Verizon to acquire MCI for US$6.6 Billion, beating Qwest

Verizon, America's largest regional phone company, has just reached a deal to acquire MCI for about US$6.6 billion in cash and stock, the latest merger in the rapidly consolidating US telecommunications industry.

The New York Times reports (14 Feb.) that Verizon's acquisition will end the independence of MCI, America's second-largest long-distance company, with 14 million residential customers and about a million corporate customers.

Last year MCI emerged from bankruptcy protection and changed its name from WorldCom after nearly collapsing when an US$11 billion accounting fraud was unearthed. MCI is a shadow of its former self, but its high-margin corporate customers and worldwide telephone and data network make it quite valuable.

The NYT says MCI became the subject of a torrent of takeover interest among its rivals in recent weeks after SBC, the second-largest regional phone company in the US, agreed to acquire AT&T for US$15 billion.

That left MCI one of the last remaining major telecommunications companies up for grabs, and Verizon defeated its much smaller rival, Qwest Communications, in an 11th hour takeover skirmish last weekend for control of MCI.

The paper says Qwest had submitted several ever-increasing bids for MCI over the past week, and late Friday night submitted a final bid worth US$7.3 billion. Still, the NYT says, MCI's board chose to accept Verizon's lower bid because it had concerns about Qwest's ability to finance the transaction and about the long-term value of Qwest's stock.

The deal reflects Verizon's interest in growing its present business of selling telephone and data services to corporate customers, an operation said by industry analysts to be worth about US$250 billion a year. Still, the lure of MCI was considered more complicated than the acquisition of AT&T, in part because of the stigma of its recent bankruptcy.

The paper says mergers in the US telecommunications industry have revived in the last few months after several years of declining sales, bankruptcies and accounting scandals. In December, Sprint and Nextel agreed to merge to form the third-largest wireless company. Less than a month later, Alltel, a regional cellular provider, said it would buy Western Wireless.

The acquisition of MCI reflects a marked and swift change sweeping the telecommunications industry, the NYT reports, adding that it has been brought about largely by shifts in technology - a combination of forces, like heavy reliance on wireless communications and the internet, have cut deeply into the traditional wired telephone business, forcing companies like Verizon to find new sources of revenue.

Europe renews review on ContentGuard
The European Commission has raised new doubts about the joint purchase of the antipiracy software company ContentGuard by Microsoft and Time Warner, renewing an investigation of the deal on Friday.

The New York Times/Reuters report that the commission set 7 April as the new deadline to complete its review, at the same time raising questions about the way Microsoft conducted itself. The investigation was suspended in December until Microsoft provided more information to the commission.

A commission spokesman said, Microsoft had provided the information which was necessary and the commission was now examining the original deal.

The deal involved patents for the potentially lucrative market in software for managing digital rights. The software prevents the swapping of music and movies that Web surfers once did through Napster.

The paper says that Microsoft and Time Warner expected no problems in gaining approval, but the commission surprised them in August by opening an investigation. It said Microsoft might gain or increase a dominant position in digital rights.

The companies responded by bringing in Thomson of France as a third equal player. The commission cannot review deals that are controlled equally by more than two companies.

Now the commission is asking if the companies followed its rules when they brought Thomson on board by selling it shares in ContentGuard.

The NYT says ContentGuard holds important patents on software that protects digital media, including music, films and documents. It was mostly owned by Xerox until the purchase by Microsoft and Time Warner.

Simplifying web checkouts

For many e-commerce sites, the shopping cart is where transactions go to die, because about half of prospective customers bail out of their purchases sometime after selecting products and before hitting the buy button, according to Forrester Research, a technology consultant, reports the New York Times/Reuters (14 Feb.)

That online buying phenomenon, says the NYT., has prompted sites in the US like TJMaxx.com and HomeGoods.com to find new ways to shepherd customers smoothly through the checkout process. As traditional retailers sharpen their online operations, those kinds of improvements could be critical in winning business.

The paper says that groups like the TJX Companies, which owns T. J. Maxx, Marshalls and HomeGoods, among others, opened online stores for T. J. Maxx and HomeGoods, using a traditional checkout method that makes users click through multiple screens while typing in shipping information, credit card numbers and the like.

But, now says the paper,both TJMaxx.com and HomeGoods.com have tested a new checkout system that lets customers use a single page for all shipping and billing information. Fifty percent more customers completed the one-page checkout process than finished the multipage process.

The NYT says the technology is known in industry circles as a rich Internet application. Such applications work by loading a small, temporary software application onto the computer of a user who clicks on a particular web page. The web site feeds information to that software program in the background while the user is interacting with the page so when someone, say, types in an invalid postcode while checking out, the computer flags it and requests a correction.

The technology is not new, says the NYT.,with some retailers using similar applications for years. But, recent advancements by software vendors have made the application considerably easier for less-sophisticated web sites to use.

China says it shut sown internet cafes

Chinese authorities shut down more than 12,575 Internet cafes from October to December last year for operating illegally, the government has said, in an endeavour to create a "safer environment for young people in China".

The New York Times/AP report (13 Feb.) that the government didn't give details of the violations, but said the businesses closed were mainly located nearby primary schools and middle schools.

China promotes internet use for business and education, but communist authorities complain that internet cafes harm public morality by giving children access to violent games and sexually explicit material.

However, according to the NYT.,the government controls what the public can see online and blocks access to Web sites deemed pornographic or subversive. Internet cafes are banned near schools and the hours that children can use them are restricted.

The paper says China has the world's second-largest population of internet users after the United States, with 87 million people online.

Microsoft deal on low - cost smartphones

Microsoft has announced a partnership with Singapore-based Flextronics International to market a new range of high-specification phones, running Windows Mobile, to handset makers and network operators worldwide.

The New York Times/AP report (13 Feb.) that the deal between the world's No.1 software company and the largest contract manufacturer of handsets comes as companies like Motorola and Samsung are pushing to improve profits on high-tech 'smartphones' and wireless services.

Microsoft and Flextronics said the new ``Peabody'' phone platform -- a blueprint from which any number of new models can be designed to order -- would cut costs and production time.

The NYT says the announcement came on the first day of the 3GSM World Congress, an annual mobile industry gathering in Cannes,France.

Microsoft's Windows Mobile operating system for phones is battling for market share against rivals Palm OS and Symbian, which is the clear leader in Europe. The new phones will include cameras for both video and stills, a Windows media player that handles a broad range of formats and ``seamless integration with Outlook (PC software) applications, calendar, e-mail, tasks, contacts -- all wirelessly.

The paper reports that Microasoft says the specifications can also be customised for clients' individual needs,including significant security improvements for the corporate market, such as the ability to erase the phone's memory by remote access.

The Peabody platform runs on GSM networks -- the dominant standard in Europe and much of the world -- and slightly faster GPRS. Flextronics also said it is working on a new range of devices based on the next generation of Windows Mobile software to run on EDGE, the prevalent third-generation or ``3G'' standard in North America.

The NYT reports that Microsoft also unveiled a new software package designed to smooth wireless service delivery, overcoming interoperability problems between different network operators, service providers and handset types.

The company said the new 'Connected Services Framework' will be launched by three mobile operators: Bell Canada, Celcom Malaysia and Britain's BT.

Toshiba starts premium corporate laptops

At the Cannes conference, Toshiba launched a new line of laptops which are more secure, sturdier and easier to connect, in an attempt to lure business customers by retaining the latest technology longer for itself.

Toshiba, which is also a major supplier of hard disks, DVD drives, chips and thin displays to rival laptop computer makers, introduced the new line of EasyGuard portable computers to differentiate itself from commodity products, reports the New York Times/Reuters (13 Feb.).

Toshiba claims about 15 percent market share of the laptop market and ranks No. 7 in the overall PC rankings, including desktops and laptops, according to Gartner research group. Last year 189 million personal computers were sold worldwide.

The paper says the strategy to approach the business market with EasyGuard products is similar to the Qosmio line of premium laptops for the consumer segment launched six months ago.

But unlike the Qosmio products, EasyGuard laptops will not be priced much above other laptops.

Toshiba has fitted the products with a range of safety features that prevent loss of data, reports the NYT., including advanced movement sensors, rubber bands and air cells around fragile components, and water insulators that keep the computer from crashing three minutes after spilling a cup of tea over the keyboard.

Tests by independent test institute TUV showed the laptops survived a fall from a desk and 30 milliliters of water.

The machines will also be fitted with a range of the latest market-standard security features, as well as improved connectivity systems for wireless and wired networks.

Gadget boom, but gloom at phone show

Still in Cannes, the New York Times/AP report that the mobile industry is weighing a tough challenge as it struggles to maintain profitability: how to sell more expensive, sophisticated phones -- while making them simpler.

This year's 3GSM World Congress marks a coming of age for faster third-generation mobile services in much of the industrialised world, says the paper, and 39,000 visitors registered ahead of the opening -- 10,000 more than last year.

The number of companies showcasing the music games, music, video-streaming and other high-tech phone services made possible by ``3G'' has almost doubled, according to organisers.

But, the paper says that behind the gadgetry and glitz on display at the Mediterranean coastal resort, times are harder than they appear.

Uptake of the faster phones last year fell short of earlier expectations. In western Europe, sales of handsets running on UMTS networks -- the 3G successor to the region's dominant GSM standard -- accounted for 4 percent of all units sold. Phones using EDGE, the main US equivalent, represented about 3 percent of North American sales.

What's more, the overall sales are slowing, reports the NYT., with growth in the number of phones sold almost halved between the first and last quarters of 2004, according to analysts.

The paper says analysts forecast a market expansion of just 8 percent in 2005 and ``single-digit annual growth'' in subsequent years, after 32 percent last year.

Nokia, the world's largest phone maker, said last month that its fourth-quarter net profit declined 13 percent year-on-year, and No. 3 Samsung said its phone division's operating margin slid to 3 percent, from 13 percent in the previous quarter.

Reportedly, companies like Nokia which have turned to emerging markets for new customers, are now finding that even there, major cities like Beijing and Jakarta are 'approaching mild saturation'.

The paper says analysts say that the fundamentals look gloomy for everyone from handset makers to network operators, unless they can persuade more users to upgrade to pricier 'smartphones' and use them to consume more music, video and other paid-for services.

Nokia is set to unveil new handsets, including at least one that is designed to make it much quicker and easier to download music.

AMD updates Opteron family

Advanced Micro Devices (AMD) is just releasing three new Opteron chips for servers--the Opteron 852, 252 and 152-- that sport a number of enhancements over existing models. The chips run at 2.6GHz, faster than the 2.4GHz chips AMD has been selling. The HyperTransport links, which shuttle data between the processors and other devices, have been sped up from 800MHz to 1GHz.

The New York Times reports (14 Feb.) that AMDa has said that the chips contain PowerNow with Optimised Power Management, which lets the operating system slow the processor's clock speed and consequently reduce power consumption.

The paper also reports that Hewlett-Packard will announce its plans to use the 252 in a blade server at the LinuxWorld Conference and Expo being held in Boston.

AMD has included PowerNow, adopted from its notebook chips, in server chips since the middle of last year, but the software to take advantage of it is only coming out now. Customers who bought PowerNow-enabled servers last year can update their software to activate the feature.

Intel also has a line of energy-efficient server chips, says the paper, and will release the Irwindale version of its Xeon, which doubles the amount of high-speed cache memory to 2MB compared with existing "Nocona" Xeon models.