April 2014

Activist investor Jeff Ubben urges ‘fix’ for Silicon Valley

One of the West Coast’s leading activist investors has added to the growing criticism of corporate governance in Silicon Valley, and of Google in particular, amid fresh warnings of a bubble in tech valuations.

Jeff Ubben, whose hedge fund ValueAct is an investor in Microsoft, eBay and Adobe Systems, singled out what he said was excessive compensation for Eric Schmidt, Google’s chairman. “Jamie Dimon [chairman of JPMorgan Chase] gets hauled over the coals in New York for his $20 million, but Eric Schmidt presides over four board meetings and gets paid $100 million,” he said, referring to the Google chairman’s 2011 package.

David Einhorn, the activist investor behind Greenlight Capital who has taken on Silicon Valley companies such as Apple in recent years, warned that excessive enthusiasm about “cool kid companies” had created a new bubble in tech valuations to rival the late 1990s.

Edward Snowden’s NSA hacking claim creates woes for Huawei

Huawei executives have been criss-crossing the globe in recent weeks to reassure customers that their equipment has not been compromised, in the wake of revelations by whistleblower Edward Snowden in March that the US national security agency tried to hack the Chinese telecoms equipment maker.

The Snowden revelation “does not have a big impact on our business, but [it does have] a big impact on our workload,” said Eric Xu, one of three rotating chief executives at Huawei. “We have to work with different stakeholders, to reassure them, and this is very tiresome work.” Xu and other Huawei executives declined to specify how they have addressed the allegations, which said that the aim of the NSA operations was both to determine Huawei’s links to China’s People’s Liberation Army and to find vulnerabilities in Huawei’s equipment that could be exploited to hack Huawei’s customers.

Pakistan Is Asked to Shut Down News Channel

The attempted killing of a prominent Pakistani journalist has prompted a bruising public dispute between Pakistan’s powerful army spy agency and the largest media group that has exacerbated tense relations between the country’s civilian and military leaders. In a first, the Defense Ministry requested that the government invoke media regulations to shut down a major news channel -- in this case Geo, Pakistan’s largest television news station. The ministry accused Geo of running a “vicious campaign” against the military’s Inter-Services Intelligence directorate, or ISI.

Teachers Know Best: What Educators Want From Digital Instructional Tools

The Gates Foundation released a report surveying 3,100+ teachers and 1,250+ students on what they want from digital instructional tools. The report, entitled "," suggests that while many teachers support technology, only 55% of teachers reported available resources sufficient in helping students meet college- and career-ready standards.

This study explores four questions:

What do teachers want and need from digital instructional tools?
How can product developers use this information to more effectively serve students, teachers, and schools?
What do we know about how teachers and districts select and purchase digital instructional tools?
What do we know about the overall market for digital instructional tools?

Google Agreed to Pay Some of Samsung’s Costs, Assume Some Liability in Latest Apple Case

A Google lawyer testified that the company, pursuant to its contractual obligations, agreed to take over defense of some of the claims in Apple’s current patent lawsuit as well as to indemnify Samsung should it lose on those claims.

Apple played deposition testimony from Google lawyer James Maccoun, who verified emails in which Google agreed to provide partial or full indemnity with regard to four patents as well as to take over defense of those claims.

Of the four patents Google over which offered to cover at least some costs, two were dropped from the case before the trial began. The two patents that remain in the case, the ’414 and ’959 patents, cover background synchronization and universal search, respectively.

Although Google was seen as a shadow figure in the case -- most of the patents in this trial have to do with functions of Android or Google’s apps -- this was the first evidence shown to the jury that Google is playing a central role in the defense.

AT&T Q1 earnings beat estimate on wireless data sales

AT&T said its first quarter net income dipped 1.2 % to $3.65 billion as expenses rose but robust demand for its more expensive wireless data plans drove quarterly revenue higher.

Revenue totaled $32.5 billion for the three-month period ending March 31, up 3.6% from in 2013. Customers "are choosing to move off device subsidies to simpler pricing while at the same time, they are continuing to move to smartphones with larger data plans," said AT&T chairman and CEO Randall Stephenson.

Revenue for the wireless unit, which runs the nation's second largest wireless carrier, grew 7% year-over-year to $17.9 billion as it added more than 1 million subscribers. About 625,000 new customers signed up for postpaid plans -- contract-based wireless voice-data plans that are considered the most profitable in the industry -- during the quarter.

U-Verse had 11.3 million customers in the first quarter, including 201,000 new TV customers who signed up during the quarter. Its Internet service gained 634,000 subscribers. About two-thirds of U-verse TV subscribers take "three or four services" from AT&T, the company said. The average revenue per U-verse triple-play customer continues to be more than $170.

Lawmakers push advertisers to stop supporting pirate sites

Members of the Congressional International Anti-Piracy Caucus are asking online ad networks to do more to keep advertisements off websites that promote online piracy.

"Only through proactive efforts will the harms associated with ad-supported piracy be mitigated," the caucus wrote in identical letters to the Interactive Advertising Bureau, the American Association of Advertising Agencies and the Association of National Advertisers.

The caucus is led by House Judiciary Chairman Bob Goodlatte (R-VA), Rep Adam Schiff (D-CA), Sen Sheldon Whitehouse (D-RI) and Sen Orrin Hatch (R-UT). The group of lawmakers called on the ad networks to develop "greater specificity" around steps to prevent legitimate ads from ever appearing on pirate sites, as well as ways to measure how effective those steps are.

Cable companies shell out for lobbyists ahead of merger decision

Comcast and Time Warner Cable forked over more than $5 million on lobbying in the first three months of 2014, according to recently disclosed lobbying records.

The two cable giants are pushing regulators at the Justice Department and the Federal Communications Commission to approve their proposed $45 billion merger, which they say will lead to faster Internet and better service.

Skeptics warn the deal will offer few benefits and cause consumers’ bills to go up. Comcast, the largest cable company in the country, spent $3.09 million to pay for dozens of lobbyists so far. Among those were at least 27 different firms to focus specifically on the Time Warner Cable merger or “competition” issues.

Time Warner Cable spent $1.93 million on lobbyists, including at least four shops focusing on the merger or “competition” in the marketplace. Among the hired lobbyists are multiple former lawmakers and staffers on Capitol Hill.

'Full Disclosure' Sought For Political Ads

Former Federal Communications Commission Chairman Newt Minow and former National Telecommunications and Information Administration chief Henry Geller have urged the agency to plug what critics allege is a loophole in existing political advertising law that allows nonprofit groups to protect the identities of donors for some political broadcast attack ads.

“This pervasive use of secret money undermines the democratic process,” they said in a petition filed at the FCC. “Full sponsorship disclosure is the law.”

They are urging the agency to act, because FCC rules only require disclosure of the actual sponsor of the issue ads -- not also the individuals or groups who donated funds to the sponsor of the ads. In their petition, Minow and Geller insist that the FCC already has the power to require the additional donor disclosure.

“It is the responsibility of the FCC to enforce the long-established rule,” the two said in their petition. “The voting public needs and is entitled to know who is trying to persuade it.”

Amazon Sales Take a Hit in States With Online Tax

Amazon is taking a hit in states that are collecting an online sales tax. In one of the first efforts to quantify the impact of states accruing more tax revenue from web purchases, researchers at Ohio State University published a paper that found sales dropped for Amazon when the online charge was introduced.

In states that have the tax, households reduced their spending on Amazon by about 10 percent compared to those in states that don’t have the levy. For online purchases of more than $300, sales fell by 24 percent, according to the report titled “The Amazon Tax.” The findings add to concerns about how much the world’s largest online retailer can expand.

The company has been grappling with decelerating revenue growth amid heavy spending by Chief Executive Officer Jeff Bezos on new initiatives. Amazon has enjoyed an edge against brick-and-mortar retailers because consumers didn’t have to pay a sales tax for purchases from the e-commerce site, yet that has eroded as states including California and Texas have unveiled the levies.

Benton

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