Microsoft to issue debt

Chaos in the money markets gave Microsoft Corp. an opening Monday to announce it would take on debt for the first time, launch a new $40 billion stock buyback plan and raise its dividend.

The moves indicate that for all the credit problems plaguing the financial sector, cash-laden technology companies with good credit ratings are still borrowing money on favorable terms and otherwise enjoying flexibility.

The largest information-technology company, Hewlett-Packard Co., approved an $8 billion buyback plan Monday. And Intel Corp. Chairman Craig Barrett told The Associated Press that the chip maker — which boasted $11.5 billion in cash and $2.1 billion in debt at the end of the last quarter — was feeling no squeeze from the credit crunch.

"I don't see any slowdown in our technology investment or R&D investment or manufacturing investment going forward," he said. "When you've got 10, 15 billion dollars in your bank account, short-term credit is not a significant issue."

Microsoft, which benefits from having $23.7 billion in cash and short-term investments on hand as of June 30, historically has avoided taking on debt to fund day-to-day operations, acquisitions and stock buybacks, even as many of its peers, including IBM Corp. and Oracle Corp., have done so.

Oracle, for one, has accumulated $11.2 billion in debt in recent years while buying up dozens of its smaller rivals, while sitting on $13 billion in cash as of Aug. 31. The business software maker indicated recently that much of that money would go toward acquisitions or buybacks.

Microsoft did plan to borrow money for its $47.5 billion run at Yahoo Inc. this year, but the proposal fell through before the company issued any debt.

Now, as investors are growing increasingly risk-averse, blue-chip companies like Microsoft are finding interest rates on commercial paper — short-term loans that range from overnight to nine months — hovering around 2 percent. Finally the world's largest software maker decided it was time to borrow.

The company said Monday its board approved a $2 billion commercial paper program, as part of a bigger $6 billion, open-ended allowance for debt financing. Moody's Investors Service and Standard & Poor's Rating Services both assigned Microsoft's debt their highest ratings.

"They've had pressure to do this for a long time, and I think it's a process of just getting everybody at the company comfortable with taking on debt," said Walter Pritchard, an analyst at Cowen and Co.

Heather Bellini, an analyst for UBS, said she was surprised by the move, given that the company was vague about what it might use the proceeds for.

"Listening to (CEO) Steve Ballmer in the past, his position has been he wouldn't issue debt for the sake of issuing debt," the analyst said. But given the interest rates available to companies like Microsoft right now, "I think they were just being opportunistic," she said.

In general, taking on debt makes sense for a company like Microsoft. The interest payments Microsoft would make are tax-deductible, which could help boost Microsoft's mighty profits even more.

Richard Lane, a senior vice president at Moody's, also noted that because much of Microsoft's revenue growth comes from overseas, it's cheaper to use debt to fund buybacks and other domestic activities than to do it with money that originates with overseas sales and is taxed when it is brought back into the U.S.

Microsoft also raised its quarterly dividend to 13 cents from 11 cents, payable Dec. 11 to shareholders of record on Nov. 20. Investors reacted to that, the buyback and the debt offering by sending Microsoft's shares up 24 cents, nearly 1 percent, to close at $25.40 even as the broader market fell.

Microsoft's fiercest competitor in the Web search business, Google Inc., has said it isn't planning to buy back stock or take on debt. Google has $12.7 billion in cash, which it prefers to use for acquisitions and investments in its business.

"The drama is in New York, not here," Chief Executive Eric Schmidt said in a meeting with reporters last week. "It's business as usual at Google."

Google co-founder Sergey Brin begins blogging

Google co-founder Sergey Brin has started a blog, candidly telling of being at risk for Parkinson's Disease and plugging his wife's genetic testing start-up firm.

While Brin is no stranger to news-making webcasts and online press announcements, he made a blogging debut Thursday by sharing personal musings in a post at the Blogger weblogging website Google bought in early 2003.

Brin wrote of his mother being diagnosed with Parkinson's Disease and how testing by 23andMe, a company started by his wife Anne Wojcicki, shows he has a gene mutation that "markedly" increases his chances of getting the illness.

"This leaves me in a rather unique position," Brin wrote.

"I now have the opportunity to adjust my life to reduce those odds. I also have the opportunity to perform and support research into this disease long before it may affect me."

Brin told of working with The Parkinson's Institute and the Michael J. Fox Foundation to combat the disease and provided links to the organizations' websites.

Brin wrote of comparing his genes with those of relatives and of checking whether his DNA links him to others with his family name.

Founded by Wojcicki and Linda Avey two years ago, California-based 23andMe offers genotyping for a price of 399 per person.

iPods make choice harder

The Zune has a long way to go to become a threat to the iPod. But it is getting closer.

With updated Zunes and new iPods hitting the market in the past week, I spent some time with each: a black-on-black version of Microsoft Corp.'s music and video player and a bright red model of Apple Inc.'s iPod Nano. And it became clear that there are a few things Apple can learn from the Zune — though not surprisingly, Microsoft might want to take some notes as well.

The Nano ($149-$199) remains the more attractive of the two. Its new look is sort of growth-spurt chic, combining the long, lean looks of earlier models with a reoriented 2-inch screen that debuted with the shorter, wider third-generation model. In addition, its sides are rounded, which gives it an oval-esque shape that felt awkward cradled in my hand but was easy to slip into a back pocket.

The new Nano comes in an array of bright colors, and this alone may appeal to buyers who want something that stands out from the crowd.

The latest flash memory-based Zune ($150-$200) comes with some new color options, but they're not nearly as loud, and overall the device is identical to the one Microsoft rolled out in October. At 3.6 inches tall and one-third of an inch thick, it is the same height as the new Nano but noticeably bulkier.

Looks aside, the biggest differences are in the players' new features, which include wireless music downloads and streaming on the Zune and an accelerometer that makes it easier to manipulate song-shuffling, gaming and image viewing on the Nano.

Unlike the iPod family, Zunes have always included a wireless feature, but it was limited to sharing songs with other Zune users (who can be hard to find) and to synchronizing music, videos and photos with personal computers. On the most recent Zune, this has been expanded so that when users are in Wi-Fi hotspots they can access the Zune Marketplace online music store straight from the device.

The ability to download songs over the air is not unique — the Nano's big brother, the iPod Touch, can snag songs from Apple's iTunes Store via built-in Wi-Fi — but it certainly gives the smaller Zunes an edge over the wireless-less Nano, and a free update makes it work on older Zunes, too.

I found the Zune's Marketplace feature easy and definitely satisfying, especially since I tend to think of music I want while I'm listening to tunes.

The feature lets you search by lists of top songs, or by sluggishly tapping in artist names; most users will probably find the former simpler, but I did appreciate the option of the latter.

Another neat Wi-Fi feature on the Zune is the ability to download songs you hear over the built-in FM radio. This was simple, and only required a few clicks from start to finish. If you don't have Wi-Fi access, you can still choose songs and they will queue up so you can download them the next time you connect to your computer.

Users who pay $15 per month for Microsoft's all-you-can-eat Zune Pass music subscription can also stream songs over Wi-Fi, and I found songs came in pretty clearly.

The new Nano, meanwhile, does have a few tricks up its chrome sleeves. Apple added an accelerometer, which it had previously included in the iPod Touch and iPhone. The accelerometer lets you do things like turn the Nano sideways while listening to music to scroll through album covers. That had its own menu tab on the previous Nano. Or now you can give the Nano a shake to shuffle it to another song.

I thought the shaking-shuffle feature was kind of annoying. With the slipperiness of the Nano's curved sides I worried I would throw the little guy onto some subway tracks or a busy street while commuting.

But the accelerometer can make games cooler. Apple included a simple game called "Maze" to give users an idea of how this works, and I was surprised at the responsiveness of a little, silver on-screen ball as I tilted and maneuvered the Nano. This was one trick I wished the Zune could learn.

You can also view photos either in portrait or landscape mode on the Nano; the Zune only shows photos in landscape mode, and both devices limit video playback to landscape mode, too.

Another highlight of the Nano's makeover is the new "Genius" feature, which is meant to help you put playlists together by taking one song as a starting point and suggesting other tracks with a similar sound or feel. Or if you try this from a computer, while using the iTunes software, a Genius sidebar shows related songs you can buy from the online iTunes Store.

This gave me some interesting suggestions, like Fujiya & Miyagi's light electro-groove tune "Cassettesingle" when I used The Bird and the Bee's dreamy-sounding pop song "Because" as a starting point. But it seemed a bit off-base by suggesting Jason Mraz's cheerful "I'm Yours" when I started with Rihanna's dark-sounding "Disturbia."

The Zune's latest software includes a similar feature called Mixview that uses thumbnails of album art and artist photos to illustrate users' listening patterns and give music suggestions. Visually, Mixview is miles above the Genius feature, as the images show up in a circular pattern around a rectangle containing a user's profile information.

I liked being able to click on each thumbnail to find related albums, artists who may have influenced the music I'm checking out, or profiles of other Zune users who listen to that music.

Beyond these features, there are plenty of similar specs on the two players. Both sound good, power up fully in about three hours and are rated for up to 24 hours of audio or four hours of video playback per charge.

Their screens appeared similarly bright, and a photo of my brother's bandana-clad dog looked equally crisp (and cute) on the Zune and Nano.

Videos looked very good on both, but the Nano is easier for watching because it has a larger viewing area — 2 inches on the diagonal, compared to 1.8 inches on the Zune.

Both are solid multimedia players, though. And while Apple may be at the front of the pack right now, clearly Microsoft is making strides — and maybe making consumers think twice before running out to buy a new iPod.

Wikipedia's Wales launches Wikia Green

Jimmy Wales is best known for evangelizing Wikipedia, the open-source, nonprofit encyclopedia he co-founded in 2001. On Tuesday his for-profit venture, Wikia, in its fourth year, unveiled a community for all things "green."

Anyone can edit Wikia, just like Wikipedia, which is built to attract people passionate about a given topic rather than to provide a general reference. For example, a Wikipedia article about ExxonMobil provides an overview of corporate history, while Wikia Green might zero in on the company's environmental record, with special emphasis on the Exxon Valdez oil spill of 1989.

To reduce costs and its load on the electrical grid, Wikia has halved its server need over the past six months, in part through using virtualization and efficient power supplies. Its offices recently moved from San Mateo, Calif., to San Francisco in part to reduce employees' commutes, and the company is applying to be certified by the city's green business program.