Sony Corp has decided to freeze its workers' salaries for the year starting in April to improve profitability, the financial daily Nikkei said in its Thursday edition.
The paper said workers' bonuses will also be lowered to four months' pay from six months, and annual compensation for managers will be dropped 10 to 20 per cent through wage cuts and 35 to 40 per cent bonus reductions.
"Executives will also be slugged with huge cuts to bonuses and salaries," Nikkei said. Due to the global economic downtown and the strength of the yen, Sony is expected to report a group operating loss of 260 billion yen ($2.65 billion) for the year ending March 31, the paper said.
Agencies
Monday, March 23, 2009
Has HP cut salaries of EDS employees?
Hewlett-Packard Co said it will cut the base salaries of some employees in its EDS business by 10 per cent for the month of April.
The temporary salary reduction is in addition to a company-wide pay cut HP instituted last month.
The salary cut impacts only EDS workers based in the United States and Puerto Rico and will not affect those making less than $40,000.
A company spokeswoman said in a statement via email that the move is a "temporary cost action to keep the organization strong while increasing financial flexibility."
HP bought EDS last year for $13.2 billion. Last month, after the company cut its full-year outlook and posted weaker-than expected quarterly revenue, HP moved to reduce base pay for all its employees, including a 5 per cent cut for most salaried workers.
HP Chief Executive Mark Hurd has stressed the company's commitment to lowering costs. HP is the world's largest maker of personal computers, and second-largest technology services company.
Agencies
The temporary salary reduction is in addition to a company-wide pay cut HP instituted last month.
The salary cut impacts only EDS workers based in the United States and Puerto Rico and will not affect those making less than $40,000.
A company spokeswoman said in a statement via email that the move is a "temporary cost action to keep the organization strong while increasing financial flexibility."
HP bought EDS last year for $13.2 billion. Last month, after the company cut its full-year outlook and posted weaker-than expected quarterly revenue, HP moved to reduce base pay for all its employees, including a 5 per cent cut for most salaried workers.
HP Chief Executive Mark Hurd has stressed the company's commitment to lowering costs. HP is the world's largest maker of personal computers, and second-largest technology services company.
Agencies
Sun Microsystems seen as first salvo in tech battle
Quite a few technology companies could lose their independence in the next year or so as the battle among industry giants IBM, Hewlett-Packard Co and Cisco Systems Inc heats up.
The weak economy notwithstanding, Cisco this week announced its entry into the computer server market now dominated by HP and International Business Machines Corp.
And IBM is in talks to buy high-end server maker Sun Microsystems Inc, sources with knowledge of the matter said on Wednesday.
As these companies deliberately step on each other's toes to search for growth, analysts and bankers say the deals market is warming up with cash-rich tech powerhouses hunting for niche technologies at bargain prices.
Virtualization software maker Citrix Systems Inc, storage company NetApp Inc, and network equipment makers Brocade Communications Systems Inc and Juniper Networks Inc are among those that could catch the eye of tech bellwethers looking to compete in new markets, analysts said on Wednesday.
"If I own 60 percent of a market, maybe I can get to 65 percent, but really, I need a new market," said Peter Bell, a venture capitalist at Highland Capital Partners, of the dilemma that faces maturing tech companies.
Morningstar Inc analyst Rick Hanna agreed: "They're all in the war for increasing the total addressable market."
The biggest tech companies have been trying to become one-stop storefronts for business customers for years, offering software, services and hardware for everything from the data center to the desktop as their own core businesses slow down.
The larger impetus behind any deal making is the advent of two hot trends: virtualization and "cloud computing."
Virtualization software lets businesses reduce space and energy usage in their data centers, while cloud computing technologies let them access applications over the Web. Data centers house computing equipment used by companies.
The "arms race" among companies like Cisco, HP and IBM did not happen overnight, Jeff Bistrong, a technology banker at Harris Williams & Co, an investment banking firm said on Thursday.
HP's purchase of technology outsourcer Electronic Data Systems last year already pit it directly against IBM.
"What's different is we're in a major recession, enterprise values have been significantly diminished," Bistrong said.
Companies held on to their cash in the past few months as they assessed the damage to their business from the recession, said Howard Lanser, a mergers and acquisition analyst at Robert W. Baird said on Wednesday.
But now, the price tags of targets are cheap enough to justify longer-term strategic goals and tech companies that have cash will make the "buy decision," Lanser said.
Cisco has $29.4 billion in cash, IBM has $12.7 billion and HP $11.2 billion, according to recent financial statements.
Bargain Hunting
Companies like Microsoft Corp, EMC Corp and Dell Inc also may seek to own choice pieces of the "cloud," as computing becomes more Web-based.
Microsoft has been bullish on cloud computing, but its grip on data center operating systems could be threatened by the move toward remote data centers, forcing the software maker to search for acquisitions, Morningstar's Hanna said.
Microsoft CEO Steve Ballmer said at a conference on Thursday the company plans to buy up to 20 companies this year, with deal sizes ranging from $10 million to $500 million.
EMC, the world's largest maker of corporate storage, may also look for deals to improve its services offering, analysts said.
EMC itself could get acquired by Cisco; the two companies talked about a deal last year, a person familiar with the matter told Reuters in February.
Analysts said the timing of IBM's move to buy Sun illustrates the partly strategic, partly opportunistic thinking of companies that could drive dealmaking in the next year.
"Cisco has clearly laid out all its cards on the market," said Hanna, referring to the networking giant's plans to sell servers for data centers.
Hanna said he reads the talks as "a preemptive move by IBM to take Sun off the table," to keep rivals like Cisco from getting their hands on a bigger piece of the data center pie.
IBM may be betting that it can do a better job than Sun in taking advantage of these emerging technologies, and use it to compete better against Cisco and HP.
The Wall Street Journal reported that IBM has offered between $10-$11 a share for Sun, the Java software maker, or a total value of $6.5 billion, net of cash.
That's the kind of deal size big companies will be comfortable with as they look to plug holes in their software, services and hardware offerings for enterprises, said Highland Capital's Bell.
Bell, a former chief executive of information storage company StorageNetworks, said small acquisitions were unlikely to satisfy the appetites of large companies.
Rather, companies with market values of between $1 billion and $10 billion would be the focus of acquisitions, he said.
The thinking is more like, "If I can find a larger player, maybe I can accelerate and leapfrog, maybe 12 to 24 months, on my competitor," he added.
Agencies
The weak economy notwithstanding, Cisco this week announced its entry into the computer server market now dominated by HP and International Business Machines Corp.
And IBM is in talks to buy high-end server maker Sun Microsystems Inc, sources with knowledge of the matter said on Wednesday.
As these companies deliberately step on each other's toes to search for growth, analysts and bankers say the deals market is warming up with cash-rich tech powerhouses hunting for niche technologies at bargain prices.
Virtualization software maker Citrix Systems Inc, storage company NetApp Inc, and network equipment makers Brocade Communications Systems Inc and Juniper Networks Inc are among those that could catch the eye of tech bellwethers looking to compete in new markets, analysts said on Wednesday.
"If I own 60 percent of a market, maybe I can get to 65 percent, but really, I need a new market," said Peter Bell, a venture capitalist at Highland Capital Partners, of the dilemma that faces maturing tech companies.
Morningstar Inc analyst Rick Hanna agreed: "They're all in the war for increasing the total addressable market."
The biggest tech companies have been trying to become one-stop storefronts for business customers for years, offering software, services and hardware for everything from the data center to the desktop as their own core businesses slow down.
The larger impetus behind any deal making is the advent of two hot trends: virtualization and "cloud computing."
Virtualization software lets businesses reduce space and energy usage in their data centers, while cloud computing technologies let them access applications over the Web. Data centers house computing equipment used by companies.
The "arms race" among companies like Cisco, HP and IBM did not happen overnight, Jeff Bistrong, a technology banker at Harris Williams & Co, an investment banking firm said on Thursday.
HP's purchase of technology outsourcer Electronic Data Systems last year already pit it directly against IBM.
"What's different is we're in a major recession, enterprise values have been significantly diminished," Bistrong said.
Companies held on to their cash in the past few months as they assessed the damage to their business from the recession, said Howard Lanser, a mergers and acquisition analyst at Robert W. Baird said on Wednesday.
But now, the price tags of targets are cheap enough to justify longer-term strategic goals and tech companies that have cash will make the "buy decision," Lanser said.
Cisco has $29.4 billion in cash, IBM has $12.7 billion and HP $11.2 billion, according to recent financial statements.
Bargain Hunting
Companies like Microsoft Corp, EMC Corp and Dell Inc also may seek to own choice pieces of the "cloud," as computing becomes more Web-based.
Microsoft has been bullish on cloud computing, but its grip on data center operating systems could be threatened by the move toward remote data centers, forcing the software maker to search for acquisitions, Morningstar's Hanna said.
Microsoft CEO Steve Ballmer said at a conference on Thursday the company plans to buy up to 20 companies this year, with deal sizes ranging from $10 million to $500 million.
EMC, the world's largest maker of corporate storage, may also look for deals to improve its services offering, analysts said.
EMC itself could get acquired by Cisco; the two companies talked about a deal last year, a person familiar with the matter told Reuters in February.
Analysts said the timing of IBM's move to buy Sun illustrates the partly strategic, partly opportunistic thinking of companies that could drive dealmaking in the next year.
"Cisco has clearly laid out all its cards on the market," said Hanna, referring to the networking giant's plans to sell servers for data centers.
Hanna said he reads the talks as "a preemptive move by IBM to take Sun off the table," to keep rivals like Cisco from getting their hands on a bigger piece of the data center pie.
IBM may be betting that it can do a better job than Sun in taking advantage of these emerging technologies, and use it to compete better against Cisco and HP.
The Wall Street Journal reported that IBM has offered between $10-$11 a share for Sun, the Java software maker, or a total value of $6.5 billion, net of cash.
That's the kind of deal size big companies will be comfortable with as they look to plug holes in their software, services and hardware offerings for enterprises, said Highland Capital's Bell.
Bell, a former chief executive of information storage company StorageNetworks, said small acquisitions were unlikely to satisfy the appetites of large companies.
Rather, companies with market values of between $1 billion and $10 billion would be the focus of acquisitions, he said.
The thinking is more like, "If I can find a larger player, maybe I can accelerate and leapfrog, maybe 12 to 24 months, on my competitor," he added.
Agencies
Saturday, March 21, 2009
What is the latest buzz on Sun, IBM deal?
Whether it is mere speculation or a fact , the combination of two IT giants -- IBM and Sun Microsystems -- will surely alter the dynamics of the IT services market.
Of recent times, everybody is racing to offer hardware-software services and own data centres. We have seen that happen with Cisco s Unified Computing Systems, HP bought EDS, now IBM is looking at Sun.
There is no official comment from the two companies, but if the deal goes through it will give IBM a bigger control of the market and make it a fitting rival for HP, Dell and Microsoft.
Together, IBM and Sun would have about 65% of the market for server computers running the Unix operating system and 42% of the total server market, measured by the dollar value of the market.
Like Sun's Java and Solaris, the operating systems have gained substantial market share over the years. Similarly, Sun could give it some extra hardware market share specifically in servers.
However, reports indicate that Sun has not been doing well ever since the global recession began last September. Reports indicate that IBM may pay at least $6.5 billion in cash for the deal, which would be a 100% premium over Tuesday's closing price for Sun.
In last year's fourth quarter, IBM led in the global server market revenue with $4.9 billion in sales, about 36% of the market. HP was No. 2 with $3.9 billion in sales ie, about 29% of the market. Dell, with $1.4 billion in sales, and Sun, with about $1.3 billion, were a distant No. 3 and No. 4.
However, Sun's Solaris servers have a strong presence in the premium market, which is seen as more profitable. That is why that valuation may be justifiable for IBM.
But Sun's recent acquisition of StorageTek for $4.1 billion was termed as a hogwash, mainly because it did not go well with Sun and ended up in cold waters.
With customers like HDFC Bank, Punjab National Bank (PNB) and Tata Teleservices, Sun's strong presence in the financial services and telecom domains has been the envy of its rivals.
But in case of a merger, issues like having a number of common customers and how to merge the two global brands will come up. As a Sun employee, said, Sun employees are concerned about the future of our products if the acquisition happens, since there is a significant overlap between our products and that of IBM s.
Sun's corporate communications office terms it as a mere speculation and refused to comment on the rumour . So did the IBM communication team, saying they have no reactions from their headquarters and cannot comment on the issue.
Meanwhile, T.R. Madan Mohan, managing partner, Browne and Mohan, said that the WSJ picked up the news from the blog of a Sun employee.
According to him, the deal may not come through, but given the market cap of Sun, which is just about $ 2 billion, and IBM is supposed to have quoted $ 6.5 to $ 6.8 billion that is a very good valuation for a company that has been dithering.
Similarly, Sun's strengths are in government, BFSI and telecom. In telecom, it has some marque clients such as NTTDocomo, Dialog, Telefunken, Vodafone, etc which run mission-critical applications.
IBM has not been able to move into these accounts globally, unlike the easy entry the company had with Bharti Airtel, Aircel, Vodafone, Idea in India. By acquiring Sun, IBM will get access to these critical markets and benefit from the Java/My SQL communities.
CXOtoday
Of recent times, everybody is racing to offer hardware-software services and own data centres. We have seen that happen with Cisco s Unified Computing Systems, HP bought EDS, now IBM is looking at Sun.
There is no official comment from the two companies, but if the deal goes through it will give IBM a bigger control of the market and make it a fitting rival for HP, Dell and Microsoft.
Together, IBM and Sun would have about 65% of the market for server computers running the Unix operating system and 42% of the total server market, measured by the dollar value of the market.
Like Sun's Java and Solaris, the operating systems have gained substantial market share over the years. Similarly, Sun could give it some extra hardware market share specifically in servers.
However, reports indicate that Sun has not been doing well ever since the global recession began last September. Reports indicate that IBM may pay at least $6.5 billion in cash for the deal, which would be a 100% premium over Tuesday's closing price for Sun.
In last year's fourth quarter, IBM led in the global server market revenue with $4.9 billion in sales, about 36% of the market. HP was No. 2 with $3.9 billion in sales ie, about 29% of the market. Dell, with $1.4 billion in sales, and Sun, with about $1.3 billion, were a distant No. 3 and No. 4.
However, Sun's Solaris servers have a strong presence in the premium market, which is seen as more profitable. That is why that valuation may be justifiable for IBM.
But Sun's recent acquisition of StorageTek for $4.1 billion was termed as a hogwash, mainly because it did not go well with Sun and ended up in cold waters.
With customers like HDFC Bank, Punjab National Bank (PNB) and Tata Teleservices, Sun's strong presence in the financial services and telecom domains has been the envy of its rivals.
But in case of a merger, issues like having a number of common customers and how to merge the two global brands will come up. As a Sun employee, said, Sun employees are concerned about the future of our products if the acquisition happens, since there is a significant overlap between our products and that of IBM s.
Sun's corporate communications office terms it as a mere speculation and refused to comment on the rumour . So did the IBM communication team, saying they have no reactions from their headquarters and cannot comment on the issue.
Meanwhile, T.R. Madan Mohan, managing partner, Browne and Mohan, said that the WSJ picked up the news from the blog of a Sun employee.
According to him, the deal may not come through, but given the market cap of Sun, which is just about $ 2 billion, and IBM is supposed to have quoted $ 6.5 to $ 6.8 billion that is a very good valuation for a company that has been dithering.
Similarly, Sun's strengths are in government, BFSI and telecom. In telecom, it has some marque clients such as NTTDocomo, Dialog, Telefunken, Vodafone, etc which run mission-critical applications.
IBM has not been able to move into these accounts globally, unlike the easy entry the company had with Bharti Airtel, Aircel, Vodafone, Idea in India. By acquiring Sun, IBM will get access to these critical markets and benefit from the Java/My SQL communities.
CXOtoday
Has AIG bonus outrage gives employees a fear?
The bonuses paid to AIG executives have turned pillars of a Connecticut community into pariahs and have workers fearing for their safety.
An executive who feared retribution and spoke Friday on condition of anonymity says AIG workers in ritzy Fairfield County are ``very, very nervous'' about security.
AIG's financial products division is in nearby Wilton. Corporate officials have told employees to avoid sporting the company logo and to travel in pairs at night.
Activists plan to visit the homes of AIG executives Saturday in an attempt to deliver letters highlighting the economic problems of ordinary Americans.
Security companies say the financial crisis is creating brisk business in everything from bomb-sniffing dogs to bodyguards.
Agencies
An executive who feared retribution and spoke Friday on condition of anonymity says AIG workers in ritzy Fairfield County are ``very, very nervous'' about security.
AIG's financial products division is in nearby Wilton. Corporate officials have told employees to avoid sporting the company logo and to travel in pairs at night.
Activists plan to visit the homes of AIG executives Saturday in an attempt to deliver letters highlighting the economic problems of ordinary Americans.
Security companies say the financial crisis is creating brisk business in everything from bomb-sniffing dogs to bodyguards.
Agencies
US bank rescue plan likely out on Monday
The US government will announce as soon as Monday a long-awaited plan to try to get bad assets off the books of banks, a cornerstone of its efforts to tackle the credit crisis, The Wall Street Journal reported.
The Obama administration, battling a deepening recession, is set to adopt a three-pronged approach to ridding the financial system of so-called toxic assets, reports said.
The plan would create an entity, backed by the Federal Deposit Insurance Corp, a U.S. banking regulator, to buy and hold loans, the reports said.
It would expand a newly launched Federal Reserve facility -- that lends money to investors to buy securities backed by consumer loans -- to include toxic assets. And it would create new public and privately financed funds to buy such securities under the management of private investment experts.
The Obama administration plans to contribute between $75 billion and $100 billion in new capital to the effort although that amount could be expanded, the Wall Street Journal said.
The Treasury Department and Federal Reserve declined to comment. Sources familiar with the government's thinking have told Reuters details of a plan could be announced next week.
The Bush administration tried without success late last year to set up a mechanism to get bad assets off the balance sheets of commercial banks.
The banks have been hammered by losses incurred by mortgage-related debt that has turned sour amid a fall in house prices and a pickup in defaults, sparking a credit crisis that has strangled the US and global economies.
Obama's Treasury secretary, Timothy Geithner, has outlined a new proposal to soak up as much as $1 trillion in assets through a public-private program.
But investors have grown increasingly concerned that his efforts are running into problems more than a month after he outlined the plan.
The slow start of the new Federal Reserve consumer lending program this week has been seen as a sign that private capital may shun the toxic-asset plan because of public outrage over large executive bonuses.
Many big private investors are worried they could face tough new rules in US financial rescue programs after Congress pressed ahead with efforts to claw back bonuses paid to executives at failed insurer American International Group.
The Wall Street Journal said the Treasury would match private sector finance for the public-private toxic asset funds on a one-for-one basis in most cases.
Washington would be a co-investor also in the new FDIC troubled loans program but could contribute 80 percent in some cases, and would guarantee as much as $500 billion in loans investments, the newspaper said in its report.
The New York Times said the FDIC program could involve government funding for up to 97 percent of the equity.
It also said the plan is likely to offer generous taxpayer subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government.
Agencies
The Obama administration, battling a deepening recession, is set to adopt a three-pronged approach to ridding the financial system of so-called toxic assets, reports said.
The plan would create an entity, backed by the Federal Deposit Insurance Corp, a U.S. banking regulator, to buy and hold loans, the reports said.
It would expand a newly launched Federal Reserve facility -- that lends money to investors to buy securities backed by consumer loans -- to include toxic assets. And it would create new public and privately financed funds to buy such securities under the management of private investment experts.
The Obama administration plans to contribute between $75 billion and $100 billion in new capital to the effort although that amount could be expanded, the Wall Street Journal said.
The Treasury Department and Federal Reserve declined to comment. Sources familiar with the government's thinking have told Reuters details of a plan could be announced next week.
The Bush administration tried without success late last year to set up a mechanism to get bad assets off the balance sheets of commercial banks.
The banks have been hammered by losses incurred by mortgage-related debt that has turned sour amid a fall in house prices and a pickup in defaults, sparking a credit crisis that has strangled the US and global economies.
Obama's Treasury secretary, Timothy Geithner, has outlined a new proposal to soak up as much as $1 trillion in assets through a public-private program.
But investors have grown increasingly concerned that his efforts are running into problems more than a month after he outlined the plan.
The slow start of the new Federal Reserve consumer lending program this week has been seen as a sign that private capital may shun the toxic-asset plan because of public outrage over large executive bonuses.
Many big private investors are worried they could face tough new rules in US financial rescue programs after Congress pressed ahead with efforts to claw back bonuses paid to executives at failed insurer American International Group.
The Wall Street Journal said the Treasury would match private sector finance for the public-private toxic asset funds on a one-for-one basis in most cases.
Washington would be a co-investor also in the new FDIC troubled loans program but could contribute 80 percent in some cases, and would guarantee as much as $500 billion in loans investments, the newspaper said in its report.
The New York Times said the FDIC program could involve government funding for up to 97 percent of the equity.
It also said the plan is likely to offer generous taxpayer subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government.
Agencies
Friday, March 20, 2009
AT&T Looks for Customers for Center in India
AT&T Inc., a US-based company offering advanced IP-based business communications services, is set to acquire customers from IT, ITES, manufacturing and finance service companies for its newly launched data center in India.
AT&T set up its India data center in Bangalore last December. Since then the company is looking at the growing demand from multinational customers in India for online data centers with highly resilient facilities and a wide range of IT infrastructure management services.
Talking to CXOtoday, Gopi Gopinath, chairman and chief executive officer of AT&T Global Network Services India, said, "Since the data center has just become operational, we have not got any customers in India so far, but the data center has been build to 'Green' specifications laid down by the parent company across all data centers."
The Whitefield center has a 5,000 sq ft of capacity and can expand unlimitedly. It is part of a $1 billion planned AT&T global network and portfolio investment for 2009. Data center customers will have access to a wide range of fully integrated managed hosting, application and networking services to support their data and e-commerce needs. Connectivity to the centre can be supported with AT&T's existing suite of managed data services in India.
The data center is built to the same rigid specifications consistent with AT&T's other 37 global data centers and are enabled with services that proactively manage customers' hosting solutions for predictable application performance. They are protected from intrusion and failure with the same multi-layered security, failsafe redundancy, diversity measures, and rapid response recovery measures built into each data center.
"We will be able to support multinational customers in India who turn to AT&T for integrated hosting and network solutions, allowing them to focus on running their businesses," said Gopinath.
The center is directly connected to AT&T's global MPLS backbone to offer a portfolio of hosting solutions with network performance and features. Among them are greater agility when making real-time changes to IT environments, more control to extend applications to the customer's premises or to other data centers, and the ability to include 'on network' capabilities in a customer solution.
CXotoday
AT&T set up its India data center in Bangalore last December. Since then the company is looking at the growing demand from multinational customers in India for online data centers with highly resilient facilities and a wide range of IT infrastructure management services.
Talking to CXOtoday, Gopi Gopinath, chairman and chief executive officer of AT&T Global Network Services India, said, "Since the data center has just become operational, we have not got any customers in India so far, but the data center has been build to 'Green' specifications laid down by the parent company across all data centers."
The Whitefield center has a 5,000 sq ft of capacity and can expand unlimitedly. It is part of a $1 billion planned AT&T global network and portfolio investment for 2009. Data center customers will have access to a wide range of fully integrated managed hosting, application and networking services to support their data and e-commerce needs. Connectivity to the centre can be supported with AT&T's existing suite of managed data services in India.
The data center is built to the same rigid specifications consistent with AT&T's other 37 global data centers and are enabled with services that proactively manage customers' hosting solutions for predictable application performance. They are protected from intrusion and failure with the same multi-layered security, failsafe redundancy, diversity measures, and rapid response recovery measures built into each data center.
"We will be able to support multinational customers in India who turn to AT&T for integrated hosting and network solutions, allowing them to focus on running their businesses," said Gopinath.
The center is directly connected to AT&T's global MPLS backbone to offer a portfolio of hosting solutions with network performance and features. Among them are greater agility when making real-time changes to IT environments, more control to extend applications to the customer's premises or to other data centers, and the ability to include 'on network' capabilities in a customer solution.
CXotoday
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