All Things Digital

Our industry is not immune to what goes on in the global economy. And yet as I travel, given the current circumstances, people still see a certain buoyancy in the market.”

– Microsoft CEO Steve Ballmer, Sept. 26, 2008

Wall Street’s 777-point selloff Monday–one of its worst days since 1929–hit many tech stocks harder even than the overall market on Monday. Said Ross Sandler, senior Internet analyst at RBC Capital Markets, “Tech took it on the chin disproportionately.”

Indeed, it did. And a couple of other places as well, from the looks of things.

A quick overview of the carnage:

• Amazon (AMZN) fell 10 percent to $63.35
• Apple (AAPL) fell 17.9 percent to $105.26
• Cisco (CSCO fell 8.5 percent to $21.79
• Comcast (CMCSA) fell 13 percent to $18.01
• Dell (DELL) fell 9.4 percent to $15.41, a new 10-year low
• eBay (EBAY) fell 12 percent to $19.95
• Google (GOOG) fell 12 percent to $381.00, a new 2-year low
• Intel (INTC) fell 10.1 percent to $17.27, a new 2-year low
• Microsoft (MSFT) fell 8.7 percent to $25.01
• Oracle (ORCL) fell 9 percent to $18.77
• Qualcomm (QCOM) fell 13 percent to $39.88
• Research In Motion (RIMM) fell 12.8 percent to $61.73
• Sirius XM (SIRI) fell 18 percent to $0.62
• Sun (JAVA) fell 11.7 percent to $6.75, a new 13-year low
• Yahoo (YHOO) fell 10.8 percent, to $16.88, a new 5-year low

Seems the tech industry “buoyancy” to which Microsoft CEO Steve Ballmer referred last week was more of a noneffervescence. Certainly, that’s the impression one gets from reading the statement Microsoft just issued calling on Congress to revisit its vote against the financial bailout plan. “Microsoft strongly urges members of the U.S. House of Representatives to reconsider and to support legislation that will re-instill confidence and stability in the financial markets,” General Counsel Brad Smith said in a statement. “This legislation is vitally important to the health and preservation of jobs in all sectors of the economy of Washington State and the nation, and we urge Congress to act swiftly.”

What was that you were saying about “buoyancy” again, Steve?

Still, to be fair, the tech sector does appear to be gaining some ground in early trading today. The tech-heavy Nasdaq rose 2 percent to 2,027, reclaiming some of Monday’s ugly 9 percent loss. Apple shares are up 2.7 percent at $106.70 as I write this. Google shares are up 4.5 percent at $398.06. Microsoft is up 2.5 percent at $25.63. Even Yahoo is on an upward track, up 2.43 percent at $17.29.

On the CEO search, we’re making very good progress and I will obviously keep you posted, and when we have something to announce, we will do so accordingly.”

– Motorola CEO Greg Brown, Jul. 31, 2008

When Motorola CEO Greg Brown told investors last Thursday that the company was making progress in hiring a CEO for its mobile division, he wasn’t kidding. This morning the company named former Qualcomm (QCOM) COO Sanjay Jha to the position.

“Sanjay’s technical expertise and industry experience make him ideally suited to lead mobile devices,” board Chairman David Dorman said in a statement.

Great news for Motorola (MOT), which has spent months searching for an executive to run its handset division, with several candidates reportedly refusing the job. With that position finally filled, the company is firmly on track to spin off the division as a separate company in the third quarter next year, as planned.

Then begins the arduous task of reversing the ongoing collapse of the company’s post-Razr phone business and its share price which is down more than 61 percent since Oct. 2006.

The Federal Communications Commission’s “beachfront” spectrum auction in January will, for the most part, be a multibillion-dollar bidding war among the usual suspects. And one or two unusual ones as well.

Among the more than 260 applicants included on the bidder list released last night by the FCC (accepted applications; incomplete applications) are AT&T, Verizon Wireless, Cox Communications, Google (bidding as Google Airwaves Inc.), MetroPCS, Qualcomm, National Datacast (the for-profit subsidiary of the Public Broadcasting Service), Alltel, Towerstream, Chevron and Frontier Wireless (EchoStar).

And then there’s zillionaire investor Paul Allen–Microsoft’s other founder (pictured above). Applications from Vulcan Spectrum LLC and Bend Cable Communications LLC, both Allen-backed ventures, have been accepted by the FCC. Seems Allen fancies himself the Pied Piper of the Wired World, and the Wireless World as well. Perhaps someday we’ll have the Paul Allen Brain Atlas, the Paul Allen Telescope Array and the Paul Allen Advanced Wireless Services Spectrum.

Note: John Paczkowski is on vacation and won’t be writing or posting videos until he returns Monday, Aug. 27.

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. We’re calling it the Tech 10 and it will appear in Digital Daily.

1. Dell says it will restate financial results after an internal audit finds evidence of irregularities going back several years. The adjustment will reduce the company’s profit by $50 million to $150 million.



2. Though some Skype users report being able to log on after a major outage yesterday, many users of the VOIP service remain in connectivity limbo as the company struggles to resolve what is presumed to be a software problem.
3. Despite the lingering hangover from its board-leak counterintelligence scandal, Hewlett-Packard reports robust third-quarter earnings, based largely on lower computer-component costs.
4. Computer rivals IBM and Sun Microsystems will collaborate on server technologies. The move means Sun’s Solaris operating system will be able to run on Big Blue’s servers.
5. Sprint announces it will spend $5 billion on its upcoming WiMax service dubbed (somewhat unpronounceably) “Xohm.”
6. Crying patent infringement, Nokia wants U.S. authorities to halt imports of Qualcomm’s chips and the cellphones they’re used in. The world’s largest cellphone maker is in a legal fray with Qualcomm since a deal over patents expired on April 9. Meanwhile, Nokia has warned its handset users that defective batteries pose a potential danger, offering to replace them in a voluntary program.
7. Strong sales of its Mac and iPhone are giving Apple renewed momentum, says RBC Capital’s Mike Abramsky, who maintains that shares of the computer-maker’s stock could eventually hit $175.
8. MTV Networks will pump $500 million into video-game development based on the network’s range of shows over the next two years. The investment comes as the traditional media company attempts to gain a toehold in the $30 billion global games market.
9. It looks like there’s upheaval at Technorati. The blog-search service is reportedly laying off eight people, and CEO David Sifry is resigning.



10. Today marks the 25th anniversary of the compact disc, the format that triggered a revolution in the recording industry and one that remains the principal means for consumers to listen to music, despite the growing popularity of digital downloading.

–posted by Associate Editor John Sullivan

Bet that $6-per-handset settlement Broadcom offered Qualcomm back in June is looking pretty good to the chip-maker right now. Yesterday, the Bush administration let stand the International Trade Commission ban on the import of devices using Qualcomm chips found to infringe on Broadcom patents.

“After extensive review, DHS [Department of Homeland Security] has advised that it does not believe there are public-safety risks sufficient to justify disapproval of the USITC’s limited exclusion order,” U.S. Trade Representative Susan Schwab wrote in her decision. “DHS has also advised that Broadcom Corporation’s offer of royalty-free public-safety licensing to state and local public safety organizations and its licensing agreements with two major wireless carriers will ameliorate to a significant degree concerns regarding the order’s potential effect on public-safety wireless broadband systems and 3G network deployment. We also understand that other market participants are investigating the use of a noninfringing software workaround. We believe that such licensing agreements and workarounds will address in large part the concerns raised about delay in 3G network deployment.”

Quite a nasty turn of events for Qualcomm. The company had lobbied–fiercely–for White House intervention to reverse the ITC ruling, arguing that allowing it to remain would harm consumers, telecom carriers and handset makers. But the administration apparently didn’t buy it, and without the sort of deus ex machina it could have offered, Qualcomm is nearly out of options. It is facing an immediate ban on all forthcoming handsets running its WCDMA and EVDO chips–a potentially devastating blow to the company’s hugely important chip IP licensing business.

“If I’m one of Qualcomm’s customers, I’m furious,” Gartner analyst Michael King told the Associated Press. “My product line has the potential to be disrupted. The merits of the case notwithstanding, the fact they let it get this far is going to be somewhat unconscionable to their customers.”

Qualcomm, which is working on a software workaround to avoid any infringement on the Broadcom technology in question, is pursuing a stay of the ITC ban. Third time’s a charm, right?