Tuesday, July 28, 2009

Time Warner buys Google's stake in AOL for $283 million

Time Warner Inc paid $283 million for Google Inc's 5 percent stake in AOL, the Internet company said in a U.S. regulatory filing on Monday.

Time Warner, which plans to spin off AOL by the end of the year, bought the stake from Google on July 8, AOL said in the filing with the U.S. Securities and Exchange Commission.

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The price that the company paid for Google's stake implies that AOL has a total value of about $5.7 billion.

The filing is a registration statement with the government that AOL must file before its long-expected separation from Time Warner, and brings the company one step closer to ending a troublesome eight-year-old merger.

Brigantine Advisors analyst Colin Gillis said the implied $5.7 billion AOL valuation from purchasing Google's stake represents a "floor valuation" as AOL moves toward a spinoff.

"It shouldn't be anything lower than that," said Gillis.

Current Time Warner shareholders are expected to be holders of the new AOL shares once the company is separated.

AOL Chief Executive Tim Armstrong told Reuters last week the company will focus primarily on being a Web advertising business.

In its registration statement, AOL said that it expects to incur up to about $90 million of additional restructuring charges in the last nine months of 2009.

The company already incurred $58.3 million in restructuring charges during the first quarter of 2009, which it said were related primarily to layoffs and closing facilities.

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Google, the number search engine in the U.S., purchased its 5 percent stake in AOL in December 2005 as part of a five-year advertising partnership between the two companies.

Time Warner shares rose 2 cents to close at $27.60 on the New York Stock Exchange. Google shares fell $1.92 to close at $444.80 on the Nasdaq stock market.

Tuesday, July 21, 2009

Yahoo jazzes up home page with major makeover

Yahoo Inc. is sprucing up its Web site's home page with a long-promised makeover that is supposed to make it easier to see what's happening at the Internet's other hot spots.

The revamped home page, scheduled to debut Tuesday in the United States, is part of an overhaul aimed at recapturing some of the buzz that Yahoo has lost to increasingly popular online hangouts like Facebook, MySpace and Twitter.

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Even as Yahoo's star has faded, its Web site has remained among the Internet's busiest. More than 570 million people worldwide came to Yahoo in May, according to the most recent data available from online research firm comScore Inc.

The retooled page will be introduced in the United Kingdom, India and France later this week. It will roll out to the rest of the world during the next year, with the option to retain the old design starting to phase out this fall.

The Sunnyvale, Calif.-based company is hailing the new look as the biggest change to its front page since Yahoo's Web site launched 15 years ago. It's the first time that Yahoo has overhauled its home page since 2006.

"Every pixel on the page is relevant now," boasted Tapan Bhat, a Yahoo senior vice president who oversaw the revisions. "We have taken out a lot of our own stuff that was creating a dead zone for our users."

After spending the past 10 months tinkering with the redesign, Yahoo has a lot riding on the new look. The company sorely needs a lift, with its profits mired in a slump that has led to three different chief executives since June 2007.

Carol Bartz, the latest CEO hired six months ago, has predicted the revised home page will help revive the company by re-establishing its Web site as an Internet gateway for more people. If she is right, Yahoo could get a better handle on its users' interests and ultimately sell more of the ads that generate most of its revenue.

Yahoo hadn't intended to take the wraps off the redesigned page until the fall, but apparently felt like it had all the pieces in place now.


While Yahoo was trying to figure out what it wanted to include in the new home page, other online social hubs have become even more deeply ingrained in people's lives.

Facebook, for instance, now has more than 250 million regular users worldwide, up from about 100 million last September when Yahoo first began to publicly discuss its vision for the home page. Meanwhile, Twitter has evolved from a quirky obscurity into a pervasive communications tool for passing along blurbs of personal information, as well as links to news stories and photos.

Yahoo is betting its home page will be more useful if it's easier for people to connect with information and services available elsewhere.

Users can plant a variety of applications from other Web site onto a "My Favorites" section of the redesigned front page. The 65 applications initially available on Yahoo's new page include competing e-mail services from Google Inc. and AOL as well as plug-ins for Facebook and MySpace.

Once the outside applications are set up, Yahoo visitors can scroll over their favorite sites to get a glimpse at what's happening elsewhere without leaving Yahoo.

The front page's news section will automatically feature stories from newspapers located in a user's area and enable people to broadcast what they are doing or thinking, just as millions already do every day on Facebook and Twitter.

Yahoo isn't currently offering a Twitter application, but will eventually, Bhat said.

The home page preferences programmed on a computer can also be transferred to appear on mobile phones and other handheld devices

Wednesday, July 15, 2009

Intel's strong numbers suggest PC business

Intel Corp.'s second-quarter results bolster the company's position that the computer business is on the mend after its roughest patch in years.

Intel is the world's biggest maker of microprocessors, the electronic brains of PCs. More than three-quarters of the world's PCs use Intel chips. The company late Tuesday posted second-quarter sales substantially stronger than Wall Street expected, and its outlook suggests there's more good news to come. The stock jumped 7 percent in after-hours trading.


That's not to say that personal computers are flying off the shelves. PC makers are still hurting, which shows how brisk business for Intel might take months to translate into better numbers for its customers.

The No. 2 PC maker, Dell Inc., for example, warned this week that the U.S. computer market might have hit bottom, but its sales to businesses remain weak. CEO Michael Dell said penny-pinching computer buyers appear to be holding on to their existing machines for longer than is typical.

Intel's numbers show that PC makers bought more chips than expected in the quarter that ended June 27. Part of the reason is a pickup in end user demand, but another big reason is that customers have burned through massive amounts of inventory to save money, and now need to restock.

A $1.45 billion antitrust fine from the European Union, which Intel had to pay while it appeals the case, gave the Santa Clara, Calif.-based company its first quarterly loss since 1986. Including the fine, Intel lost $398 million, or 7 cents per share, compared with year-ago profit of $1.6 billion, or 28 cents per share.

But excluding the EU fine, Intel earned $1 billion, or 18 cents per share, in the second quarter — easily beating the 8 cents per share expected by analysts surveyed by Thomson Reuters.

Sales fell 15 percent to $8.02 billion in the most recent quarter but also topped Wall Street's $7.28 billion average forecast by a wide margin.

"I'm in shock — it's great news," said Kevin Cassidy, a semiconductor analyst with Thomas Weisel Partners. "It's just amazing the market can snap back this quickly. The question is, is it sustainable?"

Intel's numbers are closely watched because they reflect the health of the computer market and technology spending in general. Interest in the second-quarter numbers was particularly acute because CEO Paul Otellini predicted in April that PC sales had "bottomed out" after their worst holiday season in six years.

The trends that helped Intel should also help its smaller rival, Advanced Micro Devices Inc., which reports its numbers July 21. AMD has racked up billions of dollars in losses over the past few years under pressure from Intel, and is trying to bounce back by spinning off its chip-making factories.

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Global PC shipments in 2009 are expected to fall for the first time since the dot-com meltdown in 2001, according to the iSuppli Corp. research firm. Yet analysts said Intel's numbers Tuesday indicated that the industry is not in as dire shape as it appeared just months ago.

"How can we not be happy? I think they did a tremendous job," said Leslie Fiering, a research vice president with Gartner Inc. "It has to inspire some confidence in the market. ... There is uncertainty in this market, but we're seeing improvement, and it beats the alternative."

Intel offered a third-quarter sales outlook of $8.5 billion, plus or minus $400 million, which is significantly better than the $7.8 billion average estimate of analysts polled by Thomson Reuters.

The numbers helped drive Intel shares up $1.27 to $18.10 in extended trading. Before the earnings report, the stock closed at $16.83, up 2.1 percent on the day.

Tuesday, July 14, 2009

Blockbuster to stream video rentals on Samsung TVs

Having been a step behind in the race to pipe entertainment from the Internet to television screens, struggling video rental-chain Blockbuster Inc. is counting on a new partnership with Samsung Electronics America Inc. to regain ground on rival Netflix Inc.

In an alliance announced Tuesday, Samsung's next generation of high-definition TVs will include a built-in feature that will enable people to rent the latest DVD releases from Blockbuster with the press of a button on the remote control.

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The Blockbuster rentals, expected to be priced from $1.99 to $3.99 apiece for 24-hour viewing opportunity, will be piped over high-speed Internet connections. Samsung's HDTVs will begin offering Blockbuster's on-demand service this fall.

The relationship is a coup for Dallas-based Blockbuster because Samsung is the world's largest manufacturer of flat-screen TVs. Blockbuster's on-demand rental service also will be accessible through software installed on Samsung's Blu-ray DVD players and home theater systems — devices that already offer Netflix's own Internet streaming service.

With its stores losing favor among many tech-savvy consumers who want more instant gratification, Blockbuster has been diversifying its distribution options to reverse a long-running slump that has decimated its stock price and raised doubts about its future.

Besides stores and Internet streaming, Blockbuster also rents videos through the mail — just like Netflix — and in kiosks.


The multiple channels haven't impressed Wall Street yet. Blockbuster shares closed Monday at 58 cents, leaving it with a market value of just $112 million. Netflix's market value is approaching $2.5 billion, with some investors speculating the company could be acquired by Amazon.com Inc., which also rents video over the Internet.

Netflix got the jump on Blockbuster in video streaming by introducing its technology in early 2007 as a free supplement to its DVD-by-mail service, which charges $8.99 to $16.99 per month for its most popular subscription plans. The Los Gatos-based company then made the streaming option even more attractive last year by linking it to a variety of gadgets that connect to TVs.

Blockbuster responded with its own digital alternative late last year.

Besides Samsung, both TV maker Vizio and digital video recording TiVo Inc. are teaming up with Netflix and Samsung to offer video streaming.

Saturday, July 11, 2009

North Korean suspected cyber attack

SEOUL, South Korea – A North Korean army lab of hackers was ordered to "destroy" South Korean communications networks — evidence the isolated regime was behind cyberattacks that paralyzed South Korean and American Web sites — news reports said Saturday, citing an intelligence briefing.

Members of the parliamentary intelligence committee have said in recent days that the National Intelligence Service has also pointed to a North Korean boast last month that it was "fully ready for any form of high-tech war."

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The spy agency told lawmakers Friday that a research institute affiliated with the North's Ministry of People's Armed Forces received an order to "destroy the South Korean puppet communications networks in an instant," the mass-circulation JoongAng Ilbo newspaper reported.

The paper, citing unidentified members of parliament's intelligence committee, said the institute, known as Lab 110, specializes in hacking and spreading malicious programs.

The Ministry of People's Armed Forces is the secretive nation's defense ministry.

The NIS — South Korea's main spy agency — said it couldn't confirm the report. Calls to several key intelligence committee members went unanswered Saturday.

The agency, however, issued a statement late Saturday saying it has "various evidence" of North Korean involvement, though has yet to reach a conclusion.

South Korea's Yonhap news agency carried a similar report, saying the NIS obtained a North Korean document issuing the June 7 order. The report, quoting an unidentified senior ruling party official, said the North Korean institute is affiliated with the North Korean People's Army.

The state-run Korea Communications Commission said Friday that it had identified and blocked five Internet Protocol, or IP, addresses in five countries used to distribute computer viruses that caused the wave of Web site outages, which began in the U.S. on July 4.

The addresses point to the computers that distributed the virus that triggered so-called denial of service attacks in which floods of computers try to connect to a single site at the same time, overwhelming the server.

They were in Austria, Georgia, Germany, South Korea and the U.S., a commission official said. He spoke on condition of anonymity because he is not authorized to speak to the media on the record.

Speculation over who was responsible for the attacks that targeted high-profile Web sites, including those of the White House and South Korea's presidential Blue House, has centered on North Korea.

And though such finger-pointing has been trickling out since the attacks began, the identity of the IP addresses themselves provides little in the way of clarity.

That's because it is likely the hackers, whoever they are, used the addresses to disguise themselves — for instance, by accessing the computers from a remote location. IP addresses can also be faked or masked, hiding their true location.

South Korean media reported in May that North Korea was running an Internet warfare unit that tries to hack into American and South Korean military networks to gather confidential information and disrupt service. The Chosun Ilbo newspaper reported Friday that the North has between 500-1,000 hacking specialists.

The fact that some of the attacked sites — such as the ruling party and the office of President Lee Myung-bak — have links to the South Korean government's hard-line policies toward the North was cited as further reason why Pyongyang might attack them.

The North has drawn repeated international rebuke in recent months for threats and actions seen as provocative by the international community. Those include a nuclear test in May and short-range ballistic missile launches on July 4.

North Korea has not responded to the allegations of its involvement in the Web site outages.

The assaults appear to be on the wane. No new similar cyberattacks have been reported in South Korea since Friday evening, according to the state-run Korea Information Security Agency.

Tuesday, July 07, 2009

Online radio stations strike big deal on royalties

The future of Internet radio appears more secure after a handful of online stations reached an agreement Tuesday to head off a potentially crippling increase in copyright royalty rates.

The deal is the product of two years of negotiations between webcasters and copyright holders. In March 2007, a ruling by the federal Copyright Royalty Board dramatically raised the rates that Internet radio stations must pay artists and recording labels — leading many online radio stations to warn that the new rates would put them out of business by eating up as much as 70 percent of revenue.


At least one popular online radio service — Pandora Media of Oakland, Calif., which derives much of its revenue from advertising — said the new agreement will help ensure its survival.

"For us, it's hard to overstate how significant this is," said Pandora founder Tim Westergren. "It was either this or an ugly alternative."

The revenue-sharing deal announced Tuesday is between SoundExchange, a nonprofit that collects royalties for recording copyright owners from digital radio services, and three smaller webcasters: radioIO, Digitally Imported and AccuRadio.

Westergren said Pandora plans to sign on to the new royalty terms too. And Jonathan Potter, executive director of the Digital Media Association, which represents webcasters and other online media companies, predicted some of the association's other members will also join the deal.

Under the agreement, large commercial webcasters will pay copyright owners up to 25 percent of their revenue or a "per-performance" rate that is below the rates set by the Copyright Royalty Board. Smaller webcasters will pay either a percent of revenue or a percent of expenses.

In a statement, SoundExchange executive director John Simson said the deal will give webcasters a chance to "flesh out various business models" and give artists and other copyright holders the opportunity to "share in the success their recordings generate."

Lawmakers also praised the agreement. Congress has already passed legislation making any deal reached between webcasters and SoundExchange legally binding. Because Internet radio companies operate under a government license, these deals need congressional authorization.

Already this year, SoundExchange struck new online royalty agreements with the National Association of Broadcasters and the Corporation for Public Broadcasting.

Traditional AM and FM broadcasters are exempt from copyright royalty rates for over-the-air radio play, because that airplay is thought to provide free promotion for artists and labels. But the broadcasters are subject to the new rates for any songs streamed over radio station Web sites.

Thursday, July 02, 2009

Companies that track consumer behavior online for advertising purposes are vowing to make their practices more transparent and to give people a way to

Companies that track consumer behavior online for advertising purposes are vowing to make their practices more transparent and to give people a way to decline being shadowed.

It's unclear how much of an effect the new policies will have. One consumer group said the changes don't go far enough, and that extensive profiles of people still will be collected without their complete consent.

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The new guidelines, which were due to be unveiled Thursday, represent the industry's attempt at self-regulation as Congress and the Federal Trade Commission have been examining online behavioral advertising.

Companies can track consumers as they visit different Web sites, conduct searches and buy things. Over time, profiles of consumer interests can be sold to advertisers who want to pitch their products only to people most likely to be interested in them. The information collected can include a best guess at someone's ethnicity, income, educational level, age and hobbies.

The new guidelines recommend that companies tell consumers more clearly when they're being tracked, educate them on how Web tracking works and give them an easy way to opt out of being followed. According to the new policies, industry groups will monitor whether companies are breaking the guidelines and report violators to federal agencies, starting next year.

These guidelines are coming from trade associations that represent 5,000 companies. The consortium comprises the American Association of Advertising Agencies, Association of National Advertisers, Direct Marketing Association, the Interactive Advertising Bureau and the Better Business Bureau. Their members are some of the nation's largest companies, including Google Inc., General Electric Co., Microsoft Corp., Coca-Cola Co. and Procter & Gamble Co.

The groups say they are developing uniform links or a clickable icon that will take consumers from a Web site or an ad itself to a disclosure page.

The guidelines also call for companies to provide "reasonable" security for the data they collect and to limit how much data they retain. The companies are advised to get consumer approval before making material changes that would erode privacy protections. In particular, certain sensitive data such as children's personal information, financial data and medical records must have more protection.

"We think it's a very big leap forward," said Stu Ingis, a partner at Venable LLP, the law firm hired by the groups to undertake this effort.

Jeff Chester, executive director of the Center for Digital Democracy, said the online ad industry's promise to regulate itself through the new guidelines is designed to undercut the federal government's increased interest in overseeing online behavioral advertising.

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"The online ad industry is terrified that finally regulators and lawmakers have woken up from a deep slumber that people's data are being collected without them being aware and in control of it," he said.

Chester said the groups should not only protect children's private information, but also teens'. And he said all health and financial data should be covered, rather than just certain kinds.

"Congress needs to create fair rules (under which) online marketing can thrive but consumers have greater control on how the information collected is being used," Chester said.