Where's broadband in US?

The national stimulus package passed by Congress in February may have been too enthusiastic about spending money on one particular project: figuring out where broadband Internet access is available and how fast it is.

The $787 billion stimulus bill championed by the Obama administration set aside up to $350 million to create a national broadband map that could guide policies aimed at expanding high-speed Internet access. That $350 million tag struck some people in the telecommunications industry as excessive, compared with existing, smaller efforts. The map won't even be done in time to help decide where to spend much of the $7.2 billion in stimulus money earmarked for broadband programs.




Now it appears the final cost won't be as high as $350 million — though just how much it will be is unclear.

To ensure the mapping money is used "in a fiscally prudent manner," the National Telecommunications and Information Administration signaled Wednesday it would initially spend more than $100 million, and then reassess the program.

The agency, which is part of the Commerce Department, said it has received requests for $107 million in funding for projects that would map broadband in individual states over the first two years. The states want another $26 million for various purposes over five years, including steps to encourage broadband demand. On top of that, the NTIA will have to spend more money to collate the statewide maps into a national one.

But while the map should run much less than the $350 million cap set by Congress, the total still looks like it will be far higher than estimates based on the costs of smaller mapping programs in individual states.

In North Carolina, for instance, state broadband authority e-NC spends at most $275,000 per year on maintaining a map of broadband availability in the state, detailed enough to list individual addresses, according to executive director Jane Smith Patterson.

Rory Altman, director at telecommunications consulting firm Altman Vilandrie & Co., which has helped clients map broadband availability in some areas, said $350 million was a "ridiculous" amount of money to spend on a national broadband map.

Even $100 million might be high. The firm could create a national broadband map for $3.5 million, and "would gladly do it for $35 million," Altman said.

Dave Burstein, editor of the DSL Prime broadband industry newsletter, believes a reasonable cost for the map would be less than $30 million.




The map should reveal what most individuals already know: whether their homes can get broadband, and how fast it is. Officially, the goal for the map is to help shape broadband policy and determine where best to invest government funds. It may also help consumers shopping for Internet service.

However, the map won't be ready in time to influence the first round of broadband grants and loans funded by the stimulus package. That money will start going out this fall. And the map likely won't be finished before February's scheduled release of a national broadband plan being developed by the Federal Communications Commission, which is also mandated by the stimulus bill.

About two-thirds of U.S. homes already have broadband. It's available to many more, perhaps 90 percent of homes, but the figure is uncertain because of the lack of authoritative nationwide studies. The cable industry alone says it covers 92 percent of U.S. households.

When the Pew Internet and American Life Project surveyed people who didn't have broadband in 2007 and 2008, it found that most of them aren't interested in it, find the Internet too hard to use, or don't have computers. Lack of available broadband was the third most common reason.

Still, there is concern that the U.S. is falling behind other countries in the reach and speed of its Internet connections, and that this might hinder economic growth. Advocates of expanding broadband also worry that some rural areas might never get high-speed Internet because service providers don't see a payoff in extending their lines there.

Identifying those areas will be a major thrust of the mapping project. The maps will show broadband availability, type (phone or cable, for example) and speeds for each small cluster of homes, roughly equivalent to a city block in urban areas.

Each state's grant for mapping will go to either a nonprofit or a government agency. Internet service providers have already committed to handing over data about where they have broadband coverage, so the main job will be to collect and translate that information into a map.

Mark Seifert, who is overseeing the broadband grant and mapping programs at the NTIA, offers several reasons why the federal government may spend proportionally more on mapping than some states. For one thing, he said, most efforts that have been done in states have focused on so-called "last-mile" connections that link homes and businesses with the broader infrastructure of the Internet. The NTIA also wants extensive data on that behind-the-scenes Internet infrastructure.




What's more, since much of the mapping data will come from phone and cable companies, the NTIA wants the information to be independently verified — which could involve knocking on doors to confirm where broadband is and is not available and conducting other on-the-ground checks.

"You can spend less money on a map ... but you get what you pay for," he said. "Data costs money."

Although the map will not be done in time to guide this round of broadband funding in the stimulus package, it could prove useful for later broadband deployment programs. And it could help set priorities in the years ahead for huge federal programs such as the Universal Service Fund and the Rural Utilities Service, which spend billions of dollars annually to subsidize telecom services.

In addition to the NTIA's mapping project, there's a parallel push at the FCC to gather more detailed data on broadband subscribers. Both efforts are designed to aid the Obama administration's goal of "data-driven decision making" in setting telecom policy, said Colin Crowell, a senior counselor to FCC Chairman Julius Genachowski.

"There is a voracious appetite for all kinds of broadband data," said Crowell, who helped write the broadband mapping legislation as a staffer on a House subcommittee overseeing telecommunications. "Policymakers have been wringing their hands for several years that we don't have accurate data on broadband deployment and adoption."

Facebook to let users tag friends in status posts

Facebook will soon let users "tag" their friends in their posts, similar to how they already can with photos.

Product manager Andrew Huang said the status tags — coming over the next several weeks — are "all about engagement." He said Facebook wants to let users reference their real-world connections in their status posts.




For example, if a status update mentions having lunch with a friend, the user can tag the post with that friend's name. That'll make it easier for someone to pull up all status posts mentioning that particular friend, regardless of who made the posts.

It's similar to how someone can now easily pull up photos of a friend, regardless of which user had taken and shared the image. People will also be able to reference brands and businesses that have Facebook pages, as well as events, groups and applications.

To use the feature, users will have to type the "at" symbol in their post. This will activate a drop-down menu, from which users can select the friends to reference. The "at" symbol won't appear in the post itself; only a link with the person's name will show up.

Apple telegraphs iPods; fans see Beatles, tablets

Once again, it's time to peer into Apple Inc. CEO Steve Jobs' cup and try to read the tea leaves.

Apple, as usual, has said almost nothing about the new products it plans to unveil at an invitation-only affair Wednesday in San Francisco. Playing their part, bloggers and Apple fans have filled the vacuum with "leaks," rumors and wish-list items that, while often far-fetched, can't completely be ignored. Sometimes, just sometimes, a bit of truth shines through.




In recent years, the Cupertino, Calif.-based company has used its September event to unveil new iPods, which have grown smaller, sleeker and more powerful with each new generation.

This year's event is along the same lines, if Apple's e-mail to reporters is any indication.

The invitation looks like an iTunes gift card and features one of Apple's iconic, iPod-toting silhouettes and the words, "It's only rock and roll, but we like it," a reference to a 1970s Rolling Stones song.

That still left room for creative speculation. Detail-starved bloggers took a close look at the image and noted that the headphones jack into the large-ish iPod at the bottom — making it an iPod Touch, not an iPod classic. The observation has added weight to one rumor that Apple could discontinue the classic, the only model left to use a hard drive instead of flash memory.

Of course, other rumors postulate an even bigger hard drive on an updated iPod classic, which already boasts a 120-gigabyte hard drive, far beefier than any other iPod. Still more speculation, this time based on what appear to be photos of new iPod cases, call for built-in digital cameras on Touch and Nano models.

Apple watchers are also looking out for the ninth incarnation of iTunes, the media management software that helps people keep track of their music, videos, podcasts and data and send it to iPods and iPhones.




"Leaked" screen shots of unknown origin and varying quality have cropped up online that indicate iTunes might be melded into social networking sites including Facebook and music-enthusiast network Last.fm. According to the buzz, iTunes 9 may also get better at helping people organize their iPhone and iPod Touch applications, and support Blu-Ray disc playback.

One of the more solid predictions is that Apple will be packaging digital albums with videos, liner notes and album art that could be viewed in iTunes — to help revive consumers' interest in buying more than just one or two tracks. The Associated Press and other media reported in July that Apple and the four major recording labels were working on launching this package in the fall.

Two of the flashiest predictions have lost steam in the run-up to 9/9/09. For a while, the date itself seemed to portend that Apple might finally have scored the right to sell the Beatles' music on iTunes. A digitally remastered collection of the Beatles' oeuvre is due out on CDs on the same day, as is an all-Beatles edition of the popular play-along video game "Rock Band." Beatlemania-infected Apple fans also point to the recurrence of the number nine in band lore.

But the use of the Rolling Stones line in the invitation has quieted most proponents of this scenario. It might just be standard Apple misdirection, but a person familiar with the situation told the AP there's no Beatles-Apple deal. The person was not authorized to talk about the matter and spoke on condition of anonymity. A statement from EMI, the Beatles' record label, said simply that discussions on digital distribution continue.

Analysts with contacts in Apple's supply chain have predicted all year that the company will come out with at least one "tablet"-style device resembling a giant iPod Touch, based on Apple's purchases of screens that are bigger than an iPod but smaller than a MacBook. Blogs and message boards lit up when it seemed Apple was finally ready to show it off. But analysts including Piper Jaffray's Gene Munster and Shaw Wu of Kaufman Bros. both see a 2010 release as more likely.

One more thing: CEO Jobs hasn't presided over one of these pep-rally-style product launches since Apple gave its laptop line a light makeover last October. His lieutenants, Tim Cook and Phil Schiller, Apple's COO and top marketing executive, have been holding their own. But now that Jobs is back from his nearly six-month medical leave, fans are still holding their breath for an appearance from the maestro.

Web-monitoring software gathers data on kid chats

Parents who install a leading brand of software to monitor their kids' online activities may be unwittingly allowing the company to read their children's chat messages — and sell the marketing data gathered.

Software sold under the Sentry and FamilySafe brands can read private chats conducted through Yahoo, MSN, AOL and other services, and send back data on what kids are saying about such things as movies, music or video games. The information is then offered to businesses seeking ways to tailor their marketing messages to kids.




"This scares me more than anything I have seen using monitoring technology," said Parry Aftab, a child-safety advocate. "You don't put children's personal information at risk."

The company that sells the software insists it is not putting kids' information at risk, since the program does not record children's names or addresses. But the software knows how old they are because parents customize its features to be more or less permissive, depending on age.

Five other makers of parental-control software contacted by The Associated Press, including McAfee Inc. and Symantec Corp., said they do not sell chat data to advertisers.

One competitor, CyberPatrol LLC, said it would never consider such an arrangement. "That's pretty much confidential information," said Barbara Rose, the company's vice president of marketing. "As a parent, I would have a problem with them targeting youngsters."

The software brands in question are developed by EchoMetrix Inc., a company based in Syosset, N.Y.

In June, EchoMetrix unveiled a separate data-mining service called Pulse that taps into the data gathered by Sentry software to give businesses a glimpse of youth chatter online. While other services read publicly available teen chatter, Pulse also can read private chats. It gathers information from instant messages, blogs, social networking sites, forums and chat rooms.

EchoMetrix CEO Jeff Greene said the company complies with U.S. privacy laws and does not collect any identifiable information.

"We never know the name of the kid — it's bobby37 on the house computer," Greene said.

What Pulse will reveal is how "bobby37" and other teens feel about upcoming movies, computer games or clothing trends. Such information can help advertisers craft their marketing messages as buzz builds about a product.

Days before "Harry Potter and the Half-Blood Prince" opened in theaters on July 15, teen chatter about the movie spiked across the Internet with largely positive reactions.

"Cool" popped up as one of the most heavily used words in teen chats, blogs, forums and on Twitter. The upbeat comments gathered by Pulse foreshadowed a strong opening for the Warner Bros. film.

Parents who don't want the company to share their child's information to businesses can check a box to opt out.

But that option can be found only by visiting the company's Web site, accessible through a control panel that appears after the program has been installed. It was not in the agreement contained in the Sentry Total Home Protection program The Associated Press downloaded and installed Friday.




According to the agreement, the software passes along data to "trusted partners." Confidentiality agreements prohibit those clients from sharing the information with others.

In recognition of federal privacy laws that restrict the collection of data on kids under 13, the agreement states that the company has "a parent's permission to share the information if the user is a child under age 13."

Tech site CNet ranks the EchoMetrix software as one of the three best for parental control. Sales figures were not available.

The Sentry and FamilySafe brands include parental-control software such as Sentry Total Family Protection, Sentry Basic, Sentry Lite and FamilySafe (SentryPC is made by a different company and has no ties with EchoMetrix).

The Lite version is free. Others range from $20 to download and $10 a year for monitoring, to about $48 a year, divided into monthly payments.

The same company also offers software under the brands of partner entities, such as AmberWatch Lookout.

AmberWatch Foundation, a child-protection nonprofit group that licenses its brand to EchoMetrix, said information gathered through the AmberWatch-branded software is not shared with advertisers.

Practically speaking, few people ever read the fine print before they click on a button to agree to the licensing agreement. "Unless it's upfront in neon letters, parents don't know," Aftab said.

EchoMetrix, formerly known as SearchHelp, said companies that have tested the chat data using Pulse include News Corp.'s Fox Broadcasting and Dreamworks SKG Inc. Viacom Inc.'s Paramount Pictures recently signed on.

None of those companies would comment when contacted by the AP.

EchoMetrix has been losing money. Its liabilities exceeded its assets by nearly $25 million as of June 30, according to a regulatory filing that said there is "substantial doubt about the company's ability to continue as a going concern."

To get the marketing data, companies put in keywords, such as the name of a new product, and specify a date range, into Pulse. They get a "word cloud" display of the most commonly used words, as well as snippets of actual chats. Pulse can slice data by age groups, region and even the instant-messaging program used.

Pulse also tracked buzz for Microsoft Corp.'s "Natal," a forthcoming Xbox motion-sensor device that replaces the traditional button-based controller. Microsoft is not a client of Pulse, but EchoMetrix used "Natal" to illustrate how its data can benefit marketers.

Greene said children's conversations about Natal were focused on its price and availability, which suggested that Microsoft should assure teens that there will be enough stock and that ordering ahead can lock in a price.

Competing data-mining companies such as J.D. Power Web Intelligence, a unit of quality ratings firm J.D. Power and Associates, also trolls the Internet for consumer chats. But Vice President Chase Parker said the company does not read any data that's password-protected, such as the instant message sessions that EchoMetrix collects for advertisers.

Suresh Vittal, principal analyst at Forrester Research, said EchoMetrix might have to make its disclosures more apparent to parents.

"Are we in the safeguarding-the-children business or are we in the business of selling data to other people?" he said. If it's the latter, "it should all be done transparently and with the knowledge of the customer."

Mitsubishi HDTVs Will Have VUDU Service Built In

The number of HDTV sets with an Internet-based movie service increased Thursday with Mitsubishi's announcement that two of its new TVs will feature the VUDU service. The announcement follows a series of similar moves from other TV manufacturers and online video services.

The models are the Unisen Diamond LT-46249 and LT-52249, both 1080p flat-panel HDTVs with a 16-speaker sound system and Dolby Digital Plus 5.1 surround sound. Both come with an Ethernet port for high-speed Internet.




Two Months Included

The VUDU service is part of the circuitry and software, and Mitsubishi is including a two-month subscription to the service. VUDU has more than 2,200 HD movies in a library of about 16,000 titles, and will also offer access to YouTube, Flickr, Picasa, Pandora and more than 80 channels of on-demand TV.

Mitsubishi's announcement comes as VUDU has been redefining itself, with a strategic announcement in July focusing on its second-generation platform that is "optimized for Internet-capable smart TVs."

The first participating consumer electronics company was LG, which embedded the VUDU BX100 set-top box into its Netcast models. The platform includes instant fast forward and rewind, instant start, and a redefined user interface.

The emphasis on platform is redirecting VUDU's efforts toward offering its embedded service through consumer devices, rather than its stand-alone set-top boxes, to get the company back on a solid path. In January, the company laid off 15 percent of its staff on top of a 15 percent reduction last fall.

In May, VUDU said its BX100 functionality would be added to Entone set-top boxes and VCRs via a software upgrade. The Entone box is used by smaller video providers, such as regional phone companies.

Netflix has also announced that its online service will be added to TVs from such manufacturers as Sony, and Samsung has a similar deal with Blockbuster.




'Isn't Surprising'

Ross Rubin, director of industry analysis for consumer technology at research firm NPD, said the Mitsubishi-VUDU deal "isn't surprising," since Mitsubishi was already bundling a VUDU set-top box with its TVs. TV manufacturers, he said, are looking to have "a range of connected video services," and both TV makers and VUDU are looking to differentiate themselves.

Forrester's James McQuivey said the difference between Netflix, "arguably the most successful online video service in operation today," and VUDU is that "Netflix content is not as complete as what VUDU offers."

"If you want to watch the latest movies, you can't do that on Netflix, but you can on VUDU, in streamed HD," he said. In that sense, he noted, "they're not competitive with each other, which is why the ideal television will offer both services, as LG's TVs do."

McQuivey added that he expects there will be some kind of on-demand video service through all Internet-connected TVs and Blu-ray players, "whether it's VUDU, Blockbuster or Amazon."

Amazon.com makes its case against Google book deal

Online bookseller Amazon.com Inc. is warning a federal judge that Internet search leader Google Inc. will be able to gouge consumers and stifle competition if it wins court approval to add millions more titles to its already vast digital library.

The harsh critique of Google's 10-month-old settlement with U.S. authors and publishers emerged this week in a 41-page brief that Amazon filed in an attempt to persuade U.S. District Judge Denny Chin to block the agreement from taking effect.




A flurry of filings opposing and supporting the class-action settlement is expected by Friday — the deadline for most briefs in the case. At least two other Google rivals, Microsoft Corp. and Yahoo Inc., are expected weigh in with their opposition by then.

Microsoft, Yahoo and Amazon are all part of a group called the Open Book Alliance, formed last month to rally opposition to the Google book settlement. Other participants include the Internet Archive, the New York Library Association and the American Society of Journalists and Authors. The Science Fiction and Fantasy Writers of America, representing about 1,500 authors, on Wednesday became the latest group to join the alliance.

The U.S. Justice Department, which is taking a look at Google's book deal, has until Sept. 18 to share its thoughts on the case. That filing may provide a better indication whether Justice believes Google's deal with authors and publishers would violate U.S. laws set up to prevent predatory pricing and promote competition.

Amazon left little doubt where it stands. Its brief brands the provisions of Google's settlement as "a high-tech form of the backroom agreements that are the stuff of antitrust nightmares."

Although not all the critics have been as strident as Amazon, opposition has been mounting to Google's plans to create a registry that will sell digital copies of copyright-protected books on behalf of U.S. authors and publishers unless they withdraw from a class-action settlement. Even the German government expressed its opposition to the settlement earlier this week, even though the agreement only covers U.S. copyrights.

Google is downplaying the objections of Amazon, as well as the anticipated protests from Microsoft and Yahoo, as potshots from frightened rivals.

"The Google books settlement is injecting more competition into the digital books space, so it's understandable why our competitors might fight hard to prevent more competition," Google spokesman Gabriel Stricker said.

Seattle-based Amazon not only sells books, both in print and digital form, but also is trying to create a new distribution channel with its electronic reader, the Kindle.

The Authors Guild, one of the parties that reached the settlement with Google, thinks Amazon is opposing the settlement because it wants the Kindle be the primary method for buying and reading digital books. "Amazon apparently fears Google could upend its plans," said Paul Aiken, the guild's executive director.

Google would turn over most of the revenue from its digital book sales to the authors and publishers, just one of the many benefits that the Mountain View-based company is touting. What's more important, Google contends, is that millions of out-of-print books and other works collecting dust on library shelves would be more accessible if they are stored in its digital library.



More than 10 million books already have been scanned into Google's electronic index since 2004. The settlement would clear the legal hurdles that have been preventing Google from stockpiling even more digital books to show and possibly sell.

While the concept of a library accessible around the clock from anywhere with an Internet connection has plenty of supporters, opponents cite concerns over how much control Google would be able to exert over pricing and how much information the company intends to collect about the books that people are reading.

Even some proponents of the settlement are telling Chin that he probably needs to address the monopoly concerns and privacy issues raised by the deal.




"This is a pivotal moment in the history of access to recorded information, not unlike the introduction of moveable type or the birth of the Internet," Susan Benton, president of the Urban Libraries Council, wrote in an Aug. 19 letter to Chin.

A court hearing on the settlement is scheduled in New York on Oct. 7.

Many of worries about the book settlement appear driven by the market power that Google has already gained while running the Internet's most lucrative advertising system along with the Web's most popular search engine.

In its brief, Amazon suggested the agreement could pave the way for Google to supplant Amazon as the Internet's largest book store, too.

Amazon maintains it uses its clout to negotiate lower prices for its customers "by playing one publisher off against another."

If Google's settlement is approved, Amazon believes it will lose negotiating leverage because prices will be set through the central registry that is supposed to be created. Authors and publishers joining the registry can either name their own prices or depend on a Google formula that the company says will generate the most sales. Amazon derided the registry's pricing rules as "highly suspect, if not per se illegal."

"The use of collective pricing by a single organization without any checks or balances presents a significant danger that consumers will be overcharged," Amazon warned.

What's more, Amazon contends the settlement will give Google the right to make digital copies of a huge stack of books that won't be available to any other online seller or electronic subscription service. In particular, Amazon and other critics are focused on a part of the settlement that will enable Google to scan millions of "orphan works" — out-of-print books that are still protected by copyright but the whereabouts of the writers are unknown.

Google maintains those concerns are unfounded because the settlement is nonexclusive, but Amazon and other opponents say it would be too expensive and time-consuming for potential rivals to secure the digital rights to orphan works.

"Google's ability to offer and sell far more titles than Amazon and other booksellers will make Google's Web site the destination of choice for persons desiring to view or purchase books over the Internet," Amazon said. "Google will certainly find a way to use that economic advantage to make consumers pay more."

EBay partially undoes Skype deal, selling majority

Rather than enduring the uncertainty of spinning off the Skype telecommunications service through a public stock offering, eBay Inc. has found a different way out: It is selling the majority of Skype for about $2 billion to a group of private investors.

The deal will help eBay undo its 2005 acquisition of Skype, a deal that puzzled analysts. Despite Skype's strong, steady growth, it was hard to see how eBay, which specializes in running online marketplaces and facilitating Internet payments, needed to own a service that lets people make free or cheap calls on cell phones and computers.




EBay said Tuesday that it will trade a 65 percent stake in the business to a group of private investment funds for $1.9 billion in cash and $125 million to be paid later. EBay will own the other 35 percent.

Investors in the group of buyers include Web browser pioneer and eBay board member Marc Andreessen and former Skype board members Danny Rimer and Mike Volpi.

Rimer is also an original Skype investor, while Volpi is the former CEO of online video startup Joost, which was started by the same team that created Skype.

The deal, which is expected to close in the fourth quarter, halts at least temporarily a plan eBay announced in April to spin off Skype through an initial public offering. Skype's management team, including president Josh Silverman, will stay in place through the change in control, and eBay will retain one seat on Skype's board.

The agreement values Skype at $2.75 billion, eBay said.

This is about $380 million less than the $3.13 billion eBay paid for Skype — which includes the original acquisition price of $2.6 billion, plus $530 million paid in 2007 to several of Skype's investors because the unit met certain targets for profit and growth.

EBay had already acknowledged that Skype was worth much less than it had paid for Skype by taking a $900 million charge to write down Skype's value on its books in 2007. EBay CEO John Donahoe said in an interview that the value eBay got for Skype in Tuesday's deal is "well above what most people expected."

Donahoe said the deal is "a real win-win-win," as it lets eBay's management focus on its marketplace and PayPal businesses, while allowing eBay shareholders to keep a stake in Skype's future success. It also gives Skype an ownership team that "believes passionately" in its future, he said.

EBay shares fell along with the broader market Tuesday, closing at $21.68, down 46 cents, 2.1 percent.

The deal is the latest chapter in a tale that began four years ago when eBay bought Skype, hoping eBay buyers and sellers would use the service to communicate. Skype was founded by Niklas Zennstrom and Janus Friis, creators of the music downloading service Kazaa, which had riled the recording industry.

EBay's expectations for how its users would adopt Skype didn't take hold. For the San Jose-based Web auction pioneer, "Skype has been a distraction," Lazard Capital Markets Colin Sebastian said. "This allows them to focus on turning around the core marketplace."

Although it didn't turn out to be the best fit for eBay, Skype has become increasingly popular overall. It counted more than 480 million users at the end of the second quarter — up 42 percent from the same time a year earlier. Users shouldn't notice any changes to the service as control shifts hands.




It's also likely profitable. EBay doesn't break out Skype's earnings, but based on Skype's 2008 revenue of $551 million, Gabelli and Co. analyst Robert Haley believes Skype did make money last year. EBay has predicted Skype will see more than $1 billion in revenue by 2011.

Haley said the deal was good for eBay because it lets the company cash out of Skype for more than it could have expected in an IPO — and sooner, since a public offering might not have come until next year. Partially because of uncertainty about the markets, IPO activity has been lower than normal since the financial crisis.

The new majority owners could still decide to pursue an IPO. Donahoe called that "a potential outcome in the medium to longer term."

The group of investors buying the stake includes Andreessen Horowitz, the new $300 million fund set up by Andreessen. Led by the private equity firm Silver Lake, the group also includes Index Ventures and the Canada Pension Plan Investment Board.

Donahoe said the group approached eBay several weeks ago — just as eBay was ready to submit its IPO registration filing to the Securities and Exchange Commission. He would not comment on whether eBay spoke with other potential buyers, but did say that in the negotiations with this group eBay always intended to hold on to a portion of Skype.

"There's never been any doubt in my mind in Skype's potential ... it just didn't fit in eBay's portfolio going forward. This allows us to sort of have our cake and eat it too," he said.

Icahn pares Yahoo stake with sale of 12.7M shares

Financier Carl Icahn, one of Yahoo Inc.'s largest stockholders, has sold 12.7 million shares to whittle his holdings in the slumping Internet company down a percentage point to a 4.5 percent stake.

The sales occurred in the stock market's last three trading sessions, according to a Monday filing with the Securities and Exchange Commission.




Icahn, who also is on Yahoo's board of directors, sold the shares at prices ranging between $14.74 and $14.93 each, leaving him with 62.9 million shares still under his control. He paid an average of about $25 per share when he bought most of his Yahoo stake last year.

Yahoo Inc. shares fell 24 cents Monday to close at $14.61.

Icahn's stock sales came just a month after Sunnyvale-based Yahoo agreed to an Internet search partnership with Microsoft Corp. that he tried to arrange last year when he was still looking to oust Yahoo co-founder Jerry Yang as chief executive. Yang relinquished the CEO reins and was replaced by Silicon Valley veteran Carol Bartz earlier this year.




The terms of the Microsoft alliance announced last month didn't include the large cash payments that were part of the terms Icahn lobbied for last year. That disappointed investors, causing Yahoo's stock to fall by 15 percent since it struck the Microsoft deal.

Icahn was traveling Monday and unavailable for comment, according to his spokeswoman.

In the SEC filing, Icahn described the sales as part of an effort to balance his portfolio of technology investments. He said he remains optimistic about Yahoo's long-term prospects with Bartz at the helm and believes in "the wisdom" of the Microsoft partnership.