Thursday, February 28, 2013

Groupon fires CEO, Mason admits "failure" in candid memo

SAN FRANCISCO (Reuters) - Groupon Inc fired Andrew Mason as chief executive officer on Thursday, ousting a co-founder who captured headlines with his quirky style but failed to reverse a crumbling share price and gradual erosion of its daily deals business.

The leader in Internet daily deals has now launched a search for a new leader to turn the company around, the same day its stock slid 24 percent after dismal quarterly results.

In an unusually candid post-firing letter, Mason -- known for his atypical sense of humor -- confessed he was getting in the way of the company he co-founded just a few years ago, and had failed in his role as leader.

'After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding - I was fired today. If you're wondering why... you haven't been paying attention,' Mason wrote in a memo addressed to the People of Groupon and made available to Reuters.

'From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that's hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.'

Co-founder Eric Lefkofsky and board member Ted Leonsis will lead the company in the interim, until a permanent CEO is found.

'We all know our operational and financial performance has eroded the confidence of many of our supporters, both inside and outside of the company. Now our task at hand is to win back their support,' the pair wrote in a joint letter to employees.

The company's stock closed 24 percent lower on Thursday after the daily deals company posted a surprise quarterly loss on Wednesday, partly because it took a smaller cut of revenue from merchants offering holiday season discounts.

'The next person who comes in will have tough road ahead. The new CEO will have to be somebody with a strong stomach,' said Dan Niles, chief investment officer at AlphaOne Capital.

'It's a lot like J.C. Penney. Changing the CEO is not going to change the fundamental tough aspects of the business. J.C. Penney stock did great when they replaced the CEO, and look what has happened since then.'

Shares in the company rose as much as 8 percent in after-hours trade, from a close of $4.53 on the Nasdaq. It has now lost three quarters of its value since its November 2011 initial public offering at $20.

(Reporting By Alistair Barr and Edwin Chan; Editing by Gary Hill and Carol Bishopric)

Yahoo telecommute ban is much ado about nothing: Silicon Valley

SAN FRANCISCO (Reuters) - Yahoo Chief Executive Marissa Mayer's decision to ban telecommuting sparked outrage around the country, but left many in Silicon Valley wondering what the fuss was all about.

Working from home is common enough in the Valley, but that is in addition to - not instead of - the 40-plus hours spent working in the office. Despite the area's image as a freewheeling space that makes much of the technology that allows people to work remotely, Bay Area workers tend to head into the office, especially at start-ups.

'Every idea we have is a result of more than two people sitting in a room, riffing on or trying to think up a clever solution to a certain problem,' said Sahil Lavingia, founder of payments startup Gumroad. 'Things like that you can't do over any Internet protocol.'

That does not mean Lavingia thinks his staff should never work from home. Just the opposite.

'Everyone should have a setup at home that makes them equally as productive, or close, as if they were in the office,' he says. 'Many people put in hours before and after work, and on the weekends.'

The new policy at Yahoo, announced in a February 22 memo, calls for 'all employees with work-from-home arrangements to work in Yahoo! offices.' The change goes into effect in June.

Many of the storied trappings of startup life - the free food, the game rooms, the flip-flops - are aimed at keeping people in the office. That goes for the engineers, often young and male, just as it does for other employees in groups such as marketing and sales.

And the private, Wi-Fi-equipped buses that shuttle employees from San Francisco to Google and Facebook and other companies based in Silicon Valley are meant to make the commute more productive, lest anyone advocate eliminating them altogether.

The lack of rules is also a hallmark of startup culture, and few companies will declare a firm policy on issues like telecommuting. But the message is pretty clear.

Apple Inc cofounder Steve Jobs liked to talk about the long hours employees put in at the company's Cupertino, California, headquarters. 'I've seen cars in the parking lot late at night, cots in some of the engineering offices,' he said at a 2010 press conference.

Many companies hold regular meetings which all employees are strongly encouraged attend. At Twitter, they are called 'tea time' meetings, but more typically Silicon Valley companies use the term 'all-hands.'

Cloud-content start-up Box holds an all-hands every Friday over lunch at its main office in Los Altos, California, and streams it to a satellite office in San Francisco. Box also has London offices, where a rebroadcast runs the following week.

And sometimes companies insist workers show up at the office, such as during the start-of-semester crunches at online textbook company Chegg, says CEO Dan Rosensweig.

'Everybody knows to either be in, or be available,' Rosensweig says. 'When you're in the rush, you can't really afford to not know where somebody is.'

He believes Silicon Valley's premium on in-person collaborations comes from different teams having overlapping responsibility for products.

'Most of the companies out here, there's product, engineering, and business,' he says. 'There isn't necessarily one person who owns every piece of the P&L,' or profit and loss statement, meaning that close communication is crucial.

David Rusenko, founder of Web-building service Weebly, says it simply becomes more efficient for everyone to sit together.

'We've tried to work with contract designers remotely, and the feedback cycle gets so long,' he says. 'If you're sitting with somebody two seats away, you say, 'Hey, I'm finished with this, can you take a look.''

Teams can have as many as 10 back-and-forths a day when they are physically together, compared with maybe one working remotely, he says.

Some workers chafe at the premium that companies place on a physical presence, including Jeff Spirer, a mobile-marketing veteran. He recalls one job at which the CEO required everyone to be at the office, even though many employees had long commutes and would have been more productive staying home a couple of days a week.

'It was much easier for me to work at home, which I could only really do when he was traveling,' Spirer says, referring to the CEO.

Old-guard Silicon Valley companies such as Hewlett-Packard Co and Cisco Systems Inc tend to be much more open to telecommuting.

That contrast may explain Yahoo's new policy. It is a big, mature company, but a struggling one, and people inside and outside agree it desperately needs a jolt of the all-hands-on-deck, start-up spirit.

'This isn't a broad industry view on working from home, this is about what is right for Yahoo!, right now,' a Yahoo spokeswoman said.

(Reporting by Sarah McBride; Editing by Jonathan Weber, Jeffrey Benkoe and Leslie Gevirtz)

Samsung Electronics says loses a Japan patent lawsuit to Apple

SEOUL (Reuters) - A Tokyo court on Thursday ruled in favor of Apple Inc in a patent lawsuit over mobile devices filed by Samsung Electronics, the South Korean firm said.

The world's top two smartphone makers are engaged in a global legal battle over patents on smartphones and tablets, as they vie to win customers in the lucrative mobile market.

'We are disappointed by today's court decision. Following a thorough review of the ruling, we will take the measures necessary to protect our intellectual property rights,' Samsung said in a statement without giving further details.

(Reporting by Hyunjoo Jin; Editing by Edwina Gibbs)

Wednesday, February 27, 2013

Apple CEO says he feels shareholders' pain, urges long view

CUPERTINO, California (Reuters) - Apple Inc CEO Tim Cook acknowledged widespread disappointment in the company's sagging share price but shared few details about its secretive product pipeline or a raging debate about how to best reward shareholders.

The world's most valuable technology company headed into its annual shareholders' meeting at its headquarters on Wednesday on shakier ground than it has been accustomed to in years, since the iPhone and iPad helped vault the company to premier investment status.

A declining share price has lent weight to Wall Street's demand that it share more of its $137 billion in cash and securities pile - equivalent to Hungary's Gross Domestic Product, and growing - a debate now spearheaded by outspoken hedge fund manager David Einhorn.

Einhorn was not spotted at the meeting on Wednesday. Cook repeated that the company's board remained in 'very very active' discussions about options for cash sharing, and said he shared investors' dissatisfaction over the stock price.

'I don't like it either. The board doesn't like it. The management team doesn't like it,' Cook told investors at the company's headquarters on 1 Infinite Loop.

But by focusing on the long term, revenue and profit will follow, he said.

Cook added that the company was working on new product categories, but, as usual, would not elaborate.

Speculation is rife on Wall Street and in Silicon Valley that the iPhone maker is working on a project to revolutionize the television and TV content, or a smart 'iWatch.'

Apple's stock was down 1 percent to $444 in afternoon trade. It is now down more than 35 percent from its $702.10 September peak.

Despite a slipping share price, dissatisfaction on the Street over its cash allocation and uncertainty over its product pipeline, shareholders re-elected the entire board on Wednesday, and Cook won more than 99 percent of the vote in preliminary results.

SHARE AND SHARE ALIKE

Apple's annual shareholder meetings have been celebrations in recent years. Since the company came out with its first iPhone in 2007, the company has multiplied in market value until it peaked in September.

Then Samsung Electronics and Amazon.com Inc began seriously eroding its market share in 2012, powered by arch-rival Google Inc's Android software. On March 14, Samsung will launch the Galaxy SIV smartphone, the latest iteration of a flagship smartphone that helped it dethrone Apple from the top of the industry.

Institutional investors want the company to share a greater chunk of its cash and securities pile, a demand growing increasingly strident with the company's stock wallowing at levels untested since the start of 2012.

Einhorn himself is advocating 'iPrefs, preferred stock that will carry a perpetual 4 percent dividend to boost returns while not hampering cash flow.

On Friday, Einhorn won an important legal victory that strengthened his hand. His Greenlight Capital secured an injunction that invalidated shareholder voting on a proposal to scrap Apple's power to issue preferred stock at its discretion.

Apple says this will enhance governance. But the hedge fund manager argued it could complicate efforts to issue preferred securities in the future.

Cook said again on Wednesday that Einhorn's lawsuit - regardless of its efficacy - was a 'silly sideshow'. The underlying principle of cash distribution was something he and the board took seriously, he added.

The California Public Employees Retirement System, owner of 2.7 million Apple shares, had supported the so-called Proposal 2. Senior Portfolio Manager Anne Simpson said it was unfortunate the proposal could not be put forward for a vote.

'We know there is hot debate going on with cash,' Simpson told the assembled shareholders at 1 Infinite Loop. 'We are willing and happy to wait.'

(Reporting by Poornima Gupta; Editing by Lisa Von Ahn and Tim Dobbyn)

Networking creates devices buzz at mobile fair

BARCELONA (Reuters) - Networks, whether superfast mobile broadband, wifi or a combination of both, are helping add pizzazz to new mobile products as the rapid evolution in smartphone and tablet design slows to a trickle.

The world's fastest smartphone, new 'phablets' - sized between a phone and tablet - and small tablets optimized to watch video and run multiple applications on 4G mobile networks were making the biggest splash at the Mobile World Congress in Barcelona.

Networks are also enabling millions of other devices, from coffee makers to bicycles and cars to homes, to become 'smart'.

Chipmaker Qualcomm Inc for instance demonstrated a connected home in which a smartphonecoffee can be used to start a coffer maker and speakers burst into sound when you enter the room, thanks to the handset in your pocket.

Such innovations are made possible by AllJoyn, an open-source software framework compatible with mobile operating systems Android, Windows and iOs, that allows devices to speak to each other directly without needing a separate server.

'We are making the Internet of everything a seamless blend of the physical and the digital world,' said Brian Spencer, engineer at Qualcomm Innovation Center.

U.S. network operator AT&T Inc, meanwhile, is adding your home and your car to your smartphone contacts.

Its Digital Life product allows a user to automate and monitor his or her home remotely, and it has replaced Verizon Communications Inc as mobile partner for General Motors Co's OnStar connected car service.

Glenn Lurie, AT&T president of emerging enterprises, said the next step would be joining the two products together, creating a smart ecosystem dedicated to an individual.

'When my wife drives into the house and flips the garage door open, the house will know she's home and unlock the door and turns the thermostat up; that's the future,' Lurie said.

NEXT BIG THING

Meanwhile wearable devices are the next big thing to be connected, industry watchers say. Google Inc revealed on YouTube last week some of the features of Google Glass, a pair of glasses that allows users to see information and record video.

Apple Inc, meanwhile, is experimenting with the design of a smart device similar to a wristwatch made with curved glass, according to a New York Times report.

In Barcelona, many of the wearables were designed to keep tabs on health problems.

A blood sugar monitor was being used by cyclists, with real-time data sent to a Sony Corp Xperia smartphone on the handlebars. Readings can then be sent to doctors using a secure mobile connection.

It will be used by a team of diabetics riding between Brussels and Barcelona next month, said trip organizer Adam Denton.

Most new smartphones and tablets unveiled at the show, however, displayed no departure from the touch-screen format popularized by Apple and Samsung Electronics Co Ltd.

Device maker Huawei set itself apart by emphasizing the connection speed of its flagship smartphone, the Ascend P2, while Japan's NEC Corp took a fresh approach to smartphone form with a device offering screens back and front that can be unfolded to make a 5.6 inch-sized tablet.

Olaf Swantee, chief executive of British network operator EE, said faster networks were changing how people use their devices and how manufacturers were designing kit.

'Miniaturization was the big thing a few years ago, but now, with customers able to do more on their screens than ever before, we're seeing device manufacturers maximize screen space, not minimize it,' he said at the show.

(Editing by David Holmes)

Tuesday, February 26, 2013

Pentagon unveils plan to tap potential of mobile devices

WASHINGTON (Reuters) - The Pentagon unveiled a plan on Tuesday to ultimately enable the Defense Department's 600,000 users of smartphones, computer tablets and other mobile devices to rapidly share classified and protected data using the latest commercial technologies.

The system aims to quickly enable the latest technologies to be securely used by the military while remaining 'device agnostic,' said Major General Robert Wheeler, a Defense Department deputy chief information officer.

That sets the stage for an intensified struggle for Pentagon customers among BlackBerry devices, Apple's iPhones or iPads, and units using Google's Android platform.

The Defense Department currently has more than 600,000 mobile device users, including 470,000 with BlackBerries, 41,000 who have Apple operating systems, and 8,700 who use Android devices.

The new plan will result in the use of a much wider variety of mobile devices across the military. Currently most devices using Apple and Google platforms are in pilot or test programs, officials said.

Few commercial devices are used for classified communications, whereas the new system aims to bolster security of commercially available devices so they can be used for classified information, they said.

Wheeler said the implementation plan aimed to ensure that mobile devices, wireless infrastructure and mobile applications remain 'reliable, secure and flexible enough to keep up with the fast-changing technologies of today.'

He said the department has a broad range of mobile device users, from the chairman and planners on the Joint Chiefs of Staff to policymakers and soldiers on the battlefield, all of whom would be affected by the implementation plan.

The military services would decide which devices to buy and provide to users based on need. The system would not initially enable an individual service member to purchase their own mobile devices and use them on the Pentagon's networks, but that is a longer-range goal if security can be assured, officials said.

The plan is a step toward implementing the 'mobility strategy' the Pentagon released last June. The strategy aims to use smartphone, tablet and other mobile technologies to improve information sharing and collaboration across the department.

The plan aims to 'align the various mobile devices, pilots and initiatives across the department under common objectives to ensure the war fighter benefits from these activities,' Teri Takai, the Pentagon's chief information officer, said in a statement.

'This is not simply about embracing the newest technology - it is about keeping the department's workforce relevant in an era when information accessibility and cybersecurity play a critical role in missions,' she said.

As part of the implementation plan, the department has asked companies to submit proposals for creating a mobile device management platform and an applications store where users can get the programs they need for their devices.

The mobile device management platform would need a number of security features, such detecting malware and enabling officials to remotely delete data from the device, according to documents outlining the plan.

(Reporting by David Alexander; Editing by Eric Beech)

Sony's Xperia Z smartphone off to a good start: executive

BARCELONA (Reuters) - Sales of Sony Corp's Xperia Z high-end smartphone have got off to a good start since its launch in several leading European markets on Monday, said Sony Mobile's Calum MacDougall, head of Xperia marketing.

'We have seen really good pre-orders', McDougall said in an interview at the Mobile World Congress. 'We had the first stocks available in Germany in Berlin at the Sony store and sold those out in two hours.

'In France, we sold more in one day in our online store than we sold in 12 weeks in mobile devices.'

The Xperia smartphone, which went on sale in Japan last month and is now available in 60 countries, sells for 649 euros and is part of the Japanese electronics group's push for a greater market presence in mobile devices.

Sony has identified mobile devices, which also include Xperia tablets, as part of its efforts to overcoming problems in its television unit that contributed to a record group loss in its last fiscal year.

'It (the Xperia smartphone) sold over 150,000 units in its first week in Japan, taking a 24 percent market share straight away.' McDougall said. 'It may be a bit too early to say but the first signs a very positive.'

Yet the phone faces stiff competition from already-established devices from Apple Inc and Samsung Electronics Co Ltd. Sony's share of mobile phone sales in the fourth quarter was 1.7 percent, compared with Samsung's 22.7 percent and Apple 9.2 percent, according to consultancy Gartner.

Also in Barcelona, Sony presented the Xperia Z tablet, billed as dust and water resistant. Only 6.9 millimeter thin and weighing 495 grammes, the Tablet Z has a 10.1 inch high-definition screen and will go on sale this spring.

The tablet aims to be a direct challenge to Apple, which has dominated the high-end tablet market, although smaller and cheaper Android-based tablets have also won market share.

'Many have tried and failed to compete with the iPad in the premium 10 inch tablet space and, at first glance, it is difficult to see how Sony expects to achieve this,' said David McQueen, Informa telecoms & media analyst.

With its Xperia line Sony hopes to bank on a multi-device strategy, adding its media content such as movies and music, as well as its PlayStation gaming Service. Both devices run on Google Inc's Android operating system, but that doesn't mean it will be Sony's only bet.

Sony Mobile also agreed on Monday to work with Telefonica on developing smartphones aimed at emerging markets powered by the Mozilla Firefox operating system.

Asked if Sony would create a Windows-based smartphone, McDougall declined to say. 'The products we will bring to the market in the first half of this year are Android products ... Of course we are always looking at different operating systems.'

(Editing by Leila Abboud and David Holmes)

Monday, February 25, 2013

HP sells webOS operating system to LG Electronics

SAN FRANCISCO (Reuters) - Hewlett-Packard Co said on Monday it will sell the webOS operating system to South Korea's LG Electronics Inc, unloading the smartphone software it acquired through a $1.2 billion acquisition of Palm in 2010.

LG will use the operating software, used in now-defunct Palm smartphones years ago, for its 'smart' or Internet-connected TVs. The Asian electronics company had worked with HP on WebOS before offering to buy it outright.

Under the terms of their agreement, LG acquires the operating software's source code, associated documentation, engineering talent, various associated websites, and licenses under HP's intellectual property including patents covering fundamental operating system and user interface technology.

HP will retain the patents and all the technology relating to the cloud service of webOS, HP Chief Operating Officer Bill Veghte said in an interview.

'As we looked at it, we saw a very compelling IP that was very unique in the marketplace,' he said, adding that HP has already had a partnership with LG on webOS before the deal was announced.

'As a result of this collaboration, LG offered to acquire the webOS operating system technology,' Veghte said.

Scott Ahn, President and CTO, LG Electronics, said the company will incorporate the operating system in the Smart TV line-up first 'and then hopefully all the other devices in the future.'

Both companies declined to reveal the terms of the deal.

LG will keep the WebOS team in Silicon Valley and, for now, will continue to be based out of HP offices, Ahn said.

HP opened its webOS mobile operating system to developers and companies in 2012 after trying to figure out how to recoup its investment in Palm, one of the pioneers of the smartphone industry.

The company had tried to build products based on webOS with the now-defunct TouchPad tablet its flagship product.

HP launched and discontinued the TouchPad in 2010, a little over a month after it hit store shelves with costly fanfare after it saw poor demand for a tablet priced on par with Apple's dominant iPad.

WebOS is widely viewed as a strong mobile platform, but has been assailed for its paucity of applications, an important consideration while choosing a mobile device.

(Additional reporting By Paul Sandle and Alistair Barr; Editing by Gerald E. McCormick, Tim Dobbyn and M.D. Golan)

BlackBerry launches first BB10 device in India at $800

MUMBAI (Reuters) - BlackBerry launched its first smartphone from its BlackBerry 10 line in India on Monday, pricing the phone at 43,490 rupees ($800).

The touch-screen BlackBerry Z10 phone, which goes on sale in India from Tuesday, will compete with Apple Inc's iPhones and Samsung Electronics Co Ltd's high-end Galaxy series phones.

The Z10 has already gone on sale in the United Kingdom and Canada, and is expected to hit the United States in mid-March.

(Reporting by Aradhana Aravindan; Editing by Devidutta Tripathy)

Sunday, February 24, 2013

Apple signals emerging-market rethink with India push

NEW DELHI/BANGALORE (Reuters) - As BlackBerry launches the first smartphone from its make-or-break BB10 line in India, one of its most loyal markets, the company faces new competition from a formidable rival that has long had a minimal presence in the country.

More than four years after it started selling iPhones in India, Apple Inc is now aggressively pushing the iconic device through installment payment plans that make it more affordable, a new distribution model and heavy marketing blitz.

'Now your dream phone' at 5,056 rupees ($93), read a recent full front-page ad for an iPhone 5 in the Times of India, referring to the initial payment on a phone priced at $840, or almost two months' wages for an entry-level software engineer.

The new-found interest in India suggests a subtle strategy shift for Apple, which has moved tentatively in emerging markets and has allowed rivals such as Samsung and Blackberry to dominate with more affordable smartphones. With the exception of China, all of its Apple stores are in advanced economies.

Apple expanded its India sales effort in the latter half of 2012 by adding two distributors. Previously it sold iPhones only through a few carriers and stores it calls premium resellers.

The result: iPhone shipments to India between October and December nearly tripled to 250,000 units from 90,000 in the previous quarter, according to an estimate by Jessica Kwee, a Singapore-based analyst at consultancy Canalys.

At The MobileStore, an Indian chain owned by the Essar conglomerate, which says it sells 15 percent of iPhones in the country, iPhone sales tripled between December and January, thanks to a monthly payment scheme launched last month.

'Most people in India can't afford a dollar-priced phone when the salaries in India are rupee salaries. But the desire is the same,' said Himanshu Chakrawarti, its chief executive.

Apple, the distributors, retailers and banks share the advertising and interest cost of the marketing push, according to Chakrawarti. Carriers like Bharti Airtel Ltd, which also sell the iPhone 5, run separate ads.

India is the world's No. 2 cellphone market by users, but most Indians can't afford fancy handsets. Smartphones account for just a tenth of total phone sales. In India, 95 percent of cellphone users have prepaid accounts without a fixed contract. Unlike in the United States, carriers do not subsidize handsets.

Within the smartphone segment, Apple's Indian market share last quarter was just 5 percent, according to Canalys, meaning its overall penetration is tiny.

Still, industry research firm IDC expects the Indian smartphone market to grow more than five times from about 19 million units last year to 108 million in 2016, which presents a big opportunity.

Samsung Electronics dominates Indian smartphone sales with a 40 percent share, thanks to its wide portfolio of Android devices priced as low as $110. The market has also been flooded by cheaper Android phones from local brands such as Micromax and Lava.

Most smartphones sold in India are much cheaper than the iPhone, said Gartner analyst Anshul Gupta.

'Where the masses are - there, Apple still has a gap.'

'I LOVE INDIA, BUT...'

Apple helped create the smartphone industry with the iPhone in 2007, but last year lost its lead globally to Samsung whose free Android software is especially attractive in Asia.

Many in Silicon Valley and Wall Street believe the surest way to penetrate lower-income Asian markets would be with a cheaper iPhone, as has been widely reported but never confirmed. The risk is that a cheap iPhone would cannibalize demand for the premium version and eat into Apple's peerless margins.

The new monthly payment plan in India goes a long way to expanding the potential market, said Chakrawarti.

'The Apple campaign is not meant for really the regular top-end customer, it is meant to upgrade the 10,000-12,000 handset guy to 45,000 rupees,' he said.

Apple's main focus for expansion in Asia has been Greater China, including Taiwan and Hong Kong, where revenue grew 60 percent last quarter to $7.3 billion.

Asked last year why Apple had not been as successful in India, Chief Executive Tim Cook said its business in India was growing but the group remained more focused on other markets.

'I love India, but I believe that Apple has some higher potential in the intermediate term in some other countries,' Cook said. 'The multi-layer distribution there really adds to the cost of getting products to market,' he said at the time.

Apple, which has partly addressed that by adding distributors, did not respond to an email seeking comment.

Ingram Micro Inc, one of its new distributors, also declined comment. Executives at Redington (India) Ltd, the other distributor, could not immediately be reached.

BlackBerry, which has seen its global market share shrivel to 3.4 percent from 20 percent over the past three years, is making what is seen as a last-ditch effort to save itself with the BB10 series.

The high-end BlackBerry Z10 to be launched in India on Monday is expected to be priced not far from the 45,500 rupees price tag for an iPhone 5 with 16 gigabytes of memory. Samsung's Galaxy S3 and Galaxy Note 2, Nokia's Lumia 920 and two HTC Corp models are the main iPhone rivals.

Until last year, Blackberry was the No. 3 smartphone brand in India with market share of more than 10 percent, thanks to a push into the consumer segment with lower-priced phones. Last quarter its share fell to about 5 percent, putting it in fifth place, according to Canalys. Apple was sixth.

($1 = 54.2000 Indian rupees)

(Additional reporting by Aradhana Aravindan in MUMBAI and Poornima Gupta in SAN FRANCISCO; Editing by Tony Munroe and Mark Bendeich)

Analysis: The near impossible battle against hackers everywhere

SAN FRANCISCO (Reuters) - Dire warnings from Washington about a 'cyber Pearl Harbor' envision a single surprise strike from a formidable enemy that could destroy power plants nationwide, disable the financial system or cripple the U.S. government.

But those on the front lines say it isn't all about protecting U.S. government and corporate networks from a single sudden attack. They report fending off many intrusions at once from perhaps dozens of countries, plus well-funded electronic guerrillas and skilled criminals.

Security officers and their consultants say they are overwhelmed. The attacks are not only from China, which Washington has long accused of spying on U.S. companies, many emanate from Russia, Eastern Europe, the Middle East, and Western countries. Perpetrators range from elite military units to organized criminal rings to activist teenagers.

'They outspend us and they outman us in almost every way,' said Dell Inc's chief security officer, John McClurg. 'I don't recall, in my adult life, a more challenging time.'

The big fear is that one day a major company or government agency will face a severe and very costly disruption to their business when hackers steal or damage critical data, sabotage infrastructure or destroy consumers' confidence in the safety of their information.

Elite security firm Mandiant Corp on Monday published a 74-page report that accused a unit of the Chinese army of stealing data from more than 100 companies. While China immediately denied the allegations, Mandiant and other security experts say the hacker group is just one of more than 20 with origins in China.

Chinese hackers tend to take aim at the largest corporations and most innovative technology companies, using trick emails that appear to come from trusted colleagues but bear attachments tainted with viruses, spyware and other malicious software, according to Western cyber investigators.

Eastern European criminal rings, meanwhile, use 'drive-by downloads' to corrupt popular websites, such as NBC.com last week, to infect visitors. Though the malicious programs vary, they often include software for recording keystrokes as computer users enter financial account passwords.

Others getting into the game include activists in the style of the loosely associated group known as Anonymous, who favor denial-of-service attacks that temporarily block websites from view and automated searches for common vulnerabilities that give them a way in to access to corporate information.

An increasing number of countries are sponsoring cyber weapons and electronic spying programs, law enforcement officials said. The reported involvement of the United States in the production of electronic worms including Stuxnet, which hurt Iran's uranium enrichment program, is viewed as among the most successful.

Iran has also been blamed for a series of unusually effective denial-of-service attacks against major U.S. banks in the past six months that blocked their online banking sites. Iran is suspected of penetrating at least one U.S. oil company, two people familiar with the ongoing investigation told Reuters.

'There is a battle looming in any direction you look,' said Jeff Moss, the chief information security officer of ICANN, a group that manages some of the Internet's key infrastructure.

'Everybody's personal objectives go by the wayside when there is just fire after fire,' said Moss, who also advises the U.S. Department of Homeland Security.

HUNDREDS OF CASES UNREPORTED

Industry veterans say the growth in the number of hackers, the software tools available to them, and the thriving economic underground serving them have made any computer network connected to the Internet impossible to defend flawlessly.

'Your average operational security engineer feels somewhat under siege,' said Bruce Murphy, a Deloitte & Touche LLP principal who studies the security workforce. 'It feels like Sisyphus rolling a rock up the hill, and the hill keeps getting steeper.'

In the same month that President Barack Obama decried enemies 'seeking the ability to sabotage our power grids, our financial institutions, our air traffic control systems,' cyber attacks on some prominent U.S. companies were reported.

Three leading U.S. newspapers, Apple Inc, Facebook Inc, Twitter and Microsoft Corp all admitted in February they had been hacked. The malicious software inserted on employee computers at the technology companies has been detected at hundreds of other firms that have chosen to keep silent about the incidents, two people familiar with the case told Reuters.

'I don't remember a time when so many companies have been so visibly 'owned' and were so ill-equipped,' said Adam O'Donnell, an executive at security firm Sourcefire Inc, using the hacker slang for unauthorized control.

Far from being hyped, cyber intrusions remain so under-disclosed - for fear leaks about the attacks will spook investors - that the new head of the FBI's cyber crime effort, Executive Assistant Director Richard McFeely, said the secrecy has become a major challenge.

'Our biggest issue right now is getting the private sector to a comfort level where they can report anomalies, malware, incidences within their networks,' McFeely said. 'It has been very difficult with a lot of major companies to get them to cooperate fully.'

McFeely said the FBI plans to open a repository of malicious software to encourage information sharing among companies in the same industry. Obama also recently issued an executive order on cyber security that encourages cooperation.

The former head of the National Security Agency, Michael Hayden, supports the use of trade and diplomatic channels to pressure hacking nations, as called for under a new White House strategy that was announced on Wednesday.

'The Chinese, with some legitimacy, will say 'You spy on us.' And as former director of the NSA I'll say, 'Yeah, and we're better at it than you are,' said Hayden, now a principal at security consultant Chertoff Group.

He said what worries him the most is Chinese presence on networks that have no espionage value, such as systems that run infrastructure like energy and water plants. 'There's no intellectual property to be pilfered there, no trade secrets, no negotiating positions. So that makes you frightened because it seems to be attack preparation,' Hayden said.

Amid the rising angst, many of the top professionals in the field will convene in San Francisco on Monday for the best-known U.S. security industry conference, named after host company and EMC Corp unit RSA.

Several experts said they were convinced that companies are spending money on the wrong stuff, such as antivirus subscriptions that cannot recognize new or targeted attacks.

RSA Executive Chairman Art Coviello and Francis deSouza, head of products at top vendor Symantec Corp, both said they will give keynote speeches calling for a focus on more sophisticated analytical tools that look for unusual behavior on the network - which sounds expensive.

Others urge a more basic approach of limiting users' computer privileges, rapidly installing software updates, and allowing only trusted programs to function.

Some security companies are starting over with new designs, such as forcing all of their customers' programs to run on walled-off virtual machines.

With such divergent views, so much money at stake, and so many problems, there are perhaps just two areas of agreement.

Most people in the industry and government believe things will get worse. Coviello, for his part, predicted that a first-of-its kind - but relatively simple - virus that deleted all data on tens of thousands of PCs at Saudi Arabia's national oil company last year is a harbinger of what will come.

And most say that the increased mainstream attention on cyber security, even if it fixes uncomfortably on the industry's failings and tenacious adversaries, will help drive a desperately needed debate about what do to internationally and at home.

(Reporting by Joseph Menn in San Francisco; Additional reporting by Jim Finkle in Boston and Deborah Charles in Washington; Editing by Tiffany Wu and Jackie Frank)

Saturday, February 23, 2013

Einhorn scores legal victory versus Apple in cash scuffle

NEW YORK (Reuters) - A U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with Apple Inc on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

U.S. District Judge Richard Sullivan in Manhattan granted a motion by Einhorn's Greenlight Capital for a preliminary injunction stopping a vote on that proposal, scheduled for the company's February 27 stockholders' meeting.

The decision could hand Einhorn more leverage as he pursues his pitch for Apple to issue what he has called the 'iPref': preferred stock with a perpetual dividend that he contends would reward investors and help boost the company's share price.

Greenlight sued Apple on February 7 as part of a broader pitch to unlock more of its $137 billion in cash. The hedge fund manager has lobbied Apple to issue preferred stock with a perpetual 4 percent dividend, and on Thursday made a direct appeal to shareholders on a teleconference.

Apple Chief Executive Tim Cook last week dismissed the lawsuit as a 'silly sideshow.'

The lawsuit itself challenged a measure called Proposal No. 2 that Apple put forward, which would eliminate its power to issue preferred shares without a shareholder vote.

At issue is Apple's 'bundling' of that measure with two other unrelated matters into a single proxy proposal.

Greenlight said it supported two of the proposed amendments, but not the one on preferred shares.

In his ruling, Sullivan said Greenlight and another investor who also sued Apple 'are likely to succeed on the merits and face irreparable harm if the vote on Proposal No. 2 is permitted to proceed.'

'We are disappointed with the court's ruling. Proposal No. 2 is part of our efforts to further enhance corporate governance and serve our shareholders' best interests,' Apple spokesman Steve Dowling said. 'Unfortunately, due to today's decision, shareholders will not be able to vote on Proposal No. 2 at our annual meeting next week.'

A spokesman for Greenlight called the ruling a 'significant win for all Apple shareholders and for good corporate governance.'

But not all shareholders were happy. California pension fund Calpers, a major Apple investor and public supporter of Apple's proposal, said implementation of 'majority voting and shareholder approval for the issuance of new stock - preferred or otherwise - is worth waiting for.'

'We encourage Apple to reintroduce these measures as soon as is practical so that all investors can be heard,' Anne Simpson, Calpers' director of global governance, said in a statement.

BUNDLES

The ruling could be a warning for other companies when issuing proxy proposals, said James Cox, a professor at Duke University School of Law.

'It's going to make managers reluctant to bundle things together, because you're never going to know when you send them out if there's an Einhorn out there,' he said.

The lawsuit was centered on a narrow issue of whether Apple violated U.S. Securities and Exchange Commission rules by 'bundling' the preferred shares item with two other unrelated matters into one proxy proposal.

Greenlight's lawyers contended the SEC rules were intended to protect shareholders from being forced to vote for a proxy proposal involving materially different issues that the investors might not entirely support.

Apple had argued Proposal No. 2, which only dealt with amendments to its charter, constitute a single matter and wasn't bundled. Sullivan called the company's arguments 'unavailing.'

'Given the language and purpose of the rules, it is plain to the Court that Proposal No. 2 impermissibly bundles 'separate matters' for shareholder consideration,' Sullivan wrote.

Judge Sullivan also found that Greenlight would be irreparably harmed without the injunction, since it would be forced to vote against its own interests. Denying Greenlight's motion would prevent it and other investors from exercising their rights to a fair vote, Sullivan said.

Sullivan separately declined to block a vote from going forward on a separate proxy proposal, Proposal No. 4, which sought an advisory 'say on pay' vote on Apple executives' compensation.

The proposal had been challenged by investor Brian Gralnick of Pennsylvania, who contends Apple did not disclose enough details about how it made its compensation decisions.

Sullivan rejected that argument, saying Apple's disclosures were 'plainly sufficient under SEC rules.'

Arnold Gershon, a lawyer for Gralnick at Barrack, Rodos & Bacine, said he was 'very pleased' with Sullivan's decision to the extent it enjoined the Proposal No. 2 vote, though said he would have to decide what to do next with regard to the say-on-pay proposal.

Sullivan directed the parties to submit a joint letter by March 1 outlining the next contemplated steps in this case.

Apple shares closed up 1.1 percent at $450.81 on Friday.

The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.

(Reporting by Nate Raymond in New York; Additional reporting by Poornima Gupta in San Francisco; Editing by Martha Graybow, Gary Hill, Leslie Adler, Carol Bishopric and Lisa Shumaker)

Friday, February 22, 2013

Einhorn wins ruling against Apple in cash pile fight

NEW YORK (Reuters) - A U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with Apple Inc on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

U.S. District Judge Richard Sullivan in Manhattan granted a motion by Einhorn's Greenlight Capital for a preliminary injunction stopping the vote on that proposal.

The vote was scheduled for February 27 as part of the company's annual stockholders' meeting.

Greenlight sued Apple on February 7 as part of a broader pitch to unlock more of Apple's $137 billion in cash for shareholders. Einhorn has argued Apple should issue preferred stock with a perpetual 4 percent dividend.

The lawsuit itself challenged a measure called Proposal No. 2 that Apple put forward that would eliminate Apple's power to issue preferred shares without a shareholder vote.

At issue is Apple's 'bundling' of the measure on the preferred shares with two other unrelated matters into a single proxy proposal.

Greenlight said it supported two proposed the amendments but not the one on preferred shares.

Sullivan said Greenlight and another investor who also sued Apple 'are likely to succeed on the merits and face irreparable harm if the vote on Proposal No. 2 is permitted to proceed.'

Representatives for Apple did not immediately respond to requests for comment.

For Einhorn, the decision could provide leverage as he pursues his pitch for Apple to issue what he has called 'the iPref,' preferred stock with a perpetual dividend that he contends would reward investors and help boost the company's share prices.

In a statement, a spokesman for Greenlight called the ruling a 'significant win for all Apple shareholders and for good corporate governance.'

The lawsuit was centered on a narrow issue of whether Apple violated U.S. Securities and Exchange Commission rules by 'bundling' the preferred shares item with two other unrelated matters into one proxy proposal.

Greenlight's lawyers contended the SEC rules were intended to protect shareholders from being forced to vote for a proxy proposal involving materially different issues that the investors might not entirely support.

Apple had argued Proposal No. 2, which only dealt with amendments to its charter, constitute a single matter and wasn't bundled. Sullivan called the company's arguments 'unavailing.'

'Given the language and purpose of the rules, it is plain to the Court that Proposal No. 2 impermissibly bundles 'separate matters' for shareholder consideration,' Sullivan wrote.

The judge separately declined to block a vote from going forward on a separate proxy proposal, Proposal No. 4, which sought an advisory 'say on pay' vote on Apple executives' compensation.

The proposal had been challenged by investor Brian Gralnick of Pennsylvania, who contends Apple did not disclose enough details about how it made its compensation decisions.

Sullivan rejected that argument, saying Apple's disclosures were 'plainly sufficient under SEC rules.'

Arnold Gershon, a lawyer for Gralnick at Barrack, Rodos & Bacine, did not respond to a request for comment.

Apple shares closed up 1.06 percent at $450.81 on the New York Stock Exchange on Friday.

The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.

(Reporting By Nate Raymond in New York; Editing by Martha Graybow, Gary Hill and Leslie Adler)

Nevada legalizes first interstate online poker

(Reuters) - Nevada has become the first U.S. state to legalize interstate online poker and allow state-to-state gaming agreements, beating New Jersey to the punch and putting in place a potential nationwide framework for Internet wagering.

Republican Governor Brian Sandoval signed the landmark bipartisan bill into law on Thursday, authorizing his office to enter into agreements with other states that will in effect allow Nevada-based companies to host interactive gambling for residents of other states.

A number of companies have already been granted Nevada licenses for online poker, but were prepared to be limited to serving Nevada residents. Applicants include social gaming leader Zynga Inc. Shares in Zynga leapt as much as 7.4 percent on Friday.

With the bill, Nevada - home to Las Vegas, the world's second-largest gambling hub - wants to pave the way for national Internet wagering even though efforts at federal regulation have stalled. Established companies including MGM Resorts and Wynn Resorts hope they can add new customers and pitch online players to come to Vegas.

'This bill is critical to our state's economy and ensures that we will continue to be the gold standard for gaming regulation,' Sandoval said in a statement after signing the bill on Thursday.

The bill removes a provision requiring federal legislation or Department of Justice approval before online gaming licenses are made active, according to Nevada's statement.

Nevada Assembly Majority Leader William Horne, a Democrat from Las Vegas, told Reuters that he expects online poker to be the first of multiple online gambling offerings to residents of other states.

'Initially it'll be starting with online poker, but certainly the infrastructure is set up for various interactive gaming,' Horne said.

'There are approximately a half-dozen companies already licensed to do this in our state,' Horne added. 'We anticipate that to grow significantly.'

Horne said it is too early to say how much Nevada, which relies heavily on tourists spending money at its resorts and in its casinos, will see in the way of revenue from its initiative, which relies on compacts with other states.

'We recognize that online gaming worldwide has generated in excess of $5 billion,' Horne said. 'Going forward we anticipate being competitive in this area.'

Nevada's legislation comes as New Jersey - home to Atlantic City - considers a similar move to legalize online gambling. Republican Governor Chris Christie rejected a measure earlier this month that would have allowed Internet gambling, but has said he would consider approving such a law if it was framed properly.

A RISING TIDE

Many industry players hope that a tide of such proposed legislation will sweep through states across the country, opening a massive new online market.

The bills follow a 2011 declaration by the U.S. Justice Department that only online betting on sporting contests broke federal law. That opened the door for states to legalize some forms of online gambling.

Although widespread legalization appears years away at the minimum, obtaining a license in Nevada would be a meaningful start for the nationwide aspirations of entrants such as Zynga, especially if they can offer games to those in other states.

Zynga, which runs one of the world's largest online communities of poker players, is hoping that a lucrative real-money market could make up for a steep slide in revenue from games like 'FarmVille' that are losing players but still generate the bulk of its sales.

The Nevada signing came after a joint Judiciary committee hearing on Thursday morning and approval by the legislature in the afternoon.

(Reporting by Ian Simpson in Washington, D.C. and Jim Christie in San Francisco; Editing by Joseph Menn, Paul Thomasch and Phil Berlowitz)

Hackers circulate tainted version of China cyber security report

BOSTON (Reuters) - Unknown hackers are trying to infect computers by capitalizing on strong interest in a recent report by a security firm that accuses the Chinese military of supporting widespread cyber attacks on U.S. companies.

Tainted digital versions of the report from cyber forensics firm Mandiant infect PCs with computer viruses that allow hackers to gain remote control of computers after users attempt to read those documents, according to security researchers.

Anti-virus software maker Symantec Corp said on its blog that some of those tainted documents were attached to Japanese-language emails purporting to be from someone recommending the report.

Security engineer Brandon Dixon said on his blog that he had identified a similar document on the Internet, which appeared to have originated in India.

'It was only a matter of time,' Mandiant said on its blog, adding that its own network had not been compromised. 'Reports downloaded, previously and currently from our website, do not contain exploits.'

The report, which is available from Mandiant at http://intelreport.mandiant.com/ charges that a secretive Chinese military unit is behind a series of hacking attacks. It prompted a strong denial from Beijing and accusations that China was in fact the victim of U.S. hacking.

(Reporting By Jim Finkle; editing by Andrew Hay)

EU sees Google competition deal after August

PARIS (Reuters) - EU regulators hope to resolve a two-year investigation into U.S. internet company Google in the latter half of the year, the EU's antitrust chief said on Friday, although a rival expressed skepticism about the effectiveness of any solution.

The European Commission - the EU's executive arm - has been examining proposals put forward by Google to resolve complaints from more than a dozen companies, including Microsoft, that Google was using its market dominance to block competitors.

'We can reach an agreement after the summer break. We can envisage this as a possible deadline,' EU Competition Commissioner Joaquin Almunia told a Concurrences Journal conference.

The Commission is closed for its summer break for most of August.

Almunia said there would only be a decision 'if everything was okay.' Neither Google nor the EU antitrust authority have detailed what concessions the U.S. group has offered. If the EU authority accepts the offer, it would mean no fine for Google.

People familiar with the matter have previously told Reuters that Google offered to label its own services in search results to differentiate them from rival services, and also to impose fewer restrictions on advertisers.

The Commission is expected to seek feedback from Google rivals and other third parties once it completes its examination of the concessions.

However, British price comparison site and Google complainant Foundem had doubts about the efficacy of any proposals from the U.S. company.

'We will withhold judgment on Google's proposals until we have seen them, but everything we have learned about Google makes us sceptical that it would volunteer truly effective remedies until it has been formally charged with infringement,' said Foundem Chief Executive Shivaun Raff.

The U.S. Federal Trade Commission last month ended its own investigation without any significant action, handing Google a major victory.

EU regulators have said Google may have favored its own search services over those of rivals, copied travel and restaurant reviews from competing sites without permission, and placed restrictions on advertisers and advertising.

(Editing by Dan Lalor and Mark Potter)

Nokia to fight rivals with cheaper models: sources

COPENHAGEN (Reuters) - Finnish mobile phone maker Nokia is set to launch cheaper handset models in an attempt to fend off growing competition from Chinese rivals in the low-end market, company sources said on Friday.

The new models, due to be unveiled at the Mobile World Congress industry convention in Barcelona next week, show Nokia is expanding its focus after concentrating in the past two years on catching up with Apple and Samsung in more expensive smartphones.

The sources said Nokia would introduce cut-price basic phones aimed at competing with the likes of Huawei and ZTE, as well as a new, lower-price model of its Lumia smartphones running on Windows Phone 8 software.

Details such as exact pricing were not available, and a company spokesman declined to comment.

Nokia, once the undisputed leader in the mobile phone industry, has struggled with growing competition in both smartphones and lower-end handsets.

Its Lumia smartphone range was widely been seen as a make-or-break product line for Nokia due to its high margins. Its success is seen determining whether Chief Executive Stephen Elop made the right decision two years ago in switching to Microsoft Windows software from its own Symbian system.

Most Lumia phones cost over $200, and the top-of-the-range Lumia 920 can cost over $600 without a carrier contract in the United States and some European markets. By contrast, the average selling price of Nokia's mobile phones was 31 euros in 2012, down from 35 euros a year earlier.

But analysts estimate Nokia's market share in the smartphone business is still only around 5 percent, and that it needs to protect its position in basic phones if it wants to survive.

Nokia's net sales of mobile phones fell 21 percent in 2012 to 9.44 billion euros, while sales of higher-end 'smart devices' slumped 50 percent to 5.45 billion.

The company sold 4.4 million Lumia devices in the fourth quarter, including the Lumia 820 and 920 which were launched in November. Many analysts say it needs to sell more than double that amount per quarter to convince investors that its smartphone strategy is working.

(Reporting by Ritsuko Ando; Editing by Leila Abboud and Helen Massy-Beresford)

Thursday, February 21, 2013

Facebook blocks access to NBC.com after reports site is infected

BOSTON (Reuters) - Facebook Inc has blocked users from accessing the NBC.com website following reports that the site is infected with a computer virus.

Facebook users were told 'This link has been reported as abusive' on Thursday when they attempted to access the NBC.com website.

Several security bloggers warned on Thursday that the site was infected with malicious software, advising computer users to avoid the site.

Officials with NBC could not immediately be reached for comment.

(This story is corrected with changes in paragraph 3 to Thursday from Tuesday)

(Reporting By Jim Finkle and Jennifer Saba; Editing by Gary Hill)

Sony seeks head start over Microsoft with new PlayStation

NEW YORK (Reuters) - Sony Corp said it will launch its next-generation PlayStation this year, hoping its first video game console in seven years will give it a much-needed head start over the next version of Microsoft's Xbox and help revive its stumbling electronics business.

The new console will have a revamped interface, let users stream and play video games hosted on servers, and allow users to play while downloading titles as well as share videos with friends. Its new controller, dubbed DualShock 4, will have a touchpad and a camera that can sense the depth of the environment in front of it.

Sony, which only displayed the controller but not the console, said on Wednesday the PlayStation 4 would be available for the year-end holiday season and flagged games from the likes of Ubisoft Entertainment SA and Activision Blizzard Inc, whose top executives also attended the glitzy launch event.

It did not disclose pricing or an exact launch date.

Sony's announcement comes amid industry speculation that Microsoft Corp is set to unveil the successor to its Xbox 360 later this summer. The current Xbox 360 beats the seven-year-old PlayStation 3's online network with features such as voice commands on interactive gaming and better connectivity to smartphones and tablets.

But all video game console makers are grappling with the onslaught of mobile devices into their turf.

Tablets and smartphones built by rivals such as Apple Inc and Samsung Electronics Co Ltd already account for around 10 percent of the $80 billion gaming market. Those mobile devices, analysts predict, will within a few years be as powerful as the current slew of game-only consoles.

'It looks good and had a lot of great games but the industry is different now,' Billy Pidgeon, an analyst at Inside Network Research, said of the new PlayStation.

'It'll be a slow burn and not heavy uptake right away.'

MIGRATION TO MOBILE

Console makers will also have to tackle flagging video game hardware and software sales, which research firm NPD group says have dropped consistently every month over the last year as users migrate to free game content on mobile devices.

PlayStation 4 will have an app on Android and Apple mobile devices that connects to console games and can act as a second screen, Jack Tretton, President and CEO of Sony Computer Entertainment of America, said in an interview.

'Playstation 4 ... really connects every device in the office and the smartphone and the tablet out there in the world,' Tretton said.

The console, which has been in development for the last five years, will have 8 GB of memory and will instantly stream game content from the console to Sony's handheld PlayStation Vita through a feature called 'Remote Play,' the company said.

'What Sony is banking on is the ease of the use of this system,' Greg Miller, PlayStation executive editor at video game site IGN.com, said.

After six years, Sony PlayStation sales are just shy of Xbox's 67 million installed base and well behind the 100 million Wii consoles sold by Nintendo Co Ltd, according to analysts.

Tretton said it would be a big undertaking to manufacture and distribute the console in Sony's four major markets by the end of the year, adding that it would be a 'phased rollout' that starts before the end of the year.

Sterne Agee analyst Arvind Bhatia predicted Sony would probably get a couple of million units of the PlayStation 4 out by the 2013 holiday season and 7 million or 8 million out a year later.

Sony also announced a strategic partnership with video game publisher Activision Blizzard to take its Diablo III game to the PlayStation 4 and PlayStation 3 consoles.

Activision's upcoming sci-fi shooter game 'Destiny' in development by its Bungie Studio will also be available on PlayStation consoles.

(Editing by Gary Hill, Bernard Orr and Edwina Gibbs)

Wednesday, February 20, 2013

Sony unveils new PlayStation 4 console

NEW YORK (Reuters) - Sony Corp took the wraps off its next-generation video game console called 'PlayStation 4' on Wednesday that will allow users to stream and play video games hosted on servers.

The company revealed the new console, which will succeed the seven-year-old PlayStation 3, in New York.

The controller dubbed 'DualShock 4' will have a touch pad, Mark Cerny, lead system architect on PlayStation 4, said.

Sony purchased U.S. cloud-based gaming company Gaikai for $380 million in July. Using that technology, the new console will offer a cloud-gaming service, the company said.

The 8GB PlayStation 4 can also instantly stream game content from the console to Sony's handheld PlayStation Vita through a feature called 'Remote Play,' the company said.

Sony has also revamped the user interface on the new console that keeps tabs on user preferences and added social networking features.

(Reporting By Liana Baker; Editing by Gary Hill, Bernard Orr)

Twitter begins integrating advertising software

SAN FRANCISCO (Reuters) - Twitter Inc said on Wednesday it is opening up its platform to third-party advertising management software, taking another step to establish its ad-based business model ahead of an initial public offering.

The ads application programming interface, or API, would allow advertisers to connect their existing ad management software to their Twitter account to automate ads on the micro-messaging platform.

Twitter said that it would begin by integrating with ad software by Adobe Systems Inc, Salesforce Inc, Hootsuite, SHIFT and TBG Global.

'With the Ads API, marketers now have more tools in their arsenal to help them deliver the right message, to the right audience, on the desktop and on mobile devices - all at scale,' Twitter product manager April Underwood wrote in a blog post.

Under pressure to show growing revenues, Twitter in recent years has ramped up its ad-serving capabilities while building a sales staff to woo corporate marketers. The firm said last year it would allow marketers to target Twitter users based on a profile of their perceived interests and by location.

Twitter makes money every time a user clicks or retweets a 'promoted' message paid for by an advertiser. The new API would allow great automation for advertisers, who previously had to manually write every promoted tweet.

In 2013, Twitter's ad revenues are expected to grow nearly 90 percent to $545 million, according to eMarketer which noted that Facebook Inc experienced similarly rapid growth after opening its API to advertisers in 2011.

(Reporting By Gerry Shih; Editing by Bernard Orr)

Sony set to make pre-emptive strike on Microsoft with PS4

TOKYO (Reuters) - Sony Corp is expected to showcase a new PlayStation console on Wednesday in a pre-emptive strike against Microsoft Corp's bid to make its Xbox the world's leading hub for household entertainment.

The rare PlayStation event in New York comes amid industry speculation that Microsoft is set to unveil the successor to its Xbox 360, which beats the seven-year-old PlayStation 3's online network with features such as voice commands on interactive gaming and superior connectivity to smartphones and tablets.

'Their focus is on establishing a beachhead for the next generation of consoles, and that's what February 20 is all about,' said P.J. McNealy, CEO and founder of Digital World Research. 'The reality is they have been playing catch-up.'

Pushing ahead of Microsoft's Xbox and Nintendo Co Ltd's new Wii U could help Sony revive an electronics business hurt by a dearth of hit gadgets, a collapse in TV sales and the convergence of consumer interest around tablets and smartphones built by rivals Apple Inc and Samsung Electronics Co Ltd.

Tablets and smartphones already account for around 10 percent of the $80 billion gaming market. Those mobile devices, analysts predict, will within a few years be as powerful as the current slew of game-only consoles.

After six years, Sony PlayStation sales are just shy of Xbox's 67 million installed base and well behind the 100-million selling Wii, analysts said.

A lackluster launch in November of the Wii successor, the Wii U, gives Sony a chance to focus on toppling Microsoft as all three battle the encroachment of casual gaming on tablets and smartphones. Nintendo cut its sales target to 4 million machines from 5.5 million for the year ending March 31.

STREAMING

Microsoft's answer to the casual gaming threat has been software that gives users extra content and allows them to surf the Internet from their mobile devices. The Xbox already streams Netflix and ESPN and links to tablets and smartphones using Windows or Apple's iOS and Google Inc's Android. Sony's PS3 online network has lagged.

'For Sony, they have to come out and make this PlayStation event the definitive statement of why gamers need to adopt the PlayStation 4 or PlayStation Orbis or whatever they end up calling it,' said Greg Miller, PlayStation executive editor at video game site IGN.com.

Sony's purchase in July of U.S. cloud-based gaming company Gaikai for $380 million hints that the Japanese company will pursue a similar streaming strategy to Microsoft. Sony, industry watchers say, may also offer an expanded range of free games to counter the threat from casual gaming.

Sony, which under its CEO Kazuo Hirai is focusing on gaming, mobile devices and cameras, needs a hit product. But by betting on a PS3 successor, Hirai, whose most profitable business is life insurance, risks deepening consumer electronic losses as he will have to sell consoles at below the manufacturing cost to gain market traction.

That choice is made harder because the other two pillars of Hirai's new Sony - cameras and mobile - are losing money.

Sony expects to post a $1.4 billion operating profit in the current fiscal year. Yet, much of that rebound is gains from offloading real estate, including $1.1 billion for its New York headquarters.

The PlayStation event in New York starts at 2300 GMT (1800 EST).

($1 = 93.5200 Japanese yen)

(Additional reporting by Reiji Murai; Editing by Ryan Woo)

Tuesday, February 19, 2013

HTC launches smartphone with revamped software to take on Samsung

LONDON (Reuters) - Taiwan's HTC Corp has unveiled the new smartphone that it hopes will set it apart from the crowd of Google Android devices on the market and help it to make up ground lost to Samsung.

The HTC One is powered by Google's software, but the company has distinguished it from rivals by using new software to replace icons on the home screen with a personalized stream of news articles, social networking updates, photos and video.

Chief executive Peter Chou told reporters in London that the BlinkFeed feature would reinvigorate the smartphone experience.

'BlinkFeed transforms your home screen into a live feed of information that matters to you,' he said.

HTC was an early, and successful, maker of smartphones based on Android, but it has been eclipsed by the increasing dominance of Samsung in the Android market.

Android is widening its lead in smartphone operating systems, with devices running the software capturing nearly 70 percent of the market in the fourth quarter, Gartner said last week.

Apple is in second place with 21 percent, while Blackberry and Windows Phone, which Nokia is pinning its hopes on, trailed with 3.5 percent and 3 percent respectively.

HTC, however, has failed to capitalise on Android's dominance. Its share of mobile phone sales fell to 1.8 percent of the market last year, down from 2.4 percent in 2011, according to Gartner, and reported a 91 percent plunge in fourth-quarter net profit last month.

The company, which started as a contract manufacturer, has been outgunned in the marketing stakes by both Samsung, which Gartner said made more than 42 percent of Android smartphones in the fourth quarter, and Apple.

HTC launched its new device, which features a 4.7 inch screen and quad-core processor, days before the mobile phone industry's biggest gathering in Barcelona.

Analyst Julian Jest, of Informa Telecoms and Media, said that the new smartphone would help HTC to differentiate its brand from the typical Android offering.

'The introduction of HTC One has come at an ideal time - iPhone sales are slowing down and advanced users are now desperately looking for more innovative devices to satisfy their appetite to explore the new technology horizons,' he said.

HTC said the device would be available in more than 80 countries from March.

(Reporting by Paul Sandle; Editing by David Goodman)

Exclusive: Apple, Macs hit by hackers who targeted Facebook

BOSTON/SAN FRANCISCO (Reuters) - Apple Inc was recently attacked by hackers who infected the Macintosh computers of some employees, the company said on Tuesday in an unprecedented disclosure that described the widest known cyber attacks against Apple-made computers to date.

Unknown hackers infected the computers of some Apple workers when they visited a website for software developers that had been infected with malicious software. The malware had been designed to attack Mac computers, the company said in a statement provided to Reuters.

The same software, which infected Macs by exploiting a flaw in a version of Oracle Corp's Java software used as a plug-in on Web browsers, was used to launch attacks against Facebook, which the social network disclosed on Friday.

The malware was also employed in attacks against Mac computers used by 'other companies,' Apple said, without elaborating on the scale of the assault.

But a person briefed on the investigation into the attacks said that hundreds of companies, including defense contractors, had been infected with the same malicious software, or malware.

The attacks mark the highest-profile cyber attacks to date on businesses running Mac computers. Hackers have traditionally focused on attacking machines running the Windows operating system, though they have gradually turned their attention to Apple products over the past couple of years as the company gained market share over Microsoft Corp.

'This is the first really big attack on Macs,' said the source, who declined to be identified because the person was not authorized to discuss the matter publicly. 'Apple has more on its hands than the attack on itself.'

Charlie Miller, a prominent expert on Apple security who is co-author of the Mac Hacker's Handbook, said the attacks show that criminal hackers are investing more time studying the Mac OS X operating system so they can attack Apple computers.

For example, he noted, hackers recently figured out a fairly sophisticated way to attack Macs by exploiting a flaw in Adobe Systems Inc's Flash software.

'The only thing that was making it safe before is that nobody bothered to attack it. That goes away if somebody bothers to attack it,' Miller said.

NATIONAL SECURITY

Cyber-security attacks have been on the rise. In last week's State of the Union address, U.S. President Barack Obama issued an executive order seeking better protection of the country's critical infrastructure from cyber attacks.

Over the weekend, cyber-security specialists Mandiant reported that a secretive Chinese military unit was believed to have orchestrated a series of attacks on U.S. companies, which Beijing has strongly denied.

White House spokesman Jay Carney told reporters on Tuesday that the Obama administration has repeatedly taken up its concerns about Chinese cyber-theft with Beijing, including the country's military. There was no indication as to whether the group described by Mandiant was involved in the attacks described by Apple and Facebook.

An Apple spokesman declined to specify how many companies had been breached in the campaign targeting Macs, saying he could not elaborate further on the statement it provided.

'Apple has identified malware which infected a limited number of Mac systems through a vulnerability in the Java plug-in for browsers. The malware was employed in an attack against Apple and other companies, and was spread through a website for software developers,' the statement said.

'We identified a small number of systems within Apple that were infected and isolated them from our network. There is no evidence that any data left Apple,' it continued.

The statement said Apple was working closely with law enforcement to find the culprits, but the spokesman would not elaborate. The Federal Bureau of Investigation declined to comment.

Apple said it plans to release a piece of software on Tuesday, which it said customers can use to identify and repair Macs infected with the malware used in the attacks.

(Editing by Andre Grenon, Edwin Chan and Richard Chang)

Monday, February 18, 2013

Burger King takes down Twitter account after hack attack

NEW YORK (Reuters) - Hackers breached the Twitter account of fast-food chain Burger King, posting the online equivalent of graffiti and sometimes making little sense.

Burger King Worldwide Inc suspended its Twitter account about an hour after it learned of the attack at 12:24 p.m. EST on Monday, company spokesman Bryson Thornton said in an email.

'It has come to our attention that the Twitter account of the BURGER KING® brand has been hacked,' the company said in a statement. 'We have worked directly with administrators to suspend the account until we are able to re-establish our legitimate site and authentic postings.'

Several tweets carried the logo of Burger King's larger rival McDonald's, but spelled the latter company's name incorrectly. Others sought to tarnish Burger King, the third-largest U.S. hamburger chain, and its employees.

'Just got sold to McDonalds,' one tweet said, adding 'FREDOM IS FAILURE'.

(Reporting by Ilaina Jonas; Editing by Dale Hudson)

Thursday, February 14, 2013

Apple's search technology lawsuit against Samsung may go on hold

SAN JOSE, California (Reuters) - A U.S. judge on Thursday asked Apple Inc and Samsung Electronics Co Ltd whether an Apple patent lawsuit over search technology should be put on hold for several months until after an appeals court resolves a separate lawsuit between the two companies.

Apple won a $1.05 billion verdict last year against Samsung in a California trial court, but U.S. District Judge Lucy Koh rejected Apple's request for a permanent sales ban against several Samsung phones. Apple has appealed and a ruling is not expected until September at the earliest.

Apple also accused Samsung in a second lawsuit of violating a separate batch of patents, including the rights to search technology that is part of the iPhone Siri voice feature. That case is scheduled for trial in March 2014.

At a hearing on Thursday in a San Jose, California, federal court, Koh told attorneys for both companies that a potential resolution of the Apple versus Samsung legal war would cover both lawsuits. Koh asked if the second case should be suspended until after the appeals court ruled on the first.

'I just don't know if we really need two cases on this,' Koh said.

Apple attorney William Lee said the cases should proceed in parallel as they involve different patents. However, Samsung attorney Victoria Maroulis said there was substantial 'overlap' between the two proceedings.

Koh ordered attorneys for both sides to discuss the idea and report back on their positions by March 7.

'I assume there have been no further settlement discussions,' Koh asked, 'or at least none that have gone anywhere?'

'The answer to the last question is, that's correct,' Lee said.

The case in U.S. District Court, Northern District of California is Apple Inc. vs Samsung Electronics Co Ltd et al, 12-630.

(Reporting By Dan Levine)

Big hedge funds fueled fourth-quarter dive in Apple shares

BOSTON (Reuters) - Some of the biggest hedge funds that helped make Apple Inc a stock market darling lost faith and dumped their stakes in the fourth quarter, fueling the massive drop in the iPhone maker's share price.

Noted stock pickers including Leon Cooperman, Eric Mindich and Thomas Steyer unloaded billions of dollars of Apple shares between September 30 and December 31, according to disclosure documents filed on Thursday.

Shares of Apple rose to an all-time high of $705.07 on September 21 but ended 2012 down more than 24 percent from that peak as investors worried about increasing competition and declining profit margins.

The shares also may have dropped because their price rose too much, too fast.

'The stock just went up so much in early 2012 and then was coming back to earth,' said Justin Walters, co-founder of Wall Street research firm Bespoke Investment Group. 'Three months from now, we'll be seeing a lot of the people who sold starting to pick it up again.'

The fourth-quarter sellers avoided even deeper losses. Apple's shares have lost 12 percent so far this year. The shares lost 42 cents, or 0.1 percent, to close at $466.59 on the Nasdaq on Thursday.

Cooperman's Omega Advisors fund dumped its entire stake of more than 266,000 shares during the fourth quarter, according to its required quarterly disclosure form filed with the Securities and Exchange Commission.

Mindich, named the youngest partner ever at Goldman Sachs before starting his Eton Park Capital Management fund in 2004, got out of Apple entirely in the fourth quarter after making big sales in the third quarter as well. Eton owned 600,000 shares at the beginning of 2012.

Farallon Capital, the hedge fund founded by Steyer, sold 137,000 shares. Steyer, who once worked on the Goldman Sachs risk arbitrage desk under Robert Rubin, stepped down at the end of the year from the firm, which he founded in 1986. Rubin served as U.S. Treasury secretary from 1995 to 1999.

Jana Partners, an activist fund run by Barry Rosenstein, also unloaded its entire Apple stake of more than 143,000 shares. Other notable sellers included Third Point LLC, which had owned 710,000 shares, Viking Global Investors, which dumped 1.1 million shares and Lone Pine Capital, which sold over 800,000 shares.

A much smaller line up of funds bought shares amid the stock's crash. David Tepper's Appaloosa Management nearly doubled its stake during the quarter to about 913,000 shares. George Soros more than doubled his stake to about 184,000 shares. And David Einhorn, who last week sued Apple in a bid for higher dividends, added 20 percent to his holdings to end the quarter with 1.3 million shares.

PROFITABLE TRADES

Despite the plunge in Apple's stock price, most of the managers likely exited their positions with substantial profits because they bought years earlier.

Rosenstein and Cooperman, for example, both started gathering their stakes in the middle of 2010, when Apple shares traded below $300.

At the time, the company's iPhone 4 was beset by alleged faulty reception, a problem that became known as 'antennagate.' Apple's then-chief executive, the late Steve Jobs, famously dismissed the issue, saying 'we don't think we have a problem.' But Apple offered customers a free bumper case that was supposed to minimize any issues.

Customers did not seem to care, snapping up millions of iPhones and sending Apple's share price up almost 50 percent over the next year.

Apple came under further scrutiny last week from Greenlight's Einhorn. Einhorn filed a lawsuit to block changes in Apple's policy for issuing preferred stock. Instead, Apple should issue a new class of preferred stock to share more of its $137 billion cash hoard with shareholders, Einhorn said.

Apple Chief Executive Tim Cook dismissed the moves as a 'silly sideshow' on Tuesday.

SOME TRIMMED

Not all well-known hedge fund fans of Apple cut ties in the fourth quarter. Some only trimmed their holdings.

Philippe Laffont, who worked under famed hedge fund manager Julian Robertson before striking out on his own at Coatue Management, sold about 18 percent of his Apple shares. Coatue ended the year with a still sizable 643,000 shares.

Chase Coleman, another manager who worked for Robertson, reduced the Apple stake at his Tiger Global Management fund by 19 percent to just over 1 million shares.

Robertson's own Tiger Management LLC fund trimmed its Apple stake by 28 percent to about 42,000 shares.

Large hedge funds are required to disclose their U.S. stock holdings within 45 days after the end of each quarter.

But the filings may not give a complete picture of each fund's moves, since only U.S.-listed shares and options must be revealed. Bonds, foreign shares and derivatives are not included, and short positions, or bets that a stock will fall in price, are not listed.

(Reporting by Aaron Pressman; Additional reporting by Katya Wachtel, Svea Herbst, Sam Forgione and Jennifer Ablan in New York; Editing by Steve Orlofsky and David Gregorio)