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Filter - Cynthia L. Webb
Microsoft, Amazon Go up Against the Wall St.

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_____About Filter_____
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.

_____Filter Archive_____
Democrats Get Wired in Boston (washingtonpost.com, Jul 26, 2004)
EBay Wins a Beating (washingtonpost.com, Jul 22, 2004)
Microsoft Gives Back, Grows up (washingtonpost.com, Jul 21, 2004)
We Built This City on Spam (washingtonpost.com, Jul 20, 2004)
VoIP: The Next Household Word? (washingtonpost.com, Jul 19, 2004)
More Past Issues
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The news sent Amazon shares down early in the trading day. More on this from the Wall Street Journal: "Amazon is the third large Internet company-following eBay Inc. and Yahoo Inc.-whose second-quarter results disappointed investors. All three companies met or exceeded their own forecasts for various performance measures, but investors have shown little tolerance for Internet companies with relatively high stock values that don't significantly exceed estimates. In after-hours trading, Amazon's shares fell as much as $2.20, or 4.8%, to $43.62, according to Inet ATS Inc. In 4 p.m. trading on the Nasdaq Stock Market, the shares rose $1.06 to $45.82."

"I think Amazon still has a solid model and a good business, but growth is clearly slowing down and spending is increasing," Safa Rashtchy, an analyst at Piper Jaffray, told the New York Times. "The growth from here is going to be more difficult and they have to spend to get there."
The Wall Street Journal: Amazon Reports Profit, Raises Forecast For Year (Subscription required)
The New York Times: Amazon Reports A Profit, But Misses Expectations (Registration required)

The Los Angeles Times said Amazon blamed Harry Potter's "extraordinary popularity in 2003 for a slowdown in the longtime growth of its sales: Amazon sold 1.4 million copies of 'Harry Potter and the Order of the Phoenix,' the fifth book in the series, during last year's second quarter, making this year's results look weaker by comparison. Concerns about the slowdown in revenue growth overshadowed the Seattle-based company's rebound from a steep loss a year earlier largely on the strength of increased shopping on Amazon's international stores."
Los Angeles Times: Amazon.com Posts Profit, but It's Missing Old Magic (Registration required)

Earnings Endnotes

Germany's SAP logged earnings yesterday that bode well for Europe's tech sector. "SAP remains locked in a fierce global battle with U.S. rivals, including Oracle Corp., of Redwood Shores, Calif. Microsoft Corp., of Redmond, Wash., is trying to crack the business-application sector and recently disclosed it had held preliminary merger talks with SAP," the Wall Street Journal reported. "Still, SAP's results mark a contrast to those of its main U.S. competitors in the sector, which have suffered from a reluctance by corporations to invest in big technology projects. Wednesday, Siebel Systems Inc., of San Mateo, Calif., said its second-quarter net fell nearly 16% and revenue declined 10% as major customers delayed purchases." SAP's "results showed signs of a long-awaited European recovery and strong U.S. growth, but it failed to raise its outlook for sales for the year," Reuters said.
The Wall Street Journal: SAP Net Rose 14% In Second Quarter On Gains in U.S. (Subscription required)
Reuters via International Herald Tribune: In Europe, Software Sales Signal Recovery

In other earnings news, gaming firm Electronic Arts logged a profit, but like many tech companies these days, it issued a warning too. The company said "its fiscal first-quarter profit rose 32% but warned that sales during the holiday season would be flat. EA, the world's largest video game publisher, takes in about half its revenue for the year during the October-December period. But Chief Financial Officer Warren Jenson told analysts in a conference call that sales would be even with the nearly $1.5 billion the company took in during the holiday quarter last year," the Los Angeles Times reported. The San Francisco Chronicle noted "revenue for the holiday season – EA's third quarter – may end up being flat, as competition will likely heat up when rival firms release highly anticipated blockbuster titles such as Grand Theft Auto: San Andreas, Halo 2, Doom 3, Half-Life 2 and Gran Turismo 4."
Los Angeles Times: Electronic Arts Says Profit Up 32% But Issues Warning (Registration required)
San Francisco Chronicle: Electronic Arts Post Solid 1st-Quarter Gain

Atlanta-based EarthLink, the nation's second-largest Internet service provider, released its earnings yesterday. The company "swung to a profit, but revenue declined slightly as the Internet provider saw customers leave its dial-up service for competing broadband services" and "reported second-quarter net income of $49.7 million, or 31 cents a share, compared with a loss of $15.3 million, or 10 cents a share, in the same quarter last year. Revenues slipped 1.1% to $348.6 million from $352.3 million last year. Revenue was in line with the company's earlier forecast," the Wall Street Journal reported.
The Wall Street Journal: EarthLink Reports Profit, But Revenue Declines (Subscription required)

Cybersecurity Crunch

The Department of Homeland Security's cybersecurity efforts aren't so stellar, according to a new government report. The department's "efforts to battle computer-network and Internet attacks by hackers and other cyber-criminals suffer from a lack of coordination, poor communication and a failure to set priorities, according to an internal report released yesterday. The report, by the department's inspector general, said the shortcomings of the National Cyber Security Division leave the country vulnerable to more than mere inconvenience to businesses and consumers," The Washington Post reported. The paper said "the report comes at a time of heightened frustration among technology company executives and members of Congress that cyber-security is not getting enough attention and is poorly understood by some senior department officials. The issue is not just the possibility of a broad cyber-terrorist attack, those people say, but the daily attacks that are costing U.S. businesses and computer users hundreds of millions of dollars a year and countless hours of lost productivity." Among the report's conclusions? "Though NCSD has undertaken some major initiatives, it still faces a number of challenges to address long-term cyber threats and vulnerabilities to the nation's critical infrastructure." The full report, in PDF format, is available online.
The Washington Post: Report Faults Cyber-Security (Registration required)

Hyper Skyper

Skype Technologies continues to raise the stakes in the Internet phone wars. "The Internet calling rebel plans to start offering calls from computers to regular phone lines anywhere in the world for less than two cents per minute. The company announced today a deal with Level 3 Communications Inc. and other carriers to route the calls," the Wall Street Journal reported. "Already, in less than a year, Skype – a creation of the makers of music file-sharing software KaZaA – has attracted more than seven million registered users by offering free software that allows users to make free calls from one computer to another, using PCs to speak to each other instead of telephones. The new service comes in addition to the already free existing service, which has been downloaded more than 16 million times."
The Wall Street Journal: Telecom Rebel To Connect PCs To Telephones (Subscription required)

Bitter Apples

You better believe that Apple is going to watch its cash-cow iPod digital music product like a proud, yet protective mama bird. The New York Post, quoting the ever-famous undisclosed source, reported today that Apple "is outraged over new advertisements by upstart music channel Fuse that resemble ads for the iPod, Apple's popular digital music player, The Post has learned. Apple lawyers have been calling Fuse and threatening to sue unless the ads – which went up in outdoor locations in New York City on Monday – are taken down. Not only do the ads resemble Apple's iPod ads, but they also are quite risque: one depicts a man masturbating, while another shows a woman pole dancing. Apparently, Apple has received numerous calls from iPod users who have expressed outrage over the advertisements, a source said. Spokesmen for Apple and Fuse were unavailable for comment."
The New York Post: Apple Blows Fuse Over Ads

In Case of Piracy, Induce Lawmaking

And back on the Hill, more chatter over stopping peer-to-peer networks from allowing file swaps of copyrighted songs and other files. "The chairman of the U.S. Senate Committee on the Judiciary said Thursday that a ban on file-trading networks is urgently required but agreed to work with tech companies concerned that devices like Apple Computer's iPod would be imperiled," CNET's News.com reported. "Sen. Orrin Hatch, R-Utah, said he intended to move ahead with the highly controversial Induce Act despite objections from dozens of Internet providers and Silicon Valley manufacturers." And this from washingtonpost.com: "Hatch urged supporters and opponents of the bill to help him develop a compromise that protects legitimate manufacturers while allowing copyright owners to protect their rights. 'If you help us, we just might get it right, but if you don't we're going to do it [anyway],' Hatch said."
CNET's News.com: Senator Wants To Ban P2P Networks
washingtonpost.com: Senator Induces Support for Piracy Bill (Registration required)

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.)

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