Microsoft (MSFT) Patent Battle Has Companies, Industries Choosing Sides

The battle by Microsoft (NASDAQ:MSFT) to make it easier to challenge whether or not a patent is valid or not is heading to the Supreme Court, as various companies and industries line up on both sides of the issue in support of or against the case.

Backing Microsoft are many in the tech sector, including Google Inc. (NASDAQ:GOOG), Verizon Communications Inc. (NYSE:VZ), Apple Inc. (NASDAQ:AAPL), Cisco Systems Inc. (NASDAQ:CSCO), eBay Inc. (NASDAQ:EBAY), Facebook Inc. and Intel Corp. (NASDAQ:INTC), while lining up against them are 3M Co. (NYSE:MMM), Johnson & Johnson (NYSE:JNJ) and General Electric Co. (NYSE:GE), along with branded drug companies like Pfizer (NYSE:PFE) and Merck (NYSE:MRK).

Companies supporting Microsoft said in a brief, "Those allegations are often based on invalid patents, but they are nonetheless costly and risky to defend, in part because of the clear-and-convincing standard."

Companies opposing Microsoft noted, "Inventors and society would suffer from such a rule, which would simultaneously reduce the rewards of innovation by weakening property rights while increasing the costs of innovation."

Banks and other financial companies also support Microsoft, as they are often recipients of lawsuits in regard to patents as well.

Cisco (CSCO) Loses Chrapaty to Zynga

Following on the heels of hiring Neil Roseman from Amazon.com (NASDAQ:AMZN) as its vice president of engineering, Zynga has now tapped Cisco (NASDAQ:CSCO) in hiring Debra Chrapaty to be its chief information officer.

Chrapaty formerly worked at Microsoft (NASDAQ:MSFT) and Etrade (NASDAQ:ETFC) before landing at Cisco in 2009. She was senior vice president of Cisco's collaboration software group before being hired away.

Cadir Lee, CTO of Zynga, said Chrapaty's "experience with both rapidly growing companies as well as running some of the largest networks in the world will prove invaluable as Zynga continues to grow and develop games that delight our hundreds of millions of players."

For the uninitiated, Zynga is the company that operates the FarmVille and CityVille games on Facebook.

Chrapate will help oversee the technologies that empower the company to serve the gigantic audience that play Zynga games, estimated to be at over 270 million.

Cisco closed Thursday at $17.91, falling $0.16, or 0.89 percent.

Facebook Challenging Google (GOOG) (YHOO) (MSFT) (AOL) for Mobile Advertising Dollars?

It appears Facebook Mobile is ramping up its growth with the goal of competing for advertising dollars in the mobile space, challenging Google (NASDAQ:GOOG), Yahoo (NASDAQ:YHOO), Microsoft (NASDAQ:MSFT) and AOL (NYSE:AOL) in the segment.

As of March 2011, Facebook Mobile has about 250 million users, up from 100 million in February 2010.

The battle is in search, text and display advertising. If Facebook is able to continue to expand at this type of rate, it could significantly boost the value of the company.

Facebook offers both cost per click (CPC), for which advertisers pay only when users actually click on the advertisement, and cost per thousand impressions (CPM), for which advertisers pay based on the number of times these advertisements are displayed on user pages.

Text and display advertising probably accounts for over 60 percent of the value of Facebook at this time.

Google (GOOG) Adds Social Button to Search Results

Google (NASDAQ:GOOG) announced on its blog that it's about to add what they're calling its "+1" button, which will be used in a similar fashion as the "Like" button Facebook employs with its users.

The purpose of the button is for users to be able to share search links they found helpful with their friends.

When users perform a Google search, results in the near future will have the +1 button appear along side the corresponding links, which they can then recommend to their friends in Gmail chat and "My Contacts" group.

The button will also work with advertisements on the search results page.

Google closed Wednesday at $581.84, up $0.11, or 0.02 percent.

Google (GOOG), FTC Reach Agreement over Buzz

In an agreement with the FTC, Google (NASDAQ:GOOG) agreed to allow its privacy procedures to undergo an independent review every two years, along with a requirement for users to opt-in before privacy changes are put into place.

In a blog post today, Google (GOOG) outlined an agreement with the FTC over privacy concerns connected to the release of Google Buzz in February of 2010. Specifically, if users took no action to change defaults, Google disclosed on users' Google profile a list of Gmail contacts. Those contacts were chosen by Google if the user had frequently or recently emailed or chatted with them (among other factors).

Google was relatively quick with a fix (which was to make Google profiles private) but the damage had already been done to Google's reputation for privacy.

The privacy breech lead to a well publicized stalking case as well as showing that a former Google Lobbyist and current White House staffer kept in close contact with his former Google colleagues, a double whammy for Google.

If the opt-in privacy disclosure requirements become a baseline (and they haven't) for tech/social companies, what affect will this move by the FTC have on Facebook? Facebook changes user privacy settings quite frequently and requiring users to opt-in each time could slow down their rate of change.

Google was trading at $584.74, up $3.01, or 0.52 percent, as of 1:05 PM EDT.




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Facebook Digging into More Netflix (NFLX) Territory

Netflix (Nasdaq:NFLX) is slowly facing more competition from giant competitors, with the latest news being several additions to the social networking site of films from Warner Bros.

The movie company said they're ready "expand its test offering of movies for rental through Warner Bros. Entertainment's Facebook Movie Pages."

"The Dark Knight" was the first movie to be offered on the website, and will be followed by "Harry Potter and the Sorcerer's Stone," "Harry Potter and the Chamber of Secrets," "Inception," "Life as We Know It," and "Yogi Bear." All movies are now available on Facebook for viewing.

Facebook users can rent the movie for approximately $4 each, equal to close to 40 Facebook credits for those familiar with the site.

Users can rent the movie for two days and view it as many times as they wish during that time.

Once there is a serious variety of top-level films, it will be interesting to see if it begins to make a dent in Netflix, which is surely will after time, although it appears it'll be incrementally, depending the the pace titles are released rental.

Should We Fear Amazon (AMZN) (AAPL) (EBAY) (GOOG)?

If we were to believe the influential but clueless Columbia Law School professor Tim Wu, who has written a new book, The Master Switch: The Rise and Fall of Information Empires, companies like Amazon.com (NASDAQ:AMZN), Skype, Twitter, Apple (NASDAQ:AAPL), eBay (NASDAQ:EBAY), Google (NASDAQ:GOOG) and Facebook are the latest in high-tech "monopolies" that threaten our digital liberties, according to an excellent article by Forbes' Adam Thierer.

Here's his argument against the nonsense:

"The first problem with Wu's argument that "we are living in an age of large information monopolies" begins with the fact that he speaks of "information monopolies" in a plural sense and apparently misses the irony entirely. If so many "monopolies" exist, then Wu's thesis is undermined by the very fact that no single company dominates the high-tech landscape.

"That points to the second problem with Wu's analysis: He defines "markets" so narrowly that virtually every digital capitalist becomes a "monopoly." If both Amazon and eBay have monopolies, as Wu claims, then they couldn't possibly compete against each other and no other online shopping sites could exist. That's preposterous, of course: Amazon and eBay actually compete quite aggressively while fending off countless other competitors.

"Third, it's interesting to note who's missing from Wu's list of "information empires." There's no mention of Microsoft, MySpace, AOL (NYSE:AOL) or Palm. This points to just how dynamic markets built upon code can be. If Wu had published his book just five years ago, chances are that he would have named those companies "monopolists" using his narrow market definitions. Ten years ago, he probably would have listed Netscape, AltaVista, EarthLink (NASDAQ:ELNK), Friendster and Yahoo (NASDAQ:YHOO). But in each of those cases markets innovated around those once mighty tech giants--and did so in rapid fashion."

Thierer goes on to conclude that "the reign of any given information "empire" is brief, and its fall is often precipitous." So the idea of control of information and content by tech companies is ridiculous and reveals a lack of understanding of the sector and its economics.

Even the greatest investor in history, Warren Buffett, wouldn't significantly invest in Microsoft (NASDAQ:MSFT) when it was at the height of its growth, as he said there was no way he could reasonably project the growth of the company in the years ahead, and he obviously proved prescient in the matter.

Many of these high-flying tech companies today, won't be tomorrow, and new entities will arise to challenge and surpass them, leaving the idea of some type of ability to control the arena of ideas and content a extremely weak and anemic argument.




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Microsoft (MSFT), Adobe (ADBE), Cisco (CSCO), eBay (EBAY) Make Ethics List, Surprising Who Doesn't

Microsoft (NASDAQ:MSFT), Adobe (NASDAQ:ADBE), Cisco (CSCO) and eBay (NASDAQ:EBAY) all made a list of most ethical companies in the world, as compiled by the Ethisphere Institute, while tech giants Apple (NASDAQ:AAPL), Facebook and Google (NASDAQ:GOOG) didn't make the cut this time around.

Of the approximate 3,000 or more companies that apply to be on the list, only 110 make it.

Criteria for the list includes nominations from peers, sustainable business practices, and the history of a company for regulatory infractions.

If a company has had any major legal problems over the last five-year period, they are automatically disqualified, which speaks to some of the techs being investigated in Europe over antitrust violations.

EBay closed Wednesday at $29.73, falling $0.71, or 2.33 percent. Cisco closed at $17.05, dropping $0.34, or 1.96 percent. Adobe closed at $32.09, down $0.95, or 2.88 percent. Microsoft closed at $24.79, falling $0.60, or 2.36 percent.

Netflix (NFLX) Flies on Goldman (GS) Upgrade

Shares of Netflix (NASDAQ:NFLX) rocketed up on Tuesday after Goldman Sachs (NYSE:GS) analyst Ingrid Chung upgraded the stock, saying she thinks the unveiling of competition for the video streamer is being overplayed.

Of particular note from Chung was her take that there is a higher barriers to entry in light of the subscription service model employed by Netflix.

She sees video-on-demand services offered by Amazon (NASDAQ:AMZN) as being more pressured by Facebook and others entering the streaming-video space than Netflix.

"Chung says she believes that the nearly 20 percent sell-off in recent months is an overreaction to signs of competition, especially considering that subscriber growth has been better than expected. She expects the company to add as many as 4 million subscribers *per quarter* to its 20 million subscriber base. Other reasons for optimism about Netflix: 27 percent of US consumers now stream movies or TV shows, up from 16 percent a year ago, and International prospects for Netflix are strong," said CNBC.

Netflix was upgraded by Chung from "Neutral" to "Buy." Netflix closed Tuesday at 217.11, up $15.91, or 7.91 percent. Goldman has a price target of $300 on the company.

BofA (BAC) Tells Netflix (NFLX) Investors Not to Worry

In an interesting statement, Bank of America analyst Nat Schindler said to Netflix Inc. (NASDAQ:NFLX) investors that their concerns over the 18 percent drop in the share price of the company was due, and there is no need to be concerned over the company.

Schindler says, "To a combination of a broad pullback in the Internet sector and newer perceived competitive offerings from Amazon (NASDAQ:AMZN) and Facebook. In our view, neither these service offerings are remotely competitive with Netflix’s leading subscription video streaming service and recommend investors buy the stock on this pullback."

Citing shares of the company trading at a multiple of 27 of the consensus of earnings for 2012, Schindler called it "attractive."

While his assessment may be correct in the short term, I don't see how it could be over time, as the issue of the quality of Amazon.com and Facebook (among others) video streaming isn't where they are at now, as few expect it to take out right out of the gate.

But once they are expanded and video streaming becomes a commodity product based on pricing, there is no foreseeable defense the much smaller NetFlix would have against these giants.

Netflix closed Thursday at $200.02, gaining $7.03, or 3.64 percent.

Netflix (NFLX) Hammered on Facebook Competition

It appears many Netflix (NASDAQ:NFLX) supporters are officially in denial, as the latest entry into the streaming video fray is none other than social-networking behemoth Facebook, which inked a deal with Warner Bros. to offer for movie rentals or purchases.

While in the short term this may not be a big deal, as far as impact on Netflix goes, but it shows the tremendous vulnerability they have to companies with huge pockets which can incrementally eat away at their market share.

Facebook will assuredly sign up more companies for video streaming, and that will eat away even more at the market share of Netflix.

Interestingly, Goldman Sachs (NYSE:GS), which reported on the deal between Facebook and Warner Bros. said, "Facebook’s foray into pay-per-view does not impact our Netflix estimates."

Again, that's probably true, but the important story is what is the future of Netflix when a large number of these types of deals are expanded at Facebook and another streaming video competitor: Amazon.com (NASDAQ:AMZN).

Goldman analyst Ingrid Chung did note this though, "Facebook represents a new potential entrant that few in the investment community were concerned with prior to this announcement, so we believe it does indeed represent an incremental negative for Netflix shares."

In an environment where streaming video is becoming a commodity which will be based on price, it's hard to see how Netflix will defend themselves over the long term.

Shareholders and investors were evidently thinking the same thing, as the company closed at $195.45, plunging $11.95, or 5.76 percent.

AmEx (AXP) Partners With Foursquare

American Express Co. (NYSE:AXP) has entered into a deal with Foursquare Labs Inc. to offer discounts to shoppers.

Foursquare Labs Inc. allows users win prizes and meet people by using their mobile phones to "check in" at their favorite bars, restaurants and stores.

The move reflects the credit card company's drive to win over younger consumers and gives Foursquare a heavyweight partner as Google Inc., AT&T Inc. and others jump into the mobile-commerce game.

"You go where your customers are and they are on places like Foursquare," says Edward Gilligan, vice chairman for AmEx.

Foursquare sees itself as a variant of Facebook or Twitter, but with location thrown in. Its priority is to amass a large base of active users.

The service is built around smartphones, which use GPS and other technologies to keep track of their position. Users who check in frequently can win discounts or recognition. The deal with AmEx opens up another set of incentives for using the service.




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Microsoft (MSFT) May Take Legal Action Against Facebook

The hiring away from Microsoft (NASDAQ:MSFT) of global ad sales head Carolyn Everson by Facebook has resulted in a fissure between the two companies, with Microsoft considering taking legal action to block the actions of Facebook, according to AllthingsD.

Heated talks between lawyers have evidently been taking place for several days over Everson leaving the company to be VP of global sales at the social networking site.

The question is what is it Microsoft will attempt to do to combat the event.

They will probably either outright attempt to keep Everson from actually stepping into the new position, or they could take a lesser route of keeping her from using information gained at Microsoft to generate ad business at Facebook.

With the close relationship between Microsoft and Facebook, some were surprised at Facebook taking the type of action that could alienate the tech giant from future collaboration with them.

Microsoft closed Wednesday at $26.08, dropping $0.08, or 0.32 percent.




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Microsoft (MSFT), Facebook Ramping Up Online Privacy Protections

Technology majors Microsoft Corp. (NASDAQ:MSFT) and Facebook Inc. are working to strengthen and clarify their efforts around the controversial issue of online privacy—the latest steps by the Internet firms to call for stronger consumer protections.

On Thursday, Microsoft endorsed the concept of adding a do-not-track tool to its Web browsing software, signaling a shift in support for a system that could let people avoid having their movements monitored online. Microsoft slipped its mention of the tool—specifically, adding a reference to a do-not-track feature in its Internet Explorer browser—into a technical paper it submitted to the World Wide Web Consortium.

On Friday, meanwhile, Facebook unveiled a new draft of its highly watched privacy policy. While the new policy doesn't change the social network's data-handling practices, it contains chunks of information organized around more practical headings such as "your information and how it is used" and "how advertising works."

The moves underline how some tech companies are continuing to grapple with online privacy concerns. The Wall Street Journal has been running an investigative series, "What They Know," which chronicled the scope and increasing intrusiveness of online-tracking technologies. The Federal Trade Commission has since weighed in with proposals on improving online privacy, as efforts to simplify privacy policies and controls have also gained steam across a range of companies.





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AT&T (NYSE:T) to Release ChaCha, Salsa Smartphones from HTC

In the ongoing smartphone wars, AT&T (NYSE:T) will be releasing a couple of new phones in the months ahead, the ChaCha and Salsa from HTC, built exclusively for AT&T.

The names seem to imply a nod toward the younger Hispanic demographic, and includes a dedicated Facebook button.

Both smartphones will run on Google's (Nasdaq: GOOG) Android 2.3 platform, and include a secondary screen for video chatting. The Facebook button will empower users to immediately transfer photos or comments to their Facebook account.

The Salsa will have a 3.4-inch touchscreen as the means of interaction, while the ChaCha will include a full QWERTY keyboard.

The two phones will be released in Asia and Europe in the second quarter of 2011, and in America in the latter part of the year.

Facebook Raises Another $1 Billion From Outside US

Facebook adding another $1 billion to its latest round of funding, to bring the total to $1.5 billion, and valuing the company at $50 billion.

That includes the approximate $500 million Goldman Sachs (NYSE:GS) and Digital Sky Technologies invested in Facebook in December.

While some like to make a big deal about Facebook having a market value higher than eBay (NASDAQ:EBAY) and Yahoo (NASDAQ:YHOO), the reality is until everyone gets a look under their financial hood, those numbers are really meaningless. That will happen in 2012.

Facebook confirmed they'll start filing public financial reports by April 30, 2012. Assumptions are it won't be long after they'll go public, as all the reasons for remaining private will now be gone since they've surpassed the 500-investor mark.

Investments in Facebook are in the Class A shares of the company, which don't offer as much voting power as the Class B shares, which are held by executives and early employees at the company. That gives those in charge continual control of the company. Companies like Warren Buffett's Berkshire Hathaway (NYSE:BRK-a) and Google (NASDAQ:GOOG) have similar corporate structures.

Facebook's Goldman (NYSE:GS) Offering Not Available to U.S. Investors

Investors from the U.S. will be blocked from participating in the private offering from Goldman Sachs (NYSE:GS) for Facebook, with the giant financial institution citing the amount of coverage the offering has incurred, which could somehow be interpreted as going outside of Securities and Exchange Commission guidelines for public placements.

The offering is projected to raise up to $1.5 billion for the social networking site.

One potential shareholders residing in Europe or Asia will be allowed to participate in the Facebook offering from Goldman.

Citing an unnamed person close to the situation, the Wall Street Journal said already about $7 billion in orders have been received for Facebook.

An offshore fund has been set up by Goldman, of which U.S. investors were originally going to be allowed to invest in before the Monday news saying it has now changed.

Will Facebook Go Public in 2012?

Rumors are getting legs at a fast pace at to whether or not Facebook will decide to go public in 2012 because of the investor interest in the company, which if it surpasses 500, they'll have to reveal their finances to the public, removing one of the reasons for staying private.

There are only one basic reason a company goes public, and that's to raise capital. Since Facebook seems to have no trouble doing that privately, it seems to imply they've been planning a public move in 2012, or they didn't understand fully the consequences of Goldman Sachs (NYSE:GS) investing in the company via numerous individuals or entities.

The government evidently must have started to pressure the company after the Goldman deal, or at least there have been indications they have, and that could drive Facebook public as well.

Why 2012 is important is that's the year they would have to unveil their finances to the world, and if that's the case, there's no more reason to stay private, even if they have the interest of investors to pull them through.

They must reveal their finances and strategies because they will apparently go beyond the 500-investor rule in 2011, which causes the regulation to be triggered.

The regulation requires disclosure 120 days after the fiscal year is over when the 500 threshold is reached.

Since FACE is already taken as a ticker symbol, maybe they should consider "ZUCK."

Google (Nasdaq:GOOG) Led Acquisitions of Companies Backed by Ventures for 2010 with 10

Data from Dow Jones VentureSource shows that Google (Nasdaq:GOOG) led the field in the number of companies acquired that were backed and owned by venture capital in 2010.

Other companies among the top venture acquirers were Facebook, which was second with the acquisition of five companies; Zynga Game Network acquired four companies, as did IBM Corp. (NYSE:IMB).

Other companies buying up ventures, all of which acquired three, were Apple Inc. (Nasdaq:AAPL), Federated Media Publishing, Cisco Systems Inc. (NASDAQ:CSCO), Dell Inc. (NASDAQ:DELL), Microsoft Corp. (NASDAQ:MSFT), Nokia Corp. (NYSE:NOK), Playdom Inc., Tibco (NASDAQ:TIBX) and Software Inc.

Last year's leader Oracle (NASDAQ:ORCL) wasn't in the running this year, having only acquiring two venture-backed companies this year, while last year purchasing five.

Google closed Tuesday at $602.12, losing $2.23, or 0.37 percent.

Goldman (NYSE:GS) Values Facebook at $50 Billion, Does it Matter?

The recent news that Goldman Sachs (NYSE:GS) had invested in Facebook which valued the social networking business at $50 billion. Why and should this matter?

Not really. Being a private company, Facebook doesn't have to reveal its numbers, and we have no way of knowing whether or not the value imputed by the investment of Goldman on them is accurate at this time, or based on future optimism.

That's fairly obvious, but if we think back to Google (Nasdaq:GOOG) at a similar juncture in its history, it's a very similar scenario as Facebook's is now.

The reason I mention whether it matters or not is because whether or not Facebook is worth $50 billion or not isn't relevant, for the same reason it wasn't relevant to Google: they're going to get the valuation either way.

It's similar to a car zooming along the interstate at 100 mph and it suddenly runs out of gas. The powerful momentum it has allows it to continue going on whether it has gas in it or not.

That's the Google, Facebook phenomenon. It's about hype and potential, and that people believe they'll be able to measure up to it whether there's gas in the tank or not at this time.

The valuation of Facebook is meaningless. You can fill in the blank and people would believe it on momentum alone. That's the power Facebook has, and will have if they ever do decide to go public.

Even if they don't they retain that power, the reason they continue to attract investment dollars without the need to go public.

No matter what news emerges about investment in Facebook, they have the momentum to make whatever valuation emerges as a result believable.

What does all of that mean? Other than the ability to continue operating while they build up and out their business model, literally nothing.

For better or for worse, Facebook is considered to be on forward momentum with or without the goods, and have no need to prove one way or the other whether they really are running on gas or not.

Eventually they'll slow down in growth and momentum as far as users goes, and at that time we'll see what's really under the hood of the Facebook car.

Until them, the hype and mania will continue, and exorbitant valuations are sure to be fixed upon Facebook without any way of knowing whether they're based in any way on reality.

That's not important now, but it will be if they ever go public and prices are based on not much more on smoke and mirrors; at least as to how high the company is valued goes.

Everyone knows they're probably starting to make money now, but the current price of the company is obviously based on future outlook, and that's anybody's guess as to how that's being figured out.