Rockbridge Global Village, Inc.
RGV HOME
   

N E W S

 

iPOD
 
An IPod Crime Wave?
May 2, 2005 
By Micheal Brick

Read one way, a report last week by the New York Police Department seemed a public relations disaster for Apple Computer. Thefts of iPods were held accountable for an increase in subway crime, and the story traveled far and wide. The Daily Telegraph of Sydney, Australia, published an item under the headline "iPod Crime Wave Sweeps N.Y."

But finding different ways to read bad news is the lifeblood of public relations executives, some of whom said that the company could make a windfall of its misfortune. After all, if iPods are targets of theft, isn't the implicit message that iPods are objects of desire?

"You can't buy ads that say that; you can't put out press releases that say that," said David Brooks, vice president of Beckerman Public Relations in Bedminster, N.J. "Half of you is cringing, but half is bursting with pride."

Clarke L. Caywood, a professor of public relations at Northwestern University, said Apple should put forth a furrowed brow. "I'd come out with a statement right now saying, 'We're concerned,' " Mr. Caywood said. "Maybe their product is too visible. The P.R. department at Apple ought to be scrambling with the design department."

Apple would not comment on the effects of the iPod crime wave, but the popularity of many products is unaffected by acquiring dark connections. Cellphones outlived a reputation as a tool of drug dealers, and Nike is marketing Air Jordan basketball shoes more than a decade after a well-publicized killing in Philadelphia over a stolen pair.

Still, Mr. Brooks said any attempts to capitalize on the publicity could backfire. "You can't go out and do ads based on this - 'So good we're the most often ripped off,' " Mr. Brooks said. "The first time somebody gets shoved onto a subway track in a scuffle over an iPod, all bets are off." MICHAEL BRICK

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
R G V  N E W S L E T T E R


MAY 2005

Welcome to the Rockbridge Global Village, Inc. Newsletter. We have selectively found information and articles that may be of interest to our customers.  We hope that you find information and topics within this newsletter interesting and useful.

Topics in this newsletter:

Hackers Aren't Just Picking on Microsoft
An IPOD Crime Wave?
Amazon.com - Growth Comes Ahead of Profit
Microsoft Wants Everybody Talking
MCI/Verizon Merge?

Hackers Just Aren't Picking on Microsoft
May 2, 2005  By Reuters

WASHINGTON (Reuters) - Online criminals turned their attention to antivirus software and media players like Apple Computer Inc.'s (AAPL.O) iTunes in the first three months of 2005 as they sought new ways to take control of users' computers, according to a survey released on Monday.

While hackers continued to poke new holes in Microsoft Corp.'s (MSFT.O) popular Windows operating system, they increasingly exploited flaws in software made by other companies as well, the nonprofit SANS Institute found.

As more Windows users agreed to receive security upgrades automatically, hackers looked to take advantage of other software programs that might not be patched as frequently, the head of the cybersecurity training and research organization said.

``Operating systems have gotten better at finding and fixing things and auto-updating, so it's less fertile territory for the hackers,'' said SANS Chief Executive Alan Paller.

Malicious hackers exploit security holes to lift credit-card numbers and other sensitive personal information from a user's computer, or commandeer it to send out spam and pornography.

More than 600 new Internet security holes have surfaced in 2005 so far, SANS found.

Of those, 20 were deemed most dangerous because they remain unfixed on a large number of Internet-connected computers even though software makers quickly made patches available.

As always, Microsoft products were a popular target.

Hackers found ways to take control of a user's computer by tunneling through Microsoft's Web browser, media player and instant-messaging software, as well as Windows software for servers and personal computers.

But software by Oracle Corp. (ORCL.O) and Computer Associates International Inc. (CA.N) also made the list, along with media players like Apple's iTunes, RealNetworks Inc.'s (RNWK.O) RealPlayer, and Nullsoft's Winamp.

Anti-virus products from Symantec Corp.. (SYMC.O) F-Secure, TrendMicro and McAfee Inc. (MFE.N) proved vulnerable as well, a prospect Paller found particularly discouraging.

``We ought to do better in our industry -- we should be a model for others,'' he said.

Microsoft Wants Everybody Talking
April 29, 2005  By Susan Kuchinskas

While much of the excitement about Web services is about how corporations and e-commerce operations, such as Amazon.com (Quote, Chart), can use these standard protocols for trading and collaboration, Microsoft wants to get consumer devices like printers and cell phones into the loop.

Longhorn, Microsoft's (Quote, Chart) next-generation version of Windows, will include Web Services for Devices, executives said at the Windows Hardware and Engineering Conference (WinHEC) this week. The specification and device profiles are available now, and will be included in the first beta of Longhorn, expected this summer.

Microsoft's protocol enables easier networking and installation of peripherals. At WinHEC, executives demonstrated how Web Services-Discovery enabled installation of a printer and projector without a search for drivers.

"We support a subset of WSTL [Web services transaction language]," program manager Mike Fenelon told internetnews.com, so that device manufacturers can set up Web services connections directly between the devices they sell and services they provide."

For example, a digital camera or printer manufacturer could enable a Web services call to a Web-based storage and image-editing service, so that someone on vacation could upload pictures without lugging a laptop.

Enabling Web services on devices takes a small amount of Flash memory, said Microsoft program manager Rob Williams. The protocols use SSL for securing transmissions between devices.

"In the past, your only option for networking devices was proprietary protocols that are expensive to develop and maintain," Williams told an audience of engineers and manufacturers. "If you wanted to communicate with third parties, you needed to get them to adopt your proprietary protocols."

Adopting Microsoft's WS-Discovery, he said, would enable OEMs to focus on improving the device itself instead of the networking layer. "Build your competitive advantage in the device, not in the protocol," he told them.

"We're now treating IP as just another bus," said Microsoft product manager Tali Roth, while demonstrating printer reconfiguration. After reconfiguration, when the printer went back on, it sent a Web services notification event to the PC, which notified the driver of the change. "All of this happens in a standardized way, so any device can see these events," she said. "It means no manual configuration as an administrator."

In addition to WS-Discovery, the protocol specs include WSDAPI.DLL, which allows for publishing, finding and consuming Web services resources on a network. Web services-enabled devices also need to have a Web service definition language file that defines what functions the device can use, plus application software to control the device.

Also included is WS-Discovery Microsoft Operations Manager (WSD-MOM) will be implemented and extensible in Longhorn. Microsoft has written print and scan protocols, but Williams said that hardware vendors can create their own. WSD-MOM will be delivered in the Longhorn Driver Kit.

Williams said device Web services would open up new revenue opportunities for manufacturers.

"Now, it's the retailers that sell extended warranties," Williams said. A device manufacturer could notify customers right before the warranty expires via the device interface; or, a printer could notify a customer right before new toner or service is needed.

IBM, Microsoft, BEA and others independently develop specifications for a Web services stack. The Liberty Alliance also is working on Web services for devices, mostly focusing on identity-based Web services.

For example, Liberty's Identity Web Services Framework could define how a WS-enabled camera determined where the owner's photo service was located on the network and how to authenticate to the service once found.

Paul Madsen, co-chair of the Liberty Alliance Technology Expert Group, said Liberty would welcome Microsoft's participation.

"Microsoft has been invited to join a couple of times," he said, "but it hasn't come to the table."

Verizon Boosts MCI Bid to $26 per share
May 2, 2005  By CNN Money News

NEW YORK (CNN/Money) - MCI announced Monday that it has received an improved offer from Verizon Communications, and that its board has decided the new offer is superior to the previously recommended one from Qwest Communications.

A spokesman from Qwest was not immediately available for comment.

Verizon's statement said it is now offering at least $26 per MCI share, in the form of $5.60 in cash and the higher of either 0.5743 Verizon share, or the amount of Verizon shares needed to deliver an additional $20.40. Verizon is also allowed to use cash to supplement its offer, instead of issuing additional shares, as part of this price-protection feature.

As of Friday's close, the offer would be worth $26.16, or about $8.4 billion based on MCI's shares outstanding.

"While MCI shareholders benefit from a 'floor' of $20.40, they also benefit from the upside potential of an increase in Verizon's stock price," said a statement from MCI recommending the new offer.

While Verizon's new offer is up from its previous offer of $23.10 a share, plus a 40 cent a share dividend from MCI. But it is still below the $30 a share offer from Qwest that the MCI board recommended a week earlier. That offer is valued at $9.9 billion, and includes $16 in cash in addition to Qwest stock.

MCI's statement said that a number of its large business customers had expressed a preference for the company to be bought by Verizon rather than Qwest, and that a number of customers have requested rights to terminate their MCI contract in the event of a purchase by Qwest during current negotiations.

"These customer concerns, in the board's view, pose risks in connection with a Qwest transaction," said MCI's statement.

The New York Times and Wall Street Journal reported Monday that Verizon had demanded that MCI disclose that customer preference as part of its offer, an effort to convince MCI shareholders that its bid would be superior.

The MCI had recommended Verizon's offer for the company three previous times beforeturning to Qwest a week ago, after shareholders objected to Verizon paying $25.72 a share for a 13.7 percent stake in MCI held by Mexican investor Carlos Slim Helu.

Future uncertain for Qwest's efforts

Telecom Greg Gorbatenko of Marquis Investment Research said he believes this new Verizon offer answers MCI shareholders' concerns about Slim getting preferential treatment. He also believes that it will clear the way for Verizon to clearly beat out the offer from Qwest.

Gorbatenko said Qwest doesn't have the financing, financial wherewithal or credibility to raise what it said was its final offer. And he said the statement about possible loss of business should convince Verizon critics among MCI shareholders to accept the Verizon deal.

"We believe that this deal is now done," he said in a note to clients. "Thus, we believe Qwest now folds the cards on this bidding war. The ante is too high and Qwest is unlikely to have ardent backers."

Shares of Verizon gained about 1 percent in early trading, while shares of MCI lost well less than 1 percent and shares of Qwest edged up slightly.

Gorbatenko said he doubted that Qwest would bother to launch a proxy fight to win support for its offer from MCI shareholders. He said he thought the company would now look elsewhere for a deal to grow. He said there's also a chance it could now be acquired by another telecom.

But he said the immediate outlook for Qwest's stock is not good, despite the fact that it was little changed early Monday.

"I would not want to be a Qwest shareholder this morning," he said. "If they raise the bid, they'll get slammed. If they don't get MCI, they'll get slammed."

Gorbatenko has a "sell" recommendation on Qwest, a "hold" recommendation on MCI and a "buy" recommendation on Verizon. He does not own shares in any of the companies.

When MCI announced it was recommending Qwest, it had given Verizon until April 29 to improve its offer. But the weekend passed without any announcement of an improved Verizon offer from either MCI or Verizon.

Rockbridge Global Village, Inc.
312 S. Main Street
Lexington, VA 24450
540-463-4451
www.rockbridge.net

 


Copyright © 2005. Rockbridge Global Village, Inc. All rights reserved.
RGV NEWS
 
Something you would like to see more of in our newsletter?  Topics you want more information about? 

Just email us at info@rockbridge.net

 

 
 
Amazon.com
 


At Amazon.com Growth Comes Ahead of Profit
May 2, 2005
By Gary Rivlin

SAN FRANCISCO, May 1 - Bad news is relative if you're an investor in the online retail giant Amazon.com.

Last Tuesday, Amazon reported its quarterly earnings after the close of the markets. In its three previous reports, Amazon presented its numbers to Wall Street and then watched its stock tumble between 12 percent and 15 percent over the next 24 hours.

This time, the share price fell only 3 percent in the session after the company reported its results, prompting one financial analyst, Mark S. Mahaney of American Technology Research, to joke, "That's almost worth a victory lap for Amazon."

The company, based in Seattle, reported a 24 percent rise in revenue in the first quarter of the year. But profits fell sharply: net income was $78 million in the first quarter, or 18 cents a share, down from $111 million, or 26 cents a share, a year ago.

Both results were in line with the expectations of analysts monitoring Amazon, limiting the immediate blow to Amazon stockholders, whose shares are down more than 40 percent in the last 10 months. Shares of Amazon.com closed at $32.36, down 16 cents, or 5 percent, on Friday.

But some analysts are projecting a further decline in profits over the next few quarters as the company focuses on developing newer areas of business.

For instance, the company is spending more on computer programmers to build out its search engine, called A9, while continuing to rely on discounting and shipping subsidies to draw in and retain customers.

Jeff Bezos, Amazon's chief executive, in a written response to questions for this article, pointed to a longer-term perspective, noting several recent customer-oriented initiatives "that won't pay off for years."

These include Amazon Prime, introduced in February, which gives customers unlimited two-day shipping for $79 a year. The company also continues to offer free shipping on orders over $25.

"If we take care of customers, the stock will take care of itself in the long term," Mr. Bezos said.

The company has also cut its prices on tens of thousands of products in the books, music and video category by nearly 4 percent.

"Wall Street gets in a kerfuffle when we lower product prices and invest heavily in the future," Mr. Bezos wrote. "So don't buy our stock - instead buy our products and enjoy our investments."

Mark R. Anderson, publisher of The Strategic News Service, a weekly business newsletter based in the Seattle area, wonders if the company is too customer-friendly. "The question about Amazon is, 'Will the company start paying attention to profits, or will it continue to give those profits to the customer?' " Mr. Anderson said.

"I'd have to think some investors are running out of patience," he said.

Taking care of customers is certainly proving expensive, if nothing else. The $167 million Amazon spent on shipping during the first three months of the year, only a portion of which was paid by customers, was a 29 percent increase over the same quarter last year. That means fulfillment costs are outpacing revenue growth.

Other operating expenses are also pinching profits. Marketing costs, for instance, rose 30 percent in the first quarter. That follows a 44 percent increase in marketing costs during the last three months of 2004.

"For two quarters in a row, marketing has been growing faster than revenues," said Mr. Mahaney. "The rate of increase is slowing down but it's still a concern."

The increase in marketing costs is largely because of the rising price of advertising based on keywords sold by search engine companies like Google and Yahoo, said David M. Garrity, an analyst with Caris & Company. As traditional companies increase their online spending, it creates new competition in keyword bidding, he said. Until last week, Mr. Garrity had been one of only three analysts - out of the 15 who cover the company - with a bullish view of Amazon. But last Wednesday he downgraded Amazon from above average to a rating of average, or neutral.

Mr. Garrity said that he downgraded the stock largely because "the growth initiatives Amazon put in place to sustain, if not accelerate, growth were not showing signs of gaining traction." As an example, he said that A9 did not seem to be contributing much in the way of revenues despite a huge surge in the dollars that companies are now spending on paid search.

In his statement, Mr. Bezos implied that analysts such as Mr. Garrity were simply impatient. But Mr. Garrity said, "There's a limited window of opportunity, and given the sluggish pace with which Amazon seems to be developing its own efforts, they might be missing that window of opportunity."

For his part, Mr. Mahaney, the analyst with American Technology Research, who has a neutral rating on the stock, said that last week's earnings report was not a "thesis-changing quarter."

On the positive side, the company continues to add third-party merchants who sell their items through the Amazon platform. "That's the type of business where if you get enough people, you can make gads of money," Mr. Mahaney said. Third-party sales accounted for 27 percent of Amazon's sales in the first quarter, compared with 23 percent a year earlier. On the negative side, Mr. Mahaney said he was disappointed that "international growth was weaker than I thought it would be." International sales increased 28 percent over last year in the first quarter, compared with a 32 percent rise during the last three months of 2004.

"You could find good things and bad things in these numbers, and the question is which of these is most important to you," Mr. Mahaney said.