Curiouser and curiouser

Apple on Jan. 23 reported revenue of $54.5 billion for the quarter ending Dec. 29, an increase of 18 percent from the same period a year earlier. Net income was flat at $13.1 billion. The company sold 47.8 million iPhones, 22.9 million iPads and 4.1 million Mac computers. In the same quarter for 2011, Apple sold 37 million iPhones, 15.4 million iPads and 5.2 million Macs. Apple reported $137 billion of cash and investments on its balance sheet at the end of the quarter. Apple finally succumbs to uncreative destruction 23 January 2013 | By Robert Cyran Apple has finally succumbed to uncreative destruction. A five-year run with the iPhone and iPad catapulted the company to investment royalty, but it’s coming to an end. Over $50 billion of market value - nearly the equivalent of HP and Dell combined - vaporized in the hours after Apple reported flat fourth-quarter profit. Copycats are gaining and margins are shrinking. Chief Executive Tim Cook needs a real innovation to escape this Red Queen’s race. A collection of evolutionary upgrades is helping Apple compete with rising rival Samsung, but only up to a point. The top line grew 18 percent from a year earlier, with almost 48 million iPhones and 23 million iPads sold in the quarter. Unfortunately, the bottom line isn’t keeping pace. The new iPad mini is in hot demand, but isn’t as profitable as its bigger brother. And while the iPhone 5 is also attracting plenty of customers, it’s proving expensive to produce. Apple’s operating margin fell nearly six percentage points to 31.6 percent. Essentially, Apple is running faster and faster simply to stand still. The danger, of course, is that the treadmill accelerates faster than Apple can run and rivals catch up. Or Apple slips, and introduces a real dud beyond just a wonky maps app. Investors are obviously bracing for it. Including the 10 percent after-hours decline on Wednesday, the shares trade at about 10 times last year’s earnings. Apple’s $137 billion of cash and investments provides a nice cushion against any fall. The sum accounts for nearly a third of its market capitalization. Apple’s best hope, however, isn’t from dividends, share buybacks or the introduction of another slightly modified and cheaper iPhone. It is to do what it has done best: run in a different direction. The company’s phenomenal growth has come from introducing devices people didn’t even know they wanted. Whether it’s in payments, TV or some other secret project, Apple will have to pick up the pace. ======= Exxon Mobil regains market-value crown from slumping Apple Fri, Jan 25 17:37 PM EST By Rodrigo Campos NEW YORK (Reuters) - Exxon Mobil Corp has reclaimed its place as the largest U.S. publicly traded company by market value one year after losing it to Apple Inc, as shares of the technology giant extended their recent fall on Friday. Apple's market capitalization has fallen by about $250 billion - roughly the total market value of Google Inc - since hitting a high last September, when the stock traded above $700. Apple shares traded as low as $435 before closing down 2.4 percent on Friday at $439.88, for a market value of roughly $413 billion. Exxon shares, up 0.4 percent on the day to $91.73, added to a market value of about $418.2 billion. Apple "was clearly a momentum stock. Whenever the numbers behind momentum stocks stop, the momentum players are out and the stock tumbles," said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh. There was heavy volume in Apple shares as they hit the session low shortly before the closing bell. The stock dropped by as much as $7, to $435 from $442, within the span of 1 second during the last minute of trading. More than 50 orders were executed on NYSE Arca at $435 a share, according to Thomson Reuters time-and-sales data, in blocks as small as 100 shares and as large as 10,494 shares. No other exchange executed orders at a price lower than $438 a share prior to the day's close. After those trades went through, the stock resumed its earlier levels around $442 a share before closing at $439.88. Apple shares slid 12.4 percent on Thursday - their biggest percentage drop since late September 2008 - as disappointing holiday-period iPhone sales reinforced fears the company is losing its dominance in smartphones. Apple shipped a record 47.8 million iPhones in the December quarter, up 29 percent from a year earlier. But that lagged the 50 million that analysts on average had projected. "They make great products, expensive products, but as a value investor I'm interested in the unloved stocks, just not the recently unloved ones," Forrest said. Apple's reign as largest company by market value began in the last week of January 2012, when it surpassed Exxon. (Editing by James Dalgleish, Sofina Mirza-Reid and Matthew Lewis)

Sony to ax 10,000 jobs in turnaround bid: Nikkei

Mon, Apr 09 09:13 AM EDT
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By Chris Gallagher

TOKYO (Reuters) - Japan's Sony Corp is cutting 10,000 jobs, about 6 percent of its global workforce, the Nikkei newspaper reported on Monday, as new CEO Kazuo Hirai looks to steer the electronics and entertainment giant back to profit after four years in the red.

The job cuts would be the latest downsizing in Japan Inc where companies from cellphone maker NEC Corp to electronics firm Panasonic Corp are trimming costs in the face of a strong yen and competition from rivals like Apple and Samsung Electronics.

TV makers in particular have been hit hard by the tough business climate as well as sharp price falls, with Sony, Panasonic and Sharp expecting to have lost a combined $17 billion in the fiscal year just ended.

Investors will closely monitor a briefing on Thursday by Hirai, who formally took over this month as chief executive from Howard Stringer, for further clues on how Sony plans to revamp its business.

"Under a new CEO, it's easier to cut jobs or go in a new direction," said Yuuki Sakurai, head of fund manager Fukoku Capital, which had around $7 billion worth of assets under management as of end-March 2011.

"One of the things I'd like to see is that they shift their resources to other areas outside TVs ... If they stick to TVs, they may have to fight a war they may not be able to win."

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Sony sees $2.9 bln loss, CEO warns of pain

Hirai to get tough on costs

Sony earnings graphic: http://r.reuters.com/wah46s

Sony to sell chemical business

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The Nikkei said half of the latest round of job cuts would come from consolidating the firm's chemicals and small and midsize LCD operations.

Sony said last month it was selling a chemical products division, accounting for some 3,000 people, while on April 1 it merged its Sony Mobile display unit, which had about 2,000 workers, with the small LCD panel businesses of Toshiba Corp and Hitachi Ltd into a new firm called Japan Display.

The Nikkei said it was not clear how many of the cuts would take place in Japan or overseas.

As of end-March 2011, Sony had 168,200 employees on a consolidated basis, according to the company's website.

Sony may also ask its seven executive directors who served through the fiscal year to end-March, including Stringer, who is now chairman, to return their bonuses, the Nikkei said.

Sony declined to comment on the report.

Sony announced 16,000 job cuts in December 2008 after the global financial crisis battered demand for its products, but it has not managed to make a profit since then.

The company has forecast a 220 billion yen ($2.7 billion) net loss for the fiscal year just ended, hurt in large part by its ailing TV business.

Sony said last month that Hirai would keep direct charge of the TV business as part of a structural reorganization.

Sony shares closed up 0.6 percent, while the benchmark Nikkei average ended 1.5 percent lower. The stock has dropped more than 10 percent in the past 3 weeks since hitting a 7-month high.

(Reporting by Chris Gallagher; Additional reporting by Shinichi Saoshiro; Editing by Edmund Klamann and Ian Geoghegan)

=================

US to pursue vigorously antitrust case against Apple
Wed, Apr 11 12:28 PM EDT

WASHINGTON, April 11 (Reuters) - The U.S. Justice Department will "pursue vigorously" its antitrust lawsuit against Apple and two publishing houses over allegations that they conspired to fix prices for electronic books, the head of the agency's antitrust division, Sharis Pozen, said on Thursday.

The department settled with three other publishers who were accused of participating in the alleged scheme, and they will have to end their "most-favored nation" agreements with Apple and other e-book retailers, U.S. Attorney Eric Holder said.

===============

U.S. sues Apple, publishers in e-book price scheme
Wed, Apr 11 15:38 PM EDT
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By Diane Bartz and Poornima Gupta

WASHINGTON/SAN FRANCISCO (Reuters) - Apple Inc and publishers Penguin and Macmillan have decided to fight U.S. government charges that they conspired to fix the prices of e-books, even as three other publishers agreed to a settlement aimed at lowering prices for consumers.

The Justice Department accused Apple of colluding with the five publishers, as the Silicon Valley giant was launching its iPad in early 2010 and was seeking to break up Amazon's low-cost dominance in the digital book market.

The settlement reached with three of the publishers will allow Amazon.Com Inc and Barnes & Noble Inc to resume discounting books, and will terminate the "most favored nation" contracts with Apple.

Amazon said in response to the settlement that it plans to lower prices on books associated with its Kindle e-reader.

The pact also requires the publishers to wait two years before entering into any agreements that require an "agency model" that prevent retailers from offering discounts on electronic books.

The publishers who agreed to settle are News Corp's HarperCollins Publishers Inc, CBS Corp's Simon & Schuster Inc and Lagardere SCA's Hachette Book Group.

Hachette and HarperCollins also settled with a group of U.S. states, agreeing to pay $51 million in restitution to consumers who bought e-books.

James McQuivey, a media analyst at Forrester Research, said e-book prices were destined to come down, even without a Justice Department settlement, because publishers have still been experimenting with drastic deep discounting to stimulate sales.

"It essentially will accelerate the reversion back to the sub-$10 prices that Amazon had already established as the standard," McQuivey said.

DEFIANT MACMILLAN

U.S. Attorney General Eric Holder told a news conference in Washington that executives at the highest levels of Apple and the publishers worked together to eliminate competition among sellers of e-books.

"As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles," Holder said.

The Justice Department said it will vigorously pursue the suit against Apple and the publishers that did not settle. The federal lawsuit was filed in the U.S. District Court for the Southern District of New York.

Apple declined to comment. A person familiar with the matter said Apple has not been part of the settlement negotiations.

Macmillan Chief Executive John Sargent released a defiant letter to the book industry on Wednesday saying the publisher did not act illegally and did not collude.

Sargent said Macmillan had been in discussions with the Justice Department for months, but the settlement terms were "too onerous".

"After careful consideration, we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model," Sargent said.

Hachette said in a statement that it reluctantly agreed to join the federal and state settlements, and that it "was not involved in a conspiracy to illegally fix the price of eBooks."

The three other publishers, including Pearson Plc's Penguin Group, could not be reached for comment.

The European Commission is also probing Apple and publishers in a similar antitrust probe. It said on Wednesday that it had received settlement proposals from Apple and four publishers - Simon & Schuster, Harper Collins, Hachette Livre and Macmillan parent Verlagsgruppe Georg von Holtzbrinck.

JOBS' ROLE

The U.S. government alleged that Apple and the publishers had a common interest in fighting Amazon's practice of selling e-books for as little as $9.99 as it was building market share and trying to drive sales of its Kindle reader.

Apple's late co-founder and technology legend

Steve Jobs figures prominently in the Justice Department's lawsuit with many instances of his personal involvement in negotiations with publishing executives about deal terms.

"Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99," Jobs wrote to one of the publishers, according to the Justice Department's complaint.

Apple successfully persuaded the publishers to adopt an agency model that allowed publishers to set the price of e-books and in turn, Apple would take a 30 percent cut. The Apple agreements with publishers effectively barred them from allowing rival retailers to sell the same books at lower prices.

The strategy upended the "wholesale model" in which retailers pay for the product and charge what they like.

In one instance during the summer of 2010, Jobs spoke by telephone to the chief executive of a publishing firm that was holding out, according to the lawsuit.

"Apple flatly refused to sell the holdout publisher's e-books unless and until it agreed to an agency relationship substantially similar to the arrangement between Apple and the Publisher Defendants defined by the Apple Agency Agreements," the government's lawsuit said.

The e-book industry has continued to explode, despite the increase in prices that occurred after Apple reached its deals with the publishers.

The market has grown from $78 million in sales in 2008 to $1.7 billion in 2011, according to Albert Greco, a book-industry expert at the business school of Fordham University.

Greco has estimated e-book sales will be $3.55 billion in 2012.

(Reporting By Diane Bartz and Poornima Gupta, with additional reporting by Jennifer Saba, Grant McCool and Jeremy Pelofsky; Editing by John Wallace and Tim Dobbyn) ===================== Apple courts EPIX for upcoming TV: sources Fri, Apr 27 16:51 PM EDT image By Ronald Grover and Lisa Richwine LOS ANGELES (Reuters) - Apple Inc began talks earlier this year to stream films owned by EPIX, which is backed by three major movie studios, on devices including a long-anticipated TV, according to two people with knowledge of the negotiations. Apple, which now sells a $99 set-top box that hooks up to a television set and lets users stream online content from Netflix and the MLB channel, opened discussions with three-year-old EPIX, created by Lions Gate Entertainment Corp, MGM and Viacom's Paramount Pictures. One of the sources told Reuters that any discussions would apply to its set-top box and also to upcoming devices that stream content. Apple is widely expected to unveil a full-fledged TV product later this year or in early 2013 to drive its next phase of growth and potentially revolutionize the industry. Apple has been stymied for much of the past year in securing marquee Hollywood content. Talks with EPIX are in the preliminary stages and no agreement is considered near, the source said. The talks could be complicated by EPIX's 2010 agreement with Netflix, which pays $200 million a year for the rights to stream movies to its 23.4 million U.S. clients. That deal gives Netflix exclusive streaming rights to EPIX movies through September - before Apple is expected to trot out its planned TV set. Apple declined to comment on what it called "speculation." A Netflix spokesman had no immediate comment. An EPIX spokesman had no comment. Netflix CEO Reed Hastings said in an April 23 conference call with analysts that the DVD and streaming service was in a "broad range of discussions" with EPIX about "how to operate most effectively for both of us." EPIX currently offers movies such as "Rango" and "The Lincoln Lawyer." It will soon add "Thor" and "Transformers: Dark of the Moon," Netflix said in a letter to investors. Apple has become the world's most valuable corporation by dint of the popularity of its iPhone, which helped revolutionize the smartphone industry, and its more recent iPad. But many on Wall Street say that with the death of visionary co-founder Steve Jobs, new CEO Tim Cook could take the company forward with a major new product, such as the much-speculated Apple TV. Apple unsuccessfully tried last year to secure agreements with Hollywood studios for movies and TV shows that it could fashion into its own version of a TV service, according to studio executives who were contacted. EPIX does not have agreements with larger cable operators like Comcast Corp and Time Warner Cable or with satellite service DirecTV. It has contracts with the Dish satellite service, Cox Cable and other cable operators, it says on its website. Shares in Netflix closed down 1.6 percent at $83.74 on the Nasdaq. Apple, which snapped a two-week losing streak this week after better-than-expected results, finished off 0.8 percent at $603. (Reporting By Ronald Grover, Lisa Richwine; Yinka Adegoke, Poornima Gupta; Editing by Gary Hill) =============== Apple, Samsung patent trial set to kick off in U.S., billions at stake Mon, Jul 30 08:57 AM EDT 1 of 3 By Dan Levine (Reuters) - Jury selection is due to begin on Monday in the United States in a high stakes patent battle between Apple Inc and Samsung Electronics Co Ltd, the culmination of over a year of pretrial jousting with billions of dollars in the balance. Apple and Samsung, the world's largest consumer electronics corporations, are waging legal war around the world, accusing each other of patent violations as they vie for supremacy in a fast-growing market for mobile devices. The fight began last year when Apple sued Samsung in a San Jose, California federal court, accusing the South Korean company of slavishly copying the iPhone and iPad. Samsung countersued. The stakes are high, with Samsung facing potential U.S. sales bans of its Galaxy smartphones and tablet computers, and Apple in a pivotal test of its worldwide patent litigation strategy. Apple will try to use Samsung documents to show its rival knowingly violated the iPhone maker's intellectual property rights, while Samsung argues Apple is trying to stifle competition to maintain "exorbitant" profit, according to court filings. A 10-member jury will hear evidence over at least four weeks, and it must reach a unanimous decision for Apple or Samsung to prevail on any of their claims. That the jurors will hail from Silicon Valley, where Apple is an icon and major employer, will be something for Samsung to consider during the jury selection, said James Dobson, a jury consultant with Empirical Creative. "Although certainly if I were Samsung I would be concerned about what prospective jurors think about Apple, given that it's a huge employer there," Dobson said, "by and large jurors want to do the right thing and decide the case on the merits." It has been tough going so far for Samsung in the case. U.S. District Judge Lucy Koh halted U.S. sales of the Galaxy Tab 10.1, giving Apple a significant early win. This was followed by a pretrial ban on the Galaxy Nexus phone. Samsung has appealed both orders. The trial is expected to last at least four weeks. The case in U.S. District Court, Northern District of California, is Apple Inc v. Samsung Electronics Co Ltd et al, No. 11-1846. (Reporting By Dan Levine; Editing by Tim Dobbyn) === Apple seeks severe punishment for Samsung lawyer's actions Thu, Aug 02 12:53 PM EDT By Dan Levine SAN FRANCISCO (Reuters) - Apple Inc asked a U.S. judge on Thursday to punish Samsung Electronics Co Ltd for a Samsung attorney's conduct by ordering that the South Korean company has infringed Apple's phone design patents, according to a court filing. Trial began this week in high stakes litigation between the two companies. Apple sued Samsung last year in San Jose, California federal court, accusing Samsung of copying the iPhone and iPad. Samsung has countersued.

U.S. District Judge Lucy Koh on Tuesday had barred Samsung's attorneys from presenting some evidence during opening statements. Later that afternoon, Samsung emailed reporters links to that material, along with a statement that "fundamental fairness requires that the jury decide the case based on all the evidence." Samsung attorney John Quinn, of the law firm Quinn Emanuel Urquhart & Sullivan, acknowledged in a court filing on Wednesday that he authorized the press statement but said it was not designed to influence the jury. "The members of the jury had already been selected at the time of the statement and the transmission of these public exhibits, and had been specifically instructed not to read any form of media relating to this case," Quinn wrote.

Apple called his conduct "egregious, because it impugned the integrity of the court," according to its legal brief on Thursday. Samsung spokesman Adam Yates said the company will be submitting a response. "Apple's filing is baseless," Yates said. A typical sanction for attorney misbehavior is a monetary fine, but Apple is asking Koh to rule that Apple's phone design patents in the case are valid, and that Samsung has infringed them. Those are issues that the jury has been empanelled to decide. The trial is set to resume on Friday. The case in U.S. District Court, Northern District of California, is Apple Inc v. Samsung Electronics Co Ltd et al, No. 11-1846. (Reporting By Dan Levine; Editing by Tim Dobbyn) ================= Foxconn reopens huge China factory after riot Mon, Sep 24 22:21 PM EDT TAIYUAN, China (Reuters) - A Chinese factory owned by iPhone assembler Foxconn resumed production on Tuesday after a riot involving 2,000 workers had forced it to close for 24 hours, in an incident that put Chinese labor conditions back under the microscope. The huge factory that employs some 79,000 workers in northern Taiyuan city erupted into violence late on Sunday and into the early hours of Monday morning after what the plant's owner, Foxconn Technology Group of Taiwan, described as a personal dispute that spun out of control. Workers on Tuesday morning walked back through the gates of the factory, which was still ringed by police and showed clear signs of damage caused by the fighting, in which 40 people were injured, according to Foxconn and Chinese local media. Some gates were still flat on the ground, having been bent over, and windows were smashed. A loud speaker on a loop recording called for people to maintain social order. Foxconn, which assembles Apple's iPhones as well as making components for other global electronics firms, has faced accusations of poor conditions and mistreatment of workers at its plants in China, where it employs about 1 million people. The company says it has been spending heavily in recent months to improve working conditions and to raise wages. Foxconn spokesman Louis Woo said on Tuesday that the one-day closure would not disrupt supplies from the factory. "We have 79,000 people working in the Taiyuan campus, and we always have spare inventory," Woo said. Foxconn does not confirm which of its plants supply Apple, but an employee told Reuters that the Taiyuan plant was among those that assembled and made parts for Apple's iPhone 5. Foxconn said in a statement the incident had escalated from a row between several employees at around 11 p.m. on Sunday in the privately managed workers' dormitory, and was brought under control by police at around 3 a.m. Comments posted online, however, suggested security guards may have been to blame. Foxconn is the trading name of Hon Hai Precision Industry Co, the world's largest contract maker of electronics. (Reporting by Michael Martina in TAIYUAN and Clare Jim in TAIPEI; Editing by Mark Bendeich and Ken Wills) =========== China brawl Foxconn brawl reflects China's economic challenges 24 September 2012 | By Richard Beales Print Email Save . Monday’s violence at a Foxconn Technology factory shows the dark side of China’s expertise supplying shiny gadgets to the world. The combination of 79,000 employees, excess hours and dependence on a tough employer made a recipe for tension. Foxconn, the trading name for Taiwan’s Hon Hai Precision Industry, has contributed to China’s success. Its huge factories across the Middle Kingdom have brought jobs for around a million people. Even critics concede they mostly pay above the minimum required wages. And with customers like Apple, Foxconn has been central to China’s dramatic export-led growth in recent years. Yet working conditions are a concern. The electronics industry is not the worst offender. But perhaps because of its gigantic factories and high-profile, hugely profitable customers like Apple, Foxconn has attracted critical attention. Despite efforts by both Apple and Foxconn to improve conditions at its factories in China, they still fall short. It may be no coincidence that the Taiyuan factory boiled over the same weekend that Apple’s iPhone 5 went on sale to huge demand. At times of peak production some employees work more than the recommended or legal maximum hours, according to the Fair Labor Association which has investigated labor practices at several Foxconn factories (though not at Taiyuan). Reports of the disturbance, which may have started in a dormitory – not to mention the seemingly heavy-handed response – conjure up Western prison riots. That’s an extreme comparison, but there are echoes. Foxconn runs giant, secure campuses full of people working long hours, far from their families and often totally dependent on their bosses. Maintaining relations among tens of thousands of employees at close quarters would tax the best managers in the world. But as China gets richer and its leaders try to develop the domestic economy, it’s reasonable to wonder about the long-term sustainability of the Foxconn model. Factory unrest – of which this was only the latest instance – and possible consequences like higher wages also raise the risk that global customers could go elsewhere. Of the midrange iPhone 5’s $749 price tag, only $8 is the assembly cost that might go to Foxconn, according to IHS iSuppli. Apple’s profit dwarfs that, but other hardware producers have much less room in their margins. The brawl at Taiyuan reflects, on a small scale, China’s broader challenges. ============ Foxconn Technology, which assembles Apple’s iPhones and makes components for top global electronics companies, closed a plant in China on Sept. 24 after about 2,000 workers were involved in a brawl at a company dormitory. Foxconn is the trading name of Taiwan’s Hon Hai Precision Industry. It was not clear how long the shutdown would last at the plant, which employs about 79,000 people in the northern Chinese city of Taiyuan. Foxconn does not confirm which of its plants supply Apple, but an employee told Reuters that the Taiyuan plant is among those that assemble and make parts for Apple’s iPhone 5. Criticism of labor conditions at Foxconn - including factors that contributed to deadly accidents - led to an investigation in March by the Fair Labor Association, sanctioned by Apple, of conditions at three Foxconn locations. The review did not include the Taiyuan factory. The FLA’s investigation revealed “serious and pressing non-compliances with FLA’s Workplace Code of Conduct, as well as Chinese labor law” including excessive hours during peak production, health and safety issues, poor worker relations, and unfair wage practices - though wages were above legal minimums. ================== Foxconn's iPhone plant "paralyzed" as thousands strike: report Fri, Oct 05 23:34 PM EDT SAN FRANCISCO (Reuters) - Thousands of workers went on strike Friday at a Foxconn plant in central China that makes Apple Inc's iPhone 5, paralyzing production of the smartphone, the rights advocate group China Labor Watch reported. The reported strike comes at a crucial time for the U.S. corporation, weeks after kicking off its largest-ever global rollout of the smartphone. Apple is already struggling with supply constraints, analysts say. Citing workers, the labor group said 3,000 to 4,000 workers began their strike at Foxconn's Zhengzhou complex in central China in the afternoon, angered by over-exacting quality controls as well as demands they work through the week-long National Day holidays, which began on Monday. The strike could not be immediately confirmed, and nor was it clear whether the stoppage was over or continuing. Some Chinese media carried reports of the China Labor Watch account, but did not offer any verification. Apple declined to comment. A Foxconn spokesman said the company was "gathering facts" on the reported strike and would issue a statement when ready. Tensions have boiled over repeatedly in factories operated by Foxconn, the Taiwanese contract manufacturing giant that employs more than a million and makes most of the world's iPads and iPhones. Last month, thousands rioted at its Taiyuan facility in northern China, disrupting production for about 24 hours and underscoring the potential for labor unrest. "In addition to demanding that workers work during the holiday, Foxconn raised overly strict demands on product quality without providing worker training for the corresponding skills," the Watch said in a statement on its website (http://www.chinalaborwatch.org/news/new-433.html). "Additionally, quality control inspectors fell into conflicts with workers and were beat up multiple times by workers. Factory management turned a deaf ear to complaints about these conflicts and took no corrective measures." The group did not say in its release when work might resume. Foxconn Technology Group of Taiwan, the trading name of Hon Hai Precision Industry Co, is the world's largest contract maker of electronics for global brands such as Hewlett Packard Co, Nokia and Dell Inc. Apple and Foxconn have come under fire for poor working conditions and wages at plants across China. In response, they have organized an audit of factory conditions, raised wages, improved safety and reduced overtime, among other measures. Apple's chief executive officer Tim Cook visited Foxconn's vast complex on the far outskirts of Zhengzhou in late March. (Reporting By Edwin Chan; Additional reporting by Jonathan Standing in Taipei; Editing by Richard Chang and Sanjeev Miglani) ===============

Google's $12.5bln insurance buy may worry partners

Reuters
Motorola Mobility Holdings Inc. MMI +0.08% jumped nearly 56% to $38.12 a share, rallying after Google Inc. GOOG -0.09% said it would buy the cellphone manufacturing business for about $12.5 billion, or $40 a share. Shares of Google fell 1.2%.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Robert Cyran
NEW YORK, Aug 15 (Reuters Breakingviews) - Google is spending $12.5 billion on insurance for itself -- but its partners may not feel at ease. The search giant's deal to buy smartphone maker Motorola Mobility locks in patents to help protect its rapidly growing Android mobile operating system. But Google's plans for the hardware business that comes along with the patents will be the key concern for regulators and other current Android handset makers alike.
Intellectual property suddenly mattered to Google following the recent $4.5 billion purchase of 6,000 patents from the bankrupt Nortel by a consortium of Apple, Microsoft and several others. Google's much smaller hoard of patents left Android vulnerable. The risk was that rivals could extract increased royalties from the manufacture of Android devices -- or, worse, prevent companies selling them altogether.

Owning Motorola Mobility's 17,000 patents should insulate Android against this danger. Google paid up for this peace of mind with its biggest acquisition deal yet, at a whopping 63 percent premium to Friday's closing price.

Antitrust regulators may raise an eyebrow. They are mainly concerned that Google might use its Internet search dominance to gain an unfair advantage in, say, the provision of mobile services. But some might also worry that making hardware could give the company a different kind of edge. Motorola Mobility has only a small share of the fast-moving smartphone market, so the deal isn't likely to be blocked. But Google has agreed to pay its target a whopping $2.5 billion if the deal can't be consummated.

Other makers of Android handsets face greater discomfort, though several have publicly backed the deal. The likes of Samsung, HTC and LG always feared that cellphone production could replay computer market history, with hardware becoming a brutally low-margin business with software producers like Microsoft extracting the lion's share of profit. Now they face potential hardware competition from their software partner.

Assuming Google keeps Motorola Mobility's hardware operations going, it could one day be tempted to favor its own handsets -- perhaps hoping to reproduce Apple's roughly 30 percent operating margins. Google says it wants to keep Android open to others now and in the future, and gadget-making isn't its forte. But rival makers of Android-powered mobile devices may still seek insurance of their own, for example by keeping their options open with other operating systems, like Microsoft's, as well.


CONTEXT NEWS
-- Google said on Aug. 15 that it had agreed to buy Motorola Mobility for $12.5 billion, or $40 a share -- a 63 percent premium to the closing price on Aug. 12.
-- Motorola Mobility, which makes smartphones and related devices, will remain a licensee of Google's Android mobile operating system. Google said it will keep Android open to other hardware makers and run Motorola Mobility as a separate business.
-- Google statement: http://link.reuters.com/ryx23s
-- Reuters graphic: Top Google acquisitions http://r.reuters.com/gaz23s


((robert.cyran@thomsonreuters.com))
(Editing by Richard Beales and Emily Plucina

Reuters

reuters.com
=================

By Buying Motorola, Google Can Now Do Whatever The Heck They Want With Android
Greg Kumparak
posted 34 mins ago
10 Comments
Ball

With the announcement of their planned $12.5B Motorola Mobility acquisition this morning, Google is buying a lot of stuff. They’re buying 20,000 employees (almost doubling their headcount.) They’re buying an absurdly daunting armory of over 24,000 patents (I mean, come on: Motorola has the patent on the cell phone.) But there’s one more thing that Google’s buying, and it’s one that shifts up the Android game all together: nearly 30% of Android’s existing marketshare in the U.S.

After years of owning next to none of the hardware marketshare for their own software platform (even the so-called “Google phone” Nexus devices are made by HTC and Samsung), Google has just become Android’s 2nd biggest manufacturer.

At 29%, Googorola sits in the second place seat, just behind HTC (35%) and ahead of Samsung (25%). That stat comes from numbers pulled fresh this morning by mobile analytics firm Localytics.

Some of the things this could mean:

Updates For Everyone! Now under the Google umbrella, the pressure on Motorola to keep their Android handsets updated will be stronger than ever… which in turns ups the pressure for everyone else. If Motorola maintains their share and Google keeps a fire lit under them (as they should), nearly 30% of the devices flying off the shelves will be quickly upgraded to each new software release. Other manufacturers will feel the heat to support upgrades as often and as quickly possible, or risk being known as the manufacturer that doesnt.
The death of the skin? So far, any of the devices that Google has had a direct role in launching run what they call a “pure Google Experience” — that is, it’s Android, straight-up, without any of the custom interface replacements/overhauls that the manufacturers insist on strapping to their own Android devices. HTC has Sense. Sony Ericsson has UXP. Samsung has TouchWiz. Motorola had Motoblur.

Motorola recently announced that they would be tapering off the development of Motoblur, and now we know why. Google doesn’t want their own handset manufacturer changing up Android — that would imply that something is wrong with Android. While Moto might have one or two more devices in the pipeline with BLUR on deck, expect all of their new stuff to run vanilla Android sooner than later.

It’ll be interesting to see how this affects other manufacturer’s skinning efforts. Will they fall back to vanilla Android because that’s what most users will come to expect, or will they strengthen their UI tweaking efforts to differentiate their wares?
Google could tackle Android’s “fragmentation” by bullying for standard hardware specs Though they tend to be overblown, Android does have fragmentation issues. Among the most annoying, from a development/testing perspective, is the hugely varied selection of screen resolutions used by different manufacturers. How easy would it be for Googorola to say “So, hey guys, we’re only going to use 800×480 displays on our own devices for the next year or so. You don’t have to, but, you know, you probably should.”?

Google just instantly shot from zero to 60 (well, zero to 30% — but you get what I mean) in a race they long pretended to have no interest in. They stood aside and let the major manufacturers raise Android to the top — and now that it’s there, they’re swooping in and taking a commanding control of the hardware side of things. Is it evil? Perhaps a bit. But it’s also downright genius. Marketshare maintained, Google will have final say over what happens to thirty percent of the hardware sitting in pockets, and be able to sway the other manufacturers accordingly.

Expect Android to do nothing but improve, and fast.

Crunchbase
GOOGLE
Company:
GOOGLE
Website:
http://google.com
Launch Date:
7/9/1998
IPO:
25/8/2004, NASDAQ:GOOG

Google provides search and advertising services, which together aim to organize and monetize the world’s information. In addition to its dominant search engine, it offers a plethora of...
Learn more

Crunchbase
MOTOROLA
Company:
MOTOROLA
Website:
http://www.motorola.com
Launch Date:
1928

Motorola is a telecommunications company based in Schaumburg, Illinois. It is a manufacturer of wireless telephone handsets, also designing and selling wireless network infrastructure equipment such as cellular transmission...
Learn more

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Why Google had to have Motorola Mobility

The acquisition has provoked comment about defensive buying of patents, but Google surely has more ambition than that

Dan Gillmor
Dan Gillmor
guardian.co.uk, Tuesday 16 August 2011 20.40 BST

Google logo
Google's acquisition of Motorola Mobility gives it the potential to challenge the Apple iPhone with a proprietary handset running its Android operating system. Photograph: Walter Bieri/AP

For several years now, Google has been following a vow made by former CEO Eric Schmidt: mobile first. New CEO Larry Page is taking that dictum to a new level by announcing a deal to buy Motorola Mobility for $12.5bn.

The implications of this deal depend entirely on how Google plans to use Motorola. If, as some claim, the deal is more about obtaining Motorola's mobile patent portfolio than anything else, we can expect escalating patent warfare between technology giants and limited innovation beyond that. If, however, Google intends to operate the business it is acquiring, we may see some broad and sweeping changes in the technology industry.

If the deal is chiefly about obtaining Motorola's mobile patent portfolio, then Google would likely spin off the hardware end of the company and keep the software and patents. The patents would be vital weapons in its competition with Apple and Microsoft, as the two companies are using patent claims to try to slow the remarkable growth of Google's Android operating system, which has become the most widely used smartphone platform.

But assuming Google intends to operate the business it is purchasing – and also assuming, as seems probable, regulatory approval of the deal – the landscape for Google, and the technology industry more broadly, will change. Some of the implications are clear already.

Perhaps Google wants to be more like Apple, owning an entire ecosystem around Android. For all its success, Android has suffered from "feature balkanisation", as phone manufacturers and carriers have turned the open source system to their own aims.

Motorola knows how to make good hardware (though it's been outdone in that regard by Samsung and HTC in the Android market), and one can imagine some excellent devices – once Google controls the outcome, as it did with its initial Nexus One phone (made by HTC) and Nexus S (Samsung).

Such devices should include tablets, which have been a notably dry area so far for Google and its Android 3 "Honeycomb" operating system. To date, Android tablets, including Motorola's Xoom, have made very few inroads in an arena heavily dominated by Apple. That may change with an Amazon tablet this fall, but Google needs to create its own to showcase what is possible.

In the near term, it is difficult to imagine any competitor fully matching Apple's ability to marry hardware and software with elegance and ease of use. Where Google could beat Apple, however, is by being less controlling of users than Apple has become: one reason many people (including me) have chosen Android is a preference to make more of our own decisions about how we want our devices to work.

To the extent that Google uses Motorola to develop and launch superb devices, it will be competing directly with its partners. The company claims that the deal will not affect its relations with other Android handset makers, but that strikes me as fantasy. A cascade of happy talk in amusingly similar, supportive statements from Samsung, HTC, etc on Monday can't disguise the reality that they should be weighing their options with renewed urgency. I don't see why they should trust Google, at this point.

So, who should be happy about this deal? Microsoft, among others. The Google-Motorola deal gives the Windows mobile platform a renewed lease on life. Microsoft could now position itself as the only major operating system that is platform-agnostic. That neutrality is somewhat suspect given Microsoft's recent alliance with Nokia, which includes a major investment and all kinds of special treatment, but it will be in Microsoft's interest to be as neutral as possible in dealings with its mobile partners.

Another, less obvious dimension of this deal is that it may help Google make enormous strides in the television marketplace. Google has been trying, with limited success, to push Android into living rooms via Google TV. Given that Motorola makes set-top boxes, Google TV could become part of this market. But the other cable and satellite companies will have a lot to say about this – and they already consider Google a scary competitor, not a partner.

The most widely discussed element of the deal – the patents – highlights one of the technology industry's worst problems. As Chicago Public Radio's This American Life recently reported, America's patent system is highly dysfunctional. The United States Patent and Trademark Office (USPTO) routinely issues patents for "obvious non-inventions", many of which have already been invented. This enables patent "trolls" to extort settlements from companies allegedly violating those patents; this is, in effect, a tax on technology and a severe impediment to actual innovation. Meanwhile, several federal district courts – notably one in Texas – have become havens for the the patent trolls, further tilting the scales in favour of plaintiffs. And Congress, as usual, has refused to do its job. Among other acts of malfeasance, Congress has refused to give the USPTO the funding it needs to do the job properly, in part by appropriating the fees the agency collects from applicants in order to fund other programmes. A patent "reform" bill now under consideration and all too likely to become law would, by any reasonable analysis, make matters even worse.

To the extent that the Google-Motorola deal is defensive, a buying of weaponry in the ever-escalating patent warfare, it can hardly be called productive. But I hope it's about much more than that, namely Google's intention to push harder in the mobile arena to open it up to more competition.