May 2012

H-P Shows Age With Layoffs

Hewlett-Packard is laying off 27,000 workers as part of a massive restructuring plan to stem its declining profits and revenues, underlining the growing gulf between the technology industry's old guard and new generation.

H-P said the job cuts, which amount to about 8% of its workforce, will take place over the next two years. It projects the move, once complete, will save $3 billion to $3.5 billion annually, with most of the savings going to fund new efforts such as cloud computing and "big data" analytics. The technology giant outlined its restructuring plan as it posted a 31% profit drop and a 3% revenue decline for its fiscal second quarter. The results were ahead of H-P's projections, sending the company's stock up 9% in after-hours trading. H-P's chief executive, Meg Whitman, said she was "cautiously optimistic" the computer, printer and technology services company had turned the corner.

Motorola Is Now the Apple of Google's Eye

Those who thought Google was buying Motorola Mobility just for its treasure trove of patents can think again. Its plan to focus on "fewer, bigger bets, and create wonderful devices that are used by people around the world" sounds rather like that of the competitor to beat.

Apple produces few products, but sells a lot of them. Google not only closed its $12.5 billion acquisition of the handset maker, it has also replaced most of the top executive team. Out are Motorola's chief executive, chief financial officer, chief operating officer, strategy chief, chief marketing officer and others. In are a team of replacements from Google itself as well as the Defense Advanced Research Projects Agency and Amazon, among other places. So, even if Google does follow through on its plan to run Motorola as a separate business, it is being Google-ized. Strategically, that is a smart move—after all, Apple has become the world's most valuable company by fusing its software and hardware expertise with the iPhone. But it isn't without risks.

Will Mr. Zuckerberg Have to Go to Washington?

It was a bad time for Facebook’s IPO to go south.

Retail investors are not happy. Class-action lawsuits have been filed against Nasdaq, Facebook and the three Wall Street investment banks that took it public. The Securities and Exchange Commission, Financial Industry Regulatory Authority and the Massachusetts Secretary of State are all “looking into” just exactly how the deal went down. So, will that be enough to sate a scorned investment public at large, especially amid a current political climate of public skepticism — if not outright contempt — for Wall Street as a whole?

Not at all, especially because it is an election year. Therefore, cue the tsk-tsking politicians lining up Wall Street’s powerbrokers, as well as a Facebook exec, for a session of pompous I-told-you-sos. It’s clear the big guns on Capitol Hill are gearing up to intervene. The Senate Banking Committee is in the process of meeting with Facebook, regulators and other stakeholders in the IPO, according to a statement issued by its chairman, Sen. Tim Johnson (D-SD).

Advocates support Aereo TV

Public interest advocates at the Electronic Frontier Foundation and Public Knowledge are teaming up to defend Barry Diller's Aereo, which has come under fire from broadcasters who are suing the nascent broadcasting time-shifter for copyright infringement. “By providing an antenna to viewers, Aereo does nothing more than make it easier for viewers to access a broadcaster’s free service. By making free TV better Aereo improves and does not disrupt the television industry, and helps carry out the important public goal of preserving the ability of viewers to watch free-to-air TV," the advocates wrote in a brief to the court.

Comcast Asks FCC to Revoke Boston's New License to Reregulate Rates

Top cable operator Comcast has officially asked the Federal Communications Commission to reconsider giving the City of Boston the power to reregulate its rates there, making a case for reinstatement on the grounds that it faces sufficient competition from overbuilder RCN and satellite services.

The FCC's Media Bureau recertified the city back in April, citing changed circumstances in the 10 years since RCN was considered sufficient competition under the less stringent local exchange carrier effective competition test. The competing provider test has two prongs. The franchise area must be served by two unaffiliated MVPDs, each offering comparable programming to at least half the market. Comcast says DISH and DirecTV fill that bill -- satellite availability has been used to establish effective competition in numerous markets. The second prong is that at least 15% of the market has to subscribe to an unaffiliated provider. Comcast says that combining DirecTV subs with DISH subs with RCN subs yields a figure of 46,428, which is 18.37% of occupied households according to the 2010 census. Both prongs of the competing provider test are satisfied in Comcast's Boston franchise area, says Comcast.

Deutsche Telekom CEO Says T-Mobile USA Merger Is Option

Deutsche Telekom Chief Executive Officer Rene Obermann said a merger of the T-Mobile USA division is an option, while ruling out revisiting a complete sale after its fallout with AT&T last year.

“We do not exclude any option for the T-Mobile unit in the U.S., also not a merger,” Obermann told shareholers today at an annual meeting in Cologne, Germany. “A complete sale is unlikely. You understand that I can’t say more in public on T- Mobile USA.” The comments are the clearest yet on Deutsche Telekom’s plan to hold onto the asset -- at least partially -- five months after a $39 billion proposed sale of T-Mobile to AT&T collapsed because of regulatory resistance. Deutsche Telekom is discussing a merger of T-Mobile with MetroPCS, with other options including an initial public offering, people familiar with the matter said this month. “We don’t see any value creation by T-Mobile USA if it stays as a stand-alone company,” said Alexandre Iatrides, an analyst at Oddo & Cie. in Paris. “The alternatives would be a merger or some kind of network-sharing agreement with MetroPCS or Sprint Nextel.”

Chamber study finds intellectual property industries produce $5 trillion

The U.S. Chamber of Commerce released a study that found that industries that depend on intellectual property rights account for more than $5 trillion of the country's gross domestic product. The total GDP of the United States is about $14.6 trillion. The study also found that intellectual property industries account for 55.7 million direct and indirect jobs and 74 percent of total U.S. exports.

Ballmer Says China Intellectual Rights Protection ‘Weak’

Microsoft, which is preparing to roll out its new Windows operating system, sees intellectual property protection in China as “still weak” making it difficult to sell legitimate software, Chief Executive Officer Steve Ballmer said. Still, Ballmer is “super excited” about growth in the China market, which is unique in being the largest for both phones and personal computers and is the fastest growing, he said in a speech at Peking University in Beijing.

Local Cable Grows Political Ad Dollars

It may come as no surprise that spot TV is still the media-buying tool of choice for presidential candidates' advertising campaigns -- but local cable appears to be gaining. During the first quarter, Nielsen says 75% of all advertising units were with over-the-air local television. But local/regional cable are gaining, now averaging 19% in terms of overall ad unit share of political candidates' media buys.

Chicago Sun-Times parent buys Chicago Reader

Wrapports LLC, the Chicago company that acquired Sun-Times Media Holdings LLC last December, has purchased the Chicago Reader.

The alternative weekly is being sold by New York investment firm Atalaya Capital Management. Reader publisher Alison Draper said she will step down from her post on June 30. Wrapports CEO Tim Knight didn’t name a replacement. Reader editor Mara Shalhoup will remain at the paper. The Reader has 47 employees. Asked whether the employees will be moved from their current River North location to the nearby Chicago Sun-Times building, Mr. Knight said the company is considering its options. The Reader knows what its audience wants and has served it well, Mr. Knight said. He expects the Sun-Times papers and Reader will benefit from sharing content, particularly with the Reader providing entertainment listings, reviews and columnists content to the Sun-Times papers.

Benton

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