RealNetworks on Tuesday reported a third-quarter net loss that nearly doubled what it lost in the same period a year ago and warned that the fourth quarter would bring similar results. The quarter's loss came as worsening sales in the company's server business eclipsed gains in its consumer business.
Net loss for the quarter was $35.4 million, or 22 cents per share, compared with a loss of $19.4 million, or 12 cents per share, in the same quarter last year. The third-quarter loss included $30.8 million worth of special charges, including restructuring and severance, write-down of excess office facilities and some equity investments, and a write-off of net-deferred tax assets.
The company could follow the example of Netscape Communications, Microsoft's last famous victim of a bundled software strategy, and give its server software away for free, Hoch noted. Or it could charge for the server but not the individual streams or charge a licensing fee just for software integration.
Microsoft paid nearly $100 million Monday for a four-building office complex just west of its Redmond campus, King County property records show. The company had leased the entire 428,000-square-foot complex, known as Cedar Court, since it opened three years ago. Microsoft bought the property, on 148th Avenue Northeast, from a partnership that includes real estate developer Hines.
The deal is Microsoft's third big real estate acquisition in Redmond in the past 13 months. Intermediaries acting on behalf of the company bought SpaceLabs Medical's headquarters property for $74 million in September 2001 and the LakeRidge Square office complex, which Microsoft had leased, for $142.3 million in December.
Microsoft has no intention of withdrawing its Xbox video game console from Australia despite reports it was considering such a move in a dispute over a copyright law, the company said on Tuesday. Australian newspaper The Age reported last Friday that Microsoft Chief Executive Steve Ballmer, angry over a court ruling that allowed an individual there to sell after-market chips that modify game consoles, had said the company would have to reconsider selling its console there. A company spokeswoman told Reuters Ballmer's remarks were not specifically related to the Xbox, which she said Microsoft was committed to selling in Australia.
Microsoft said on Wednesday software piracy was on the rise worldwide and China, Taiwan, Hong Kong, Malaysia and Indonesia were the "hotspots" in Asia where major counterfeiting activities thrived. Katharine Bostick, Microsoft's senior corporate attorney, said penalties imposed by many governments were not tough enough, resulting in the growth of large-scale manufacturing and distribution of counterfeit products. "It involves organized crime," Bostick told a technology conference in Cyberjaya, Malaysia's software hub.
Bostick said data from watchdog body Business Software Alliance, in which Microsoft is a member, showed that the global piracy rate rose by one percent to 40 percent of software products sold in 2001.
VeriSign on Tuesday announced a new partnership with Microsoft under which the registrar and security company will provide security services for Microsoft's Windows Powered Smartphone software. The centerpiece of the agreement is a code-signing service that will be available to any developer who writes code for the Smartphone platform. Using the VeriSign service, developers will be able to digitally sign their applications, which should help prevent malicious or unauthorized code from running on devices using the Smartphone software.
As part of its .Net services plan, Microsoft announced on Tuesday plans to acquire Vicinity for $96 million. Vicinity, Sunnyvale, Calif., provides Web, wireless and speech-based, location-based services for customers including Kentucky Fried Chicken, Red Lobster, The Home Depot, Prudential and Airborne Express. The deal is slated to be completed before the end of first-quarter 2003. At that time, the Vicinity enterprise location-based services will be integrated with Microsoft's own location-based service called MapPoint.Net, executives said. Vicinity will be merged with the MapPoint Business Unit at Microsoft.
Microsoft on Tuesday released an update to the version of Windows XP for embedded devices. Windows XP Embedded with Service Pack 1 resolves glitches discovered since Microsoft released the operating system last year and also adds new features to the product. The operating system is a modular version of Microsoft's flagship operating system that can be installed on embedded devices, such as cash registers, slot machines or ATMs. This embedded version uses the same code base as Windows XP, but Microsoft does not license the product for use on PCs.
Among the enhancements in the release: Remote Boot, for starting the device from a server; Device Update Agent, which is used to apply software updates; System Development Image Manager, a tool for deploying Windows XP Embedded run-time images; Footprint Estimator, for estimating the size of the operating system before it is added to the device; USB 2 support; and support for the .Net Framework.
Microsoft on Tuesday announced that its long-awaited Smartphone 2002 software is complete and said the first phones with the software will debut in Europe later this month. Wireless carrier Orange plans to sell the device in the United Kingdom for 179 pounds ($277), including a digital camera add-on. The phone, known as SPV (Sound, Pictures, Video), is built by Taiwan-based High Tech Computer (HTC), the contract manufacturer for Hewlett-Packard's original iPaq handheld device as well as British wireless carrier mm02's XDA handheld.
Microsoft has two operating systems for wireless devices. Already on the market are wireless handhelds running Microsoft's Pocket PC Phone Edition. Those products can make phone calls but have a large screen and lack a number pad. By contrast, devices running Smartphone 2002 look like slightly bulkier cell phones, with a jog dial for one-handed dialing and browsing of contacts and other information.
AOL Time Warner said it will update Wall Street analysts on an internal investigation of accounting practices at its troubled America Online unit when it reports third-quarter earnings Wednesday. On Monday, two former executives at AOL advertiser Homestore.com pleaded guilty to inflating revenue at the online real estate listing company by $46.4 million in 2001. It is so far unclear whether those transactions are related to any accounting irregularities at AOL. The accounting investigation comes as AOL Time Warner is bracing for its latest tough quarter due to a steep decline in advertising and e-commerce revenue at its online unit
The software giant Microsoft broke into the mobile phone market with French operator Orange on Tuesday, unveiling a smart phone that triggers a turf war with the telecoms equipment establishment. In a move to defy top suppliers such as Nokia, Motorola and Sony Ericsson, Orange said the first mobile phones to be armed with Microsoft software would pay for themselves in less than five months.
"We want to give the likes of Nokia and Ericsson a wake-up call," Richard Brennan, executive vice president, OrangeWorld and Brands, told Reuters. "At the moment, we feel Nokia and Sony Ericsson are not innovating fast enough. We need to make a clear statement that we are not going to wait around."