Qualcomm restructures to help protect patents

n">(Reuters) - Cellphone chip supplier Qualcomm Inc is changing its internal structure to protect its technology licensing business by creating a new subsidiary that will work on open source wireless developments.

The biggest developer of cellphone chips also derives a huge amount of its revenue from selling licenses for use of its vast portfolio of technology patents to companies such as cellphone makers whether or not they use Qualcomm chips.

The restructuring comes at a time when the wireless industry is beset with litigation related to technology patents.

Under the new structure, Qualcomm Inc as the parent company, will include its technology licensing division and corporate functions as well as most of its patent portfolio. Qualcomm Technologies Inc (QTI), the new subsidiary, will include its research and development arm and its wireless chip business.

Qualcomm said it needed to make the change to protect its patent licensing business because its new subsidiary QTI plans to increase its work with open source software. Open source projects typically involve the sharing of technology with the broader development community.

While the parent company will keep most of Qualcomm's patents, QTI will hold some patents that are specifically developed to provide open source software contributions.

Bernstein analyst Stacy Rasgon said the move should not worry shareholders as it would not change Qualcomm's finances. He saw it as a forward looking effort to protect the patent business which generates a much higher profit margin than Qualcomm's chip business.

"If they do see a risk that their patents could leak out as part of their open source efforts obviously this is good," Rasgon said.

Under the new structure, QTI will have no rights to grant licenses held by the parent company, Qualcomm said.

Qualcomm said the restructuring was not aimed at spinning out either its chip business or its licensing business and nor was it in response to any third party actions.

The company said the restructuring, which will be completed during the first fiscal quarter of 2013, will not change the way it reports its financial results.

Qualcomm shares were down $1.01 or 1.83 percent at $53.90 in afternoon trade on Nasdaq.

(Reporting by Supantha Mukherjee in Bangalore and Sinead Carew in New York; Editing by Joyjeet Das, Sofina Mirza-Reid and Bernard Orr)

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Rights group says Apple suppliers in China breaking labor laws

1 of 3. A woman uses an iPhone as she and other pedestrians walk past an Apple store in Beijing June 28, 2012.

Credit: Reuters/David Gray

By Lee Chyen Yee

HONG KONG | Thu Jun 28, 2012 8:01am EDT

HONG KONG (Reuters) - Apple Inc's suppliers in China have violated local labor laws when they imposed excessive overtime and skimped on insurance, a New York-based labor rights group said.

Apple and its suppliers such as Taiwanese tycoon Terry Gou's Foxconn Technology Group have been the target of labor rights groups, which say the world's most valuable technology company are making iPhones and iPads in massive sweat shops.

"From our investigations we found that the labor rights violations at Foxconn also exist in virtually all other Apple supplier factories, and in many cases, are actually significantly more dire than at Foxconn," China Labor Watch said in a 133-page report released on Thursday.

A four-month investigation through April showed workers work up to 180 hours of overtime a month during peak periods, exceeding the legal limit of 36 hours per month, the group said, citing Riteng, a unit of Taiwan's Pegatron Corp, as an example.

Some factories also omit medical insurance as required by the law while workers are exposed to hazardous conditions, according to the report.

China Labor Watch interviewed 620 workers at 10 factories run by Apple suppliers, including Toyo Precision Appliance and BYD Electronic (International) Co.

The group also spoke with workers at factories run by units of Quanta Computer Inc, Wintek Corp and U.S.-listed Jabil Circuit Inc.

The companies couldn't be immediately reached for comment.

"As part of our ongoing supplier responsibility program, our team has conducted thorough audits at every facility in China Labor Watch's report," Kristin Huguet, an Apple spokeswoman based in Cupertino, California, said in an e-mail.

"In some places, our auditors found issues similar to those described by China Labor Watch, including overtime violations," she said, when asked to comment on the report.

DISMAL CONDITIONS

The report singled out Riteng for dismal work conditions, saying workers work almost 12 hours a day, longer than 10 hours a day at Foxconn, Apple's main supplier.

Half of Riteng's workers described safety conditions as "bad," more than Foxconn's 2 percent, according to the report.

The average hourly wage at Riteng is 8.2 yuan ($1.29), well below the average rate 10.2 yuan at Foxconn.

The Pegatron unit was not immediately available for comment.

Labor groups say wages have generally been on the rise, though the growth has been slower than inflation.

"Wages are certainly going up, but they are still a very long way from what you consider a decent wage because inflation in the major cities in southern China is going up all the time," said Geoffrey Crothall of China Labor Bulletin.

"It's generally better at the larger factories, but the problem with Foxconn and a lot of the other Taiwanese, Hong Kong-owned manufacturers, the management culture there is still very authoritarian, quite dictatorial. People say it's quasi-military."

James Wu, a spokesman for Catcher Technology Co, which was also mentioned in the report, said the proportion of short-term labor it employs without having to provide severance compensation was actually lower than that described by China Labor Watch.

"Our dispatch rate is 20-30 percent, lower than the rate of around 80 percent mentioned in the report," Wu said.

Catcher also put their workers through a three-day training program to prepare them for their jobs.

"In summary, our company provides benefits for workers that exceed basic requirements," Wu said.

MAKING CHECKS

Apple said it had been making checks at its supply chain partners and regularly publishes reports on workers' situation on its website (here).

The company, which monitors worker hours of more than 700,000 workers in its supply chain, said it had been following up to make sure suppliers comply with its labor standards.

Workers typically have little legal representation in China, where labor laws are sometimes not strictly enforced. Unions are also often not effective in providing feedback to management, labor rights groups said.

Following a spate of critical reports detailing unsafe factory practices at Foxconn plants that triggered worker deaths and suicides, Apple this year allowed the U.S.-based Fair Labor Association (FLA) to conduct a high-profile probe of Foxconn's factories in China.

"The process of change in our company continues, and competitive wages, improved living conditions and the abolition of the use of dispatched workers by our company are some examples of this," Foxconn said in an e-mailed statement.

"Our considerable investment in this process will change our industry through the positive example we are setting for other companies." ($1 = 6.3554 Chinese yuan)

(Additional reporting by Clare Jim in TAIPEI, Sisi Tang in HONG KONG and Tim Kelly in TOKYO; Editing by Ryan Woo)

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Demand for iPads, e-readers lift John Lewis sales

LONDON | Fri Jun 29, 2012 3:54am EDT

LONDON (Reuters) - John Lewis, Britain's biggest department store group, posted another strong rise in weekly sales, driven by strong demand for technology products and the start of its clearance sale.

The employee-owned retailer, which has a bias to the south east of England, said on Friday its sales increased 9.9 percent year-on-year to 76.12 million pounds ($118.03 million) in the week to June 23.

Sales of electricals and home technology items jumped 28.2 percent, fashion revenues rose 6.9 percent and homewares sales were up 1.6 percent.

"Our performance in electricals continues to delight," John Lewis' buying and brand director Peter Ruis said.

"Much of the strength in this area comes from customers continuing to buy into our new technology offer with our communication technology department delivering a 78.2 percent increase, powered by our largest-ever week on Apple and a 20 percent increase in e-reader sales as customers prepare for holidays."

The retailer has been outperforming the wider market as its generally more affluent customers have been less impacted by Britain's double dip recession, while improvements to product and service and new modern stores have chimed with consumers.

John Lewis' sales are, however, flattered by the fact the firm has more shops than last year and by higher prices because of inflation. Also electrical items tend to have relatively low profit margins.

"Management describes it as a fantastic performance," said Seymour Pierce analyst Kate Calvert.

"On-line also continues to perform strongly with sales up 36.1 percent with particularly strong demand for the special buy Nespresso Coffee Machine and 50 inch Panasonic television."

Many British retailers remain under pressure as consumers are squeezed by higher prices, muted wage growth and government austerity measures designed to cut record national debt.

However, on Thursday, Debenhams, Britain's No. 2 department store group, posted a surprise 3.1 percent rise in sales in the last 16 weeks.

Earlier this week an industry survey showed British retail sales rose at their fastest pace in 1-1/2 years in June as Britons splashed out for the Queen's Diamond Jubilee celebrations.

John Lewis also owns upmarket supermarket chain Waitrose. Here week to June 23 sales rose 1.8 percent to 107.5 million pounds.

(Reporting by Rhys Jones; editing by Kate Holton)

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Megaupload founder still faces NZ extradition battle

By Gyles Beckford

WELLINGTON | Fri Jun 29, 2012 1:14am EDT

WELLINGTON (Reuters) - The suspected kingpin of an Internet piracy ring still faces a battle to avoid extradition from New Zealand but the case against him has likely been weakened by a ruling that search warrants used by police were illegal, experts said on Friday.

New Zealand's High Court ruled on Thursday that warrants used to search the home of Megaupload.com founder Kim Dotcom were invalid and the seizure of evidence, including computer hard drives, was illegal.

It also ruled that the copying of the evidence by the U.S. Federal Bureau of Investigation (FBI) and sending it to the United States was also unlawful. The case is the FBI's highest profile action against global copyright theft.

While the ruling did not kill the extradition case against German national Dotcom, also known as Kim Schmitz, one legal commentator said it had likely made it more difficult.

"If the major plank of the extradition argument relies on the evidence obtained from the searches, then I would have thought there's a problem," Jonathan Krebs of New Zealand's Law Society told Reuters.

"That's not to say the case will fall over, it may be there's a lot of other evidence that the authorities can put before the court arising from the United States or somewhere else in the world," he said.

Dotcom, 38, was one of four men arrested during a dramatic raid on his luxury country estate, outside New Zealand's largest city, in January as part of FBI-led investigations.

Prosecutors say Dotcom led a group that had netted $175 million since 2005 by copying and distributing music, movies and other copyrighted content without authorization.

His lawyers say the company simply offered online storage.

The High Court said the search warrants were too vague and did not properly spell out either the offences or the evidence being sought, but has left it to a hearing next week to decide on what further steps will be taken.

New Zealand police have said they are discussing their next step with prosecutors, while the FBI said it would respond in court at the appropriate time.

TREMENDOUS BLOW

A U.S.-based lawyer for Megaupload said the rulings were a "tremendous blow" struck in his client's defense against the piracy charges.

"The government was engaged not only in wrongful conduct but in double wrongful conduct: they weren't allowed to go ahead and do the initial seizure ... (and) they violated the law again by bringing them (hard drives) offshore when they weren't allowed to," lawyer Ira Rothken told Radio New Zealand.

A U.S. Federal Court will hear several motions later on Friday that the company cannot be charged with criminal behavior because it is Hong Kong based and that no papers have ever been served formally.

"The court may hear a motion to dismiss Megaupload, we also have in the queue a motion to release funds," Rothken said.

The extradition hearing for Dotcom and his three co-accused on copyright theft and money-laundering charges is set for August. Under New Zealand law, the alleged offences must be an offence in both countries punishable by a jail sentence.

"The judge didn't comment on the admissibility of the evidence for the extradition hearing," said Otago University law lecturer Kevin Dawkins.

The judge in the extradition hearing would have to "go through a balancing act" when considering what evidence to accept, he said.

A public interest group, the Electronic Frontier Foundation, will also ask the U.S. court to free the private and legal data of people who stored material with Megaupload.

Before it was shut down in January, Megaupload was one of the world's most popular websites, where millions of users stored data, either for free or by paying for premium service.

Authorities say megaupload.com and related sites cheated copyright holders out of more than $500 million.

Dotcom mocked U.S. and New Zealand authorities in a Twitter post after Thursday's court ruling, showing a computer monitor encased in police 'crime scene tape' and asking if any of his 40,000 followers had a pair of scissors.

Dotcom was originally denied bail after the raid and jailed for a month, but the courts have progressively eased the conditions on him, allowing him back into his mansion, giving him access to hundreds of thousands of dollars for living and legal expenses, and removing travel and meeting restrictions.

(Editing by Paul Tait)

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RIM delays new BlackBerry launch; sales crumble

A logo of the Blackberry maker's Research in Motion is seen on a building at the RIM Technology Park in Waterloo April 18, 2012. Picture taken April 18, 2012.

Credit: Reuters/Mark Blinch

By Alastair Sharp

TORONTO | Fri Jun 29, 2012 1:41am EDT

TORONTO (Reuters) - Research In Motion Ltd delayed the make-or-break launch of its next-generation BlackBerry phones until next year, in a devastating setback to the once-dominant technology company whose sales are crumbling.

Shares of the company, which also announced a steeper-than-expected quarterly operating loss and deep job cuts on Thursday, plunged 14 percent after it said it would release its revamped BlackBerry 10 devices early in 2013. It conceded the development had "proven to be more time-consuming than anticipated."

The delay in releasing the devices - RIM's last best hope of stemming its eclipse at the hands of Apple Inc's iPhone and phones using Google Inc's Android software - confirmed the worst fears of analysts and investors.

The size of the loss, RIM's first in eight years, and the likelihood that sales will keep sliding into 2013, severely reduce the options for the company if it is to survive.

RIM's announcement that it would slash 5,000 jobs, or 30 percent of its workforce, only reinforced the impression of a company that could be in terminal decline.

"It's like watching a puppy die. It's terrible," said analyst Matthew Thornton of Avian Securities in Boston.

"Wow, what a disaster," said Edward Snyder, managing director of Charter Equity Research in San Francisco. RIM is now in "a handset death spiral," he said. "From a numbers point of view, it could hardly be worse, and it's going to deteriorate from here," he said.

RIM, which virtually invented mobile email, has fallen from a leadership position to an also-ran in smartphones over a few years filled with delayed and uninspiring products, service outages and other embarrassments.

Now the new BlackBerry line will miss both the back-to-school and Christmas shopping periods, while the competition brings out new phones with more bells and whistles.

Apple is widely expected to unveil an iPhone 5 later this year, while a slew of manufacturers using Android are constantly pushing out new gadgets. Microsoft Corp is also planning to update its Windows software for mobile devices.

"There's really no guarantee that once they come out on the other side of BlackBerry 10 that it's going to be something that people will want," said Eric Jackson, a hedge fund manager at Ironfire Capital in Toronto.

RIM's board is under mounting pressure to consider unpalatable options such as selling its network business or forming an alliance with Microsoft, sources familiar with the situation told Reuters.

Microsoft CEO Steve Ballmer approached RIM earlier this year looking to strike a partnership similar to the one the software giant has with Nokia Oyj, the sources said. Under that partnership, Nokia will use Microsoft's latest Windows operating system on its smartphones.

In such a scenario, RIM could also look for Microsoft to buy a stake in the company and fund marketing and other expenses, the sources said. However, this option is not attractive to RIM because it would mean the end of the Waterloo, Ontario-based company's technology independence, they said.

Even so, freshman CEO Thorsten Heins gave no indication on a Thursday conference call that he was losing faith in the current tack of cutting costs while waiting for the BlackBerry 10 launch, which is now more than a year overdue. The new devices are now set to land in a slow period when consumers are tapped out after their holiday spending.

"It's akin to launching fireworks underwater," said IDC analyst Kevin Restivo.

JOB CUTS

RIM expects the job cuts to cost $350 million in the current fiscal year. It has pledged to slash $1 billion from its operating costs in the year, but now considers that target as a minimum it will pursue, given the additional BlackBerry 10 delay. It said it had already cut layers of management, streamlined its supply chain and outsourced repair work.

Analyst Shaw Wu of Sterne Agee in San Francisco said RIM would now have to be very careful. "Layoffs are not free - there's a use of cash with that. They have to be very careful with their cash balance. It's a matter of survival now."

RIM's cash position - which has become a focus of concern for analysts as the company dips into the red - increased to $2.2 billion by the end of the quarter, and it aims to maintain that level this quarter.

The company conceded that may slip as it pays severance to reduce the workforce, but it declined to estimate the cash position going into 2013.

Shares of RIM, which have dropped about 70 percent over the past year, were down 14 percent at $7.86 in after-hours Nasdaq trading. At that price, the market is valuing the company at $4.12 billion, a far cry from its once-lofty market capitalization of about $84 billion.

OPERATING LOSS

RIM had warned it would post an operating loss but did not provide specifics. Excluding special items, the loss came in at $192 million, or 37 cents a share, for the first quarter ended June 2. Revenue declined 43 percent to $2.81 billion.

Analysts on average expected a loss of 7 cents a share on revenue of $3.07 billion, according to an informal Reuters poll.

For the year-earlier quarter, RIM reported a profit of $695 million, or $1.33 a share, on sales of $4.91 billion.

RIM said it expected to post another operating loss in the current quarter, as it ships fewer smartphones. It shipped 7.8 million BlackBerry smartphones in the last quarter, only about half of the more than 14 million of two quarters ago. Until now, it had shipped more than 10 million devices every quarter since late in 2009.

RIM sent out 260,000 of its poor-selling PlayBook tablet computers, which it has discounted sharply after initially pricing them at levels comparable with Apple's iPad.

Apple sold more than 11 million iPads last quarter. RIM said last month it would no longer produce the cheapest model of the PlayBook, which uses the same QNX-based operating system that the company is struggling to integrate into its future phones.

(Additional reporting by Euan Rocha, Susan Taylor, Cam French, Allison Martell, Jennifer Kwan in Toronto and Nadia Damouni in New York; Editing by Frank McGurty, Martin Howell, Lisa Von Ahn and Ian Geoghegan)

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Google's Chrome browser to be available on Apple's iPad, iPhone

Sundar Pichai, senior vice president of Google Chrome, speaks during Google I/O Conference at Moscone Center in San Francisco, California June 28, 2012.

Credit: Reuters/Stephen Lam

By Alexei Oreskovic and Gerry Shih

SAN FRANCISCO | Thu Jun 28, 2012 4:31pm EDT

SAN FRANCISCO (Reuters) - Google Inc's Chrome, the world's top Internet browser, is now available on the iPhone and iPad, as Apple Inc finally granted access to its arch-foe's more popular Web-surfing app.

At Google's annual I/O developer conference in San Francisco on Thursday, company executives announced the development as well as a limited launch of a cloud-computing and hosting service to take on Amazon.com's thriving Web services arm.

Both moves underscore how Google is moving quickly to safeguard its dominant Internet presence.

Launched in 2008, Google's browser overtook Microsoft Corp's Internet Explorer in May as the world's most popular, according to analytics company StatCounter.

"No matter which device you're using, we are working really hard across all important software platforms," Google Senior Vice President Sundar Pichai said. "We want to make sure it's about the user."

Chrome has 310 million "active" users, Pichai said. Google's browser, along with Google Drive, the cloud storage service, will begin appearing in Apple's App Store for download later on Thursday, Google said.

Apple, which closely manages its App Store offerings, is making the concessions to its heated competitor even though it is seeking to lessen its dependency on Google's Web services within its products. Earlier this month, the phone and tablet manufacturer said it would load its own home-built mapping service, instead of Google Maps, in the next version of its mobile operating system.

The move heightened competition with Google, which has made inroads in making hardware that could challenge Apple products.

Earlier this week, Google unveiled its own tablet, the Nexus 7, which will ship with Chrome as its default browser. Google is hoping the tablet, priced at $199, will directly challenge Amazon's Kindle Fire tablet and undercut Apple's popular iPad.

AMAZON WARRIOR

Google also unveiled a cloud infrastructure service that will compete with Amazon's Web Service. Called Google Compute Engine, the new service will provide hosting for Web companies on Google's datacenters.

Google did not announce the pricing on Compute Engine. But in an oblique reference to Amazon, Google executives promised "up to 50 percent more computing power for your dollar than competing cloud services."

Google said Thursday it would make Compute Engine available on a "limited preview" basis.

(Reporting by Gerry Shih; Editing by Leslie Gevirtz)

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NZ court finds Megaupload search warrants illegal

The founder of file-sharing website Megaupload Kim Dotcom, a German national also known as Kim Schmitz, is seen at court in Auckland in this still image taken from video January 23, 2012.

Credit: Reuters/TV3 via Reuters Tv

By Mantik Kusjanto

WELLINGTON | Thu Jun 28, 2012 2:36pm EDT

WELLINGTON (Reuters) - Search warrants used when 70 New Zealand police raided the mansion of the suspected kingpin of an Internet piracy ring were illegal, a New Zealand court ruled on Thursday, dealing a blow to the FBI's highest profile global copyright theft case.

German national Kim Dotcom, also known as Kim Schmitz, was one of four men arrested in January as part of an investigation of his Megaupload.com website led by the U.S. Federal Bureau of Investigation (FBI).

Prosecutors say Dotcom was the ringleader of a group that had netted $175 million since 2005 by copying and distributing music, movies and other copyrighted content without authorization.

Dotcom's lawyers say the company simply offered online storage.

On Thursday, High Court Judge Justice Helen Winkelmann found the warrants used in the seizure of property from Dotcom's mansion near Auckland were illegal and that moves by the FBI to copy data from Dotcom's computer and take it offshore were also unlawful.

"The warrants did not adequately describe the offences to which they related," Winkelmann said in her ruling. "Indeed they fell well short of that. They were general warrants, and as such, are invalid."

In response, New Zealand's police said in a statement they were considering the judgment and were in discussions with Crown Law "to determine what further action might be required".

Police said no further comment would be made until that process was complete.

FIGHTING EXTRADITION

Dotcom is on bail in New Zealand, fighting attempts by U.S. authorities who are seeking to extradite him on charges of copyright theft and money laundering. An extradition hearing is set for August.

Dotcom and his lawyers did not immediately respond to requests for comment.

Television New Zealand quoted a spokesman for Dotcom as saying he was "pleased" but he would not be making any further comment on the court decision as appeals were likely.

Lawyers representing the U.S. government said the ruling had come as "no surprise" and that their legal team would be discussing options, including whether an appeal will be lodged, TVNZ reported.

Armed officers, backed by helicopters, cut Dotcom out of a safe room he had barricaded himself in within the sprawling country estate, reputedly New Zealand's most expensive home. Millions of dollars in assets were seized or frozen including almost 20 luxury vehicles, dozens of computers and art works.

Before it was shut down in January, Megaupload was one of the world's most popular websites, where millions of users stored data, either for free or by paying for premium service. Authorities say megaupload.com and related sites cheated copyright holders out of more than $500 million.

U.S. lawyers for Megaupload have also argued that U.S. federal authorities cannot charge the company with criminal behavior because it is Hong Kong based, and also that no papers have ever been formally served.

(Reporting by Mantik Kusjanto; Writing by Lincoln Feast; Editing by Robert Birsel)

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Exclusive: Microsoft tie-up, network sale among RIM options: sources

A woman uses her mobile phone at the Blackberry World Event in Orlando in this May 1, 2012 file photo.

Credit: Reuters/David Manning/Files

By Nadia Damouni

NEW YORK | Thu Jun 28, 2012 10:42pm EDT

NEW YORK (Reuters) - Research In Motion Ltd's board is under mounting pressure to consider unpalatable options such as selling its network business or forming an alliance with Microsoft Corp after the Blackberry maker again delayed the release of its next-generation smartphones, said three sources familiar with the situation.

Shares in the Canadian company, which announced a steeper-than-expected quarterly operating loss on Thursday, plunged 18 percent in extended trading, slashing its market value to $4.1 billion. The stock has fallen about 70 percent in the past year.

RIM said the launch of BlackBerry 10 mobile devices has been postponed to early 2013 - more than a year later than initially promised - because the development of its new operating system had "proven to be more time-consuming than anticipated."

The latest setback has increased pressure on RIM's board to more seriously explore other options, including measures that would amount to an admission that it cannot survive by sticking to its current strategy, said the sources, who declined to be identified because the information was confidential.

One of these options is for RIM to abandon its own operating system and adopt Microsoft's upcoming Windows 8. Microsoft CEO Steve Ballmer had approached RIM in recent months, looking to strike a partnership similar to the one the software giant has with Nokia Oyj, the sources said. Under that partnership, Nokia will use Microsoft's latest Windows operating system on its smartphones.

In such a scenario, RIM could also look for Microsoft to buy a stake in the company and fund marketing and other expenses, the sources said. However, this option is not attractive to RIM because it would mean the end of the Waterloo, Ontario-based company's technology independence, they said.

The RIM board prefers to see through the efforts to develop the new BlackBerry 10 operating system, according to the sources.

Microsoft could also be interested in RIM's wireless patents, the sources said.

RIM and Microsoft declined to comment.

Another option for RIM would be to sell its proprietary network to a private equity firm or a technology company. The buyer could then open up RIM's network operating centers to other smartphone providers, allowing them to also provide highly secured emails and other services to companies and government agencies, the sources said.

In that scenario, however, RIM's device business is seen to have no future, they said, adding that private equity firms have been considering how to separate the hardware business from the network business.

RIM has in the past considered opening up its network to rivals, under a plan led by former co-CEO Jim Balsillie. That could offer RIM a way forward as demand for its BlackBerry phones faces fierce competition from Apple Inc's iPhone and Google Inc's Android phones.

The idea would be to clearly define the network as an asset that could exist without BlackBerry handsets - an operational precursor that could have led to a possible legal split if the handset business ultimately proved untenable.

RIM is "going to have to be much more open minded to the idea that Jim Balsillie was working on before he was ousted of opening their network to third parties," said Eric Jackson, a hedge fund manager at Ironfire Capital in Toronto.

(Reporting by Nadia Damouni; Additional reporting by Alastair Sharp in Toronto; Editing by Ryan Woo)

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SK Hynix boosts flash chip capacity to meet rising demand

SEOUL | Fri Jun 29, 2012 3:10am EDT

SEOUL (Reuters) - South Korea's SK Hynix, the world's fourth-biggest NAND flash memory chipmaker, completed a new semiconductor line that will help meet rising demand for data-storage chips used in Apple's smartphones and tablets.

The new capacity comes as chipmakers gear up for high-profile launches of ultra-slim laptops, smartphones and tablets in the second half of this year.

SK Hynix, which mainly produces Dynamic Random Access Memory chips used in computers, is targeting to increase the revenue share of NAND chips to 30 percent this year from about 20 percent a year earlier.

The global market for NAND chips is estimated to rise to around $29 billion this year from $25 billion a year earlier, according to research firm Gartner.

SK Hynix is planning to invest around 4.2 trillion won ($3.6 billion) this year, and more than half will be spent to increase production of NAND chips.

The new chip line will add to four existing semiconductor fabs, the firm said in a statement on Friday.

The new line comes after SK Hynix announced a 287 billion won deal earlier this month to acquire privately held chip controller firm Link_A_Media Devices Corp (LAMD) to produce packaged chips.

Its bigger rival Samsung Electronics is building a $7 billion NAND chip plant in China, betting booming sales of mobile gadgets will drive the flash chip market.

SK Hynix trails Samsung, Japan's Toshiba Corp and U.S.-based Micron Technology Inc in flash chip production.

(Reporting by Miyoung Kim; Editing by Ryan Woo)

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Elpida creditors agree to forgive 70 percent of debts: Nikkei

TOKYO | Thu Jun 28, 2012 11:31pm EDT

TOKYO (Reuters) - Creditors of failed Japanese chipmaker Elpida Memory Inc (ELPDF.PK) have agreed to forgive 70 percent of 420 billion yen ($5.3 billion) of debts, the Nikkei business daily reported, without saying where it got the information from.

Elpida, the country's only maker of Dynamic Random Access Memory chips, filed for bankruptcy protection in February with more than 400 billion yen of liabilities.

The company, which also produces chips used in smartphones and tablets, has been in exclusive talks with Micron Technology (MU.O), which is seeking to buy the Japanese chipmaker.

Micron has agreed to pay a total of 200 billion yen to acquire Elpida, of which as much as 140 billion yen will be used to repay debt, the Nikkei said.

Elpida will submit its restructuring plan to the Tokyo district court by August 21, according to the report. ($1 = 79.3100 Japanese yen)

(Reporting by Junko Fujita; Editing by Ryan Woo)

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Microsoft may be making own phone: analyst

A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012.

Credit: Reuters/Rick Wilking

SEATTLE | Thu Jun 21, 2012 4:28pm EDT

SEATTLE (Reuters) - Microsoft Corp is looking at making its own smartphone to kickstart sales of its Windows mobile software, according to a Wall Street analyst who has followed the company for many years.

The talk - unconfirmed by Microsoft - comes a day after the company unveiled its latest Windows Phone 8 software, and the same week it announced an own-brand tablet, signaling a break with 37 years of focusing on software and leaving hardware manufacturing to its partners.

"Our industry sources tell us that Microsoft may be working with a contract manufacturer to develop their own handset for Windows Phone 8," wrote Nomura analyst Rick Sherlund in a note to clients on Thursday.

"It is unclear to us whether this would be a reference platform or whether this may be a go-to market Microsoft-branded handset," wrote Sherlund, who covered Microsoft for Goldman Sachs when the bank brought Microsoft public in 1986.

Microsoft did not confirm or deny the speculation. A spokesman said the company was a "big believer in our hardware partners and together we're focused on bringing Windows Phone 8 to market this year."

Windows Phone 8 is the latest version of Microsoft's mobile software, set for release in autumn. So far, the software giant has struggled to make a mark, with Windows-powered smartphones taking only 2 percent of a worldwide market dominated by Apple Inc's iPhone and devices running Google Inc's Android system.

Microsoft built its business on creating software to be used on other companies' hardware, but the success of Apple's iPhone and iPad have demonstrated that making both and integrating the two smoothly has its benefits.

Microsoft charted a new course this week by announcing two own-branded tablet PCs, although doubts remain whether that was a move to invigorate hardware makers or a genuine attempt to compete with its partners.

A similar move in phones could make sense, and the company has little to lose by trying its own handset, said another analyst, considering the strategic importance of smartphones and poor sales of Windows phones.

"Microsoft can't afford not to have phones sell. They have to find a way of selling it," said Sid Parakh, an analyst at fund firm McAdams Wright Ragen. "It's a significant piece of their long-term vision of integrated devices."

If Microsoft did make its own phone, it would be a blow for struggling Finnish handset maker Nokia, which pledged to use Windows software in its smartphones under a multi-billion dollar pact last year. If Microsoft wanted to be in the handset business, it might even consider buying Nokia, suggested Parakh, although he said that was unlikely.

Such a move would also bring Microsoft into competition with Samsung Electronics, HTC Corp and Huawei, which are slated to bring out new Windows phones later this year.

Microsoft has experimented unsuccessfully with handsets before. It bought fashionable phone designer Danger and developed a phone in-house called Kin, which was pulled off the market months after launch in 2010.

(Reporting By Bill Rigby; editing by Carol Bishopric)

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At the Salo end of Nokia's deep crisis

Nokia CEO Stephen Elop looks on during the company's news conference in Espoo, June 14, 2012.

Credit: Reuters/Kimmo Mantyla/Lehtikuva

By Eero Vassinen

SALO, Finland | Fri Jun 22, 2012 8:37am EDT

SALO, Finland (Reuters) - Nokia workers in Salo thought chief executive Stephen Elop signaled that their plant, Europe's last major mobile phone factory, would survive when he visited in February, but last week he announced its closure anyway.

This final chapter in Nokia's long goodbye to manufacturing in Finland will claim about 850 jobs, on top of 1,000 announced earlier in the year, and rob the town of 90 percent of its tax revenue.

Once the world's dominant mobile phone provider, Nokia has been bested in a smartphone war by Apple and Samsung and other phones running Google software. It is also losing share in the market for more basic phones.

Its strategy to reverse its fortunes, abandoning its own Symbian smartphone software in favor of a largely untested alternative from Microsoft, Elop's former employer, has limped from setback to setback.

Sales of Nokia's new Windows Phone models, the Lumia series, have been slow to pick up, while the bottom has fallen out of the market for old phones running dead-end Symbian.

As recently as this week, Microsoft revealed that a new version of its software won't run on the existing Lumia range, and a Wall Street analyst said the software giant was looking at making its own phones in direct competition with its new partner.

Over two years, workers at Nokia have become familiar with bad news, but are still not inured to it.

"During my whole time, 15 years and 10 months with Nokia, someone was always saying Nokia will abandon Finland. But it was still a surprise," said Katja Taskinen, who took a buyout offer in an earlier round of cuts this year.

Rivals have long been focused in Asia, and analysts had said Nokia should do the same, but the workers believed they had been made an exception.

"We were promised continuity," said Anne Malm, head shop steward of the Salo plant, which was set up in the 1970s and often held up as a model for other Nokia factories around the world.

"Salo is where it all began. Salo has been the benchmark. If there were troubles at other factories, Salo has been the place from where teams were sent to extinguish those fires."

PROMISES, PROMISES

Some are hoping for government intervention.

"The government promised us that they'll use all the instruments available to help us," said Antti Rantakokko, Salo's mayor.

Jukka Roos, a local member of the Social Democratic Party and former lawmaker, said the government should not allow the country's flagship technology company to make such drastic cuts.

"The government and unions should react and put pressure on Nokia," he said. "What the hell are they doing?"

At its peak, Nokia accounted for around 4 percent of Finnish GDP and supported an eco-system of suppliers and technology start-ups in an economy previously focused on forestry and metalworks. Now it accounts for less than 1 percent, according to analysts.

Its problems have had a knock-on effect on Finnish electronics companies, including Elcoteq, which filed for bankruptcy last October after Nokia turned to cheaper Asian suppliers.

In Salo, local unemployment is around 11 percent, already above the national average of 8 percent, and the city expects it to spike to around 20 percent once the Nokia jobs go.

The government has said it will accelerate an existing program in which it plans around 300 million euros in capital spending and tax breaks for research and development during its term, which ends in 2015.

But beyond that, there was little Prime Minister Jyrki Katainen could promise when he visited Salo on Wednesday. He had cancelled a trip to a United Nations conference in Brazil to visit Salo and Oulu, another town affected by Nokia lay-offs.

"I completely understand the outcry," he said. "But we also have to keep in mind that Nokia brought us enormous wealth in the past."

He rejected suggestions that the state should buy Nokia shares, which have fallen over 50 percent since the start of the year.

While the state holds stakes in companies considered crucial to its national interests, including forest and chemical companies, and is a majority shareholder in airline Finnair and energy company Fortum, owning shares doesn't help beat global competition.

While Finland is one of a dwindling band of triple-A rated countries in the euro zone, its exports have been declining, with old industries like forestry also struggling to compete with lower-cost rivals.

Its current account slipped into the red last year, and the central bank expects the deficit to continue through at least 2014, by which time analysts say Nokia could be short on cash if it continues to burn through reserves at the current rate.

While analysts have begun to think the unthinkable, Finns find it hard to contemplate the loss of a company that has become integral to national pride.

Harri Niinisto, coincidentally a cousin of Finnish President Sauli Niinisto, also a Salo native, remains hopeful, though he took a redundancy package from Nokia this year and set up his own consulting firm.

"At the moment, we can't see what will end up happening," said Niinisto. "Still, I want to keep believing in Nokia."

(Writing by Ritsuko Ando; Editing by Will Waterman)

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Google CEO says "nothing seriously wrong": source

Google CEO Larry Page speaks during a press announcement at Google's headquarters in New York, May 21, 2012.

Credit: Reuters/Eduardo Munoz

By Alexei Oreskovic

SAN FRANCISCO | Fri Jun 22, 2012 9:08pm EDT

SAN FRANCISCO (Reuters) - Google Inc Chief Executive Larry Page has reassured employees about his health, but the company on Friday shed little additional light on an unspecified condition affecting his voice that will sideline him from two high-profile events in the coming weeks.

Page told employees in an email on Thursday that there was "nothing seriously wrong with me," according to a source who had seen an internal staff memo.

The 39-year-old Google co-founder sat out his company's annual shareholders' meeting on Thursday because he had "lost his voice," according to Google Executive Chairman Eric Schmidt, who informed attendees of the news at the start of the event.

The condition will also cause Page to miss Google's annual developer conference next week as well as its quarterly results announcement next month.

Page continues to run Google's business, but has been asked to rest his voice, according to a Google spokeswoman. The company declined further comment on his condition.

The prolonged absence from the public spotlight raises questions about his condition, and the company's obligation to disclose issues of concern to shareholders.

Corporate governance experts say Google has met minimal disclosure requirements but will face increasing pressure while Page remains out of sight.

On Friday, Google's shares rose 1.1 percent to $571.48, lifted along with the rest of the Nasdaq.

"It gets them over the first disclosure hurdle, that is they've alerted shareholders to the fact he's going to have this health effect," said James Post, a professor of management at Boston University who specializes in corporate governance issues. "The tough questions still lie ahead, and there will be continued pressure to keep answering those tough questions."

While many people, including senior business executives, prefer to keep health matters private, public company CEOs have responsibilities to a "wide set of constituents, some of whom have a legitimate claim to know about material information," said Post.

The issue came to the fore several years ago when Apple Inc was criticized for being less than forthright about the health of CEO Steve Jobs, who died in October after a long struggle with pancreatic cancer.

"With the concerns over Steve Jobs, people are quick to jump to a conclusion that may not be the right conclusion to jump to," said Needham & company analyst Kerry Rice.

Page's health could be regarded as an especially significant issue because he, along with Schmidt and co-founder Sergey Brin, have majority control of the Internet company through special voting shares.

Wall Street analysts mostly took the news of Page's extended absence in stride, though some expressed concern about the lack of information.

"It's the number one thing I'm concerned about today just because there's so little data available," said BGC Partners analyst Colin Gillis.

JP Morgan analyst Doug Anmuth noted that Page has not posted any messages to his Google+ profile since May 25.

"We have no specific reason to think there is anything more to Larry's condition, but we find it odd that the company would already rule him out of the 2Q call, which is likely still a few weeks away," Anmuth wrote to clients late on Thursday.

"This could raise some questions among investors."

Simon Best, a head and neck surgery specialist at the Johns Hopkins Voice Center, said most cases where a doctor might order a patient to rest their voice involved either a vocal chord hemorrhage, or throat surgery of some sort.

"We actually very rarely put people on complete voice rest where they are not cleared to talk or allowed to talk," West said. "There are probably some practice differences between physicians and whoever is treating him, but there are only two scenarios where we put people on voice rest: if they've had vocal cord surgery, or if they've had a vocal chord hemorrhage."

Best, who has not treated Page, said hemorrhages were easily treatable, but a wide variety of conditions might necessitate surgery.

The Wall Street Journal first reported on the details of Page's internal memo on Friday.

During the shareholder meeting on Thursday, Google's Schmidt tried to lighten the situation by relaying comments that co-founder Brin had made about Page's condition: Sergey "has said that this problem will make Larry a better CEO because he's going to have to choose his words very carefully."

(Reporting By Alexei Oreskovic with additional reporting by Salimah Ebrahim; Editing by Gary Hill)

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Facebook's unique visitors slipped in May: comScore

SAN FRANCISCO | Wed Jun 20, 2012 8:22pm EDT

SAN FRANCISCO (Reuters) - Facebook's U.S. user numbers dwindled in May from April and March, according to data compiled by research firm comScore, in the latest sign that growth may be leveling off at the No. 1 social network.

Last month, Facebook attracted 158.01 million unique visitors in the United States, edging lower from 158.69 million in April and 158.93 million in March, comScore said.

Keeping users coming back -- or combating fatigue -- is crucial for all social media services, analysts say. Facebook is consistently trotting our new features, including the "Timeline" interface rolled out this year, and more are expected with the deal to acquire popular photo-sharing app Instagram.

ComScore has changed how it counts users, making year-ago comparisons harder. Under its old methods, comScore previously said Facebook had 157.22 million visitors in May 2011, which would make Wednesday's data a year-on-year increase of just 0.5 percent.

The changes comScore made generally reduce user numbers, so in an apples-to-apples comparison, user growth would look slightly bigger, a comsScore spokesman said.

Users spent an average of 380.8 minutes, or more than six hours, on the site in May this year, up slightly from 378.9 minutes in April.

In April last year, as measured under comScore's old techniques, users spent 374.9 minutes on the site.

Facebook was heavily criticized for the handling of its initial public offering in May, and critics have also questioned the efficacy of its ads.

One oft-cited reason for buying Facebook stock was the company's rapid growth.

The company's shares debuted at $38, but dipped well into the $20s before recovering some ground in recent weeks. On Wednesday shares closed at $31.60, down about 1 percent.

About two out of five people polled by Reuters and Ipsos Public Affairs said they used Facebook every day. Nearly half of the Facebook users polled spent about the same amount of time on the social network as six months ago.

(Reporting By Sarah McBride; Editing by Bernard Orr and David Gregorio)

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Schilling says game firm collapse cost him $50 million

By Ros Krasny

BOSTON | Fri Jun 22, 2012 3:24pm EDT

BOSTON (Reuters) - Former Boston Red Sox pitcher Curt Schilling, owner of bankrupt 38 Studios, said on Friday that the rapid collapse of the videogame development company had cost him $50 million of his own fortune.

Schilling made the comments to a WEEI, a Boston sports-radio station, in his first interview since Providence, Rhode Island-based 38 Studios filed for Chapter 7 bankruptcy on June 7 and laid off its roughly 400 workers.

When it went under, 38 Studios - named after Schilling's Major League jersey number - said it had owed more than $150 million and had less than $22 million in assets.

"I put everything in my name in this company," Schilling said. "It's crushing and devastating to see it fail the way it did."

Schilling said he was financially "tapped out" and had nothing more to give in early May, when the company missed a $1.4 million loan repayment to the state of Rhode Island.

Shortly after failing to make that payment, 38 Studios missed its May 15 payroll, and senior executives started to depart.

Most of the funding for Studio 38, launched in 2006, came from Schilling, an avid gamer, and from a $75 million loan from the Rhode Island Economic Development Corp in 2010 - funds made available to lure the company to Providence from Maynard, Massachusetts.

Last year Schilling said he had invested $30 million to $35 million into the venture.

Schilling told WEEI that raising money from outside investors had proved difficult from the start.

"One of the going concerns from Day One - and it was always something that we were cognizant of - is we needed to raise capital," he said.

But he said 38 Studios was close to signing a deal with a major videogame publisher when the company's finances started to erode in May and Rhode Island opted not to provide any additional funding.

38 Studios released its first game, "Kingdoms of Amalur: Reckoning," in February. The launch date of its planned online multiplayer game, code-named "Project Copernicus" was pushed back to 2013 as the company unraveled.

Schilling made about $114 million in salary during his baseball career. The 45-year-old won three World Series championships with the Red Sox and Arizona Diamondbacks.

"The money I saved and earned playing baseball was probably all gone," Schilling said on Friday. "Life is going to be different."

Studio 38's bankruptcy case is re: 38 Studios LLC, U.S. Bankruptcy Court, District of Delaware, No. 12-11743.

(Reporting by Ros Krasny; Editing by Lisa Von Ahn)

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Judge blocks Apple in Google smartphone war

By Dan Levine and Jessica Dye

Sat Jun 23, 2012 12:36am EDT

n">(Reuters) - A U.S. judge on Friday ruled that Apple Inc cannot pursue an injunction against Google's Motorola Mobility unit, effectively ending a key case for the iPhone maker in the smartphone patent wars.

The ruling came from Judge Richard Posner in Chicago federal court. He dismissed the litigation between Apple and Motorola Mobility with prejudice, meaning it can't be refiled.

The ruling is a blow for Apple, which had hoped a decisive ruling against Motorola would help it gain an upper hand in the smartphone market against Android.

"Apple is complaining that Motorola's phones as a whole ripped off the iPhone as a whole," Posner wrote. "But Motorola's desire to sell products that compete with the iPhone is a separate harm -— and a perfectly legal one -— from any harm caused by patent infringement."

Apple spokeswoman Kristin Huguet declined to comment on the ruling. Motorola Mobility spokeswoman Jennifer Erickson said the company was pleased that Posner dismissed Apple's case.

Both parties have the option to appeal Posner's ruling.

Motorola sued Apple in October 2010, a move that was widely seen as a pre-emptive strike against an imminent Apple lawsuit. Apple filed its own claims against Motorola the same month.

Posner issued a series of pre-trial rulings that eliminated nearly all of Motorola's patent claims against Apple from the prospective trial, while maintaining more of Apple's claims against Motorola. That meant Apple had more to gain in the trial, which had been set to start last week.

However, Posner canceled the trial earlier this month.

Apple had sought an injunction barring the sale of Motorola products using Apple's patented technology. But in Friday's ruling, Posner wrote that neither party is entitled to an injunction.

Since Motorola could design around the minor technological features covered by Apple's patents, an injunction would be an inappropriate windfall for Apple, Posner wrote.

Posner also said that Apple had not clearly demonstrated that Motorola phones caused a loss of consumer goodwill significant enough for an injunction.

"To suggest that it has suffered loss of market share, brand recognition, or customer goodwill as a result of Motorola's alleged infringement of the patent claims still in play in this case is wild conjecture," Posner wrote.

In a bright spot for the iPhone maker, Posner also ruled that Motorola could not seek an injunction based on the one patent in the case that it was still asserting against Apple.

Motorola had pledged to license that patent - which covers an aspect of wireless communication - on fair and reasonable terms to other companies in exchange for having the technology adopted as an industry standard.

"How could it be permitted to enjoin Apple from using an invention that it contends Apple must use if it wants to make a cell phone," Posner wrote.

At a hearing earlier this week, Apple had argued that it would be satisfied with an injunction forcing Motorola to remove Apple's patented features within three months. But Posner found that proposal unworkable, in part because of the hardship in administering such an order.

"Because of the potential costs to Motorola and the federal judiciary I could not responsibly order injunctive relief in favor of Apple," he wrote in his ruling.

The case is Apple Inc. and NeXT Software Inc. V. Motorola Inc. and Motorola Mobility Inc., in the U.S. District Court for the Northern District of Illinois, no. 11-08540.

(Reporting by Dan Levine in Oakland, California and Jessica Dye in New York; Editing by Gary Hill and Jeremy Laurence)

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Lawsuit over HP ex-CEO Hurd payout dismissed

Mark Hurd, chairman, CEO and president of HP speaks at the Fortune Brainstorm Tech conference in Pasadena, California, in this July 24, 2009 file photo. Hurd resigned on August 6, 2010 following an investigation of sexual harassment, the world's top computer maker said.

Credit: Reuters/Fred Prouser/Files

WILMINGTON, Delaware | Fri Jun 22, 2012 12:49pm EDT

WILMINGTON, Delaware (Reuters) - A shareholder lawsuit seeking to hold the board of Hewlett Packard Co responsible for approving Mark Hurd's $40 million severance after he abruptly quit as chief executive was dismissed by a Delaware court.

Hurd, now a president at rival Oracle Corp, resigned in August 2010 following allegations of sexual harassment against independent HP contractor Jodie Fisher. An internal HP investigation had cleared Hurd of harassment, but found he had filed inaccurate expense reports.

A shareholder, Lawrence Zucker, sued HP's directors, claiming they wasted company money by agreeing to such a large severance when they could have fired Hurd for cause and paid him nothing.

Judge Donald Parsons of the Delaware Chancery Court, however, wrote that the directors acted in good faith in approving the payment, though the amount "may appear extremely rich or altogether distasteful to some."

In his 30-page opinion issued on Thursday, Parsons said denying severance to Hurd could have hurt HP by making it more difficult to find a replacement.

In addition, Parsons said that the severance could have been considered payment for past service and he also noted that Hurd helped with the transition to a new leader and agreed to a period of confidentiality that covered his move to Oracle.

Parsons also dismissed a claim accusing HP of poor succession planning.

HP declined to comment. Attorneys for the plaintiff did not immediately reply to a request for comment.

The lawsuit was delayed by a separate legal fight over a letter sent to Hurd by Gloria Allred, a high-profile California attorney, on behalf of Fisher. Delaware's Supreme Court ruled in December that the letter should be unsealed though it contained embarrassing details about Hurd's behavior.

The case is Lawrence Zucker v Marc L. Andreessen et al, Delaware Court of Chancery, No. 6014.

(Reporting By Tom Hals in Wilmington, Del.; editing by Tim Dobbyn and M.D. Golan)

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Facebook expands ad business to Zynga's website

The Facebook logo is shown at Facebook headquarters in Palo Alto, California May 26, 2010.

Credit: Reuters/Robert Galbraith

By Alexei Oreskovic

SAN FRANCISCO | Fri Jun 22, 2012 3:40pm EDT

SAN FRANCISCO (Reuters) - Facebook Inc has begun showing ads on Zynga Inc's website, the first time the company has distributed ads beyond the borders of its own website and raising the possibility that Facebook could eventually launch an online advertising network.

"People may now see ads and sponsored stories from Facebook on Zynga.com," said Facebook spokesperson Tucker Bounds. He said that Facebook does not share information about people or advertisers with Zynga, and that Facebook's advertisers do not have any new "targeting criteria."

Asked if Facebook was planning to create a full-fledged online ad network that distributes ads on other sites, Bounds said "we are only showing ads on Zynga right now."

Zynga was not immediately available for comment.

Shares of Facebook, the world's No.1 social network, were up 4.4 percent to $33.25 in mid-afternoon trading on Friday.

Facebook's stock has been under pressure since its initial public offering last month, due in part to concerns about the company's slowing revenue growth.

Facebook made most of its $3.7 billion in revenue last year from ads that appear on its site.

An ad network could significantly increase the reach of Facebook ads, offering an important new source of revenue growth.

(Reporting By Alexei Oreskovic; Editing by Phil Berlowitz)

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U.S. judge sets 2013 trial date for Apple e-book lawsuit

The Apple Inc corporate logo is pictured on rear side of the Macbook Pro notebook computer in Warsaw February 6, 2012.

Credit: Reuters/Kacper Pempel

By Basil Katz

NEW YORK | Fri Jun 22, 2012 8:32pm EDT

NEW YORK (Reuters) - A U.S. judge on Friday set a 2013 trial date for a lawsuit from the U.S. government accusing Apple and book publishers of conspiring to fix the prices of electronic books.

Following a hearing in Manhattan federal court, U.S. District Judge Denise Cote said a bench trial in the case will begin June 3, 2013, for Apple and two publishers who are fighting the antitrust charges.

The U.S. Justice Department sued Apple in April, saying it colluding with five publishers to boost e-book prices in early 2010, as the Silicon Valley giant was launching its popular iPad tablet.

Amazon Inc, which makes the Kindle e-reader, had long sold e-books for as little as $9.99. The government complaint quoted Apple's late co-founder Steve Jobs as wanting to offer publishers a means to boost prices, and "create a real mainstream e-books market at $12.99 and $14.99."

Apple argues it has not conspired with anyone or fixed prices for e-books in an effort to thwart Amazon's dominance of that fast-growing market.

Apple says that its foray into e-books has actually fueled demand for e-books by forcing Amazon and rivals, including Barnes & Noble Inc, to compete more aggressively, including by upgrading e-reader technology.

The publishers Macmillan and Penguin Group, which are respectively units of Verlagsgruppe Georg von Holtzbrinck GmbH and Pearson Plc, are fighting the antitrust case.

News Corp's HarperCollins Publishers, CBS Corp's Simon & Schuster and Lagardere SCA's Hachette Book Group settled the case with the U.S. Justice Department.

The three publishers are also on track to submit a settlement proposal to the judge by the end of the summer to resolve claims by a group of U.S. states, lawyers for the book companies and the states said on Friday.

"I am confident that we'll get all 50 states and six territories and common wealths to sign on" to the settlement, said Gary Becker, a Connecticut assistant Attorney General.

The case is In Re: Electronic Books Antitrust Litigation, U.S. District Court, Southern District of New York, No. 11-2293.

(Additional reporting by Jessica Dye; Editing by Lisa Shumaker)

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Analysis: Search for rare earth substitutes gathers pace

By Braden Reddall and Julie Gordon

Fri Jun 22, 2012 1:45pm EDT

n">(Reuters) - The hunt for substitutes for rare earth minerals is gaining momentum as auto makers, lighting companies and clean tech developers seek to reduce their reliance on thin and unreliable supplies of the raw material.

Rare earths, found in everything from Apple Inc's iPhones to energy-efficient lighting and wind turbines, gained global attention last year as China, which produces more than 90 percent of global supply, repeatedly clamped down on exports. Prices of the individual oxides, alloys and metals soared.

The emergent battery-powered vehicle industry, with its world-scale ambitions, is leading efforts to find alternatives to rare earths, or at least curb reliance on the minerals, even as prices have fallen from last year's record levels.

General Motors Co, maker of the Chevy Volt, says it is close to a breakthrough that would reduce its need for dysprosium, a rare earth in especially high demand.

Magnets are what make electric motors spin, and the strong and durable permanent magnets used in many electric and hybrid vehicles are made from the rare earth neodymium, with dysprosium added to ensure performance at high temperatures.

While dysprosium may be the ideal option in terms of performance, carmakers must plan several years out, and do not want to depend almost exclusively on China for supplies of a key raw material.

"The problem for them is not necessarily price," said Jon Hykawy, a clean technologies and materials analyst at Byron Capital Markets. "The problem for them is the availability and security of that supply."

The price of dysprosium oxide rose from an average of $229 a kilogram in 2010 to an average of $1,454 in 2011, according to Dundee Securities.

Made of an element aptly named for the phrase "hard to get" in Greek, it now goes for about $1,000 a kg.

GM is looking at reducing its overall use of rare earths by eventually replacing permanent magnet motors, but that will take time, said Yucong Wang, manager of GM's Department of Materials Technology.

"We know that permanent magnets are still the best magnets and we want to use (them)," he said. "But then how can we, from a materials standpoint, reduce the usage of the rare earths?"

GM is not alone. Japanese media reports say Toyota Motor Corp has found a way to make electric cars without rare earths, while Renault SA has started producing cars with electric motors that do not need permanent magnets.

Two months ago Hitachi unveiled an electric motor that does not require any rare earths at all, but it will not go into commercial production for two years.

Carmakers are also rethinking other design elements, like the tiny electric motors that move seats and side mirrors, to see if those can be made with fewer rare earths, or none at all. Bob Wolf, head of sales at magnet supplier Alliance LLC, counts more than 100 permanent magnet applications in a modern car.

FROM PURSE CLASPS TO LEDS

The pricing roller-coaster is a boon for rare earth substitute makers like Nanosys, which produces rare earth-free backlighting technology for monitors and handheld devices. Nanosys has a licensing deal with display maker Samsung, which is also an investor, and a commercial deal with LG.

Nanosys CEO Jason Hartlove said that even at less-inflated rare earth prices, the cost to make light-emitting diode (LED) products using yttrium, a rare earth, is twice that of Nanosys lighting -- and LEDs are expected ultimately to replace standard light bulbs once they are competitive on price.

"We have an ambition to move into general illumination, probably in the next year or so," said Hartlove, whose firm's backers also include Germany's Nanostart AG.

Among larger competitors, Philips said in April that it was developing technology to "significantly reduce" its reliance on rare earths in the production of LEDs.

A few years ago, rare earth magnets were so abundant in China that they were used in purse clasps, but that all stopped once prices soared, said Doug Jackson, senior vice president of business development at U.S. rare earth miner Molycorp Inc.

Demand from clean-energy technologies such as wind turbines may triple global demand for dysprosium by 2025, according to the U.S. Department of Energy, which has been scrutinizing the rare earths market for two years.

With an eye on the supply shortage, Molycorp last year invested in Boulder Wind, a maker of turbines that are free of dysprosium, though they use other, less-scarce rare earths.

"We think that their technology will accelerate the uptake of the permanent magnet generator," Jackson said.

(Reporting by Braden Reddall in San Francisco and Julie Gordon in Toronto; Editing by Patricia Kranz and John Wallace)

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HP may cut up to 1,000 jobs in Germany: magazine

A woman walks past the Hewlett Packard logo at its French headquarters in Issy le Moulineaux, western Paris, in this September 16, 2005 file photograph.

Credit: Reuters/Charles Platiau/Files

BERLIN | Sat Jun 23, 2012 10:09am EDT

BERLIN (Reuters) - Hewlett Packard, the world's largest personal computer maker, may cut as many as 1,000 jobs in Germany as part of planned European-wide redundancies, WirtschaftsWoche reported, citing an unnamed staff representative.

HP is planning to cut about 8,000 positions in Europe by the end of 2014, the German magazine said, citing unnamed officials close to the company.

"As many as 1,000 jobs (in Germany) are acutely endangered," WirtschaftsWoche quoted the labor representative as saying.

HP, which employs more than 300,000 workers globally, said in May the layoff of 27,000 workers, or 8 percent of its workforce, would be made mainly through early retirement and generate annual savings of $3.0-$3.5 billion as it exits its 2013/14 year.

HP, which posted a second-quarter profit above market estimates, aims to use cost savings from planned job cuts to drive organic growth.

HP in Germany was not available to comment.

(Reporting By Andreas Cremer; Editing by Dan Lalor)

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Huawei to launch Windows 8 phones, new branding campaign

The logo of the Huawei Technologies Co. Ltd. is seen outside its headquarters in Shenzhen, Guangdong province, April 17, 2012.

Credit: Reuters/Tyrone Siu

SHANGHAI | Thu Jun 21, 2012 1:15am EDT

SHANGHAI (Reuters) - China's Huawei Technologies Co Ltd, the world's No.6 handset maker, may produce computer tablets running Microsoft's Windows 8 operating system after choosing the same system for its handsets, a senior executive said on Thursday.

The Shenzhen-based firm, which wants to increase its market share by selling mobile phones under its own name, will also spend $200 million on advertising this year to boost its brand awareness, said Shao Yang, chief marketing officer of Huawei Device, the division that sells dongles, handsets and tablets.

"We need to learn how to get close to people and understand people. That's something we lack," Shao said in an interview.

To boost margins in the highly competitive handset market that has eroded margins of some handset makers, Huawei is pushing into the higher-end segment. As a result, its average selling price doubled this year from last year, Shao said, without giving details.

Huawei plans to ship 50-60 million smartphones globally this year, up from 20 million last year and 3 million in 2010. The company's gross profit margin dropped 6.5 percentage points to 37.5 percent last year.

Huawei, founded by chief executive Ren Zhengfei in 1987, has diversified into consumer devices with its Vision smartphones and MediaPad tablets as its core telecoms gear market has stalled. Last year, Huawei recorded sales of 44.62 billion yuan ($7.02 billion) for consumer devices, a rise of 44.3 percent.

(Reporting by Kazunori Takada; Editing by Matt Driskill)

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Microsoft brings phone software closer to Windows

1 of 7. Joe Belfiore, corporate vice president of Microsoft, introduces the Windows Phone 8 mobile operating system in San Francisco, California, June 20, 2012.

Credit: Reuters/Noah Berger

By Bill Rigby

SEATTLE | Wed Jun 20, 2012 5:48pm EDT

SEATTLE (Reuters) - Microsoft Corp's new phone software will be built on the same core as its new upcoming PC and tablet operating system, bringing the company one step closer to unifying its Windows franchise across a full range of screens that are revolutionizing computing.

The world's largest software company, which is running to keep up with Apple Inc's iPhone and Google Inc's Android devices, said the common core means customers will have a greater choice of phones and applications, and be able to switch between multiple machines more easily.

The move follows the launch of the Surface tablet on Monday, Microsoft's effort to join the fast-growing mobile computing market and to tackle Apple's iPad head on.

At an event in San Francisco on Wednesday, Microsoft officially announced its new phone software, called Windows Phone 8, and said phones running the software would hit the market this autumn.

The new phones - made by handset makers Nokia, Samsung Electronics, HTC Corp and Huawei on Qualcomm dual-core chips - will feature voice commands, Skype calling, near-field communication (NFC) for wireless transactions and built-in maps for GPS directions.

Microsoft's voice recognition feature goes beyond Apple's rival Siri service by allowing users to issue commands to apps, not just the phone's core operating system.

The new software will support NFC transactions - in which the user taps a reader to make a purchase - but Microsoft is leaving it to independent software makers to write the actual applications controlling the process, meaning it will not be a direct competitor to the Google Wallet service for Android phones.

Microsoft's new phones will have an updated, customizable start screen in Microsoft's new 'Metro' style, which centers on touchable 'tiles', or colorful squares, representing people, applications and services which update in real time, for example showing Facebook posts or new email.

The Metro style is also the interface for Microsoft's Windows 8 operating system - designed to run on both tablets and traditional PCs - which Microsoft is expected to launch around October.

The success of the phones partly depends on the marketing support they get from carriers. No. 1 U.S. mobile operator Verizon Wireless said in April it expects to have Windows Phone 8 devices in time for the holiday shopping season as it wants a strong competitor to Apple's iPhone and Google Inc's Android.

No. 2 U.S. mobile operator AT&T and No. 4 T-Mobile USA said they plan to carry Windows Phone 8 smartphones later this year. No. 3 U.S. operator Sprint declined to comment.

APP DEARTH

Microsoft's Windows phones have been well reviewed but have not caught on in the market, partly due to the fact that there are only 100,000 or so apps available, compared to 500,000 or so for both Apple and Android devices.

Microsoft is hoping that a common core between its PC and phone software will make it easier for developers to create applications for both, with minimal adjustments.

The company said current devices, which run on Windows Phone 7.5, will not be able to update to Windows Phone 8. Windows Phone 7.5 users will be offered an update that includes the new software's start screen but excludes other features. That could dampen sales of Windows Phone 7.5 devices for the next few months until the new crop of phones appears in stores.

The Redmond, Washington-based company has invested billions of dollars in phones - including a deal with Nokia to use its software - in an attempt to break into the market.

So far it has had little impact, capturing only 2 percent of the world's smartphone market last quarter, according to tech research firm Gartner. Google's Android leads the market with 56 percent, followed by Apple with 23 percent.

Microsoft shares closed up 23 cents at $30.93 on Nasdaq.

(Additional reporting By Sinead Carew in New York; Editing By Leslie Gevirtz, M.D. Golan and Richard Chang)

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Dutch court orders Apple to pay Samsung damages over patent

An employee of South Korean mobile carrier KT holds a Samsung Electronics' Galaxy Tab 10.1 tablet (R) and Apple Inc's iPad tablet as he poses for photos at a registration desk at KT's headquarters in Seoul August 10, 2011.

Credit: Reuters/Jo Yong-Hak

AMSTERDAM | Wed Jun 20, 2012 3:27pm EDT

AMSTERDAM (Reuters) - A Dutch court ordered Apple Inc to pay damages to Samsung Electronics Co Ltd over a patent violation in the Netherlands, the latest twist in the global legal battle waged by the two rival phone and computer makers.

Apple and Samsung have been suing each other in about a dozen countries for the last few years as they compete globally for consumers in the fast-growing markets for smart phones and tablet computers.

The U.S. company has accused Samsung of "slavishly" copying the iPhone and iPad tablet through products that run on Google's Android software. The Korean firm has counter-sued with claims accusing Apple of infringing its patents.

A court in The Hague ruled Apple had violated a Samsung patent used in some of Apple's phones and tablet computers to connect to the Internet, and said damages should be based on certain iPhone and iPad sales in the Netherlands.

The violation applies to iPhone 3G, 3GS, and 4 and iPad 1 and 2, the court said.

Damages should be based on Dutch sales figures since August 4, 2010, which the court said was the date when Apple could have known it was violating Samsung's patent.

A Samsung spokeswoman said she did not know whether the ruling had any international implications, nor did she know how much money Samsung would ask for.

An Apple spokesman had no immediate comment.

The Dutch court dismissed three other patent infringements claimed by Samsung.

Apple has a complex relationship with Samsung, a conglomerate that makes computer chips, Galaxy smartphones and televisions.

While Samsung's smartphones and tablet computers run on Android and compete with Apple's products, Samsung is also a key components supplier to Apple.

(Reporting by Gilbert Kreijger and Bart Meijer; Editing by David Holmes)

(The photo attached to this story earlier has been removed as it was not related to the Dutch court order)

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Apple fined in Australia for misleading iPad advertising

A man waiting to buy a new iPad tablet uses his laptop as he queues in front of an Apple store in Sydney March 16, 2012.

Credit: Reuters/Tim Wimborne

MELBOURNE | Wed Jun 20, 2012 10:20pm EDT

MELBOURNE (Reuters) - Apple Inc was fined A$2.25 million ($2.29 million) by an Australian court on Thursday for misleading advertising of its latest iPad.

The Australian Competition and Consumer Commission (ACCC) took legal action against Apple in March, after the computer and gadgets maker rolled out the first wave of new iPad tablets in the Australian market.

The competition watchdog accused Apple of misleading customers with the description of its new iPad, which said it was compatible with a 4G mobile data network when it was not.

The court determined Apple had implied "that an iPad with WiFi + 4G could connect directly to the Telstra LTE mobile data network in Australia, which it could not do," according to the verdict emailed to Reuters by the regulator.

Apple "engaged in conduct that was liable to mislead the public," it said.

A spokeswoman for Apple in Sydney could not be reached immediately for comment on Thursday. Apple has already promised to email all buyers of its new iPad in Australia to offer them a refund and agreed to post warnings that its new iPad "is not compatible with current Australian 4G LTE networks and WiMAX networks."

Telstra Corp's network operates on a different frequency to the 4G on Apple's new iPad.

Apple rolled out the first wave of new iPad tablets on March 16. ($1 = 0.9815 Australian dollars)

(Reporting by Miranda Maxwell; Editing by Muralikumar Anantharaman)

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Yahoo, Facebook seek more time for settlement talks

The loading screen of the Facebook application on a mobile phone is seen in this photo illustration taken in Lavigny May 16, 2012.

Credit: Reuters/Valentin Flauraud

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Analysis: With Siri and new alliances, Apple takes on Google search

An Apple logo is seen at the Apple Worldwide Developers Conference 2012 in San Francisco, California June 11, 2012.

Credit: Reuters/Stephen Lam

By Poornima Gupta

SAN FRANCISCO | Thu Jun 21, 2012 12:08am EDT

SAN FRANCISCO (Reuters) - When Apple Inc sends out its coveted invitations to major events, one CEO has always been making the guest list of late: Jeremy Stoppelman.

The co-founder and chief executive officer of consumer review website Yelp Inc has never taken the stage at these gatherings, but his company has become an important weapon in Apple's arsenal as it steps up its assault on ally-turned-rival Google Inc.

Yelp and a handful of other major consumer content sites, including movie reviewer Rotten Tomatoes and restaurant reservation service OpenTable, will be helping to power Apple's Siri, the voice-activated iPhone personal assistant, in the new mobile operating system iOS6.

The relationship between Apple and Yelp illustrates the power struggle over how people find what they are looking for on the Internet. Much more than just a clever feature, Siri is emerging as a key tool for what some in the industry call "casual search" - quickly finding routine information such as a restaurant location.

This can bypass Google and other traditional search engines. That serves the interests of Apple, which sees an opportunity to muscle in on its rival's core business and build related advertising revenue.

Siri is also a potential lifeline for Yelp and other content companies, which have found themselves competing with Google.

"Google is a direct competitor to Yelp, and I am sure Yelp is aware of that," said Larry Cornett, founder of product strategy firm Brilliant Forge and former head of consumer products at Yahoo Inc. Yelp, which depends a lot on Google for traffic, will probably be "ecstatic" about the direct traffic it will get through Apple's upcoming version of Siri.

Google still reigns supreme in search, loved by consumers for its relevant results and advertisers for its reach. Deep-pocketed rivals, particularly Microsoft Corp with its Bing search engine, have tried in vain for years to reduce Google's dominance.

Rather than compete with Google on keyword search - which would mean battling algorithms refined by the millions of searches performed every day - Apple is taking a different tack by focusing on a subset of the search universe that users are mostly likely to scour while they are out and about.

That includes restaurants, movies, sports, business listings, maps and locations - where quick, digestible bite-sized results are desired, rather than the more involved research that users perform with Google. The increasing use of mobile devices for accessing the Internet only plays into this trend.

Advertisers value these searches, which are closely linked to location, time and intent, said David Tennenhouse, venture capitalist with New Venture Partners and former CEO of A9.com, the search unit of Amazon.com Inc.

"You can think of this as cream-skimming," Tennenhouse said. "Can I skim off some of the most valuable searches? There is a huge range of value here."

The stakes are high, said Oren Etzioni, a search and artificial intelligence expert at the University of Washington's computer science department.

"Google is very difficult to dislodge on the desktop," he said, "but mobile search is a very different beast, and the jury is still out on the question of who the ultimate winner in mobile (search) is."

'TRUSTED PERSONAL ASSISTANT'

Apple and Google are increasingly at odds, largely due to the rivalry between the iPhone and Google's Android smartphone software. As the rivalry escalates, Apple is systematically dialing back its reliance on Google services - most recently by announcing it is going into mapping big-time.

Siri is still in a beta or "trial" version, and users have criticized failings such as misinterpreted words, odd results and incomplete data. But Apple is betting that the fast-evolving technology will improve enough over time to spearhead its foray into Google's domain.

Google is still available on the iPhone, and users can even ask Siri specifically to search it for answers. Apple's strategy, however, is to reduce Google's relevance on its devices as it doubles down on the investment in the voice-enabled software, experts said.

The company's goal is to build Siri into a "trusted personal assistant," Tennenhouse said.

"The disintermediation of Google by Apple is really a matter of Apple putting together a front end, which happens to be Siri for now, and linking it directly to the high-frequency searches," said Roger Kay, technology analyst with EndPoint Technologies. "And in doing so, bypass the general search mode and more importantly, bypass Google's advertising pages."

LOCAL IS KING

Marketing research firm eMarketer forecast 30 percent growth in the U.S. search advertising market to $19.5 billion this year from $15 billion in 2011. Google accounts for about three-quarters of that market.

The company has a lesser, but still substantial, hold on the mobile advertising market. That generated $1.45 billion last year, with Google controlling about half, while Apple had 6.4 percent, eMarketer said. It expects the total market to be worth $2.6 billion this year.

Apple devices running the company's iOS operating system are the biggest source of Google's mobile revenue, generating roughly 40 percent of the total, according to Piper Jaffray analyst Gene Munster.

Mobile search has long been focused on local information, such as finding which local stores have discounts or which French restaurant in the area is the best-rated. But no one has yet been able to develop the content fully.

Google signaled its seriousness about the sector when it bought Zagat last year and vowed to make the popular dining ratings authority a cornerstone of its local information offerings. In late 2009, Google was in talks to acquire Yelp for at least $500 million, according to news reports at the time, but no deal resulted.

Yelp is now one of the few websites that is deeply integrated into iOS, featured not only in Siri but also in business listings for Apple's new map service.

Yelp's Stoppelman said the mapping integration was key, as searches are often location-based. He also says the Yelp app on the iPhone can readily integrate user reviews into the search functionality.

"Google just doesn't have that data," he said. "Yelp has the most word of mouth."

But Apple's success in search hinges almost entirely on the success of Siri.

Voice-recognition technology is not new, and users have so far not taken to it in great numbers. Google added this capability in its flagship Web search engine and its Android phones far earlier than Apple, but it is unclear how many people use it.

Whether Siri will be the answer also remains to be seen, New Venture Partners' Tennenhouse said. "The test always is: If you were to take this away from people, will they feel impoverished?"

(Additional reporting by Sarah McBride; Editing by Jonathan Weber, Martin Howell and Lisa Von Ahn)

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Cisco Packet Tracer

Cisco Packet Tracer is a most useable tool of the Network engineers and it is a powerful network simulation program in the world. That allows students to experiment with network behavior. As an integral part of the Networking Academy comprehensive learning experience, Packet Tracer provides simulation, visualization, authoring, assessment, and collaboration capabilities and facilitates the teaching and learning of complex technology concepts. 
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Microsoft demurs at Motorola patent settlement offer

A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012.

Credit: Reuters/Rick Wilking

SEATTLE | Wed Jun 20, 2012 10:12pm EDT

SEATTLE (Reuters) - Microsoft Corp has brushed off an offer by Motorola, the phone maker bought by Google Inc, to settle patent disputes with Motorola that are threatening to halt imports of Android devices and Xbox game consoles into the United States.

The patents at issue relate to Microsoft technology called ActiveSync, which updates calendars automatically on some Android phones. Microsoft is demanding royalties from all companies using Google's Android system in their devices, and has settled with most major manufacturers except Motorola.

is demanding royalties on some of its own video and wireless technology used in Microsoft's Xbox game console and the Windows operating system.

"While we welcome any good faith settlement effort, it's hard to apply that label to a demand that Microsoft pay royalties to Google far in excess of market rates, that refuses to license all the Microsoft patents infringed by Motorola, and that is promptly leaked to the press," said Horacio Gutierrez, Microsoft's deputy general counsel, in an e-mailed statement.

According to Microsoft, Motorola has offered to pay Microsoft 33 cents for each Android phone using ActiveSync, and asked for a royalty of 2.25 percent on each Xbox and 50 cents per copy of Windows for using its patents.

Last month the International Trade Commission recommended an import ban on infringing Android devices and Xbox consoles unless the patent issues were settled.

Representatives of Motorola and Google did not immediately respond to requests for comment.

(Reporting By Bill Rigby; Editing by Eric Meijer)

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