Business Tech

This was originally posted at ZDNet's Between the Lines.

Circuit City said Friday that it is in talks with "two highly motivated and interested parties" about selling the company as a going concern. Meanwhile, Best Buy, the largest electronics retailer in the U.S., reckons it continues to take market share.

Circuit City asked the bankruptcy court to approve procedures that officially would sell Circuit City in total, by business units, or by assets such as inventory.

In a statement, Circuit City said:

These interested parties are considering providing additional financing to allow the company to sustain operations and move forward with a subsequent restructuring through a stand-alone plan and/or purchasing the company or all or substantially all of the company's assets. The parties have substantially completed due diligence and now are in negotiations with the company and the company's major stakeholders in order to finalize such a transaction. While the company is optimistic that a transaction can be successfully finalized, no assurance can be given that this will occur.

If these transactions don't occur by Jan. 16, Circuit City could liquidate.

Separately, Best Buy narrowed its financial outlook. Best Buy on Friday said its holiday revenue was in line with revised expectations, but same store sales fell 6.5 percent.

The electronics retailing giant made the announcement at the Consumer Electronics Show.

By the numbers:

• Revenue was up 4 percent for the month ending Jan. 3 to $7.5 billion, in line with expectations.
• Best Buy narrowed its earnings targets. The company is predicting fiscal 2009 earnings to be $2.50 to $2.70 a share, excluding a $111 million investment impairment charge. The company had projected 2009 earnings between $2.30 and $2.90 a share.
• The company will take a fiscal fourth quarter charge of $60 million for its voluntary severance program.

Here's the breakdown of sales by category:

This year's most prominent tech trade shows were as notable for who wasn't in attendance as for what was unveiled.

Despite tons of rumors circulating about what we could expect to hear from Apple this week at Macworld, one announcement caught everyone off-guard. After insisting for months that CEO Steve Jobs' health was a private matter, Apple changed its tack in the face of widespread speculation that Jobs' weight loss had contributed to his decision to skip the conference.

On Monday, the company issued a statement that Jobs was suffering from a hormone imbalance that was "robbing" proteins from his body. That news cheered Apple investors, who dreaded far worse news regarding Jobs' health after a report last week that his health was "declining rapidly."

However, now that it has cleared the air and addressed the state of Jobs' health, Apple may be forced to give regular updates, according to corporate governance experts. And, they add, the company will need to be very careful, as it was on Monday, about how it words those statements.

Steve Jobs, hormonally imbalanced but apparently otherwise fine.

(Credit: James Martin/CNET News)

While there are no legal guidelines for companies to follow in making decisions about how and what to disclose involving the health matters of their executives, Apple may have decided that enough was enough following reports predicting its CEO's imminent demise.

Despite Jobs' absence, Apple took advantage of the San Francisco expo take the wraps off products it's been working on.

As CNET News reported first, Apple announced plans to lift DRM technology from its entire catalog of 10 million iTunes songs by the end of April. Eight million songs are DRM-free as of today, and labels will be allowed to charge different prices for their songs, in a departure from the previous iTunes Store policies.

iTunes users can upgrade their music libraries with a click of a button. For an additional 30 cents per song, consumers can receive a DRM-free version of their existing tracks at a 256Kbps rate.

In the hardware arena, Apple completed its notebook refresh with the introduction of a 17-inch MacBook Pro, which brings the unibody design, trackpad button, and new displays to the company's largest laptop. It will cost $2,799, the same price as the current 17-inch MacBook Pro. Apple is using a new type of battery that it says will allow the notebook to get between seven and eight hours of battery life, depending on which graphics chip is running.

The company also announced new versions of the iLife and iWork software suites.

As far as Macworld's future without Apple's participation, the show will go on in 2010. But it likely will have a much different look. IDG World Expo, the company that puts on Macworld, hopes to get a clearer idea itself from a town-hall style meeting it opened to Macworld attendees to solicit ideas for the future of the show.

One middle-aged man in a faded NeXT T-shirt raised his hand for the microphone. If IDG wanted to save Macworld, he suggested, it should hold a "schwag-fest," where Macolytes could bond over swapping tchotchkes from Macworlds past.

Whether IDG will take up his suggestion is unknown. But IDG has a few of its own ideas for next year's show. An executive revealed that next year's Exhibit Hall at Macworld will be free for those attending this year's show; a similar pass cost $25 this year. But there is no plan right now beyond 2010. The executive also confirmed CNET's report that Apple's decision caught IDG totally by surprise, speaking often of the "new business reality" that has been thrust upon the company in a very short period of time.

Dueling show in the desert
Meanwhile, in Las Vegas, the Consumer Electronics Show kicked off without Bill Gates' customary keynote. Instead, the Microsoft part-timer was replaced by CEO Steve Ballmer.

Ballmer used his address to announce new deals for Windows Live that will see Microsoft's search engine become the default on PCs from Dell. He also touted a deal with Verizon Wireless that was leaked earlier in the day (more on those deals below). In addition, the company is counting on two Halo game releases this year to help keep the Xbox 360 going in the right direction.

But in perhaps the biggest announcement of the night, Ballmer said that Microsoft is ready with a beta version of Windows 7 and showed off some of its key consumer features. Microsoft said it was immediately available for technical beta testers and those in Microsoft's TechNet and MSDN developer programs and would be made publicly available Friday. The company still isn't officially committing to a final release in time for this year's holiday season, although it's clearly aiming for that.

Top Windows executive Bill Veghte said the company is telling PC makers that Windows 7 might or might not be ready in time for this year's holiday season.

"I'm telling them that it could go either way," Veghte said in an interview with CNET News. "We will ship it when the quality is right, and earlier is always better, but not at the cost of ecosystem support and not at the cost of quality."

Veghte also said that the economy is factoring into his marketing plans for Windows, which is in the middle of an advertising push initially estimated at several hundred million dollars over several years.

In search of
Microsoft is hoping two new distribution deals will give its Live Search a much-needed boost. The company announced a global deal with Dell that will make Live Search the default search engine and will bundle the Windows Live toolbar on the bulk of Dell's consumer and small-business PCs sold over the next three years. That deal is in addition to a five-year pact with Verizon Wireless, news of which slipped out earlier Wednesday.

These are the latest efforts for Microsoft, which has been trying--and struggling--for the past four years to build a search business that can substantively rival Google. But the latest market share numbers indicate that Microsoft is falling even further behind. Searches at Windows Live Search fell 16.7 percent year over year, giving Microsoft 9.1 percent market share in the U.S. in November, according to Nielsen Online figures released earlier this week. Google's searches rose 21.7 percent, for 64.1 percent market share, and Yahoo's searches dropped 1.4 percent from November 2007, for a 16.1 percent share.

Microsoft has been pretty clear that it is no longer interested in buying Yahoo, but a group of investors is reportedly putting together a buyout deal for Yahoo that would call for Microsoft's financial backing. Such an arrangement would ask the investment group to pay a premium of about 20 percent to Yahoo's current share price, which closed Wednesday at $13 a share, for the entire company.

The investment group would take Yahoo, which would have a $20 billion market cap under those terms, and simultaneously sell its search and marketing business to Microsoft under its previous terms presented in June, according to the report.

Yahoo may have fallen out of favor with Wall Street after the failed Microsoft buyout bid, but that doesn't mean you can count Yahoo President Sue Decker out of the running for CEO, people familiar with executive search say.

Decker has undergone two full rounds of in-depth interviews with Yahoo's board, according to sources. And, in executive recruiting circles, more than one in-depth interview with an internal candidate signals a strong contender.

A number of industry players and major Yahoo investors had discounted Decker as a viable CEO candidate for the struggling Internet search pioneer, following Microsoft's failed buyout bid of $33 a share for the company.

But one source familiar with the search noted: "She has always been a strong candidate."

A decision may be coming soon.

Also of note
President-elect Barack Obama's transition team asked Congress to consider postponing the upcoming national switch to digital television, warning that more congressional action is needed to address potential problems...A man who posted a negative review of a chiropractor on Yelp, suggesting that the doctor was dishonest, is now facing a defamation lawsuit...Meg Whitman has been talked about as far back as March as a candidate for governor of California. Now there's more evidence that the former eBay CEO will actually run.

Updated with correction at 2:02 p.m. PST, noting only two of Allin's four businesses are being acquired by Dell.

Dell has acquired Allin's Microsoft IT consulting business, as well as its collaboration and business applications services business, in a $12 million stock deal.

The acquisition, announced Friday, aims to bolster Dell's consulting work in the areas of designing and implementing scalable networks and application architectures via Allin's technology infrastructure business, as well as in the areas of collaboration and business applications.

"The expertise we gain from Allin further deepens our ability to help customers exploit Microsoft technologies for business advantage," Stephen Murdoch, vice president of Dell's Global Infrastructure Consulting Services, said in a statement.

The acquisition will further increase Dell's services business that it has been expanding since early 2000, as a means to further sales of its hardware.

The acquisition does not include Pittsburgh-based Allin's interactive media and business process consulting units.

LAS VEGAS--If you haven't noticed, Toshiba doesn't offer a Netbook for the U.S. market.

Yes, that's right Toshiba--whose name is practically synonymous with laptops--is still undecided about committing to one of the hottest mobile PC markets in the U.S., according to Toshiba officials at the Consumer Electronics Show in Las Vegas on Thursday.

The Japanese company did launch the NB100 Netbook in December, but it is not marketed in the U.S., according to a Toshiba representative, speaking at CES.

Toshiba NB100 Netbook is marketed in Latin America

(Credit: Brooke Crothers)

This highlights the Netbook quandary some of the largest mobile computer markers are facing. Throw Sony into the we don't-offer-a-Netbook-either category. This week Sony launched the pricey Vaio Lifestyle PC that it is very careful to bill as the "world's lightest 8-inch notebook." It costs a cool $900--which does tend to disqualify it as Netbook since Netbooks are, by definition, inexpensive (typically under $400 and only occasionally venturing into $600 or $700 territory when, for example, a 3G Wireless Wide Area Network, or WWAN, option is added.)

Listening to a Toshiba representative at CES, the company seems genuinely perplexed by the Netbook category. Where is the real value-add? What if Netbooks begin eating into its notebook line?

On the latter point, Toshiba, like Sony and Apple, may also be worried about getting consumers hooked on low-cost laptops.

(Note: The Toshiba NB100 is marketed in Latin America, according to the representative.)

This may be nothing but blogosphere blah-blah-blah, but a colleague sent me a note Thursday stating that Juniper Networks' share price fell earlier this week because of a rumor that its customer Google is actually building its own router.

This Google news was attributed to multiple sources including at least one within Cisco Systems, according to a story Monday on SDTimes. CNET News sister site BNET contacted Google about the rumor: "The answer was the now-standard 'It's our policy not to comment on rumor or speculation.'"

OK, so my guess is that this rumor is probably true--with a caveat. Remember that routers are simply purpose-built computers for routing packets. Microsoft had a similar project in the 1990s called Steelhead that used Windows as the routing operating system. My old friend Roy Chua is working with a Silicon Valley company named XORP, which stands for "extensible open source routing platform." Nothing new here.

My guess is that some of the smart guys over at Google are tinkering around with XORP or something similar just as they have for back-end storage. On the other hand, I can't imagine that Google is trying to build a router comparable to the Juniper J or M series systems as these are the latest generation of Juniper routing platforms with thousands of development hours behind them. Juniper isn't a leading provider in this market for nothing.

On the off chance that Google is actually undertaking a project like this, I have a bit of advice to Google shareholders: sell your stock. Google employs some of the smartest computer scientists around, but if this is true, you have to question the company's business focus. What's next? Google building its own powerplants? A Google department of defense? A Google space shuttle?

LAS VEGAS--Some notebooks and an un-Netbook are worth noting on the CES show floor Thursday.

From top to bottom: An Asus concept computer; the just-announced Asus S121 (officially not a Netbook) with an optional 512GB solid-state drive--yes, that's 512 gigabytes; HP's new Pavilion dv2 and dv3 powered by processors from Advanced Micro Devices, including its newest Neo silicon.

Asus was showing its fold/unfold concept at CES

(Credit: Brooke Crothers)

The just-announced 12-inch Asus S121 is "not" technically a Netbook but uses an Atom processor and a massive 512GB solid-state drive--the largest yet in any device

(Credit: Brooke Crothers)

HP Pavilion dv2 ultraportable (0.9 inches thick) uses AMD's new Neo silicon

(Credit: Brooke Crothers)

HP 13-inch Pavilion dv3 uses the AMD Turion processor

(Credit: Brooke Crothers)

LAS VEGAS--It was fitting that in a city created as an elaborate fantasy world that a knight would get up on stage and tell us how to save the princess.

Sony's Howard Stringer takes the stage at CES Thursday for a keynote address.

(Credit: Corinne Schulze/CNET Networks)

In this case, the knight is Sir Howard Stringer, CEO of Sony (and Knight Bachelor, a title awarded by the queen of England), and the princess is the consumer electronics industry. And according to Stringer, one of the keys to slaying the monster of the recession is the convergence of networked entertainment and technology.

In his keynote address on the opening day of CES here, besides pushing various Sony products like OLED TVs, Blu-ray players, and PlayStation 3, Stringer outlined a series of principles he says will be necessary to create consumer experiences that, if followed, will sustain the consumer electronics industry. The industry is expected to see negative growth for the first time in seven years.

"I can promise you the consumer electronics industry will ultimately prevail," Stringer told the large crowd gathered in the Venetian Hotel ballroom Thursday. "Because everyone is still innovating."

The principles, or "seven imperatives" are fairly broad: Embrace the convergence of IT, CE, and entertainment. Focus on adding value with customer service. Make products that do more than one thing. Support open technologies. Embrace social networking and user-created content. Make products whose value builds on each other. Go green.

Clearly, it was not only directed outwardly at the rest of the industry, but is intended as a new mission statement for his own company. Some of those goals--open technologies, products that interact with those from other manufacturers--aren't things Sony is known for in the industry. But Stringer said he "intend(s) to make this the total Sony experience."

One of Stringer's "seven imperatives" for sustaining the consumer electronics industry.

(Credit: Corinne Schulze/CNET Networks)

To demonstrate, he brought a parade of celebrities and industry leaders onto the stage to demonstrate Sony's reach into film, music, television, gaming, sports, and, of course, technology, including several new products the company is cooking up in its R&D department.

First up was actor Tom Hanks, star of a new Sony movie (Angles & Demons) who singlehandedly stole the show, mocking the scripted lines Sony had written for him detailing how much he loved the company's products. "They write the lies, I tell the truth," Hanks joked to loud laughs from the audience.

Hanks provided much of the entertainment at the morning's event with similar off-the-cuff jabs at Sony. It was welcome, as most of Sony's most interesting announcements actually occurred the previous afternoon at its annual pre-CES press conference.

But Stringer did reserve a couple of nifty products to announce, like its new Wi-Fi-enabled Cybershot digital camera, which allows users to upload pictures directly to the Web. Stringer said there would be a lot more where this came from. The company's goal is that by 2011, 90 percent of its product categories will connect wirelessly to the Internet and to each other.

Tom Hanks, next to Stringer, stole the show. Click on image for more photos.

(Credit: Corinne Schulze/CNET Networks)

He also showed some concept products his engineers are working on, like the Wi-Fi clock radio. Partnering with Chumby, the maker of the too-cute-for-its-own-good hackable Wi-Fi gadget, Sony is working on a more elegant take on the idea, but keeping Chumby's open platform for which anyone can develop a widget.

Sony's been pushing Blu-ray for home video for a while, but it's also moving to promote 3D for movie theaters. Stringer brought out Pixar's John Lasseter and DreamWorks Animation's Jeffrey Katzenberg to try to hype the two entertainment formats. There are three competing 3D technologies right now, and it appears based on the demonstration Thursday that Sony is partnering with RealD.

But the march of famous personalities didn't stop there: Kaz Hirai, CEO of Sony Computer Entertainment of America, baseball hall of famer Reggie Jackson--Sony is providing all the tech in the new Yankee Stadium--Oprah health guru Dr. Mehmet Oz, and finally Sony Ericsson-sponsored Usher, who sang one song to close the speech.

Sony's hurting right now, and many of the tasks Stringer laid out would call for Sony to change some of its most ingrained policies. It remains to be seen if these "imperatives" will still be an imperative after the world economy eventually recovers.

Thousands of businesses were left without access to their applications Tuesday after Salesforce.com's servers suffered a service disruption.

The problem affected all of the software-as-a-service vendor's data centers for at least 40 minutes.

According to a Salesforce.com status page, the problem occurred at 12:40 p.m. PST Tuesday when a core network device failed, stopping all data from being processed in Japan, Europe, and North America.

When the system failed to trigger a failover to redundant systems, Salesforce.com staff had to carry out a manual recovery.

Most of the services were restored in about 40 minutes, according to Salesforce.com, and all services were back online about two and a half hours later.

"While we are confident the root cause has been addressed by the work-around," the company said, "the Salesforce.com technology team will continue to work with hardware vendors to fully detail the root cause and identify if further patching or fixes will be needed."

Freeform Dynamics senior analyst Tony Lock said that "having a service interruption like this one is certainly noticeable when you have a vendor like Salesforce.com that has been delivering pretty good service over the course of the last five or six years."

Lock added that as long as software-as-a-service vendors continue to deliver good service levels and availability, the occasional interruption is acceptable since "nobody expects IT to be perfect."

"It will not have a major impact on organizations' plans for the adoption of software as a service. I think that software as a service will continue to grow as it has been doing over the course of the last few years," he said.

Tim Ferguson of Silicon.com reported from London.

Dell announced Thursday that it is closing its manufacturing operation in Limerick, Ireland, and shifting production to its Polish plant and to third-party contractors.

Assembling a desktop PC at Dell's Limerick plant.

(Credit: Dell)

The move will result in the loss of 1,900 jobs in a facility that employs 3,000 people.

Employees and unions in Ireland have long been expecting the decision, which is part of a $3 billion restructuring that Dell announced last year. In September the company said it wanted to shed 24,600 jobs around the world.

Dell said in a statement that the first Limerick employees would leave the company in April and the whole process of switching production will be completed by January 2010. Workers will receive a competitive severance package and career outplacement assistance from the company, the company added.

The PC maker has had a facility in Ireland for 18 years, where it has become a major force in manufacturing and the largest employer in the Limerick area. Commenting on the move Sean Corkery, vice president of operations, Dell Europe Middle East and Africa said: "This is a difficult decision, but the right one for Dell to become even more competitive, and deliver greater value to customers in the region."

According to Dell, the company's remaining employees in Ireland "will continue to co-ordinate EMEA manufacturing, logistics and supply-chain activities across a range of functions including product development, engineering, procurement and logistics." Dell will keep its Global Innovation Solutions Center and European Command Center in Limerick.

In late December, the company reorganized its management structure as it reacts to changing customer requirements. In March 2008, Dell closed a home state plant in Austin, Texas, as part of its plans to cut at least 8,800 jobs.

Colin Barker of ZDNet UK reported from London.