Google hits new high as analysts set lofty price targets

Google's high-flying stock has hit a new peak, propelled by the widening belief that the online search engine leader can continue to grow as major advertisers shift more spending from traditional media to the internet.

The New York Times/AP report (2 Feb.) that after underestimating Google's robust earnings growth in its latest quarter, industry analysts substantially raised their future estimates in enthusiastic reviews that underscored Wall Street's deepening adulation for the company, though some injected a note of caution.

Investors appeared to agree after digesting Tuesday's news that Google's fourth-quarter profit was seven times higher than the previous year.

The NYT reported that Google's shares surged US$14.06, or 7.3 percent, Wednesday to close at US$205.96 on the Nasdaq Stock Market. Earlier in the day, the shares traded at US$216.80 -- the highest price since Google went public at US$85 per share less than six months ago.

The paper also said that the feverish run-up in Google's market value -- now standing at US$59 billion -- is reminiscent of the dot-com heyday of the late 1990s and early 2000 when investors bid up the prices of young internet companies on the premise that they were about to change the world.

The biggest difference between now and then, though, is that Google is generating genuine profits, says tghe paper, which are multiplying at a dazzling rate. With few exceptions, the prized internet stocks of yesteryear belonged to companies that weren't making money.

The advertising formula that Google has built around its popular search engine is the main reason investors are betting the company will continue to click on all cylinders. Google delivers advertising links tied to the requests entered into the main search box -- a system that businesses like because they only pay when a prospective customer clicks on the link.

While Google has been selling the ads for several years, many of the elite companies in the Fortune 500 just recently began to buy into the concept. Analysts believe a steady steam of new advertising dollars will pour into the internet during the next five years and Google will be one of the biggest beneficiaries, along with Yahoo and Microsoft's MSN, the rerport said.

Microsoft offers early security alerts to governments

Microsoft yesterday offered to begin alerting the world's governments early to cyberthreats and security flaws in its attack-prone software.

According to The New York Times (2 Feb.) Microsoft also wants to work with governments to help prevent and mitigate the damage from hacker attacks.

The announcement, in Prague on Wednesday by Microsoft chairman Bill Gates, coincides with a mounting threat to the company's global dominance from ``open source'' software alternatives such as the Linux operating system.

The NYT reported that proponents say open-source software is cheaper to run and less vulnerable to security threats because the underlying code is freely shared and government agencies and municipalities from China and Japan to Germany and France are embracing or investing in developing it.

Microsoft already provides the US government with early warnings.
The paper said that the new program intends to complement Microsoft's existing Government Security Program, in which governments and agencies may review Microsoft's proprietary source code for Windows operating systems and Office business software and evaluate for themselves the software's security and ability to withstand attacks.

It supplements the advance but often vague warnings that Microsoft gives the general public on the severity of threats and which particular products are affected.

Governments, for instance, will be able to get information about publicly known vulnerabilities that Microsoft is investigating.

The government program will also provide data on security incidents and foster collaboration such as joint response in emergencies, Microsoft said.

The NYT days so far three countries, Canada, Chile and Norway, as well as the US state of Delaware, have been engaged in the new project, and
Microsoft said it is currently in discussions with a number of countries about their possible participation in the program.

Governments currently under a trade embargo with the United States are not eligible to sign up to the program, which is provided free of charge.

Amazon shares plunge on earnings miss

Amazon.com has reported that earnings for its all-important fourth quarter rose more than fourfold, but the internet retailing giant was helped by a big one-time tax benefit and missed Wall Street expectations.

The New York Times reports (2 Feb.) that the results sent Amazon shares plunging 12.8 percent, or US$5.34 to US$36.54 in after-hours trading on the Nasdaq Stock Market, having fallen 60 cents or 1.4 percent to close at US$41.88 in regular trading Wednesday. The company reported results after the markets closed.

For the fourth quarter ended 31 December, Amazon.com reported earnings of US$346.7 million or 82 cents per share, compared with earnings of US$73.1 million or 17 cents per share in the same period a year earlier.

The company benefited from a US$244 million one-time tax gain. Without that benefit, it would have earned just 24 cents per share.

The paper said Amazon's chief financial officer had said the tax gain was from losses that it incurred in previous years, and he expected the company to continue to take such one-time benefits in coming quarters.

Revenue was US$2.54 billion, up 30 percent from US$1.95 billion in the same period last year. But the revenue figure included an US$85 million benefit from favorable foreign exchange rates. Without that gain, revenue would have risen just 26 percent.

Amazon also announced that it would begin offering its customers the option of paying a flat annual fee of US$79 for unlimited free two-day shipping on orders. The deal also would let customers pay just US$3.99 for overnight shipping.

Mergers narrow telecom choices for US consumers

SBC's proposed US$16 billion purchase of AT&T is another reminder of the dramatic technological and regulatory changes sweeping the telecommunications industry and reshaping the choices consumers face when they shop for communications services, says The Mercury News in a 2 February report.

The paper says that the notion of phone companies battling one another for local customers is all but dead. Instead, the emerging competition is between phone giants, such as SBC Communications and Verizon Communications, and cable behemoths such as Comcast.

Both are encroaching on each other's turf, hoping to entice consumers by bundling internet access and phone and television services into all-in-one packages, according to The Mercury, and also suggests that mobile phone companies and internet phone start-ups such as Vonage will try to steal away slices of the telephone market. But experts predict the lion's share of the phone market will go to the regional Bell phone companies and cable companies.

The Mercury says the remaining four Baby Bells dominate most US phone markets for now, and SBC is believed to control about 90 percent of the local residential market in California.

The report says that the number of cable internet phone users in North America jumped tenfold last year, from less than 50,000 to close to half a million, according to a study being released today by Infonetics Research.

According to the paper,the cable and phone companies in the US will try to attract customers by bundling their array of services into competitively priced packages.

SBC already bundles local and long-distance phone service with internet access, mobile phone service and satellite television, and the cable companies are countering by bundling television, high-speed internet access and phone service into one package.

Rivals challenging IPod with rented music

Is music something you own or something you rent? - how music fans answer that question in coming months will help determine the viability of a new slate of online music services that offer to fill portable music players with an unlimited number of songs for a monthly fee, reports The New York Times/AP (3 Feb.).

The paper says that while the music subscription approach has grown in recent years, far more music fans have opted to buy songs by the track, a business model popularised by Apple's iTunes Music Store and its hugely successful iPod portable player.

But, reports the NYT, the release late last year of new copy-protection software from Microsoft Corp. may begin to change that. The software frees subscribers to move their rented tracks from their computers to certain portable music players.

The report says the system works by essentially putting a timer on the tracks loaded on the player. Every time the user connects the player to the PC and the music service, the player automatically checks whether the user's subscription is still in effect. Songs stop playing if the subscription has lapsed. If the user doesn't regularly synch up the player with the service, the songs go dead as well.

Several online music purveyors see portability as selling point that can lure consumers to their subscription services, and Forrester Research projects music subscription revenues will more than double this year to US$240 million, largely because of portability.

And, the paper says marketing will be crucial to persuading consumers accustomed to buying CDs or owning digital music tracks purchased online to switch to paying a monthly fee for music, like they might do for cable television programming.

Apple has said it has no plans to offer a music subscription service. The iPod players don't support the Janus format. Microsoft's own music service, MSN Music, has yet to offer any services beyond pay-per-track downloads.

The NYT says doubts also linger over whether consumers will be happy with the crop of portable music players that can support portable subscription services.

Report: PDA shipments drop for third Year

Worldwide shipments of personal digital assistants declined for the third straight year, according to a new report.

The New York Times/AP report(3 Feb.) that shipments of basic handheld PDAs lacking telephone capabilities shrank to 9.2 million units in 2004, down 13 percent from 10.6 million units in 2003, according to research firm IDC. It's the first time in five years that sales dropped below 10 million units.

The paper says the digital gadgets first popularised by the original PalmPilot in 1996 have been facing increasing competition in recent years from the so-called smart phone, which combines organiser functions with cell phone capabilities.

PDA shipments from palmOne, the industry's pioneer and top seller, fell by 9 percent to 3.7 million units in 2004, from 4 million units in 2003.

Sony, which pulled out of the market during the year to sell its PDAs only in Japan, saw its shipments drop dramatically from 1.4 million in 2003 to about 419,000 in 2004.

The paper reports that shipments from other leading PDA makers, such as Hewlett-Packard, Dell and Medion, increased, but not enough to offset the overall market's downward spiral. Those three companies all make PDAs that run Microsoft operating systems.

Study: Deleting spam costs billions

Time wasted deleting junk e-mail costs American businesses nearly US$22 billion a year, according to a new study from the University of Maryland.

The New York Times/AP report (2 Feb.) that a telephone-based survey of adults who use the internet found that more than three-quarters receive spam daily. The average spam messages per day is 18.5 and the average time spent per day deleting them is 2.8 minutes.

The loss in productivity is equivalent to US$21.6 billion per year at average US wages, according to the National Technology Readiness Survey produced by Rockbridge Associates and the Center for Excellence in Service at Maryland's business school.

The paper says the study also found that 14 percent of spam recipients actually read messages to see what they say, and 4 percent of the recipients have bought something advertised through spam within the past year.

The random survey of 1,000 US adults was conducted in November and has a margin of sampling error of plus or minus 3 percentage points.

Symbian unveils more powerful smartphone software

British mobile phone software maker Symbian, part-owned by Psion, has just unveiled a new version of its operating system that supports high resolution cameras and three-dimensional games graphics.

The software, which runs on faster processors based on designs from British chip developer ARM, comes with reference designs and other tools to help mobile phone producers save time and cut costs when developing new models, reports The New York Times/Reuters (2 Feb.).

The software can process pictures of two million pixels and more, it can send stereo music to a wirelessly connected headset and can import MP3 songs from a desktop computer without the need for additional synchronization software.

The first phones with Symbian ``operating system version 9'' will be introduced in the second half of 2005, with volume sales expected by Christmas.

Symbian is the world's biggest producer of software for so-called smartphones, a new category of versatile phones that can have built-in music players and video recorders, and which run computer-like applications such as enterprise customer relationship software, car navigation programs and e-mail.

The NYT reports that today its software is the engine of some 20 million phones, available through 200 mobile operators around the world.

Symbian was set up with financial backing from the world's biggest mobile phone vendors, including Nokia, Motorola and Sony Ericsson, who wanted a strong alternative supplier to Microsoft. While Microsoft aims for corporate clients looking to supply smartphones that work well with other Microsoft software on office computers, Symbian is looking for big volume sales in the mass consumer markets where multimedia and video phones are becoming more popular with the advent of faster networks.

The paper reports that market research group IDC forecasts 130 million smartphones will be sold in 2008 alone. Symbian receives between US$5 and US$7.25 for every phone that contains its software, depending on sales volumes.