The Digital Business Week

16 Aug 2010

A digest of the top business and technology news stories from the past week, including Oracle’s lawsuit against Google, Facebook’s major advertising growth and Cisco’s US$10bn quarter revenues

Oracle in mega-lawsuit against Google over Java in Android

Software giant Oracle, which acquired Sun Microsystems earlier this year, is suing search giant Google over the use of Java in the Android operating system. Android-based phones edged past Apple’s iPhone in terms of unit sales in the second quarter.

While a patent cross-licensing deal was never announced, Google was assumed to have rights to use Java. Google CEO Eric Schmidt was a former chief technology officer at Sun Microsystems, creator of the Java technology, and was instrumental in spreading Sun’s open software message at Google.

In its suit filed at a US District Court in North California Oracle said Google infringed the following patents: United States Patents Nos. 6,125,447; 6,192,476; 5,966,702; 7,426,720; RE38,104; 6,910,205; and 6,061,520.14.

The Android operating system has been an extraordinary success for Google. According to Gartner, Android’s global share of the smartphone market had leapt from 1.8pc a year ago to 17.2pc in the second quarter of 2010.

This has been largely at the expense of industry stalwarts like Research in Motion and Nokia.

Facebook ad sales to reach $1.3bn in 2010

Latest research from eMarketer predicts that Facebook will earn $1.28bn from advertisers worldwide in 2010. Myspace, however, is expected to earn $347m, down from over $400m in 2009.

Ad spending for Facebook in the US alone is expected to be $835m in 2010, a significant rise from $500m in 2009.

The research also states that ad sales for Facebook are estimated to reach $1.76bn in 2011.

Facebook’s self-serve ad platform was seen as its fastest growing area, according to eMarketer analyst Debra Aho Williamson.

“It’s really become a tremendous business for the company,” Williamson said.

“We didn’t account for the size of that business last year in our estimate, but we found that it’s become a great tool for direct-marketing advertisers.”

The figures come as no surprise, considering how Facebook reached 500 million members last month. And the user base is still growing.

Myspace, in comparison, is not predicted to be as successful. With 120 million members, they currently cannot stand up against Facebook’s success.

“MySpace and Facebook really aren’t even competing in the same category anymore,” Debra Aho Williamson said.

Skype files to raise US$100 million IPO

VoIP firm Skype intends to raise up to US$100m for an initial public offering of its ordinary shares.

Filing the Form S-1 registration statement with the US Securities and Exchange Commission Skype plans to go public, with Goldman, Sachs & Co, J.P. Morgan Securities and Morgan Stanley & Co as joint global co-ordinators and joint book-running managers for the offering.

Skype said that, when available, a copy of the preliminary prospectus can be obtained from Goldman Sachs.

Founded in 2003 by tech entrepreneurs Niklas Zennström and Janus Friis, Skype was one of the first VoIP services that allowed users to voice and video chat over an internet connection on their desktop.

There have since been Skype-specific mobile handsets as well as smartphone applications for the iPhone, Nokia handsets and Android devices amongst others.

Although eBay acquired Skype in 2005 by 2009 it had sold the majority stake in September 2009 following a series of disputes between Skype and its technology partner Joltid over licensing. It had been rumoured at the time that eBay had even talked to Google about a purchase.

Comms giant Cisco reports US$10.8bn quarter revenues

Cisco has reported a profit of US$1.9bn on fourth quarter revenues of US$10.8bn. This revenues for the full year 2010 to US$40bn out of which the company derived a US$7.8bn profit.

“This was yet another very strong quarter with a number of record financial results for Cisco, closing the fiscal year in a tremendous position of strength—a compelling financial model, a well-tuned innovation engine and solid execution on our growth strategy,” said John Chambers, chairman and CEO, Cisco.

Chambers continued: “Whether the global economy continues to show mixed signals or not—the strength of our financial model and profit generation serves us well.

“As we to continue to successfully grow our business and share of IT investments, our focus is squarely on helping our customers accelerate productivity and growth.

“We are very confident in our strategy, and will continue to aggressively move into new areas where the network is becoming the platform, and where our customers want us to invest and innovate,” Chambers said.

The fourth quarter results included a pre-tax impairment charge of US$120m.

Cash flow for the company was US$3.2bn, up from US$3bn last year. The company has cash and investments valued at US$39.9bn.

Cisco repurchased 99 million common shares valued at US$2.3bn, bringing to US$65bn the amount of shares the company has repurchased under its repurchase programme. The remaining authorised repurchase amount at the end of July stood at US$7bn.

Currys and PC World go 2-in-1

A new Currys and PC World superstore from DSG Retail Ireland has officially opened at Blanchardstown Retail Park, combining home and lifestyle products with consumer technology and gadgets.

This new store has over 4,000 products and offers some extended ranges you won’t find elsewhere – all packed into 25,000 sq ft store that should easily suck up an entire Saturday.

The superstore lets customers test and try products with a series of interactive “play tables” where gadgets and electronics can be picked up and tried and tested before a purchase is made.

The new store employs 51 people with more jobs to come as DSG Retail Ireland plans to open a Dixons Travel Store at Dublin Airport as part of its expansion programme for 2010 and 2011.

“We are constantly striving to offer our customers value, choice and service. The ‘2 in 1’ superstore format combines all three,” said Declan Ronayne, managing director of DSG Retail Ireland.

“This format has worked successfully in DSG stores throughout Europe so it’s got a proven commercial track record. Indeed, the Blanchardstown store is already trading above expectations and it looks set to become very successful in Ireland.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years