The UpStream (Page 242)

HP Takes $9 Billion Hit from Acquired Asset, Autonomy, Citing Accounting Errors

posted Sunday Nov 25, 2012 by Nicholas DiMeo

HP Takes $9 Billion Hit from Acquired Asset, Autonomy, Citing Accounting Errors

HP has been unable to pick itself back up after being knocked down from its rendition of CEO roulette. Meg Whitman, former eBay CEO, picked up the slack and tried to continue on but problems continue to plague the company. If wavering on the future of webOS, deciding to make another smartphone and weathering a 30,000 employee layoff wasn't enough, HP has recently discovered a huge blunder with their $11 billion acquisiton of British software company, Autonomy. In fact, things are so bad now that the company announced this week that it would be devaluing $9 billion of the acquired assets in order to balance the sheet, citing "accounting improprieties and disclosure failures" during the purchase of Autonomy.

CEO Meg Whitman broke the bad news during HP's fourth-quarter earnings call. She said that Autonomy's books were completely wrong and way off before HP even looked to buy the company. It would appear that Autonomy's accounting team tried to hide their issues in order to sell their assets and jump ship. The earnings report (source link) explains the problem,

HP recorded a non-cash charge for the impairment of goodwill and intangible assets within its Software segment of approximately $8.8 billion in the fourth quarter of its 2012 fiscal year. The majority of this impairment charge is linked to serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation plc that occurred prior to HP's acquisition of Autonomy and the associated impact of those improprieties, failures and misrepresentations on the expected future financial performance of the Autonomy business over the long-term. The balance of the impairment charge is linked to the recent trading value of HP stock. There will be no cash impact associated with the impairment charge.

So what's next for the company? Even through all of this, Whitman emphasized that HP is still "100 percent committed to Autonomy and its industry-leading technology." I guess while the accounting team were a bunch of morons and essentially thieves, that the software is still a viable product. HP believes this too it would appear, as Whitman said the turnaround strategy on this asset will now be a "multi-year journey (that) will not be linear." I wonder what that journey will entail but I can assure you it will be an interesting story to follow as it develops. If we discover any specifics behind the falsifications of Autonomy's records, I'll be sure to share it with everyone. Until then, any guesses on what HP's next smartphone will be? Give us your best guesses in the comments below.

Intel's CEO Paul Otellini to Step Down in May After 40 Years of Service

posted Sunday Nov 25, 2012 by Nicholas DiMeo

Intel's CEO Paul Otellini to Step Down in May After 40 Years of Service

Intel held a conference this week to inform us that the company's CEO, Paul Otellini, is hanging up the work boots after almost 40 consecutive years of leading the processing company into the future. Otellini, being the extremely gracious and nice guy he is has given the company six months to find his replacement as he will be departing in May 2013. The next CEO has a large role to fill as he or she would be the sixth CEO since Intel incorporated 45 years ago.

Andy Bryant, Intel's chairman of the board, spoke highly of Otellini and said in a statement,

Paul Otellini has been a very strong leader, only the fifth CEO in the company's great 45-year history, and one who has managed the company through challenging times and market transitions. The board is grateful for his innumerable contributions to the company and his distinguished tenure as CEO over the last eight years.

On his departure, Otellini seemed thankful for his long tenure but said that he felt he's done all he could do for Intel and it was time for someone else to lead the company.

I've been privileged to lead one of the world's greatest companies. After almost four decades with the company and eight years as CEO, it's time to move on and transfer Intel's helm to a new generation of leadership. I look forward to working with Andy, the board and the management team during the six-month transition period, and to being available as an adviser to management after retiring as CEO.

Intel said that the board of directors will be handling the hiring process and will be looking both internally and externally to find his successor. The company also noted some of the successes they've had under Otellini's reign, including a net worth of $100 billion over seven years, achieving record revenue and net income, reinventing the Ultrabook, delivering the first smartphones for sale with Intel inside and more.

With Otellini making his way out, and PC sales struggling as the market is (temporarily or permanently) shifting to mobile, can the next CEO keep pace with competitors? Who would you like to see fill this position? Let us know in the comments below.

Microsoft's New VP, Head of Research

posted Saturday Nov 24, 2012 by Scott Ertz

Microsoft's New VP, Head of Research

Shortly after the departure of Steven Sinofsky from Microsoft's Windows team and the promotion of two current executives into his former roles, Microsoft is continuing to beef up its executive team. Most likely in response to the surprisingly negative reviews from tech blogs (though the sentiment does not seem to be echoed by consumers themselves), Microsoft has brought in a new Vice President and head of Microsoft Research International, Dr. Jeannette Wing.

Joining the company from Carnegie Mellon University and the National Science Foundation, Dr. Wing will answer to Chief Research Officer Rick Rashid and will head up the international branches of Microsoft's research endeavors. She is a leader in formal methods, security and privacy, and will probably work primarily on related tasks, such as privacy policy and setting research for Skype, Windows 8, Windows Phone 8 and so.cl, particularly for other countries. This could help free up some brain power to work through some of the perceived cognitive friction in the new Windows Start screen.

Dr. Wing's new boss had some very nice things to say about his new executive,

Jeannette is a leading light in the computer science research community, providing strong leadership both at Carnegie Mellon and at NSF. I have long been impressed by both her profound commitment to world-class research and her service to the research community, and I look forward to working alongside her. It's a privilege to welcome Jeannette to Microsoft Research.

Rashid is not the only one excited about the move. Dr. Wing said,

I'm excited to join Microsoft Research, a world-class research organization in computing and related disciplines, and I appreciate this unique opportunity to lead its international labs. Microsoft Research has already had tremendous impact on the field of computing, on Microsoft's products and services, and on society, with potential yet to be unleashed. I am looking forward to working with the extraordinary talent at Microsoft Research, and I am especially honored to serve the international labs, each with its own character, strengths and distinct cultures.

It will be interesting to see how she is able to work through the problems of internationalizing some very localized products while maintaining proper, legal privacy. It sounds like Microsoft is working to prevent the problems Facebook is facing now.

ICANN Tries to One-Up XXX with New Top-Level Domains

posted Saturday Nov 24, 2012 by Scott Ertz

ICANN Tries to One-Up XXX with New Top-Level Domains

Domain names have gotten more and more difficult to register with companies and individuals hijacking sites before the popularity of their content has been established. For example, a personal domain from one of our staff members was once being sold by one of these hijack organizations for $2500 and the domain for our sister company was purchased for a little over $500. One way to eliminate this problem is to offer more specialized top-level domains.

For those who don't know, top-levels are the suffixes at the end of a domain name, such as .com and .net. ICANN, the organization responsible for moderating the Internet domain, has been taking suggestions for new top-levels over the past few months. As of the closing of the requests, 1930 applications were submitted, including .cloud, .music and .lol. Personally I really like .lol and would consider purchasing one just for laughs.

Not all of the applications have been well-received, however. A panel of officials from 50 countries have given a list of 50 of these applications that they believe to be concerning either globally or regionally. For example, .patagonia has been contested because of being a name of a region and the problems that could come from assigning it to a private company. Also, some intolerant countries, such as Saudi Arabia, have protested the use of .gay because of their collective dislike of the people and the fear it might encourage more gay people to be born, I suppose.

This Government Advisory Committee (GAC) has submitted 242 "early warnings," which equate to concerns over usage. Some of the concerns are of the type mentioned above, while others are over registrations by companies that might end up owning a top-level, such as Google or Microsoft owning .search or amazon owning .book. The applicants have 21 days to respond to the warnings and, if no response or no application withdraw happens, then the GAC can lodge a formal complaint to ICANN in April.

We know that formal complaints do not always equate to canceled top-level domains. At the beginning of 2011, ICANN approved .xxx, even through massive complaints. My guess is that some of these top-levels will be approved, such as .gay, despite protest, and others, like .book, will not because of Amazon's possibility to register one for every book ever (not really, of course - that would be insane).

We probably have another six months before any of these are available to register, but if you would like to be prepared, you can check out the list here and the ones that have been marked as warnings here.

Facebook May Be Deemed Illegal in Scandinavia

posted Saturday Nov 24, 2012 by Scott Ertz

Facebook May Be Deemed Illegal in Scandinavia

We are all annoyed by Facebook's constant privacy policy changes and advertising schemes, but apparently not as much as the governments of the Scandinavian countries, who believe that Facebook's recent changes to their news feed advertisements go against the European Directive on Privacy and Electronic Communications. The directive was created as a way to prevent email spam by requiring a user to have opted-in to receive solicitations, unlike the US requirement to be able to opt-out of solicitations.

Obviously the "Sponsored Stores" aren't exactly opt-in, and they aren't exactly not. Until recently, the Sponsored Stories would only show up for companies you or your friends had liked, but now that isn't exactly the case. When it was, it was easy to justify opt-in status - you friended a person who liked the page voluntarily, you can always remove them from your friends list if you don't like the things they do. In the new world, it is a little harder to justify to the Scandinavian governments.

It is not impossible, however. This is not email where, without it life on the Internet is impossible. This is a free, opt-in social networking site who needs to make money somehow to keep providing their free service to consumers. If you are not happy with the service you are receiving, or you believe the ads are too hard for you to live with, you are always able to opt-out of receiving them by deleting your Facebook account. I hear Myspace is looking for users again.

In reality, advertising on a social networking site is no different that advertising on any other free site. Why would Facebook's Sponsored Stores be any different than the SMS Audio and Microsoft Store ads on this site? Is it because the news on Facebook belongs to the user? No, that can't be it because anything that is posted on Facebook becomes the property of Facebook, they merely give you easy access to it. So what if they want to add a little more data in there between the other content?

Everyone is coming to the realization that Facebook advertising doesn't work, so why not let them burn out this business model while they look for the next one? No, that isn't how it is going to work - instead there will be a lawsuit filed and, once again, we will be forced to follow a suit between one group that doesn't understand technology and one that is trying to stay afloat. Hopefully either the governments will back off and let Facebook try and make money in one of the last ways they know how or Facebook can pull a Google and shut its service down in those countries. It seemed to work for Google, except for those 2 times this month.

What do you think? Should Facebook be forced to stop showing Sponsored Stories because they make some government officials uncomfortable or should they back off and leave things as they are? Let us know in the comments.

Psy Takes Number 1 Spot on YouTube

posted Saturday Nov 24, 2012 by Scott Ertz

Psy Takes Number 1 Spot on YouTube

It's official - Korean pop sensation Psy has taken the top watched video spot from Justin Bieber this week. We kind of all knew this was coming - when Gangnam Style hit 800 million views it was clear that it would not be long before it overtook "Baby", which has held the top spot for a very long time. The difference here is that Bieber has had since 2010 to reach the 806 million views he has, while Psy has managed to accomplish the same goal in only five months.

YouTube trends manager, Kevin Allocca, said,

The velocity of popularity for Psy's outlandish video is unprecedented. Each day, 'Gangnam Style' is still being watched between 7 and 10 million times.

Coverage, like ours, in addition to Psy's official tweet and YouTube's blog post about the topic certainly won't slow down that trend. In fact, ChannelMeter, a video data tracker, believes that not only will Psy own this title for a while to come, he will blow past Bieber like he was standing still. At his current rate, increased by the news of his record breaking week, they believe Gangnam Style will become the virst ever YouTube video to receive 1 billion views.

Yes, the very catchy galloping song will become the first ever 1 billion view video on YouTube. Congratulations, Internet, you win. You have officially unified the world under one song that most of the world cannot understand but a few words of.

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