What direction for HP with Fiorina departure?

The industry and media debate about the successes or otherwise of sacked Hewlett-Packards CEO and Chairman, Carly Fiorina continues, with the New York Times saying that no matter who succeeds her as chief executive, the challenge will be the same: to shift the company's center of gravity to businesses with more ample profits.

The paper suggests in its 11 February report that one swift step in that direction - and a step Hewlett-Packard has considered, according to an industry executive close to the company - would be to buy Eastman Kodak or Xerox to complement and expand Hewlett-Packard's most profitable division, the printer, ink and imaging business.

Currently, the company's printing and imaging division contributes nearly 75 percent of its profits,according to the NYT., but represents only 30 percent of its US$81 billion in yearly revenues. The rest of the company, particularly its personal computer and corporate computer businesses, are clearly not carrying their weight, observes the paper.

For the long term, industry analysts say, Hewlett-Packard has three options - break up the company, improve the efficiency of its current businesses, or make a sizable acquisition to add to its profitable units like services or printing.

The report says that Hewlett-Packard has closely studied potential deals on that front, including Eastman Kodak and Xerox - the stock market value of Kodak is US$9.8 billion and Xerox's value is US$14.2 billion.

Hewlett-Packard has the cash to make such a big move, says tghe paper, as tt has more than US$14 billion in foreign profits that qualify for a one-time tax break passed by Congress, if it brings the money back to the United States for investment.

Hewlett-Packard has insisted that the ouster of Ms. Fiorina on Wednesday is not a sign that the company has lost faith in the course she set. Ms. Fiorina championed the controversial purchase of Compaq Computer in 2002, a move that greatly increased Hewlett-Packard's dependence on the cutthroat PC business and the market for the larger computers that run corporate data centers.

One analyst said that Hewlett-Packard's shareholders would do best if the company were split into separate companies, with an estimate that the break-up value of Hewlett-Packard at US$27 to US$28 a share, with the printing business alone worth about US $20 a share.

The NYT says that even if there are any strategic changes at Hewlett-Packard, they will most likely not come for several months, after a new chief executive is named.

So for the foreseeable future, the paper adds, Hewlett-Packard will focus on improving the performance of its existing businesses, and to do that, analysts say, will require ruthless cost-cutting and quick moves into new markets where profit margins are higher.

Microsoft investigates malware

Microsoft is investigating a malicious program that attempts to turn off the company's newly released anti-spyware software for Windows computers.

The Register/AP report (11 Feb.) that Microsoft has said the program, known as ``Bankash-A Trojan,'' could attempt to disable or delete the spyware removal tool and suppress warning messages. It also may try to steal online banking passwords or other personal information by tracking a user's keystrokes.

To be attacked, Microsoft said a user would have to be fooled into opening an e-mail attachment that would then start the malicious program, but the company had not seen any evidence so far that the program is widespread.

Microsoft has recommended that users who believe they might be infected use antivirus software, such as products made by Symantec or McAfee, to try to remove it.

Microsoft has said it plans to offer its own paid antivirus software, but it has not yet set a date for that release.

The Register reports that Microsoft AntiSpyware is currently being offered in test form, and about 6 million people have downloaded it so far. The free product aims to help users find and remove spyware, or programs that can secretly monitor a users' internet surfing habits, spew out relentless pop-up ads and slow computer performance.

Microsoft and Pfizer sue web sites over generic Viagra

Microsoft and Pfizer have taken coordinated legal action against two groups sending junk e-mail messages that offer illegal generic versions of Viagra, Pfizer's best-selling drug for erectile dysfunction.

The New York Times reports (11 Feb.) that the two companies filed separate lawsuits against the people behind the CanadianPharmacy site at www.cndpharmacy.com, and the operators of Pharmacy Direct at www.myepharmacydirect.com.

The paper says the Microsoft suits, filed in Washington State court, claim each group sent deceptive junk e-mail messages, known as spam, that violated federal and state antispam laws and flooded users of its MSN Hotmail service. Pfizer's suits, filed in federal court in Manhattan, accuse the sites of violating its trademark and of unfair competition.

Microsoft has been active in suing suspected spammers, including several online pharmacies. In August, Pfizer took legal action against 30 Web sites selling a generic version of Viagra.

But this was the first time the companies had worked together, jointly hiring private investigators to track down the operators of the two sites.

Separately, Microsoft filed three additional suits against other groups of online pill purveyors, and Pfizer has challenged internet domain names that include its trademarks, like www.half-price-viagra.com.

The NYT says hundreds of web sites sell drugs illegally, and the US Food and Drug Administration has said there had been a few reports of health problems stemming from such sales, with tests finding many drugs with impurities and improperly labeled dosages.

The FDA has taken action against many site operators in the United States, and has engaged foreign authorities to help out as well, reports the NYT.

Dell sets revenue record

Dell has just reported that an increase in sales to corporations led to record revenue in the fourth quarter, although profit slipped slightly because of a one-time tax charge.

The New York Times reports (11 Feb.) that Dell, the leading personal computer maker, earned US$667 million, or 26 cents a share in the quarter, compared with US$749 million, or 29 cents a share, in the period a year ago, including a one-time tax charge of US$280 million. Excluding the charge, Dell earned 37 cents a share, topping estimates of analysts surveyed by Thomson Financial, who had forecast a profit of 36 cents a share.

Dell said the tax charge was taken in anticipation of repatriating foreign earnings at a lower tax rate, a provision of the Bush administration's American Jobs Creation Act.

The paper reports Dell revenue climbed 17 percent to US$13.46 billion, from US$11.51 billion a year ago. Dell forecast first-quarter earnings of 37 cents a share on sales of US$13.4 billion, while analysts estimate earnings of 36 cents a share on revenue of US$13.5 billion.

The company said purchases by business customers increased 19 percent, an indication that it wasa healthy sector of the economy, and sales of servers and storage systems were particularly strong, climbing 20 percent over last year.

In Europe, sales rose 22 percent in the fourth quarter, and 21 percent in Asia.

The NY says that not all analysts saw Dell's report as a disappointment, with one industry analysts saying that "the quarter was sensational given the environment", with the company growing faster than the market.

According to the paper, Wall Street appeared to be discounting Dell's aggressive move into the printer market, which is led by Hewlett-Packard.

There was speculation, the paper adds,that the ouster of Carly Fiorina as chief executive of Hewlett-Packard could provide Dell with an opportunity to grab market share. With its acquisition of Compaq in 2002, Hewlett overtook Dell to take the role of market leader. but during 2004, Dell won back the No. 1 spot as Hewlett stumbled.

The company told media that Dell was on course to reach US$60 billion in annual sales by the end of 2005, and is focusing on annual sales of US$80 billion, though it declined to provide a timetable for achieving that goal.

Ericsson: accelerating shift to latest mobile phones

Offering a ray of hope for the mobile phone industry, the chief executive of Ericsson said yesterday that seven million cellphone users in Europe and Japan switched to high-speed third-generation mobile, or 3G, networks in the last quarter of 200e.

The New York Times reports (11 Feb.) that Ericsson, the maker of mobile networks, also reported a surge in income for the fourth quarter. Profit rose to 6 billion Swedish kronor (US$850 million) from 142 million kronor a year earlier. Sales at the company, which is based in Stockholm, rose 9 percent, to 39.4 billion kronor, from 36.2 billion.

The company has said it is focused on advances in the adoption of 3G handsets and networks. From October to December last year, the number of people around the world on 3G networks - almost all of them in Europe and Japan - rose to 18 million from 11 million.

Report: Verizon enters MCI bidding

In the US, Verizon Communications has reportedly floated an informal counterbid to buy MCI Corp., offering about the same for the long-distance phone company as Qwest Communications in the hopes that MCI management and investors would prefer a deal with a stronger company.

According to a report by the New York Times/AP (10 Feb.) the potential offer, reported, marks another twist in a two-week frenzy of merger speculation prompted by SBC Communication's deal to acquire AT&T, and an almost year-long effort by MCI to sell itself.

Verizon has been steadfast that it doesn't need to make such an acquisition in response to the $16 billion AT&T buyout, which would make SBC a much more formidable rival.

The NYT says although MCI's reputation remains tarnished by a massive accounting scandal, and its business inflicted with the same ills as the rest of the long-distance industry in the US, the company has some very valuable assets for largely regional telephone companies like Qwest and Verizon.

For instance, MCI's national network infrastructure and its sizable base of consumer and business customers, number 15 million despite a sharp decline fueled by price wars and competition from cell phones and internet-based calling (VoIP).

US regulator rejects broadcasters' requests

In the US, Federal regulators have rejected a request by broadcasters to require cable and satellite operators to carry multiple digital-channel offerings from local TV stations.

The 4-to-1 vote by the Federal Communications Commission upheld a 2001 ruling by the commission that cable companies are required to carry only one digital channel per station, reports the New York Timesa/AP (11 Feb.).

The paper says that some stations have chosen to use their digital signals for crystal-clear high-definition broadcasts, while others have established multiple channels.

Cable operators have voluntarily agreed to carry multiple digital channels in some cities, but broadcasters say making it a requirement would benefit the public by providing more programming choices, the NYT report says.

Digital camera growth slowing:report

The photography industry expects US digital camera sales growth to slow to about 13 percent this year, as the market matures after growing at a breakneck pace for almost a decade, according to a report released on Thursday.

Unit sales of digital cameras, which use no traditional film and record images on a memory chip, will rise to 20.5 million this year from an estimated 18.2 million in 2004, industry trade group Photo Marketing Association said in its annual photography industry report.

The increase pales beside the rapid gains of more than 30 percent in each of the last three years.

The researtch firm said that digital cameras were expected to continue their growth in 2006 before reaching their peak at the end of that year or the next, and as the digital camera market matures, industry revenue would increasingly depend on accessories, consumables and services.

The NYT says the reserarch fund that more consumers are printing digital photos at local shops, but the majority still develop their snapshots at home,

Some 40 percent of the 7.7 billion digital images printed in the United States this year will be made at retail stores, up from 31 percent in 2004. By contrast, 18.2 million traditional film prints will be made in 2005, down 18 percent from last year.

The research group came up with its projections after surveying retailers and about 10,000 households, the paper reports.

Hasbro aims to connect with 'tweens' with ChatNow

After a rough 2004, Hasbro is setting its sights on ``tweens,'' and beefing up its offerings to that lucrative market.

The New York Times/Reuters report (10 Feb.) that the No. 2 toy maker is putting a good deal of its research and development behind its Tiger Electronics unit, which also makes handheld video player VideoNow, music recorder PlayItNow, and the Furreal Friends line of interactive, lifelike pets.

For 2005, in addition to a souped-up version of Furby, and I-Dog -- an ornamental dog that responds to music -- the company is rolling out ChatNow, a cellular phone-like communication system aimed at kids who want a cell phone, but whose parents don't want to pay airtime charges.

Hasbro, which struggled in 2004 with weaker sales of some key items, said in its conference call earlier this week that it had high hopes for its tween consumer electronics line. The items would ``blur the division between toys and electronics.''

Tweens -- a demographic of kids aged 7 to 12 -- weigh in on family purchases says the NYT., have their own spending money and a wide range of interests. What's more, these picky shoppers are abandoning toys in favor of video games, clothes, and, increasingly, electronic gadgets.

The paper says ChatNow, which will be in stores by the US fall and cost $74.99 for two, looks like a cell phone and lets kids ``call'' or ``text'' each other, with technology similar to a walkie-talkie. Each ChatNow comes with a seven-digit ``Buddy Number'' that can be used like a phone number so kids can call each other directly within a 2-mile radius.

The new product will be shown to toy buyers and reporters during the American International Toy Fair, which officially opens on 20 Februaryin New York City.

USD toy industry magazines say that the toy business is transitioning from purely toys to family entertainment,and high-tech electronics are going to make up a large part of kids' playtime in the future.

With ChatNow, kids can create a buddy list with their friends' numbers. It has a built-in digital camera allowing kids to assign a photo to their friends. Other features include 10 ring tones, text messaging and a flashing light to let users know they have an incoming call.

And, ChatNow can also take up to 30 digital photos that can be animated with cartoonish eyes or wild hairstyles, the paper adds.

Yahoo sees small victory in Nazi dispute

Free speech activists and Yahoo declared a small victory Thursday in a dispute over whether the e-commerce giant can host auctions for Nazi memorabilia on its US sites, the New York Times/AP report (10 Feb.)

The 9th US Circuit Court of Appeals said it would rehear some arguments in a 5-year-old lawsuit against Yahoo by two French human rights groups, which are trying to ban the sale of Nazi-related items on any internet site viewable in France.

The paper says France's Union of Jewish Students and the International Anti-Racism and Anti-Semitism League sued Yahoo in 2000 and won a French court order requiring the company to block internet surfers in France from auctions selling Nazi memorabilia. French law bars the display or sale of racist material.

Yahoo stripped Nazi memorabilia -- including flags emblazoned with swastikas and excerpts from Adolf Hitler's ``Mein Kampf'' -- from its French subsidiary, yahoo.fr. But to the anger of French Jews, Holocaust survivors, their descendants and other activists, Yahoo kept such items on its vastly more popular site, yahoo.com.

For failing to take down the offensive items, French courts began levying fines on Yahoo of more than US$13,000 per day starting in February 2001, and Yahoo theoretically owes more than US$5 million today, the paper reports.

The NYT says the two-sentence ruling Thursday does not explain how the judges came to their decision but forces both sides to argue their cases again in front of an 11-judge panel, likely this US spring.

The new opportunity for a courtroom victory, Yahoo executives clamed, could benefit all Internet service providers and anyone who publishes content online, but Attorney Richard Jones, who represented the French organisations, called the decision ``meaningless'' and said there's no reason to believe the new panel would vindicate Yahoo.

Microsoft sues for tinkering with Xbox games

In the first case of its kind, a California video game maker is suing an entire community of software tinkerers for reverse engineering and modifying Xbox games that they legally purchased.

The Register in the UK reports (10 Feb.) that Tecmo, a subsidiary of a Japanese company, announced a federal lawsuit Wednesday for alleged violations of US copyright law and the controversial Digital Millennium Copyright Act.

According to the complaint, the two accused were webmasters of ninjahacker.net, an online forum dedicated to creating custom content and modifications for certain video games. Also included in the suit are up to 100 anonymous users of the site, whose identities the company vowed to unmask.

The Register says that the lawsuit claims the ninjahacker.net users decompiled the code to several Tecmo titles, including Ninja Gaiden, Dead or Alive 3, and Dead or Alive Xtreme Beach Volleyball, and figured out how to create their own "skins" that change the appearance of game characters. They swapped modding techniques and hundreds of custom skins over the website message board.

The defendants are not accused of pirating the games, and the modifications and methods at issue appear no different than those employed by hobbyists on other video games - from Halo to the Sims 2 --for years, the paper says, but according to the lawsuit, Tecmo suffers in the practice anyway.

Tecmo says the company is seeking US$1,000 to US$100,000 in damages for every custom skin swapped over the website, according to The Register.

PalmOne settles gaming patent action with Peer-to-Peer

PalmOne has come to an out-of-court accord with Peer-to-Peer Systems, the technology holding company that sued the PDA pioneer in January 2003 alleging patent infringement.

Terms of the settlement were not made public - or, rather, they'll tell you but you won't be able to tell anyone else, reports The Register (11 Feb.)

The Register says that back in 2003, PTP claimed that the ability of two or more PalmOne - then trading as Palm - devices to connect wirelessly for the purpose of multi-player gaming amounted to an infringement of a US patent which PTP maintains on behalf of Jerusalem-based inventors Michael Kagan and Ian Solomon. They filed the patent in 1995 and it was granted two years later.

When the PalmOne lawsuit was initiated, PTP was already in litigation with Cybiko, a designer of handheld games consoles. It recently reached a settlement with that company too, but again, the terms of the agreement are shrouded in secrecy, according to The Register.