NewsFactor Business

SMBs Remain Bullish Despite Weak Economy

Fri, 09 May 2008 07:21:39 -0500

Small businesses are confident that bleak economic conditions will pass without their being adversely affected by the economic downturn, according to a new study of 250 small-business owners. Or, at the very least, they're keeping a stiff upper lip about the downturn and the prospects for a speedy recovery.

A survey from Opinion Research Corporation, a market-research firm, found that there was a general feeling among small businesses that the economy is in rough shape, but there was near-unanimous agreement that future prospects were bright.

Wayne Russum, senior vice president at Opinion Research, said that nearly two-thirds of the small businesses interviewed felt that current economic conditions were having a negative effect on their businesses. "The current economic crisis is not just hitting big business," he said. "It is having a strong negative impact on the entrepreneurs whose unique contributions have a significant impact on our overall economic success."

This Too Shall Pass

Even though six in 10 businesses felt that the nation's current economic woes were negatively impacting their business, respondents were certain that bad times would pass quickly, with 88 percent saying they felt their businesses would do well in the future. And, as Russum pointed out, if almost 60 percent are seeing problems arising from the weak economy, more than a third of respondents are not.

Small professional-services companies that include IT-based businesses were "the most optimistic group" about the future of their businesses, Russum told us, noting that some 40 percent of this group saw the economic downturn "as having no impact on their specific business." Russum saw a "bright spot" among the small businesses surveyed, noting that restaurants, gas stations and grocery stores seemed to be doing remarkably well.

He added that other sectors were taking a more serious beating. "The findings emphasize that the current economic...

Bleeding a Stone: TorrentSpy Loses $110M Case

Thu, 08 May 2008 15:29:27 -0500

In what the Motion Picture Association of America (MPAA) is calling a significant victory for the major Hollywood studios, a federal judge in Los Angeles has issued a $110 million judgment against file-sharing Web site TorrentSpy for infringing on the copyrights for thousands of popular movies and television shows.

The worldwide motion-picture industry, including foreign and domestic producers, distributors, theaters, video stores and pay-per-view operators, loses more than $18 billion annually as a result of movie theft. More than $7 billion in losses are attributed to illegal Internet distribution, while $11 billion is from illegal copying and bootlegging.

"This substantial money judgment sends a strong message about the illegality of these sites," said Dan Glickman, chairman and CEO of the MPAA. "The demise of TorrentSpy is a clear victory for the studios and demonstrates that such pirate sites will not be allowed to continue to operate without facing relentless litigation by copyright holders."

And Don't Do It Again!

The court rendered its judgment against Valence Media, the company operating TorrentSpy, for willful inducement of copyright infringement, contributory infringement and vicarious copyright infringement. Specifically, Valence was charged $30,000 per violation for nearly 3,700 illegal television program and movie downloads.

The court also issued a permanent injunction prohibiting TorrentSpy from further infringing any of the studios' copyrighted works. The permanent injunction prohibits Valence from engaging in any activity that encourages, promotes or solicits, or knowingly facilitates, enables or assists, copyright infringement.

The ruling marks the second decisive defeat for TorrentSpy in the case. Late last year the same federal court entered a default order and found the TorrentSpy operators liable for copyright infringement. The TorrentSpy Web site shut down on March 24, 2008. Valence has reportedly filed for bankruptcy protection in a United Kingdom court and has requested the judgment be stayed.

Cracking Down on Piracy Cartels

Led by the United States,...

Grand Theft Auto IV Speeds Past Six Million Mark

Thu, 08 May 2008 15:22:55 -0500

Since its release on April 29, global sales of the Grand Theft Auto 'GTA IV' video game from Take-Two Interactive Software (Nasdaq: TTWO) have surpassed six million units, with an estimated retail value of more than $500 million in the first week. Over the first day alone, GTA IV sales were approximately 3.6 million units with a retail value of $310 million worldwide.

While GTA IV's first-week performance represents the largest launch in the history of interactive entertainment, Take-Two Chairman Strauss Zelnick said that GTA IV has also now surpassed retail sales levels of any movie or music launch to date, although some critics beg to differ with that comparison.

Interestingly enough, Michael Pachter, a research analyst at Wedbush Morgan Securities in Los Angeles, said, "The dollar amount is not particularly relevant. The unit numbers are what matters."

Six million is a great number," Pachter said. Yet at the same time, he pointed out that, "It doesn't change the value of the company [Take-Two Interactive Software] at all. I expected greatness and they delivered."

Take-Two CEO Ben Feder attributes the success of Grand Theft Auto IV to its use of the next-generation technology, saying that critics are hailing it as both "an artistic and technological masterpiece."

Is GTA IV Just Too Violent?

The "M" for Mature rating on Grand Theft Auto means children can't buy it, but some parents are still concerned. The Parents Television Council via its President Tim Winter, has said that GTA IV is a brutally violent video game that must be kept out of the hands of children.

The PTC is calling on major retailers to reconsider any decisions to sell the game. "Since the first version was released in 1997," Winter said, "the Grand Theft Auto series has lowered the bar for graphic and grotesque video-game content."

Analyst Michael Pachter has a...

Hackers' Posts on Epilepsy Forum Cause Migraines, Seizures

Fri, 09 May 2008 07:12:40 -0500

Computer attacks typically don't inflict physical pain on their victims.

But in a rare example of an attack apparently motivated by malice rather than money, hackers recently bombarded the Epilepsy Foundation's Web site with hundreds of pictures and links to pages with rapidly flashing images.

The breach triggered severe migraines and near-seizure reactions in some site visitors who viewed the images. People with photosensitive epilepsy can get seizures when they're exposed to flickering images, a response also caused by some video games and cartoons.

The attack happened when hackers exploited a security hole in the foundation's publishing software that allowed them to quickly make numerous posts and overwhelm the site's support forums.

Within the hackers' posts were small flashing pictures and links -- masquerading as helpful -- to pages that exploded with kaleidoscopic images pulsating with different colors.

"They were out to create seizures," said Ken Lowenberg, senior director of Web and print publishing for the foundation.

He said legitimate users are no longer able to post animated images to the support forum or create direct links to other sites, and it is now moderated around the clock. He said the FBI is investigating the breach.

Security experts said the attack highlights the dangers of Web sites giving visitors great freedom to post content to different parts of the site.

In another recent attack, hackers exploited a simple coding vulnerability in Sen. Barack Obama's Web site to redirect users visiting the community blogs section to Sen. Hillary Rodham Clinton's official campaign site.

The hackers who infiltrated the Epilepsy Foundation's site didn't appear to care about profit. The harmful pages didn't appear to try to push down code that would allow the hacker to gain control of the victims' computers, for instance.

"I count this in the same category of teenagers who think it's funny to put a cat in...

Google Looking Golden Again After Challenging Stretch

Fri, 09 May 2008 07:15:46 -0500

It's hard to believe Google Inc. actually looked vulnerable just two months ago. The Internet search leader's stock had plummeted 45 percent from its peak. And its two biggest rivals, Microsoft Corp. and Yahoo Inc., appeared poised to combine forces and launch a double-barreled attack.

But as Google holds its annual shareholders meeting Thursday, the company looks stronger than ever. Its stock is hot again and Microsoft has scrapped its plans to buy Yahoo, with Google playing the spoiler's role.

"Google is winning again. What a surprise," said Canaccord Adams analyst Colin Gillis. "If you want to invest in the Internet space, where else do you want to be but Google?"

More investors have been coming to that conclusion since last month, when Google's stellar first-quarter results cast aside concerns that the drooping U.S. economy would depress the online advertising spending that generates most of the company's profit.

Google shares have surged 29 percent since the first-quarter report, regaining a little more than half of the $100 billion in shareholder wealth that evaporated as the stock plunged from an all-time high of $747 last November to a 52-week low of $412 in mid-March.

Meanwhile, Microsoft and Yahoo are again trying to figure out how to lessen Google's dominance of Internet search and advertising.

Microsoft hoped to throw Google for a loop by buying Yahoo for $47.5 billion. Unnerved by the threat, Google worked behind the scenes with Yahoo to thwart Microsoft's unsolicited takeover attempt.

The counterattack now has Yahoo considering a deal that would allow Google to sell some of the ads displayed alongside the search results on Yahoo's Web site. The alliance, which has already been tested in a two-week trial, will likely hinge on whether the two companies can persuade antitrust regulators the partnership wouldn't undermine competition in the ad market.

Even if a Google-Yahoo pact...

EU Says Consumers Are Cheated by Travel, Airline Sites

Fri, 09 May 2008 07:16:53 -0500

A third of people who shop for flights on airline and other travel Web sites in the EU are being cheated by misleading ads and price schemes, the European Commission said Thursday, threatening legal action to stop such practices.

The European Union's consumer protection chief gave airlines and tour operators one year to fall in line with consumer rules or face court action and possible fines.

"It is unacceptable that one in three consumers going to book a plane ticket online is being ripped off or misled or confused," said Meglena Kuneva, the EU's consumer protection commissioner.

"My message to industry is clear: act now or we will act," she said.

Preliminary findings of an EU investigation indicate the main problems on the sites are misleading pricing and vague conditions and contract terms. Airlines and other travel companies often add airport taxes, handling fees, baggage and seating charges and a variety of other costs on top of the prices that first appear on Web sites.

"The price first advertised on a Web site should be the final price," said the European Commission, the EU's executive office.

Kuneva said such problems existed "in all sectors" of the airline industry, including both discount and full-fare carriers.

The EU is hoping to raise the awareness of bargain hunters so they will not be fooled by hidden charges or unclear small print.

Kuneva said legal restrictions in most EU nations prevented her from "naming and shaming" the airlines and tour operators suspected of breaking EU laws.

Norwegian and Swedish consumer rights authorities, however, listed many of the companies involved on their Web sites. They included Irish low-cost carrier Ryanair, Austrian Airlines and Blue1, a Finnish airline fully owned by Scandinavian airline operator SAS AB.

An initial review in September found that more than 50 percent of sites checked were misleading consumers on tickets advertised...

Google Shows Off Strategic Muscle with Death of Microhoo

Thu, 08 May 2008 07:17:39 -0500

Microsoft and Yahoo were pushed to the brink of a multibillion-dollar marriage and then to a sudden breakup this past weekend by the same player.

It was Google, in the odd dual role as both unwitting matchmaker and self-interested spoiler.

Google's phenomenal rise, after all, prodded Microsoft, the dominant technology company for more than two decades, to court Yahoo. And Google's success also weakened Yahoo enough to give Microsoft the sense that it could buy the company at a good price.

A combined Microsoft-Yahoo would create a powerful competitor, and Google early on indicated that it would fight the merger on antitrust grounds in Washington and Brussels.

But Google played a part in killing the deal, for now at least, by acting more as friend than foe. It offered to let Yahoo use its more sophisticated search advertising technology, which by some estimates would have meant $1 billion more revenue a year for Yahoo. The partnership would also bring Google more revenue.

The prospect of such a partnership emboldened Yahoo's board to demand more money for the company and eventually caused Microsoft to rethink its strategy.

Steven Ballmer, Microsoft's chief executive, cited the proposed Google partnership as the main reason for not pursuing a hostile bid and instead walking away Saturday.

"Such an arrangement with the dominant search provider would make an acquisition of Yahoo undesirable to us," he wrote Jerry Yang, Yahoo's chief executive, in a letter, and cited five specific reasons Google would be bad for Yahoo.

Yahoo may well pursue the partnerships with Google, its main rival, to bolster its depressed stock price. Yahoo shares dropped 15 percent Monday, to close at $24.37. The two companies refused to comment.

Not surprisingly, analysts are saying the Microsoft-Yahoo saga has one clear winner: Google. And its stock price reflected that thinking Monday. More than $4 billion was added...

Sources Give Inside Look at Microsoft's Yahoo Bid

Thu, 08 May 2008 07:20:58 -0500

Just how serious was Microsoft Corp. about raising its bid to $47.5 billion for slumping Internet pioneer Yahoo Inc.?

The answer is taking on greater importance as more outraged Yahoo shareholders threaten to sue the company's board -- or try to replace the 10 directors -- for the way they responded to Microsoft's sweetened offer.

With shareholders up in arms, Sunnyvale-based Yahoo has been trying to raise doubts about the legitimacy of Microsoft's last bid of $33 a share by pointing out that it wasn't submitted in writing.

There is even a theory circulating that Microsoft Chief Executive Steve Ballmer dangled the new offer before his Yahoo counterpart, Jerry Yang, fully knowing that it would be spurned and open a window for him to flee a deal that was starting to look like a potential albatross.

Yahoo shares fell 37 cents, or 1.4 percent, to $25.35 as trading opened Monday, while Microsoft shares rose 6 cents to $29.76.

In Tokyo, Microsoft Chairman Bill Gates said Wednesday the company isn't pursuing other deals. He said the company put "a lot of effort" in the talks with Yahoo and has decided the two should pursue "independent paths."

Since the talks unraveled, The Associated Press contacted people familiar with the deal to piece together how the final days of negotiations unfolded. These people asked not to be identified because the talks were confidential.

While they differed on some details, the people agreed Redmond, Wash.-based Microsoft didn't spell out the $47.5 billion offer in writing. Instead, it was orally presented by both Ballmer and Brad Smith, the software maker's general counsel.

In contrast, Microsoft's initial bid of $44.6 billion, or $31 per share, was sent to Yahoo's board in a Jan. 31 letter that contained specific financing terms.

Although raising a takeover bid orally isn't ideal, it's acceptable when two sides like Microsoft...

'Crimeserver' Discovered with Treasure Trove of Stolen Data

Thu, 08 May 2008 07:23:39 -0500

Cybercriminals collect a treasure trove of data from Web surfers whose computers are infected with Trojans. That's all-too-common news these days, but a recent case shows that the problem is getting worse. Finjan Inc., which makes secure Web gateway products, discovered a server in Malaysia being used by hackers to store more than 1.4 gigabytes of stolen data. What surprised the Finjan researchers was that the data was stolen from businesses as well as individuals -- and it was amassed in just three weeks.

Yuval Ben-Itzhak, Finjan's chief technology officer, told us that there were other surprises from the discovery of the Malaysian-based "crimeserver" that was being used as a command-and-control center for the Trojans installed on infected PCs around the world.

"Quite often we see end-user online banking information being logged, but on this server we found a lot of business-related data, such as e-mail communications, patient medical histories, and even screenshots of Outlook," he said. This compromised information could lead to a host of problems for an organization, from violations of federal regulations about patient privacy to the loss of critical business information.

Crimeware as a Service

Ben-Itzhak said the crimeserver was left totally open so that data could be accessed by anyone. The Finjan report about the attack surmised that crimeware is evolving with a new and alarming customer-service focus.

"Crimeware has reached a new level of sophistication. After the birth of sophisticated crimeware toolkits, closely followed by Crimeware-as-a-Service (CaaS), we now see the availability of user data as a 'customer' service by granting open access to the crimeware server with the harvested data."

Finjan researchers noted that the Malaysian server had changed hosting locations a number of times between late last year and the time the crimeserver was discovered, "likely to prevent it from being closed down...

Why Many Wireless Resellers Are Going Under

Thu, 08 May 2008 07:22:19 -0500

A few years ago, organizations from Disney to 7-Eleven to the local pinochle club were jumping into the cell phone business, leveraging their brands to appeal to niches untapped by the big carriers.

Now, many are digesting a hard reality: Running a wireless company isn't as easy as it seemed.

Many resellers of cell phone service -- which lease the networks of national carriers -- are closing, going bankrupt or struggling.

"Most of these people came in with a gold rush mentality," says Roger Entner, senior vice president of IAG Research. "Let me show up, and millions will flock my way."

The latest casualty is Sonopia, which helped clubs and organizations set up their own mobile services. The company is shutting down, says Greg Beltzer, a spokesman for Sevin Rosen Funds, a Sonopia investor.

Earlier this year, Hispanic-focused Movida Communications and high-end boutique Voce filed for Chapter 11 bankruptcy. While Voce shut down, Movida was quickly snapped up by Paul Greene, CEO of gear provider APC Wireless.

In the past 18 months, ESPN Mobile, Disney Mobile and youth-targeted Amp'd Mobile have all flamed out. All told, about 10 wireless resellers have closed shop, leaving about 55, says consultant Alex Besen of the Besen Group.

Others are struggling. Even Virgin Mobile, the No.2 reseller, said Monday that first-quarter earnings fell 75 percent vs. a year ago. That followed a $14.7 million fourth-quarter loss. The company largely blames the sluggish economy.

Resellers, also known as mobile virtual network operators (MVNOs), are being tripped up by:

*Fresh competition from the major carriers. With U.S. cell phone penetration reaching 84%, the big carriers are targeting the faster-growing youth and lower-income prepaid markets that had been the province of MVNOs such as Virgin, say Entner and Yankee Group analyst Chris Collins.

*Failure to offer a distinctive service. ESPN, Amp'd Mobile and Helio coveted the same...