Microsoft's newest browser may block ads

The next version of Microsoft Corp.'s Web browser makes it easier for people to surf the Internet without leaving a trace.

Companies that sell advertisements online — including Microsoft — can electronically gather tidbits about Web surfers' habits, and then use that information to help decide what kinds of ads to show. However, in the newest "beta" test version of Microsoft's forthcoming Internet Explorer 8, which was made available Wednesday, a mode called InPrivateBrowsing lets users surf without having a list of sites they visit get stored on their computers.

The program also covers other footprints, including temporary Internet files and cookies, the small data files that Web sites put on visitors' computers to track their activities.

Both Internet Explorer 7, Microsoft's current browser, and Mozilla's recently released Firefox 3, already allow users to block cookies. The top two browsers also let users delete private information such as temporary files and browsing history after the fact. But they can't turn off that collection entirely.

The beta also introduces an additional InPrivateBlocking mode, which can block third-party content from appearing on Web sites. For example, a news site might carry stock quotes from one company and weather information from another. Companies that provide such content may also be collecting and sharing information about what people do online. But users who turn on InPrivateBlocking won't see that content or be exposed to such data collection without their consent.

InPrivateBlocking can also keep some types of ads from appearing — including those served up by Microsoft's own advertising platform, whose success is considered critical to the software maker's future.

JJ Richards, a general manager in Microsoft's advertising division, responded in a statement that consumers understand that they get free content and services in exchange for advertising, but want "transparency, trust and control with respect to the sites they visit."

"If IE8 helps heighten awareness of this value exchange, that's a step in the right direction," he said.

Users surfing with InPrivateBlocking turned on can review a list of which companies are trying to display or collect data. Users also can click a link to read more and decide case by case whether to permit certain ones to go ahead.

"Today as a user, we have no visibility or control over how that information is shared and recorded," said James Pratt, a product manager for IE8. "I wouldn't put Microsoft as being the arbiter of what should and shouldn't be tracked."

InPrivateBlocking isn't purely an ad-blocker by design, but publishers are still worried, said Mike Zaneis, vice president of public policy for the Internet Advertising Bureau, which represents Web publishers.

If InPrivateBlocking were widely adopted by IE8 users, small sites that rely almost exclusively on outside companies to serve ads couldn't survive, he said. The Internet ad economy didn't crash after ad-blocking plug-ins appeared for Firefox, but Zaneis said that may have more to do with Firefox's much smaller market share. (Firefox's challenge to IE has grown, however; the browser is used by more than 10 percent of Web surfers.)

If IE8 blocks programs that track how many times an ad is seen — a calculation that helps determine payments to advertisers and publishers — that could also bring down the Web ad marketplace, Zaneis noted.

"We'll wait and see what the marketplace looks like," he said. "I think (Microsoft) realizes, we all realize that it's a beta version, and it's sure to change before it's finalized."

An earlier IE8 beta showed off many bells and whistles that make Web browsing easier. Since then, Microsoft said it also improved the address bar's ability to figure out users' intended Web destination as they type.

An improved search box also provides more content alongside suggested results. For example, an Amazon.com search for an music album, entered in the browser toolbar, populates a drop-down menu with titles, prices and thumbnails of cover art.

Microsoft would not say when it plans to release a final version of the newest browser, but said this second beta is ready for average users to try.

Google resolves Gmail access problems

SEATTLE (Reuters) - Google Inc said on Monday it has resolved an issue with its contacts system that caused many users of its Gmail service to have trouble accessing their online e-mail.

The problems began at about 5 p.m. EDT and an announcement on the company's Gmail "Help Center" site said the issue is now resolved.

Google said an outage in the contacts system used by Gmail prevented the e-mail system from loading properly. The company also said that there may be minor delays in deliveries even though all mail is safe.

Users across the United States, Canada and India reported problems with Gmail and a Google employee also reported that the company's own corporate e-mail account was down.

Text of Chinese Foreign Ministry's statement

BEIJING - Text of a statement by Chinese Foreign Ministry spokesman Qin Gang in response to President Bush's speech, posted on the ministry's Web site Thursday and translated from Chinese by The Associated Press:

With the common efforts made both by China and the U.S., the Sino-U.S. relationship has developed steadily in the last few years. The two countries have conducted fruitful talks, communication and cooperation bilaterally and on a range of international issues. Facts prove again that although there are divergences between China and the U.S., there is a wide range of common interests, and a basis for cooperation. A good Sino-U.S. relationship is a benefit to the people of both countries, and helps peace and stability in the Asia-Pacific region and throughout the whole world.

We are willing to work together with the U.S. on strengthening dialogue and cooperation, appropriately dealing with divergences and sensitive issues and helping the relations to develop constructively and stably.

The Chinese government puts people first, and is dedicated to maintaining and promoting its citizens' basic rights and freedom. Chinese citizens have freedom of religion. These are indisputable facts.

As for the divergence on human rights and religions, we always advocate that both sides talk from a basis of mutual respect and equality, to enhance understanding and diminish divergence, and enlarge mutual consensus.

We firmly oppose any words or acts that interfere in other countries' internal affairs, using human rights and religion and other issues.

Sun 4Q profit falls 73 pct, guidance hurts stock

SAN FRANCISCO - Sun Microsystems Inc.'s profit plunged 73 percent in the most recent quarter as slumping sales to big U.S. companies and restructuring charges weighed on the server and software maker.

The Santa Clara, Calif.-based company also revealed plans Friday to expand its stock buyback program by $1 billion, a sign Sun believes its shares, which have fallen by 50 percent over the last nine months, are undervalued and poised to rebound.

Wall Street didn't share that optimism.

Sun's shares sank more than 12 percent on the company's worse-than-expected guidance, which indicated that the pressures that hurt Sun in the April-June period, its fiscal fourth quarter, are bleeding into the current quarter.

Sun, the world's fourth-largest server maker, said before the market opened that it expects a "slight" sales decline in the fiscal first quarter, which ends in September, and indicated it likely wouldn't turn a profit. Analysts surveyed by Thomson Financial were expecting flat sales and a profit of 11 cents per share in this quarter.

Goldman Sachs analysts David Bailey and Min Park said in a note to clients that Sun's results supply "another piece of evidence that the problems the company faces have no short-term fixes, and we would continue to avoid the shares."

The disappointing forecast represents the latest setback for a company that until recently was riding a sudden run of profitability: The latest quarter was Sun's sixth profitable quarter out of the last seven periods.

That marked a turnaround from the more than $5 billion in losses Sun racked up after the dot-com meltdown obliterated demand for many of its expensive servers. Sun turned the corner with intensive cost-cutting, such as by slashing 6,500 jobs over the past two years.

Investors still have had muted expectations. Analysts lowered their estimates in July when Sun announced early that its fourth-quarter sales and profit margins would be below the company's previous guidance.

Sun blamed weakness in the U.S. economy, which has caused some of its biggest customers to cut spending, and the sale of fewer higher-end servers, which carry better profit margins. Sun faces intense competition in that market from IBM Corp. and Hewlett-Packard Co.

Sun earned $88 million, or 11 cents per share, in the latest quarter. That compares with $329 million, or 36 cents per share, in the year-ago period.

Excluding one-time charges, Sun earned 35 cents per share. Analysts surveyed by Thomson Financial were expecting profit of 25 cents per share, but some include charges that Sun is excluding, so the numbers aren't directly comparable.

Sales were $3.78 billion, a 1 percent decline from $3.84 billion last year. That matched analyst estimates.

For the full 2008 fiscal year, Sun earned $403 million on $13.9 billion in sales.

Investors remain wary of Sun's prospects considering the U.S. market makes up about 40 percent of its sales. They're also concerned because much of Sun's gains have come from its cost-cutting, which might not be sustainable.

Those fears have been reflected in Sun's stock, which has fallen steadily since the company's 1-for-4 reverse stock split in November. The maneuver was supposed to improve Sun's image, but instead seemed like a sign of trouble.

Sun shares fell $1.31, or 12.3 percent, to close at $9.32 Friday.

Another worrisome figure for Sun was its gross profit margin, which declined 2.9 points to 44.3 percent in the latest quarter. For all of fiscal 2008, however, the figure improved by 1.3 percentage points to 46.5 percent.

Some view Sun's stock as attractive because of its sharp decline.

Wachovia analyst David Wong said it might take a while for the shares to get any kind of big boost, but in the meantime, "Sun continues to restructure and focus on cost cutting, which we think will result in improved profitability when demand improves."