SILICON VILLAGE

Saturday, April 25, 2009

Will Yahoo layoff 700 more jobs?

Yahoo Inc said it would cut 5 per cent of its global workforce (nearly 700 jobs) and reported quarterly results that showed progress towards controlling costs, sending shares higher in an after-hours relief rally.

The Internet company said economic conditions remained challenging, as revenue on Yahoo Websites from both display ads and search ads fell during the first quarter.

But the decline in revenue was offset by better cost controls, as new Chief Executive Carol Bartz seeks to revive Yahoo's fortunes. "People were really looking at the profit structure of the business and for things not to be falling apart," said Kaufman Brothers analyst Jason Avilio.

Yahoo said last October it would cut about one-tenth of its workforce, or about 1,600 jobs. The company finished 2008 with roughly 13,600 employees and said it would take severance charges from the new round of layoffs during the second quarter.

The company also announced in an internal memo to employees on Tuesday that it planned to implement a mandatory shutdown of operations during the holiday week of December 25, 2009 through January 1, 2010.

Yahoo said its operating cash flow, excluding certain items, was $409 million in the first quarter, at the high end of the $365 million to $415 million range it forecast in January.

Yahoo shares were up 54 cents at $14.92 in after-hours trading on Tuesday. The company's stock is up roughly 9 per cent from its Monday close of $13.66.

Yahoo's financial report comes as speculation has mounted that the firm has restarted discussions with software giant Microsoft Corp about an Internet search partnership, following last year's failed merger negotiations.

Bartz, who replaced Yahoo co-founder Jerry Yang in the top job in January, declined to comment on anything related to Microsoft during the conference call on Tuesday.

But she reiterated her belief that search is a very valuable part of Yahoo's business.

"I'm well-versed enough in the search business at Yahoo to say it's absolutely critical to Yahoo," Bartz said in response to a question regarding whether she is now familiar enough with the business to respond to an offer for search.

In the first full quarter under Bartz's leadership, Yahoo generated revenue of $1.58 billion, down 13 per cent from the year-ago period. Exclud
ing traffic acquisition costs (TAC), Yahoo's revenue was $1.16 billion, compared with the average analyst expectation of $1.2 billion, according to Reuters Estimates.

The Sunnyvale, California-based company reported a net profit in the first quarter of $118 million, or 8 cents a share -- down from $537 million, or 37 cents a share, a year earlier. Wall Street analysts, on average, had forecast earnings at 8 cents a share, according to Reuters Estimates.

While revenues were "a bit light," Jefferies & Co analyst Youssef Squali said in an email that Yahoo's overall results, particularly on the bottom line, were not bad given the environment.

Yahoo said that revenue from display ads on its owned and operated websites slid 13 per cent year-over-year in the first quarter, with revenue from automotive advertisers down "substantially" and spending by retail advertisers "softened" compared to the year ago period.

Revenue from search-based ads on Yahoo sites were down 3 per cent. And Yahoo said that advertisers were spending less money to bid for the individual keywords that their ads appear alongside, echoing a theme present in results last week from Google Inc, the No.1 US Internet search company.

Yahoo, like Google, stressed the importance of keeping costs in line amid the difficult economy. The new round of job cuts come about two months after Bartz announced a reorganization of Yahoo's internal management structure.

The layoffs, said Bartz, are a "natural outgrowth" of the reorganization, which will allow Yahoo to streamline its operations and eliminate duplication of efforts.

The Internet company said it would also continue to implement unspecified "non-headcount cost reductions," so it can increase its ability to make strategic investments and target hiring in its core operations

"It's crucial that management adjusts the cost structure to the new growth (or lack thereof) realities; so margin protection is paramount to Yahoo right now," said Jefferies analyst Squali. "We think there is potential outperformance on margins."

Chief Financial Officer Blake Jorgensen told Reuters there were "still very dark clouds on the horizon" for the economy.

"I'll try to resist calling the bottom in any way," he said in a telephone interview.

Yahoo projected that sales in the current quarter would range between $1.425 billion and $1.625 billion.

Agencies

Has Conficker attacked thousands of PCs globally?

A malicious software programme known as Conficker that many feared would wreak havoc on April 1 is slowly being activated, weeks after being dismissed as a false alarm, security experts said.

Conficker, also known as Downadup or Kido, is quietly turning thousands of personal computers into servers of e-mail spam and installing spyware, they said.

The worm started spreading late last year, infecting millions of computers and turning them into "slaves" that respond to commands sent from a remote server that effectively controls an army of computers known as a botnet.

Its unidentified creators started using those machines for criminal purposes in recent weeks by loading more malicious software onto a small percentage of computers under their control, said Vincent Weafer, a vice president with Symantec Security Response, the research arm of the world's largest security software maker, Symantec Corp.

"Expect this to be long-term, slowly changing," he said of the worm. "It's not going to be fast, aggressive."

Conficker installs a second virus, known as Waledac, that sends out e-mail spam without knowledge of the PC's owner, along with a fake anti-spyware program, Weafer said. The Waledac virus recruits the PCs into a second botnet that has existed for several years and specializes in distributing e-mail spam.

"This is probably one of the most sophisticated botnets on the planet. The guys behind this are very professional. They absolutely know what they are doing," said Paul Ferguson, a senior researcher with Trend Micro Inc, the world's third-largest security software maker.

He said Conficker's authors likely installed a spam engine and another malicious software program on tens of thousands of computers since April 7.

He said the worm will stop distributing the software on infected PCs on May 3 but more attacks will likely follow. "We expect to see a differen
t component or a whole new twist to the way this botnet does business," said Ferguson, a member of The Conficker Working Group, an international alliance of companies fighting the worm.

Researchers had feared the network controlled by the Conficker worm might be deployed on April 1 since the worm surfaced last year because it was programmed to increase communication attempts from that date. The security industry formed the task force to fight the worm, bringing widespread attention that experts said robably scared off the criminals who command the slave computers.

The task force initially thwarted the worm using the Internet's traffic control system to block access to servers that control the slave computers. Viruses that turn PCs into slaves exploit weaknesses in Microsoft's Windows operating system. The Conficker worm is especially tricky because it can evade corporate firewalls by passing from an infected machine onto a USB memory stick, then onto another PC.

The Conficker botnet is one of many such networks controlled by syndicates that authorities believe are based in eastern Europe, Southeast Asia, China and Latin America.

Agencies

Friday, April 24, 2009

Does cost cuts help tech giants ride out weak economy?

A solid crop of earnings reports from the leading lights of technology suggests the sector is proving adept at cost cuts and more resilient to the economic meltdown than previously thought.

While executives from Apple Inc, Google Inc, IBM and Intel Corp were almost uniformly cautious in talking about the rest of the year, they all reported quarterly profits that beat Wall Street expectations.

Microsoft Corp's earnings on Thursday were in line with forecasts, but investors sent its shares higher in part because of cost cuts that the world's largest software maker is undertaking to protect its bottom line.

With corporate and consumer spending under pressure, analysts say many tech companies moved swiftly to slash jobs and output- positioning themselves for growth when a bottom is reached, which some say may have happened already.

"It does look like tech might very well lead us out of the recessionary market," said Enderle Group analyst Rob Enderle. "They are structured to respond more quickly and they've demonstrated they can."

Although the results were not necessarily strong on a historical basis and the outlook for the economy remains extremely uncertain, analysts see positive signs for the sector.

Technology shares have been surging, with the Morgan Stanley Hi-Tech index of major tech stocks up more than 30 per cent since early March.

While a rally may prove difficult to sustain, analysts say the prospects are better for an IT recovery because tech products and services are integral to the day-to-day functioning of the global economy and people's lives.

"Everybody's taking big cuts in their budgets, but a lot of tech spend is not so variable," said M Eric Johnson, director of the Center for Digital Strategies at the Tuck School of Business at Dartmouth. "A lot of their spending needs to and has to occur even in a downturn."

He said the recession in some ways has benefited information technology service providers like IBM, as corporations have moved to outsourcing.

IBM reported an 11 per cent drop in revenue, which was weaker than expected, but higher margins helped its profit beat analysts' forecasts.

There were other encouraging signals in major tech earnings reports. Apple's earnings topped Wall Street forecasts as consumers showed they were still willing to spend on premium devices such as iPhones and iPods even in a tough economy.

Google's and Intel's results also beat expectations, thanks to cost discipline. Intel Chief Executive Paul Otellini declared the worst is over for the PC market, a message echoed by disk drive maker Seagate Technology, but Microsoft Chief Financial Officer Chris Liddell said he saw no sign the bottom had been reached.

Positive signs also emerged from earnings reports from chipmaker Texas Instruments and flash memory maker SanDisk.

"Things at least seem to have stopped falling," said Barry Jaruzelski, a partner at consulting firm Booz & Co He said the key is in how enterprise IT spending plays out.

"It looks like we've found the reset level...The thing IT has going for it is it's often an enabler for cost reductions."

Agencies

The rise and fall of oil prices since 2008

Oil prices have steadied at around $50 a barrel this month as markets begin to find their equilibrium after a dramatic spike to nearly $150 in the first half of last year gave way to an unprecedented collapse to near $30.

Asian energy ministers and their Middle East counterparts meet in Tokyo on Sunday to discuss the outlook for prices.

Here is a brief timeline charting the price highs and lows since January 2008.

Jan 2, 2008: US crude briefly breaks the $100 barrier for the first time on the first trading day of 2008. Prices rise fairly steadily through the first half of the year.

March 5: Despite new record price highs of over $104 a barrel, Organisation of the Petroleum Exporting Countries (OPEC), which pumps more than a third of the world's oil, says it will not put more oil on the market. It says there is enough oil, and blames US economic "mismanagement" for global prices.

June 6: Prices surge $11 to a record high near $139 a barrel on a slumping dollar and mounting tensions in the Middle East. Soaring crude leads a frenzied broad-based commodity rally on US grains and oilseed futures markets.

June 7: Average retail price for regular gasoline tops $4 a gallon for the first time in the United States.

July 11: Oil peaks at $147.50 for Brent and $147.27 for US crude.

July 15: A sell-off begins after remarks by Federal Reserve Chairman Ben Bernanke indicating a significant fall in demand in the United States, the world's top consumer.

July 18: Oil prices drop by more than $18 from a week ago to $128.88 per barrel. The price fall is triggered by a 3 million barrel increase in US crude stocks and falling US demand.

Aug 15: Prices continue sharp decline, falling to around $110 a barrel for Brent crude.

Sept 15: Prices below $100 a barrel for first time since March 4, and still falling.

Sept 22: Oil spikes $16 in biggest one-day gain on record. Prices pop over $120 a barrel, extending a climb from a low near $90 the previous week after the United States unveils a sweeping rescue plan for its battered financial sector.

But soon after, oil prices begin a heavy slide. Nov 21: National average price of regular gasoline falls below $2 a gallon for first time since March 2005 - dropping 3.1 cents to $1.989.

Dec 19: Oil drops below $34 a barrel - charting about a 75 per cent loss of value since July.

Jan 2, 2009: Oil falls more than $3 on first day of trading, with US crude at $41.25 a barrel and Brent at $42.18.

April 24: US crude just below $50 a barrel, Brent just above at $50.29.

Agencies

Thursday, April 23, 2009

India retains its leadership on global IT export, says World Bank

The World Bank on Wednesday said India leads all countries in exports of information communication technology (ICT) services.

In its latest report 'World Development Indicators 2009', World Bank said India's exports from the ICT sector increased from about $5 billion in 2000 to over $ 30 billion in 2006. This accounts for about 42 per cent of total service exports, it said.

At a time when there is a global recession and hundreds and thousands of people are being laid off, India's software industry employs about 1.6 million people, the report said.

China, though a distant second, is the next largest ICT services trader, with about $5.5 billion in ICT service exports, the report said.

The report said China and India were among the fastest-growing exporters. Export growth was led by manufactures in China and by services in India, it said.

Agencies

Buy your software from a cloud to ease your budget

As small and medium businesses in India struggle to stay afloat during the global economic slowdown, they are opting for cheaper computing services, and a Boston-based entrepreneur is here to promote his solution, cloud computing, in which software is shared over a wide network of computers.

Sumeet Sabharwal, senior vice-president of outsourcing and IT hosting firm Navisite Inc, says cloud computing is a viable Internet model for small and medium businesses across India, especially in the technology hubs in and around the capital and in Bangalore.

"The demand for having a reliable hosted infrastructure has increased over the years in India as businesses are shifting to the Internet from off-line facilities. At the same time, users do not want to burden themselves with the cumbersome processes of installations and hardware specifics. They look for solutions that are flexible, to scale and automated from the deployment standpoint, to maximise profit and output," Sabharwal said.

He said cloud computing was "still in a nascent stage in India and users need to be educated. Demand will grow as medium and small business owners realise its financial upside. I think it is the technology of the future for a country like India".

"Cloud computing," explained Sabharwal, a Cornell University alumnus, "is a computer paradigm in which tasks are assigned to a combination of connections. It operates on three basic principles - computer, bandwidth and storage.

"It eliminates the manual tasks of shipping the software to the user and allows users direct access to the software from the net. This network of servers and connections is collectively known as 'the cloud', which is a kind of a platform."

Computing at the scale of the cloud, said Sabharwal, allowed users to access supercomputer-level power. "Using a thin client or other access points like an iPhone, BlackBerry or laptop, users can reach into the cloud for resources they need. For this reason, cloud computing has also been described as on-demand computing."

Cloud computing, where the "intelligent network acts as the supercomputer", is a way to increase network capacity or add capabilities without investing in new infrastructure, new personnel or licensing new software.

"It is a pay-per-use service and cuts business cost by at least 40 percent depending on how the businesses leverage it. At the same time, one can scale up or scale down on the network itself, going by the number of visits to a business site
and its growth," Sabharwal said.

"Clouds are of two types - the public cloud, where infrastructure can be shared horizontally depending on areas and geographies of growth - and large private clouds dedicated to big companies, mostly the independent software vendors
, retail firms and technology providers.

"Cloud Computing," said Sabharwal, "is also the most effective technology for hosted e-mails for medium-sized corporate firms."

Agencies

Wipro, HCL unlikely to make any campus offers this fiscal

To save on the cost of training, one of the leading domestic software exporter HCL Technologies said it will hire people 'just in time' of requirement rather than maintaining a bench.

HCL has been following the policy of just in time hiring, which has paid off well for the organisation, HCL Technologies CEO Vineet Nayyar said.

Declining to give a hiring outlook for the year ahead, Nayyar said the firm is unlikely to make campus offers.

"We have hardly made any campus offers... we have moved to the lateral strategy," he added.

Similarly, Suresh Senapaty, CFO of Wipro Ltd said the company will not hold any campus interviews this fiscal but will honour all the commitments made to 7000 fresh graduates last fiscal.

The overall global headcount of the company fell by 992, to 54,026, from December to March. However, the company clarified that it has not laid off any employee.

During the quarter the company has made a gross addition of 2,298 employees. In the BPO services segment, however, the headcount has came down to 11,426 from 12,750 in December.

Commenting on the BPO business, he said the company is trying to move away from voice-based services to platform-based services. So, it is unlikely that the company would make new recruitments for voice-based services.

Agencies

Tuesday, April 21, 2009

Is HP top PC maker in US?

Global shipments of personal computers fell 7.1 percent in the first three months of the year, but the decline was smaller than expected and research group IDC on Wednesday said the industry could turn around by the end of the year.

A second research group, Gartner Inc, calculated first-quarter PC shipments fell 6.5 percent from the same period in 2008. The two groups use different methods to track PC shipments.

IDC had predicted worldwide shipments would fall 8.2 percent in the quarter. The US market was also much stronger than IDC forecast, with PC shipments falling 3.1 percent from a year ago, compared with an expected 8.9 percent drop. By Gartner's count, US shipments dipped less than one percent.

"Based on the U..being the center of the financial crisis, and looking at trends of last recession, we were concerned that demand and growth would continue to decline," said Loren Loverde, an IDC program director.

Instead, the US PC market, which took a beating in the fourth quarter, benefited from intense price competition among PC makers as well as the growing demand for netbooks, or small, cheap, low-powered laptops.

Both groups reported that Hewlett-Packard Co used the trend to overtake Dell Inc as the top PC maker in the US HP's lower prices and more established brand among shoppers helped push its market share to 27.6 percent. Dell's share fell to 26.3 percent as it struggled to reorganize its consumer business, according to IDC.

Taiwan's Acer Inc, the No 3 PC maker in the US and a force in the netbook market, snagged 10.5 percent of the market. Apple Inc's share edged up to 7.6 percent, and Japan-based Toshiba Corp, the fifth-largest, took 6.6 percent.

Worldwide, HP's market share crept up to 20.5 percent while Dell's slipped a few points to 13.6 percent, IDC reported. HP's shipments rose 2.9 percent as Dell's plunged 16.7 percent.

No 3 Acer captured 11.6 percent of PC shipments worldwide. China's Lenovo Group's share was flat at 7 percent, and Toshiba's share edged up to 5.4 percent.

Chipmaker Intel Corp. on Tuesday said personal computer sales "bottomed out" in the first quarter. Neither IDC nor Gartner wanted to match Intel's bold assessment, but IDC took a more optimistic stance.

"I don't think Intel's comment was meant to say we're going to come roaring back next quarter," Loverde said. "It's likely we won't see growth deteriorate from here."

Before the release of Wednesday's numbers, IDC had forecast an 8.4 percent decline in the second quarter and a 4.5 percent drop in the third before seeing growth in the fourth quarter.

George Shiffler, research director at Gartner, said in a statement that retailers may be restocking inventory, but "this restocking should not be interpreted as a recovery in PC end-user demand. It's still unclear if the global PC market has hit the bottom."

Agencies

India's IT export target of $50 bn will be delayed, says NASSCOM

IT industry association NASSCOM said the export revenue target of 50 billion dollar by 2010 will be delayed by 3-4 quarters due to the global economic downturn, and warned of uncertainties in the near future.

The NASSCOM-McKinsey, however, presented an ambitious scenario for the Indian IT industry for the next 11 years saying the total revenue from export is expected to expand to 175 billion dollars by 2020 and revenues from the domestic market could achieve the 50 billion dollar mark.

"This, however, needs a concerted effort by both the industry and the government to ensure swift and sustained reforms in critical areas of education and infrastructure," NASSCOM said.

On the economic scenario, the organisation said the "global economic crisis will have far-reaching and as yet uncertain impact on the industry. Near term volumes and pricing is likely to come under pressure."

Commenting on the opportunities for the industry, Som Mittal, President, Nasscom, said, "The Indian IT industry is in the midst of unprecedented times because of the current economic environment. We expect the next few quarters to be extremely challenging with companies doing everything required to effectively overcome the challenges."

NASSCOM is of the view that the 2020 business landscape would be different from the one that was witnessed in the last decade as now it would be driven by global megatrends.

There are likely to be new verticals in the public sector, healthcare, media and utilities (which have adopted global sourcing only to a limited extent) along with new customer segments in the small and medium businesses.

"These new opportunities will result in export revenues of 175 billion dollar by 2020. On the back of these megatrends the Indian domestic industry too will experience significant growth and record a four-fold increase in revenues from 12 billion dollar in 2008 to 50 billion by 2020," it said.

"80 per cent of the incremental revenue growth by 2020 will be driven by opportunities outside of the current core markets, verticals and customer segments and the industry needs to redefine its value proposition to capture these," Mittal said.

The NASSCOM-McKinsey report said that India has been the destination for global sourcing over the last 10 years and has garnered a 51 per cent share of the industry today. India continues to be the most competitive among 25-30 low-cost locations even today.

Agencies

Oracle may layoff 10,000 jobs after Sun deal

Global IT giant Oracle's $7.4 billion acquisition of Sun Microsystems could terminate 10000 jobs, predicted a financial analyst, as per a report in IDG News Service.

Excluding charges related to the restructuring, Oracle expects the Sun deal to contribute $1.5 billion toward its earnings next year and $2 billion in the second year of the acquisition, making it more profitable in per-share contribution in the first year than the company had planned for the acquisitions of BEA, PeopleSoft and Siebel combined, according to Oracle President Safra Catz. Meanwhile, Tony Sacconaghi, a well-respected technology analyst with Sanford C. Bernstein & Co said, "That profitability will come via layoffs." Sacconaghi had been forecasting $800 million in operating profit for Sun's fiscal 2010, rather than the $1.5 billion predicted by Oracle.


"In order to deliver $1.5 billion in profit, Oracle would need to boost profits by $700 million assuming no material revenue erosion, which suggests incremental headcount reductions of 5,500 to 10,000 depending on timing," Sacconaghi wrote in a research note. But, Oracle declined to comment on any possible layoffs.

The acquisition was announced Monday, just two weeks after Sun's previous suitor, IBM, had walked away from the table after being unable to come to acquisition terms.

Analyst firm Technology Business Research (TBR) agreed that layoffs are coming, predicting that sales and marketing staff will be hit hardest. "Oracle will rapidly rationalize Sun's cost-base," the company said in a report on the deal. "This means general layoffs and a reshaping of cost centers such as services and support."

Sun is already in the process of slashing between 15 to 18 percent of its workforce, or as many as 6,000 employees.

Agencies

Monday, April 20, 2009

World Wide Web conference opens in Madrid

A global conference on the World Wide Web got under way in Spain Monday, 20 years after the invention of the global information medium that has changed the daily lives of people around the world.

British software genius Tim Berners-Lee, one of the founders of the system, will give a keynote talk on Wednesday "which will reflect on the last 20 years and look forward to the next 20 years" of the Web.

Spanish Crown Prince Felipe and his wife Letizia are scheduled to attend the talk.

Over the five days of the 18th international World Wide Web conference, 105 research papers will be presented covering topics including interactive television, mobile web applications and the challenge of new media to traditional media.

The conference is organised each year by the International World Wide Web Conferences Steering Committee (IW3C2), a professional organization registered in Switzerland which promotes Web research and development.

It was held in China last year. The US will hold the next conference in 2010.

With the help of other scientists at the European Organisation for Nuclear Research (CERN), Berners-Lee set up the system to allow thousands of scientists around the world to stay in touch.

In March 1989, the young Berners-Lee handed his supervisor in Geneva a document entitled 'Information Management: a proposal."

The supervisor described it as "vague, but exciting" and gave it the go-ahead, although it took a good year or two to get off the ground and served nuclear physicists in Europe initially.

The WWW technology -- which simplifies the process of searching for information on the Internet -- was first made more widely available from 1991 after CERN was unable to ensure its development, and the organisation made a landmark decision two years later not to levy royalties.

As recently as 1994 there were only 500 fairly modest Web sites worldwide, according to Microsoft. Now there are millions.

Berners-Lee, now a researcher at Massachusetts Institute of Technology in the United States and a computer science professor at Southampton University in Britain, still heads the World Wide Web Consortium (3WC) that coordinates development of the Web.

Agencies

Satyam to be standalone unit, says TechM

Tech Mahindra Ltd, which is taking over Satyam Computer Services Ltd, said on Monday the fraud-hit Indian outsourcer would continue to function as a standalone unit.

The mid-sized Indian IT services firm's immediate priority was to retain and win back lost clients of Satyam, a statement from Tech Mahindra said.

Tech Mahindra's deal to take over Satyam will propel it into the top tier of Indian IT firms and throw a lifeline to the firm at the centre of India's biggest corporate scandal.

Three months ago, Satyam's founder and chairman shocked investors by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's fourth-largest software services exporter.

The government quickly stepped in and sacked the board to limit damage to India's once-shining IT sector.

Agencies

Sunday, April 19, 2009

Is IBM no longer keen on buying Sun anymore?

IBM is no longer interested in buying smaller rival Sun Microsystems Inc at any price, CNBC reported, although many investors appear to believe a deal was still possible.

Citing sources close to Sun, CNBC said the high-end computer maker had approached International Business Machines Corp earlier this week to ask it to return to the negotiating table, indicating that Sun would be flexible about price.

But IBM has decided it is not interested in any further negotiations with Sun, the cable news network reported, citing sources close to IBM. IBM and Sun declined to comment.

IBM had withdrawn a $7 billion offer for Sun earlier this month, after the smaller company rejected the bid of up to $9.40 per share as too low, sources with knowledge of the matter have said.

Shares of Sun were up 4.24 percent at $6.39 after the CNBC report, but lower than before the market opened on Thursday. Sun traded at around $4.97 before talks between the two technology companies were first reported in March.

Avian Securities' head of research, Avi Cohen, said he believed the two sides would talk again.

"If the deal made sense a couple weeks ago, it certainly would still make sense today," he said. "If there was a willingness, which I think there is, if there was a business case, which I think there is, I think they will start up talks."

CNBC said IBM decided against the move after looking at Sun's structured contracts, as well as change of control clauses that would make an acquisition of the company costly.

It also reported that IBM's contacts within the US Justice Department, US Securities and Exchange Commission and the European Union have all advised the company that such a merger could be subject to an antitrust review lasting six to nine months.

Analysts have said a deal may be crucial for Sun's long-term survival as it has been losing market share in servers to IBM and Hewlett-Packard Co, and analysts expect it to report a third straight quarter of losses excluding special items.

Sun, which rose to prominence in the 1990s, had been searching for a buyer for several months, according to bankers.

The Silicon Valley company never fully recovered from the burst of the dot-com bubble burst in the early 2000s, when demand for servers cratered. It has also failed to fully capitalize on its software assets, including its Java software platform.

Agencies

Will Sony Ericsson layoff additional 2,000 jobs?

Sony Ericsson Mobile Communications Ltd, the mobile-phone venture of Sony Corp and Ericsson AB, said it will cut an additional 2,000 jobs to revive profit amid falling demand.

The measure will reduce costs by 400 million euros ($524 million) annually by mid-2010 and cost 200 million euros to implement, Sony Ericsson said in a statement. It follows a plan announced in July to slash 2,000 positions to save 300 million euros, which has been completed, and another unveiled in January to reduce costs by 180 million euros by the end of 2009.

Sony Ericsson reported its third straight quarterly loss today after it slipped to fourth place in global handset shipments at the end of last year. The London-based company has suffered as consumers snapped up touchscreen models from competitors such as Apple Inc with its iPhone.

“As expected, the first quarter of this year has been extremely challenging for Sony Ericsson due to continued weak global demand” Chief Executive Officer Dick Komiyama said in the statement. “We are aligning our business to the new market reality with the aim of bringing the company back to profitability as quickly as possible.”

Third loss

The first-quarter net loss was 293 million euros, compared with a profit of 133 million euros a year earlier, the company said. Sales fell 36 per cent to 1.74 billion euros.

Analysts in an SME Direkt survey predicted a 293 million- euro net loss on sales of 1.68 billion euros, based on 28 estimates.

Sony Ericsson’s gross margin, or sales minus manufacturing costs, narrowed to 8.4 per cent in the quarter from 29.2 per cent a year earlier.

Restructuring charges for the first two cost-cutting programmes will stay within the 300 million-euro sum set aside in July to pay for the measures, the company said.

The venture shipped 14.5 million phones, a 35 per cent drop from a year earlier. The company estimated its market share fell two percentage poi
nts to 6 per cent from the fourth quarter. The average selling price of its handsets fell to 120 euros from 121 euros in the fourth quarter as well as the year-earlier period.

Sony Ericsson predicts global industry handset unit sales will shrink at least 10 per cent this year from the 1.19 billion sold in 2008. Nokia Oyj, the world’s largest mobile-phone maker, yesterday reiterated its forecast of about a 10 per cent drop in the global handset market.

Nokia reiterated its margin targets for the year after announcing job cut programmes that will cover about 3,000 employees. The Espoo, Finland-based company’s first-quarter net income declined 90 per cent to 122 million euros.

Agencies

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