The digital business week

18 Oct 2010

A digest of the top business and technology news stories from the past week.

Phone giant announces profits and Android intentions

Mobile phone maker Sony Ericsson has released its third-quarter profits in which it cites the “continued success of the smartphone portfolio”.

According to Sony Ericsson, smartphone technology makes up for around 50pc of its total sales and its overall aim to become a global leader in providing the Android platform.

The profits report marks a pre-tax income of €66m, excluding restructuring charges, a net income €49m, an increase of €213m year-on-year and €37m sequentially.

Sony Ericsson underperformed according to the third-quarter sales of €1.6bn against a forecast for sales of €1.8bn and shipped 10.4 million units, missing all 27 analysts’ expectations, which ranged from 10.5 million to 13.9 million units.

Google reports a bumper US$7.2bn third quarter

Google has reported revenues of US$7.2bn for the third quarter, up 23pc on last year and 7pc on Q2. The company, which has US$33bn in cash on hand, made a profit of US$2bn for the third quarter.

For the first time Google gave a glimpse of just how financially divisions like display and YouTube were actually doing.

Senior vice-president of product management Jonathan Rosenberg said Google’s annualised run-rate for display ad revenues is approaching US$2.5bn. YouTube is monetising 2 billion views per week, up 50pc on last year.

Google’s mobile business will have achieved annualised run-rate of US$1bn this year, driven by the success of Android, which is now in close to 16pc of all smartphones worldwide after just one year and Google’s acquisition of DoubleClick.

In the third quarter of 2010, TAC (traffic acquisition costs) totalled US$1.81bn, or 26pc of advertising revenues.

Operating income in the third quarter of 2010 was US$2.55bn, or 35pc of revenues, compared with US$2bn last year. Earnings per share in the third quarter of 2010 was US$6.72 on 322 million diluted shares outstanding, compared to US$5.13 last year.

AOL and venture firms forming a plan to buy Yahoo!

Web giant AOL and a number of venture capital firms – including Silver Lake Partners and Blackstone Group – have made signals they are interested in teaming up to acquire web portal Yahoo!, it has emerged.

As well as Silver Lake and Blackstone, at least two or three other venture capital firms are interested in participating in a formal buyout.

Citing people familiar with the matter, the Wall Street Journal has reported the discussions are preliminary and don’t even yet involve Yahoo!

iPad hype blamed for softening PC sales in US and Europe

The historically strong third quarter for the PC industry has been disrupted by slowing consumer demand for notebooks and netbooks, and media hype surrounding the iPad and other tablet devices have also had an impact.

Worldwide PC shipments surpassed 88.3 million units in the third quarter of 2010, a 7.6pc increase from the third quarter of 2009, according to Gartner. These third-quarter results were below Gartner’s earlier market outlook. Gartner had expected third-quarter PC shipments to grow 12.7pc.

“The major growth inhibitor in the third quarter of 2010 was softness in consumer PC demand in the US and Western Europe. The third quarter historically is a strong consumer quarter, led by back-to-school sales,” said Mikako Kitagawa, principal analyst at Gartner.

“Consumer mobile PC demand, driven by low-priced notebooks, including mini-notebooks, slowed after very strong growth the past two years.

“Media tablet hype around devices such as the iPad has also affected consumer notebook growth by delaying some PC purchases, especially in the US consumer market. Media tablets don’t replace primary PCs, but they affect PC purchases in many ways,” Kitagawa said.

“At this stage, hype around media tablets has led consumers and the channels to take a ‘wait-and-see’ approach to buying a new device.”

Enterprise Ireland CEO heralds new era of development

At the height of the recession, Irish software companies grew their exports by 6pc. Companies like these in sectors like mobile and telecoms will be in the vanguard of a new era of development and it is vital the digital infrastructure is there to support them, said Enterprise Ireland CEO Frank Ryan.

“The greatest mishap for this country was the recession, because any reduction in global demand hits us very hard,” Ryan said, addressing TIF’s annual conference recently.

He said that over the past two years his agency, as well as finding new markets and growing companies, were heavily involved in stabilising Irish businesses, including intervening with banks. “This included internationalising Ireland’s construction industry into an industry that is globally focused with Ireland as a hub. “The good news is the key markets for Ireland have already emerged from recession.”

Media groups look to halt News Corp expansion

The BBC, Channel Four and The Guardian are among the rival media groups who have come together to try to block Rupert Murdoch’s attempt to take full control of BSkyB.

The move, they say, may harm public interest and would reduce diversity in the industry.

In a letter to Business Secretary Vince Cable, those opposed to the Murdoch-owned News Corp’s intended takeover of the remaining 61pc of BSkyB, asked the government to intervene.

“We believe that the proposed takeover could have serious and far-reaching consequences for media plurality,” the letter said.

News Corp already owns News International, which owns The Sun, The News of the World, The Times and The Sunday Times newspapers in Great Britain.