16th > October > 2000 Archive

Egg loses cash

British Internet-cum-telephone bank, Egg, reported an increase loss, before tax, for the nine months to September 30 of £115.1 million - up 7 per cent compared to last year (£108 million). The bank's loss before tax for the three months to 30 September 2000 was £34.4 million - down a smidgen from the £38.2 million reported last year. Despite losing even more money, Egg remains bullish and claims it's on course to deliver profitability. It claims more than 120,000 new customers have signed up during Q3 bringing the total number of customers to 1.2 million. And this month it launched a £3 million brand advertising campaign to attract even more punters. Mike Harris, CE of Egg said: "Our results this quarter reinforce our belief that the UK businesses will break-through into profit during the fourth quarter of 2001." Digimedia outfit, 365 Corporation plc, is to receive a sponsorship payment and a fixed-fee from Sportingbet.com (Alderney) Ltd for every user clicking through from its association football site, Football365, and placing a bet on Sportingbet.com. In return, Sportingbet.com gets access to followers of association football around the world in the run up to and including the 2002 FIFA World Cup in Japan and South Korea, the companies said today. AIM listed e-quisitor plc it has agreed a funding facility with Barclays Acquisition Finance of £25million on a six-year term. A £2million working capital facility has also been agreed. e-quisitor intends to use a combination of cash and debt to fund acquisitions and build a group of information-oriented businesses. ® Bored? Check out Cash Reg. Then you'll know what real boredom is.
Team Register, 16 Oct 2000

Dell, AMD and Taiwan: the final, final word

The weekend before last, a new Dell sources AMD rumour floated to the surface, courtesy of a report in Taiwanese newspaper The Commercial and Industrial Times, and amplified by way of the press-clippings service on chip firm VIA's Web site. We thought we had, with the help of many readers, nailed the story (Wanted: Taiwanese to confirm Dell-AMD lovefest) - i.e. it was wrong, but probably not a hoax. However, the emails are still coming in, asking us for 'updates'. So let's state once and for all, there is no update. But if you want more background, here is a report from our special correspondent in Taiwan, filed with me on October 11. " Just spoke to VIA about the Dell / AMD issue. According to VIA, the issue is a misunderstanding, in which the reporter concerned got his facts wrong, and mixed up CPU for chipset. Dell may be talking to AMD, but VIA has no knowledge of this. The original mistake was included in a report included in a compilation of news posted on VIA's website. That has since been corrected. I checked the Chinese of the Ctech report, and there it was. Ctech has yet to get back to me, but knowing the way reports tend to borrow from reports here, there could be a case of repeated mistake here. And mistake it is, VIA emphasizes adamantly." ®
Drew Cullen, 16 Oct 2000

UK awaits G4 Cube discount and speed bump

Although Apple cut $300 from the G4 Cube in the US on Friday, there's no word yet of similar discounts being made available to UK buyers. To make matters worse, US punters have the option of a high-end G4 Cube as standard that isn't available through the UK store. Unless Apple follows through quickly in the UK with a definite statement, G4 Cube sales could grind to a complete standstill as propective buyers wait on the likelihood of saving themselves £200. The new, top-of-the-range G4 Cube simply has a 32Mb Radeon graphics card as standard - it's an option on the US site - bumps the memory up to 256Mb, and has a 40Gb as opposed to 30Gb hard disk. It sells for $2799 before discount at the US Apple store. However the model isn't available from Apple's UK store. As we reported last week, Apple's US offer is conditional on buying one of the latest Apple monitors with the Cube - the 17inch CRT, or the 15inch or 22inch flat panels - and the mail-in offer applies to all purchases from now until December 31. Full details are here. This sparked the suggestion in at least one Mac forum that existing G4 Cube owners should take their recent purchases back to the store, then buy it all over again to claim the rebate. A San Francisco retailer confirmed that as many customers had been buying Cubes without the new monitors, despite the attraction of the all-in-one cabling which supplies power and USB to the monitors. Then again, he said they'd be selling pretty well in spite of Apple's recent statement that Cube sales had not come up to expectations. Which only goes to prove that you should never take anything that happens in San Narcisco to be representative of anything, really. ® Related stories Apple offers cash for Cubes Apple denies Cube is cracking Apple Q4 earnings to take a kicking
Andrew Orlowski, 16 Oct 2000

IBM bumps up Unix flagship with SOI

IBM still has some life to squeeze out of its POWER3 chips, and today it tops up the RS/6800 S80 line with processors based on Silicon on Insulator (SOI) process technology. Except it isn't called the S80 any more, and it isn't even the RS/6000 these days, either. So as two successful brands slip down the disposal chute, say hello to the "eServer pSeries p680". We're sure this makes sense to someone, somewhere.... Marketing whimsy aside, the new S80 beats HP's Superdome to market - although only just - and IBM's Unix chief Jim McGaughan tells us it amounts to a 30pc speed improvement over last year's model, as you'd expect: the new processors clock in at 600Mhz, compared to the 450Mhz in today's S80 range. IBM claims real world improvements of 10 per cent in Transactions per dollar benchmarks over Sun's E10000 Starfire, and also claims top spot for the SPECweb, Java, TPC-C, and SAP benchmarks amongst others. According to our blurb, the p680 wins in several of these categories simply because none of the others showed up: to whit, the PeopleSoft and Baan benchmarks. In fact, our press material boldly - and scientifically - states that the pSeries is the "Most powerful OLTP @ $4x.xx" ... figures that rocked us to our core, we must admit. How do you pronounce this, exactly? Unconvincing supporting material aside, the S80 has proved itself a successful flagship for IBM's Unix midrange. IBM introduced copper to the S80 a year ago, and added the same technology to the "deskside" and rack versions in May. Like-for-like sales comparisons are getting to be as difficult as performance comparisons though, as IBM notches up more sales of smaller S80s than the big-box E10000s. McGaughan was keen not to get into the SMP bragging wars that Sun seems to have made its speciality. The 24way eserver products can still oust 64way, systems he says. The entry barrier is lower too, according to IBM, with a 6CPU 4Gb memory system starting at $420,000, compared to the $750,000 and upwards for the Starfires. Hard disks and fans can be hot-swapped, but in-place memory and chip upgrades aren't possible. However dynamic CPU allocation means you can take processors (and iffy memory banks) off line. Full details should emerge on the IBM website later today. IBM's Unix midrange - whatever it'll be called this time next year - will be revamped with the POWER4 architecture featuring multiple cores on a die, and a fiendishly clever memory architecture. Rival HP is expected to migrate its Superdome architecture downstream before the end of the year. Sun has UltraSparc III just about ready to ship, but the serious servers based on the sCOMA architecture won't be ready til next Spring. Which is just about the time for another Alpha Wildfire speed bump. ® Related Stories COMA chameleons: The Reg goes inside Sun's Serengheti IBM's first SOI server hits the streets Wildfire takes aim at Intel, Sun, IBM, HP's server pants IBMs plunders copper mine for new RS/6000s Sun debuts UltraSPARC III and embraces copper Sun hits back at Unix vendors' FUD Superdome service is mandatory, admits HP HP wants to spank you with its Superdome
Andrew Orlowski, 16 Oct 2000
DVD it in many colours

SMEs get ‘cyber slingshot’ from Telewest

Peter Wood - the founder of insurance outfit, Direct Line and the man responsible for that annoying little beeping red phone on wheels - is to chair a new broadband operation aimed at SMEs. Cableco, Telewest, and e-service firm, CobWeb Solutions, have formed a joint venture called blueyonder workwise to "revolutionise the delivery of e-economy services to Britain's small businesses". The service is going live this week after being tested by 100 SMEs over the last couple of months or so. First to be launched is a broadband portal providing a range of Web-enabled applications including finance and accounting packages for payroll, expenses, stock control and invoicing, as well as managed email and communication systems. Telewest reckons this is Britain's first high-speed digital access package to the Internet for businesses through a cable modem. Asked whether Telewest's claim was true, a spokeswoman for rival cableco and telecoms outfit, ntl, said: "I don't think so." "ntl already offers broadband via cable modems and part of its business essentials," she said. Still, that shouldn't mar Telewest's big day. For according to Wood, blueyonder workwise, chairman: "The beauty of blueyonder workwise is that it will give small businesses big-business scale. "It will allow them to compete on a level playing field technologically in the e- economy without the need for hugely expensive IT systems and management," he said. Adam Singer, group CE of Telewest, went on: "To draw an analogy with David and Goliath, it gives small businesses a "cyber slingshot" with which to fight their bigger competitors." Telewest will own 70 per cent of blueyonder workwise, with CobWeb holding the remainder. The service will be offered initially in Scotland, the North West and North East of England, followed by all other Telewest franchise areas. Installation costs £295 and service costs £125 a month - although we're still waiting to hear from Telewest whether that includes VAT or not, although we suspect it does. ®
Tim Richardson, 16 Oct 2000

Secret IRA Web site shut down

A Web site run by the Real IRA has been pulled by its American ISP. UK newspaper Daily Express is claiming credit for the discovery and subsequent removal of the site, which contained security details for Prince William while at St Andrews university. "An anonymous caller" gave the newspaper log on details to the site, which it duly did and found the information concerning Prince William, including where he could be "overlooked at extremely accurate range". The information was posted by the political side of the Scottish National Liberation Army, but the Express claims security forces have confirmed the site was run by the Real IRA. A Californian businessman who owned the domain on which the site appeared said he was unaware of its content. Hopefully we're only getting half the story here - if the site was simply shut down, then very little has been learnt and the Real IRA will simply start up another. Maybe the security forces are a little more Web-savvy than the government. Maybe. ®
Kieren McCarthy, 16 Oct 2000

Colour Handspring Visor on sale

Handspring has released the Visor Prism, the colour-screen version of its electronic organiser. It is capable of producing more than 65,000 colours, 16 times more than its colour competitors. The 16-bit $449 device weighs 6.9ozs, 1.5ozs heavier than its monochrome stable mate, but boasts a faster 33MHz processor. It also has a built-in lithium ion rechargeable battery to counteract the power draining abilities of colour screens. The battery lasts about six hours with continuous use, or two weeks occasional use before needing a recharge in the docking cradle. Handspring has also begun selling the Visor Platinum, a $299 silver model that also boasts the faster 33MHz processor, and has a sharper monochrome picture. ® Related Stories Colour Handspring Visor debuts on Web Handspring chases Palm upmarket with colour PDA
Robert Blincoe, 16 Oct 2000
server room

Oftel to be grilled by MPs

The head of telecoms regulator, Oftel, is to be hauled up in front of a committee of MPs next month to explain how local loop unbundling is progressing in Britain. Actually, that's not exactly true. According to yesterday's Observer, Edmonds is due to get a right "grilling" over his "slow progress in opening up BT's local networks to competitors" from the Commons Trade and Industry Select Committee. And if they have their way, Edmonds could end up all charred and crispy like those horrible burnt bits you find in an oven that's never been cleaned. Martin O'Neill, chairman of the committee told the Observer: "We are concerned that BT is obstructing access to a wide range of important telephone exchanges on the basis that they do not have the space to accommodate competition. "There is a suspicion that this is an excuse, and it has been suggested that regulatory capture has occurred," he said. The newspaper also reports that BT is to be hauled up in front of the MPs and that e-commerce minister, Patricia Hewitt, could even be called in for a chat. However, there are fears that there might not be enough space in the committee room for all three parties to take their seats at once so it's understood that a deliciously difficult system will be used to work out who gets a chair, when - and where. The system for allocating chairs will be based on an electoral system based on the single transferable vote (STV) and if all else fails, then lots will be drawn. However, this complicated but fair process could delay the hearing indefinitely. ®
Tim Richardson, 16 Oct 2000

IT giants who don't pay tax part 1: how Cisco does it

AnalysisAnalysis Cisco is "a modern house of cards, in which the cards are Cisco's stock and the companies acquired for Cisco stock" according to Barrons. Part of the problem is that Cisco is not employing astute financial engineering techniques, so it has been increasing its exposure with little or no appreciation of the potential downsides. One sneeze from the market, and maybe the whole lot could go over. The company's acquisitions are mostly by pooling, which results in distorted accounts. It also has enormous stock-option debt, and customers' purchases are financed via related party transactions. So long as Cisco is on the up, this works, but it's a precarious edifice that stands in peril if the company were to fail to meet financial analysts' expectations. Cisco's acquisition trail In 1993, Cisco was pretty much a one-product company making routers, but its major customers began to buy switches instead. Overnight, Cisco decided to become a network company with an aggressive acquisition policy that became "wired into the DNA of the company". Cisco has made 80 acquisitions so far, with 24 acquisitions in fiscal 2000 and a further eight in the present financial year, which began on 30 July. Pooling - using shares - has been used in more than three quarters of the acquisitions by value, and purchase - using cash - for the remainder. Cisco's dominant market position results from these acquisitions and allows it to charge high prices for its products and leverage its Internet Operating System for its own products. Juniper is the only significant competitor with routers that are compatible with Cisco's. Although Cisco claims that 99 per cent of its IOS is based on open standards, it's the proprietary part that causes the grief. Cisco is squeezing the major telcos like AT&T and Sprint and shutting them out of the market, so that they are having to spend $2 on equipment to get $1 in revenue and perhaps $0.10 in profit (according to a Lehman Brothers' study), with the probability that this will rise to $3 this year and $4 next year. Cisco's results have been remarkable: sales of $19 billion in fiscal 2000, with year-on-year share growth of 55 per cent, net income of $4 billion, net margins of 21 per cent, no debt, and $5.5 billion in cash. There is however a staggeringly high price/earnings ratio, well into three digits. The market capitalisation was at one stage more than half a trillion dollars, which is extraordinary for a company with less than $20 billion in annual revenue. It will therefore be extremely hard for Cisco to maintain its earnings expectations, although so far it has consistently given the Street around a cent more than expected. Cisco is now in the position where profits must grow faster than the stock price for a collapse to be avoided, which puts the company under enormous pressure to increase profits. Pooling, or watering the whisky Some say that using shares to make acquisitions - pooling - is like watering the whisky, since the shares don't show up in the accounts. Consequently, investors are unable to see how each investment is doing, or to make any sensible predictions about cash flow from each acquisition. What Cisco is doing is accelerating depreciation and keeping the assets off the balance sheet. The amazing aspect of this pooling is that it is legal, and it does not have to be accounted for in the financial statements. Barrons opined that Cisco's profits would have been wiped out if it had used the purchase method of accounting for acquisitions, instead of pooling. Cisco includes in its accounts the sales from the companies it acquires, but excludes most of the acquisition cost - a technique that forensic accountant Bill Parish calls "financial deception". Parish claims that pooling resulted in Cisco having a $13 billion tax credit for fiscal 1999, despite reporting a gross margin of more than $7 billion. Even when pooling is not used for acquisitions, in-process R&D can be written off and used to suppress current earnings and decrease the tax bill, so making future earnings look better than they are. Thomas Donlan in Barrons in August suggested that it was as though there were two sets of books when there is such a divergence between financial reporting and tax reporting. Because Cisco uses pooling, it is not allowed by SEC rules to buy back its own shares to reduce the dilution that results from its stock option programme. The SEC was going to repeal pooling in December - it is not allowed in most countries - but Cisco has successfully lobbied to have this put back by six months. Cisco's controller Dennis Powell told the Washington Post that the "elimination of pooling will derail the engine that is driving the strong economy of this country". CEO John Chambers just happened to make a donation of $210,000 to a group of Congressmen shortly before they wrote to the Financial Accounting Standards Board criticising its proposal to scrap pooling. Because both George W Bush and Democrat VP candidate Joe Lieberman have defended pooling, there must be some considerable doubt as to whether it will be banned by the next administration. Despite its profits, Cisco pays no federal income tax, as confirmed in its recent 10K filing with the SEC. There is a provision for income taxes, but "deferred tax assets" from previous years ($1.091 billion in the July accounts) ensure that no tax is paid. Cisco has also received considerable tax credits from the now-illegal foreign sales corporation rebates, but there is no agreement yet with the EU about an alternative export subsidy scheme. Stock options Bill Parish says that Cisco owes more than 800 million shares to its employees in options. Donlan described stock options as deserving "to go under the inquisitor's hot lamp as another dubious tax subsidy that perverts good sense and harms the owners of the corporation that issues them". The WSJ has put Cisco's stock option debt at $40 billion, increasing by some $800 million for every dollar that the share price increases. Cisco is allowed to claim a full tax deduction for the exercise price of share options paid to employees. A consequence for investors is that earnings are being diluted as more shares are issued. Funding the customers According to Parish, Cisco maintains a pyramid by pooling and manipulating gross revenues, and undercutting competitors with equipment leases through its finance company. Not infrequently, Cisco announces vendor financing rather than product sales, which is indicative of the importance that Cisco attaches to funding its customers. This implies that the quality of Cisco's current business is not as good as for competitors who have no leasing business, since Cisco would be reporting income from leasing operations two or three years earlier, when in reality the equipment may be close to valueless because of obsolescence. Cisco has the cash for leasing because it does not use as much cash as its competitors for acquisitions or salaries. Cisco Capital is also suspected by Parish of accepting stock options from customers in lieu of cash, and should any pre-IPO shares appreciate on listing, there would be no tax liability. The accounting information disclosed on Cisco Capital is very scanty. Related party transactions Although Michelangelo Volpi, Cisco's chief strategy officer, has claimed that less than one per cent of Cisco-financed transactions go sour, this does not square with the data and litigation record, for example with Louisiana telco American Metrocomm. In a major denunciation recently the WSJ followed up various accusations and found many examples of related party transactions involving loans to start-ups that were used to pay for purchases, but with the added spice that Cisco employees were permitted to get commissions and arrangement fees for loans, as well as to invest in customers, take part in IPOs, and even receive stock options in customers. Cisco did require that the company was told of such related-party transactions, and required that employees with stakes in a supplier or customer did not make decisions about them. This evidently did not work very well, since Cisco has had to change its policy on conflicts of interest, and dismiss some employees. After Parish told consumer advocate and presidential green party candidate Ralph Nader about Cisco finances Nader has $1.2 million investment in Cisco), Nader called a press conference on the steps of Cisco's offices and called for more corporate accountability, but said he was not selling the stock because he thought he would be better able to bring about change from the inside. If Cisco's financial practices bring about the collapse of its house of cards, this would have enormous implications for US pension funds because so many of them pile money into Cisco's stock. Parish notes with suspicion that PriceWaterhouseCoopers audits Cisco as well as most of the major pension funds investing in Cisco. The prospect of a possible collapse in the US pensions system, triggered by a Cisco collapse, is an overwhelming argument for fiscal reform. Few believe this will happen. ® Related Stories: Accounting masterclass: how Cisco and MS avoid tax IT giants who don't pay tax part 2: how Microsoft does it
Graham Lea, 16 Oct 2000

IT giants who don't pay tax part 2: how Microsoft does it

AnalysisAnalysis Microsoft makes much more money from dealing in stock options than from Windows, and as a result paid no tax in fiscal 2000. It's not the picture you'd expect, and it's not exactly easy to get the real picture either - but it's all perfectly legal, really. In effect, Microsoft has three sets of accounts: the ones its auditors see; the ones it gives to the IRS tax man, with some further breakdowns; and the ones it uses to figure out how to optimise its financial position. Since it discloses only the first set, it requires quite a bit of work to figure out the hidden lines available to Microsoft and which are hard to reconstruct from the data available. We used Microsoft's recent 10-K filing with the SEC, analysis from Bill Parish's web site - Parish is the best-known critic of Microsoft's financial practices - and insightful comment from fool.com and elsewhere in an attempt to dissect how Microsoft manages its finances. Put warrants In 1994, the then-Microsoft treasurer Greg Maffei convinced Bill Gates that Microsoft should sell put warrants to offset the costs and risks associated with buying back its own shares. Puts are essentially a bet by Microsoft that the share price will go up, and the warrants are sold to investment managers at a specific, higher price for redemption on a specific date. This worked well until recently and made Microsoft hundreds of million of dollars that it used to repurchase its shares. But with the downturn in the share price, Microsoft is forced pay the difference between the strike price and the expiry price. The puts are now "in the money", and Microsoft is in effect having to shell out the difference. Fund managers buy the warrants as an insurance, so that they can always be sure of getting at least the strike price back from Microsoft, however much the share price might fall. Microsoft received nearly $500 million for selling its puts in fiscal 2000, down 40 per cent from the previous year. As of 30 June, warrants for 157 million shares were outstanding, with strike prices ranging from $70 to $78 per share and expiring between September 2000 and December 2002. The average price is $74 and the total value more than $11 billion, so that if they had all expired when the share price was $54, there would be a loss of $3.14 billion, dwarfing the $2.1 billion Microsoft has made from hedging premiums and giving a net loss of around $1 billion. Microsoft analyst Rick Sherlund of Goldman Sachs suggested recently that the puts could cost Microsoft around $1 billion a quarter if the share price stays at present levels. Curiously, this liability does not have to be shown on the balance sheet. Stock options Microsoft's game plan for making money from stock options is quite simple. First, print some share certificates. Second, give out handfuls of stock options from time to time to keep the employees slaving away for at least 4.5 years until the shares vest. Third, Microsoft claims a tax rebate from the IRS when the employee takes up the shares and pays tax on them. Microsoft gained $5.5 billion in "stock option income tax benefits" in fiscal 2000, meaning that it had a tax benefit against share options that had been exercised (up nearly 80 per cent over the previous year). With corporate tax levels around 35 per cent, Microsoft effectively received an untaxed benefit of $16 billion. In practice, Microsoft has no choice but to pay employees substantially in shares if it is to keep its present level of staffing, since if it had used cash in fiscal 2000 instead of shares, this would have increased the salary bill by $16 billion - more than Microsoft's net income, and thus resulted in Microsoft making a loss of $7 billion. The beauty of this system for Microsoft is that it did not have to spend anything to grant the options, but gained $2.25 billion (shown as "common stock issued" in the cash flow) from what the employees have to pay to exercise the options. A line that should appear in Microsoft's accounts - but doesn't - is how much it saves as a result of stock option dealing. The total can be worked out by adding three things together: $0.5 billion from put warrants; $5.5 billion from the income tax that employees had to pay to acquire the stock; and $2.25 billion that employees had to pay Microsoft for the stock, making a total of $8.25 billion or 88 per cent of Microsoft's net income of $9.5 billion in fiscal 2000. Microsoft only made $5.8 billion on Windows, $4.9 billion on applications, and lost $1.5 billion on its consumer and other activities. Of course, Microsoft does not have to account for stock option dealing in this way under the present accounting rules, but the benefit that Microsoft gets is clearly of very great importance - and more than that received by any competitor. The provision for income tax in Microsoft's accounts was $4.9 billion, implying it would carry forward a tax credit of $680 million. There appears to be no direct way of identifying the rebate (in effect a subsidy on non-US sales) that Microsoft gets from the now-illegal foreign sales corporation scheme, but it must be considerable. Repurchasing shares There are no effective rules about the number of shares a company can print for its employees, and the only real problem comes when these dilute the shares owned by other investors, which is why Microsoft has a share buy-back programme. The employees have tended to hang on to their shares, but the crunch will come if they start having to sell them on a significant scale to repay loans against them - and with the share price in the low 50s, that time could well be near. This would increase the number of shares in circulation and could result in a further fall in the share price. Not even Microsoft's reserves would be enough to stop such an avalanche of selling, since its $24 billion cash and short-term investments would be insufficient for any large-scale support operation. Microsoft spent $5 billion repurchasing its shares in fiscal 2000. At 30 June 2000, Microsoft had options for 341 million shares vested and 734 billion shares available for future grants. The weighted average price per share was $41.23. The dilutive effect of employee stock options was $338 million. Since fiscal 1990, Microsoft has repurchased 765 million of its common shares and issued 1,990 million shares. The market value of all outstanding stock options at 30 June was $67 billion, and there were 5.26 billion shares outstanding. There are four main problems for Microsoft if the share price remains depressed: because of poor morale, Microsoft had to agree in April to give employees an additional $1.9 billion of new options because the depressed share price had made the previous year's options worthless. Another similar handout may be needed soon. Furthermore, while the share price is down, employees will not exercise so many options so Microsoft could find itself paying some tax this year. Then there's the amounts that Microsoft will have to pay up on expiring put warrants. Finally, major fund managers have been reducing their Microsoft holdings for several months: Fidelity Investments reduced its holdings by 36 per cent to 119 million shares, Janus Capital by 47 per cent to 18.1 million shares and Putnam Investments by 14 per cent to 48.4 million shares, according to their latest SEC filings. Socially responsible investment funds have also been dropping Microsoft holdings as a result of the trial verdict. And let's not forget that the Dominican Sisters Vision of Hope in Fremont, California clearly saw no upside for the shares they were given, so have sold them. MS financial practices questioned Parish believes that if Deloitte and Touche, Microsoft's external auditors, followed the Statement of Auditing Standards (SAS), it should qualify Microsoft's accounts. He also accuses Microsoft of having constructed a "financial pyramid" that has the key weakness that Microsoft has liability for some $67 billion of stock options but is not required to account for these in the balance sheet. In a Senate hearing in 1993 when this issue was discussed, it was claimed in evidence produced by an auditor that Silicon Valley profits would decline by 35 per cent if options had to be shown on the balance sheet. Parish also says that the accounts that Microsoft presents publicly, and files with the SEC each quarter, have been managed to ensure that analysts' expectations are met. We know that the SEC became interested after Microsoft settled with a whistleblower former employee, who funnily enough then shut up, and because Microsoft admitted that the SEC has started a "non-public investigation into the company's accounting reserve practices". This investigation was spurred following disclosures related to a wrongful dismissal claim brought by Microsoft's former (internal) general auditor, Charles Pancerzewski, who had been offered a "resign or be fired" choice in 1996 after he claimed accounting practice irregularities. Pancerzewski complained that Microsoft used its reserves to pad its earnings in lean quarters, with the result that Microsoft misreported its earnings. Microsoft's "unearned revenue from prior periods" in its cash flow statement shows that Microsoft recognised $5.6 billion in fiscal 2000, up from $4.526 billion in fiscal 1999 and $1.798 billion in fiscal 1998. Pancerzewski filed suit under the Whistleblowers Protection Act, resulting in Microsoft's records being subpoenaed. The judge decided there was enough evidence to go to trial on the whistleblower charges, but Microsoft quietly settled out of court, with Pancerzewski apparently accepting $4 million in compensation, a gagging agreement, and the sealing of the court record. It is interesting to recall that pundit Robert Cringely noted a conversation he had with former Microsoft CFO Frank Gaudette. When asked what signs there would be as to when Microsoft stock should be sold, Gaudette said: "Watch for any changes in our accounting. If I need, I can start depreciating the software and maintain earnings growth for years on flat revenue." Although Microsoft hasn't yet reached the point of doing this, it is highly significant that a major change in the accounting system was introduced recently, especially as lacklustre results are expected for the current Q1. The worst scenario for Microsoft would be if the share price stayed depressed during the appeals. A long-term financial decline at Microsoft is beginning to look more likely than a defeat in the appeal courts. ® Related Stories: Accounting masterclass: how Cisco and MS avoid tax IT giants who don't pay tax part 1: how Cisco does it
Graham Lea, 16 Oct 2000
grey vulture logo

Register no longer the worst search engine in the world

Site NewsSite News We've lost count of the number of people complaining that our search engine didn't work (literally - we've probably had a few dozen emails, long since deleted). Of course, it worked - sort of, most of the time. It just wasn't very good, that's all, as it only searched articles for single words - or, even more uselessly, sequences of letters within words. As of now - well last week - the search engine has been upgraded so it will look for strings. This means that you can look up, say RIP Bill, and find 37 relevant stories and one of passing interest(recursively, it includes digs up this story.) Before, you had to make do with a search for RIP to find 1378 "matching documents" - as the search engine spewed up articles containing words such trip or stripe. So, it's not exactly Google. And we've taken our time to get even this far. However, I think we can safely claim that The Register no longer has the world's worst search engine. ®
Drew Cullen, 16 Oct 2000

New radio software: the legal Napster?

Some new fancy software from SongCatcher.com may mean you'll never have to pay for your favourite songs again. And the good thing is that it's perfectly legal. That is according to man behind the movement James Logan. Logan's software downloads radio songs from the Net onto your hard drive and then automatically sorts them into your personal playlist. Since it is perfectly legal to record music off the radio for personal use (in the US anyway) and there is no file transfer involved, the software looks as though it will avoid the legal shenanigans that Napster is involved in. Tracks are recognised by referring to a station's playlist and using some digital sound recognition software. From that point you'll have a list of artists' tracks and song titles which can be jiggled around as you fancy. Save or delete them or put a ban on artists you want nothing to do with. Logan is also working on a find feature - only trouble is you'll have to wait until that song is broadcast before you can get it. So, the ups? Legal, trouble-free, free, simple to use. The downs? Large hard disk needed - about one-and-a-half Gb for 24 hours radio listening on one station. Endless recurrence of annoying pop songs on the station's playlist. You need one of the digital radio tuners that plug into a USB port. But, most annoyingly, you will most likely pick up clips of irritating DJs who think we prefer their pathetic reflections on life rather than a good song as they talk over the start and end of the track. Oh well. What do you want for free? ® Related Link SongCatcher (download the software here if you're interested) The software's patent information
Kieren McCarthy, 16 Oct 2000

Freeserve ‘right to kick out heavy users’

Last week's we reported the (Consumer Association's attack on Freeserve for terminating the flat fee accounts of its 700 heaviest users. This provoked a blizzard of emails - mostly anti-Freeserve. One reader, Ridwan Hughes, has even set up a site for Freeserve abnormal users, hosted at, of all places, the neurotically libel-averse ISP Demon (and here's why). However there were some pro-Freeserve correspondents, moved to reply to the question raised in our article by abnormal user Andrew Smith: "How can one per cent of users on a modem-only service harm network performance to such an extent?" Very simply, Freeserve would be foolish on technical as well as commercial grounds not to have kicked out the abnormal users, they argue. And it's all got to do with contention. Here are their explanations in full. From James McPherson I worked at a U.S. ISP for several years, going from 0 customers in '95 to over 60,000 customers in 2000. Depending on the year, and which product packages we offered, 1% of the customers would monopolize 10-20% of the network. Until network controls were in place there were a significant number of people sharing usernames & passwords. A small group of offenders would routinely use 30 hours per day by being dialed in at two locations. The average user is only online about 1.5-2 hours/day. (Easily verified by the typical 100 hour/month limit on the $20/month dial-up account). Freeserve's 17 hour/day users would each count for 10 "normal" users, so again, 1% of the users are monopolizing 10% of the network. Cut that one guy off and you can get 10 normal customers. It should be noted that people using 12+ hours/day are onling 460+ hours/month? Think about it, they are online from the time you get up until the time you finish your evening meal. As for the other comment of "Even if everyone in that one per cent was online 24 hours a day, sucking up every bit of bandwidth they could get, any half-decent network should still be able to cope." I'd point out that 24 hour/day users would be using 16% of the network. Can you really imagine any business plan letting 1% of users getting that much for nothing? Imagine an all you can eat buffet restaurant where 1% of the customers are expected to eat 10x the average person's meal. That's not a restaurant long for this world. "One wafer thin mint..." From Brian Greenaway Andrew Smith asks the question: "How can one per cent of users on a modem-only service harm network performance to such an extent? Even if everyone in that one per cent was online 24 hours a day, sucking up every bit of bandwidth they could get, any half-decent network should still be able to cope." The answer: In one word, contention. No ISP provides sufficient interconnect bandwidth or modem ports to allow all the users to connect, all of the time (unlike in the US, where they do...), usually they operate at least 20:1 contention, more regularly 40:1. If 1% of the users are connected full time, the hit on the access platforms and interconnects is out of proportion to the 1% figure, equating to 40% at 40:1 and 20% at 20:1 - in fact X% at X:1 contention . (assume 200 users at 40:1 contention - 5 modems supplied, and around 256KB of interconnect. If 1% of users are online full time, that takes out 2 modems, or 40% of the supplied capacity - this is where the problem is.) It is not physically possible or financially feasible to work at 1:1 contention in the UK telecomms market - we've looked into it here, and there isn't enough physical capacity in the UK phone network to handle all those pesky modems. Thanks, BT! So there are good technical reasons for Freeserve behaving as they do - but they really should be minimising contention on an unlimited subscriber service, since it's only natural to stay on line for as long as you like if you feel you've already paid for it. From Julian King Normally I wouldn't write to defend large institutions, let alone ones associated with Dixon's group, that I loathe with a passion, however since in this case no-one else is likely to... But (Andrew Smith) asks: "How can one per cent of users on a modem-only service harm network performance to such an extent? Even if everyone in that one per cent was online 24 hours a day, sucking up every bit of bandwidth they could get, any half-decent network should still be able to cope." Most companies have a modem ration in the order of 100:1, even if it were 25:1, if 1% of their users are using their connection 24 hours a day then 25% of the ISP's modems are tied up, which only leaves 75% for the remaining users. I am a believer in umetered internet access, and had NTL world until recently, although I've since moved onto a cable modem. However if someone breaks the T&C of a cheap service then, especially if the company is subsidising this anyway, I cannot see that they have much to complain about if the company says 'enough is enough'... If the users are not in a position to take advantage of other services like ADSL, then this is hardly the fault of FreeServer, or any other ISP, well apart from BT Internet... ®
Drew Cullen, 16 Oct 2000

MS spends $250k to shore up ‘Most Net-Friendly Senator’

Microsoft's recently discovered interest in politics has resulted in substantial, disguised company backing for embattled Michigan Republican Senator Spencer Abraham, today's Wall Street Journal reports. By a strange coincidence two major issues pushed by Abraham, H-1B visas for IT workers and the high tech business itself, are both dear to Microsoft's heart. Writing in IntellectualCapital.com Bill Bellenger earlier this year described these as "the only two issues on which Abraham's work has been noteworthy." Abraham looked in trouble a few months back, but is now pulling ahead of challenger Debbie Stabenow. According to the WSJ, Microsoft has channeled "soft money" contributions through the Michigan Chamber of Commerce, which fronts the Abraham ads Microsoft has helped to pay for. Other IT firms, including Intel, have backed him strongly, and earlier this year the Information Technology Industry Council, a grouping of most of the biggies, named him and Senator Christopher Dodd (Democrat, Connecticut) High Tech Legislators of the Year on the strength of their H-1B work. Abraham doesn't seem to have been anything like as strident in support of Microsoft against the DoJ as Senator Slade Gorton (Republican, Washington State), but there are a couple of nuggets that point to him being on the side of freedom and innovation. He was, for example, one of the three senators who wrote to Janet Reno in 1998 accusing the DoJ of encouraging "foreign governments to use their antitrust laws against Microsoft." The technology section of his campaign site is however silent on antitrust, although he proudly boast his Yahoo! Most Net-Friendly Member of the Senate Award. The WSJ says that Abraham got $250,000 from Microsoft in August, and that more has been paid since then. His campaign manager is quoted as saying the Senator is proud of the support from Microsoft and Steve Ballmer. Abraham has been able to get Microsoft to open its wallet for other purposes too. In May of this year he reported that he had got Microsoft to make a "major technology grant" for the Clinton (sic) Township Senior Center in Grand Rapids. ® Related story: Gorton hangs trial on Gore - will MS become an election issue?
John Lettice, 16 Oct 2000

Who's the most powerful IT exec in the UK?

AOL supremo Steve Case is the fourth most powerful man in the UK (just behind the prime minister, chancellor and Alan Greenspan, chairman of the American federal reserves), according to a Power 300 list compiled by Channel 4. How come? Because of the Time Warner deal, stupid. That's right, the top man of AOL has usurped Billy Boy Gates in terms of influence, mostly because of the hold he will have over content delivery on the Internet in the next few years. Bill came in a respectable eighth. Cisco CEO John Chambers won the award for highest new entry at 11, closely followed by Chris Gent (Vodafone) at 12. Hans Snook of Orange came in 58. Our favourite visionary Sir Peter Bonfield of BT came 26; the man that's supposed to be watching him, David Edmonds, came exactly 100 places behind at 126. What about the big computer companies? IBM beats Apple beats Oracle beats Intel beats Sun beats HP beats Compaq. The Internet visionaries? Good old Linus Torvalds is up there in 39, beating Tim Berners-Lee, who comes in at 75. Jeff Bezos (Amazon) is down in 138, ahead of Michael Dell at 149. Shawn Fanning of Napster infamy comes 189. So there you have it. The full list of IT-based people in the list is given below. Of course, it's all bollocks really: the 300 placings were decided by a team of seven comprising two journalists, two marketing people, a doctor, a banker and a barrister. Results 4 Steve Case, Chairman and CEO, AOL 8 Bill Gates, Chairman, Microsoft 11 John Chambers, President and CEO, Cisco (highest new entry) 12 Chris Gent, chief executive, Vodafone 26 Sir Peter Bonfield, chief executive, BT 36 Louis Gerstner, chairman and CEO, IBM 38 Steve Jobs, interim CEO, Apple 39 Linus Torvalds, Linux originator 58 Hans Snook, chief executive, Orange 68 Larry Ellison, chairman and CEO, Oracle 72 Dr Andy Grove, chairman, Intel 75 Tim Berners-Lee, director, W3C 79 Stelios Haji-Ioannou, chairman, easyGroup 80 Jean-Marie Messier, chief executive, Vivendi 102 Charles Dunstone, MD, Carphone Warehouse 103 Tim Koogle, chairman and CEO, Yahoo! 105 Barclay Knapp, president and CEO, NTL 109 Scott McNealy, chairman and CEO, Sun 119 David Potter, chairman, Psion 126 David Edmonds, head of Oftel 130 Carly Fiorina, president and CEO, Hewlett-Packard 131 Ben Rosen, chairman and acting CEO, Compaq 138 Jeff Bezos, CEO, Amazon 149 Michael Dell, chairman and CEO, Dell 150 Meg Whitman, president and CEO, eBay 168 Sir Stanley Kalms, chairman, Dixons (Freeserve) 183 Jeff Hawkins, founder, Palm 189 Shawn Fanning, founder, Napster 212 Adam Singer, chief executive, Telewest 248 John Pluthero, chief executive, Freeserve 257 Pat Chapman-Pincher, senior VP, UUNet 299 Eva Pascoe, MD, Zoom.co.uk Related Link Channel 4's site (click on Power List 2000)
Kieren McCarthy, 16 Oct 2000

TSMC sales soar on fab contracts

Taiwan Semiconductor Manufacturing Co(TSMC) last week announced that sales in September reached a record monthly high. However the company's stock fell by almost the maximum limit as the market had been anticipating even stronger revenue figures, analysts said. TSMC, the world's largest producer of made to order computer chips, said revenue in September rose 168.4 per cent over the same month a year ago to NT$16.39 billion. Revenue during the first nine months of the year totted up to NT$112.4 billion, up 127.4 percent on the same period a year ago. Analysts and investors had been expecting revenue of over NT$16.50 billion in September, so weren't quite so impressed. TSMC's share price fell by 3.15 percent to NT$107.50 on the day the figures were release. "The results were a little lower than expected because of the VIA problem," said Peter Wang, an analyst at Fubon Securities Co. TSMC's September sales figures may have made a new monthly record, but they beat the August figures by less than two per cent. VIA is one of TSMC's major customers. "VIA had originally been very optimistic about chipset orders, but in September, its orders to TSMC were lower than expected," said Wang. VIA, the world's second largest chipset designer, reported last week that revenue in September rose by over 250 percent compared with the same month a year ago, but fell seven percent month on month to NT$3.53 billion. VIA is the world's second largest chipset designer. Besides reduced orders from major customers, TSMC may also have suffered from a slightly lower capacity utilization rate and less profitable product mix, analysts said. K C Chen, senior vice president of TSMC, said in a statement that the company's capacity utilization rate remained full. The company was continuing to expand capacity aggressively to meet demand, she said. But while sales may still be growing as the company expands capacity, there are signs that the utilization rate may be slightly lower than in previous months. Fabless integrated circuit design companies are finding it easier to ask for capacity allocation, said Jessica Chang, semiconductors analyst at Nomura International in Taipei. "Two to three months ago, they had difficulty asking for more capacity," she said. Their ability to obtain capacity allocation suggests a fall in TSMC's utilization rate. "A small decline in the utilization ratio might affect the degree by which TSMC is able to ask for a higher average selling price," said Chang. "The company says it's been raising its average selling price, but I think they've been under pressure not to increase the price," she said. TSMC's revenues may also be suffering from a less profitable product mix. "Some communications companies pulled out some orders from TSMC," said Andrew Teng, semiconductors analyst at Taiwan International Securities Corp. TSMC said in mid-August that Motorola Inc, the world's no.2 cellular phone maker, had scaled back estimates of potential future order volumes because of lower than expected demand. Communications chips have higher gross profit margins than PC chips, said Teng. As a result, revenue growth will rise more slowly. "Even though TSMC is running at 100 percent capacity, the product mix has changed, which pulls down the gross margin," said Teng. Still, the company's fundamentals remain strong, analysts said, and its stock was suffering from the bearish market sentiment. "We formally announced our annual sales and profits forecast on Sept 14," said TSMC's Tzeng. "The forecast so far is expected to be reachable." The company predicted revenue for the year of NT$164.87 billion, up over 125 per cent compared with revenue last year. Revenue so far this year amounts to 69 per cent of that figure. ® Related stories Taiwan chip makers slam silent fab claims VIA September sales: not so bad
Our correspondent, 16 Oct 2000

HP gets its garage back

HP has bought the famous garage where William Hewlett and David Packard used to keep their Bar-B-Q, charcoal briquettes, and broken sun lounger. The Silicon Valley shrine, a 12ft by 18ft one car garage, was sold to HP in August for $1.7 million (but this included the house and cottage it served). The plan is to restore it to the glorious state it was in when Hewlett and Packard started their business there with $538 and a product designed to test sound equipment. ® Related Stories HP's going down the cubes Incredible shrinking cubicles - the madness continues
Robert Blincoe, 16 Oct 2000

Oops! Bush email campaign sparks blizzard of spam

UpdatedUpdated Self-styled "leader in permission-based email marketing/e-messaging" ClickAction says it is working closely with the FBI and various ISPs to nail the spammers responsible for sending "millions of unauthorised emails" in the past few days. Said ClickAction coyly: "These illegal emails included references to a ClickAction hosted web site, but are neither sent nor authorised in any way by the Company." At first ClickAction was willing to concede that the messages were "related to a political campaign" the company is running, but the truth spilled out later. In a "Breaking Privacy News" notice posted at www.echampions.com (the GOP campaign site), it's conceded that "unknown third-party organisations are sending out unauthorised emails, that purport to be on behalf of the eChampions program, from lists not in our control." In the past few weeks The Register has received messages sent by ClickAction on behalf of the George W Bush campaign, www.echampions.com. This is run by ClickAction on behalf of the Republican National Committee, as a matter of fact. We've also been contacted by a couple of readers who received messages identical to the 'official' GOP ones we received, but the message headers indicated they came from spammers rather than the GOP/ClickAction Definitely Not Spammers double-act. The bleat now up at eChampions confirms that spammers have indeed run with the ball and sent out "millions of unauthorised emails" on behalf of Dubya. Of course they are unauthorised, and as the spammers seem to have hijacked third party servers to send them out you can understand the FBI's interest. But if they weren't authorised, they were certainly encouraged, and there are some people apart from the spammers who you might reckon are ultimately responsible. Look at the people walking hurriedly in the other direction protesting they're members of RECA and TRUSTe, for starters. As the recruitment message for eChampions2000, sent out by ClickAction and signed by RNC chairman Jim Nicholson, says: "Your role as an eChampion is to send these e-mails on to AS MANY friends, neighbors and family members as possible." At the time we did say this was an encouragement to spam, but we didn't expect enthusiastic Dubya supporters (or indeed Gore secret agents - he invented the stuff, after all) to get quite so badly out of hand. RNC chairman pulls trigger to spam millions for Bush? Oh dear, that's torn it... ® Related story Spam a friend for Dubya! Bush campaign mounts email assault
John Lettice, 16 Oct 2000

NTL in cut-price broadband trial

NTL has cut the cost of it broadband cable modem service for punters in the Cambridge area as part of a trial. It wants to see whether price affects the take-up of the service, one can only assume. The cost of monthly subscription has been lowered to just £24.99 - a drop of some £15 a month. The catch is that users have to fork out for their own ntl-approved cable modem - something that will set them back around £150. According to a circular from the cableco: "ntl is running a cable modem price promotion in its Cambridgeshire franchise (also covering some parts of Suffolk and Essex and Hertfordshire) from October. The promotional packages are only available to new and existing customers within the region." It's also understood that ntl is running a nation-wide trial offering 24/7 unmetered Internet access via its cable network for just £5 a month. ®
Tim Richardson, 16 Oct 2000
Cat 5 cable

Reg readers get the hump with BTOpenwoe

Reg's mail bag was worryingly full this morning following Friday's report about the hassles experienced by someone trying to sign up to BTopenworld - the broadband ADSL service from BT. It appears the tales of delays and lost orders are not isolated and you're not happy. Here's what you've been telling us - and as always, we've kept the comments anonymous since these people are currently trying to get ADSL installed and we don't want to jeopardise that. Here's what one hacked off punter wrote: "BT's order management desk never received my order and it took sales more than two weeks to find it again (their system recognised my credit card when I tried to re-order - so I had to wait for them to find the original again). "By the time the line test was ordered my provisional installation date had come and gone. The line test had taken 13 days, apparently, because they lost my first order, it was marked to be done manually so it did not get lost again. I have read about people who have ordered ADSL through an independent ISP getting their line test results the same day! "I was called to say the line test had passed but then discovered an answer phone message left this morning to say the line test had failed. "Their order process is a shambles." Another reader writes: "Just read the article regarding the lost BTopenworld orders. I registered for the installation the same day the site went live, since then, due to lack of communication, I have resubmitted five times. After still getting no luck, I telephoned them and was told that they would fill in the lost order information and the installation will take place. I don't hold out much hope." And what about this? "I decided to take on BT today because I was told ADSL was going to be installed 'last month'. "I was bounced about all over the place (lucky enough they were all 0800 numbers) and typical situation - 'You have come through to the wrong department - blah blah blah'. "I was switched six times - but I decided to hold my corner." By being persistent, this reader has secured an installation date. He adds: "By the way - I think that their deal is a very good one - I was lucky and registered for their free installation. But of course time will tell. It's a good deal if it all works as promised." And finally.... "Just read your BTopenworld story where you mention that orders are being lost in their system...been there...read the book...bought the T-shirt...lost the order(s)... "Well I am in the middle of trying to get BTopenworld/ADSL installed and have been so for more than three weeks. "Several lost orders later I am still waiting. In fact, I was due to have ADSL installed on XXXXXXXX...received the glossy customer pack this morning with 'Your Internet future starts here...' emblazoned across the front...unfortunately it didn't. "Now they are claiming they have lost my line test results...sales says 'yes your line has passed muster'...engineers say 'no record of the line test in our system mate'...sales guy says 'we'll have to do another line test'. Sales guy eventually admits this is happening all the time." Oh dear. ® Related Stories BTOpenworld on show next week
Tim Richardson, 16 Oct 2000

SCH confirms Compel stand-off

It's all working out rather nicely for Specialist Computer Holdings, the UK's second biggest reseller group. Today it announced that it had 'no intention' of making an offer to take over Compel, the UK's third biggest reseller group. This is not so very meaningful considering the get-out clauses. "SCH reserves its right to review this situation if: 1. The Board of Compel agrees to recommend an offer by SCH; 2. A third party announces a firm intention to make an offer for Compel; 3. Compel announces it is putting itself up for sale; 4. There is a material change in circumstances." SCH has a 11 per cent stake in Compel, the UK's third biggest reseller group, accumulated when the latter's share price into freefall following a profit warning in May. In turn this provoked Computacenter, the UK's biggest reseller group, to launch an informal cash offer in June for Compel, rejected by the Compel board as wholly inadequate. On October 6, Computacenter withdrew its offer - a profits warning of its own in the summer meant that the company would have had no stomach - or shareholder backing - for a hostile takeover. This means now that Compel is no longer in play - although continuing profits gloom and low share price means the company is still vulnerable. It cannot be comfortable for it to have SCH, a big rival, as a shareholder. It looks very comfortable for SCH - the timing for a Compel acquisition looked very poor this year, considering that the privately held company had/ maybe still has its hands full with the integration of Info'Products Europe ( a larger company than SCH) into the group. It can now return to Compel at its leisure. Maybe next year? ® Related stories SCH bucks dealer doldrums Win2K to blame for Computacenter profits slump Pan UK reseller play no longer enough
Our correspondent, 16 Oct 2000

Toshiba pays US govt $33.5m for ‘defective’ laptops

Toshiba has agreed to cough up $33.5 million to settle a lawsuit in the US over potentially dodgy laptops. The settlement will consist of $23 million cash and $10.5 million in Toshiba product coupons, the US Department of Justice said on Friday. The class-action lawsuit involves machines sold to US government agencies and alleges that a defect caused undetected data corruption when data was switched to and from floppy disks. According to the government this increased when multiple programmes were running. Toshiba hasn't admitted to anything, or even acknowledged a defect in its laptops. But it has issued a software patch to stop any malfunctions by floppy disk controllers in about 60,000 of its machines sold to the government since 1998, AP reported. "This settlement is an example of the Justice Department's determination to ensure that goods and services provided to the United States government meet the highest possible standards and are free of defect," said David Ogden, chief of the Justice Department's civil division. According to the Justice Department, the move released Toshiba from liability under the False Claims Act for the sale of the laptops. ® Related Stories IBM, Toshiba team on Linux cluster systems Toshiba to start peddling online music Notebooks to take quarter of PC market in 2000 Toshiba signs $5b Dell supply deal
Linda Harrison, 16 Oct 2000

Sony goes iMac with trendy Transmeta Vaio

Sony is to bring out two trendy versions of its Viao computers aimed at fashion-victim laptop users. From next month punters will be able to get their mits on a blue-black translucent model as Sony shifts from the traditional purple-gray Viaos currently on offer. The Viao QR (PCG-QR I/BP) will also be decorated with a light grey aluminium pipe around the outside of the machine which connects to a fold-out handle. The inside of the Vaio QR is reportedly pretty similar to the rest of the range - with a 13.3 inch screen, CD-Rom etc - so it is just the funky design which Sony is hoping will attract buyers. There are no plans to copy Apple's iMac sales magnet idea and bring out more colours. The laptop will cost $1,850. The other product announced today, the Viao GT (PCG-GTI), is a hybrid laptop/video camcorder. It has a big video lens unit stuck on the side, and both this and the display can be turned 180 degrees. The machine will be based on a Transmeta Crusoe chip, which is designed to make laptops run longer, and it will have a battery life of up to 17 hours. Sony is going to throw in software that will let users make live online personal broadcasts, and the Viao GT is expected to cost $2,785. Last week Sony revealed the latest designs of its robot dog Aibo. The cyberpet will now come in gold, silver or black and express more canine traits such as being able to wag its tail and respond to its own name. ® Related Stories Sony's latest robot dog comes out of the kennel Sony's Transmeta PC: Speeds and feeds Sony seeks PlayStation 2 licencees Fantasy gamer banned in porno row
Linda Harrison, 16 Oct 2000

Brits are miserable

People in Britain are bloody miserable with nearly a quarter of men and women fearing a hopeless future, according to research out today. This shocking insight into the health of the nation comes from NetDoctor.co.uk, which questioned 400 men and women as part of the survey. The results show that nearly one in three men and women often feel downright miserable and feel that life is passing them by. A quarter feel life is unfair, and more than one in 10 feels that fate has dealt them a miserable life about which they can do nothing. Nearly one in 10 think their death would make things better for others. NetDoctor.co.uk expert and psychotherapist, Christine Webber, who carried out the survey, said: "Sadly, these results come as no surprise to me. "It seems people's lives do not live up to their extremely high expectations of what things should be like and it is particularly worrying to see so many people dwelling on morbid thoughts, with a large proportion just plain exhausted by life," she said. The survey explored attitudes to happiness, health, friends and family, sex, relationships, work, spirituality and the future. It didn't look at issues such as the cost of Net access, local loop unbundling, big brother e-spying powers, the way Government tries to make out it's e-friendly when really, it isn't - you know, that kinda thing. Which is just well. For if it did, it would find that Brits weren't just miserable - they were downright suicidal. ®
Tim Richardson, 16 Oct 2000

HWRoundup 3dfx and Nvidia PCI punch-up

At Viahardware Buck has put the 3dfx Voodoo 4 PCI up against Nvidia's MX PCI in a PCI budget card punch-up. It's billed as a young gun versus the wise master kind of thing. Uncle Buck reckons the "GeForce2 MX PCI would most likely scale better than the Voodoo4 4500 PCI with faster CPU's. However the Voodoo4 4500 PCI can do Glide, something that the GeForce obviously lacks at." PC Review is quite excited about the new Asus A7Pro Motherboard, which they call the 'lite' version of the A7V. It says the board features the same overclockers dream tool, the multiplier dipswitch function, but no ATA 100 Controller. In summary "this board is exactly the same, just cheaper!" Check it out here. Over at Sharky they've had a peek at the MSI K7T Pro mobo. They like the price, the stability, the fuzzy logic for overclocking, and the inclusion of the ATA/100 card. Marks against were for having no USB bracket, and no multiplier adjustment. Overall and average board with a good price. Overclockers.com are chillin' with a review of a new radiator from Cool-Computers. This is what the fridge fella says: "It's small so fits nicely inside most cases and has a high flow rate, the disadvantage of course being the water spends less time being cooled. Anyway, it stacked up pretty well - I tested it against my own setup and the full Senfu kit, it came out on top!" ® For more top lab action compilations visit our Hardware Roundup.
Robert Blincoe, 16 Oct 2000

ICANN steps over mark – again

Domain name registrar Regland.com has threatened to sue ICANN with regard to the new top level domains unless it apologies for damaging behaviour and makes a public statement of its official policies. Regland offers a pre-registration service for the new TLDs, including the controversial ".web" domain names. It does not guarantee acquisition of the chosen URL but for $20 offers to keep individuals up to date with the situation and to let them apply for the URL as soon as it is possible. However, on 29 September, ICANN posted an article on its Web site entitled "Names Council Warning: Pre-Registration of Speculative New Domain Names Is Premature". Contained in the article was the following statement: "The Names Council feels it is premature for companies to offer pre-registration services for domain names in speculative new TLDs... The registration of names in new TLDs will be done on a fair basis, and the practice of pre-registration should not be encouraged." Needless to say, this angered Regland. However, it was not this but the direct intervention of ICANN's general counsel Louis Touton that caused Regland founder Scott Harris to send a letter to all ICANN board members asking for the apology and public statement. According to Harris, he had arranged several meetings with big name registrars to discuss the new TLDs. In an act of goodwill, Regland linked to Register.com. However when Touton saw the link-up, he reportedly called Register.com's lawyers "screaming" and asking why it was linked to from Regland's site. Register.com then issued a cease and desist order on Regland to remove its link. Both Harris and Regland lawyer Alan Greenspan confirmed that they had been informed of Touton's conversation by Register.com's lawyers, although the man named on the order, Scott Brown, said he appreciated our concern over the issue but was unable to comment. Harris is furious at ICANN's "absolutely ridiculous" behaviour, calling it illegal. The letter, sent to ICANN on Thursday and cc'ed to The Register has yet to receive a response. He is not keen to go ahead with his threat however. "I don't want to sue ICANN, but if I have to I will," he told us. "I don't even expect an admission of guilt, just an apology." Harris also said that while, in a three-hour subsequent conversation with Touton, ICANN's counsel assured them the argument would not affect their accreditation, Harris feels a public statement of this sentiment would be advantageous. Without such a statement, registrars are very unlikely to criticise ICANN - at least, not until the new TLDs are decided. There is a strong case to be answered in the accusation that ICANN is attempting to monopolise the Internet. This is despite the fact that its very formation was intended to open up the Internet domain market. ®
Kieren McCarthy, 16 Oct 2000

Brit sentenced in Daily Mail hacking plot

Former Daily Mail employee William Culbert approached the Daily Express with an exclusive offer to disable the Mail's operations for a week in exchange for £600,000, but earned himself eighteen months in the slam instead. Culbert apparently sought revenge against his former employer after shift changes caused him to resign. He threatened to use his insider knowledge of the Mail's crummy computer security to disable operations for up to a week. "I have the knowledge and the access to take everything down and I can take it right down." The effects of this attack would last up to a week because "they are not terribly efficient....they do not have a backup system". The Mail has since invested £63,000 in computer security which it undoubtedly needed all along. Express production manager Paul Rudd tipped the coppers, who for three weeks tapped Culbert's phone until they could gather enough evidence to prosecute him. Culbert's lawyer said the defendant was suffering from some manner of depressive illness brought on by the shift changes which inspired his resignation from work. But Southwark Crown Court Judge Peter Fingret addressed Culbert, saying he was "satisfied from everything I have seen and heard that you were planning to bring down the operations of one of the principal newspapers in this country," and that he had devised a "carefully-prepared plan to use your expertise and show that you could do the damage you claimed." Well, it was worth a shot..... ® Related story Hacker thwarted in newspaper plot
Thomas C Greene, 16 Oct 2000

1.33GHz Athlon ‘for sale’ – in Sweden

Dustin, a Swedish computer reseller, is touting on its Web site for the spanking price of 8,225.00 kr. We say "touting" because Dustin announces the part is "Ej i lager" - or not in stock (we've also removed the link, as the company has excised references to the part since we first wrote this story). Not such as surprise, that, as there is no such thing as the "AMD-K7 ATHLON THUNDERBIRD 1330 MHZ FÖR SOCKET A" in the AMD roster - yet. And neither has AMD announced a 1.33GHz chip - yet. So is this a typo? It doesn't appear to be (while we're not so hot on Swedish, we are perfectly capable of thumbing through rows of part numbers). Or is Dustin jumping the gun with a bit of fancy footwork on the pre-ordering front (in which case it's going to get a sound slapping from AMD)? We'll give the company a call tomorrow, and see if we can find out some answers. We don't have the inside info on any 1.33GHz AMD part - yet (but any leaks gratefully accepted). In the meantime, you'll have to make do with this snippet published in June this year by fan site AMD Zone. It outlines a purportedly leaked AMD roadmap which targets Q1 next year for the launch of a 1333Mhz part. This kinda makes sense - AMD ships the 1.2GHz Athlon this week - on Tuesday, October 17, to be precise. So why muddy the sales message by launching a hotter hungrier chip too soon afterwards? ® See also AMD price cuts revisited
Drew Cullen, 16 Oct 2000

Taxan scraps plan to make PCs in UK

Taxan Europe has ditched plans to manufacture PCs in the UK after its Japanese parent company got the jitters. The monitor maker was planning to set up a separate division and open a PC factory in Wales. It was even in the process of submitting plans to the Welsh National Assembly for funding and had poached the general manager of would-be rival system builder Mesh, Paul Kinsler, to lead the project. But the scheme was abandoned just weeks after Kinsler's appointment. "I hired Paul Kinsler - he started to work on September 1 to implement a project for Taxan to launch into the PC market in the UK. He joined based on project approval which had come from Japan," said Hugh Chappell, Taxan Europe deputy MD. But Taxan's parent company Kaga Electronics became nervous at the recent spate of profit warnings in the PC industry - from industry heavyweights such as Dell and Intel. "The long term risks associated with the project were considered to be too great," the company said in a statement. And Kaga bosses scrapped the plan. Taxan Europe staff were told of the decision on Friday. The move has no doubt been a costly one for Taxan - it has paid Kinsler "considerable compensation" in lieu of his contract, which exceeded two years. But Hugh Chappell, Taxan Europe deputy MD, stressed Kinsler was still working for the company. "I want to make it very clear that the intention was to make the announcement about the intention to go into the PC market," said Chappell. "That project is cancelled, but Paul is still an employee of Taxan." He added that the move was "in no way a reflection on Paul." Taxan's decision to start making PCs, which was never officially announced but revealed by The Register in August, also upset some UK system builders who were Taxan monitor customers. The Taxan computers would have been aimed at the retail and direct mail order markets, pitting the company against the likes of Evesham.com, Mesh and the recently troubled Carrera. According to Kinsler, the company, which has a sales office in Bracknell, accepted system builders might take their business elsewhere, but this was in no way a reason behind the decision. He described the u-turn as "very frustrating", but said he plans to stick with Taxan. Kinsler will be kept on to "consider other areas" the parent company is involved in, Chappell said. No more details were given. When asked how he felt about the instructions from his Japanese bosses to cancel the project, Chappell, who has been with Taxan for 15 years, said: "It [the PC manufacturing plan] had my backing and I'd hired Paul Kinsler. I don't start projects and hire people on projects that don't work." "Sometimes you have to respect a decision from above." ® Related Stories Taxan to start building PCs Rivals start sniffing round troubled Carrera Mesh top nob scampers into arms of rival
Linda Harrison, 16 Oct 2000
The Sentinel 2-A mosaic of Africa

Hi-tech South Africa is ‘too white’

The information and communications industry is still too white, a black achievers gala in South Africa heard at the weekend.
Linda Harrison, 16 Oct 2000

AMD price cuts revisited

AMD revised its OEM price lists to take effect, yesterday, October 16. The new prices pave the way for 1200MHz Athlon and 800MHz Duron parts, which ship officially today. That's what AMD is telling the OEMs, at any rate (it wants to make their Q4 "go with a bang"). Incidentally, we revealed details of the new price list on October 5 (story: AMD chops chips by 50 per cent) Our copy said the price cuts would take place on October 9, but we warned there would probably be a delay in timing. We were right. However, in doing the math, our hardware editor Andrew Thomas made a crucial mistake when he wrote: "the 850MHz Athlon drops by more than 50 per cent from around $350 to $165". Unfortunately, it was the 900MHz chip that was $350. The old OEM price for the 850MHz was a somewhat less hefty $282. Which makes the percentage fall much less spectacular. Oops. We're sorry for that. But it doesn't stop there - the figures and percentage drop cited in this article were lifted by Salomon Smith Barney analyst Jonathan Joseph - without credit- for a bearish report on AMD, the amateur sleuths at community financial BB Silicon Investor discovered. Here is what he wrote: "The cuts will be steep, brokers tell us. For instance, a mid-grade 850MHz Athlon could drop by more than 50 per cent from around $350 to $165, while the low-end Duron 600 could move from $79 to $53." It's never nice to be found out: you now know that The Register can't count; you also know that Mr Joseph is ungracious. (Not that we mind in this instance - we prefer not to be a pawn in the chip/ideological/money wars, so anonymity would have suited us fine.) ® Readers - where would we be without them? Thanks to everyone who sent us the Silicon Investor links alerting us to the errors of SSB's - and our -ways. http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=14540859 http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=14541151
Drew Cullen, 16 Oct 2000