Filter looks at the day's top technology news through snapshots and analysis of what the world's media outlets are covering. Washingtonpost.com's new Mon.-Fri. feature is penned by technology reporter Cynthia L. Webb. If a technology story breaks, a company falters or triumphs, or there's a new trend in technology, Filter wants you to know about it.
Some analysts are still bullish on Intel. "They haven't said anything about any softness in corporate (information technology) spending, indicating a fairly balanced pick-up for corporate and consumer in the September quarter," JMP Securities analyst Krishna Shankar, an Intel stock owner, told the San Francisco Chronicle.
Yet these remarks from analysts sum up a lot of investors' reaction to the latest report. "That is not what you want to see from the bellwether of the industry," Daniel Niles, chief executive of Neuberger Berman Technology Management, told the Journal. "There are troubling signs," Raymond James analyst Ashok Kumar told the New York Times. "Intel anticipated demand that didn't materialize. The company might have been seeing strength in the corporate side, but it's definitely more moderate growth than we saw late last year." Kumar also told the paper "that it was possible Intel could recover fairly quickly from the inventory problem."
The New York Times said that for the past several quarters, Bryant "has been reporting improving demand from corporate technology managers. But analysts now contend that he may have been overly optimistic for the quarter, which is seasonally the chip industry's weakest. Intel has spent much of the last year shifting to new manufacturing processes that it says will drive costs down."
• San Francisco Chronicle: Intel Posts 96% Jump In Profit
Here's something that could help Intel's manufacturing woes. "The Mexican government this week plans to promote the development of a chip manufacturing and assembly industrial park in Baja California, according to people close to the plans. The project, which has been dubbed the 'Silicon Border,' envisions a 15-square-mile industrial park in northwestern Mexico near the border with California, built at a cost of around $500 million, said Ron Jones, chairman of Technology Park Investment and Development LLC, the project's developer," Reuters reported. "Mexico, Jones said in a recent interview, is appealing to chip makers for new investment based on its proximity to the corporate headquarters of U.S. chip makers, a bid that puts it in competition with China and Taiwan."
• Reuters: Mexico Plans Push For Chip Factories In Baja
Get on Board the Restatement Train
In other earnings news, Linux software developer Red Hat is in the hot seat. The company said it is restating its earnings for the past three years and is also facing scrutiny from the Securities and Exchange Commission. The news sent "its shares down 23% and raising concerns about the credibility of the software company's management. Investors and analysts said the restatement would have little impact on the company's earnings, only slightly changing its revenue and earnings per share for the three years. Meanwhile, the SEC inquiry isn't a formal investigation and relates to one annual report, Red Hat Chief Executive Officer Matthew Szulik said on a conference call," the Wall Street Journal said. "But the restatement and the SEC inquiry came just weeks after Red Hat's surprise announcement that its chief financial officer was resigning for personal reasons. The string of announcements raised concerns about whether there are more surprises to come." The Associated Press reported remarks from Szulik: "The restatement is not expected to reflect any material difference in the meaningful historical trends of our business, nor will it adversely affect our business outlook, which remains strong," he said.
Telecom gear maker Nortel is also part of the restatement bandwagon. The Canadian company "said its long-running earnings restatement will wipe out nearly all of last year's operating earnings, with one-third of the earnings reduction coming for the second half of 2003," the Wall Street Journal reported. "Nortel had already said the earnings restatement would erase the profit for the first half of 2003. Yesterday, the company said the restatement would cut earnings in the second half, when a recovering economy boosted Nortel's results. The overall impact will be to eliminate nearly all of Nortel's earnings from continuing operations for the year, though earnings from discontinued operations will likely still leave the company with a net profit."
• The Wall Street Journal: Nortel Restatement To Erase Profit (Subscription required)
The Canadian Press said Nortel shares "jumped about 10 per cent early today after CEO Bill Owens said the troubled company is focusing on cost controls amid an investigation into finances that led to the firing of top executives." Owens said that "It has become clear that we will need to put into place an improved cost structure to drive financial performance."
• Canadian Press via The Toronto Star: Nortel Promises Tighter Budget Controls
Microsoft's Patchwork Quilt
The security of Microsoft's software remains on fragile ground. The company has issued two "critical" software patches, "bringing to 12 the total number of critical software fixes the company has released so far in 2004 and putting the focus once again on the security of Microsoft's widely used Internet Explorer Web browser," washingtonpost.com reported. "The two patches deal with security holes in the Windows 2000 and Windows XP operating systems. The first involves a flaw in 'task scheduler' a program that allows Windows users to run applications at scheduled intervals. The other resides in Microsoft's built-in 'HTML Help' function, which offers tips on using Windows programs."
• washingtonpost.com: Microsoft Releases New Batch of Patches (Registration required)
The AP noted that Microsoft issued a tool to remove the "download.ject" computer virus, "but was not yet able to offer a software patch to prevent the infection from spreading." Stephen Toulouse, a Microsoft security program manager with Microsoft, could not say when a patch would be available to stop the virus, which exploits a hole in Microsoft's Internet Explorer browser, the article said.
Even though its products are still falling prey to hackers and other security vulnerabilities, Microsoft is playing it cool. Reuters reported Microsoft "was on track to deliver on its 2-1/2-year-old promise to make its software more secure and reliable," citing remarks Microsoft chief executive Steve Ballmer made during a speech yesterday at the Worldwide Partner Conference in Toronto.
• Reuters via The Washington Post: Microsoft CEO Touts Security Push At Conference (Registration required)
Microsoft posted a transcript of Ballmer's speech on its Web site. CNET's News.com covered the speech and also interviewed Ballmer. When asked about the company's recent legal case clean-up, Ballmer told CNET: "The legal matters are as they are. From a bandwidth of communication standpoint, there was a period a few years ago particularly when legal issues were taking up a larger percentage of our available time to talk with people than I would have liked. I think we've had some hard work, and still do, hard, important work on security. What that allows us to do is spend more of our dialogue with our partners this year talking about not security, like I did in the past, or concerns about where we would wind up being because of legal issues in the future, but really focusing squarely on that which they care the most about, which is building their business by winning in the marketplace."
• CNET's News.com: Ballmer: Xbox To 'Take Sony'
Filter is designed for hard-core techies, news junkies and technology professionals alike. Have suggestions, cool links or interesting tales to share? Send your tips and feedback to cindyDOTwebbATwashingtonpost.com. (Yes, those spammers have been having a lot of fun with my e-mail address lately.)
