Weekly Digest
Weekly Digest Issue No. 462
23-04-2009
by Deirdre McArdle
Project Liffey rejected by Eircom | Oracle soaks up Sun
DTT: Boxer takes a dive
The plan to roll out digital terrestrial television (DTT) in Ireland took an unexpected twist on Monday, when Boxer, the consortium that won all three national DTT licences last July, announced that it had pulled out of the project. The group, which includes Denis O'Brien's Communicorp and BT, blamed the economic downturn and 'challenges' in reaching a deal on transmission facilities with RTE Networks for its decision. So, with the Broadcasting Bill currently going through the Dail to allow for the management of DTT, we need a company to deliver the project, and soon, if we are to meet the European deadline of 2012 to turn off all analogue television services. The Broadcasting Commission of Ireland is resorting to Plan B: asking the second placed contract bidder -- OneVision -- if it wants to go ahead with the project. The consortium, which includes TV3, Setanta Sports and Eircom, has been given two weeks to decide if it will take up the task. Wonder if there's a Plan C?
Project Liffey rejected by Eircom
In more surprise news, Eircom was the subject of an unforeseen takeover bid on Friday, when a group of former Babcock & Brown executives made a EUR95 million cash offer for the entity that owns Eircom, Babcock & Brown Capital (BCM). The bid was made by TaemasBridge, a company led by former Babcock & Brown executive and financier Rob Topfer, who masterminded the takeover of Eircom back in 2006. The TaemasBridge proposal -- dubbed Project Liffey -- included the delisting of BCM, which is the majority owner of Eircom, restructuring Eircom's EUR3.8 billion debt and possibly introducing compulsory redundancies at the telecoms firm. Unsurprisingly, Eircom management, trade unions, politicians and the ESOT all reacted promptly to the bid, issuing statements rejecting the proposal. The general theme running through all these statements: the proposal is not in the best interests of Eircom, or of Ireland. Then on Wednesday BCM itself rejected the offer, saying it was "unacceptable in its current form". BCM chairman Kerry Roxburgh also said the approach was just one of "several" proposals before the board at present. Whether TaemasBridge comes up with another, more acceptable offer, or whether another suitor steps up to the plate, remains to be seen. Whatever happens, it certainly seems like another change of ownership at Eircom is on the cards.
Google and Yahoo post results
Two internet heavyweights posted their first-quarter results this week, and there was a marked difference in their respective fortunes. First up, Google reported revenue of USD5.51 billion for the quarter, up 6.2 percent on the year-ago period, but down 3 percent from the previous quarter. This is the first quarterly revenue decline Google has reported since it launched on the stockmarket over five years ago. Still, the internet behemoth's profit jumped 8.9 percent year-on-year to USD1.42 billion, or USD4.49 per share, thanks to restructuring and a reduction in expenses. Meanwhile, search rival Yahoo's results didn't have quite the same glow. The firm posted a 78 percent drop in first-quarter profits, which came in at USD118 million, or USD0.08 a share, down from USD537 million, or USD0.37 a share, in the year-earlier quarter. Revenue was also down for the quarter at USD1.58 billion, a drop of 13 percent from last year's USD1.81 billion. As companies scale back their marketing spend Yahoo is clearly suffering. In a bid to counter the weak advertising market, the firm is planning to cut 5 percent of its global workforce, or around 675 jobs. It looks like new head Carol Bartz also plans to cut some of Yahoo's dead weight: on Wednesday the firm announced it was to sell its 10 percent stake in Korean e-commerce site Gmarket to eBay. And let's not forget the endless Yahoo-Microsoft speculation, although Bartz is keeping schtum on that issue, for now.
The Pirate Bay to appeal 'crazy' verdict
Last Friday, a Swedish court found Peter Sunde, Fredrik Neij, Gottfrid Svartholm and Carl Lundstrom -- the founders of BitTorrent tracker site The Pirate Bay -- guilty of infringing copyright law. The court went on to sentence the four men to one year in prison and ordered them to pay USD4.5 million in damages to the plaintiffs, who included Warner Bros, Sony Music Entertainment, EMI and Columbia Pictures. The plaintiffs had sought damages of USD17.5 million; however, the court ruled that they had not proved the full extent of their losses. So what's changed since the (some might say unexpected) verdict? Well, on the face of it, not a whole lot. The Pirate Bay is still up and running, pointing users to content but not hosting it -- an action which it claims is not illegal. The defendants plan on appealing the verdict, which they've called "crazy". The foursome also have no plans to pay the USD4.5 million in damages: "We can't pay and we wouldn't pay. Even if I had the money I would rather burn everything I owned, and I wouldn't even give them the ashes," said Sunde, quoted by the BBC. Though copyright holders cheered the decision, it may well backfire; a recent report from the BI Norwegian School of Management has found that those who download music illegally are also 10 times more likely to pay for songs than those who don't.
Oracle soaks up Sun
It's been quite a dramatic week in the tech world. We were just getting ourselves together after the collapse of merger talks between Sun Microsystems and IBM, when Larry Ellison at Oracle swooped down and snapped up Sun. Sure, it was no secret that Sun was looking for another possible suitor but the swiftness of Oracle's move took many by surprise. Oracle is reportedly offering Sun USD9.50 per share in cash, a transaction value of USD7.38 billion. One of the most acquisitive of the big players in recent years, Oracle has bought a number of rivals such as PeopleSoft and Siebel Systems. In acquiring Sun, Oracle gains control over what Ellison called "the single most important software asset we have ever acquired," namely, Sun's programming technology, Java. Oracle is bullish about the acquisition, saying it expects Sun's operations will boost earnings per share by at least USD0.15 in the first full year after the deal closes while contributing more than USD1.5 billion in first-year profits. The deal is subject to closing conditions, shareholder approval and approval from US regulators, although industry commentators believe the merger will face less regulatory scrutiny than an IBM-Sun link up, as there is less of a business overlap between Oracle and Sun. All going according to plan, it looks like the deal could be finalised by the summer.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 