14th > October > 1998 Archive

The Register breaking news

Roundup: Markets on 13th October 1998

The Dow and Nikkei were down marginally, and Nasdaq down 2 per cent. In the US, yesterday was a day of irrational movements in the markets, with fierce reactions to downgrading by financial analysts. On the acquisitions front, Alcatel is acquiring Packet engines Inc, a specialist in wire-speed routing and Ethernet, for $315 million, which sent its shares up 6 per cent. Platinum Software is acquiring DataWorks in a stock swap worth $93 million. There were few gainers. Apple edged up 3.5 per cent on anticipation of good results because of iMac sales. Intel fell 2 per cent to $83.56 before its Q3 results were known. Cisco and Microsoft lost 3 per cent, Dell, Electronic Arts and Symantec fell 5 per cent, and Intuit 6 per cent. The Irish CBT Group dived 26 per cent on Nasdaq as a result of disappointing Q3 earnings down 39 per cent on the year-earlier quarter, while Broadcast.com fell 12 percent because of its Q3 loss, despite doubled earnings. Compaq lost 10 per cent when financial analyst Piper Jaffray reduced its Q4 eps estimate to $0.30 from $0.34, and shave $500 million from the revenue estimate to $10.5 billion. E*Trade was fingered by BancBoston and fell 12 per cent on downgrading. Baan had another damp day, and fell a further NLG 2 to NLG 21.50 in Amsterdam, down 8.5 per cent following yesterday's 29 per cent. Analysts International, a Y2K specialist consultancy, was down 25 per cent after reporting eps of $0.27, only three cents below expectations, which shows how jittery investors/speculators are about earnings. Even when Computer Task Group, another Y2K specialist, reporter eps of $0.37 and beat its Q3 estimate by two cents, it was downgraded by Warburg Dillon Read to "hold" and its shares lost 17 percent. Is there no pleasing these gnomes, or could it be that the future has arrived too soon? Service companies are thought to be suffering from less spending by their clients because of the Y2K issue. PeopleSoft, mindful of what had happened to Baan, decided not to turn up to give a presentation at BT Alex Brown's investors' conference. The excuse, that they were in their quiet period, is invalid as this was known when the invitation was accepted. Bad news seems likely when its results are announced, and shares dropped 19 per cent. Bob Austrian of Montgomery Securities expects PeopleSoft to report Q3 income of $44 million, up 53 per cent from the $29 million in the year-ago quarter. He may be disappointed, it seems. PeopleSoft shares fell 25 per cent on 2 October as part of what is now seen to be general concern about the health of the ERP market, which is having a contagious effect on related companies. David Readerman of Montgomery Securities and a good buddy of Microsoft, is looking to Microsoft announcing Q1 income of $1.3 billion, up 38 per cent on the year-ago quarter. He thinks the revenue will be $4.1 billion, up 30 per cent. Microsoft eps are estimated by First Call consensus to be 49 cents. It would be a surprise if the Street were not surprised: it always underestimates Microsoft's eps, either because it helps to put the share price up for their own holdings, and/or because Microsoft uses Excel at the last minute to juggle its unaudited results to beat the Street, by changing policy on such variables as revenue recognition and deferred income. ® Click for more stories
The Register breaking news

NDS for Linux to boost OS in corporate networks

Novell is to announce a port of NDS (formerly Novell Directory Services, now a free-floating acronym) to Linux this month, according to sources at Caldera, the company that's doing the port. NDS is one of the key 'secret weapons' for Novell in its campaign to position NetWare 5 as an integrating platform for heterogeneous networks, so by supporting it for Linux, the networking giant will be officially accepting that Linux has a place in corporate networks, and will be easing the OS' route into them. The Caldera port is being undertaken via a two-year old alliance between the companies. This has already produced NetWare for Linux, but the latest phase of development increases NetWare Linux support to bring it into the NetWare 5 sphere. With 5, Novell is aiming for seamless multi-platform support, allowing network administrators to manage different platforms from a single console, and 'contextless login' for users. The pitch Novell is making sounds remarkably like the one Microsoft makes for NT 5.0, the key difference here being that NetWare 5 is shipping. Also key is the fact that despite years of claims to the contrary from certain quarters, NetWare is still by far the leading PC networking platform in the corporate space. Much of the installed base in of course earlier versions, but Novell is now optimistic about its prospects of migrating them to 5, securing its lead, then going onto the attack. Supporting Linux via Caldera, which via former Novell boss Ray Noorda has a long (and sometimes fraught) relationship with Novell is a shrewd strategy. Novell thinks Microsoft has bitten off more than it can chew with NT 5.0, and that it can capitalise on this, while much of the Linux community seems to hold a similar view, and figures it's time to get Linux into the enterprise. As Novell is in the enterprise, but doesn't want to own all the platforms Microsoft-style, this could be a marriage made in heaven. ® Click for more stories
The Register breaking news

Intel beats the Street after record shipments

Intel beat the Street for Q3 with $0.89 earnings per share, rather than the anticipated $0.09. The income was $1.6 billion and revenue was up 9 per cent to $6.7 billion. The anticipation is that Q4 will be slightly ahead of Q3. Capital expenditure for the FY is now expected to be down around $400 million on earlier estimates, to $4.2 billion. Intel had originally forecast its Q3 revenue would be flat, but subsequently amended this to a gain of 8 to 10 per cent. In the event, revenue was up 14 per cent to an all-time quarterly record, with unit shipments of microprocessors and chip sets also at an all-time high. The gross margin went above 50 per cent again, to 53 per cent. After hours trading sent the share price down, which was surprising as the results were so much better than anticipated. This may have been a reaction to Intel's cautious expectation for Q4 revenue to be marginally up. The market is riddled with self-fulfilling prophesies at the moment, with the result that solid results are not recognised. Certainly, the result had not been anticipated and built into the share price. Intel pays a small dividend of 4 cents/share, but with their value currently at $83, the amount is derisory. With cash and short-term investments at $8.7 billion, up a billion dollars in the quarter, there is a good case for returning some value to shareholders in the form of a significant dividend, which would of course stabilise the share price. Estimates by analysts are that Intel sold around 24 million processors in the quarter, at an average price of around $212, with the derided Celeron accounting for perhaps a quarter of the number. ® Click for more stories
The Register breaking news

HP announces next generation PA chips

Last year Hewlett-Packard was giving every impression of betting the farm on Wintel, but its semiconductor plans, announced yesterday at the Microprocessor Forum in San Jose, and also earlier this week, make it clear that HP hasn't any intention of actually putting its money on the table until sometime in the dim and distant future. The company is already engaged in the implementation of an NT-based enterprise network strategy, so in the fullness of time its own PA-Risc architecture and HP-UX Unix ought to be for the chop. The demise of PA is a certainty (but hardly a racing one), while an HP-UX phase-out falls more into the territory of a logical consequence that could easily become less logical as the years roll by. It's obviously logical to HP's Intel enterprise people, but scarcely so to the Unix guys. Yesterday HP gave PA a shot in the arm by outlining plans for an 8900 chip with a 1.2GHz clock speed, and the continuation of the architecture through until 2003. PA customers are intended to eventually migrate to IA-64 via HP's joint development deal with Intel, but PA public roadmaps currently extend beyond Intel's public IA-64 ones. Basically, HP can espouse IA-64 as an ultimate goal all it likes, without having to do anything about it until we're all dead. The company's plans and Intel's roadmaps don't altogether gel at the moment. Continued support and development for PA is necessary, because Intel doesn't scale enough for the purposes of HP's big corporate customers. Tellingly, when HP itself specified and installed the systems for the World Cup earlier this year, practically all of the crunching was done on PA, with Wintel handling the productivity stuff, mostly. Some migration… The roadmaps Intel showed last week meanwhile confirmed that the company is going to squeeze a lot more out of IA-32 before it goes fully 64, and that it'll do this more likely via the McKinley chip rather than Merced. So HP's planned early lead in IA-64 Merced servers next year may turn out to be of little consequence, and HP's customers will quietly refrain from migration from PA in that cycle. The efforts to include PA binary compatibility in IA-64 meanwhile mean that HP-UX customers ought to be able to shift platforms without too much trouble when IA-64 boxes have enough beef to attract them - but when will that be? And will NT still exist by then? ® Click for more stories
The Register breaking news

PB claims Taiwan outfit infringed patents

Packard Bell NEC has filed suit against CTX International, claiming the company's machines infringe five patents. PB wants the Central California District Court to issue an injunction restraining CTX from manufacturing, selling or importing its notebooks and desktops. PB also wants "substantial monetary damages." The patents the company says have been infringed all relate to configuration and ease of use. The cover automatic memory reconfiguration, suspend and resume power management, peripheral interconnect systems and battery management. Taiwanese company CTX rolled out a new line of notebooks in the middle of the year, and recently took aim at PB with a sub-$800 Celeron-based desktop. ® Click for more stories
The Register breaking news

Intel unveils three-pronged strategy for appliance and embedded

Intel yesterday announced a three-pronged approach to the embedded and mobile device markets, pushing the StrongARM SA-1100, which is to be used in HP's next generation of hand-held machines, but also revving its i960 (which until StrongARM was the foundation of Intel's embedded operations), and taking embedded Pentium chips up to a 266MHz clock speed. Intel's embedded operations have been losing ground to rivals (or one-time rivals) like ARM, MIPS and Hitachi, but the restructured portfolio announced yesterday by Intel Computer Enhancement Group general manager Ron Smith promises tougher competition. StrongARM takes Intel into the handheld, PDA and smart phone arenas, and in the longer run gives Intel the option to use cheaper ARM implementations for classic low-cost embedded systems. But the company can still push i960 here for the moment, while embedded Pentium may ultimately have roles in areas where some form of Wintel compatibility is important. Embedded Pentium has in the past been seen by Intel as the big one it can use to face-off the low-cost Risc guys, but Wintel compatibility is (not least thanks to Intel's launch schedule) a moving target, and getting embedded Pentiums that are both fast enough and cheap enough is hard for the company. Smith reckons the growth in embedded is going to be in "handhelds, POS terminals, networking devices and others that connect, communicate, and control information in and around the information services environment." ARM-based handhelds and Wintel POS systems sound like runners (Microsoft is having some success in getting NT boxes at POS), but the $64,000 question is what Intel's going to propose using in its thin server appliance' strategy (Earlier story), and what OS the company will use. Sudden feverish efforts by Microsoft to develop Embedded NT may shed some light on this. The new Intel chips are the SA-1100, 166MHz and 266MHz MMX embedded Pentiums with new cheaper packaging and lower power consumption, and a 100MHz i960 VH Embedded-PCI processor. ® Click for more stories
The Register breaking news

Ellison resumes attack on Microsoft ‘servers everywhere’

Larry Ellison was singing his new anti-NT song again yesterday at Gartner Group's Symposium/Itexpo in Florida. Fresh from attacking networks with "servers everywhere" in his Internet World keynote (Ellison takes aim at Microsoft crown jewels), Ellison is calling for a return to the centralised computing model, and the abandonment of the distributed approach favoured by Microsoft. His goal is to establish the ultimate in thin client computing, a world where all of the data and the apps run on a few big servers that are easy to control and administer, and where the only thing the client user needs to access the lot is a browser. This pitch favours Oracle's old allies, the Risc vendors, and swipes at Microsoft's notion of having a lot of distributed server power across the organisation (running NT, naturally), and scaling it up via clustering, and via increasing the number of processors supported in single systems. The Microsoft model also requires a lot of horsepower at the client end running applications, and Microsoft's halfway house between centralised and distributed is intended to keep the data centrally, and cache it and run the apps locally. Which is a scheme that makes Larry sound sane. Ellison told the adoring Florida audience that "servers everywhere" was costing a fortune in terms of administration and information fragmentation. He doesn't appear to have said how we're going to break out of this cycle directly, but appears to envisage the increased communications offered to organisations by the Internet as driving increased centralisation. And he may be right. ® Click for more stories
The Register breaking news

Microsoft spin-doctors ‘refute’ DoJ case

Microsoft released late yesterday a paper entitled "Setting the record straight: Microsoft's statement on government lawsuit". Even those with neutral feelings about the case will find it hard to accept the disingenuousness of Microsoft's arguments. There's not much new in the document, despite claims by quite a few cub reporters unfamiliar with the documentation of the case. What is interesting is the level of low quality of rhetoric. It reads like the reviewers' guides that Microsoft produces for idle software reviewers, in the hope that they will not bother to examine the product, but just write what Microsoft wishes them to write. This document is a pre-trial propaganda piece aimed at the media, and it merely presents the current Microspin. Is it really true that Microsoft was "seeking ways to increase the distribution and promotion of [IE], in order to increase competition in the marketplace"? Were there really "choices made by consumers in a free market"? Discussing the June 1995 meeting with Netscape at which Microsoft wanted to carve up the browser market, Microsoft says: "the purpose of this routine [sic] meeting… was to explore the possibility of forging a strategic partnership in some areas of the two companies' businesses, while understanding the areas in which they would continue to compete. Such co-opetition' relationships are pervasive in the industry." Ray Noorda, the former Novell CEO who invented the term co-opetition' (the FT on Saturday didn't know the source, and got it wrong), will be appalled at Microsoft's claim that its relationship with Netscape was co-opetition, and that Microsoft was motivated by any notion of ethics in its business practices. Microsoft keeps suggesting that the DoJ is selecting snippets out-of-context in its briefs. It will be interesting to see the actual evidence from Intel and Intuit and Sun witnesses, rather than Microsoft's attempt to neutralise the evidence in advance. In the paper, Microsoft has introduced an interesting error that shows simultaneously its paranoia and the propaganda line it would like to convey. In discussing the "very low" cost of market entry for a new operating system to compete with Windows, Microsoft writes about "Linux, a new version of Unix developed by a single individual". We rest our case. ® Click for more stories
The Register breaking news

Update: Cirrus sells software team to ISD

Cirrus Logic has hived off its graphics software business to ISD Corporation. Financial terms were undisclosed, but we assume that money flowed into Cirrus' coffers from ISD. Broad outlines of the outsourcing deal are in the public domain. ISD is to take on all the workers of the Cirrus Logic PC graphics software group, organising the team as a standalone division. It will also handle all customer relationships and support agreements for Cirrus graphics software. And it will develop and support software drivers and firmware. The ISD deal has received the blessing of Jon Peddie, author of the graphics card bible The Peddie Report "Cirrus Logic has historically provided some of the best software support in the graphics industry," he says in a Cirrus press release, announcing the ISD deal. "It's a real coup for ISDCorp to hire this team." But how much of a coup is it for Cirrus to transfer this killer team to another company? The recently restructured company is tossing away a strong differentiator. Remember, there are 50 graphics chips companies out there. And that means an awful lot of also-rans. The Register is singing off an old song sheet, according to Zahir Parpia, of ZEN News. He writes: "What you didn't mention is that Cirrus is now refocussing on mixed signal and linear chips (Cirrus was a major player in the graphics business, but is at best a marginal player - they correctly realized that they can't compete and have basically pulled out of the business). Cirrus has always had a strong mixed signal/linear group (it owns Crystal, one of the top companies in the field." ®
The Register breaking news

Compaq profits down, but company exceeds forecasts

Compaq's third quarter profits have beaten expectations, despite falling 78 per cent to $115 million. Sales were up 36 per cent on the previous year's Q3, to $8.8 billion, and CEO Eckhard Pfeiffer says that integration of Compaq and Digital operations was on track during the quarter. Compaq also managed to improve gross margins to 24.9 per cent, and says its distribution channel sales growth was at 38 per cent approximately twice that of the market in general. The company expects Q4 to see further progress as more and more of the "synergies" from the Digital merger kick-in. ® Click for more stories
The Register breaking news

Seagate wouldhavebeens mar Q1 results

Seagate has taken a $63 million bath on currency holdings in the Thai baht and the Malaysian ringitt. The so-called "market to market adjustment" is one of an awful lot of would have beens in Seagate's Q1. Other wouldhavebeens include: $77 million to cover an amendment to the October 1997 purchase agreement for Quinta; and $7 million in R&D write-offs and tax charges connected to the acquisition of Eastman Software's storage management group. Tallied up, the wouldhavebeens plunge Seagate into a net loss of $30 million on sales of $1.553 billion (Q1 1997:$240 million losses on $1,896 million revenues). Without these charges, Seagate's net profit for the quarter would have been $46 million. Next quarter, the market can look forward to another wouldhavebeen, a write-off connected with Seagate's decision announced last week to withdraw from the manufacture of semiconductors for hard drives. It says it will close the Livingston, Scotland plant if it fails to find the buyer. ®
The Register breaking news

Microsoft will be trial of century – but which one?

It may well prove inappropriate to dub USA versus Microsoft Corporation the trial of the century, because it could easily carry on to the next century. The longer the trial continues, the better it will be for Microsoft since the issues will have less relevance if the case drags on, and Microsoft would have the opportunity to become dominant in additional markets such as Internet tools and e-commerce. There is an outstanding request filed last Friday by Microsoft for a two-week continuance (delay) until 2 November. Yesterday, the DoJ filed its opposition to this. Judge Jackson can rule when he wishes, and it could well be that he will wait until later in the week to make it more difficult for Microsoft to appeal against his ruling before the trial starts on Monday. It is expected that he will deny the request, made as a result of what Microsoft called "last minute maneuvering" by the DoJ in substituting two witnesses, Avadis ("Avie") Tevanian of Apple and James Gosling of Sun. Microsoft asked for leave of the court to depose them, obtain additional documents from Apple and Sun, and possibly depose other current or former employees of Apple and Sun. Last night, Microsoft received the depositions of Gosling and Tevanian. In a relatively unusual step, Judge Jackson ordered that testimony for the case should be presented in writing to speed things up. The witness documents have been filed under seal, but will be made public probably the day before the witness is cross-examined and rebutted. It would be very unpopular if the trial went on beyond Christmas, since the court would probably sit on all days that were not public holidays. The DoJ has also been talking about what amounts to a further proceeding before the present case ends, to discuss remedies to prevent future occurrences of Microsoft's behaviour, which could lengthen the trial. It is most unlikely that Judge Jackson will rule for a month, or more likely several months, after the trial ends. Appeals are very likely, whatever the outcome. We expect the action in the federal court to take at least three months, but the most important proceedings will be in the court of public opinion. ® Click for more stories
The Register breaking news

MIPS preens after shipping 100 millionth CPU

Eat your heart out, Intel. MIPS says it has now shipped more than 100 million processors, and while that might not match Intel's total, MIPS' 48 million in 1997, capturing a claimed 49 per cent of the embedded Risc processor market, isn't half bad. Kind of spoiling the arithmetic, MIPS boasts that the real significance of the milestone is that more than half of the 100 million units have shipped in the last three years, which means either somebody at MIPS can't count, some of the licensees are pretending hard they can't count, or the company shifted dismal numbers in 1996 and 1998 so far. MIPS' big volume customer is the games console outfit Nintendo, but it's starting to diversify. Tektronix, NCD, various CE machines and PalmPC, and set-top boxes from General Instruments, EchoStar and webTV are customers. The company has been frequently sneered at, its low-cost business categorised by rivals as dead meat if Nintendo goes away, but it argues that it's in a growing segment, and that as appliances and devices take off, it will be sitting pretty. Which is as good a pitch as the ones from the rival embedded companies who were doing the sneering. ® Click for more stories
The Register breaking news

Nat Semi CEO proposes giveaway PCs

Brian Halla, president and CEO of National Semiconductor, has become the latest industry big-wig to leap on the idea of giving away PCs for free. But don't call the guy up to demand a Pentium in the post -- he reckons Web-based e-commerce practitioners will do the donating. Speaking at the Microprocessor Forum in San Jose, California, Halla pitch centred on the coming ubiquity of e-commerce. He reckons that once more users begin to order everyday goods and services via the Web, the companies behind those sites will seek to differentiate their offerings not only on price but by making their sites easier to access. To Halla, that translates to giving away free, or at least very low cost, Internet access hardware, such as NC-like terminals, possibly running Citrix WinFrame-style client software, an interesting alternative to the set-top box approach most such visionaries adopt. Like Netscape's Marc Andreessen (see Andreessen predicts free PCs), who propounded the free PC model last September at the Telecosm conference, Halla looks to the cellphone model, where handsets are sold well below cost as part of airtime packages, for his vision. Not that Halla's view of the future is untarnished by commercial gain. His gameplan is based on the hope that the emerging market for cheap Internet access machines will drive up demand for Nat Semi subsidiary Cyrix's PC-on-a-chip MediaPC product, due next June, and which, according to Halla, Acer's Stan Shih has given the thumbs-up. During his talk, Halla alluded to the graphical power of the Sony Playstation, capable, he said, of stunning imagery generated solely by a collection of intergrated processors and a 34MHz CPU, as a guiding light for the low-cost Net terminals he envisages. His demo did indeed include super-slick Playstation imagery, but since it was streamed off a CD-ROM, not generated on the fly, Halla's clearly not quite as au fait with gaming technology as he believes. His proponency of WinFrame is also based on his own company's ongoing roll-out of some 50 WinFrame machines serving thousands of clients across the world. It would be ungallant of us to suggest a free ad for Citrix at the Forum may lead to lower licence fees, so we won't. ® Click for more stories