Facebook targeted Web 2.0 start-up Twitter

Social networking company Facebook recently held acquisition talks with Twitter, the micro-blogging company, the Financial Times said.

The negotiations, put a valuation of as much as $500 million on Twitter, which has become one of Silicon Valley's most closely watched start-ups, the paper said.

The talks, which were first reported by the AllThingsD blog, were confirmed to the paper by two people familiar with the situation.

Facebook offered to pay for the acquisition in stock, the paper said, citing a person close to the situation.

Putting a value on Twitter's shares proved controversial, according to the paper.

If it used the $15 billion valuation at which Microsoft Corp bought a stake in Facebook last year, it would have valued the Twitter purchase at $500 million, though that investment was seen as a high-water mark for Web 2.0, the paper said.

One person close to the situation suggested to the paper that the $15 billion valuation for Facebook was the top end of a range of values the two companies talked about, implying that a deal might have valued both Facebook and Twitter at a much lower level.

Biz Stone, Twitter's co-founder, would not comment on the talks, but suggested that the company wanted to remain independent to build on its messaging service, the paper said.

Yahoo to replace Yang as CEO, ending rocky reign

Yahoo Inc. co-founder Jerry Yang is stepping down as chief executive, ending a rocky reign marked by his refusal to sell the Internet company to Microsoft Corp. for $47.5 billion — more than triple Yahoo's current market value.

The change in command announced Monday won't be completed until Yahoo finds his replacement. The Sunnyvale, Calif.-based company said it is interviewing candidates inside and outside Yahoo in a search led by its chairman, Roy Bostock, and the executive recruitment firm Heidrick & Struggles.

"Jerry and the board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new CEO who can take the company to the next level," Bostock said.

Yang, who started working on Yahoo with Stanford University classmate David Filo in 1994, will revert to "Chief Yahoo," a titular role he filled before replacing former movie studio boss Terry Semel as CEO in June 2007. He will also remain on Yahoo's board of directors.

"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," Yang said in a statement.

Sue Decker, Yahoo's president, is expected to be among the candidates to succeed Yang, although she has been an integral part of the management team that has exasperated the company's shareholders.

Google Adds On-Demand Indexing to Site Search

In another move to gain traction in the enterprise, Google on Thursday launched a new feature to help businesses that use its Site Search service instantly add and update Web pages.

Google Site Search serves all Web site content as search results with the aim of offering relevant and comprehensive coverage of a Web site. Google does this by creating special indexes that supplement pages already searched by Google.com.

"Customers today demand speed. Waiting around is so, well, yesterday -- as so many of the things we used to have to wait for are now at our fingertips online," said a blog posting by Google's Nitin Mangtani and Tom Duerig. "For a business running their own Web site, this means that visitors who turn to search expect to have access to the newest products, pages and announcements a site has to offer."

Google looking to invest in energy sector

(Reuters) - Internet search and advertising leader Google Inc is increasingly looking at the energy sector as a potential business opportunity, the New York Times reported.

Engineers at Google are hoping to soon unveil tools that could help consumers make better decisions about their energy use, the paper said.

To support these efforts, Google has hired engineers who are conducting research in renewable energy, former government energy officials, scientists and even a former NASA astronaut, whose experience with electronic gadgets is being put to use to develop energy tools for consumers, the Times said.

It added that the company's philanthropic unit, Google.org is considering large investments in projects that generate electricity from renewable sources.

"We want to make money, and we want to have impact," Dan Reicher, director for climate change and energy initiatives at Google.org told the Times.

But with a recession looming and oil prices dropping, investors might pressure Google to curtail its clean energy ambitions, the paper said.

Calls to Google seeking comment were not immediately returned.

Adobe's Flash Player 10 Takes on Microsoft's Silverlight 2

Just weeks after releasing the beta version of its Flash Player 10, code-named Astro, Adobe Systems this week released the final version for Linux, Windows and Macintosh computers. Flash Player 10 comes with a slew of new features and goes head-to-head with Microsoft's Silverlight 2, which was also released this week.

The multimedia products are competing head-to-head. Adobe has the lion's share of the market, but adoption of Microsoft's Silverlight has ramped up since it launched a year ago with 150 partners, including NBCOlympics.com, Blockbuster, Yahoo Japan and AOL.

Silverlight features content protection, deep zoom, a compatible subset of Microsoft's .Net framework, and built-in controls. Silverlight also supports several programming languages, including JavaScript, Visual Basic, C# and IronPython.

"We launched Silverlight just over a year ago, and already one in four consumers worldwide have access to a computer with Silverlight already installed," said Scott Guthrie, corporate vice president at Microsoft.

New Text Engine

Adobe's new Flash Player includes new 3-D effects, custom filters and effects, enhanced sound through audio mixing, and improved visual performance, including faster and smoother videos. The company said it has used 25 years of experience to develop its new text engine, which gives designers and developers more text-layout options and better control.

"Designers and developers know if they deliver video, online games, rich Internet applications, and other interactive experiences using Adobe Flash Player, they can reliably reach the entire Web," said David Wadhwani, general manager and vice president of the platform business unit at Adobe.

After releasing the beta version to developers, Adobe found some issues and has created fixes.

For example, in Linux, Flash Player 10 supported only browsers supported by each specific distribution of Linux. At the time the product was written, Firefox 3 was not supported by Ubuntu 7.

Another problem was with the 3-D effects. Components were not working properly, and objects were not being sent correctly to PDF files or printers.

Other problems included dynamic streaming. Adobe plans to release Adobe Flash Media Server in the future, which will be required to use dynamic streaming. The same is true for other features, including Real Time Media Flow Protocol and Speex for speech.

Quick Fixes

Adobe made several quick fixes before releasing the final version. Linux camera issues have been fixed, full-screen optimizations have been made, vector printing on Macs now works, and video-playback issues on PPC Macs have been resolved.

Another Adobe fix was for video-camera support. Flash Player 10 includes native support for cameras conforming to the Video4Linux v2 API, according to Adobe's Mike Melanson, who writes about the fix in his blog.

"Flash Player content reaches over 98 percent of Internet-enabled desktops, and more than 80 percent of online videos worldwide are viewed using Adobe Flash technology, making Flash the number-one format for video on the Web," said Tom Barclay, senior vice president of product development for Adobe. "We think the new features in Flash Player will change the look of the Web in under a year."

"In the last year, Adobe has increased its worldwide share of video on the web from 66 percent to 80 percent and MSFT Windows Media/Silverlight has dropped from 24 percent to 13 percent," Barclay added. "This is both because Flash is making video more important on the Web and because sites are transitioning to Flash from other technologies."

Microsoft ad deal with Yahoo may still be possible

NEW YORK (Reuters) - Microsoft Corp Chief Executive Steve Ballmer said a Web search advertising deal with Yahoo Inc makes economic sense and may still be possible, though the two sides are not in any discussions.

Shares of Yahoo jumped as much as 17 percent as investors hoped Ballmer's comments could lead to the two sides returning to the negotiating table. But gains were pared back to about 12 percent after Microsoft issued a statement saying it had no interest in buying Yahoo.

Talks between the two broke off in July after Yahoo rejected Microsoft's proposal to buy its search advertising business and enact a revenue-sharing partnership.

Yahoo had also rebuffed in May a full acquisition bid from Microsoft that was priced at $33 per share, or $47.5 billion. Instead, Yahoo signed a search advertising pact with Web leader Google Inc, which is being scrutinized by regulators.

"Perhaps there will continue to remain opportunities to partner around search," Ballmer told a Gartner Inc conference in Orlando, Florida.

"We are not in any discussions with them. We'll see. They want to remain independent. There are probably still opportunities around search. I think it would still make sense economically for their shareholders and ours."

Since talks broke off, Yahoo shares have plunged to a 5-1/2-year low of $11.37, weighed by concerns over the outlook for Web display advertising, as major advertisers such as banks and automakers cut back spending.

"We offered 33 bucks not too long ago and it's 11 and a half. So I don't know what price might have got the job done," Ballmer said, responding to a question from Gartner analyst David Smith on whether Microsoft might take another stab at buying Yahoo now that its stock price is so low.

"It's clear that Yahoo did not want to sell the company. It did not want to sell when we offered 33 ... They probably think it's worth at least 33 today."

Yahoo declined comment. Its shares rose to as high as $13.73 on Thursday, before settling at around $13.16 in late trading on the Nasdaq.

"Our position hasn't changed. Microsoft has no interest in acquiring Yahoo; there are no discussions between the companies," a spokesman for Microsoft said in a statement.

Microsoft shares were up 3.6 percent at $23.48.

Despite the market's excitement, any pursuit of new talks would be impeded by several issues, including Yahoo's severely depressed stock price and the poor outlook for the advertising market due to the weak economy, analysts said.

"The larger issue is strategic fit," Cross Research analyst Richard Williams said. "Microsoft clearly has spent money and changed its focus to 'build' rather than 'buy.'

He added that for businesses driven by advertising, such as Microsoft and Yahoo's Internet operations, it is the wrong time for a deal with markets reeling and consumer confidence plummeting.

"Going into a recession is about the worst time to buy an advertising firm," Williams said. "It's hard to know how hard they are going to be hit and how low they are going to go."

Microsoft backs using videogames as teaching tools

SAN FRANCISCO (AFP) - Microsoft's research arm and a set of US universities are creating a first-of-its-kind institute devoted to using videogames to teach math, science and engineering to school children.

A Games For Learning Institute (G4LI) is being established at New York University in Manhattan and guaranteed funding for at least three years.

G4LI research will focus on the potential of videogame as tools to teach sciences and other technology-related subjects to middle school children, particularly girls and minorities, according to Microsoft.

"Technology has the potential to help reinvent the education process, and excite and inspire young learners to embrace science, math and technology," Microsoft chief research and strategy officer Craig Mundie said Tuesday.

"The Games for Learning Institute at NYU is a great example of how technology can change how students learn, making it far more natural and intuitive."

Microsoft is providing 1.5 million dollars to fund the institute and an equal amount of money is being provided Columbia University, Dartmouth College, Parsons, Polytechnic Institute of NYU, and other colleges.

"Middle school is a critical stage for students, a time when many are introduced to advanced math and science concepts," said NYU computer science professor Ken Perlin, who will direct G4LI.

"Many students become discouraged or uninterested and pour their time at home into gaming. Ironically, we think gaming is our starting point to draw them into math, science and technology-based programs."

Educators are hoping that by adding videogames to their education arsenals they will be able to win over Internet generation students whose math and science skills are on a disturbing decline.

"While educational games are commonplace, little is known about how, why or even if they are effective," said John Nordlinger, senior research manager for Microsoft Research's gaming efforts.

The G4LI will evaluate game prototypes and test them in New York City schools. Results will be shared with researchers, game developers and educators, Microsoft said.

A Microsoft Gaming Initiative has invested more than three million dollars in educational game kits, studies and academic events since 2004.

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."