Business Tech

Matt Carter (left) and Jason Zander (right)

(Credit: ZDNet UK)

In the wake of the recent PDC and TechEd developer events, Microsoft has decided to put some of its key executives out on the road to explain the innovations that Visual Studio 2010 and .Net 4.0 have in store.

Microsoft is promoting the next version of its Visual Studio tool set, code-named Rosario, as offering new levels of analysis of the application development process.

On the back of a well-rehearsed pledge to democratize the application life cycle management process, the company is hedging its bets with a set of product enhancements it says will meet the software development needs arising from trends such as virtualization, cloud computing, and parallelism.

Attempting to shed light on the forthcoming tools with a visit to the U.K. were Redmond-based Jason Zander, general manager for Visual Studio, and Matt Carter, group product manager in the same division. ZDNet UK caught up with them both at Microsoft's London headquarters in Victoria.

Q: What's the core technology proposition for the new tools and how will the new releases simplify everyday development tasks?
Carter: with VS2010 (Visual Studio 2010) there will be a strong focus on providing insight into the development process in terms of the structure and function of the code. We're also concerned with making it easier to build web applications. We want to encourage the development of departmental business applications that utilize the Office UI and we want to make SharePoint development feel like Visual Studio development so that usability is improved.

We also want to reach out to C++ developers if they have a large investment in terms of lines of C++ code, so they can now carry those forward into a Visual Studio environment. There will also be evidence of our investments in Visual C++ to simplify development of native Windows 7-based applications, and this will mean support for innovations compliant with Windows 7, such as multitouch user interfaces.

Specifically, how will developers be able to work competently with increasingly complex applications if they adopt the forthcoming tools within the .Net 4.0 framework?
Zander: If you learn a language like C# or Visual Basic and you learn a framework like .Net and how to program against it and combine that with Visual Studio, then those three things together provide a very consistent environment for working towards numerous platforms that you may want to target--complex or otherwise.

This is already the case now, but it will be more so when .Net 4.0 arrives.

If we need the integration elements of Rosario so pressingly, why have the so-called development silos you often talk about developed to such a degree? Surely this segmentation has developed through the use of much of your existing technology.
Zander: In a big enterprise there will always be multiple tiers of development with externally facing elements sitting alongside internal business management needs, so silos will always exist to some degree. What we need to look at now is a situation where, let's say, a procurement department needs to build in a new external web service as well as form tighter links to the rest of the business. What we're trying to do with our tools is make sure the programming for those different segments--and, crucially, being able to stitch them together--becomes a simple task.

Your marketing people are fond of saying VS2010 will "democratize application lifecycle management from architects to developers, to project managers to testers." Where's the substance for that kind of statement?
Carter: The substance, for us, comes from the information share and insight improvements we've made. We've looked very hard at the problem of non-reproducible bugs--when a tester tries unsuccessfully to replicate reported defects. We have a new test tool that allows a developer to view a screen-captured video of the defect as recorded by the tester. At the same time, the developer can also view the historical debugging information and machine state at the time of the problem. By lowering barriers and making sure everyone works from the same repository of information, you get a far greater sense of a team and that, for us, represents democratization.

Visual Studio Team System [VSTS] 2010 architecture is claimed to bring non-technical users into the modelling process to define business and system functionality. How do we keep business managers reigned in to keep their requirement specifications under control?
Carter: It's all about transparency. Through VSTS we will aim to try and make available all the reporting and business intelligence necessary for business users to be able to view the status of a project. So if that reporting exists and is delivered to business users via tools they're used to, such as Excel and Outlook, it must represent a positive addition to the project at hand.

Your next Windows Azure tools are aligned to development for the cloud. How will they look and feel in practice?
Zander: We want to make it possible for developers to use all their .Net programming skills for the cloud. There will be a sandbox security model similar to that which we have provided with the ASP.Net web application framework. The best practices you can find with that technology will also extend to Azure on the cloud.

Carter: With Azure, the key thing is everything will look very familiar to you as a Visual Studio developer, because the programming model is the same. With the same components at hand, we hope developers will see a movement to the cloud as a natural and evolutionary extension.

What tools do you have to help developers with the techniques chip developers say are necessary for multicore?
Zander: In terms of VS2010 and parallel computing, there is a new set of libraries specifically built to enable to developers to write parallel code. At the base level we have a new runtime called the concurrency runtime, which allows me as a developer to take advantage of all the cores present on the machine. Secondly, the tooling inside VS2010 will be enhanced so both the debugger and the profiler are able to track all the extra work you're scheduling for the machine and see how well it is executing.

You're making a big play for Web developers with the new products. Other than full support for Silverlight, which we would have expected, what else is new?
Zander: Of course, it's more than just Silverlight support, but as we head towards version 3.0 that will be important. With the new products we have incorporated new model-view-controller (MVC) patterns and we're also shipping the JQuery JavaScript library with VS2010 including full IntelliSense support for auto-completion functions.

VSTS 2010's testing and debugging features have been described as a black-box recorder to help eliminate non-reproducible bugs. Do you think you'll "eat your own dog food" and improve your own beta releases with this technology?
Zander: Absolutely. One of the sessions people will have seen at PDC and TechEd delivered by Stephanie Saad was designed specifically so she could document all the instances where Microsoft is "dog-fooding" on the development of VS2010 and VSTS. It is used internally right across teams like the Microsoft Office division where thousand of developers will be contributing code at any one time. In fact using "dog-fooding" as a verb in this way has been the norm at Microsoft for some time now. We're pretty comfortable with it.

Adrian Bridgwater of ZDNet UK reported from London.

Sun Microsystems last week launched its second major restructuring for the year--with good reason.

The company posted a sizable $1.68 billion net loss in its fiscal first quarter last month, amid a 7 percent decline in revenue, as its traditional business of high- to midrange servers running on Sparc processors took a hit. Add to that a steep sell-off of its stock over the past 12 months, falling from about $25 a share earlier in the year to close at $3.02 a share on Friday.

For the embattled tech titan that's lost its allure over the years, a dramatic restructuring is virtually the only option to make good for Sun's investors--given prospective buyers aren't around, say some investment bankers and private equity players.

Here are five reasons why Sun won't be acquired, even if its stock is trading at dramatically low prices:

1. Market turmoil and tightening credit markets dish up a double whammy for Sun.

Prospective buyers hoping to use their stock as currency to buy Sun are facing a market that is dramatically undermining the value of that currency. As a result, that leaves prospective buyers with the prospect of using cash--a precious commodity in light of the credit crunch that has enveloped corporate America and beyond.

2. Sun's parts aren't greater than its whole.

The company's software offerings have yet to offset the losses on its traditional business lines, even though it's banking on open source as paving the way to profitability for the company and its high-end Sparc servers. Products from the StorageTek acquisition and legacy storage products are rather long-in-the tooth, said one major private equity player.

And this source noted that any likely buyer that would snap up various parts of Sun (like IBM, Hewlett-Packard, EMC, and Microsoft) is already in the market and taking share. That begs the question of why it would want to buy its competitor's business units when it's already making progress in the market.

Nonetheless, it could still be an attractive proposition. Analyst Toni Sacconaghi of Sanford C. Bernstein said in a research note last week:

We believe a controlling shareholder could also realize meaningful value by selectively selling, harvesting, or growing specific business lines within Sun. We believe such a strategy could drive $7 to $8 per share or more in value, though the value-creation potential is difficult to quantify precisely.

He pointed to Sun's MySQL, Java, and other software assets as potential sale items, as well as letting some of its slow-growth lines of business--such as its high-end Sparc servers, StorageTek, and legacy storage products--die a slow death by scaling back research and development investments, direct sales teams, and support.

Sacconaghi, however, notes such a strategy carries some risks:

The harvest opportunity at Sun carries significant risks for shareholders, however, including uncertainty around what buyers would pay for Sun's assets (and indeed, if any buyers can even be found) and the risk that public equity investors will not ascribe appropriate value to a declining business. Given this, and the relatively limited upside potential available, we continue to believe aggressive cost-cutting is the most viable strategy for Sun to regain profitability.

3. Lack of debt financing makes so-called leveraged buyout companies, which have had turnaround successes with tech companies such as Seagate Technology, a tough go to take the company private.

"There is no debt financing available today, which makes LBOs (leveraged buyouts) a nonstarter in every category, not just tech," Roger McNamee, a managing director with private equity firm Elevation Partners, said in an e-mail interview.

He added it will take both availability of money and a significant easing of rules that regulate LBOs, before there is a sizable increase in the number of technology buyouts. As a result, McNamee does not expect to see any transactions this year involving companies going private.

McNamee added there were a fair number of private equity transactions in tech over the past five years, since the Seagate IPO, but most were transactions where most of the return came from leverage and cost cutting, rather than growth.

"My view is that the better way to do private equity in technology is acquire a large stake and partner with management to transform the company," McNamee noted. "Being public creates hassles during the transformation, but at least you don't have to worry about getting public again."

4. Lack of earnings growth potential and company mismanagement.

A management-led leverage buyout with support from private equity players is not a likely option for Sun, even when the choke hold on debt financing lessens, said another source, who comes from a major private equity firm.

Sun's problems are multifaceted--an inability to deliver a successful strategy, an ineffective management team in CEO Jonathan Schwartz and founder Chairman Scott McNealy, and a lack in its ability to execute, said this private equity source.

As a result, cheap stock or not, it would take demonstrated earnings growth potential to seal a deal.

And one investment banker noted: "They have a great installed base, but their lack of product innovation is hurting them. They need to solve their product position first, otherwise it's like catching a falling knife."

5. There are other investor concerns.

Last May, Southeastern Asset Management, an investor that seeks out downtrodden stocks that show potential, took a 10 percent stake in the company and steadily increased its position through the fall to 21.2 percent.

But late last month, it became apparent this investor was not a happy camper. In a filing with the Securities and Exchange Commission, Southeastern Asset Management went from being a passive investor to an active one, in which it wants the flexibility to hold talks with Sun's management and also third parties.

Southeastern has previously declined to comment on its investments in Sun.

And KKR Private Equity Investors, which last year invested $700 million in the company in exchange for two interest-bearing senior notes, will likely want its principle paid back in cash and not Sun stock, when the notes come due in 2012 and 2014.

Sun's shares are currently trading substantially below the $7.21 a share value that would be assigned to its stock if KKR wanted its $700 million principle in Sun shares and not cash.

KKR declined to comment on its Sun investment, but one private equity investor noted Sun's shares are underwater in relation to the $7.21 a share price. So it makes more sense for KKR to take the money, rather than to become a sizable equity holder in the company.

Sun was not immediately available for comment.

Sun also may be less attractive to private equity players because its $2.6 billion in cash and short-term securities is not as sizable as it may seem. When adding in the $700 million in senior debt that Sun will likely have to pay out in cash, that reduces its net cash and short-term securities by roughly a third.

As a result of these factors, a white knight buyer is unlikely to appear on the horizon anytime soon, despite Sun's cheap stock price, which is down 85 percent from its 52-week high, and substantially lower value in comparison to its competitors IBM, HP, and Microsoft.

It's a "screaming deal," said the investment banker. That is, if you don't look at all those other factors.

Discontent with Intel graphics goes back a few years. But the unsealing of 3-year-old e-mail exchanges between Intel and Microsoft reveals something about the present, too.

Intel 915 chipset

(Credit: Intel)

First some background. Intel makes integrated graphics silicon--that is, graphics functionality that is built into its chipsets. Performance is not the name of the game for Intel. Delivering power-efficient, adequate graphics that can handle everyday tasks and do basic gaming is the goal. Anything beyond this is left to the high-octane discrete chips from ATI and Nvidia.

"We've always been consistent that high-end gamers should use discrete graphics," said Intel spokesman George Alfs. Intel graphics is also inexpensive and comes virtually free on some PCs.

But Intel graphics silicon is everywhere. It ships in tens of millions of PCs every year. And herein lies the issue. The silicon becomes the lowest common denominator that Microsoft and game developers must write to because it's so ubiquitous.

This is the root of the Intel 915 integrated graphics and the "Vista Capable" controversy. As widely reported, Intel's 915 (which shipped as standard in many PCs) was not up to running Vista's Aero Glass interface (among other features). So, Microsoft dropped this as a requirement.

Reams of material have been released according to this Seattle Times blog documenting the infighting that took place trying to resolve the 915 issue. The documents stem from a lawsuit that alleges Microsoft misled consumers by lowering the requirements so a 915-based PC could be designated as "Vista Capable."

According to an unsealed motion citing e-mail and internal Intel and Microsoft documentation released by U.S. District Court Judge Marsha Pechman, Microsoft objected to an internal Intel link "positioning the 915 GM as optimum for Windows Vista on mobile PCs." The motion states that Microsoft viewed this as "misleading" and "egregious" and that Microsoft asserted that the 915 chipset "should not even be in the list of recommended hardware for Windows Vista" and further opined that the "higher end of the chipset choices" from Nvidia and ATI were more suitable.

But that may not be the whole story. According to an article on Channel Web, Microsoft did not "cave" to Intel and the 915, but rather "it was Microsoft, led by Poole, that initiated that change all on its own." Will Poole at that time was a Microsoft senior vice president.

"We are seriously confused. We believed that 915 is NOT vista ready as it will never have WDDM drivers," according to an e-mail from Intel Vice President Renee James, cited in the Channel Web article. (WDDM stands for Windows Display Driver Model.)

Whatever the case, Intel integrated graphics was so commonplace that it was a big issue.

(For the record, Nvidia had issues with its drivers and Windows Vista too.)

Intel targets graphics
Fast-forward to September of 2006 and the Intel X3000 and X3100 (G965/GM965) graphics. With this silicon, Intel decided it was going to provide a better graphics experience for gaming in particular. The 965 started shipping in September of 2006, but it took Intel nearly a year to write the drivers needed to unlock better performance.

"New drivers for the company's 965GM chipset, found in many notebooks and midrange desktops, still don't deliver the uniform performance increases promised earlier this year, according to testing by CNET Labs," CNET News' Tom Krazit wrote in October 2007.

Intel documentation (here) says that "Intel recently introduced the 15.6 and 14.31 Windows Vista and Windows XP graphics drivers that enables Shader Model 3.0 including support for hardware vertex shader and HW TnL on the Intel G965, GM965, and G35 Express Chipsets."

The document continues: "This capability has shown enhancements in game compatibility as well as game play" and concludes the "Introduction" by saying: "The end result is that Intel is able to deliver the highest possible frame rates by leveraging Intel's world class processors."

Now fast-forward to the present and the MacBook Air. The first version of the MacBook Air was rolled out in a show of great camaraderie with Intel CEO Paul Otellini. Intel silicon all around: not only a special version of the Intel mobile Core 2 Duo was used, but Intel X3100 graphics, too. At that time, Apple CEO Steve Jobs heaped praise on the Core 2 Duo processor.

Then came the MacBook Air update. Intel graphics out, Nvidia 9400M graphics in.

This time Apple stressed the graphics capability of the Air.

Gains and compromises
To reiterate, the issue is not that Intel graphics are horrendous. It's simply that Intel's graphics silicon is so widespread that it becomes an issue for people, for example, who buy a laptop and later decide they want to play games at a certain level or do more high-level graphics.

What do analysts think about the X3100? Jon Peddie says Intel graphics has improved, but he is cautious. (Note that the X3100 has recently been superseded in laptops by the Intel GMA 4500MHD.)

"Whereas it would never be used by a real gamer (of which I like to consider myself) it will allow someone with a tighter budget to have some experience (with gaming on a PC)," Peddie said in response to an e-mail query. Peddie does research and testing of graphics products from Intel, Nvidia, and ATI.

Peddie: "Based on early tests we have run on the X3100, we found it ran all the games we tried, i.e., Spore, Stalker Clear Sky, Crysis, and Far Cry Warhammer, but "mind you we had to use lower resolution than we would normally, and if the game didn't automatically turn off some of the special features, we had to in order to get a descent frame rate."

He continues: "But the fact that it ran at all is I think a major slap on the back for Intel. Turning features off and reducing resolution is a reasonable compromise considering the costs."

But Intel (to state the obvious) is not Nvidia. "Now having said that I also have to say that the Nvidia mGPU 9400 (now used in the MacBook Air) is much more capable and you can run at higher resolutions with more features turned on," Peddie said.

The conclusion. Intel graphics is adequate and probably does more than enough for most users. But the issue will never go away because integrated graphics set itself up as a low-watermark benchmark for competitors (that offer higher-end discrete cards) to surpass. Meanwhile, it forces multimedia and game developers to make their games and applications run in a less-than-stellar way on millions of PC worldwide.

With the overall economy slumping, the tech industry is taking its fair share of hits. We'll keep updating the chart below as news of company changes comes in. See our complete coverage of how the tech sector is faring here: Tracking the tech downturn.

Know of a layoff not listed here? Let us know on this form or e-mail us.

See also: The spreadsheet of sunshine: Who's hiring.

The biggest search Yahoo is working on involves finding a new CEO.

Eighteen months after returning to the helm of the company he co-founded in 1994, Jerry Yang will step down as chief executive when a replacement is found, the company said. Yang will resume his position as chief Yahoo, the role he had before taking over in 2007 after former CEO Terry Semel departed.

Yahoo has been struggling for months to improve its financial performance, but things have gone from bad to worse for the company this year, and its stock has sunk to less than $10. First, the company thwarted Microsoft's unfriendly attempt to acquire Yahoo outright, and later just its search business, though Yahoo appeared to grow more interested in a deal even as Microsoft grew cooler. At one point, Microsoft offered to acquire the company at $33 per share.

After reporting a 64 percent drop in net income and warning that the advertising market is softening, Yahoo announced in October a layoff of at least 1,430 by the end of 2008. The cut follows another in which about 1,000 Yahoo employees lost their jobs in February.

But if Yahoo thinks it can get Microsoft back to the negotiating table, it would do well to try the lure of a search-only deal--regardless of whether Yang is CEO. That's the assessment from one influential Microsoft source.

"If Jerry was still CEO and called (Microsoft CEO) Steve (Ballmer) tomorrow and said, let's talk about a search-only deal, I think Steve would listen," said the source. "Microsoft is open to a mutually beneficial search deal. But people are still lusting after a Yahoo (buyout) and no one is thinking about that in Redmond. There's been no discussion of it for months and months."

And while Ballmer said the software giant might be interested in a search-only partnership, a buyout of the entire company is out of the question. His comments sent Yahoo shares into a free fall, plummeting 20.9 percent on Wednesday.

"We are done with all acquisition discussions with Yahoo," Ballmer said, adding that he has said this a bunch of times but that some people remain "confused."

"We did our best," he said. "We've moved on."

Changing of the guard
Microsoft it is changing its strategy for offering PC antivirus software, with plans to discontinue its subscription-based consumer security suite and instead offer individuals free software to protect their PCs. Code-named Morro, the new offering will be available in the second half of 2009 and will protect against viruses, spyware, rootkits, and Trojans.

With the arrival of Morro, Microsoft plans to stop selling the Windows Live OneCare service, although the two services are not identical. Morro lacks OneCare's non-security features, such as printer sharing and automated PC tuneup. Morro will, however, use fewer resources than the subscription-based offering, making it better suited to low-bandwidth systems and less powerful PCs.

Microsoft's decision to discontinue OneCare also means an end to Equipt, a $69-per-year subscription version of Office and OneCare that the company had been selling on the shelves of Circuit City.

The copies will be headed out of retail stores in the coming weeks, although the subscription will run through sometime next year. But since Microsoft plans to offer free licenses of Office to Equipt customers when their subscriptions end, those existing copies look like a pretty good deal for those who need Office Home and Student--the version of Office included in Equipt.

Microsoft's decision to offer free antivirus software puts rivals such as McAfee and Symantec in a tough position. To be sure, those two--and other rivals--will be able to tout products that offer a broader range of features than Microsoft plans to deliver with Morro next year. At the same time, "nada" is a tough price to compete against.

That raises the question of whether those companies or others may look to antitrust regulators for help. One thing in Microsoft's corner is the fact there are already free antivirus products on the market, such as AVG, though typically security vendors look to up-sell consumers from low-cost or free products to higher-end ones.

Rowan Trollope, senior vice president of Symantec's consumer business, characterized the announcement as a "capitulation by Microsoft, and a reinforcement of the notion that it's simply not in Microsoft's DNA to provide high-quality, frequently updated security protection."

Amy Barzdukas, senior director of product management for the Online Services and Windows Division at Microsoft, had dismissed similar criticism from McAfee. "If the current approach isn't working (as far as protecting consumers broadly) we need to go with a new approach," she said.

Sing along with DRM
Tennessee has agreed to filter computer networks for unauthorized music downloads at the state's colleges and universities. Tennessee Gov. Phil Bredesen signed into law a bill designed to thwart music piracy at the state's campuses.

The bill requires Tennessee public and private schools to exercise "appropriate means" to ensure that campus computer networks aren't being used to download copyright material via peer-to-peer file-sharing programs, the Recording Industry Association of America said.

A year after iTunes began offering music without copy protection software from EMI, Apple is in discussions with the other three top recording companies about acquiring DRM-free songs, music industry sources said. The talks are still preliminary and no deals have been finalized, but one source said one of the major labels is close to a final agreement. Rumors have been swirling on the Internet for a week that Sony would soon be offering music without the controversial digital rights management software.

With fewer consumers than hoped for signing up for all-you-can-eat music subscriptions, Microsoft and the record industry are trying to make the option more appealing. Those who pay for the $14.95 a month Zune Pass subscription will start being able to permanently keep 10 tracks a month. The subscription already allows unlimited music downloads, but users have the ability to listen to the music only so long as they are subscribers.

Under the new plan, Zune Pass members will essentially get $10 worth of music to own each month, along with whatever subscription content they download. The move comes as much of the consumer enthusiasm in the digital music industry has been for music that is sold free of DRM (digital rights management) protections.

Guns N' Roses fans who have waited 17 years to hear the rock band's new album were rewarded with a free Web debut before it goes on sale next week. Guns N' Roses' Chinese Democracy made its debut on the band's MySpace page on Thursday. Fans can stream the album for free before it goes on sale Sunday in an exclusive deal with Best Buy. Listeners, however, will not be able to download tracks from the site.

Also of note
Internet advertising revenue for the third quarter was nearly $5.9 billion, representing an 11 percent increase over the same period last year...Microsoft plans to offer one more public test version of Internet Explorer 8 before releasing the final version of the updated browser in 2009...Transmeta, a company that once hoped to rival Intel and Advanced Micro Devices to power portable computers, plans to sell itself to Novafora for $255.6 million in cash.

Upstart Boston-Power is within months of having its long-lasting batteries shipped in notebook PCs, as it eyes expansion into portable power packs and electric cars.

The three-year-old company says its Sonata batteries are able to recharge to 80 percent capacity in 30 minutes, versus two hours to get to a 90 percent charge in conventional notebook batteries. And Boston-Power's batteries can be recharged 1,000 times before their performance starts to wane, versus 150 times in today's laptops, according to founder and CEO Christina Lampe-Onnerud. Typically, the amount of computing time that a laptop battery supplies goes down after hundreds of charges.

Boston-Power founder and CEO Christina Lampe-Onnerud holding a Sonata lithium ion battery cell.

(Credit: Martin LaMonica/CNET Networks)

I caught up with Lampe-Onnerud on Tuesday at the Fourth Conference on Clean Energy in Boston. Ironically, we bumped into each other at a water cooler where I was doing what so many laptop toters are stuck doing: plugging into a free outlet because my battery was dying.

Lampe-Onnerud says the arrival of Sonata batteries will mean a completely different user experience, allowing people to go all day without having to carry cords and search out public power outlets.

Hewlett-Packard last year said it has tested Boston-Power's batteries.

Without mentioning HP by name, Lampe-Onnerud said Boston-Power expects to announce its first customer soon. A company representative on Wednesday said Sonata-powered laptops will be available early next year. Lampe-Onnerud added that the company is working with smaller laptop providers as well.

Boston-Power, which has raised $70 million, has a technology road map to improve further on performance. In its labs, it has batteries able to recharge 1,400 times. Next year, it intends to release a portable power source for recharging consumer electronics, either through a USB connection or a small solar panel, Lampe-Onnerud said.

In two years, it expects to have a product for plug-in electric cars, she added. "The specifications for laptops and electric cars are remarkably close," she said.

The company has done a number of things to improve lithium ion battery performance and safety, according to Lampe-Onnerud. The company has also redesigned the battery pack to have fewer cells and has made a number of manufacturing improvements, she explained.

She argued that the Sonata batteries are a "clean technology" because they are more energy-efficient. The company also seeks to use less harmful reactive chemicals and no heavy metals.

To manufacture its batteries--a significant business challenge for any new battery company--Boston-Power has set up factories in Taiwan and China.

The Consumer Electronics Show has become a mammoth event every January in Las Vegas, but the down economy is paring it back as Cisco Systems, Yahoo, and other companies scale back their presence.

CES remains a useful way for technology companies to meet with retailers, press, and the media. But for some in the current economic climate, it's not useful enough to pay $35 per square foot for a sprawling booth on the Las Vegas Convention Center's cavernous interior.

"This was to have been Cisco's first time as a formal exhibitor," said spokesman Jim Brady. "Given (Cisco's) focus on reducing costs, the company has decided to scale down its participation in CES in Las Vegas in January 2009." Instead, the networking giant is sticking with a more modest space rented at the Venetian Hotel supplemented with videoconferencing technology.

Cisco isn't the only one to scale back. Also on the list are Yahoo, Seagate, Logitech, and Belkin, company representatives confirmed. Philips won't have a space on the CES show floor, either, though Funai, which has taken over manufacturing and selling TVs under the Philips brand in the United States, will pick up some of the slack.

The Consumer Electronics Association, which runs the show, said the show will be the third largest in terms of floor space, shrinking from its size the peak years of 2007 and 2008.

"The economy is causing some companies that may have had booths to say, 'Maybe we want to be in a meeting room instead,'" said association spokeswoman Tara Dunion. Despite it, the total number of exhibitors is level from 2008's show at about 2,700. "We're also seeing companies on the show floor for first time," including Verizon Wireless, T-Mobile, Iomega, and Mattel, she said.

And there's a silver lining, too. "Vegas hotel rates are coming down because tourism travel to Vegas is slower than it's been in years. That provides an opportunity for business professionals," she said.

Incentives to show
But the organizers are working hard to keep the show as lively as possible. One promotion is aimed at technology buyers--the middlemen who buy all those TVs, gadgets, cameras, and other devices before selling them to ordinary folks.

... Read more

Salesforce.com announced Thursday a 43 percent increase in third-quarter revenue, beating Wall Street's expectations.

Shares of Salesforce.com rose about 11 percent in after-hours trading to $25.30 a share. It closed the regular trading session at $22.83 a share, up nearly 4 percent.

In the period ending October 31, revenue reached $276 million, fueled by growth in the company's subscription and support business. Wall Street had been expecting Salesforce.com to generate $273.5 million, according to analysts' estimates compiled by Thomson Reuters.

The online customer relationship management (CRM) software developer posted net income of $10.1 million, or 8 cents a share, for the quarter, up from $6.5 million a year ago. That beat analysts' expectations of 7 cents a share, according to Thomson Reuters.

"In the third quarter, we continued to add customers at the same record level we did last quarter, at a time when the traditional enterprise software world was retrenching," Marc Benioff, Salesforce.com CEO, said in a statement.

Indeed. Enterprise software applications giant SAP shook the industry to the core, when it issued its third-quarter results, posting a decline in profits and yanking its projections of how it would perform for the rest of the year.

Salesforce.com, however, issued its fiscal fourth-quarter 2009 guidance for Wall Street, as well as its expectations for fiscal year 2010. The online customer relationship management software developer projected its fourth-quarter revenue will fall short of analysts' current expectations.

The company expects to generate $284 million to $285 million in revenue for the quarter. That's below Wall Street's current forecast of $289.4 million, according to Thomson Reuters. And the CRM developer anticipates earning 6 cents to 7 cents a share.

The company anticipates it will post revenue of $1.35 billion to $1.36 billion for the full fiscal year of 2010.

Updated at 1:37 p.m. PT with comments from earnings call.

Dell on Thursday reported third-quarter profit of $727 million, or 37 cents per share, and revenue of $15.16 billion.

Profits were down 5 percent from the same quarter a year ago, though earnings per share improved 9 percent. Revenue was down 3 percent.

"We expect the short term to stay challenging," says Dell CFO Brian Gladden.

(Credit: Dell)

Most analysts had been anticipating earnings of 32 cents per share and $16.3 billion in sales.

A year ago, Dell earned $766 million, or 34 cents per share, on $15.65 billion in sales.

Chief Financial Officer Brian Gladden said on a call with reporters Thursday that the company is "pleased" with its performance during the quarter, "especially against the backdrop of the global economic environment."

Looking to the future, Gladden said Dell continues to see a slowing in demand "almost all" of its businesses. "We expect the short term to stay challenging," he said, but refused to provide any additional commentary on what Dell expects for the fourth quarter or for next year.

He did say that the company would make plans on the expectation of tightening IT budgets in the next year.

Some bright spots for Dell included its global consumer business, which saw a 10 percent improvement in profits and shipments that rose by one-third.

Dell was also able to reduce its costs further than expected. The company previously said it had met its goal of reducing employee headcount by 8,900--Gladden said Dell actually cut 10,800 positions.

The company said delaying or canceling any planned products was not part of its cost-cutting measures. Earlier there had been reports Dell had delayed the debut of a music player product until after the holiday season.

Regarding Netbooks, Gladden described the product category as a "complementary" business, and said that market response for its new Inspiron Mini products as been positive. So far, he said, Netbooks haven't affected the demand for any of its other products.

On a separate call later Thursday with investors, chief executive Michael Dell said that including 3G capability in its Netbooks has been well-received and that the company is working on signing up more wireless carriers to carry the Mini Inspiron. So far the company has partnered with European carrier Vodafone.

Dell has been battling to get its costs under control as part of a broad turnaround plan. The company will continue to look at ways to get the costs of its products down, including reviewing its supply chain and manufacturing process.

Dell shares rose 5 percent to $10.30 in after-hours trading.

There's not a lot of good news about the PC industry lately.

Gartner is predicting that IT spending will be down, and Intel says it sees signifi