Apple in hot water in France over 'exploding iPhones'

Half a dozen new cases of "exploding iPhones" emerged in France on Wednesday, as Apple faced an official inquiry and calls to come clean over possible risks linked to its wildly popular smartphone.

An 80-year-old pensioner from the Paris suburbs said Wednesday his iPhone screen cracked up in his hands, a day after a supermarket watchman claimed he was hurt in the eye when his screen suddenly shattered this week.

Ten French consumers have now come forward saying their iPhone screens exploded or cracked without explanation, according to an AFP tally, including a first case in mid-August in which a teenager suffered an eye injury.

Apple is accused of trying to hush up 15 cases of iPod music players heating up and bursting into flames in the United States and in one similar British case, all apparently due to overheated lithium ion batteries.

None of the incidents has caused a serious injury but Apple was forced to defend the safety of its flagship smartphone before the European Union this month, insisting the exploding screen cases were "isolated incidents".

The US technology giant, which has sold 26 million iPhones and 200 million iPods to date, said it been informed of the French cases, but would not comment until it had examined the damaged phones.

"We are aware of these reports and we are waiting to receive the iPhones from the customers. Until we have the full details, we don't have anything further to add," Alan Hely, head of communications at Apple Europe, told AFP.

But France's official competition, consumer affairs and fraud watchdog, the DGCCRF, has launched an investigation to find out whether the Apple smartphone could pose a threat to consumers.

"An investigation is under way. We have been alerted to the problem and we are looking into it closely," a spokesman said Tuesday.

France's consumer rights group, UFC-Que Choisir, also called on Apple to come clean about possible faults with its iPod and iPhone devices.

"We want to know if this is an isolated incident as they claim, or a real problem involving the iPhone -- in which case, what are they planning by way of compensation and to prevent it happening again?" said a spokesman.

In the British case Apple came under fire for allegedly asking the young girl's family to sign a confidentiality agreement -- slammed as a "gagging order" -- before it would agree to refund her.

In the latest French incident, Rolland Caufman, a pensioner from the Paris suburb of Noisy-le-Sec, says his iPhone screen broke up on July 21, the week after he bought it.

"I went out shopping, with my iPhone in my left pocket, when I suddenly felt it heat up and start vibrating -- even though I never use the vibrate setting.

"I took it out of my pocket and held it to my ear -- and saw the screen crack up like a car windscreen," he told AFP.

Caufman says Apple initially refused to believe him, before finally sending him a free replacement.

On Tuesday, 26-year-old security guard Yassine Bouhadi, claimed he was hit in the eye with a glass shard when the screen of his iPhone cracked up. He said he would seek a full refund and file suit for damages.

French mobile phone operator Orange said it had been contacted by two customers with shattered iPhone screens, out of 1.2 million iPhones sold.

The European Commission has asked all 27 EU nations to keep it informed of any problems, under the community's rapid alert system for dangerous consumer products, known as RAPEX.

Commission spokeswoman Helen Kearns said "Apple has been very cooperative", stressing that RAPEX alerts were issued every week -- sometimes leading to mass product recalls, but at other times with no consequence.

"We're not there yet. We just need to monitor closely now and see if these are isolated incidents," she told AFP.

"We'll be vigilant and if necessary we'll take further actions. But we need to examine the situation better."

YouTube Pumps More Ads Into Lineup



Google Inc., which has struggled for nearly three years to turn YouTube into an advertising platform, is aggressively pushing new ad formats and ramping up deals with media companies for the online video site.

YouTube said Wednesday it will distribute a range of short clips from Time Warner Inc. properties such as CNN and the Cartoon Network. The agreement follows similar deals struck with Walt Disney Co.'s ABC and ESPN and a number of Hollywood studios earlier this year.

Such content is one piece of YouTube's new money-making emphasis -- a sweeping effort the company has tapped Google veteran Salar Kamangar to oversee. More professional shows help it attract higher ad rates. But to get the content, YouTube has had to push a range of new ad products to generate enough revenue to share with partners.

YouTube has recently added larger ad formats, shown a greater variety of ads against user-uploaded content and promoted videos that draw higher ad rates more than other videos.

While YouTube continues to lose money, Google Chief Financial Officer Patrick Pichette recently told analysts he was "really pleased" with YouTube's revenue growth and said it will be profitable "in the not long, too long distant future." Some Wall Street analysts estimate YouTube's revenue will roughly double to about $500 million this year.

Many changes at YouTube have been spearheaded by Mr. Kamangar, who since September has jointly run the video site with its co-founder and CEO, Chad Hurley. YouTube's other co-founder, Steve Chen, left his role at the site to work on other Google projects around that time.

Mr. Kamangar, who joined Google in 1999 fresh out of Stanford University and helped build Google's AdWords search-ad system, has pressed YouTube to be more aggressive with online ads and advocated promoting more content from media companies on YouTube's homepage.

One of Mr. Kamangar's first priorities was moving more Google engineers to YouTube's offices in San Bruno, Calif., about 25 miles away from Google's headquarters in Mountain View. He completed the shift of YouTube's video-serving operations onto Google's infrastructure, reducing video-serving costs and allowing the site to roll out features faster.

In an interview, the soft-spoken 32-year-old said the push for new ad products is driven by YouTube's need to make more money for premium video creators, whose content is increasingly among the most popular on the site.

"We can't be successful unless our partners are successful and making money," said Mr. Kamangar, a Google vice president of product management, who has stayed out of the public spotlight.
Advertisers are noticing a difference. YouTube is "definitely being more creative," said Nick Bomersbach, vice president of e-commerce for J.C. Penney Co. The retailer is making YouTube "a much more important component of our marketing campaigns," he added, after a campaign it launched in July to promote its new clothing line from professional skateboarder Ryan Sheckler was more successful in directing traffic to the retailer's Web site than its previous YouTube campaigns.

YouTube has mostly been a distraction since Google bought it for $1.7 billion in 2006. The Internet giant hasn't been able to turn a profit from the video site even though YouTube has grown into a massive destination, with 428 million unique monthly visitors in June, according to comScore.

As a result, YouTube has fueled doubts about whether Google can profit off anything other than search advertising, which generated the majority of its $21.8 billion in 2008 annual revenue.

YouTube has also embroiled Google in a legal battle with Viacom Inc., which sued in 2007, contending the video-sharing site violated its copyrights. Lawyers for both sides are currently building their cases and a trial date has yet to be set.

Last year, Google Chief Executive Eric Schmidt admitted that making money from YouTube was "taking longer than I thought."

Mr. Schmidt made turning around YouTube a company-wide goal and Mr. Kamangar was chosen to jointly run YouTube with Mr. Hurley.

Mr. Kamangar, who was among the first dozen people hired at Google, had most recently overseen Google Web applications, including Gmail and Picasa, Google's photo-sharing service.

Mr. Hurley, 32, credited Mr. Kamangar with improving YouTube's "focus and understanding" on "the advertising side," as well as smoothing communications with headquarters.

"We're going through the process of still learning the ins and outs [with Google], even though it has been two years, and he's helping us navigating the waters," said Mr. Hurley.

Mr. Kamangar has pushed YouTube staffers to take more risks. Last November, he overrode some executives' concerns about whether a feature that allowed people to watch video in high-definition was ready to launch. The feature went live three hours later.

This spring, after being told YouTube hadn't sold an ad on the home page for a few days, Mr. Kamangar advocated taking video ads that appeared on other areas of the site to fill that prominent space. Revenue from the home page increased, the company said.

By The Associated Press

Veterans Start Over as Colleges Ignore Experience

Twelve years of military service left Donald Spradling highly trained in satellite imagery, nuclear engineering and foreign intelligence analysis. None of that made a difference to the University of Missouri.

When the fall semester begins next week, the 33-year-old father of five will be taking largely introductory courses with the rest of the school's freshmen.

Nearly half a million veterans are expected on college campuses this year as part of the new GI Bill. The surge is leading to a call for schools to re-examine their policies of declining to grant college credit for military training and service, along with offering them veteran scholarships.

An estimated one in five colleges and universities do not offer military scholarships or give academic credit for military education, according to a recent survey of 723 schools by the American Council on Education that is believed to be the first systematic measure. Even more of the schools, 36 percent, said they don't award credit for military occupational training.

For Spradling and others, that can mean spending more on tuition, stretching financial aid or GI Bill scholarships and delaying their entry into the work force.

In most cases, it's simply an academic decision that they're not going to award any credit for learning acquired outside a traditional classroom.

It may be very practical skills acquisition, but that may not be what university education sets out to do. Universities are looking to build on a framework, a foundation of knowledge.

At Boston College, a private school, the standard has always been to accept credit only for institutions of higher education.

Many college-bound veterans said military recruiters often offer an unrealistic portrayal of what awaits in academia, suggesting their military coursework and training will count for college credit.

Some advocates also fault a campus climate where military training is poorly understood. They say many schools underestimate the quality of their education, and unlike community college credit or Advanced Placement classes, it's not easy to measure.

Because of their lack of knowledge of the military, they don't equate it as the same as being in the classroom. But, some colleges are promoting their credits for military work as a way to recruit veterans.

School's are starting to establish college scholarships for veterans and have established two degree programs geared specifically for service members: an emergency medical care degree for Special Forces medics and an emergency and disaster management degree for civil affairs personnel. Both accept military training and transfer military training for credit for other degrees.

By The Wall Street Journal

Medicare For All Isn't The Answer

With Congress now in recess, the debate over health-care reform has moved to each member’s home district. The American people have rightly been asking elected officials many probing questions. While few Americans deny we need health-insurance reform (too many people lack adequate coverage), most believe we receive the best quality health care in the world and do not want to see it compromised.

Several advocacy groups and members of Congress want a individual health insurance plans, modeled after Medicare, to cover all Americans. They say Medicare works to provide health care to seniors, so the government should extend the program to Americans of all ages. Others want to create a government-run plan, sometimes called a "public option," which they say would compete with private insurance but would only be two steps away from individual health insurance plans.

There are more than 1,300 insurance companies competing for business without unneeded competition from a federal government plan. Backed by tax dollars, a government-run option could offer artificially low rates without regard to profitability, or even meeting operating expenses. That would push businesses to move employees to the public-option plan, ultimately putting private insurers out of business and leaving only individual health insurance plans run by the government.

Individual health insurance plans may appear attractive to some. But as someone with more than 30 years of experience running a leading hospital company with international operations, I have firsthand knowledge of the hidden costs.

Medicare reimbursements to hospitals fail to cover the actual cost of providing services. The Medicare Payment Advisory Commission (MedPAC), an independent congressional advisory agency, says hospitals received only 94.1 cents for every dollar they spent treating Medicare patients in 2007. MedPAC projects that number to decline to 93.1 cents per dollar spent in 2009, for an operating shortfall of 7%. Medicare works because hospitals subsidize the care they provide with revenue received from patients who have commercial insurance. Without that revenue, hospitals could not afford to care for those covered by Medicare. In effect, everyone with insurance is subsidizing the Medicare shortfall, which is growing larger every year.

If hospitals had to rely solely on Medicare reimbursements for operating revenue, as would occur under a single-payer system, many hospitals would be forced to eliminate services, cut investments in advanced medical technology, reduce the number of nurses and other employees, and provide less care for the patients they serve. And with the government in control, Americans eventually will see rationing, the denial of high-priced drugs and sophisticated procedures, and long waits for care.

Advocates of individual health insurance plans say that hospitals would survive if they learned to operate more efficiently. While we are always looking for ways to improve efficiency, the economic conditions of the past few years have already forced most institutions to reduce expenses and increase efficiency as much as possible.

The reality is that Americans have come to expect the best health care in the world, and to provide that, hospitals must continue to invest in advanced medical technology, salaries for well-trained nurses and technicians, and state-of-the-art facilities. If hospitals were required to operate solely on revenue from a single-payer system, they could no longer afford to provide the care that Americans deserve.

Most people in America are satisfied with the care they receive, so it is important that we take the time to fix only the parts of our system that need repair. Let's not destroy a system that works well for most Americans. Let's judiciously change only the areas in need.

Stand Out With Your Jewelry


Unique jewelry gifts can change an outfit dramatically. Unique jewelry can either be huge, tiny or even unnoticeable. Your desire to select a wedding jewelry that would perfectly fit your dress. In choosing the right jewelry in a specific occasion, you must know what kind will match your dress, your shoes, your skin tone and even your eyes. You can definitely collect a perfect jewelry for your dress, from dolphin jewelry to plumeria jewelry, you're sure to find something to complement your dress.

You really don’t need to be a celebrity or a superstar to be the center of attention in a gathering. You can have a unique style of your own by wearing estate jewelry that will make you stand out from everyone else. You have to pass through many hardships, practice and studying in order to establish a style of you own.

Vintage jewelry is an ever-increasing trend and lots of women are going further than just dolphin jewelry and plumeria jewelry, and wonderful wedding jewelry that will complement any dress.

Story by The Wall Street Journal

Yahoo Searches for an End to Its Dog Days

Is it time to let Yahoo out of the doghouse?

The Web portal alienated much of Wall Street with the terms of its search deal with Microsoft. But, with the shares now off 16% since the deal was announced, investors may want to step back and look at the bigger picture.

Despite all the turmoil at the company, the number of unique monthly visitors to Yahoo sites continues to grow. It rose 10% in the year to June to 154 million, according to comScore, 79.5% of the total U.S. Internet audience and only a little below Google in terms of reach. Microsoft, No. 3 in reach, is well below, at 66%. Most of Yahoo's departments, including email, news, Yahoo Answers, sports, finance and entertainment also are growing in double-digit percentage terms. Internationally, Yahoo's traffic is up although not as much as the overall Internet audience.

Maximizing the revenue potential of that huge audience is a challenge that has bedeviled Yahoo as much as other big-audience Web sites like social networks. It would be foolish to bet that the challenge can't be overcome.

After all, people spend 34% of their media time online, compared with 35% watching TV, according to a recent study by Forrester Research. But TV's percentage of ad spending is 31%, while the Internet draws only 12%—of which paid-search advertising is close to half.

Yahoo's potential is in boosting the share accruing to display advertising. Part of that means getting more big "brand" advertisers to spend money online. Brand.net, an ad firm, estimates that only 5% of brand-focused advertising dollars has moved online, compared to 30% of direct-response ad dollars. Changing that requires better performance measures for display ads and better targeting for specific demographic groups. Standardized formats for video ads would be helpful, too.

The biggest challenge may be the oversupply of inventory that has helped depress prices for display. But Yahoo's hefty audience should prove a draw for big marketers.

So how much of this potential is built into Yahoo's current share price of $14.46? Not a lot. Consider: Yahoo has roughly $2.75 a share in cash and marketable securities. UBS estimates Yahoo's stakes in Yahoo Japan and Alibaba Group are valued at another $5.81 a share, discounted 20% for tax and illiquidity. This figure is probably conservative, given the growth of Alibaba's Taobao Chinese e-commerce site. UBS values Yahoo's search business at $6.05 a share, assuming 10 times 2010 projected search earnings before interest, taxes, depreciation and amortization of $855 million. And that's before the impact of the Microsoft deal.

There may be no way around the reality that a more traditional media business built on audience and display advertising isn't going to be as high-margin as search. But Google has so far got search locked up.

Yahoo already has been punished for squandering the chance to squeeze a big premium from Microsoft. But that is done. Investors might now focus more on the potential. The deal with Microsoft could make a stronger competitor to Google, giving Yahoo upside on its share of search revenues. It will let Yahoo avoid trying to keep up in the technology-spending battle with deeper-pocketed rivals. And, although Yahoo is taking the risky step of losing control of its destiny when it comes to search, management will at least be able to focus exclusively on trying to crack the lucrative code for display advertising.

Bing Showing Growth

When it comes to search, there is little change month to month, but the little changes are beginning to add up. At least a little. According to the latest report from Nielsen Online Google still leads the search pack with nearly 65% share of searches. However, newcomer Bing continues to show strong growth.

Here is the breakdown: Google leads with a 64.8% share (3% increase over June), Yahoo is next with a 17% share (11% increase) and then Bing with a 9% search share (8% increase). Rounding out the top five are AOL (3% share) and Ask.com (1% share).




Googlers conducted 6.8 billion searches while Bingers conducted nearly 10 million. Although that is a very large difference, we must keep repeating that Bing only launched a few weeks prior to June and already it is in the top 3; being a part of Microsoft is part of the rapid growth, but consumers are coming back to the engine.

In a related report search advertising network Chitika found that Bing could be outperforming Google when it comes to searches. Researchers found that consumers using Bing were 55% more likely to click organic search listings that they were to click on Google's organic listings.

Google Working on Faster, More Caffeinated Search Engine

Google announced today that it has been working on a faster search engine that will improve results for web developers and power searchers.

Dubbed Caffeine, the new project focuses on next-generation infrastructure and seeks to improve performance in a host of areas including size, indexing speed, accuracy and comprehensiveness. Could this also be seen as a step towards improving access to the Deep Web?

For now though, developers are being asked to go and check out the http://www2.sandbox.google.com/ and try a few searches with it. Then, compare those results with those found on the current Google site.

If a "Dissatisfied? Help us improve." link displays, click on it and type your feedback in the text box along with the word caffeine.

Since it's still a work in progress, Google engineers will be monitoring all feedback.

Story from The Wall Street Journal

Yahoo Renovates Its Home Page

Makeovers are always fun to watch. Someone swoops in on an unsuspecting fashion “don’t,” improves him or her with a new hairstyle, makeup and wardrobe, and presents the finished product to overjoyed friends and family.

Last week, Yahoo unveiled the results of its latest makeover: the revamped home page. Carol Bartz, the company’s relatively new CEO, has said that Yahoo’s home page needed just such a makeover. After not changing significantly since 2006, the home page fits the role of a fashion don’t. And consumers, like family and friend observing the aftermath of a makeover, will either be overjoyed or nonplussed by the finished product.


I’ve been using this new home page for over a week now and I can report that Yahoo followed one of the most important makeover rules by doing more with less. Gone is the busy screen saturated with advertisements and clutter. The new home page is clean and easier to absorb.
Favorite ‘Apps’

Yahoo’s home-page makeover goes beyond surface improvements. Its most useful feature is a Yahoo SEO list called My Favorites, which contains a variety of Web sites from within and outside of Yahoo. When your cursor hovers over one of these entries, which Yahoo calls “apps,” a pane opens with a preview of content from that site. This turns your Yahoo home page into an aggregator of information, bringing glimpses of information to you in one place so you don’t have to waste time navigating to other sites.

But if a greater number of these apps were more robust, you would be able to do more right within the hover pane, like watch videos or play a game. Currently, the hover preview pane only lets you see content, update social-network statuses and enter search terms, the results of which are shown on a new Web page.

This makeover comes at an interesting time in the world of online news aggregation. Competitors like Google and Microsoft incorporate data from all over the Web into iGoogle.com and MSN.com, respectively. And the concept of the home page as a starting point isn’t as popular as it once was: Many people now start browsing the Web by first clicking on a link in an email or in one of many social-networking sites, like Twitter.



Traffic Driver

Of course, Yahoo plans to use this redesigned home page to drive traffic to the company’s own sites like Shine, Answers, Health and OMG (a celebrity gossip site). These Yahoo sites make up half of the 65 apps designed especially for My Favorites. Yahoo says that its apps for other sites were made by Yahoo and the outside company running the Web site. An ad runs on the hover preview page of each app and the revenue for this ad goes to Yahoo, not the content provider.

Yahoo will use your list of My Favorites apps to learn about what sites you use so as to target ads at users. This proved true for most of the ads I saw on my home page, but strangely, the AllThingsD.com app displayed ads for Mars chocolate and Del Monte fruit snacks rather than technology products.

Module Thinking

My Favorites is fixed on the far left of the Yahoo home page and a large search box sits prominently at the top of the home screen.

The top middle section of the screen shows a carousel of images and current news that Yahoo calls the Today Module; below this is the News Module, which houses tabs labeled News, World, Local, and Finance. The Local and Finance tabs can be customized by entering a ZIP Code and stock tickers, respectively. The Today and News Modules can switch positions if you click on a small arrow.

The revamped home page will serve as a starting point for the Yahoo Application Platform, or YAP. Sometime around late September, Yahoo will open its YAP (no pun intended) to software developers so they can make all kinds of apps with a variety of functions for the home page, not just apps that are tied to Web sites.

You can customize the home page for style or content changes if you sign on using a user ID and password. Changes should appear the next time you log in. But this didn’t work as well as it should. I set my page to display in a tangerine color, one of six colors offered for customizing the page, but the home page wasn’t tangerine-colored the next time I logged in.

Some Problems

I had trouble logging into my Gmail account using a special Gmail app, but this and the color problem were fixed by the time this column went to press.

Some apps didn’t work at all, like the Facebook app, which couldn’t connect to my Facebook account. Yahoo said the problem should be fixed this week.

The home page seemed to have a longer memory when it came to the list of My Favorites. I edited my list, adding more pre-made apps and creating some of my own using a built-in tool that lets you enter a Web site. Yahoo has preloaded icons for some popular Web sites such as cnn.com; otherwise, it will use a generic star.

Permanent Apps

Two apps are permanent fixtures at the top of the My Favorites list: One shows a list of all Yahoo sites and the other shows Yahoo Mail. Everything else can be deleted, added and moved around in the list. One of my favorite apps was for Epicurious.com, the food and recipe site. When I hovered over the Epicurious app, images of food with recipe names appeared in the hover preview pane. One click on an image sent me to the Web site for the full version of the recipe.

After adding many of my own apps to My Favorites, I wished Yahoo had a one-click tool for converting my browser bookmarks into apps. Yahoo says this is something it hopes to introduce in the future.

Mobile Rollout

This week, Yahoo started rolling out a mobile Web site made to run on the iPhone’s Safari browser that coordinates with the more robust version of the home page. I used this Yahoo home page on the iPhone and liked that it immediately pulled up the My Favorites list I had carefully constructed on my computer. Similar offerings will soon be available for other mobile devices.

The new Yahoo home page, powered with Bing SEO search results, is a refreshing way of bringing content to you rather than you chasing around the Web looking for it. The My Favorites apps need a little more power to be truly useful and to encourage people to use the Yahoo SEO home page every day, but Yahoo hopes to solve some of that problem in a couple of months when it opens the site to developers.

Finally Microsoft and Yahoo Search Join Forces

Story by CNN Money

After a year and a half of dealing, the tech giants reach a deal to take on Google, which holds a 65% market share in online search.

NEW YORK (CNNMoney.com) -- Microsoft and Yahoo reached a long-awaited partnership Wednesday in a bid to challenge Google's dominance in online search.

Under the 10-year deal, searches on Yahoo.com will be powered by Microsoft's new Bing search engine. Yahoo, in turn, will be responsible for attracting premium advertisers.

Microsoft will pay Yahoo 88% of the revenue it gains from searches on Yahoo's sites. Microsoft will also have the rights to integrate Yahoo search technology into its own existing Web search platforms.

Yahoo said the revenue sharing agreement will increase its operating income by about $500 million annually.

According to Microsoft Chief Executive Steve Ballmer, the deal will allow Microsoft to "create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company."

And in a dig against search market leader Google (GOOG, Fortune 500), the companies said in a joint statement that "advertisers no longer have to rely on one company that dominates more than 70% of all search."

An 18-month odyssey. It was a partnership that was a long time in the making. Microsoft's (MSFT, Fortune 500) search market share has been slipping for more than two years, and the company has struggled to make its online advertising unit profitable. Meanwhile, Yahoo (YHOO, Fortune 500), once the search market leader, dropped to a distant second place behind leader Google (GOOG, Fortune 500) by 2007.

The dealings between the two companies began Feb. 1, 2008, when Microsoft made an unsolicited $44.6 billion cash and stock bid for Yahoo. A week later, Yahoo rejected the bid, saying the $31 per share offer "massively undervalues" the company, despite the fact that the bid represented a 62% premium over Yahoo's $19.18 closing stock price a day before the announcement.

In an attempt to fend off Microsoft, Yahoo launched a two-week trial partnership with rival Google on April 10, 2008. That involved outsourcing advertising space to Google as part of a short-term agreement that could eventually lead to a bigger partnership.

Microsoft threatened to take its bid to Yahoo's shareholders by the end of April if a deal could not be reached, and even sweetened the pot to $33 per share. In a turnaround move, Microsoft opted to avoid a hostile takeover and simply dropped the bid for Yahoo altogether on May 5 of last year. Microsoft CEO Ballmer cited the economics of the deal as well as Yahoo's interest in a long-term Google partnership as reasons.

Almost as soon as the deal seemingly died, signs of life re-emerged. First, activist investor Carl Icahn threatened Yahoo's board with a proxy battle if the company's executives didn't return to the bargaining table with Microsoft. Then, shares of Yahoo rocketed higher on May 19, 2008, when rumors circulated that Microsoft was interested in Yahoo's search advertisement business.

On June 12 of last year, however, Yahoo announced that discussions with Microsoft had ended without a pact. The same day, Yahoo turned around and announced a deal with Google to put Google ads on Yahoo's search pages. That tie-up was later nixed after a Justice Department antitrust investigation prompted Google to end the partnership. Icahn and Yahoo reached a truce in late July of last year.

The situation at Yahoo took a turn for the worse after the credit crisis erupted in October. Yahoo announced it would lay off 10% of its workforce in late October, shares slipped below $9 in November and Chief Executive Jerry Yang announced his resignation.

When Carol Bartz came on as Yahoo's new CEO in January 2009, she said she would not sell the company outright, but appeared to be more open to a sale of the company's search business.

Rumors of a possible deal were reignited when Bartz acknowledged at the All Things Digital conference on May 27 that Yahoo and Microsoft had been talking "a little bit," and said outright that Yahoo's search business was for sale, albeit for "boatloads" of money.

The next day, Ballmer unveiled Microsoft's new Bing search engine. Reports began to circulate in mid-June that Bing was a success, growing Microsoft's beaten-down search market share and eating into Yahoo's, and Ballmer reiterated to Fortune's Patricia Sellers that Microsoft "remains open to a partnership with Yahoo."

Google's results show slowing growth as online advertisers cut back

MercuryNews.com

As the toll of the financial collapse mounts, add one more victim: Google's go-go growth.

On Thursday, the search giant announced second-quarter revenue was essentially flat compared with the first quarter.

Profit rose, but that's because the Mountain View company slashed spending on computer technology and the giant data centers that power its business. And the company continued shedding jobs, after years of adding hundreds or even thousands of new Googlers every quarter.

Google's report adds to a mixed picture about the health of the technology industry. Earlier this week, Dell forecast that weak demand from big corporate customers would keep pressuring its profit, while Intel delivered a bullish report that led to a market rally Wednesday. And late Thursday, IBM delivered an especially upbeat assessment about the rest of the year.

CEO Eric Schmidt said Google's advertising business had stabilized. "We are not at the moment looking at the downward spiral we thought we might see six months ago," Schmidt told analysts in a conference call, noting that "a quarter ago, we had no idea where the bottom was."

But Schmidt could not identify signs of a recovery. The best news was that enough of Google's big advertisers have come back that the company was able to ring up $5.52 billion in revenue during the second quarter. That was $10 million better than the first quarter, when the company's revenue declined for the first time ever from the quarter before that and it looked like the economy was falling off a cliff. Advertisers, however, are spending less than they used to.

"For the first time, we saw a really big drop in revenue per search," said Jeffrey Lindsay of Bernstein Research. "We thought it wouldn't have deteriorated much for the first quarter, but obviously it has gotten worse." Revenue per search is a measure analysts watch. It goes down when advertisers pay less for ads or buy fewer ads.

The silver lining? The amount advertisers are willing to pay is "no longer declining now as a general rule across the board," said Jonathan Rosenberg, senior vice president for product management.

Google did manage to increase profit 18 percent as net income rose to $1.48 billion, or $4.66 a share, compared with $1.25 billion, or $3.92 a share, a year ago.

But that increase only came because of the cuts in hiring and technology spending, as well as an unusually low tax rate.

The number of employees at Google dropped by 378 to 19,786, marking a definitive end to a madcap hiring spree that characterized the company in the early years following its IPO.

Spending on capital projects plunged to $139 million. Two years ago, it was $575 million.

In an interview with the Mercury News, Chief Financial Officer Patrick Pichette praised employees for being frugal but said it would be wrong to assume that austerity had come to the Googleplex.

"We still have free food," he said. "We still have massages. There is still a doctor on site."

"It's mixed results," said Ron Gruia, an analyst with Frost & Sullivan who praised Google for its discipline. "It's the lowest growth rate since the company went public five years ago."

And if Google, one of the most profitable companies on the planet, is struggling, other smaller Internet companies are fighting for survival.

Schmidt and other executives described how Google has been pulling out the stops to turn YouTube into a profitable business and to begin selling meaningful amounts of display advertising — graphical ads that may soon increasingly replace the smaller, unobtrusive text ads that fueled Google's early growth.

"I think that is the next area where online advertising is going to shift and we are going to see tremendous growth," said Nikesh Arora, president of global sales. Arora said he was also pleased with the "trajectory of YouTube," which is selling more ads. "In the not long too distant future we see a profitable business," he said.

Google stock rose 1 percent to close at $442.60 in regular trading Thursday. But it fell as low as $427.67 in after-hours trading.

Bing Continues to Show Growth in Search Activity
Story from ComScore

Microsoft Sees Gains in U.S. Searcher Penetration and Share of Search Result Pages During the Second Week of Bing’s Debut

RESTON, VA, June 17, 2009 – comScore, Inc. (NASDAQ: SCOR), a leader in measuring the digital world, today released a follow up study on the performance of Bing, Microsoft’s new search engine, during the second week of its public launch. The results show that Microsoft has continued to increase its position in the search market following the initial week of Bing’s debut.

Microsoft Sites saw its average daily searcher penetration and share of search result pages in the U.S. continue to climb during the second week of Bing’s introduction. Microsoft Sites’ average daily penetration among U.S. searchers reached 16.7 percent during the work week of June 8-12, up 3 percentage points from the May 25-29 work week prior to Bing’s introduction. Microsoft’s share of search result pages in the U.S., a proxy for overall search intensity, increased to 12.1 percent during the period of June 8-12, also climbing 3 percentage points from the pre-introduction work week of May 25-29.

Microsoft Sites Search Performance
Work Week: 5/25/09 – 6/12/09
Total U.S. – Home/Work/University Locations
Source: comScore qSearch

Work Week *************5/25/09-*************6/1/09-*************6/8/09-
****************************5/29/09**************6/5/09***********6/12/09

Searcher Penetration**13.7% ***************15.8% ************16.7%
(Avg. Daily)

Share of Search**********9.1%****************11.3% ************12.1%
Result Pages

“It appears that Microsoft Bing has continued to generate interest from the market for the second consecutive week,” said Mike Hurt, comScore senior vice president. “These early data reflect a continued positive market reaction to Bing in the initial stages of its launch.”

China Accuses Google Of Lewd Behavior
Beijing Continues Its Fight Against The Public Square In Cyberspace
Story from Mercury News

Damming the Web: Days before a deadline abruptly imposed by China, computer makers are scrambling to comply with an order to supply Web-filtering software with PCs amid concerns about what it might do to their reputations.

Hewlett-Packard, Dell and Taiwan's Acer — the top three global producers — are asking regulators for details of the order that takes effect July 1 to provide Green Dam Youth Escort software with every laptop and desktop PC sold in China.

The conflict comes as Beijing launched new criticisms this week against search giant Google, which a foreign ministry spokesman accused Thursday of spreading pornography. Chinese users were unable to connect to Google's main site or its China-based service, google.cn, from late Wednesday into today. But spokesman Qin Gang, speaking at a regular briefing, sidestepped questions about whether the government was blocking access.

Government regulators say Green Dam must be supplied with every computer to prevent children from surfing the Internet for pornography. But technical analyses of the software — developed by a previously unknown Chinese company — have shown embedded programs to filter out content the government deems politically objectionable.

Yahoo To Build Data Center Near Buffalo
Story from the Mercury News

BUFFALO, N.Y. — Internet giant Yahoo plans to open a data center in western New York.

Gov. David Paterson says that the center in Lockport north of Buffalo is expected to begin operating in January 2011 and will create about 125 jobs.

The governor says construction of the center, housing computer systems and other equipment, is expected to begin this fall.

Based in Sunnyvale, Yahoo has been expanding its number of data centers around the country. The centers use a large amount of energy, and Paterson says Tuesday that the New York Power Authority came up with a low-cost power plan to lure Yahoo to Lockport.