Archive for April 8th, 2008


Tech Biz  :  IT   

How Can Directory Assistance Be Free?

By Chris Anderson  02.25.08 | 12:00 AM

AT&T and its competitors rake in $7 billion a year from directory assistance, charging 50 cents to $1.75 per call. Google, on the other hand, offers its automated GOOG-411 service gratis. How can the search juggernaut afford not to charge?

A) Get free data. Each time callers to GOOG-411 request a phone number, they’re giving Google valuable information. Each call provides voice data representing unique variations in accent, phrasing, and business names that Google uses to improve its service. Estimated market value of that data since the service launched last spring: $14 million. B) Invest in the next big thing. Still, the value of that information hardly compares with potential earnings if Google were to charge $1 per call. Why give away the store? Honcho Peter Norvig has said that GOOG-411 is a test bed for a voice-driven search engine for mobile phones. If it serves ads to those phones, Google’s share of that market could be measured in billions. 

Chart: Steven Leckart; Chart design: Nicholas Felton; Sources: Jingle Networks, Linguistic Data Consortium, Opus Research

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The Grid: The Next-Gen Internet?

Douglas Heingartner Email 03.08.01 | 2:00 AM

AMSTERDAM, Netherlands — The Matrix may be the future of virtual reality, but researchers say the Grid is the future of collaborative problem-solving.

More than 400 scientists gathered at the Global Grid Forum this week to discuss what may be the Internet’s next evolutionary step.

Though distributed computing evokes associations with populist initiatives like SETI@home, where individuals donate their spare computing power to worthy projects, the Grid will link PCs to each other and the scientific community like never before.


The Grid will not only enable sharing of documents and MP3 files, but also connect PCs with sensors, telescopes and tidal-wave simulators.

IBM’s Brian Carpenter suggested “computing will become a utility just like any other utility.”

Carpenter said, “The Grid will open up … storage and transaction power in the same way that the Web opened up content.” And just as the Internet connects various public and private networks, Cisco Systems’ Bob Aiken said, “you’re going to have multiple grids, multiple sets of middleware that people are going to choose from to satisfy their applications.”

As conference moderator Walter Hoogland suggested, “The World Wide Web gave us a taste, but the Grid gives a vision of an ICT (Information and Communication Technology)-enabled world.”

Though the task of standardizing everything from system templates to the definitions of various resources is a mammoth one, the GGF can look to the early days of the Web for guidance. The Grid that organizers are building is a new kind of Internet, only this time with the creators having a better knowledge of where the bottlenecks and teething problems will be.

The general consensus at the event was that although technical issues abound, the thorniest issues will involve social and political dimensions, for example how to facilitate sharing between strangers where there is no history of trust.

Amsterdam seemed a logical choice for the first Global Grid Forum because not only is it the world’s most densely cabled city, it was also home to the Internet Engineering Task Force’s first international gathering in 1993. The IETF has served as a model for many of the GGF’s activities: protocols, policy issues, and exchanging experiences.

The Grid Forum, a U.S.-based organization combined with eGrid – the European Grid Forum, and Asian counterparts to create the Global Grid Forum (GGF) in November, 2000.

The Global Grid Forum organizers said grid communities in the United States and Europe will now run in synch.

The Grid evolved from the early desire to connect supercomputers into “metacomputers” that could be remotely controlled. The word “grid” was borrowed from the electricity grid, to imply that any compatible device could be plugged in anywhere on the Grid and be guaranteed a certain level of resources, regardless of where those resources might come from.

Scientific communities at the conference discussed what the compatibility standards should be, and how extensive the protocols need to be.

As the number of connected devices runs from the thousands into the millions, the policy issues become exponentially more complex. So far, only draft consensus has been reached on most topics, but participants say these are the early days.

As with the Web, the initial impetus for a grid came from the scientific community, specifically high-energy physics, which needed extra resources to manage and analyze the huge amounts of data being collected.

The most nettlesome issues for industry are security and accounting. But unlike the Web, which had security measures tacked on as an afterthought, the Grid is being designed from the ground up as a secure system.

Conference participants debated what types of services (known in distributed computing circles as resource units) provided through the Grid will be charged for. And how will the administrative authority be centralized?

Corporations have been slow to cotton to this new technology’s potential, but the suits are in evidence at this year’s Grid event. As GGF chairman Charlie Catlett noted, “This is the first time I’ve seen this many ties at a Grid forum.”

In addition to IBM, firms such as Boeing, Philips and Unilever are already taking baby steps toward the Grid.

Though commercial needs tend to be more transaction-focused than those of scientific pursuits, most of the technical requirements are common. Furthermore, both science and industry participants say they require a level of reliability that’s not offered by current peer-to-peer initiatives: Downloading from Napster, for example, can take seconds or minutes, or might not work at all.

Garnering commercial interest is critical to the Grid’s future. Cisco’s Aiken explained that “if grids are really going to take off and become the major impetus for the next level of evolution in the Internet, we have to have something that allows (them) to easily transfer to industry.”

Other potential Grid components include creating a virtual observatory, and doctors performing simulations of blood flows. While some of these applications have existed for years, the Grid will make them routine rather than exceptional.

The California Institute of Technology’s Paul Messina said that by sharing computing resources, “you get more science from the same investment.”

Ian Foster of the University of Chicago said that Web precursor Arpanet was initially intended to be a distributed computing network that would share CPU-intensive tasks but instead wound up giving birth to e-mail and FTP.

The Grid may give birth to a global file-swapping network or a members-only citadel for moneyed institutions. But just as no one ten years ago would have conceived of Napster — not to mention AmIHotOrNot.com — the future of the Grid is unknown.

An associated DataGrid conference continues until Friday, focusing on a project in which resources from Pan-European research institutions will analyze data generated by a new particle collider being built at Swiss particle-physics lab CERN.

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Technology April 8, 2008, 12:01AM EST

Is Yahoo Right to Resist Microsoft?

Delaying a takeover ups regulatory pressure and gives Yahoo’s new ad system a chance to boost the stock, forcing a sweetened bid

https://i0.wp.com/images.businessweek.com/story/08/370/0407_jerry_yang.jpgJerry Yang, Yahoo co-founder and CEO Getty Images

Yahoo’s resistance to a takeover by Microsoft looks foolhardy to some investors and Wall Street analysts. But the push-back may prove effective in the end—at least by forcing the suitor to cough up a few more bucks a share.

Executives from Yahoo (YHOO) on Apr. 7 reiterated the reasons for their opposition. The $31-a-share offer, made public Feb. 1, “substantially undervalues” Yahoo, and its stock component is even less attractive in light of Microsoft’s (MSFT) slumping share price. “We have continued to launch new products and to take actions which leverage our scale, technology, people, and platforms as we execute on the strategy we publicly articulated,” Yahoo Chief Executive Jerry Yang and Chairman Roy Bostock wrote.

The letter was addressed to Microsoft Chief Executive Steve Ballmer, in response to Microsoft’s threat to take the proposal directly to shareholders. “The public equity markets and overall economic conditions have weakened considerably, both in general and for other Internet-focused companies in particular,” Ballmer wrote in the Apr. 5 public appeal to Yahoo’s board (BusinessWeek.com, 4/5/08). “By any fair measure, the large premium we offered in January is even more significant today.”

The Fruits of Time

But holding out may force Ballmer to up the ante. Analysts think Microsoft could eventually sweeten its bid to as much as $34 a share. In an Apr. 6 note to investors, Citigroup (C) analysts Mark Mahaney and Brent Thill wrote that they would consider $34 a “reasonable” offer. UBS (UBS) analyst Benjamin Schachter also believes the deal could be raised to $34.

By delaying, Yahoo increases pressure on Microsoft to hike its bid to push the deal through before regulatory conditions grow unfavorable. Resistance also buys Yahoo time to introduce a product or service that stirs investor excitement, thereby raising its share price and making the 62% premium Microsoft offered over Yahoo’s Jan. 31 stock price of 19.18 look like a lowball bid.

Microsoft also needs to win global regulatory approval for the deal. Delays give opponents more time to foment antitrust opposition, particularly in China, where an Aug. 1 law gives authorities greater leeway in scrutinizing large mergers that could be deemed anticompetitive. “Yahoo seeks to gain leverage by extending the time for regulatory approval internationally, thereby putting Microsoft in a position to lose the deal altogether,” says Lee Westerfield, U.S. Internet analyst at BMO Capital Markets.

New Yahoo products are in the works. On Apr. 7 the company previewed its AMP! advertising management platform. The system unites many of the advertising acquisitions and investments Yahoo has made in the last year, including the $720 million purchase of ad exchange Right Media. AMP! is designed to persuade major publishers to buy and sell their online inventories on Yahoo’s system by creating an open market for ads. “The impact is hard to overstate,” wrote Yahoo President Sue Decker in a blog post.

Under the Radar

Some in the online ad market believe AMP! has the power to substantially increase Yahoo’s value in the long term. R. Michael Leo, co-founder of aQuantive, the advertising outfit Microsoft purchased last year for $6 billion, says Microsoft is trying to get Yahoo now—before AMP! has a chance to start generating revenue and increase the portal’s value. “The Street isn’t taking this into account,” says Leo, now CEO of ad management software provider Operative. “[Microsoft] probably thinks it’s going to get this on the cheap.”

Certainly, some shareholders agree with Yang that Yahoo should hold out for a better offer. Bill Miller of Legg Mason (LM), one of the largest institutional investors in Yahoo, said in February that Microsoft must raise its offer for a deal to go through.

But that view isn’t universally held. “If we were in the midst of a bull market, I would be tempted to let Yahoo have some more rope and demonstrate that it can be more like $40 or $50 a share,” says Kevin Landis, chief investment officer at Firsthand Capital Management, which owned more than 1 million Yahoo shares at the end of last year. “But we are not in a bull market. I can take that $30 or $40 and buy a bunch of really great tech companies at pretty steep discounts…I want that deal to go through.” Yahoo shares slumped 2.3%, to 27.70 on Apr. 7.

Yahoo will get another chance to prove whether resistance makes sense on Apr. 22, when it releases its first-quarter results. A quarter that outperforms forecasts would strengthen Yang’s hand.

Holahan is a writer for BusinessWeek.com in New York .

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Yahoo Answers Microsoft With Yet Another No


Published: April 8, 2008

SAN FRANCISCO — After their top executives traded recriminations in an exchange of letters, Microsoft and Yahoo continued their stalemate, with Yahoo shareholders expected to play an increasingly large role in the takeover battle.

In a letter to Microsoft early Monday, Jerry Yang, the chief executive of Yahoo, and Roy Bostock, its chairman, once again rejected Microsoft’s bid for their company, saying it undervalues Yahoo. But they made it clear that Yahoo remained open to a deal, as long as Microsoft sweetened its bid.

The two Yahoo officials also said that the company was continuing to explore alternatives to Microsoft’s offer.

People briefed on the situation said Yahoo was still in conversations with Time Warner about a deal to merge that company’s AOL unit into Yahoo.

A Time Warner spokesman declined to comment.

“We are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders,” Mr. Yang and Mr. Bostock wrote. “Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders.”

Yahoo’s statements were in response to a letter on Saturday from Steven A. Ballmer, the chief executive of Microsoft, threatening to begin a proxy fight to oust Yahoo’s directors if the two companies had not reached a negotiated deal in three weeks.

Mr. Ballmer also warned that a proxy fight would probably be accompanied by a lower offer for Yahoo.

Microsoft’s offer on Jan. 31 was initially valued at $44.6 billion, or $31 a share, but has fallen to just over $42 billion, or $29.36 a share, after a decline in the price of Microsoft’s shares.

Shares of Yahoo fell 66 cents on Monday, to $27.70.

With the threat of a proxy fight looming, the two companies are expected to increasingly court shareholders, whose views will prove decisive.

In its letter, Yahoo said that shareholders owning “a significant portion of our outstanding shares” supported the company’s position.

For his part, Mr. Ballmer said in his letter that Yahoo’s business appeared to have weakened in the last two months. As a result, he said, Microsoft’s bid offered Yahoo shareholders an even larger premium than when it was first made. Mr. Ballmer said he believed that a majority of Yahoo shareholders shared that view.

Yahoo rejects the notion that its business has weakened and has recently reaffirmed its forecast for the first quarter, which calls for revenue to grow 8 percent to 17 percent from a year earlier. Wall Street analysts, on average, have pegged the company’s growth at about 12 percent.

“The first quarter is absolutely crucial to the credibility of Yahoo’s management,” said Youssef H. Squali, an analyst with Jefferies & Company. “If they expect Microsoft to sweeten its offer, they need to come in at 12 percent or better. Coming in at the low end of the range won’t cut it.”

Yahoo is expected to report first-quarter results on April 22, less than a week before the deadline imposed by Microsoft.

In its letter, Yahoo also said that it had raised with Microsoft executives a number of antitrust concerns related to a merger of the two companies, and it complained that Microsoft had failed to respond to those concerns. “To date, you have still not provided any of the requested information,” the company said.

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Faster Forward

Microsoft and Yahoo’s Courtship Continues

Another Monday, another round of stories about how this deal is still up in the air somewhere. The latest developments: On Saturday, Microsoft sent a letter to Yahoo’s board of directors, telling them to take the offer on the table in the next three weeks or be prepared to get even less for the company in a hostile takeover:

“If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! board. The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal.”

Yahoo’s board replied to Microsoft today, writing that while the company won’t reject a fairly priced offer, it doesn’t like Microsoft’s proposed deal–especially since it’s declined in value since the first announcement–or the manner in which it’s been offered:

“Our Board’s view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo! and our stockholders. Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo!. Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal.”

The letter also takes a shot at Microsoft chief executive Steve Ballmer:

“We regret to say that your letter mischaracterizes the nature of our discussions with you. We have had constructive conversations together regarding a variety of topics, including integration and regulatory issues. Your comment that we have refused to enter into negotiations to conclude an agreement are particularly curious given we have already rejected your initial proposal, nominally $31 per share at the time, for substantially undervaluing Yahoo! and your suggestions in your letter and the media that you are considering lowering the value of your proposal. Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit.”

Some industry observers are already sick of this back-and-forth; TechCrunch blogger Michael Arrington summarized his reaction as “Someone, please throw a punch already.”

I still think a Microsoft-Yahoo combination is a bad idea overall in terms of the costs and benefits for Internet users and the poor track record of most large technology mergers–but that doesn’t mean Microsoft won’t engulf Yahoo anyway.

What do you think? In the two months since Microsoft popped the question, has anything made you more or less in favor of this merger?

By Rob Pegoraro | April 7, 2008; 12:02 PM ET | Category: The Web
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Please email us to report offensive comments.

I have always felt that Microsoft has the worst track record in terms of search engines. I never use it or any of their Internet mail programs. If MS grabs Yahoo!, I think it will go down into an Internet black hole, much like Nextel did.

Posted by: umm.huh | April 7, 2008 1:09 PM

Microsoft built it’s success in software on predatory behavior, ranging from wholesale “adoption” of ideas developed by others (notably, Apple) to the contracts they levered PC builders into in order to supply their O/S with PCs built by those companies.

When the Web became an important factor, once again predatory practices were used to insure that Internet Explorer had a virtual stranglehold on market share, a stranglehold broken only by the intervention of governments.

So, why should we trust them now?

Posted by: pagun | April 7, 2008 1:58 PM

Business is war.

You’ve been trashed!!!

Recycling Today For A Greener Tomorrow

Posted by: recycling-milwaukee | April 7, 2008 5:25 PM

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Yahoo Reiterates Stance After Threat by Microsoft

Search Engine Says Buyout Bid Is Low

Yahoo chief executive Jerry Yang, shown at Consumer Electronics Show, is resisting a threat from Microsoft to accept its buyout offer or be taken over.
Yahoo chief executive Jerry Yang, shown at Consumer Electronics Show, is resisting a threat from Microsoft to accept its buyout offer or be taken over. (By Paul Sakuma — Associated Press)

Washington Post Staff Writer
Tuesday, April 8, 2008; Page D03

Yahoo, responding to pressure from Microsoft to accept its buyout offer within three weeks, responded yesterday saying it was open to a deal but was still looking for better alternatives.

This Story

In a letter to Microsoft chief executive Steven A. Ballmer, Yahoo chief executive Jerry Yang and chairman Roy Bostock reiterated their position that Microsoft’s $44.6 billion unsolicited offer “substantially undervalues” the Internet company. On Saturday, Ballmer sent a letter to Yahoo’s board threatening a hostile takeover unless Yahoo agreed to a merger by the end of April.

The latest exchange intensifies the stalemate between the two technology companies and increases the likelihood of a contentious boardroom battle. If Yahoo ignores Microsoft’s ultimatum, Ballmer said he “will be compelled to take our case directly to your shareholders,” including a proxy fight to elect an alternative slate of directors for Yahoo’s board.

Such action, Yang and Bostock wrote, would be “counterproductive and inconsistent with your stated objective of a friendly transaction,” adding that “we will not allow you or anyone else to acquire the company for anything less than its full value.”

Microsoft offered to buy Yahoo for $31 a share on Jan. 31, in a bid to strengthen its position in online advertising and to better compete against Google, which is the runaway leader in Internet advertising revenue. Yahoo formally rejected Microsoft’s offer on Feb. 11 and has been looking for alternative deals.

Since then, worsening economic conditions have depressed each company’s stock price. Microsoft held steady yesterday at $29.16 a share. Shares of Yahoo closed down 66 cents at $27.70. While Ballmer suggested that the poor economic environment makes Microsoft’s offer “even more significant today,” Yahoo responded by pointing out that the fall in Microsoft’s own stock price renders the offer “significantly lower than it was when you made your initial proposal.”

Since the initial bid, Google has completed its acquisition of DoubleClick, leaving the search giant well positioned to go after the display advertising market.

Marianne Wolk, senior Internet analyst at Susquehanna Financial Group, said Google’s continued progress is putting even more competitive pressure on both Microsoft and Yahoo. “Time is working against Yahoo,” she said. Microsoft and Yahoo “need to move quickly to build a strong combined branded effort to thwart an increasingly strong Google.”

The fact that Yahoo has not found an alternative bidder or partner weakens its ability to negotiate, analysts said.

In a note to investors, Citigroup analyst Mark S. Mahaney said Microsoft’s latest advance “may well force Yahoo’s hand and bring closure to the negotiations.”

In his letter, Ballmer warned Yahoo that resorting to hostile takeover tactics “will have an undesirable impact on the value of your company . . . which will be reflected in the terms of our proposal.”

Yahoo has maintained its desire to stay independent and has been developing new products for advertisers and consumers. Yesterday, the company introduced an advertising platform called Amp that will deliver ads based on consumers’ surfing habits.

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