its game network may have raised the profile of online gaming, he added.

Before the Sony breach, Bartel said many people had no idea there were 100 million people on Sony's game networks.

Sony's breach "raised awareness that there's a huge group of gamers out there and there's nothing but growth ahead." Bartel said.

(Editing by Paul Thomasch and Tim Dobbyn)
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Verizon eyes family data plans

2011-05-19T15:31:00.000-07:00

By Sinead Carew

NEW YORK (Reuters) - Verizon Wireless expects to offer family plans for data services supporting multiple devices including smartphones and tablet computers at some point in the future, according to a top executive of parent company Verizon Communications. (VZ.N)

Verizon Wireless plans to kick off pricing changes this summer by eliminating smartphone plans that allow unlimited Web access for a flat fee. It will replace them with tiered pricing that forces heavy data users to pay more for mobile data.

After this change the company will look to soften the blow by offering more options such as family plans for data services, Chief Financial Officer Fran Shammo told the Reuters Global Technology Summit.

While families can share a bucket of minutes for phone calls today, each family member with a smartphone has to pay $30 per month each for data services. If they own a tablet computer they pay another separate data fee.

"We had individual minutes for individual users. Then we eventually got to what we call family share where everyone in the family shares the same minutes," Shammo said.

"I think it's safe to assume that at some point you are going to have mega-plans (for data) and people are going to share that mega-plan based on the number of devices within their family. That's just a logical progression," he said, but did not provide a time frame for such mega-plans.

HIGH-SPEED IPHONE?

Like its rival AT&T Inc (T.N), Verizon is limiting usage of data services to avoid putting a strain on its network or increasing network costs out of proportion with monthly fees.

But since they are also dependent on data services for revenue growth, operators are still figuring out how to cap usage in a way that makes data services affordable enough for consumers to use devices other than phones on their network.

In February Verizon ramped up its competitive efforts against AT&T by launching a version of the Apple Inc (AAPL.O) iPhone, which had previously been exclusive to AT&T.

While Verizon has sold fewer iPhones than some analysts expected, Shammo said he was happy with sales of the "six-month-old phone" that only works in some countries.

When the next iPhone model launches Verizon will be able to offer it at the same time as AT&T. Verizon's version will also work in as many countries as AT&T's iPhone, which has global coverage, Shammo said.

Some customers held off on buying the first Verizon iPhone because they were waiting for a model that supports Verizon's high-speed wireless service, which runs on a new technology called Long Term Evolution (LTE).

Shammo said that even if the next iPhone does not support LTE, Verizon will have enough high-speed alternatives to sell.

"I think it's a bigger issue for Apple than it is for us," he said. "Depending on where Apple plays, that's where we'll sell."

PREPAID "IMPORTANT"

For voice services Verizon focuses mainly on postpaid customers who pay monthly bills and commit to a long term contract. It is also experimenting with prepaid services, where customers pay in advance but do not commit to a contract as this is the one area in voice services that is growing.

Until now Verizon's prepaid services have been uncompetitive with more specialist rivals and have made the biggest in-roads in the market by renting network space to prepaid provider Tracfone, a unit of America Movil (AMXL.MX).

The company has yet to decide if it will expand nationwide with a $50 per month prepaid plan it is testing in Florida and elsewhere, according to Shammo. He said Verizon would do what it "needs to do" in prepaid.

"We've always said we're a postpaid company," he said. "That doesn't mean that prepaid is not important to us."

Expansion of the prepaid plan would put Verizon into direct competition with smaller rivals such as MetroPCS (PCS.N) and Leap Wireless (LEAP.O).

Verizon Wireless is currently the top U.S. mobile provider but it will be leapfrogged by AT&T next year if AT&T gains regulatory approval for its $39 billion plan to buy T-Mobile USA, a unit of Deutsche Telekom (DTEGn.DE).

Verizon, which recently bought business services firm Terremark, may add to this deal with the purchase of boutique software companies worth less than $100 million, Shammo told Reuters.

Verizon is the majority owner of Verizon Wireless, its venture with Vodafone Group Plc. (VOD.L).

(Reporting by Sinead Carew, editing by Matthew Lewis)
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Apple updates iMac line with new processors

2011-05-03T14:59:00.000-07:00

NEW YORK (Reuters) - Apple Inc refreshed its lineup of iMac desktop computers with new Intel Corp processors that is says are up to 70 percent faster.

The new iMac line will also include new Thunderbolt ports that were introduced earlier this year in its MacBook Pro laptop line. Thunderbolt is an input/output technology that supports displays and devices.

Thunderbolt ports are similar to USB ports but about 20 times faster, according to Apple.

Apple said on Tuesday that the new iMac, which has quad-core Intel processors, is on sale online and its retail stores starting at $1,199.

(Reporting by Sinead Carew; editing by Gerald E. McCormick)
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Microsoft plans sweeping pay raises: CEO memo

2011-04-21T16:32:00.000-07:00

SEATTLE (Reuters) - Microsoft Corp plans to broadly raise salaries and stock awards to attract and retain top talent, Chief Executive Steve Ballmer said in an internal memo obtained by Reuters on Thursday.

Microsoft, which like Silicon Valley companies Google and Yahoo risks losing top employees to hot upstarts like Facebook, must improve the way it rewards and support its most talented staff, Ballmer said.

"Through our history, we have been THE place people came when they wanted to make a difference in the world through software, hardware and services," the chief executive said in a memo sent to all employees on Thursday morning.

"This is as true today as it has been at any time in our history, and the changes we're rolling out today will help ensure Microsoft continues to be the place that top talent comes to change the world."

The action follows Google's 10 percent increases this year. Microsoft plans, among other things, "important" compensation increases for divisions with fast-moving markets, including research and development and certain geographies.

All employees will have a portion of their stock awards shifted into base salary, according to the memo. Microsoft's shares are at the same level as 10 years ago.

The company will tie bonuses and stock awards closer to performance, with the review process also undergoing changes, Ballmer said.

Microsoft suspended merit-based pay raises for all employees two years ago, when it laid off 5,000 workers, or about 5 percent of staff, to cut costs. It brought back what it calls "modest" merit raises in 2010.

Last year it told employees they would have to contribute to health insurance for the first time, beginning in the next couple of years.

The changes will occur around September, according to the memo. Microsoft's shares closed down 0.9 percent at $25.52.

(Writing by Edwin Chan; Editing by Steve Orlofsky)
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Sony Ericsson battles for parts after Japan quake

2011-04-19T17:26:00.000-07:00

By Simon Johnson and Tarmo Virki

STOCKHOLM/HELSINKI (Reuters) - Cellphone maker Sony Ericsson is suffering component shortages following the Japanese earthquake and has roped in its bigger parents to give it more muscle in the fight for supplies with bigger rivals.

Chief Executive Bert Nordberg said there were shortages of displays, batteries, camera modules and some printed circuit boards due to the March 11 quake, adding the problem was stabilizing but would definitely have a bigger impact in the second quarter.

"We are now fighting for parts with bigger players," Nordberg told Reuters in an interview, adding the company was cooperating closely with its parent groups Sony Corp and Ericsson to garner more influence in talks with parts makers.

First-quarter results from Sony Ericsson, which only returned to profit a year ago after seven straight quarters of losses, showed the company staying in the black on the back of booming smartphone demand and cost cuts. Yet Nordberg's comments add to signals from other global companies on the continuing impact of the earthquake.

Earlier on Tuesday Toshiba Corp said its operating profit missed forecasts due to the disaster, while chip maker Texas Instruments Inc warned overnight of slower-than-usual quarterly sales growth as it scrambles to restart production.

Japanese component factors will also be in focus in reports from Apple Inc on Wednesday and Nokia Oyj a day later.

DELAYED ROLLOUT

Sony Ericsson had said in early April the March 11 quake was limiting volumes in its new smartphone offerings and delayed the wider launch of its neo model to the third quarter.

"The second quarter and possibly third will be difficult because of Japan," said Gartner analyst Carolina Milanesi.

Sony Ericsson has slashed costs -- including cutting around 4,000 jobs -- and refocused on higher-margin smartphones that link to social networking sites like Facebook. The share of smartphones in its sales rose to 60 percent from 40 percent in the previous quarter.

But analysts say it still takes too long for the group to bring new products to market and it has been left trailing by the likes of Apple's iPhone and smartphones from companies such as Samsung Electronics Co and HTC Corp.

IDC analyst Francisco Jeronimo said the group -- which dropped behind HTC to ninth-largest phone maker by volume -- risks remaining a niche player if it does not expand its offering beyond the top end of the market.

"They are not Apple. I do not see a bright future for them if they do not do more," Jeronimo said.

Sony Ericsson posted a quarterly pretax profit of 15 million euros ($21.3 million), beating an average analyst forecast for a loss of 24 million, but within a wide range of estimates.

Revenue missed forecasts as Sony Ericsson sold just 8.1 million phones in the quarter, below all expectations, and giving it market share of just over 2 percent, the lowest level since the venture was formed 10 years ago.

Shares in Ericsson were 0.1 percent higher at 76.55 crowns by 1317 GMT, in line with a slightly firmer European technology sector.

"These results point to a significant and ongoing impact on Sony Ericsson's supply chain and operations caused by the Japan earthquake, with shipments falling a considerable way short of expectations," said CCS Insight analyst Geoff Blaber.

"This is a challenging situation for Sony Ericsson, but with lowered operating expenses and continued improvement to gross margin, it is at least in a better position to weather the storm than it was 12 to 24 months ago," Blaber said.

(Editing by David Cowell and David Holmes)

($1=.7039 Euro)
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Top court hears Microsoft appeal on i4i patent

2011-04-18T15:01:00.000-07:00

By James Vicini

WASHINGTON (Reuters) - Microsoft Corp urged the U.S. Supreme Court on Monday to make it easier to challenge some patents as part of its appeal of a record $290 million jury verdict for infringing a small Canadian software firm's patent.

An attorney for the world's largest software company argued that the court should reject the long-held requirement that a defendant in a patent infringement case must prove by clear and convincing evidence that a plaintiff's patent is invalid.

Thomas Hungar, an attorney for Redmond, Washington-based Microsoft, said a lower standard should be used, which could make some patents more vulnerable to legal challenge while promoting innovation and competition.

An Obama administration lawyer and Seth Waxman, an attorney for the Toronto-based i4i, said Congress has accepted the standard in effect for at least the past 28 years, that it was correct and that it was based on long-settled precedent.

The Supreme Court justices questioned all three attorneys closely and gave no clear indication during arguments of how they would rule. A decision is expected by the end of June.

The legal battle stemmed from a federal jury's award of $290 million to i4i after finding Microsoft had infringed its patent relating to text manipulation software in 2003 and 2007 versions of Word, Microsoft's word processing application.

A U.S. appeals court upheld the award and the U.S. Patent and Trademark Office upheld the validity of the i4i patent. Microsoft continued to dispute those decisions, but removed the contested features from its current software.

In appealing to the Supreme Court, Microsoft said it wanted a new trial.

After the arguments, Loudon Owen, i4i's chairman, expressed confidence his company will prevail. "We thought it went very well," he said.

"Microsoft did not present either policy or legal reasons that would justify any changes to the law, particularly the sweeping change they now apparently seek," Owen said.

Several justices asked about a Supreme Court precedent from 1934 that could cast doubt on Microsoft's argument. "What do we do?" Justice Elena Kagan asked. "One answer to that question is we go with our prior precedent."

Justice Ruth Bader Ginsburg also cited the 1934 ruling and asked whether Congress had ever introduced legislation to change the standard. Hungar replied it had not.

Justice Stephen Breyer asked whether the current system protected not only inventions that deserve protection, but also those that may not deserve it. "We're trying to get a better tool if possible to separate the sheep from the goats," he said.

Justice Sonia Sotomayor asked whether the dispute could have been resolved with different jury instructions.

The case was heard by eight of the nine Supreme Court members. Chief Justice John Roberts, who owns Microsoft stock, recused himself from the case. If the justices split by a 4-4 vote, then the ruling against Microsoft would be upheld.

The Supreme Court case is Microsoft Corp v. i4i Limited Partnership and Infrastructures for Information Inc, No. 10-290.

(Additional reporting by Bill Rigby in Seattle; Editing by Tim Dobbyn)
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Apple to stay ahead in tablet boom: Gartner

2011-04-11T15:55:00.000-07:00

By Tarmo Virki and Miyoung Kim

HELSINKI/SEOUL (Reuters) - Apple's iPad will continue to dominate the surging media tablet market for years, with Google playing catch-up, research firm Gartner said on Monday.

Gartner said it expects 70 million media tablets to be sold this year and 108 million in 2012, compared with just 17.6 million in 2010.

Apple's share of the market will gradually decline to 47 percent in 2015 from 69 percent this year, while Google's share will rise to 39 percent from 20 percent now.

Google's Android has stormed the smartphone market, where it will become the No 1 platform this year, and it has emerged as the only viable solution for tablet-makers who do not own their own operating system.

Research In Motion's QNX platform, used in its soon-to-be-launched PlayBook tablet, will take the No.3 position on the market this year, with a 5.6 percent share. Gartner sees that rising to 10 percent in 2015.

"It will take time and significant effort for RIM to attract developers and deliver a compelling ecosystem of applications and services around QNX to position it as a viable alternative to Apple or Android," Gartner analyst Carolina Milanesi said.

"It will be mainly organizations that will be interested in RIM's tablets because they either already have RIM's infrastructure deployed or have stringent security requirements," she said in a statement.

DISTANT NO. 2 IN HARDWARE - SAMSUNG

Apple is estimated to have sold about 1 million iPad 2's in the first weekend of its U.S. launch early last month. By comparison, its closest rival in hardware, Samsung Electronics

may have sold a similar number of Galaxy Tabs in the past three months and sales growth is expected to remain weak.

Slow sales of Tab, coupled with aggressive pricing plans of iPad2, is pressuring profit growth at Samsung.

Samsung, the most aggressive contender to Apple with three different sizes of tablets, is still playing catch-up and analysts expect the firm, which uses Google's Android in its tablets, to increase marketing expenses to boost sales.

"Their biggest challenge is user interface, how they are going to make their devices any different from those of Motorola

or HTC," said Milanesi.

Samsung is widely known as one of the fastest followers in the fickle electronics industry. To better compete with Apple, Samsung redesigned its new 10.1-inch tablet, first introduced in February, in just weeks to make it the thinnest in the category after Apple set the trend with the slimmer iPad 2.

Samsung's follow-up models will be on the market in June at the earliest, three months after iPad 2's rollout.

"Expectations for tablets have driven Samsung shares since November, but it has so far failed to live up to that expectation. Whether Samsung's share can rise again will largely depend on how strongly its follow-up tablet models do in the market," said Lee Seung-woo, an analyst at Shinyoung Securities.

(Editing by Jon Loades-Carter and Erica Billingham)
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Google's Page makes first changes to management

2011-04-08T15:12:00.000-07:00

By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Google Inc (GOOG.O) CEO Larry Page, in his first major reorganization since taking the reins as CEO, moved to streamline decision-making at the key social network, mobile, Internet software and Youtube product groups.

Social networking chief Vic Gundotra, Android head Andy Rubin, Chrome senior vice president Sundar Pichai and Youtube head honcho Salar Kamangar have been given a direct reporting line to Page and greater autonomy, according to a source familiar with the matter who confirmed changes first reported in The Los Angeles Times.

Also given a direct line to Page -- who officially assumed his role on Monday -- were search senior vice president Alan Eustace and advertising chief Susan Wojcicki, the source said.

A Google spokesman confirmed that there had been a management reorganization at the company, but declined to provide details. The spokesman noted that it had been very clear when the CEO change was announced in January that Page was looking to streamline the way the company is run and to make clear lines of accountability.

Investors had predicted bold and aggressive moves by Page to whittle down red tape at Google, and a renewed focus on search, mobile and technological innovation, following a decade under the leadership of former CEO Eric Schmidt. But some feared Page, who cofounded Google while a computer graduate student at Stanford in 1998, would neglect the crucial CEO's task of managing the expectations of Wall Street.

The changes point to major areas of focus for the company, which dominates Internet search and advertising but is increasingly expanding -- with mixed success -- into social networking and mobile software.

Google is the world's No. 1 search engine and generated roughly $29 billion in revenue in 2010. But the company is facing increasing competition from social networking site Facebook and iPhone-maker Apple Inc. (AAPL.O)

The management changes at Google also come days after the departure of Senior Vice President of Product Management Jonathan Rosenberg, who according to the company had intended to leave in the next year or two regardless. Of the promoted executives, several had reported to Rosenberg.

Shares of Google were up 0.3 percent at $581.80 on Friday afternoon.

(Reporting by Alexei Oreskovic, editing by Matthew Lewis)
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Google offers $900 million for Nortel patents

2011-04-04T15:05:00.000-07:00

By Alastair Sharp

TORONTO (Reuters) - Global Internet giant Google has bid $900 million for a warchest of patents from bankrupt Nortel Networks, in an initial "stalking horse" bid that's expected to draw in higher competing offers.

Google, which runs the world's most popular search engine, wants the Nortel patents to help it fight a growing wireless patent war against well-armed mobile superpowers. The company has pushed its Android mobile phone software to the top of the wireless heap, attracting litigation in the process.

"Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories," Kent Walker, Google's general counsel, wrote on the company's blog.

Nortel, which filed for bankruptcy protection in January 2009, was a pioneer in wired and wireless network technology and the assets include some 6,000 patents and patent applications for wireless, data and optical networking, voice, Internet, semiconductors and other technologies.

"As the mobile market gets increasingly litigious it comes as little surprise that Google is interested in assets that could help it defend its Android mobile platform against rival patent claims," said Ben Wood, an analyst at CCS Insight.

Oracle is suing Google over Android, while Apple is fighting Taiwan's HTC in what is widely seen as a proxy attack on Android, which runs on HTC smartphones as well as devices from Samsung Electronics, Motorola Mobility and others.

More established mobile vendors have cross-licensing deals with each other. That keeps their patent fees low but makes entrance expensive for newcomers like Apple and Google.

INTEREST ROBUST

Interest in the Nortel patents has been robust, but a deal was been delayed as Nortel's liquidators and potential buyers haggled over price.

Other expected bidders include Chinese telecom network company ZTE, Ericsson, which bought most of Nortel's wireless operations, and RPX, which licenses patents on behalf of member clients for a fee.

"This is an unprecedented opportunity to acquire one of the most extensive and compelling patent portfolios to ever come on the market", Nortel's chief strategy officer, George Riedel, said in a statement.

The patent sale is a last gasp for Nortel, once a Canadian technology darling with some 90,000 employees and a market capitalization of more than $250 billion.

Nortel, which has sold most of its physical assets, said Google was chosen after multiple bidding rounds involving companies and consortia from around the world.

"The patent war is getting tougher and expensive," said IDC analyst Francisco Jeronimo. He said it was unclear how widely the Nortel patents have already been licensed.

Google's bid sets a minimum price for other bidders to use as a starting point for their own proposals.

Nortel will file the agreement to a bankruptcy court in Delaware and outline how it will run the auction, which it expects to hold in June.

($1=$0.97 Canadian)

(Additional reporting by Tarmo Virki in Helsinki; editing by Pav Jordan and Janet Guttsman)
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Apple clobbered by rare Wall Street downgrade, Japan looms

2011-03-16T14:20:00.000-07:00

By Edwin Chan and Noel Randewich

LOS ANGELES/SAN FRANCISCO (Reuters) - A rare Wall Street downgrade stoked fears that Apple Inc's torrid growth is slowing and sent its shares sliding for the second straight day as nervous investors ponder the impact on the tech industry from Japan's largest-ever earthquake.

The world's largest technology company lost about $14 billion of value on Wednesday after JMP Securities' Alex Gauna downgraded the stock, pointing to a sharp pullback in sales growth at Apple's largest Asian contract manufacturer as a sign that business was also slowing at the iPhone and iPad maker.

"There's a risk of complacency. The sell-side has gotten itself into a game of one-upmanship," Gauna said. Investors "should make sure that they're comfortable with the situation ... especially since there's just so much uncertainty right now."

He added: "We know that Japan as a supplier matters."

Apple's stock slide -- the largest single-day loss in almost nine months -- comes amid uncertainty about the impact from the largest earthquake to hit Japan.

While it accounts for 6 percent of Apple's sales and is a major source of components for its screens, many analysts said Apple wielded sufficient clout and a good-enough track record to secure critical components -- for now.

Apple shares ended down 4.5 percent at $330.01 in heavy volume, following a 2.3 percent slide on Tuesday.

The company, which last week launched its iPad 2 tablet to crowds of fans outside its stores, has lost close to $22 billion in value over two days.

Gauna downgraded Apple to "market perform" from "market outperform," based on signs of a severe slowdown in sales growth at Hon Hai Precision Industry Co Ltd, a contract manufacturer and subsidiary of Foxconn that is heavily reliant on Apple's business.

Covering Apple for less than a year, he is among just five of 54 analysts on Thomson Reuters I/B/E/S with a "sell," "hold" or "neutral" rating on the stock, which is a perennial market darling and mainstay of global portfolios.

In an apparent response to Gauna's report, Oppenheimer analyst Yair Reiner said Apple's contribution to Hon Hai's revenue -- about a fifth -- was "limited," and made light of attempts to correlate their performance.

Ticonderoga analyst Brian White said the shift toward the iPad 2 -- which hit store shelves March 11 -- meant a gradual ramp-down of original iPad output, which could in turn have taken the air out of Hon Hai's sails.

BLOWING SALES

JMP said year-over-year sales growth in Hon Hai slowed from 84 percent in December to 37 percent in January and 26 percent in February.

Before this week's sell-off, Apple's stock price had doubled over 18 months. Apple declined to comment on the recent drop.

Wall Street is accustomed to Apple blowing its own sales estimates out of the water. But Gauna warned that major technology companies' shares have been punished more severely of late for missing financial estimates.

Nervous analysts have worried for years that the stellar stock prices of technology giants like Apple could tumble back to earth, especially as competition intensifies for its hottest products, from the iPhone to the iPad. The tablet is expected to have sold 1 million units since its Friday launch.

Some top hedge fund managers cut their stakes in both Apple and Google Inc in the fourth quarter, according to a Thomson Reuters survey of filings of the "Smart Money 30," some of the largest stock-picking hedge funds.

But BTIG analyst Walter Piecyk said demand for the iPad 2 has proven strong enough -- so far -- to sustain the sort of rip-roaring growth Apple is known for.

"The past weekend showed once again why Apple is putting up more than 50 percent growth. Lines for the iPad 2 extended longer than even for the iPhone 4," he said.

But with the sturdiness of the global tech supply chain uncertain, investors may be choosing to play it safe for now with Apple, analysts said.

Japan is a major source of glass for displays used in smartphones and tablets and is home to around a fifth of the world's semiconductor production. Japanese factories producing everything from chips to car parts have closed following the earthquake and tsunami last week, threatening supplies to manufacturers across the globe.

The uncertainty over Japan comes as rivals from Google, with its Android smartphone software, to Motorola and its Xoom tablet, begin to vie for the attention of the same crowd that buys iPads and iPhones.

"This issue will be far-reaching across many of the leading tech (manufacturers), and Apple is also at risk," White wrote on Wednesday. But "Apple has enough pull in the supply chain due its size, supply agreements with up-front payments and success of its products to get more than its fair share of supplier output."

(Additional reporting by Jennifer Robin Raj in Bangalore; Editing by Gerald E. McCormick, John Wallace and Richard Chang)
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Hacker group releases BofA employee correspondence

2011-03-14T15:50:00.000-07:00

By Joe Rauch

CHARLOTTE, North Carolina (Reuters) - Anonymous, a hacker group sympathetic to WikiLeaks, released on Monday emails that it obtained from someone who said he is a former Bank of America Corp employee.

In the emails dating from November 2010, people that appear to be employees of a Balboa Insurance, a Bank of America insurance unit, discuss removing documents from loan files for a group of insured properties.

Neither the emails nor correspondence released by Anonymous indicate the reason behind the electronic record keeping discussion.

A representative of Anonymous told Reuters on Sunday the documents relate to the issue of whether Bank of America has improperly foreclosed on homes. The representative added that he had not seen the documents, but he has been briefed on their contents.

Consumer groups have accused major U.S. lenders of foreclosing on many homes without having proper documentation in place.

A BofA spokesman said on Sunday the documents were clerical and administrative documents stolen by a former Balboa Insurance employee, and were not related to foreclosures.

"We are confident that his extravagant assertions are untrue," the spokesman said.

The group's email release also includes correspondence between Anonymous and the former employee, in which the former employee described the bank as a "cult" and said the company is now intent on destroying his career.

"I'm well known throughout Bank of America," the former employee said in one email. "They saw to that when they showed everyone my picture and labeled me as a terrorist."

The documents are available at http://bankofamericasuck.com/, a website that was working intermittently early on Monday morning.

(Reporting by Joe Rauch; Additional reporting by Mark Hosenball in Washington, D.C.; Editing by Jon Loades-Carter)
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Apple iPad 2 to go on sale online first

2011-03-10T14:29:00.000-08:00

NEW YORK (Reuters) - Apple Inc will kick off online sales of its new iPad in the early hours on Friday ahead of its evening store launch of the tablet computer.

Consumers can start buying the iPad 2 on Apple's website at 4 a.m. ET on Friday while customers who want to purchase it in a store will have to wait until 5 p.m. (2200 GMT) that day, Apple said.

Apple's retail partners for the first iPad - Best Buy, Target and Wal-Mart Stores - will also start selling the iPad 2 at the same time.

Carrier partners AT&T Inc and Verizon Wireless will also sell the device. Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc, just started selling Apple's iPhone last month.

(Reporting by Sinead Carew; Editing by Tim Dobbyn)
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Microsoft's Bing launches deals feature

2011-03-04T15:56:00.000-08:00

(Reuters) - Microsoft Corp's Bing search engine said it launched 'Bing deals' for both the desktop and mobile, allowing consumers to find the best deals locally, a service that will pit it against daily deals website Groupon.

The company has partnered with The Dealmap, a service provider that allows people to find and share the best local deals.

It said the feature provides access to 200,000 offers in 14,000 cities.

Bing deals compiles leading offers from Groupon, LivingSocial and Restaurant.com, Bing's director of product management said in a company blog post.

Competition has been intensifying for companies like Groupon, with the likes of LivingSocial expanding in the same space and a plethora of websites springing up globally that specialize in deals for niche markets.

(Reporting by Isheeta Sanghi; Editing by Hans Peters)
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