Weekly Digest
Weekly Digest Issue No. 461
16-04-2009
by Deirdre McArdle
eBay hangs up on Skype | Irish firms score big in US
Job cuts darken the mood
Just a week on from the tough emergency Budget, workers at Xilinx's Dublin base were dealt another blow. The microchip manufacturer, which employs 400 people at a facility in Citywest in Dublin, announced on Wednesday that it plans to cut 130 jobs, or over 25 percent of its Dublin workforce. The bulk of the job losses will be in the areas of high-end manufacturing and test engineering, with a number of administration and support jobs also being cut. Some of the jobs will be moved to Xilinx's Singapore facilities, while a number of them will be outsourced. Looking at this with a positive spin (someone has to), the firm has said that research and development, as well as engineering functions, will remain in Dublin. The job cuts form part of Xilinx's global restructuring plan, which entails cutting 6 percent of its workforce worldwide. Just last year, Xilinx created 20 new jobs in its customer engineering division in Dublin. The microchip firm, which makes programmable microchips for use in electronic systems, such as TV set-top boxes and satellites, has been based in Ireland since 1995. Separately, UK IT services and outcourcing firm Agilisys announced it was to cut 71 jobs at its IT contact centre in Shannon, Co Clare, when it closes the facility on 12 June. Work that was carried out in Shannon will be transferred to the firm's facilities in the UK. The firm said the decision was due to the current economic downturn and the strength of the euro against the pound.
Irish firms score big in US
So successful was a mid-March trade mission to the east coast of the US, where Irish firms netted contracts worth over EUR100 million, that the Government decided a trip to the west coast was now in order. Tanaiste Mary Coughlan is leading the week-long trade mission, which is focusing primarily on the ICT and financial services sectors. Initial reports have been positive, with four significant deals being announced just a day into the visit. Tidal energy company OpenHydro secured a contract to provide public utilities to Washington State. Though a value of the deal hasn't been released reports have suggested its worth a multi-million-euro sum to the Irish firm. Meanwhile, three other tech firms signed lucrative deals valued at around EUR3 million. Documatics, a Cork-based provider of advanced document-management software technology, signed a deal with Boston-based GE Sensing. SensorPro, a Limerick-based provider of web-based online survey tools, announced a partnership with Redwood City-based StrongMail Systems, and Cork-based Cubic Telecom has partnered with US start-up Qik. So far, so good. The trade mission continues until the end of this week so there could well be a few more deals in the pipeline.
eBay hangs up on Skype
Online marketplace eBay has decided (some might say finally decided) to offload its internet telephony service Skype, acknowledging that there is no real synergy between Skype and the rest of the company. The move follows the firm's unloading of recommendation site StumbleUpon this week, for the same reason: a lack of synergy between the site and eBay's core business. The e-commerce giant on Tuesday revealed plans to spin off Skype in a initial public offering (IPO) in early 2010. eBay bought Skype for USD2.6 billion in 2005, its largest ever acquisition. At that time analysts and industry observers raised their collective eyebrows at then-CEO Meg Whitman's assertion that eBay buyers and sellers would all start using Skype for web calls. For now, commentators are torn in their predictions on a value for Skype; some think eBay will recoup more than the original price tag, while others think the auction site will be lucky to pick up USD2 billion in the IPO. In any case, CEO John Donahoe believes operating Skype as a stand-alone publicly traded company "is the best path for maximising its potential". Certainly, there's potential for Skype. Most recently it released an application for the popular iPhone and has plans to roll out a similar app for BlackBerry handsets. Initial reviews have been positive for Skype on the iPhone, and there are plans afoot to launch Skype in the corporate market in the near future. Skype currently has around 405 million users, up significantly from 53 million when eBay first bought it. However, the firm continues to rely primarily on free user-to-user calls. Revenue in the fourth quarter of 2008 was USD145 million.
Intel results offer faint hope
Chip giant Intel released its first quarter results this week and offered the slightest glimmer of hope that the market could be on the verge of improving. In a conference call, Intel head Paul Otellini remarked that "a bottom in the PC market has been reached. I believe the worst is now behind us from an inventory correction and demand level adjustment perspective". The market bellwether posted net income of USD647 million, or USD0.12 a share, down 55 percent from the USD1.4 billion, or USD0.25 a share in the year earlier quarter. On a positive note, the profit figure did exceed Intel's own expectations, which were announced in mid-January. Revenue was USD7.1 billion, down 26 percent from the USD9.7 billion reported a year earlier. Despite exceeding expectations and indicating that the PC market had bottomed out, Intel's shares slid 5 percent following its admission that there was still too much market and economic turbulence to allow it to provide a revenue projection for the second quarter.
Apple and Microsoft in patent trouble
Both Apple and Microsoft came under pressure this week on the thorny issue of patents. Apple was taken to task by Taiwan chip firm Elan Microelectronics, which alleges the iPhone maker infringed on two of Elan's multi-touch patents in the production of the MacBook, iPhone and iPod Touch products. Elan claims to own the rights to the touch-screen technology that allows Apple's products to detect the position of fingers on a screen or touchpad. The Taiwanese firm said it has filed the suit "after repeated licensing negotiations over a significant period of time that failed to result in any agreement" between the pair. Elan has some form in this area; in 2006 it won a preliminary court injunction against US firm Synaptics, which was judged to have infringed on its multi-touch patent '352', one of the patents it now claims Apple has infringed on. (Last year, that lawsuit and a countersuit by Synaptics were dismissed when the pair reached a cross-licensing agreement.) So far, Apple has declined to comment on the suit, but this is one to keep an eye on. Meanwhile, Microsoft took a body blow this week when a Rhode Island federal court ordered it to pay a whopping USD388 million in damages for infringing a patent held by anti-piracy software maker Uniloc. The jury found that Microsoft infringed Uniloc's patent on software that generates unique identities for licensed users and prevents unauthorised use or copying of software. The USD388 million is one of the largest fines ever imposed in a patent law dispute. Microsoft said it plans to appeal the decision.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 