January 27, 2011

LinkedIn files for IPO, reveals sales of $161 million

NEW YORK (CNNMoney) -- Business social network LinkedIn filed for an initial public offering late Thursday, offering the first public glimpse into the finances of the seven-year-old Web company.

LinkedIn turned a profit of $10.1 million on revenue of $161 million in the first nine months of 2010, according to documents filed to the Securities and Exchange Commission.

But it may not last: "We expect our revenue growth rate to decline, and as we continue to invest for future growth, we do not expect to be profitable on a GAAP basis in 2011," the company warned in its filing.

In 2009, its last full fiscal year, LinkedIn had a loss of $4 million on sales of $120.2 million. The company has been in the red every year except 2006, when it turned a slight profit on revenue of $32 million.

The company isn't hurting for cash: It's currently sitting on a stash of $89.6 million. LinkedIn filed to raise up to $175 million in its offering, but that's a preliminary number and companies often change those targets as they get closer to their IPO.

The professional networking site launched in May 2003, and it's now adding one new user every second. LinkedIn has more than 90 million users, with more than half of its members located outside of the United States.

But LinkedIn warned about increased competition both stateside and overseas, naming Facebook, Google (GOOG, Fortune 500), Microsoft (MSFT, Fortune 500) and Twitter as rivals who "could develop competing solutions or partner with third parties to offer such products." It also called out Xing in Germany and Viadeo in France.

In the three months ending in September, 65 million unique users visited LinkedIn's site.

The company now has 990 employees -- though many of them are newbies. LinkedIn said that more than half of its staff has been with the company for less than one year, and 74% joined within the past two years.

CEO Jeff Weiner pulled in a $250,000 salary and a $211,055 bonus in 2010.

LinkedIn has a dual-stock structure, which gives the company's insiders sigificant control over shareholder decisions even after others become stockholders. Google and Facebook have similar structures.

Co-founder Reid Hoffman and other executives hold Class B shares, which have 10 times the voting power of the Class A shares LinkedIn will sell to the public. It's a structure that's controversial with shareholder advocates but popular among Silicon Valley companies, which want to ensure that their founders are able to enforce their vision.

"The holders of our Class B common stock collectively will continue to control a majority of the combined voting power of our common stock even when the shares of Class B common stock represent as little as 10% of the combined voting power of all outstanding shares," LinkedIn wrote in its SEC filing. "This concentrated control will limit your ability to influence corporate matters for the foreseeable future."

The path to IPO: LinkedIn has raised more than $100 million in venture capital funding from big names including Goldman Sachs (GS, Fortune 500), McGraw-Hill, Sequoia Capital, Bain Capital and Greylock Partners.

The company has been open about its interest in an IPO.

In an August interview with Bloomberg, CEO Jeff Weiner said, "an IPO, being public, raising money -- that's really a tactic that helps us ultimately achieve that long-term objective."

Investors have been snapping up LinkedIn stock on the secondary market, where accredited investors can buy shares of companies that don't trade on public exchanges. SecondMarket, the largest private-stock exchange, said recently that LinkedIn represented 7% of its transactions last quarter -- a distant second to Facebook's 39%.

On SharesPost, a smaller rival exchange, shares of LinkedIn have traded in the last quarter at prices of $22 to $23.50 per share. That gave the company an implied valuation of $2.2 billion.

This is the second bit of tech IPO news in as many days. Demand Media (DMD) opened 2011 with a pop for the Web sector: Its stock ended 33% higher after it made its public debut Wednesday.

by Julianne Pepitone CNNMoney.com January 27, 2010


January 22, 2011

Google co-founder to be CEO in shake-up

SAN FRANCISCO - Google Inc. co-founder Larry Page is taking over as CEO in an unexpected shake-up that upstaged the Internet search leader's fourth-quarter earnings.

Page, 37, is reclaiming the top job from Eric Schmidt, who had been brought in as CEO a decade ago because Google's investors believed the company needed a more mature leader.

Schmidt, 55, will remain an adviser to Page and Google's other co-founder, Sergey Brin, as Google's executive chairman.

The changes will be effective April 4.

"In my clear opinion, Larry is ready to lead and I'm excited about working with both him and Sergey for a long time to come," Schmidt said.

Page praised Schmidt, too.

"There is no other CEO in the world that could have kept such headstrong founders so deeply involved and still run the business so brilliantly," Page said.

"Eric is a tremendous leader, and I have learned innumerable lessons from him."

The change in command overshadowed Google's fourth-quarter earnings, which soared past analysts' estimates as the company cranked up its Internet marketing machine during the holiday shopping season.

Google earned $2.5 billion, or $7.81 per share, during the final three months of 2010. That's a 29 percent increase from net income of $2 billion, or $6.13 per share, in the prior year.

Excluding stock-compensation expenses, Google says it earned $8.75 per share. That figure topped the average analyst estimate of $8.06 per share, according to FactSet.

Revenue climbed 26 percent from the prior year to $8.44 billion, from $6.67 billion.

After subtracting the commissions paid to Google's advertising partners, the company's revenue totaled $6.37 billion - about $300 million more than analysts anticipated.

Shares rose $5.64, or less than 1 percent, to $632.41 in extended trading after the announcement. In the regular session earlier, the stock fell $4.98, or 0.8 percent, to close at $626.77.

by Michael Liedtke Associated Press Jan. 21, 2011 12:00 AM

Google co-founder to be CEO in shake-up

Pivotal acquires telecom business

Phoenix-based Pivotal Group said Wednesday that it acquired a bankrupt Chicago-based telecommunications company by paying $65 million of its debt.

The acquisition of Global Capacity will allow Pivotal to benefit from an explosion in demand for global optical fiber to distribute computer and smartphone content, said CEO Francis Najafi.

Pivotal, a private-equity and real-estate company, said it was working with Global Capacity to finalize a plan to emerge from Chapter 11 bankruptcy. A hearing is set for Wednesday.

Given that his company controls 100 percent of Global Capacity's debt, Najafi said he did not expect problems in getting a judge to approve the deal.

Global Capacity, which filed for bankruptcy in July, has a proprietary platform that shows the world's fiber lines and the fees associated with using them, Najafi said. Using that information, clients can calculate the most efficient route to send information globally across the network.

"Nobody owns 100 percent of the connectivity on fiber," Najafi said. "Everybody at some point has to go on somebody else's network."

The company can tell its customers where the most underused, best-priced fiber is in the market, he said.

Melker Sandberg, a managing director at FTI Consulting, which provided market intelligence to Pivotal as part of the transaction, said the global telecommunications market remains highly inefficient and costly for companies to manage themselves.

He said Global Capacity's design, pricing and managing of fiber-extension services were unique in the market.

Najafi said fiber was critical because the wireless spectrum needed for delivery of voice, data and video was expensive and difficult to acquire.

"All the telecoms are attempting to push down as much wireless . . . as they can . . . into the fiber because it's more reliable and it's cheaper and because spectrum has so limited bandwidth," he said. "Interestingly, wireless has increased the demand for fiber."

Najafi said Pivotal began talks with Global Capacity nine months ago. The company acquired its senior debt about six months ago, but Global Capacity paid it off after filing Chapter 11.

"At that juncture, we were out, but we continued discussions with the management and ultimately ended up negotiating to buy the convertible positions and replace their debt with our debt," Najafi said.

Pivotal started a private-equity division in 2002, and its first deal was for domain-name registrar Network Solutions. It sold the company in 2007, and decided to wait out the financial meltdown.

"After the market downturn, we've decided to go back and start looking at deals both across the private-equity space as well as real estate," Najafi said. "Among all the deals we looked at, this is the one we really liked the best."

by John Yantis The Arizona Republic Jan. 20, 2011 12:00 AM

Pivotal acquires telecom business

Comcast gets federal OK to acquire NBC Universal

Comcast, the No. 1 provider of pay TV and broadband services, is on the verge of becoming the most powerful media company in the United States after federal officials agreed on Tuesday to approve its acquisition of NBC Universal.

The Justice Department and Federal Communications Commission gave Comcast the go-ahead once it agreed to conditions designed to promote competition and boost the amount of TV programming for kids, local communities and minorities.

Comcast now is clear to pay General Electric, which owns NBC Universal, $6.5 billion for a 51 percent stake in a joint venture that will include Comcast-owned cable channels valued at $7.25 billion as well as NBC Universal.

The company is a power in broadcast and cable, movies and the Internet. Its assets include NBC, Telemundo, USA, CNBC, Bravo and Universal Studios.

The NBC Universal deal, expected to close on Jan. 28, has been controversial since it was cut in late 2009.

Consumer and open Internet advocates charged that Comcast would use its new power to choke competition in television and online.

Officials said they approved the deal only after Comcast agreed to important terms.

The agreement would protect the ability of satellite- and telephone-company TV providers - and Internet video services such as Netflix and Apple TV - to offer NBC Universal's networks and shows.

by David Lieberman USA Today Jan. 19, 2011 12:00 AM

Comcast gets federal OK to acquire NBC Universal

iPad helps longtime car dealer boost sales

Ryan Camping
Michael Schennum/The Arizona Republic Ryan Camping shows how RC Auto Corp. in Phoenix uses the iPad to display vehicles. He led the team that developed the company's DealTyper app for the device.

Much has changed since Roger Camping opened his automobile dealership, RC Auto Corp., with his mother in 1981.

Thirty years and more than 11,000 clients later, the Phoenix businessman is pleased with how the latest technology has helped change his company for the better.

Apple Inc. recently recognized RC Auto for successfully enhancing its sales and leasing business with the iPad. RC Auto is profiled on Apple's iPad in Business website with other high-profile companies.

Salespeople use the handheld mobile device to show clients different types of vehicles and their features, to perform appraisals, to run credit checks, to calculate costs and payment options, and to complete the sales transaction while on the lot, in a client's home or almost anywhere in a matter of minutes.

Camping said completing the 17 documents can be done in four minutes instead of the previous time of about 40 minutes. At many other dealers, the transaction takes place in a cubicle and can take more than an hour - often the most tedious part of the car-buying experience.

Implementing the device has led to the dealership's creation of the DealTyper application, which the company launched this month. The application is available by request at the App Store on Apple's website.

The application streamlines leasing and sales by eliminating the traditional paperwork process, basically what RC Auto has been doing with the device for the last nine months.

"Most people dread the experience and hours of paperwork. The iPad allowed us to do what we've dreamed of for years," Camping said. "It's the most exciting thing in 30 years we've ever done."

In 2010, business increased 35 percent over the previous year, Camping said. He credited much of this to the technology.

Camping recognizes that the vast majority of customers in their 20s and 30s do extensive Internet research and come to the lot prepared and informed. This is different from older customers, who come to the dealership for information. Embracing technology puts his company on the same wavelength as a new generation of customers, he said.

"Younger people today are not accepting the way their parents and grandparents bought cars. Young people have taught me a lot . . . they know more about vehicles because they've Googled it," Camping said.

About 40 percent of RC Auto's business is leasing. About four years ago, Camping said leasing made up 25 percent all national auto transactions. This trend has dropped to 10 to 15 percent in the last three years with the recession and a more stringent loan process, Camping said.

However, the pendulum is starting to swing back with more manufacturers getting into the leasing business, he added.

Used-car sales are also picking up in popularity, with midsize SUVs becoming more desirable than the larger versions, he said.

Camping graduated from college and trained with the Ford Auto Co. for four years before he decided to strike out on his own.

He and his mother, Trudy, a former longtime Arizona state senator, started RC Auto to open a different type of dealership, one that educated customers so they could make logical purchases instead of emotional ones, Camping said.

Today, Camping has fully taken the reins, and his son Ryan, vice president of resale development who headed the DealTyper application team, represents the third generation of Campings in the business.

"We wanted to reach people so they could acquire cars smartly and base decisions on facts," Camping said.

Tami Dobbs came to Camping when she wanted to give up her sleek Audi for what she called a "new mommy car" for the family, which includes her 17-month-old son.

Camping asked her a series of questions but did not ask what kind of car she had in mind. Dobbs had eyed the Toyota Venza and had Internet printouts of the crossover vehicle in her bag but never took them out.

Later, Camping brought her into the showroom so Dobbs could see the vehicle he had in mind.

"There was a white Venza. I almost fell over!" said Dobbs, president of Premier Graphics in Phoenix. "He knew what I wanted just by asking some questions."

Dobbs said the transaction procedure was very easy and she is referring RC Auto to friends.

Camping said that his new DealTyper application might not be so popular with some dealers because the time that it traditionally takes to make the transaction is often used to up-sell customers on warranties and other items that the customer may not need or want.

"Studies show that's what people most dislike about the process. We think there's a lot of dealers that won't embrace this because it runs counter to what they want," Camping said. "We believe the opposite, to make it a pleasant experience. It's all about the customer."

by Georgann Yara Special for the Republic Jan. 18, 2011 12:00 AM

iPad helps longtime car dealer boost sales

January 17, 2011

BlackBerry PlayBook: Who will buy it? | Dialed In - CNET Blogs

BlackBerry PlayBook

(Credit: BlackBerry/RIM)

After spending some quality time with RIM's in-production BlackBerry PlayBook at CES, I can tell you it's a beautiful 7-inch tablet. A sharp, high-resolution screen, pleasing rubberized perimeter, and gesture-based interface converge to create a piece of electronic equipment that I would proudly make my mini-computing companion. (Hands-on CNET videos here and here.)

However, the PlayBook comes with several thick strings attached that are awkward enough to trip up prospective tablet-buyers.

No 3G without a BlackBerry
The tautest tripwire pertains to data. Many top-tier tablets come in Wi-Fi and data (3G) versions. For a little less, you can buy the Wi-Fi version and access Web content (from apps, e-mail, and the browser) whenever you're connected to a Wi-Fi network. For a little more, you can often buy a 3G-capable model--and a carrier's monthly data plan--that lets you access the Internet so long as there's coverage.

RIM, on the other hand, has decided to sell the PlayBook as a Wi-Fi-only device. The only way to access 3G data on the PlayBook will be through a BlackBerry smartphone.

Tethering the PlayBook to a BlackBerry will work wirelessly through Bluetooth pairing, but it means that your BlackBerry needs to be powered on for you to use 3G on your PlayBook. On one hand, using your phone as a portable hotspot is handy--but only if you already own a BlackBerry smartphone. On the other, hotspot tethering also drains a phone's resources.

No native e-mail, calendar either
A 3G data connection isn't the sole thing you'll give up if you want use the PlayBook without a BlackBerry. Without tethering, you're out of luck accessing BlackBerry's secure e-mail client, the calendar, BlackBerry Messenger, and the address book. Sure, there will be Web apps that Wi-Fi-only customers can use instead, like Gmail.com and Google Calendar.

Missing out on native e-mail apps may not bother some non-Blackberry-owning PlayBook buyers who wouldn't be using a RIM-controlled e-mail address or calendar anyway, though it doesn't hurt RIM to offer all buyers a native experience.

Those with a BlackBerry on hand, however, will be able to use the BlackBerry Bridge software to access contacts and content, plus transfer files between the smartphone and tablet. Tethering will let companies that supply BlackBerrys to their employees also extend IT policies to the PlayBook.

BlackBerry Torch

To RIM, '3G' is spelled 'BlackBerry.'

(Credit: Sarah Tew/CNET)

So, who is the PlayBook for?
With one set of options for BlackBerry owners and another set for everyone else, RIM seems to have a disjointed, unrealistic vision of the PlayBook's audience. But that's not the case. RIM knows exactly who it wants to buy the tablet--everyone.

The problem is that RIM can't get the kinks worked out with things like e-mail--controlled by one set of software on the smartphone--in the new BlackBerry Tablet OS technology in time for the PlayBook's release. What we're left with are work-arounds until the OS further develops.

Because of 3G tethering, current BlackBerry owners will benefit from the PlayBook most, at least at the tablet's launch. There's an even more specialized case for corporate BlackBerry users, whose companies could control secured e-mail and calendar items on the tablet as well as on the phone.

Prospective PlayBook buyers with other cell phones have less incentive to invest in a PlayBook over an Apple iPad, Motorola Xoom, or other tablet, despite the very competitive specs. Even if they predominantly use Web mail and Wi-Fi, and don't give a hoot about missing out on BlackBerry Messenger, many people I've talked to still feel the alienating effects of being told what they can and can't have. That's not encouraging for a company that's trying to appeal to first-time owners of any BlackBerry product.

4G, updates ahead
That isn't to say that RIM will be forever mired by tethering troubles. The company did confirm a 4G model coming out later this spring with Sprint, which opens the data door for those first-time buyers who don't own BlackBerrys. RIM PlayBook product manager Ryan Bidan has also mentioned the possibility of future firmware updates that might soothe some of these launching pains.

Still, if RIM doesn't carefully manage its perception, the PlayBook could well remain a hidden gem. That's one of the last things the Canadian mobile hardware-maker could want. RIM, which is struggling to remain relevant in an ecosystem largely dominated by iPhone and Android, has already poured research and manufacturing dollars into bringing the PlayBook to market as a big-time competitor.

Of course, it's far too early to eulogize the PlayBook, and indeed, I hope I don't have to. The tablet won't hit shelves until later this fiscal quarter (Q1), which gives RIM time yet to nail down a strategy for attracting and keeping new customers.

by Jessica Dolcourt CNET January 17, 2011

BlackBerry PlayBook: Who will buy it? | Dialed In - CNET Blogs

Researchers crack friendship equation

If only they had been there in 1939: Plugging in numbers representing the friendliness between pairs of nations at the outset of World War II, researchers at Cornell University used a computer program to successfully predict which countries joined the Allied Powers and which lined up with the Axis. They got all of the countries right except Denmark and Portugal.

The group's work, reported recently in the Proceedings of the National Academies of Science, had less to do with history than with a long-established theory in social psychology called "structural balance," which describes how relationships in a social network evolve over time.

"Structural balance is an appealing and powerful theory, but it had a big missing piece," said Jon Kleinberg, a computer-science professor who was part of the team. That gap was a way of showing how small shifts in individual relationships result in particular, predictable outcomes in larger alliances. Crunching a lot of numbers, the team hit upon a method to do just that.

About the middle of the 20th century, social psychologists began studying the dynamics of "relationship triangles" involving three people, companies or other entities that are bound together in a network.

They observed that certain combinations of friendly and antagonistic relationships were stable. These included three mutual friends, or two friends who shared a common enemy.

Other relationship triangles were unstable but likely to evolve into stable configurations.

For instance, among a group of three enemies, the two who disliked each other the least tended to team up against the third, resulting in the two-friends-with-a-shared-enemy scenario. As an example, Kleinberg pointed to the aftermath of the 2008 Democratic primary, when former Democratic rivals Barack Obama and Hillary Clinton teamed up against Republican John McCain.

A triangle containing one person with two friends who don't get along is inherently unstable. As many people know from personal experience, staying friends with a duo of enemies is hard. "You'd like them to reconcile," Kleinberg said, but each of them wants you "to team up against the other one."

In addition to noting the dynamics within triangles, the structural-balance theory makes predictions about the larger network. Once all relationship triangles within a network evolved to their balanced states, psychologists observed, the members of that network either would be entirely friendly or would divide into two opposing camps.

The theory was used to help scholars understand shifting allegiances in international relations and to analyze the way companies compete in business. But though it did a good job explaining the "end state" of a stable social network, Kleinberg said, "it left everyone in the dark as to how everyone gets to that state."

The Cornell team's breakthrough was figuring out, through a series of mathematical calculations and computer simulations, a process by which structural balance can be achieved. Their big insight was that shifts between positive relationships and negative ones don't happen at once. Rather, they occur incrementally, with each one affecting, and being affected by, the incrementally shifting nature of the other relationships in the network.

Alliances and animosities don't just turn on and off in a vacuum. Instead, friendships get nudged in a more positive or more negative direction depending on who else is involved. "Everyone is updating their relationships all the time," Kleinberg said.

Previously, mathematicians got stuck trying to simulate how changes in individual relationships led to a globally balanced state, he said. Running computer simulations that took more incremental shifts into account allowed the Cornell team to (mostly) "predict" the Axis-Allies split, which provided validation for their model.

The discovery impressed scientists long baffled by the mechanism behind structural balance.

"It's a very interesting paper," said Daron Acemoglu, an economist at the Massachusetts Institute of Technology who was not involved in the research. "It has potential applicability to a range of situations."

One of those situations could be the study of online networks, Kleinberg said.

For example, companies such as Facebook want to make sure their networks don't split into polarized camps. Knowing how the predictions of structural-balance theory unfold in the real world could help them design their networks in a way that keeps them cohesive.

But, he added, "This is abstracted reality; it's not reality. Realistic scenarios are messier."

by Eryn Brown Los Angeles Times Jan. 16, 2011 12:00 AM

Researchers crack friendship equation

Go Daddy ready to launch '.co' marketing blitz

While the ".net," ".org" and ".gov" Internet domains are growing in popularity among those launching new websites, none has come close to threatening the decades-long reign of ".com."

But the ".co" domain may be the hottest new Web address, one that could be the first real.com competitor, according to some inside the domain-name industry.

Scottsdale-based Go Daddy was one of a few domain providers authorized to sell that domain suffix when it when it was launched in July.Now with about 250,000 .co registrations under its cap so far, the Internet-domain registrar will use its annual Super Bowl commercial next month to draw attention to it before television's biggest annual audience, the company said this week.

And the company will do it as only Go Daddy can.

The spot will unveil the new GoDaddy.co Girl who will join the ranks of other celebrity spokeswomen such as race-car driver Danica Patrick and celebrity fitness trainer Jillian Michaels

The company did not share how much it spent this year on the Super Bowl ads, but reports estimated that 30 seconds of airtime cost about $2.5 million last year.

The company is keeping the new girl's identity under wraps until Super Bowl Sunday.

"Our new GoDaddy.co Girl is already a big name, but after this Super Bowl commercial, she's going to be in a whole new realm," CEO Bob Parsons said in a statement.

Unlike other.com alternatives, the .co domain, which gained about 600,000 registered names worldwide since its launch, should do well simply because it sounds so similar to.com, said Richard Merdinger, senior director of domain-registration service for Go Daddy.

"There's an international recognition of using .co to represent a company," he said. "We were exceptionally pleased with the volume of registrations we did do so far."

The .co suffix offers a whole new realm of opportunities for those searching to establish their Web presence, Merdinger said.

Industry insiders see a similar trend.

"We're seeing individuals registering them for themselves, their blog, their businesses," said Lori Anne Wardi, director of marketing for .CO Internet S.A.S., the official .co registry, which allows registrars such as Go Daddy to sell its domain names to the public. "We want to be where the next Facebook starts and the next Twitter starts."

Before its July launch, the .co domain was restricted for use by the Colombian government, much like the United States has the ".us" domain, Wardi said.

The decision to expand the domain name for public use last year follows the example of other country-code names that have become more popular in the mainstream, such as Tuvalu's ".tv" and Montenegro's ".me."

Internet Corporation for Assigned Names and Numbers the non-profit in charge of assigning domains, also is in talks about expanding generic domains, such as.com, so that a corporation could become its own registry. For example, Ford could apply to obtain a ".ford" domain name.

"It's a way for corporations to brand themselves," said Brad White, an ICANN spokesman "It's a huge revolution in the Internet."

.CO Internet, a Colombia-based company, decided to only work with 10 registries, including Go Daddy, for the first year, Wardi said.

Its annual fee at Go Daddy are pricier - $29.99 compared with $11.99 for.com and other domains.

Wardi said the idea was to prevent devaluing of the domain. People will be less-willing to buy .co names in bulk and have them sit useless while waiting to be resold at a profit, which is another reason why.com names have become scarce, she said.

by Kristena Hansen The Arizona Republic Jan. 14, 2011 12:00 AM

Go Daddy ready to launch '.co' marketing blitz

DuPont Air Products to lease at ASU Research Park

DuPont Air Products Nano Materials LLC will lease a building at the Arizona State University Research Park in Tempe.

The company, which provides electronics-polishing products to the semiconductor industry, is expected to move into 95,000 square feet of office and technology space at 8555 S. River Parkway. The new lease is for nine years and is valued at more than $13 million.

It currently has operations in Tempe, but the new space is expected to enhance its ability to serve an expanding client base, according to the Phoenix office of Transwestern, a commercial real-estate firm that represented the landlord, New York-based Lexington Realty Trust.

DuPont Air Products Nano Materials joins several other high-tech tenants at the business park, including Texas Instruments and Infocrossing.

by John Yantis The Arizona Republic Jan. 12, 2011 12:00 AM

DuPont Air Products to lease at ASU Research Park

Verizon, AT&T compete for iPhone customers

Verizon Wireless customers in Arizona and across the country finally will gain access to the iconic Apple iPhone on Feb. 10, ending AT&T's 3 1/2-year monopoly on the wildly popular smartphone.

Apple's new relationship with Verizon was announced Tuesday, ending months of speculation about the match between the top smartphone maker and leading wireless carrier.

The deal heightens the competition between the nation's two biggest wireless providers as No. 1 Verizon tries to lure No. 2 AT&T's iPhone customers while AT&T offers incentives to keep them.

The companies, two of the country's biggest advertisers, are expected to roll out aggressive campaigns touting the virtues of their iPhone offers.

The big winners likely will be consumers, who will be able to access the features of an iPhone on Verizon's extensive network, and Apple, which could see sales of its phones double this year as a result of the deal.

Analysts cite potential losers as AT&T, Sprint and T-Mobile, who could see subscribers bolt for Verizon, and phone makers such as Research in Motion and Motorola, which could see sales growth slow for their BlackBerry and Android smartphones.

The deal could be costly at first for Verizon, which will have to shell out about $300 in subsidies for each phone it sells to keep them competitively priced.

Jenny Weaver, a spokeswoman for Verizon Wireless in Chandler, said customers who are eligible for an upgrade will be able to order an iPhone 4 on Feb. 3, a week before they are made available to the public.

With a new two-year service contract, the cost will be $200 for a 16-gigabyte phone and $300 for a more powerful 32-gigabyte model. The prices are comparable with AT&T.

Verizon will not offer the entry-level 8-gigabyte iPhone that AT&T sells for $49.

Weaver would not say how many of Verizon's 93 million wireless clients are eligible for an upgrade but did note the firm expects record iPhone sales.

"We believe there is a lot of pent-up demand," she said.

Steven Jim of Phoenix is a Sprint customer who plans to upgrade to an iPhone with Verizon when his contact is up. He has wanted an iPhone but was concerned about the reliability of AT&T's network.

Although AT&T has sold more than 25 million iPhones through its exclusive agreement with Apple, many customers have complained about the carrier's spotty coverage and dropped calls.

Verizon is expected to capitalize on AT&T's network shortcomings in its iPhone-marketing campaign.

A recent Consumer Reports survey ranked AT&T last in customer satisfaction in metro Phoenix, behind Verizon, Sprint and T-Mobile, with poor marks for data, texting and reliability.

A recent survey by investment banker Credit Suisse indicated that 23 percent of AT&T's iPhone users would switch to Verizon given the opportunity. Only 3 percent would be willing break their existing contracts and pay a penalty to do so, however. Most AT&T customers have two-year service contracts with the carrier, and many recently took advantage of incentives to renew.

Still, Credit Suisse estimates that AT&T could lose 1.4 million subscribers to Verizon right off the bat and millions more throughout the year as contracts expire.

Not everyone is unhappy with AT&T, though.

Doug Allen, who was visiting Phoenix from Washington, D.C., bought an iPhone from AT&T when they were first offered in 2007 and said he is completely satisfied with the service. "I have no reason to switch," he said.

The iPhone will run on Verizon's 3G network instead of the much faster 4G network the carrier rolled out to its Valley customers in December.

AT&T contends that its souped-up 3G network is faster than Verizon's and that iPhone customers would sacrifice download speed by switching. AT&T is likely to stress its network speed in its battle with Verizon to retain and attract iPhone customers.

Although the iPhone will run on Verizon's slower 3G network, the company plans to add four Android phones to its 4G network by midyear.

While Apple's exclusive agreement with AT&T helped launch the iPhone, the deal may have served limit Apple's growth and helped foster the growth of BlackBerrys and Androids.

Market-research company comSource Inc. estimates 61.5 million people in the U.S. owned smartphones during the three months ending in November, up 10 percent from the preceding three-month period. BlackBerry maker RIM lost 4 percent but still led with 33.5 percent of the smartphones in use. Google's Android phones gained 6.4 percent to displace Apple at No. 2 with 26 percent of the market, while Apple held at 25 percent with a 0.8 percent gain in market share.

JPMorgan analyst Rod Hall estimated in a research note that Motorola could lose 4 million phone sales to Apple this year as a result of the Verizon deal and that RIM could lose 2.5 million sales.


Carrier comparison

Verizon Wireless

- Selling point: More robust network. Fewer dead zones and dropped calls.

- iPhone sales: Start Feb. 10.

- Projected volume: 9 million to 13 million units (2011 estimate).

- Price: $200 for 16 gigabyte phone; $300 for 32 gigabyte model.

- Headquarters: Basking Ridge, N.J.

- Current number of wireless customers: 93.2 million.

AT&T Wireless

- Selling point: Faster speeds for downloading music and videos and for surfing the Internet.

- iPhone sales: Since June 2007.

- Sales volume: 11 million units (2010 approx.)

- Price: $200 for 16 gigabyte phone; $300 for 32 gigabyte model; $49 for 8 gigabyte.

- Headquarters: Dallas.

- Current number of wireless customers: 92.8 million.

by Max Jarman The Arizona Republic Jan. 12, 2011 12:00 AM

Verizon, AT&T compete for iPhone customers

January 9, 2011

12 News, Republic Media converge

A journalistic effort that delivers more than the sum of its parts.

That's the goal as Gannett Co., Inc., this week officially launches a resource-sharing effort by its metro Phoenix media operations.

More than a year of planning and construction has brought 12 News operations into the Republic Media building at 200 E. Van Buren St. Starting this week, the television station will broadcast from a high-tech street-level studio that welcomes attention from downtown pedestrians.

The combined news staff will be part of a broadcast, print and online collaboration designed to add breadth and depth to coverage for readers and viewers.

A daylong celebration Wednesday, kicked off with an appearance by Al Roker of the "Today" show, will mark the official melding of The Arizona Republic, 12 News, azcentral.com, various community Republic operations and Spanish-language newspaper La Voz - all under one roof.

Working to avoid pitfalls that other collaborations have encountered, 12 News and Republic executives opted to keep some functions separate while combining in areas that could pay big dividends in improved coverage.

Collaborative efforts by 12 News and Republic journalists initially will focus on four areas: breaking news, sports, features/entertainment and photo/video. Ultimately, many of the roughly 450 newsroom employees could work more closely together to cover news in metro Phoenix and Arizona.

"It's a huge opportunity," said Christopher Callahan, dean of the Walter Cronkite School of Journalism and Mass Communication at Arizona State University. "Being in the same place and working side by side, they can slowly build a richer news experience."

Street-side studio

The most visible signs of collaboration involve improvements to the Republic Media building itself. These include a 4,000-square-foot ground-floor studio with windows that face two downtown landmarks - the Herberger Theater and St. Mary's Basilica.

"You'll see pedestrians and auto traffic in the background," said John Misner, general manager at 12 News and chief operating officer at Republic Media, the unit that oversees the various Phoenix entities.

There's also a small outdoor plaza with mounted monitors that will allow passers-by to watch live broadcasts, with opportunities for TV journalists to interact with the crowd. The street-side studio is patterned after the one used by the "Today" show in Manhattan.

"Rarely does someone get the chance to build a new television set these days," Misner said. "There's lots of excitement building something like this."

The transition involved some major logistical work as new studios were built, roughly a dozen satellite receivers repositioned, and sensitive control-room equipment and Winnebago-size air-conditioners transported from the station's former home on Central Avenue, which is currently for sale.

Staff for 12 News (KPNX) moved into the building in mid-December. Misner said conducting the move while maintaining uninterrupted broadcast service was like "changing an aircraft's engine while keeping the plane flying."

Other improvements in the renovation project include a sports-broadcast desk on the seventh floor of the 10-story building, a separate TV set for cooking shows on the ground floor and a raised breaking-news desk or platform that overlooks the combined Republic/12 News/azcentral.com newsroom on the ninth floor.

The building, at 200 E. Van Buren St., has been dubbed "200 EVB."

"We took that nickname, and we're running with it," Misner said.

Better quality

The more subtle, yet substantive, change will involve improved journalistic breadth and quality, news executives said.

Like any merger, this one involves combining separate workplace cultures, values and approaches to the job - no easy task.

"What we bring to the game is a high degree of energy and spontaneity done in a less process-driven environment," Mark Casey, 12 News vice president and news director, said of the broadcast side. "There's a sense of showmanship that comes naturally with TV."

Newspapers, by contrast, tend to be more sophisticated and provide more depth, with writers who often are experts in their fields of coverage, he said.

The increased collaboration already is bearing fruit.

Republic photographers have been shooting video for 12 News. Breaking-news coverage of Wednesday's shooting at Chandler Fashion Center and recent storms in northern Arizona was coordinated among the newspaper, broadcast and online channels. Also noteworthy was a preseason ASU football package produced jointly by The Republic, 12 News and azcentral.com.

Callahan said that for the venture to work, journalists from the various entities will need to communicate with one another and embrace a collaborative spirit.

A venture of this type is a rare opportunity. Relatively few media companies have tried sharing resources in large markets, because few companies own newspapers and television stations in the same city, as Gannett does in Phoenix.

"The reality is there are only a couple of markets that have a true converged effort that included digital, TV and newspaper," said John Zidich, president and publisher of The Arizona Republic and chief executive officer of Republic Media. "The few that do exist are relatively new."

The Federal Communications Commission since 1975 has frowned on cross-ownership in an attempt to preserve diverse news sources, although various waivers have been granted, including in Phoenix.

The FCC's stance had been predicated on making sure there are multiple and diverse voices in specific communities, especially as corporate consolidations have reduced the number of major media companies. The rules don't prevent companies from owning broadcast stations and newspapers in different cities or regions.

But one important aspect of the Phoenix broadcast market is that 12 News is one of eight Valley stations that cover the news, including two Spanish-language stations and the Public Broadcasting Service.

"The TV market here is very competitive," Casey said.

The Tampa experience

Media General was a pioneer in convergence when it combined TV station WFLA onto the same site with the Tampa Tribune and TBO.com in 2000, but the effort faced some initial resistance.

Broadcast and newspaper journalists often tackled assignments from a different perspective, and many weren't comfortable working in a new platform, said John Schueler, president of Media General's Florida Communications Group.

"The cultures were materially different - night and day different," he said.

It didn't help that the company also pursued staff reductions, and there were pay differentials among the platforms.

Advertising sales, he said, was a particularly challenging area, in part because of different commission structures.

But the process has improved, Schueler said. The various entities routinely share story leads and other information, especially those involving major news events like hurricanes.

Not all Tampa newsroom employees work for multiple platforms, yet those who do eventually realized "there aren't as many differences as they thought," he added.

In his view, it's important for managers to clarify the desired changes and explain why they're happening, what the changes mean to each employee and how workers are supposed to interact.

"It takes patience but also tenacity," he said. "Get real clear that we're burning the boats on the shore and not retreating."

Individual strengths

In Phoenix, the convergence effort is being phased in gradually, with no specific timetables. Other areas, such as Republic and 12 News "watchdog," or investigative, reporting, will be kept separate, at least initially.

"We can't lose sight of what makes each platform successful," said Randy Lovely, editor and vice president for news for The Arizona Republic and azcentral.com. "We'll start small and learn as we work out the kinks."

Republic Media will measure customer satisfaction in various ways. These include audience ratings for 12 News, page views for azcentral.com and circulation numbers and reader-feedback surveys for the newspaper.

The new collaborative effort has put Phoenix in the spotlight nationally as newspapers, online-news sites and TV stations try to maintain their customer bases in an increasingly competitive digital age.

"There are news leaders around the country looking for the answer," Callahan said. "There's no one answer but a series of answers. This is one way to do it."

The effort also means more of a unified effort in reaching local and national businesses.

"Very simply, area businesses will get more media choices with increased resources under one roof," Zidich said.

Advertisers will be able to target audiences through the Phoenix metro area's biggest newspaper, largest local website, one of the top TV stations in the Valley and other avenues, he said.

"The result to businesses will translate to greater return on their investment."

by Russ Wiles The Arizona Republic Jan. 9, 2011 12:00 AM

12 News, Republic Media converge

Documents show efforts to build WikiLeaks case

WASHINGTON - Investigative documents in the WikiLeaks probe spilled out into the public domain Saturday for the first time, pointing to the Obama administration's determination to assemble a criminal case no matter how long it takes and how far afield authorities have to go.

Backed by a magistrate judge's court order from Dec. 14, the newly disclosed documents sent to Twitter Inc. by the U.S. Attorney's Office in Alexandria, Va., demand details about the accounts of WikiLeaks founder Julian Assange and Pfc. Bradley Manning, the Army intelligence analyst who's in custody and suspected of supplying WikiLeaks with classified information.

The others whose Twitter accounts are targeted in the prosecutors' demand are Birgitta Jonsdottir, an Icelandic parliamentarian and one-time WikiLeaks collaborator; Dutch hacker Rop Gonggrijp; and U.S. programmer Jacob Appelbaum. Gonggrijp and Appelbaum have worked with WikiLeaks in the past.

Justice Department spokesman Matt Miller declined comment on the disclosure in the case, which intensified following WikiLeaks' latest round of revelations with the posting of classified State Department diplomatic cables. The next day, Nov. 29, Attorney General Eric Holder vowed that anyone found to have violated U.S. law in the leaks would be prosecuted.

Assange said the U.S. move amounted to harassment, and he pledged to fight it.

"If the Iranian government was to attempt to coercively obtain this information from journalists and activists of foreign nations, human-rights groups around the world would speak out," he told the Associated Press in an e-mail.

Legal experts have said one possible avenue for federal prosecutors would be to establish a conspiracy to steal classified information.

"They are trying to show that Manning was more than a source of the information to a reporter and rather that Assange and Manning were trying to jointly steal information from the U.S. government," said Mark Rasch, a former prosecutor on computer crime and espionage cases in the Justice Department.

The problem is distinguishing between WikiLeaks as a news organization and those who republished the same classified information, like the New York Times, said Rasch, director of cybersecurity and privacy consulting at CSC, a Falls Church, Va., technology company.

"How do they prosecute?" Rasch asked.

"The answer is by establishing a unity of interest between Manning and Assange. Make it a theft case and not just a journalist publishing information case."

The demand by prosecutors sought information dating to Nov. 1, 2009, several months before an earlier WikiLeaks release.

Manning is in a maximum-security military brig at Quantico, Va., charged with leaking video of a 2007 U.S. Apache helicopter attack in Baghdad that killed a Reuters news photographer and his driver. WikiLeaks posted the video on its website in April last year.

Three months later, WikiLeaks posted about 90,000 leaked U.S. military records on the war in Afghanistan, including unreported incidents of Afghan civilian killings as well as covert operations against Taliban figures.

Assange's lawyer, Mark Stephens, said targeting Twitter showed how desperate U.S. officials were to pin a crime on the WikiLeaks founder.

Stephens told the BBC it was an attempt to "shake the electronic tree in the hope some kind of criminal charge drops out the bottom of it."

Jonsdottir said in a Twitter message that she had "no intention to hand my information over willingly."

Appelbaum, whose Twitter feed suggested he was traveling in Iceland, said he was apprehensive about returning to the U.S.

"Time to try to enjoy the last of my vacation, I suppose," he tweeted.

Gonggrijp praised Twitter for notifying him.

"It appears that Twitter, as a matter of policy, does the right thing in wanting to inform their users when one of these comes in," Gonggrijp said.

"Heaven knows how many places have received similar subpoenas and just quietly submitted all they had on me."

by Raphael G. Satter and Pete Yost Associated Press Jan. 9, 2011 12:00 AM

Documents show efforts to build WikiLeaks case

No tablet talk for Microsoft leader

LAS VEGAS - One year ago, Microsoft Corp. CEO Steve Ballmer took the stage at the tech industry's premier gadget show to showcase a Windows tablet computer to an audience that had yet to meet the iPad.

This year, with tablets marking the hottest items at the show and Windows lagging far behind Apple Inc.'s popular iPad, the stakes were higher. Microsoft's status as a technology oracle, which guaranteed its spot delivering the trade show's night-before keynote each year, is slipping.

On Wednesday evening, Ballmer spent more time talking about existing products such as the Xbox video-game system and Windows Phone 7 smartphone software than he did tablets.

Even Surface, Microsoft's giant coffee-table-size touch-screen computing system, got more attention.

Gadget makers including AsusTek Computer Inc. and Vizio Inc., the TV company, have already unveiled new tablet computers this week, and more were expected from the likes of Motorola Inc., Dell Inc. and Toshiba Corp.

Many of the new tablets will use Android, Google Inc.'s operating software that was initially designed for smartphones.

While Windows 7 remains a question mark for its prospects as a tablet system, Microsoft began talking Wednesday about the next version, which is expected to be called Windows 8 and to launch in 2012.

"Whatever device you use, now or in the future, Windows will be there," Ballmer said.

This year's trade show, which runs until Sunday, will also see TV makers adjusting strategies for selling 3-D televisions after a year of tepid sales.

LG Electronics Inc. said Wednesday it will be among the TV makers switching from sets that require expensive battery-powered glasses to ones that work with cheaper glasses like those used in movie theaters.

Ballmer said Microsoft sold 8 million of its new Kinect sensors, an add-on for Xbox 360 that lets people control games and other features by moving around and speaking. That's 3 million more than expected in Kinect's first two months on the market.

The CEO himself demonstrated new Kinect avatar software that will more closely mimic game players' behaviors and facial expressions after an update this spring.

Microsoft also said that this spring, people who have Xbox and Kinect will be able to wave their hands or speak aloud to browse and play video from Netflix and Hulu.

This was Ballmer's third year leading the gadget-show address. He took the mantle from Microsoft co-founder and chairman, Bill Gates, who had used the stage for the preceding 10 years to talk about his vision for the future of technology.

Gates talked about the tablet computer a decade ago, but it is only in the past year that the tablet - a slim touch-screen computer with no keyboard - has caught consumers' imaginations in a big way.

Ballmer took over Gates' role as CEO but not as company visionary; as such, his pronouncements have not seemed as grand or oraclelike.

Associated Press Jan. 7, 2011 12:00 AM

No tablet talk for Microsoft leader


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