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Filed under: Techland
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]]>First up: BiologicsMD
Developing OsteoFlor, a new prescription medication for treatment for Osteoporosis.
"You're not looking at a hip fracture, you're looking at a death sentence." --Jerry MORE
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First up: BiologicsMD
Developing OsteoFlor, a new prescription medication for treatment for Osteoporosis.
"You're not looking at a hip fracture, you're looking at a death sentence." --Jerry Tenenbaum, MD Mount Sinai Hospital
Existing drugs: Antiresorptives (Boniva, Fosamax, Reclast; doesn't grow new bone), Anabolics (Forteo; grows new bone but requires shot every day, expensive)
In animal studies: OsteoFlor 13% increase in bone density vs. 5% for Forteo
3X efficacy, fewer side effects, less frequent dosing
Patent pending, 60 claims, three independent reviews (patentability, freedom to operate)
Annual prescription sales for osteoporosis: $2B in U.S.; $9B WW
Founders have already been awarded $18M in federal grant funding for other projects
Outsource: manufacturing, preclinical testing, clinical trials
In-house: assay development, regulatory
Total capital required: $5.3M
Exit strategy: Patent cliff+ Pipeline gap --> Demand for biotech --> Proven industry strategy
Angel Investors 4.5 years = 45X ROI
Now the questions:
Target group? Advanced users, history of fractures, low bone score, history of osteoporosis
How did you come up with your pricing? It's $4500 per shot/per year. Forteo currently costs $8500. This fits within industry expectations.
Possible application to chemo-induced alopecia.
Second team: Ambiq Micro
Future of computing: ubiquitous computing --> most energy efficient chip will win
Improve battery life, lower cost to user
World's most energy efficient microcontroller
4-10X less active energy than today's low power MCUs
25-130X less sleep energy than today's low power MCUs
Integrates into existing software
Competitive Analysis: Smart label application, 19X greater battery life
MCU market $13.2B, 5.5% CAGR/Low Power MCU $2.7B
Fabless: Chip design, sales in-house; fabrication, packaging, testing outsourced
Over $5M spent on research to date, 4 research prototypes 2005-2009
Goal: 40 customers, $12M net income on revenue of $41.2M by 2015
Seeking up to $10M: $1M seed round; $6M A round; Possible B round
Positioning for IPO!!! But could be acquisition target for silicon provider with gap in low power portfolio...
Question time
Doing customized MCUs is a pain. Uphill battle between Texas Instruments, MIT. How will you compete? Re: Texas Instruments, we are orders of magnitude lower power at same performance.
How much are you selling chips for and how does it compare? $1.87 per packaged microcontroller, parity with current market.
What about IP? Right now we have the exclusive licensing option; we will finalize agreement over next two months.
Who are your current investors? Letter of intent from entrepreneurs--no history in semi but successful exit experience.
It takes $50M to do anything in this field per KPCB's Bill Joy. Would you take more capital to move faster? Yes. We're testing waters to see what appetite is for semiconductor investing. Typical semi startup isn't as far along development line as we are.
You're two years away from selling a chip. Industry will change. What multiple over competitors do you need to be at to succeed? 10X. We have a lead but we must continue to innovate and come to market with a chip that's 10X better.
Third team: GlucaGo
"The Future of Drug Injection"
The GlucaGo team fields questions from judges during the finals. Photo: Jessica Shambora
Device with two chambers: powder drug and liquid
No need for refrigeration, intuitive to use, engineered to fit existing drug filling processes
Developing drug is risky and expensive, so pharma adds unique delivery systems: syringes, pre-filled syringes, auto-injectors = all liquids
Fourth class: reconstitution devices = difficult and unsafe to use
Solid barrier between drug and liquid is what eliminates need for refrigeration
Cannot be refilled or reused, especially important to developing countries
Potential markets: emergency situations (aspirin, glucagon), vaccine delivery (requires refrigeration, trained health care provider), protein drugs (must be injected, complex molecules that degrade rapidly)
Hep C market: $2.7M WW, 20,000 new cases yearly U.S.
Partner with drugs due to come off-patent
Need $500K for regulatory approvals
Relevant parallel: Intelliject sublicense to Sanofi-Aventis: $25M up front; $205 in possible milestone payments
Need CEO to leverage contacts.
Question time
What about competition from other drug delivery i.e. internasal, subcutaneous/patches? Internasal degrades proteins. Subcutaneous: air bubble forms and hits side of impact area, no needle but still pain. More cost too. Patches prohibitive on molecular size going through the skin.
Doesn't drug in chamber need to be approved too? Mechanism of action needs to be validated, not drug in the chamber.
How did you land on your specific IP? We found holes is what had been done and identified that breaking the solid barrier had not been patented.
What about drug loss? Our device injects everything that's in the chamber.
Is there a good history of equity value in supplying the delivery system? We are selling licensing package rather than supplying drug makers directly. They have their own subcontractors they work with.
Are pharma companies willing to incur cost of approval for drug container? Yes, they have confirmed their willingness to do so.
Fourth team: Rebellion Photonics
The home team from Rice. Four women, one guy!
Product = camera that can "see" chemicals
Established technology, but now you can bring this outside the lab. Portable and instant.
Video capable, battery powered, easy to use LCD screen.
Every material is made up of chemicals. All chemicals reflect light. Camera can read this reflection like a bar graph.
Market $1.6B
Competitor Ocean Optics can only capture a point in an image
Target customers: drug companies, food manufacturers, energy industry
Need to develop software for different customers to register presence of chemical and amount
Device does not rely on filters; more sensitive and adaptable
How we make $: hardware, service contracts, software updates --> recurring revenue
1st target market: security; secondary: pharma, energy industry
Already received $3M from NIH in 2007
Seeking $1.25M VC funds
Does technology work? Validation in 3 journals, 3 customers, 1st step of DOD intake
Difficult to make? One critical part. Easy for us to make; not for others. Rest off the shelf.
Initial sales? Market penetration can be slow because you have to educate customers. Since publishing in journals, customers have already started coming to us.
Gross profit margins of over 50%; 30X-45X ROI
Here we go with questions...
How does it work in layman's terms? Our big breakthrough is making it a full 16MP camera
Use diamond-turning machine to make critical part. Machine costs about $350,000.
Can you detect gases? Yes with active light system. So we would include a laser.
Is it plug-and-play or does it need to be integrated? Yes it is plug-and-play.
Software algorithms: one-off investment, once we create software algorithms we just need to get chemical libraries which are minimal cost because that's public information. They've optimized algorithms already since the technology has been around for processing graphics (like in video games).
Too many three-part questions for these folks! Someone needs to come up with a business to deal with these three-part questions...I can't keep track of them. Kudos for this team for doing so.
Differentiation: Patented ability to do 3D zoom. We have strong IP with the component that breaks apart the image.
Yes we can (!) ...do spectral unmixing.
Time's up! Next group: Reveal Design Automation
Leading chip design firms such as Intel and IBM are shifting to a new approach to finding bugs in their chips. But new approach isn't fast enough, can't be done until the end of the design process, only works on small designs.
"We solve that problem."
Past approach: Simulation approach requires annually defining specific test cases.
Chip complexity grows exponentially with each generation; too much effort for simulation to keep up.
The future: Formal verification, which uses a systematic proof-based approach.
We offer the best of both processes: complete coverage, short setup, continuous check, large designs.
Remove unnecessary information from the design.
Proven in academic and real world design and specifications; 6 years R&D.
Big four EDA tool vendors have integrated tool chains.
Some have standalone supplement and replacement tools.
Industry standard data formats, no technical barriers.
Acquisition of standalone tools into integrated tool chain.
$800M target market
Market price for formal verification software: $200K per chip design team.
Relationships: ARM -- prototyping Reveal and preparing to release tool; Intel -- negotiating a product trial phase for Reveal.
Exit via acquisition by big four EDA vendor by 2017.
Total ask through 2015: $15.5M
Questions--these should be toughies...
What happens to seed investors return if you exit prior to B round? We'll work with that seed investor to make sure they get a fair return for the risk.
Raise more money faster, exit sooner? Throwing more money at is not going to advance adoption cycle.
(Wouldn't it be cool if someone here just raised their hand and offered the money to one of these teams?)
"Maybe I'm slow, but does the product actually work today? If so, why aren't you going out and selling the product?" We're working on validating the prototype with ARM.
What about a strategic partner vs. a financial partner? Our customers don't deal with underlying technical challenges in formal verification space. They don't have intelligence in software development. On tool chain support side, their collaboration has simplified this.
Final group: OrthoIntrinsics
Another home team from Rice.
First measure of hand muscle weakness. Concentrating on muscles that let you tie your tie, use your chopsticks (laughs from the audience...).
Product: Peg Restrained Intrinsic Muscle Evaluator (PRIME)
Existing competition: manual muscle test, Rotterdam Device, hand-held dynamometers (not designed for hands).
Physicians can use for diagnosis; Surgeons for decision-making; intervention; therapists for rehabilitation.
"We do have adult supervision." Cue the advisors...
Class II non-significant risk device, approved along 510(k) pathway.
Watch out insurance companies: Can be used to justify health claims.
Price: $7,000 based on competitors and value; 200,000 addressable clinicians.
Recognized risks: slow adoption, slow sales growth, competitor entry.
This field has seen limited innovation in the last 30 years.
Initial ask: $500K
Canary in mineshaft for total neuromuscular function
Questions
FDA strategy: how long is it going to take? We don't attempt to diagnose, treat or mitigate disease. We can get initial filing fairly quickly. Documentation and testing ($7,000-8,000).
Convince me you are doing this full-time? I developed this technology while I was a Rice student. We're better suited for technical engineering side. Best for investors to select someone to fill sales, executive roles with more experience. We've divided labor so we can each add value in our own way.
Where are quotes from carpal tunnel doctors saying "This is the most awesome thing, I have to have it'? We have worked with clinicians, therapist developing our product. Therapists, after they see are demos, say, "I will purchase your device."
We want to be stethoscope for hand injury market.
What's the IP patent status? In negotiations with office of tech transfer. Hope to have an agreement with Rice within two months.
What about consumer market? It's outside our core competency but we've thought about it. We can command premium with clinicians now and don't want to dilute that.
Explain revenues beyond initial purchase of device? Sensitive instrumentation sensor. We'll be handling that service contract. Also collect and monetize patient data.
And that's it! Tune in later tonight for the results!
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A hallway at Rice's Jones Graduate School of Business. Photo: Jessica Shambora
Rice is ranked No.5 among graduate entrepreneurship programs in the U.S. by Princeton Review. Wonder if it has anything to do with these fancy lockers? What do they keep in there? --Jessica Shambora
]]>During the first round of competition at Rice on Friday, one audience saw business plans ranging from a Netflix for maternity wear, to a better tool for identifying bugs in semiconductor chips. The assembled judges, including investors, attorneys and past winners, asked questions and offered feedback. Here are some key lessons that emerged:
1. Action speaks louder than words: Even if it's very basic, do an alpha test to MORE
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During the first round of competition at Rice on Friday, one audience saw business plans ranging from a Netflix for maternity wear, to a better tool for identifying bugs in semiconductor chips. The assembled judges, including investors, attorneys and past winners, asked questions and offered feedback. Here are some key lessons that emerged:
1. Action speaks louder than words: Even if it's very basic, do an alpha test to prove traction with customers before presenting. –Jeff Mullen, 2009 RBPC winner and CEO, Dynamics Inc.
2. Demonstrate your prototype at the beginning of the presentation—don't wait until the Q&A. –Gautam Ghandi, 2004 RBPC winner and now leading business development efforts for Google India
3. Five years is too long to project out. I don't know what's going to happen next year. Stick with what you can reasonably estimate. –Terry Hunt, entrepreneur
4. Don't rely too much on your advisory board for essentials, like operating experience. Acknowledge your gaps up front. –Carl Walker, Houston-based angel investor
5. Show how your product will fit into existing systems and processes with minimal disruption to customers. –Edward Olkkola, managing director, Teakwood Capital
]]>The Rice Business Plan Competition kicked off in Houston Thursday night with an elevator pitch contest. All 43 teams had one minute to pitch their plans. Each asked for a specific dollar amount; some suggested a valuation and exit strategy; a few even promised 40x returns!
While there were designated judges for the competition (including VCs and high school students), audience members with the event's iPhone app got to MORE
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The Rice Business Plan Competition kicked off in Houston Thursday night with an elevator pitch contest. All 43 teams had one minute to pitch their plans. Each asked for a specific dollar amount; some suggested a valuation and exit strategy; a few even promised 40x returns!
While there were designated judges for the competition (including VCs and high school students), audience members with the event's iPhone app got to play along, rating the teams as they presented. One student was alarmed: "Will we see our scores in real time?" Fortunately, they were spared. Winners of the people's choice award, and all other contests will be announced Saturday night.
Among the teams presenting Thursday and over the next couple days, there are some common themes.
Medical tools and tests stack the deck, from laparoscopic devices to cervical cancer diagnostics. One team, Urovention, is developing an endoscope for urology surgery. It was hard to miss a demo of their prototype with a piece of raw chicken, accompanied by some stirring visual aids.
A demo of Urovention's prototype. Photo: Jessica Shambora
Seafood farming is also hot. Deli Worm wants to feed worm meals to farmed fish. Blue Revolution Sea Farms plans to grow and sell cobia. AquaREAL promises to efficiently cleans the water in shrimp farms.
Waste processing: Ancora Energy believes microwaving trash can produce power. Biogas & Electric will reduce the Nitrous Oxide byproduct that results when disposing of methane gas. (This team also posted a persuasive tweet during the earlier TwitPitch competition: MOO POO PEE YEW! Biogas exhaust & NOx rot the atmosphere- patent pending BioCat saves the world. See Biogas & Electric @ Rice Bplan Competn.)
Most presenters invoked classic sales pitch gimmicks, starting with a personal anecdote or question. Two teams took the same approach in acknowledging their shortcoming: This business is not sexy. No offense to the turbines and compressors out there.
Stay tuned to find out whether an unsexy business can take home the $325,000 grand prize at the "Superbowl" of business plan competitions.
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]]>By Josh Hyatt, contributor
Call it April Madness. In just a few days, 42 teams of student entrepreneurs will compete in a grinding competition to win a record-busting $1 million in cash and prizes.
Meet the 42 teams who have been chosen — out of 420 entries — to face off in Rice University's Tenth Annual Rice Business Plan Competition, the country's largest and wealthiest graduate-level MORE
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By Josh Hyatt, contributor
Call it April Madness. In just a few days, 42 teams of student entrepreneurs will compete in a grinding competition to win a record-busting $1 million in cash and prizes.
Meet the 42 teams who have been chosen – out of 420 entries – to face off in Rice University's Tenth Annual Rice Business Plan Competition, the country's largest and wealthiest graduate-level business contest. "Rice has not only become the richest competition, but it has surpassed the others in terms of prestige," says Joseph Picken, executive director of The Institute for Innovation and Entrepreneurship at UT Dallas. "For student entrepreneurs, this is the World Series and the Superbowl."
Picken has attended four out of the last five contests, accompanying a student-run startup – including one that has since raised $16 million. But this year "our folks didn't make the cut," he says. The surviving 42 were chosen based on their executive summaries, and are grouped in six categories: Life sciences, information technology, energy, green tech, social and other.
If history is any guide, the business plans will be put to even greater tests after the contest. From last year's batch, 80 percent are forging ahead with their businesses – a percentage that has risen every year. Over the past nine years, 95 of the 270 competitors have gone into business, raising more than $220 million, by the university's count.
Every startup that did earn an invitation to this weekend's event will be rewarded with at least $500. But which team of aspiring entrepreneurs will walk away with a Grand Prize valued at $380,000? Whose plans will the 200-plus judges – entrepreneurs, investors, and other business leaders – deem worthy of one of the five $100,000-plus awards? New prizes this year include one for the most succinct TwitPitch (prizes are $14, $140 and $1400, reflecting Twitter's iroclad140-character limit), $10,000 worth of mentoring for the winning social-venture plan and a NASA-sponsored $50,000 "Game Changer" award for commercial space innovation. There's also a $10,000 award for the most courageous female entrepreneur.
The campus-based contest begins with a $1000 "elevator pitch" competition on Thursday night, with a team member getting just 60 seconds to win over a judge. After two rounds of pitching investors, the final contest comes on Saturday afternoon. The Grand Prize includes a mix of cash, equity investment, incubation and mentoring services.
With the economy emerging from the recession's shadow, this year's contest should also provide valuable insight into where fledgling entrepreneurs – and seasoned investors alike – see the most promising hotspots for creating value. And their vision extends beyond the U.S. market; seven of the teams are international. The three-day skirmish begins April 15. Click here to arm yourself with the information you'll need to play favorites.
The competition is hosted and organized by the Rice Alliance for Technology and Entrepreneurship, the school's flagship initiative devoted to supporting entrepreneurship. This year, Fortune is also co-sponsoring the contest.
Be sure to check the site during the course of the competition, from where we'll be filing live posts and Tweets talking with the students, advisors and judges who are participating.
]]>Nintendo seems to have bucked the recession. The Japanese video game manufacturer has doubled November sales of the Wii in the U.S. from a year ago, according to NPD's latest release on gaming sales.
The demand for the Wii remains strong since the game console's debut two years ago. The company MORE
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By Yi-Wyn Yen
Nintendo seems to have bucked the recession. The Japanese video game manufacturer has doubled November sales of the Wii in the U.S. from a year ago, according to NPD's latest release on gaming sales.
The demand for the Wii remains strong since the game console's debut two years ago. The company sold a record 2 million Wiis last month, higher than the previous 23 months. Nintendo (NTDOY) has significantly increased shipments of the red-hot Wii for this holiday season after dealing with a shortage last year. Last November Nintendo sold 981,000 Wiis.
Analysts were taken by surprise by how well the $249 console has performed in a flagging economy. "Two million? You sure? This is mind-boggling," said Michael Pachter, a top industry analyst for Wedbush Morgan Securities. Pachter had predicted sales of 1.4 million Wiis. "At least Nintendo is meeting demand."
That's something the company didn't manage to do last year, when it underestimated the craze for its consoles. Nintendo had to offer IOUs for the Wii last December and ran out of the DS, its handheld console, before Christmas. This time around, Nintendo increased its holiday inventory for the Wii by 50% and 10% for the DS for the shopping season. November sales for the touchscreen DS, which launched four years ago, tripled to 1.6 million from October '08 sales, according to NPD.
The NPD numbers also looked strong for the Xbox 360 (MSFT). A recent price reduction to $199 for its entry-level version, exclusive titles like Gears of War 2 and Fable 2, and a major software upgrade moved 836,000 Xbox consoles in November. Gears of War 2 was the top seller for games with 1.6 million copies sold.
Sony (SNE) is struggling to pick up steam with the PlayStation 3, which remains the priciest of the three console makers. Sony sold 378,000 units of the PS3. The company released Home, its sophisticated virtual reality world, on Thursday to attract more gamers to the PlayStation platform.
Reports that consumers are drastically cutting back on spending hasn't stopped nearly 15 million people in the U.S. who have bought a DS or Wii this year. "The consumer is voting with their wallets and pocketbooks," said Nintendo of America president Reggie Fils-Aime. "That the Wii and DS represent the best entertainment value in the marketplace explains why these strong sales are happening."
Pachter says it's because people are now choosing a Wii over a latte. "There's a solid middle class that's going to make substitutions to buy games. Now it's buy a Wii and don't eat out for a month, or don't take that ski trip," he said. "Or cut out Starbucks."
]]>These days, getting a large handout from venture capitalists is rare. It's even tougher when your startup needs a lot of cash to compete with Google.
Kosmix, however, has defied the odds. In late October, the plucky startup raised $20 million, led by Fortune's parent company Time Warner (TWX), by assuring investors that Google is not the only way to search on the Web. Kosmix says it takes a MORE
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By Yi-Wyn Yen
These days, getting a large handout from venture capitalists is rare. It's even tougher when your startup needs a lot of cash to compete with Google.
Kosmix, however, has defied the odds. In late October, the plucky startup raised $20 million, led by Fortune's parent company Time Warner (TWX), by assuring investors that Google is not the only way to search on the Web. Kosmix says it takes a new approach to searching by categorizing everything by broad topics for those times when you don't know exactly what you're looking for.
"This reflects the fact that Kosmix has a unique technology that's working well," said Jonathan Miller, the former chief executive of AOL who is on Kosmix's board. "No question it's a difficult period to raise significant amounts of money in a late-stage round."
A powerhouse of investors are banking on a future where search will evolve beyond typing in specific keyword terms on Google. Former Motorola CEO Ed Zander, who launched the popular Razr mobile phone, recently joined as a private investor and advisor to the company. The Mountain View-based startup, which has raised a total of $55 million in three years, is also backed by Amazon (AMZN) cofounder Jeff Bezos and Legg Mason fund manager Bill Miller.
Miller recently made noise for reportedly raising money from private investors to buy Yahoo (YHOO). Miller, a one-time Yahoo board nominee, refused to talk about Yahoo. He discussed the need for companies like Kosmix to take search to a new level in a way that Google (GOOG) does not. As CEO at AOL, Miller had tried to acquire Kosmix, cofounded by veteran entrepreneurs Venky Harinarayan and Anand Rajaraman. "How do you create breadth and depth in content pages and make it a satisfying user experience is a big and hard problem," Miller said. "Kosmix has firmly established the lead in how this is going to happen."
Take the phrase Mount Everest as a topic. Without more search keywords, Google broadly targets what you may be looking for. Google's first three links include an empty graphics box from Google Maps, a Wikipedia entry, and a well-regarded news site for mountain climbers. The same topic on Kosmix returns a rich summary from Web 2.0 sources. Kosmix includes a short paragraph from Wikipedia along with photos from Flickr, videos from YouTube and video search engine Truveo, forum posts from trekkers seeking climbing partners to Everest, and top mountaineers who've climbed Everest.
Rajaraman insists his startup is not another search engine trying to take on the search giant. Google's competitors - from tiny startup Cuil to software maven Microsoft (MSFT) - are struggling to make a dent in Google's growing dominance in search despite spending billions. The approach, Rajaraman says, is to deliver relevant results with blogs, videos, pictures and news on a single page.
"We consider ourselves an explore engine. When you don't know what's interesting or know enough about a topic, you come to us. We've built algorithms based on topics that lead to a very different end point," he said. "Google's algorithms are about finding the best Web pages out there. It's really, really hard to mess with that."
]]>Yahoo's fate is becoming more convoluted every day. Just two days after the Times of London reported that talks between Microsoft and Yahoo were back on, the the Wall Street Journal says former AOL chief executive Jonathan Miller is trying to raise money from private equity and sovereign wealth investors to buy the struggling Internet company.
Shares of Yahoo (YHOO) spiked 11% to $12.50 in mid-day trading on MORE
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Yahoo's fate is becoming more convoluted every day. Just two days after the Times of London reported that talks between Microsoft and Yahoo were back on, the the Wall Street Journal says former AOL chief executive Jonathan Miller is trying to raise money from private equity and sovereign wealth investors to buy the struggling Internet company.
Shares of Yahoo (YHOO) spiked 11% to $12.50 in mid-day trading on the news that Miller wants to raise between $28 billion to $30 billion to buy the company at $20-$22 a share.
Calls to Miller's office were not returned.
Some are skeptical that Miller will be able to succeed. Wrote Standard & Poor's Internet analyst Scott Kessler in a note, "We think YHOO is attractively valued, but that Miller would have difficulty raising this amount of capital, given the state of the global economy, of capital markets, and of YHOO itself."
Miller has close ties with Yahoo and activist investor Carl Icahn. Miller was nominated to Yahoo's board last August as part of a settlement which gave Icahn three seats. However, Miller withdrew because former employer Time Warner (TWX) (which also owns Fortune) would not waive a non-compete clause. Miller, who runs venture firm Velocity Interactive Group, was a consultant to Microsoft (MSFT) and Yahoo during their negotiations earlier this year.
Last week Icahn doubled down on Yahoo by spending $67 million for another 6.8 million shares. The corporate raider's move fueled speculation that a search deal with Microsoft was inevitable. Icahn has lost roughly $1 billion since buying 69 million Yahoo shares at $25 a pop.
]]>With clouds of economic gloom darkening the tech horizon, mobile phone sales - a former bright spot in the gadget world - look to be slowing.
Tech buyers went away early this fall, and as recession fears intensified, orders have continued to dry up.
There have been a number of ominous signs. First Cisco (CSCO) slashed its outlook and froze hiring. Then Wall Street analysts slashed Google's (GOOG) search ad sales MORE
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With clouds of economic gloom darkening the tech horizon, mobile phone sales - a former bright spot in the gadget world - look to be slowing.
Tech buyers went away early this fall, and as recession fears intensified, orders have continued to dry up.
There have been a number of ominous signs. First Cisco (CSCO) slashed its outlook and froze hiring. Then Wall Street analysts slashed Google's (GOOG) search ad sales estimates, predicting the first ever drop off in the company's growth rate.
Now, market analysts at Gartner have peered ahead into future and declared cell phone sales will likely slow from 2008 levels by 1% to 4%. This would be the first year-over-year slowdown since 2001.
"It is too early to say how long the economic climate will impact the devices market, but we expect market conditions to remain challenging through at least the first half of 2009," Gartner analyst Carolina Milanesi said in a statement Tuesday.
A low single digit drop in sales certainly isn't a steep fall and hardly a surprise in light of recent downward adjustments from wireless phone giants Nokia (NOK) and Samsung. But no growth in 2009 would be a major milepost given how newer markets like Brazil, Russia and Asia have been providing plenty of worldwide demand. And in mature markets like Europe and the U.S., smartphone sales are surging, fueled by touchscreens like Apple's iPhone and Research in Motion's new BlackBerry Storm.
Gartner now predicts mobile phone sales will hit a growth rate of 8% this year, down from the 15% level in 2007.
]]>It was a tale of two techs Tuesday. Hewlett-Packard (HPQ) surprised Wall Street on Tuesday with a fourth-quarter earnings report that beat analysts' profit and sales targets. HP shares soared nearly 14% in early trading.
Meanwhile, glass maker Corning (GLW) warned of a sales shortfall in the current quarter as demand for its flat-screen TV and computer panels drops faster than anticipated. Shares fell nearly 12%.
HP posted preliminary adjusted earnings of $1.03 a share, which compares with MORE
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It was a tale of two techs Tuesday. Hewlett-Packard (HPQ) surprised Wall Street on Tuesday with a fourth-quarter earnings report that beat analysts' profit and sales targets. HP shares soared nearly 14% in early trading.
Meanwhile, glass maker Corning (GLW) warned of a sales shortfall in the current quarter as demand for its flat-screen TV and computer panels drops faster than anticipated. Shares fell nearly 12%.
HP posted preliminary adjusted earnings of $1.03 a share, which compares with 84 cents in the year-ago quarter and beats analysts estimates by 3 cents. Sales for the quarter ended Oct. 31 were $33.6 billion, an 19% improvement from revenues of $28.3 billion in the same quarter last year. Analysts were looking for sales of $33 billion, according to Thomson First Call.
The recent acquisition of IT service shop EDS so far has helped HP dodge the full impact of the impending recession. "Our ability to execute in a challenging marketplace differentiates HP, enabling it to increase share, expand earnings and emerge from the current economic environment as a stronger force," CEO Mark Hurd said in a statement.
Looking ahead, HP predicts pro forma profit of about 94 cents a share on sales of $32.25 billion in the first quarter ending in January. Analysts expected adjusted earnings of 93 cents a share on $33.7 billion in sales. HP says it will release its October quarter earnings Nov. 24.
Corning, however, continues to struggle with order cuts as flat-panels and big-screen TV inventories pile up. The company, the largest maker of liquid crystal display screens for televisions and computers, says fourth-quarter sales will fall below its guidance of $1.1 billion to $1.2 billion. It warned that profits will be at the low end or below its prior guidance of $0.20 to $0.28 a share. Corning did not offer revised financial targets.
]]>The Xbox 360 is getting a major software update designed to transform it into a multimedia machine.
Starting Wednesday, all Xbox 360 owners will be required to update their gaming consoles so that they can watch movies in high-definition, stream TV shows and movies from Netflix (NFLX) and navigate categories like games, photos, and videos through a MORE
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By Yi-Wyn Yen
The Xbox 360 is getting a major software update designed to transform it into a multimedia machine.
Starting Wednesday, all Xbox 360 owners will be required to update their gaming consoles so that they can watch movies in high-definition, stream TV shows and movies from Netflix (NFLX) and navigate categories like games, photos, and videos through a simplified dashboard populated with cutesy avatars.
Microsoft (MSFT) is counting on the Xbox makeover to not only drive console sales during a grim holiday-spending season but to broaden its appeal to casual gamers. In a statement, Microsoft hailed the move as "a new dawn in home entertainment," going so far as to compare the Xbox Experience to the dawn of color television.
The company has been trying for years to brand the Xbox as the digital entertainment hub for the living room. Microsoft executive Shane Kim bragged that through the improved Xbox, the company is "building the world's largest social and entertainment network" that connects to televisions. The Xbox is now referred to as the "New Xbox Experience."
Some analysts argue that a recent price cut, not the Xbox Experience, is the console's major appeal. Microsoft reduced its entry-level Xbox by $80 in early September to $199 and saw U.S. sales rise 33% in October, according to market researcher NPD. The Xbox Experience "is a marginal improvement," said Todd Greenwald, a senior gaming analyst with Signal Hill. "I think if people are at Target and see an Xbox on a store shelf, they may see the Xbox Experience as a nice feature, but the price point is a much bigger driver."
Both Xbox and Sony's PlayStation 3 (SNE) are trying to make inroads to compete with Nintendo's top-selling Wii. In October, Microsoft sold 391,000 Xboxes in the U.S. while Sony sold 190,000 PS3s. But Nintendo (NTDOY) outsold both gaming consoles by moving 803,000 Wiis, according to NPD.
Xbox Experience, which will offer more than 12,000 movie titles to rent from MGM, Paramount Pictures and Warner Bros., is part of Microsoft's ongoing efforts to appeal beyond the hardcore gamer market.
Sony is also taking the multimedia approach. The PS3, which lets consumers play Blu-ray discs, is currently building a sophisticated virtual reality world called Home to make gaming a more social experience. Said Susan Panico, senior director of the PlayStation Network, "Our goal from Day 1 is to be an entertainment network. It's about original programming and videos, and now we'll bring Home to the PlayStation network."
Greenwald says new software features Xbox and PS3 aren't enough to take down the Wii. "I don't think the Wii is successful because of the Mii avatars. With the Wii, you just pick up a motion-controlled wand and play. You don't have to learn a controller and all its functions," Greenwald said.
Microsoft's Kim says it's not trying to out-Wii the Wii, but noted the 360 can compete with Nintendo on price. The low-end version of the Xbox is $50 cheaper than the Wii, a point that Kim stresses. "We feel great about having the lowest price for a console, and that will be a big advantage for the holiday season," he said. "When consumers are looking to buy a console for their kid this holiday, they will see that we're at $200. Hey, $200 is $200."
]]>At the Web 2.0 Summit two weeks ago, Yahoo CEO Jerry Yang was asked if he was the right guy to lead the battered Internet portal. Yang dodged the question by defending his passion for the company he co-founded 13 years ago. "I didn't make the decision of being the CEO lightly," he said. "I wanted to make a change at Yahoo that I believe I can make....That's MORE
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At the Web 2.0 Summit two weeks ago, Yahoo CEO Jerry Yang was asked if he was the right guy to lead the battered Internet portal. Yang dodged the question by defending his passion for the company he co-founded 13 years ago. "I didn't make the decision of being the CEO lightly," he said. "I wanted to make a change at Yahoo that I believe I can make....That's a dream that I felt I could achieve by being CEO and that's still the dream today."
That dream came to an end Monday when Yahoo announced that Yang, 40, will step down as CEO and return to his former role as "Chief Yahoo." The company's board said it has hired headhunter Heidrick & Struggles to find a replacement.
Yang has come under fire for his inability to turnaround the company in his past 17 months as CEO. During his short tenure, Yahoo (YHOO) has had two major rounds of layoffs and has seen its search market share shrink significantly while a series of reorganizations led to the departure of senior executives. Yang was heavily criticized by Wall Street and shareholders for failing to reach an agreement to sell the company to Microsoft (MSFT). But the final straw for Yang came when Google (GOOG) pulled out of a controversial ad agreement earlier this month that would have boosted Yahoo's revenues by hundreds of millions of dollars.
"When the board asked me to become CEO and lead the transformation of the company, I did so because it was important to re-envision the business for a different era to drive more effective growth," said Yang in a statement. "Having set Yahoo! on a new, more open path, the time is right for me to transition the CEO role and our global talent to a new leader. I will continue to focus on global strategy and to do everything I can to help Yahoo realize its full potential and enhance its leading culture of technology and product excellence and innovation."
When Yang took over, he was widely viewed as the right choice to replace Terry Semel, the previous CEO from Hollywood who spent six years molding Yahoo into a media company. Yang promised change in the first 100 days as CEO, declaring there would be "no sacred cows." But 100 days came and went. So did the next 400 days. Frustrated investors have seen Yahoo's shares drop 62% in value since Yang took over in mid-June 2007. While Semel never had Yang's geek cred, he did manage to drive Yahoo's stock price up to an eight-year peak of $43.21 in January 2006. Yahoo's shares closed at $10.63 on Monday.
Yang has admitted his legacy may forever linked to the debacle with the Microsoft takeover. Yahoo's board and management team quickly turned down Microsoft's original offer to acquire Yahoo for $31-a-share in February. The two parties spent six months trying to negotiate a deal. "As a CEO, my job is to find the right path for Yahoo," Yang said at the Web 2.0 conference. Not getting the deal done "is something that I'll be labeled with."
]]>U.S. regulators on Monday charged Dallas Maverick owner and outspoken blogger Mark Cuban with using confidential information in 2004 to sell his stake in Mamma.com, a Montreal search engine now known as Copernic (CNIC). His sale of all 600,000 shares helped Cuban avoid a 10% dive in the stock, or about $750,000 in losses, the government contends.
The Securities and Exchange Commission filed a civil lawsuit against Cuban on Monday. No criminal charges were MORE
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U.S. regulators on Monday charged Dallas Maverick owner and outspoken blogger Mark Cuban with using confidential information in 2004 to sell his stake in Mamma.com, a Montreal search engine now known as Copernic (CNIC). His sale of all 600,000 shares helped Cuban avoid a 10% dive in the stock, or about $750,000 in losses, the government contends.
The Securities and Exchange Commission filed a civil lawsuit against Cuban on Monday. No criminal charges were filed.
Cuban, the biggest shareholder in Mamma.com, was allegedly angered by plans for a private sale of discounted Mamma.com stock, according to the lawsuit filed in U.S. District Court for the Northern District of Texas.
Mamma's CEO had contacted Cuban to see if he was interested in participating in the so-called PIPE, or private investment in public equity, according to the SEC complaint. Selling the stock at a discount effectively dilutes the stakes held by existing shareholders. Cuban allegedly responded: "Well, now I'm screwed. I can't sell," according to information provided by the Mamma CEO to regulators.
But sell he did, according to the SEC. One minute after hearing the full details of the private investment offer for Mamma.com shares, Cuban allegedly called his Dallas broker and said: "Sell what you can tonight and just get me out the next day."
The SEC wants Cuban to pay back the $750,000 he avoided in losses after Mamma.com's shares fell as well as a potential fine of $2.25 million.
Cuban issued a statement Monday saying the charges had no merit. "The government's claims are false and they will be proven to be so," he said.
Cuban's net worth has been estimated to be $2.8 billion. His big jackpot came in 1999 when he sold Broadcast.com to Yahoo (YHOO) for nearly $6 billion, one of the largest cash-outs of the Internet boom.
As the owner of the Mavericks and Internet soapbox Blog Maverick, Cuban has displayed a fiery temperament at times. After a few shouting matches with Mavericks head coach Avery Johnson earlier this year, Cuban fired Johnson, the most successful coach in franchise history, at the end of the NBA season in April.
If skirting securities laws to avoid losing a relatively insignificant amount of money sounds strange, it isn't, says Scott Friestad, deputy director of enforcement for the SEC.
"It's not uncommon that the amount of the transaction is not correlated to a person's financial wherewithal," said Friestad. "We've seen sales worth $15,000 by people with $1 million-a-year salaries."
]]>SAN JOSE - On the same day that Intel (INTC) slashed more than $1 billion from its sales forecast and more analysts cut sales estimates for Google (GOOG), Silicon Valley luminaries momentarily put the downturn aside and celebrated a happier cause -- using technology to benefit the world.
Nearly 1,500 guests on Wednesday night attended the annual Tech Awards, which recognize innovations used to alleviate poverty around the world. "Tonight is a reminder of MORE
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SAN JOSE - On the same day that Intel (INTC) slashed more than $1 billion from its sales forecast and more analysts cut sales estimates for Google (GOOG), Silicon Valley luminaries momentarily put the downturn aside and celebrated a happier cause -- using technology to benefit the world.
Nearly 1,500 guests on Wednesday night attended the annual Tech Awards, which recognize innovations used to alleviate poverty around the world. "Tonight is a reminder of all the things that are going right," said Mike Splinter, CEO of Applied Materials (AMAT), a Tech Awards sponsor. The speech came just hours after the chip equipment maker announced earlier Wednesday that it will cut nearly 2,000 jobs.
The international awards program honored 25 organizations, five of which received a $50,000 cash prize, including Digital StudyHall, an India-based organization that was recognized for bringing instructional DVDs to underpriveledged classrooms.
Other award recipients included the Full Belly Project, a North Carolina-based non-profit that has developed a $50 nut sheller that can shell 125 pounds of peanuts per hour and requires no electricity, which helps subsistence farmers in countries like Mali and Haiti.
The Portable Light Project, another Tech Award recipient, manufactures flexible solar panels that can be woven into clothing or handbags. The wearable photovoltaics harvest sunlight to charge cell phones and other devices. According to the Massachusetts-based nonprofit organization, it is already distributing its portable solar panels in countries like Mexico and South Africa.
"People who are poor are often on the move," said Sheila Kennedy, who heads up the project. "They don't have a roof, so you can't put solar panels up."
The star of the evening was Muhammad Yunus, who received the Nobel Peace Prize in 2006 for his Grameen Bank, which gives out small loans to some of the world's poorest people. The father of the so-called microcredit movement spoke about his creative approach to financing and efforts to bring cell phones and solar power to impoverished regions. According to Yunus, his Grameen Bank has doled out more than $700,000 in housing loans (that kind of money won't get you much in the Silicon Valley, but in Bangladesh a tin-roofed house costs just $300 to build).
Yunus said that when he initially approached banks about lending to the poor, they refused and said poor people are not credit worthy.
"The poor turned out to be more credit worthy," said Yunus, whose Grameen Bank is self-reliant (it no longer relies on donor funds) and claims to have a loan repayment rate of more than 95% "We never had a subprime housing crisis."
]]>Microsoft is trying its luck at social networking - again.
After a failed attempt four years ago, Microsoft (MSFT) is ripping a page from Facebook's playbook, introducing on Thursday new profile and photo-sharing features to its web-based Windows Live services. The software giant allows users with Windows Live Hotmail or Messenger accounts to create online profiles that highlight what a person is doing through a Facebook-like newsfeed.
Microsoft hopes that MORE
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By Yi-Wyn Yen
Microsoft is trying its luck at social networking - again.
After a failed attempt four years ago, Microsoft (MSFT) is ripping a page from Facebook's playbook, introducing on Thursday new profile and photo-sharing features to its web-based Windows Live services. The software giant allows users with Windows Live Hotmail or Messenger accounts to create online profiles that highlight what a person is doing through a Facebook-like newsfeed.
Microsoft hopes that giving Windows Live a new facelift will encourage more people to spend more time on its web properties. Checking e-mail or instant messaging accounts for up a third of the time people spend on the Internet, according to research firm comScore. Microsoft has 375 million Hotmail users and 325 million Messenger users worldwide. "If we can gain a whole 60 minutes per user, we would grow a whole Facebook in [time spent]," says Brian Hall, general manager for Windows Live.
Though Hall admits that Microsoft's new strategy could shift some attention from Facebook - in which Microsoft holds a minor stake - to Windows Live, the real concern is longtime rival, Google (GOOG). The search giant already has a commanding lead in the search advertising business, and Microsoft worries about Gmail's growing share in the e-mail market. "According to comScore, Google has a 6% share of email [in the U.S.] But they're growing fast," Hall said.
Like Google, Microsoft has struggled to make inroads in social networking. Four years ago, Microsoft launched Spaces, a blogging tool to build a social networking site within Windows Live. Though Microsoft added 100 million people in it first year, less than 1% of social networking users use Spaces today. "The blogging approach [to social networking] is not the right approach. People are too busy to make that investment," Hall said.
Windows Live lets its new newsfeed feature do the heavy lifting to give people's friends updates on what they're up to. Microsoft has partnered with more than 50 web companies, including Amazon.com (AMZN), Twitter, Flickr,and iLike, a music discovery site. Anytime you blog on WordPress, write a restaurant review on Yelp, or watch videos on Veoh, your status is updated through your Windows Live profile.
Analysts say the new Windows Live makeover is a preview of Microsoft's newest operating system, Windows 7. The latest version of Windows is expected to integrate tools like photo-sharing, videos, and messaging more seamless between PCs and mobile devices. "All these built-in applications with a blend of Google, Apple, and Facebook is Microsoft's view of an integrated world," said Rob Enderle, president of the Enderle Group. "Windows Live comes out first. This is designed for Windows 7."
Microsoft's had success with operating systems, but the company still struggles to make a profit from its Internet businesses. Microsoft is banking that more time spent on Windows Live will translate into more web searches on Live and more ads viewed on its portal, MSN. For its fiscal first quarter, which ended in September, Microsoft lost $480 million from its online unit. "We have to get great at the advertising business," Hall said.
]]>What was a little fuzzy last month has become clearer of late: The sagging economy is weighing on Google (GOOG).
Goldman Sachs analyst James Mitchell cited signs of weakness in search advertising - Google's biggest moneymaker by far -- in cutting his revenue growth target for the current fourth quarter from 4% to 1%.
Mitchell is the second analyst this week to lower estimates for Google. On Monday Barclays analyst Doug Anmuth called MORE
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What was a little fuzzy last month has become clearer of late: The sagging economy is weighing on Google (GOOG).
Goldman Sachs analyst James Mitchell cited signs of weakness in search advertising - Google's biggest moneymaker by far -- in cutting his revenue growth target for the current fourth quarter from 4% to 1%.
Mitchell is the second analyst this week to lower estimates for Google. On Monday Barclays analyst Doug Anmuth called for fourth-quarter sales to be flat with third quarter's $4.05 billion. If so, it would be the first time in Google's history that revenue has not grown from one quarter to the next.
The prospects of little or no growth sent Google shares to a three-year low of $300 Tuesday amid a broad market selloff. The stock has dropped 55% this year. And the news was not particularly good for the rest of the Internet sector with Yahoo (YHOO) dropping 5% to a 52-week low of $11.25.
Why the sudden chill? Google thermometer readers apparently saw a change in tone between the company's discussions on the earnings call Oct. 16 and the comments in the quarterly filing on Nov.7.
In October, when asked on a conference call how search traffic patterns were going, CEO Eric Schmidt couldn't draw any conclusions. "We see fluctuations and they are more complex than they may appear; some things go up, some things go down."
By Friday, when Google filed its 10Q, the complexity had simplified in a not-so-positive way.
"The current general economic downturn will likely affect these seasonal trends, especially the increase in commercial queries that we typically experience in the fourth quarter of each year," Google said in the filing.
In October, Google executives were partially blinded by the huge increase in search traffic as people swarmed online for news on the financial crisis after Lehman Brothers collapsed Sept. 14. But as search traffic fell back after the initial panic subsided, consumers didn't revert to their normal behavior and spend their time searching topics like holiday electronics. Ominously for Google, the rate of click-throughs on the sponsored ads that appear to the right of search results also fell, according to some analysts. Marketers pay Google only when someone clicks on their ads.
Goldman's Mitchell writes that a poor economy is leading to declines in paid search and he noted that the size of purchases at sites like eBay (EBAY) and Amazon (AMZN) are shrinking. Given the lack of pay off, advertisers are likely to resist price increases or even cut spending, according to Mitchell.
In other words: A not-so-happy holidays ahead for the online economy.
]]>Nortel (NT) plans a major restructuring and another round of job cuts as demand for tech gear plunges.
The Toronto networking equipment giant said Monday it would trim 1,300 jobs on top 1,200 cuts previously announced. Nortel had 32,550 employees at the end of 2007.
The company also said four top executives, including its head of sales and its chief technology officer, would leave at year-end.
The news comes as Nortel posted third quarter MORE
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Nortel (NT) plans a major restructuring and another round of job cuts as demand for tech gear plunges.
The Toronto networking equipment giant said Monday it would trim 1,300 jobs on top 1,200 cuts previously announced. Nortel had 32,550 employees at the end of 2007.
The company also said four top executives, including its head of sales and its chief technology officer, would leave at year-end.
The news comes as Nortel posted third quarter earnings that met lowered targets. The company warned, however, that 2008 sales would fall 4% -- at the lower end of its previous guidance of 2% to 4%.
Like other tech shops that have lowered forecasts, including Qualcomm (QCOM), Cisco (CSCO), Microsoft (MSFT) and Intel (INTC), Nortel cited a sudden slowdown in orders that started in September and has shown no signs of letting up. Corporate spending cuts, tight-fisted phone companies and a weaker consumer demand have sent the tech sector into a deep slump.
In September, Nortel slashed guidance and said it would look to sell or eliminate some business units. The news shocked investors who sent the stock down 43% in a one-day selloff Sept. 17.
In addition to plans to cut a total of 2,500 jobs, Nortel has shuffled its management. Marketing chief Lauren Flaherty, technology chief John Roese, head of global services Dietmar Wendt and head of sales Bill Nelson will leave the company at the end of the year, Nortel announced.
For the third quarter, Nortel took a one-time charge of $3.2 billion ($2.1 billion in writedowns for tax adjustments, and $1.1 in goodwill charges) putting the net loss at $3.4 billion, or $6.85 a share. Excluding those charges, pro forma profit was 30 cents a share, well below the 8-cent adjusted profit last year but in line with analysts expectations.
Sales for the third quarter were $2.3 billion, down 15% from year-ago levels but meeting Wall Street expectations.
Looking ahead, Nortel cut its full year sales projection to about $10.5 billion or about 4% below 2007 levels. Analysts had anticipated a 4% full year slide in sales for Nortel.
]]>SAN FRANCISCO - Al Gore didn't take credit for inventing the Internet at the Web 2.0 Summit Friday, but he did credit it with enabling the victory of President-elect Barack Obama and helping restore faith in the principles upon which the United States was founded.
"The electrifying redemption of America's revolutionary declaration, that all human beings are created equal," Gore said to a cheering crowd, MORE
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SAN FRANCISCO - Al Gore didn't take credit for inventing the Internet at the Web 2.0 Summit Friday, but he did credit it with enabling the victory of President-elect Barack Obama and helping restore faith in the principles upon which the United States was founded.
"The electrifying redemption of America's revolutionary declaration, that all human beings are created equal," Gore said to a cheering crowd, "would not have been possible without the addition of the empowerment of individuals to use knowledge as a source of power that has come with the Internet."
In a speech that ranged from the foundations of printing, computing and other disruptive technologies, to the subject of the dampening effects of television and the need to tackle climate change, Gore returned to the Internet and Web 2.0 as tools to bring about huge leaps forward in society. He highlighted the way in which people organized and spread information using web-based databases of names, numbers, and ideas to support the Obama campaign.
"What happened in the election opens up a whole new range of possibilities, Gore said. "Now is the time to really move swiftly, to seize these new possibilities and to exploit them…Web 2.0 has to have a purpose. The purpose I would urge as many of you as can take it on, is to repair our relationship with this planet and the imminent danger we face."
"We have everything we need to save it and in the process create millions of new jobs, create energy security," he continued. "But the only way this is going to be solved, is by addressing the democracy crisis - a great blow was landed during the election - and taking this issue and raise it to the awareness of everyone."
Gore advocated for the construction of a $400 billion "smart-grid" to tap renewable energy sources like wind, geothermal and solar and bring green power. He said a smart-grid infrastructure would pay for itself within three-and-a-half years. He urged Obama to set a goal of generating all of the nation's power from renewable sources within a decade.
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