In other earnings news, telecom company Lucent yesterday said it had a record quarter and Qualcomm also logged good results. Lucent "posted its best quarterly profit in four years, amid growing demand from telephone companies. Lucent also raised its sales outlook for the current year and said it expected to post a profit, removing a qualifier it had used previously that any annual profit would exclude one-time items," the International Herald Tribune reported.
Verizon is the latest company to embrace Internet telephone service to compete with upstarts like Vonage and Skype and to offer additional services to customers. The company is "expected to announce today that it is launching a nationwide Internet calling service, a move likely to significantly accelerate the adoption of the low-cost communications technology," the Wall Street Journal said. "Verizon will offer the service in more than 130 cities, according to the company. The company will charge consumers with high-speed Internet connections who are not already its customers $39.95 a month, while Verizon broadband subscribers can pay $34.95 a month for the service. Verizon will offer a $29.95 a month service for the first six months to its existing broadband customers as an introductory offer. The price covers unlimited local and long distance calling."
The Wall Street Journal: Verizon To Launch Nationwide Plan For Internet Calls (Subscription required)
The New York Times said: "Most regional Bell companies have been hesitant to offer Internet phone service because it undercuts their main business of connecting calls over copper wires. They have also argued -- rightly, many analysts say -- that Internet calls are inferior in quality and reliability to traditional phone calls. Yet the phone companies are under pressure to enter the market because cable providers are starting to package that service with their high-speed data and video services. A company like Vonage, meanwhile, has captured more than 200,000 customers, many of whom have abandoned their traditional phone lines altogether. Verizon wants to use its size to grab a nationwide consumer audience, including the tens of millions of homes currently without the high-speed Internet connections needed to make the service work."
The New York Times: Verizon Seen Introducing Phone Service Via Internet (Registration required)
It Came From Florida
Here's a development that will give privacy advocates the chills: A Florida online advertiser who runs an e-mail company called Snipermail was charged yesterday by federal officials "with tapping into the computer system of a large database marketer in Arkansas and stealing 'vast amounts of personal information' about Americans in what they described as one of the largest network intrusions in recent memory. Prosecutors filed a 139-count indictment against Scott Levine, 45, of Boca Raton, in the Eastern District of Arkansas. Federal prosecutors say Levine exploited network links his company had to Acxiom Corp. in Little Rock and secretly downloaded millions of names, e-mail and home addresses and other details," The Washington Post reported.
"Acxiom, one of the world's largest data aggregators, has information about virtually every adult in America. It also manages and enhances data for major banks, insurers, direct marketers, the credit bureau TransUnion and others. It has developed some of the world's most sophisticated data analysis software, some of which it uses for homeland security screening for government contracts," the paper reported. "Yesterday's announcement came one year after authorities in Ohio discovered that a local man there, working for a company doing business with Acxiom, had illegally downloaded information from the Arkansas company. Acxiom discovered the second intrusion as it examined its computers for vulnerabilities following the discovery in Ohio. It brought the case to the attention of U.S. officials last year. Since the thefts, company officials said they have upgraded security systems."
The Washington Post: Advertiser Charged In Massive Database Theft (Registration required)
The case against Levine "represents 'what may be the largest cases of intrusion of personal data to date,' U.S. Assistant Attorney General Christopher A. Wray said Wednesday at a news conference in Washington. Prosecutors said the stolen data included personal information about 'a great number of individuals,' but they added that the information wasn't used for identity fraud," the AP reported.
Associated Press via the San Jose Mercury News: Prominent Database Company Hacked Again (Registration required)
Microsoft on Tap
All eyes will be on Microsoft's earnings today, especially after news surfaced earlier this week about the company's massive dividend payout and stock buyback program. "At Microsoft Corp.'s quarterly earnings announcement today, finance chief John Connors is expected to pound out this message: Microsoft's best days are ahead. Following the announcement Tuesday of plans to distribute as much as $75 billion in cash to shareholders over four years, Microsoft executives seem to be on a campaign to convince investors that increased payouts are not a sign of waning growth," the Wall Street Journal said. "In an interview Tuesday, Mr. Connors said, 'I would put our growth prospects up against any company in the world.' Later, Chief Executive Steve Ballmer told analysts Microsoft is in a 'phase of great opportunity and frankly of significant growth.' But that isn't the consensus of many investors, who look at the company's maturing core businesses and see modest growth for the software giant."
The Wall Street Journal: Microsoft Seeks to Convince Street That Growth Remains on Horizon (Subscription required)
In an article today about Microsoft's planned payout, USA Today said: "Microsoft's lead almost certainly will be followed by others in a torrent of dividends and stock buybacks. The trend is already underway as 152 S&P 500 companies increased their dividends this year. Nine companies also started paying dividends for the first time this year after 16 companies that introduced dividends in 2003." The Seattle Times wrote that "the historic payout plan announced Tuesday could have a longer-term effect if it persuades other cash-rich corporations to share more with shareholders, although leading tech companies said yesterday they had no plans to follow Microsoft's path."
USA Today: Microsoft's Flush, With Nothing To Splurge On The Seattle Times: Microsoft Payout Plan May Nudge Other Firms
But Jeff Brown of the Philadelphia Inquirer argued yesterday that Microsoft's plan will likely mean little for, well, the little people. "Even if you own thousands of Microsoft shares, the dividend won't make you any richer. Indeed, tax on the dividend could leave you with LESS than you started with. OK, I'm raining on the parade, but here's how it works: When a company pays a dividend, cash moves from the company's pockets to the shareholders'. That would seem to make shareholders richer. Unfortunately, it also makes the company poorer. All else being equal, the stock price falls to reflect the reduction in cash. A $3-per-share dividend payment makes the stock price fall by $3 a share. Shareholders have more cash, but their stock is worth less. So really, it's a wash," Brown wrote.
The Philadelphia Inquirer via the San Jose Mercury News: Microsoft Dividend No Windfall For Most of Us (Registration required)
Punting on TiVo
TiVo has been a popular gadget for TV fans that want to watch their favorite shows whenever they want. But not everyone wants TiVo to spread its wings to other ventures. "Hollywood studios and the National Football League are seeking to block the maker of the popular TiVo television recorder from expanding its service so that users could watch copies of shows and movies on devices outside their homes. In filings with the Federal Communications Commission, the organizations say the new technology could compromise the copyrights of shows that broadcasters send over the airwaves in digital form, which offers much higher sound and video quality than what viewers typically get today," The Washington Post reported. "The organizations fear that computer enthusiasts would capture those programs and begin trading them online in the same way that millions of music files are shared daily, which record companies have said has cut into their profit. TiVo Inc. insists its system will not allow such mass Internet distribution."
The Washington Post: TiVo's Plans Lead To Fight On Copyrights (Registration required)
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