In the 10-Q filed with the U.S. Securities and Exchange Commission (SEC) last week, Microsoft said that its Phone Hardware division, which is based largely on the Nokia assets acquired last year for approximately $7.9 billion, lost money in the March quarter.
With revenue at $1.4 billion for the period, Microsoft said, cost of revenue exceeded sales by $4 million, meaning the company lost about 12 cents — even before marketing, R&D and other expenses were factored in — on each phone sold.
More importantly, Microsoft also warned investors that it may need to write off some of the Nokia acquisition.
“Given its recent performance, the Phone Hardware reporting unit is at an elevated risk of impairment,” Microsoft said, using a term to describe the situation when the market value of a business is less than what’s carried on the books. In such scenarios, corporations are required to balance accounts by taking a charge against earnings to the tune of the difference.
“Declines in expected future cash flows, reduction in future unit volume growth rates, or an increase in the risk-adjusted discount rate used to estimate the fair value of the Phone Hardware reporting unit may result in a determination that an impairment adjustment is required, resulting in a potentially material charge to earnings [emphasis added],” the company continued.
Ben Thompson, an independent analyst who reported on Microsoft’s 10-K statement on Friday, translated the accounting-speak. “A very, very big write-off -— and associated quarterly loss -— is coming soon. What a disaster!” wrote Thompson on his Stratechery.com.
Microsoft currently carries $5.46 billion in “goodwill” from the Nokia acquisition on its books, as well as another $4.51 billion in intangible assets. The Redmond, Wash. company had attributed the Nokia goodwill to “increased synergies that are expected to be achieved from the integration of NDS [Nokia Corp.'s Devices and Services business].”
That value may now be greatly overstated, Microsoft acknowledged.
“Nokia notes recent news reports claiming the company communicated an intention to manufacture consumer handsets out of a R&D facility in China. These reports are false,”Nokia said in a statement posted on its website.
“Nokia reiterates it currently has no plans to manufacture or sell consumer handsets.”
However, Nokia has said it is looking into returning to the smartphones business by brand-licensing.
Nokia sold its phone business to Microsoft last year, but just months after that it launched a new brand-licensed tablet computer, produced under license by Taiwan’s Foxconn, with an intention to follow up with more devices.
Nokia has agreed with Microsoft that it will not enter the mobile phone business before 2016.
“It would be crazy not to look at that opportunity. Of course we will look at it,” Sebastian Nystrom, the head of products at Nokia’s Technologies unit, told Reuters in November.
Nokia this month announced a takeover of France’s Alcatel-Lucent, a bid to boost its mainstay network equipment business, and also said it could hive off its map business, which has reportedly drawn interest from carmakers as well as Facebook and online taxi service Uber.
Discount and deal site Groupon has a novel way of dealing with bounty hunters who point out security flaws in its systems. It lets them discover the flaws and refuses to pay up.
Brute Logic says that the security issue is all the more serious because Groupon stores credit card details, and it would be incredibly easy to craft a spoof Groupon-related URL to trick victims into visiting a fake site.
On April 17 he contacted Groupon security team then got back saying that it had isolated the issue and would be back in touch once a patch has been produced.
As a contributor to XSSposed.org Brute Logic spoke with people at the site and made a reference to one of the security issues ended up being published. This only appeared online for a few moments, and was removed after it was realized it had been published in error. But Groupon is using this as a reason for refusing to pay out.
Groupon’s Bug Bounty Program terms say:
“We encourage you to report it to us in a private and responsible way. In order to encourage this, we have established a reward program which will pay a bounty for verifiable security issues reported to us through the proper channel.”
Brute Logic argues that an additional 30 problems still existed and very scant details of the security flaw were published for only a very short time. In a further email, Groupon said:
“Unfortunately we won’t be able to offer you a bounty for this submission. In the future we ask that you respect our responsible disclosure policy and not publicly disclose the vulnerability without properly notification. We noticed that you submitted the vulnerability to xssposed.org.”
Understandably Brute Logic is not happy, seeing the company trying to get out of a bounty on the basis of a technicality.
Chinese e-commerce leader Alibaba Group Holding Ltd and state-owned ChinaTelecom Corp Ltd have developed a partnership to offer low-cost smartphones aimed at boosting mobile commerce in smaller cities and rural areas.
The phones, dubbed “Tianyi Taobao Shopping Handsets”, will come installed with either an app for easy access to Alibaba’s flagship Taobao online shopping platform or its home-grown YunOS mobile operating system, it said in a statement late on Friday. Buyers will be eligible for four months of free 2G data service.
The partnership is a bid to deepen Alibaba’s e-commerce base in less developed parts of the country and promote its mobile operating system in a shrinking, cut-throat handset market.
Six models produced by Coolpad, Hisense and TCL would come with the Mobile Taobao app pre-installed. Mobile Taobao is China’s most popular mobile shopping app with more than 200 million monthly active users, it said.
Another eight models, made by lesser-known brands including Uniscope, Ctyon and Kingsun, will run YunOS, providing buyers with an Alibaba account for shopping and cloud-based storage, and other preloaded services, it said.
Some 557 million people in China access the internet via mobile devices, according to government data. But shipments in China were 389 million phones in 2014, down from 423 million the previous year, according to China’s Ministry of Industry and Information Technology.
Still, mobile shopping is on the rise.
In January, Alibaba said the number of mobile monthly active users nearly doubled in the third quarter from the same period the previous year to 265 million. The proportion of gross merchandise volume derived from mobile also grew.
Alibaba says it has an 86 percent share of China mobile commerce market.
In February, Alibaba announced that it was taking a $590 million stake in Meizu, a relatively obscure domestic smartphone maker as it tests ways to expand its mobile operating system.
The South Korean tech giant’s official blog post showed images of smartwatch with a round face – which would be a first for Samsung – and naming several partners, including Baidu Inc, Yelp Inc and CNN.
Samsung also said it would release a wearable software development kit for third-party developers ahead of the launch.
The blog post came as the Apple Watch went on sale without the fanfare typical of the U.S. firm’s major product rollouts.
Apple’s offering is still expected to sell much better than any rival products to date. Researcher IHS expects shipments of more than 19 million Apple Watches this year, more than five times the number of all smartwatches shipped globally in 2014.
Samsung has launched six smartwatches since 2013 to build an early lead in the nascent market, but sales have been modest. IHS estimates that Samsung accounted for nearly 1 million of the 3.6 million smartwatches shipped globally last year.
The South Korean firm gave no other details on the new Gear smartwatch, such as when it may start selling, though the head of the firm’s mobile business said earlier in April that Samsung would launch products in the near future.
Dell’s security division has announced that it is working on a next-generation Firewall (NGFW) that it claims is the first to deliver deep packet inspection (DPI) speeds of up to 120Gbps.
The company will demonstrate these speeds at the RSA conference in San Francisco this week, and said that the NGFW cluster enables an “easy migration path” for the future growth of enterprise networks.
Dubbed a “firewall sandwich” of high DPI performance, better security efficiency and N+1 resiliency, the NGFW architecture is also said to lower the cost of demanding data centre operations.
“SSL decryption and inspection are critical NGFW capabilities required to effectively uncover malware deeply hidden inside encrypted web sessions and provide deeper perimeter network security,” said Dell.
“In this network design, the Dell SuperMassive NGFW with onboard SSL decryption can be incrementally deployed and horizontally scaled infinitely to address SSL performance loss and increase SSL decryption and inspection performance.”
The company will show off the technology at RSA in collaboration with Array Networks and Spirent Communication to give a demo of a highly-resilient, scalable, ‘Open Firewall Sandwich’ layer 3 architecture.
Dell will be joined by Ixia in demonstrating a network-based model for scaling the NGFW with DPI speeds of above 100Gbps.
Dell also unveiled several updates to the SecureWorks offering, which it claims will help firms increase network security and grow their business.
Updates include improved services in Dell Secure Mobile Access (SMA) solutions to increase mobile productivity for remote workers while protecting critical data from cyber threats.
The new SMA 11.2 release adds secure access to more resources using a standard HTML 5 browser, which Dell said allows easier access for most smartphone, tablet and laptop users while reducing reliance on Java and ActiveX components.
The new release adds HTML 5 browser access to Citrix XenDesktop and XenApp ICA support.
Dell said that new SMA 6200 and 7200 appliances also offer increased scalability. The SMA 6200 entry-level platform supports up to 2,000 concurrent users, while the SMA 7200 mid-range platform supports up to 10,000 concurrent users.
The SMA updates arrive six months after Dell revealed the SuperMassive 9800 firewall, which it claimed would protect against high-profile bugs such as Shellshock and Heartbleed.
Touted at the time as the most powerful in the SuperMassive 9000 line-up, the 9800 offered Dell’s Reassembly-Free DPI single-pass threat prevention engine, and advanced DPI with speeds up to 20Gbps. That’s a whopping 100Gbps less than the speed it is about to go for at RSA.
The company said a solution is already available, but didn’t disclose whether it is related to the device’s hardware or software or both.
In a statement issued by email to Computerworld, a Samsung spokeswoman said: “Samsung is aware of an issue affecting screen rotation on a very limited number of Galaxy S6 Edge devices and a solution is already available. Owners who believe their device may be affected should call 1-800-SAMSUNG for support.”
The problem cropped up on the first day that Edge sales began 12 days ago. Dozens of users reported last week and this week on various online forums that photos they had taken with the phone and many apps would not rotate into landscape (horizontal) mode and were stuck in portrait (vertical) mode.
Some users said they returned the faulty Edge devices to the wireless carrier retail stores to get another Edge device, then found the auto-rotate problem cropped up, again, on the new phone.
The issue has also been reported on Edge devices on carriers outside the U.S., including New Zealand and Hong Kong. One user, Leon Chan, claimed on Android Forums on April 17 to have exchanged his Edge device three times due to the auto-rotation issue, but planned to get the cousin device, the regular Galaxy S6, the fourth time around. “I called Hong Kong Samsung and they seem to be unaware,” he wrote several days before Samsung issued its statement acknowledging the problem.
AT&T and Sprint both referred Computerworld to Samsung for comment on the concern. T-Mobile said it hasn’t seen any auto-rotate problems with Edge devices. Verizon didn’t respond to a request for comment.
Facebook’s total first-quarter revenue was US$3.54 billion, up more than 40 percent from a year earlier, the company reported Wednesday. That was a bit less than the consensus analyst estimate of $3.56 billion, as polled by Thomson Reuters.
With a bounty of personal data on its billion-plus members — many of whom now log in from their smartphones — Facebook’s mobile ad business has become a juggernaut.
During the quarter, which ended March 31, Facebook grew its mobile ad sales by 59 percent to $2.59 billion. After going public in mid-2012, Facebook faced questions from investors over its ability to grow its business on mobile, but the company eventually dispelled those doubts.
Net income came in at $512 million, down 20 percent, while earnings per share dropped 28 percent to $0.18.
On a pro forma basis, which excludes certain costs, such as share-based compensation and related payroll tax expenses, Facebook had earnings per share of $0.42, up from $0.35 last year, and beating the analyst consensus estimate of $0.40.
“This was a strong start to the year,” CEO Mark Zuckerberg said in a statement.
The company’s costs and expenses rose by more than 80 percent from a year earlier, to $2.61 billion.
The number of people who log in monthly to Facebook grew by 13 percent, to 1.44 billion. And the number of those people who log in from a mobile device grew faster, by 24 percent to 1.25 billion.
In addition to its primary mobile app, Facebook now operates a suite of apps including Instagram, Messenger and WhatsApp. But its flagship app generates by far the most mobile ad sales.
Facebook began placing ads in Instagram in 2013, but by its own admission has done so slowly and gradually. Neither Messenger nor WhatsApp carry ads yet.
IBM IS bringing its QRadar Security Intelligence technology to the cloud in a bid to help companies prioritize major security threats more quickly and free up critical resources to fight cyber attacks.
The offering is available through a cloud-based software-as-a-service model, and comes with an IBM Security Managed Services option for security experts with more advanced skills.
QRadar Security Intelligence comes in the form of two services. The first is IBM Security Intelligence on Cloud, which the firm said will help organisations determine whether security-related events are simple anomalies or actual threats.
“Built as a cloud service using IBM QRadar, enterprises can quickly correlate security event data with threat information from over 500 supported data sources for devices, systems and applications,” IBM explained.
“This is complemented by more than 1,500 pre-defined reports for use cases such as compliance, vulnerability management and security incident response.”
The second service is Intelligent Log Management on Cloud designed to simplify security and compliance data collection.
This is also powered by IBM QRadar technology, and uses analytics and a hosted, multi-tenant technology to integrate with existing infrastructure, working with real-time correlation and anomaly detection capabilities.
“Through support for more than 400 platforms, security managers can also capture logs from nearly any device in their security operation,” the firm added.
IBM said that the announcement is a reaction to the findings in the 2014 IBM Cyber Index, which revealed that organisations across the world deal with an average of 91 million potential security events every year, a problem that creates huge amounts of data that needs to be stored and analysed.
The cloud software announcement arrives just after IBM posted its Q1 2015 financial results, demonstrating strong growth in the cloud.
The results showed cloud revenues up 75 percent to $3.8bn from $2.3bn in the first quarter of 2014.
However, IBM posted an overall quarterly revenue decline of 12 percent owing to the effects of the strong dollar.
Revenues were $19.6bn for Q1, a figure that would have been equal to the $22.5bn that IBM made last year were it not for the effects of the dollar and moves to divest unprofitable parts of the business.
Overall the revenue drove IBM to profits of $2.4bn for the quarter. The company said that this was down five percent on the same period last year, although at that time IBM also reported profits of $2.4bn, suggesting that the original figure was raised at some point.
When online pre-orders for Apple’s first smartwatch started on April 10, many customers were surprised to see delivery times as far out as June instead of on April 24, when the devices officially go on sale.
On Wednesday, Apple notified some buyers that they would not have to wait so long after all.
“Our team is working to fill orders as quickly as possible based on the available supply and the order in which they were received,” Apple said in a statement.
An Apple spokesman declined to say how soon the company would ship the watches or how many customers would be affected.
The Cupertino, California company previously predicted that demand would exceed supply at product launch. It has not said how many watches its customers have pre-ordered.
In a note to clients on Wednesday, FDR analyst Daniel Ives estimated Apple would take over 2 million pre-orders for the watch and ship 20 million of them in 2015.
“The longer-term consumer adoption curve for the Apple Watch remains a major ‘hot button’ question among tech investors as broad customer feedback is yet to be seen,” Ives wrote.
The Internet company has hired advisers to help it evaluate options for the stake, Chief Executive Officer Marissa Mayer told investors on a conference call on Tuesday. It will not be included in the planned spin-off of its stake in China’s Alibaba Group Holding Ltd, she said.
Investors have been urging Mayer to monetize the Yahoo Japan stake separately, after she announced plans to spin off the Alibaba stake in January, which could be worth $40 billion.
The advisers will help Yahoo “determine the most promising opportunities to maximize value” for the Yahoo Japan stake, said Mayer.
But Wall Street remained broadly cautious about the plan.
“They are taking the slow train, stressing the process,” said Colin Gillis, an analyst BGC Partners, who warned that a deal, if any, could be a long way down the line. “Engaging advisers doesn’t mean spinning it out.”
Yahoo owns about 35 percent of Yahoo Japan Corp, which has a market value of almost $25 billion on the Tokyo Stock Exchange. Japanese internet company SoftBank Corp is the biggest shareholder, with about 36 percent, according to Thomson Reuters data.
Last month Yahoo shareholder Starboard Value LP said the Alibaba spin-off was a “good first step” but urged Yahoo to also spin off its Yahoo Japan stake in a tax-efficient manner. Starboard did not reply to a request for comment.
PayPal has detailed a number of biometric security solutions that it believes could replace the conventional password.
The biometric solutions include embedded chip tattoos, vein recognition and even ingestible technology that would mean people no longer need to worry about fraudsters nicking their sensitive information or digital dosh.
The payments firm is flogging the idea via a presentation at various technology conferences entitled Kill all Passwords, where it claims that the rise of hacking and phishing targeting online banking services will lead people to use tighter security.
This next step, PayPal says, includes inserting security devices into the body to allow the use of unique internal characteristics to log-in to accounts.
It sounds a little far-fetched, but PayPal’s global head of developer advocacy, Jonathan LeBlanc, who is currently giving these presentations, doesn’t seem to think so.
He listed the most frequently used passwords, including ’123456′, ‘password’, ’12345678′, ‘qwerty’ and ‘abc123′, stating that a huge 40 percent of people have a password included in the top 100 passwords list and 14 percent have a password from the most used 10.
“As long as passwords remain the standard method for identifying your users on the web, people will still continue to use ‘letmein’ or ‘password123′ for their secure log-in, and will continue to be shocked when their accounts become compromised,” he said.
LeBlanc said that, after working with developers to uncover and trial new forms of secure account log-in, embeddable, injectable and ingestible devices are the future for mobile payments.
Devices that use some of this technology already exist, such as those used for medical applications including glucose detection, blood pressure monitoring and digestive health.
LeBlanc even went as far as to say that more recently developed online interactions using external bodily methods, such as fingerprints, used by the likes of Apple for its iPhones and iPads, are “antiquated” and will be phased out before services like PayPal will consider using them.
Sounding like something from a sci-fi film, another idea of PayPal’s is that a brain chip implant could allow humans to authenticate themselves online.
PayPal, which at the moment is still owned by auction site eBay, will become its own business again at some point this year following news of a split in 2014.
The numbers from eBay’s fourth-quarter and full-year financial statements last year explained that there will be a cull of about seven percent of staffers in the first quarter of 2015.
Meanwhile, PayPal faces challenges from established players and new entrants like Apple, which offers some kind of phone-based option.
Samsung has recently described the first week of Galaxy S6 and Galaxy S6 Edge sales as “impressive” and predicted overall sales for both devices will break a record, passing 70 million globally for both.
That projection, offered by an unnamed Samsung executive in a recent Korea Times report from Seoul, would be welcome, indeed, after the company’s problems selling the Galaxy S5.
A Samsung spokeswoman could not immediately confirm the sales estimate. Both phones went on sale April 10 in the U.S. and other major markets.
The 70 million in sales for both phones would compare to reported sales of 70 million for each of the Galaxy S3 and Galaxy S4 phones. The Galaxy S5′s sales fell 40% below expectations, as measured last November, leading to an executive shakeup.
Samsung has been using the Edge device as a kind of promotion for both phones, which are reportedly sold to carriers in a ratio deal: When a carrier buys 10 Galaxy S6 phones to resell, the carrier gets the right to buy five Edge phones to resell.
The Edge is the first smartphone with two curved front display edges on either side, something Samsung expected would be a crowd pleaser. Some reports have said there were a record high 20 million pre-orders for both new phones and that some retailers sold out within a day of availability.
Samsung is apparently seeing good early sales despite user complaints of a problem with the auto-rotate feature on some Edge devices. Some images and apps remain stuck in the portrait mode (vertical) and won’t rotate as they should to landscape mode (horizontal), according to dozens of users in forums.
Samsung and U.S. carriers have offered no public explanation for the problem or its fix, nor have they said how many units are affected. Some customers have returned an Edge device only to have a second one fail. Sprint referred all queries on the matter to Samsung, while Verizon and AT&T have not commented.
Nokia Technologies, which controls thousands of technology patents, plans to re-enter the mobile phone market in 2016, according to unnamed sources cited by Re/code.
Such plans would be ambitious, especially given the super-competitive global smartphone and feature phone market. It isn’t clear precisely what Nokia Technologies is up to, and at least two analysts are skeptical it will work.
“People loved Nokia [in previous years], but I am not sure consumers will think that this is the same Nokia,” said Carolina Milanesi, chief of research for Kantar WorldPanel ComTech via email. “From a business perspective, it will be hard to see how they can be competitive against white box players.”
It is also hard to see how devices will fit into Nokia’s overall business strategy, she said. Milanesi assumed the devices would be built on the Android platform, but that hasn’t been confirmed.
“The Nokia brand is a well-recognized brand, but I would think their re-entering the phone market is not going to happen,” added Jack Gold, an analyst at J. Gold Associates.
“They certainly will be fighting an uphill battle,” said Jitesh Ubrani, an analyst at IDC. “Nokia doesn’t have the brand catchet it once had and the phone market has gotten increasingly competitive as Chinese vendors like Xiaomi, Huawei, ZTE, etc., continue to gain share of wallet and mind, while driving down prices.”
Under terms of the $7 billion sale to Microsoft, Nokia can’t sell any phones under the Nokia brand through 2015 and can’t license the brand until the third quarter of 2016.
So far, it doesn’t appear that Nokia would manufacture any phones, but would instead design products and license those designs and the Nokia brand to other companies. The N1 Android tablet from Nokia Technologies was licensed to a Chinese manufacturer under that scheme.
Microsoft is going great guns in the server market having recently announced the Nano Server, a “minimal footprint” Windows Server, and Hyper-V containers, which provide virtual machine isolation capabilities to containers.
Nano Server is even more stripped-down than Windows Server Core with the GUI stack, 32 bit support (WOW64), MSI and a number of default Server Core components all being put in the dustbin.
You can’t do local logons, Remote Desktop and WMI and PowerShell are the only tools available to manage the creature.
Microsoft is also working on better remote tooling and is coming up with a set of management tools for the nano. It is planning work on PowerShell’s Desired State Configuration, file transfers and script authoring and debugging.
Cutting all this stuff out has made it more efficient, secure and availability. Redmond said that the Nano Server has 93 percent lower VHD (Virtual Hard Disk) size.
It also gets 92 percent fewer critical bulletins and requires 80 percent fewer reboots than a typical Windows Server. It is also a bit quicker to setup: from bare metal to running Nano Server takes 3 minutes.
Hyper-V containers also will offer the system a fair bit of isolation that was only available to “dedicated physical or virtual machines”.