Weekly Digest
Weekly Digest Issue No. 483
17-09-2009
by Deirdre McArdle
Intel does the management shuffle | Motorola bets on Android
Full steam ahead with Eircom sale
And so the to-ing and fro-ing appears to have come to an end as Eircom Holdings (majority stakeholder of Eircom and formerly Babcock & Brown Capital) has accepted a bid from Singapore Technologies Telemedia (STT). The deal values the former telecoms incumbent at EUR3.94 billion, and importantly, STT will be taking on the Irish firm's EUR3.87 billion debt. The offer values Eircom at a 20.2 percent premium on its closing price on 24 June, the last closing price posted before STT made its initial offer. The employee share ownership trust (ESOT), which has a 35 percent stake in Eircom, has also given the go-ahead to the deal. It's also emerged that Eircom could be floated on the stock exchange in the next three to five years, as part of the deal. This option has apparently been included as a potential exit mechanism for the ESOT and other shareholders who might choose to retain an equity interest in the company as part of STT's takeover. Reaction to the STT deal has been mixed: Minister Eamon Ryan has welcomed the deal while Opposition parties have given a more guarded response with Fine Gael drawing attention to past takeovers, which the part said have had negative consequences. This will be the fifth change of ownership for Eircom since 1999. One thing that may bode well for the future is STT's pedigree: it holds a majority stake in international fibre-optic network company Global Crossing, giving it a communications market presence missing from past venture-capitalist owners of Eircom.
Twitter opens door to advertising
Up until this week micro-blogging site Twitter has been reluctant to adopt advertising as a potential revenue model. In fact, in May of this year co-founder Biz Stone told Reuters the site would instead focus on add-on tools and services to generate revenue, and dismissed the idea of selling ads on the site at that time, saying it would be the "least interesting" thing Twitter could do. However, this week the site made some changes to its terms of service, which have left the door open for advertising. The expanded terms allow Twitter and its partners to target ads based on Tweets, searches, and other information users provide. The new advertising clause reads: "The services may include advertisements, which may be targeted to the content or information on the services, queries made through the services, or other information. The types and extent of advertising by Twitter on the services are subject to change." The move signifies a concerted effort to bring in a consistent revenue stream for the site, which has 45 million users worldwide but has yet to make any money. For now, the firm said it has no immediate plans to introduce advertising but the amended terms are a way for Twitter to keep its options open.
Facebook hits two key milestones
Meanwhile, social networking site Facebook this week announced that it has finally become "cash flow positive", which means that it is now earning enough money to cover its operating costs. Facebook founder Mark Zuckerberg had predicted earlier this year that the site would be cash flow positive "sometime in 2010". While being cash flow positive doesn't immediately lead to profits, it is important as it means there is cash available to Facebook, which can then become less reliant on its investors. The social network, which makes its money primarily through advertising, also announced that it had signed up its 300 millionth user. This major milestone shows just how fast Facebook is growing; in April of this year it had 200 million users. Analysts have applauded the site's consistent growth, calling it "incredible". As it continues its global expansion, Facebook also officially launched Facebook Lite this week in selected markets. The service, aimed at users with slow connections, offers a trimmed down version of Faceboook that lets users write on their 'wall', post photos and videos, browse other profiles and view events. To date reaction to the site has been so positive that industry watchers believe even users with fast connections will flock to the new service. For now, Facebook Lite is available in the US and India.
Intel does the management shuffle
Chip giant Intel has reached a four-year high in its share of the processor market. According to iSuppli, Intel took an 80.6 percent share of the chip market in the last quarter. This represented an increase of 1.4 percent from the same period last year, and a gain of 1.5 percent over the previous quarter. The processor firm is still some way short of its 2005 high of 82.4 percent, the largest share Intel ever enjoyed in the market; however, the growth will no doubt be welcomed by Paul Otellini and Co. Intel also unveiled a broad management shake-up that sets up a three-horse race for position of future head honcho at Intel. Sales chief Sean Maloney is being viewed as the front-runner, while David Perlmutter, a chip design specialist, and Andy Bryant, Intel's chief administrative officer are also being touted as possible contenders for the top job. Maloney and Perlmutter have been named to lead the newly formed Intel Architecture Group, which will manage all chip development and marketing. There seems little likelihood CEO Paul Otellini will be replaced soon; however, he is 59, and Intel has a policy of mandatory retirement from active, full-time employment for all employees at age 65. Elsewhere Intel also lost two of its highly regarded senior executives in the past week: the co-head of its enterprise digital group Pat Gelsinger, who has moved to EMC, and its top lawyer, Bruce Sewell who has been snapped up by Apple. Gelsinger will run EMC's storage-products operations and some smaller software units. EMC itself also announced a management reshuffle promoting veteran executive Howard Elias to head the services division. Elias, Gelsinger and Chief Financial Officer David Goulden have been named by EMC boss Joe Tucci as possible successors for the top job. Tucci said he plans to leave the CEO spot in three years.
Motorola bets on Android
As it tries to change its flagging fortunes Motorola has unveiled its first Google Android-powered smartphone, a touch screen device designed to compete with Apple's iPhone. The 3G and Wi-Fi enabled handset, called the Motorola Cliq in the US and the Motorola Dext elsewhere, is the first of a range of new devices aimed at reviving the struggling US mobile maker's business. The Cliq was launched with T-Mobile, however, Motorola is apparently in talks with other carriers to see if they too will take on the new device. Motorola co-CEO Sanjay Jha made the comments at a financial analyst conference on Monday where he reportedly said he was hopeful other carriers would bite. Details about Cliq are few and far between, although industry commentators have mentioned that the device stands out from other Android-powered smartphones as it has Motorola's MotoBlur software embedded into the operating system. MotoBlur aggregates photos, contacts, news streams, and other information from various online sources like Twitter, Outlook, Gmail, Facebook, and MySpace. A release date has not been given, though there are suggestions that it could be sometime in mid-October. Motorola has struggled to maintain its market share in recent years and has failed to produce a cutting edge device since the once-iconic Razr hit shelves. It's pinning all its hopes on Android, and with Google's mobile OS gaining in popularity, you never know, the gamble might just pay off for Motorola.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 