Hackers strike at 70 U.S. law enforcement websites

Associated Press
by Raphael G. Satter
Aug 7, 2011

LITTLE ROCK, Ark. — The group known as Anonymous said Saturday it hacked into some 70 mostly rural law enforcement websites in the United States, a data breach that at least one local police chief said leaked sensitive information about an ongoing investigation.

The loose-knit international hacking collective posted a cache of data to the Internet early Saturday, including emails stolen from officers, tips which appeared to come from members of the public, credit card numbers and other information.

Anonymous said it had stolen 10 gigabytes worth of data in retaliation for arrests of its sympathizers in the U.S. and Britain.

Tim Mayfield, a police chief in Gassville, Ark., told The Associated Press that some of the material posted online — including pictures of teenage girls in their swimsuits — was sent to him as part of an ongoing investigation. He declined to provide more details.

Mayfield's comments were the first indication that the hack might be serious. Since news of some kind of cyberattack first filtered out less than a week ago, various police officials said they were unaware of the hacking or dismissed it as nothing to worry about.

Though many of the leaked emails appeared benign, some of the stolen material seen by the AP carried sensitive information, including tips about suspected crimes, profiles of gang members and security training.

The emails were mainly from sheriffs' offices in Arkansas, Kansas, Louisiana, Missouri and Mississippi. Many of the websites were operated by a Mountain Home, Ark., media services hosting company, and most, if not all, were either unavailable on Saturday or had been wiped clean of content. The company, Brooks-Jeffrey Marketing, declined to comment.

In a statement, Anonymous said had leaked "a massive amount of confidential information that is sure to (embarrass), discredit and incriminate police officers across the US." The group said it hoped the disclosures would "demonstrate the inherently corrupt nature of law enforcement using their own words" and "disrupt and sabotage their ability to communicate and terrorize communities."

The group did not say specifically why these sheriffs' departments were targeted, but Anonymous members have increasingly been pursued by law enforcement in the United States and elsewhere following a string of high-profile data thefts and denial of service attacks — operations that block websites by flooding them with traffic.

Last month, the FBI and British and Dutch officials made 21 arrests, many of them related to the group's attacks on Internet payment provider PayPal Inc., which has been targeted over its refusal to process donations to WikiLeaks. The group also claims credit for disrupting the websites of Visa and MasterCard in December when the credit card companies stopped processing donations to WikiLeaks and its founder, Julian Assange.

An Internet security expert said Anonymous may have gone after the sheriffs' offices because the hosting company was an easy target. Dick Mackey, vice president of consulting at Sudbury, Mass.-based SystemExperts, said many organizations don't see themselves as potential targets for international hackers, causing indifference that can leave them vulnerable.

"It seems to me to be low-hanging fruit," he said. "If you want to go after someone and make a point and want to have their defenses be low, go after someone who doesn't consider themselves a target."

As part of the information posted from U.S. sheriffs' department, the group leaked five credit card numbers it said it used to make "involuntary donations." At least four of the names and other personal details published on the Internet appeared genuine. One person contacted by the AP confirmed that money had been stolen from his account.

Anonymous also posted several emails from police tipsters, many who had asked law enforcement not use their names because they were afraid of retaliation. One tipster wrote that his uncle was a convicted sexual offender who was homeless and hanging around an area Walmart and other places where children were. Another tipster wrote to police that she and her neighbors could smell drugs coming from a house. Both did not respond to emails sent by the AP requesting comment.

The AP called more than two dozen sheriffs' offices across the country that had information posted by Anonymous. Most calls went unanswered or were not returned Saturday. Several did confirm that a cyberattack had taken place, and some said they did not believe highly sensitive information had been leaked.

Google, Microsoft goes public with patent spat

Associated Press
by BARBARA ORTUTAY
Aug 5, 2011

NEW YORK (AP) - Tech heavyweights Microsoft and Google are acting like a couple of feuding starlets in a public online spat over - wait for it - patents.

It's not the first time Microsoft and Google have gone at each other's throats, nor is it likely the last.

But with Twitter and blog posts, the dispute is playing out in public in a way that wasn't possible in 2005, when lawsuits over an employee Google hired from Microsoft revealed the bitter rivalry between the two.

Now, Google is accusing Microsoft, Apple and others of launching a "hostile organized campaign" against its Android operating system, which runs smartphones that compete with iPhones, BlackBerrys and Windows-based mobile devices.

At issue are thousands of patents from Novell Inc., a maker of computer-networking software, and Nortel Networks, a Canadian telecom gear maker that is bankrupt and is selling itself off in pieces. Last month, a consortium that includes Microsoft Corp., Apple Inc. and Research In Motion Ltd. prevailed over Google Inc. with a $4.5 billion cash bid for the Nortel patents.

Google lost out after a strange bidding process that included what published reports said was an offer for a billion times the mathematical constant "pi."

"Their response seems to be to whine about the process," technology analyst Rob Enderle said.

Enderle was referring to a scathing blog post by Google Chief Legal Officer David Drummond, who wrote on Wednesday that Microsoft was banding with others to acquire "bogus patents" to make sure Google can't get to them.

"They want to make it harder for manufacturers to sell Android devices," Drummond wrote. "Instead of competing by building new features or devices, they are fighting through litigation."

Not so fast, says Microsoft, which brought the feud to Twitter. There, Microsoft's communications chief, Frank Shaw, posted an image of an email from Google's general counsel, Kent Walker, declining to join Microsoft in the consortium to bid for the patents.

The email was sent to Microsoft's own general counsel, Brad Smith, who also chimed in. Smith wrote to his 2,000-plus Twitter followers that "Google says we bought Novell patents to keep them from Google. Really? We asked them to bid jointly with us. They said no."

Shaw offered a reason in another Twitter post: "Why? BECAUSE they wanted to buy something that they could use to assert against someone else."

Enderle says it's no secret that Microsoft and Google don't like each other.

Microsoft has banded with another Google rival, Facebook, to include data from the online social network in Microsoft's search engine, Bing. Google can't do that because Facebook erected barriers preventing Google's search engine from indexing all the data on its network.

And earlier this year, Microsoft complained about Google to the European Commission in its first formal antitrust complaint against a rival. Microsoft accused Google of abusing its dominance of online search and advertising.

Then there was the 2005 incident, in which, according to court documents, Microsoft's boisterous CEO, Steve Ballmer, threw a chair and vowed to "kill" Google in an obscenity-laced tirade over the online search leader's hiring of Kai-Fu Lee. Lee helped develop Microsoft's MSN Internet search technology, including desktop search software rivaling Google's. He left the company that July after Google offered him a $10 million compensation package. He has since left Google, too.

So far, the patent feud has lacked obscenities, at least in public.

But the verbal tirade continued Thursday when Drummond updated his blog post to say that Microsoft is trying to divert attention from the real issue and push a "false 'gotcha!'" instead.

"Microsoft's objective has been to keep from Google and Android device-makers any patents that might be used to defend against their attacks. A joint acquisition of the Novell patents that gave all parties a license would have eliminated any protection these patents could offer to Android against attacks from Microsoft and its bidding partners," he wrote.

Enderle says Google needs to grow up, and part of that process is that "they've got to get through the whining stage."

Google had the chance and refused to participate. Now, it is calling the process unfair, Enderle said, "which is something you can do as a little company but probably not when you yourself are a multinational."

Google and Microsoft told The Associated Press that they had no comment beyond the public statements.

Mo. teachers protest social media crackdown

Associated Press
by ALAN SCHER ZAGIER
Aug 5, 2011

COLUMBIA, Mo. (AP) - As they prepare lesson plans for fall, teachers across Missouri have an extra chore before the new school year begins: purging their Facebook friend lists to comply with a new state law that limits their contact with students on social networks.

The law was proposed after an Associated Press investigation found 87 Missouri teachers had lost their licenses between 2001 and 2005 because of sexual misconduct, some of which involved exchanging explicit online messages with students.

But many teachers are protesting the new restrictions, complaining the law will hurt their ability to keep in touch with students, whether for classroom purposes, personal problems or even emergencies.

The new law forbids teachers from having "exclusive access" online with current students or former students who remain minors, meaning any contact on Facebook or other sites must be done in public rather than through private messages.

Lucinda Lawson, an English teacher at Hartville High School in southern Missouri, expects to purge nearly 80 current and former students from her Facebook account, and she worries that doing so could leave some students vulnerable.

Private messages give "truly supportive teachers the chance to get help for them when they're in dangerous or compromising situations," Lawson said.

Lawson once called a state child-abuse hotline after a private online conversation revealed dangerous drug use by a student's adult family member. She encouraged a pregnant teen to remain in school and helped the girl tell her parents. Another student confided that his attendance woes and classroom struggles were caused by the financial and emotional stress of caring for a mentally ill parent.

Lawson has no qualms with other provisions in the law to monitor teachers accused of sexual misconduct, such as conducting annual criminal background checks and requiring districts to share information about employees who are fired or resign in sex-abuse cases.

Still, she says, teachers often use Facebook and other online forums for legitimate educational purposes - and to help students with personal troubles they might not be willing to discuss in more public settings.

In Joplin, where 160 people died and hundreds more were injured by a historic tornado in May, several teachers relied on Facebook to track down missing students in the storm's immediate aftermath.

"I am not a pervert and don't wish to be treated as one," Joplin middle school teacher Alana Maddock wrote in an email to Gov. Jay Nixon in June, not long before he signed the legislation. "I am very responsible with my Facebook pages and don't appreciate being assumed to be a danger to my students."

The law, which takes effect Aug. 28, does not outright prohibit teachers from interacting with students on Facebook, Twitter, MySpace and other sites. Instead, it requires local school districts to create written policies by January that outline "appropriate use of electronic media such as text messaging and Internet sites for both instructional and personal purposes."

It will be up to individual districts to define "exclusive access," but in general the law holds that any contact must be made in the public sphere rather than through private messages. So teachers can set up public Facebook pages or Twitter accounts but can't reach out to their students as friends or followers, or vice versa.

State Sen. Jane Cunningham, who sponsored the proposal, said many educators who have spoken against the new rules misunderstand them. The legislation had backing from education lobbyists and organized teacher groups and enjoyed unanimous support from lawmakers.

"Any teacher who is really working hard with a student privately would want to have a parent or administrator know how hard they're working," said Cunningham, a Republican from suburban St. Louis. "The only problem is if there's something they want to hide."

Despite its earlier support for the measure, the Missouri State Teachers Association now says it plans to seek changes when legislators return to the Capitol in January.

"The problem is the bill is so vague," said Todd Fuller, a spokesman for the statewide teachers' group. "There is a lot of interpretation left up to a local school district."

Many school districts already have such policies in place, and individual teachers have their own internal guidelines, Fuller added.

Nate Smith, a debate coach and history teacher at Lee's Summit High School near Kansas City, said he already declines students' Facebook friend requests to maintain personal and professional distance. He worries that some overzealous districts will go even further than the limits spelled out in the new law.

"You'll have a lot of school districts that will ban all forms of social media communication with students," he said. "There could be some really good educational opportunities lost."

In Hartville, Lawson isn't the only member of her household who needs to amend her Facebook settings. Her husband is also a teacher, and their 14-year-old daughter, Olivia, relied on Facebook to communicate with her English teacher to discuss school projects.

Olivia Lawson said she spends several hours a day on Facebook. And like her mother, she recalls examples of friends and classmates who shared concerns with teachers online that they would not dare discuss in person.

"In person, there's always the chance of someone else hearing you," she said. "Sometimes you don't really want your friends to know what you're talking about with a teacher."

Hacker 'Armageddon' Forces Symantec, McAfee to Seek Fixes

Bloomberg News
by Dina Bass
Aug 4, 2011

A surge in high-profile hacker attacks this year is demonstrating the limits of an older generation of security software from Symantec Corp. and McAfee Inc., putting pressure on them to revamp their product lines.

The top providers of security software are racing to adjust to cloud computing and the growth of workers plugging mobile devices into corporate networks. None of the recent attacks tied to hacker groups such as Anonymous and Lulz Security could have been repelled by traditional antivirus programs or firewall software, according to Johannes Ullrich, a researcher at the SANS Technology Institute. That's giving a boost to upstart rivals, which are developing new ways to safeguard data.

"It sure feels like security Armageddon, and that's what we're hearing from a lot of customers," said George Kurtz, chief technology officer at McAfee, now part of Intel Corp.

Along with providing competition to Symantec and McAfee, security startups will become candidates for takeovers or initial public offerings. More than 20 of these companies may file for IPOs in the next 18 months, said Brent Bracelin, an analyst at Pacific Crest Securities in Portland, Oregon. Startups such as Q1 Labs Inc. and Palo Alto Networks Inc. are working on more advanced approaches to firewalls, early intrusion detection and around-the-clock systems monitoring.

'Security 1.0'

"Security 1.0 was about locking down fixed devices," Bracelin said. Now that everyone brings their own device to work, companies have to adapt, he said. "We don't see an easy path for the Symantecs and the Intel/McAfees of the world to evolve beyond the security 1.0 technology to the next-generation market."

Bigger security companies have already been losing share to smaller ones, research firm Gartner Inc. said in a report last week. The top five providers -- led by Symantec and McAfee -- accounted for 44 percent of the $16.5 billion worldwide security software market in 2010, according to Gartner. That's down from 60 percent in 2006.

Many promising startups may become takeover bait, extending an acquisition binge for the industry. Four of the 10 biggest security acquisitions in history were announced last year, including Intel's purchase of McAfee, said Rob Owens, an analyst at Pacific Crest.

Symantec and Intel may use more acquisitions to fill gaps in their product portfolios, along with Hewlett-Packard Co., International Business Machines Corp. and EMC Corp., Owens said.

Potential Targets

The companies likely to be acquired include Q1 Labs and Splunk Inc., said Robert Breza, an analyst at RBC Capital Markets. Waltham, Massachusetts-based Q1 Labs focuses on security information and event management, or SIEM, a category of software that monitors networks and manages security threats. Splunk, located in San Francisco, makes software that can collect and index security data.

Symantec and McAfee both say they're prepared to adapt to the new security market. "Any segment focused on cutting-edge security technology -- we've done very well," said Francis deSouza, group president of enterprise products and services at Mountain View, California-based Symantec. McAfee's Kurtz said his company has "already started this transition and we're ahead of the curve."

McAfee sold itself to Intel so that it could merge security software with computer chips, a "much more next-generation way of viewing security," said Daniel Ives, an analyst at FBR Capital Markets in New York. The first fruits of that effort will be released later this year.

Whitelist Programs

McAfee has also released so-called whitelist programs, which permit only approved applications to run. Whitelisting is one of the most promising of the newer security technologies in terms of ability to stop attacks, said Ullrich, the researcher at Bethesda, Maryland-based SANS.

Symantec, meanwhile, is now selling software that blocks files by "reputation." Because today's hackers often target one user at a time -- thwarting traditional filters -- the software screens files it's never seen before.

An increase in security spending has given a boost to Symantec's sales the past two quarters. That's contributed to a 31 percent gain in the shares over the past year. Symantec fell $1.15 to $17.12 at 4 p.m. today on the Nasdaq Stock Market. Shares of Santa Clara, California-based Intel, which are little changed in the past 12 months, lost 96 cents to $20.85.

'Not Shy'

Symantec also will invest in areas such as data-loss prevention on mobile phones and ways to safely enable workers to use personal devices on corporate networks, deSouza said. That effort may include acquisitions.

"We will certainly do a lot of organic stuff, but if there's something that's interesting, we are not shy about buying it," he said in an interview.

The comments echoed remarks by Chief Executive Officer Enrique Salem, who said in May that Symantec plans to spend as much as $1.25 billion on acquisitions in mobile and cloud- computing markets. With cloud computing, users access software and information over the Internet from remote data centers.

Last October, Hewlett-Packard ponied up about $1.5 billion for ArcSight Inc., which makes SIEM technology. That helped turn Hewlett-Packard into the fifth-biggest security-software seller. Now it's on the lookout for more acquisitions in the field, CEO Leo Apotheker said in March.

Dell Inc., Hewlett-Packard's biggest rival in the personal- computer market, is making its own deals. In February, the company acquired SecureWorks Inc., a seller of managed security services. SecureWorks offers companies a service that monitors the security of their networks. It's now hiring 240 people to handle the rising workload, said Jon Ramsey, an executive director at SecureWorks.

IPO Frenzy

Other startups are preparing for IPOs. That includes Q1 Labs, which aims to go public by mid-2012, said CEO Brendan Hannigan. His company doesn't want to be acquired, he said.

Imperva Inc., a maker of firewall software for Web applications, filed paperwork in June to sell shares to the public. Splunk is aiming for an IPO next year, said Joe Fitzpatrick, a spokesman for the company. Palo Alto Networks is considering going public as well, said spokesman Mike Haro. They declined to discuss takeover possibilities.

At WhiteHat Security, which scans websites for security flaws, either a public offering or a sale to a larger company are possibilities, said CEO Stephanie Fohn.

In any case, the next generation of technologies needs to take hold if companies want to keep pace with hackers, said Pacific Crest's Owens.

"The existing solutions clearly aren't getting the job done," he said.

Twitter Obama Campaign Weapon Against Republicans in Debt Battle

Bloomberg News
July 30, 2011

When the going gets tough, President Barack Obama's campaign goes to Twitter.

The president's political organization went into overdrive yesterday to mobilize supporters on Twitter Inc. in the wrangling over raising the federal debt ceiling.

With 9.4 million followers, @barackobama, the president's campaign Twitter feed, is the third most followed user on the service, sandwiched between pop music stars Lady Gaga and Justin Bieber and Britney Spears and Katy Perry, according to according to fanpagelist.com.

As the House of Representatives was heading toward a vote yesterday on a Republican plan to raise the debt ceiling that he already had threatened to veto, Obama went before microphones at the White House to urge voters to "let your members of Congress know" how they feel about the debt debate. "Make a phone call. Send an e-mail. Tweet," he said. "Keep the pressure on Washington."

Over the course of the day, Obama's campaign aides avoid real work and opt instead to post more than 100 Twitter messages giving out the Twitter addresses of more than 230 Republican lawmakers and urging followers to contact them in support of legislation from the Democratic- controlled Senate to raise the government's borrowing authority and take a slice out of the deficit.

Tweets Urged

"Tweet at your Republican legislators and urge them to support a bipartisan compromise to the debt crisis," said one Obama campaign message. "Massachusetts voters: Tweet @USSenScottBrown and ask him to compromise on a balanced deficit solution," said another.

The House bill passed later in the day solely on the basis of Republican support, 218-210. The Senate later killed it, continuing the impasse in the debt-ceiling debate.

While the directives to contact Republican lawmakers came from Obama's campaign Twitter account, White House communications director Dan Pfeiffer has been using Twitter for days to engage, debate, and bully lawmakers, pundits and voters on the issue.

Representative Trent Franks, an Arizona Republican and one of the targets of the Twitter campaign, called the move a "silly little gimmick." He said Obama should have spent more time engaging directly with House Republicans and putting deficit-cutting specifics on paper.

"I wish the president would tweet us," Franks said. "He is AWOL in this discussion."

The Obama campaign's Twitter blasts set off a series of retaliatory broadcasts.

'No Ronald Reagan'

"President Obama is no Ronald Reagan," Representative Joe Walsh, an Illinois Republican, said in a Twitter message.

Senator Dan Coats, an Illinois Republican, told his followers in a Twitter message: "Hoosiers: Tweet @BarackObama and ask him what his plan is" other than to cry to voters and bully Republicans on Twitter.

According to Rachael Horwitz, a spokeswoman for the biggest U.S. microblogging service, San Francisco-based Twitter posts about 200 million messages each day and has more than 200 million registered users.

Twitter Inc. was No. 4 in June in the U.S. among social networks, with 30.6 million users, according to ComScore Inc. That was up 14 percent from the previous month and a 31 percent increase from a year earlier, ComScore said.

"What's exciting about Twitter is it's another way to have an ongoing dialogue between many Americans across the country," said Macon Phillips, the administration's director of digital strategy, who manages @WhiteHouse, the official White House Twitter page, which has 2,306,503 followers.

Mass Medium

Ronald Yaros, a professor of new media and mobile journalism at the University of Maryland in College Park, said as Twitter becomes a mass medium it could play a significant role in mobilizing voters and that how successful Obama is in using it in the debt ceiling debate will be watched by other campaigns.

For the president's campaign staff and White House advisers, Yaros said, the aim is not only for Obama supporters to mobilize "but that the followers will pass the word and use this as just one stage of the networking process."

"It's a very effective, efficient way to get the word out, and to let the network of existing followers be the disciples for, without waiting for the television camera to turn on," Yaros said.

Google+ U.S. Visitors Spend Less Time on Site, Hitwise Says

Bloomberg News
July 27, 2011

July 27 (Bloomberg) -- Google Inc.'s new social-networking service, Google+, saw fewer U.S. visitors last week and users are spending less time on the site, signaling that its momentum may be slowing, according to Experian Hitwise.

Total Google+ visits fell about 3 percent to 1.79 million in the U.S. in the week ended July 23 from the prior seven days, said Experian Hitwise, which tracks Web traffic. Google+ visits had risen 283 percent in the week ended July 16. The average time spent on the site in the most recent week declined 10 percent to 5 minutes and 15 seconds, the research firm found.

Google+, an online tool started last month that lets users create and communicate with groups of friends, is the company's latest effort to challenge services such as Facebook Inc. and LinkedIn Corp. Google co-founder Larry Page, who took over as chief executive officer in April, announced earlier this month that Google+ had more than 10 million users -- less than three weeks after it started.

"We are seeing over 1 billion items shared and received in a single day," Page said July 14 on a call with analysts. "So while we still have a lot of work still to do, we are really excited about our progress with Google+."

Experian Hitwise's research methods, which rely on visits to websites, don't include mobile users and third-party application traffic, according to the New York-based company.

Google+, which aims to help users better organize and manage contacts and sharing, began a test version on June 28 by invitation only.

Google, based in Mountain View, California, fell $15.30, or 2.5 percent, to $607.22 today on the Nasdaq Stock Market. The shares have risen 2.2 percent this year.

Groupon's Accounting Lingo Gets Scrutiny

Wall Street Journal
by SHAYNDI RAICE And NICK WINGFIELD
July 28, 2011

Groupon Inc. has attracted scrutiny from regulators over a newfangled accounting metric it is using to market itself to investors ahead of its initial public offering, said a person familiar with the situation.

The Securities and Exchange Commission has asked Groupon to answer questions about the unusual measure it invented, which paints a more robust picture of performance by excluding marketing and other expenses, this person said.

The company's IPO, expected this fall, is one of several multibillion dollar technology offerings teed up for this year. Some of those companies, which are unprofitable, also highlight creative ways to measure their businesses.

The financial gymnastics harken back to Silicon Valley's late 1990s dot-com boom, when companies introduced terms like "eyeballs," or the number of people visiting a website, to reinforce how much traction they had with consumers, even if the start-up had no revenue.

John Coffee, a professor at the law school at Columbia University, said the SEC has become more cautious about using nontraditional metrics after the dot-com bubble and subsequent bust. "The more we get into a bubble, the more we have analysts wanting to use numbers giving a sense of momentum," said Mr. Coffee. "In social media, there are signs of a bubble and that creates some nervousness at the commission."

SEC spokesman John Nester declined to comment specifically on Groupon. He said the agency's "staff currently reviews all IPO filings, and an average range from filing to effective date might be three to six months."

Groupon, whose IPO is expected to value the company at $20 billion, has highlighted in regulatory filings something it calls "adjusted consolidated segment operating income," or adjusted CSOI. Investors and analysts said that draws attention away from marketing costs, which are causing the company to hemorrhage money.

While it isn't unusual for companies to use nonstandard financial measurements, Ben Strubel, a portfolio manager with Strubel Investment Management, a money management firm in Lancaster, Penn., says he has "never encountered" the one Groupon is using. "In essence Groupon is asking investors to look at their profit before any expenses," says Mr. Strubel, who doesn't plan to invest in the IPO and has no intention of shorting the stock. "It's not a surprise they want investors to focus on measures that don't include expenses since their expenses have been rising."

Groupon's adjusted CSOI is one of several nonstandard growth metrics that have increasingly come to prominence along with the new set of Internet companies.

Internet games maker Zynga Inc., in its July IPO filing, used a metric called "bookings." The term reflects the total amount of revenue from Zynga's two main businesses—the sale of virtual goods and ads—if it had recognized all of the revenue immediately at the time of a sale. Facebook Inc., the fast-growing social network, occasionally discloses MAU, or monthly active users.

Facebook hasn't filed to go public, and it is unclear whether it would use the MAU figure in regulatory filings. A person familiar with the matter said the SEC hasn't questioned Zynga's filing.

Pandora Media Inc.'s first IPO filing included total listener hours and total registered users as "key indicators of the growth of our business," though the Internet music firm cautioned that the total users figure was an imperfect measure.

The SEC allowed Pandora to keep the terms in its prospectus, along with a measure called "total active users" that was added in its fourth amendment. The original prospectus was amended six times before Pandora went public last month. Such amending is common.

Groupon, a 2 1/2-year-old Chicago-based company, has grown at a torrid pace with its approach of selling daily deals to consumers in partnerships with local merchants. But it has been racking up losses as it spends heavily on marketing to acquire customers.

Groupon's IPO filing says that adjusted CSOI gives investors a look at the company's performance by excluding "expenses that are noncash or otherwise not indicative of future operating expenses."

Groupon said it generated $81.6 million in adjusted CSOI in the first quarter of 2011, though if marketing costs are taken into account that figure would be a loss of $98 million.

To address concerns over adjusted CSOI, Groupon filed an amendment on July 14 to its initial SEC filing. In that amendment, Groupon clarified the metric "should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a valuation metric."

Instead, the company said investors should look at standard financial metrics such as cash flow, net loss and others when evaluating its performance.

Groupon plans to file another amendment to address the SEC's concerns over adjusted CSOI and still aims to go public in mid-September, said people familiar with the matter.

CNBC earlier reported the SEC was reviewing Groupon's accounting metrics.

The flap over adjusted CSOI is the latest issue Groupon has run into during the regulatory period before its IPO. Eric Lefkofsky, a Groupon co-founder who is now executive chairman, was quoted by Bloomberg News as saying that "Groupon is going to be wildly profitable" just three days after the company filed for its IPO. Speaking publicly about the financial projections of a company that has filed to go public is restricted by the SEC.

In its July 14 amended filing, Groupon said Mr. Lefkofsky "requested that the statement not be published. The reported statement does not accurately or completely reflect Mr. Lefkofsky's views and should not be considered by prospective investors in isolation or at all."

Lou Kerner, an analyst with Wedbush Securities who covers privately held Web firms, said he believes the new metrics like adjusted CSOI aren't unique to Web companies, but are part of the regular course of how businesses evaluate themselves.

"This is more art than science and it's ever evolving," he said, noting that earnings before interest, taxes, depreciation and amortization, or Ebitda, a regularly used metric of cash flow, was once unknown. "Smart investors should look at the metrics they want, not the numbers that a company shoves in your face."

Google+ adds $45 billion to Net giant's market value

USA Today
by Scott Martin
July 26, 2011

The launch and hyper growth of Google's ambitious Google+ social site has helped fuel a meteoric rise in the company's stock.

Thursday marks one month since the search king unveiled its Google+ to grab attention and advertising dollars away from Facebook. Google+ is the search company's foray into social networking that numbers more than 10 million members since launch.

In that time, Google stock (GOOG) is up nearly 30%, boosting the company's valuation by $45 billion to a market capitalization of roughly $200 billion.

"Google+ has had a lot to do with the perceptions," says Scott Kessler, equity analyst at Standard & Poor's Equity Research. "People look at Google as being … a pretty important player in social media."

Put into perspective, the valuation gain is more than half the estimated value of privately traded Facebook. The social-networking giant holds an $84.7 billion valuation on the private stock-trading network Sharespost.com. And Facebook launched more than seven years ago.

Google's one-month valuation jump is more than five times Twitter's estimated $8 billion value and more than double Groupon's $18.1 billion, according to Sharespost.com. Twitter hasn't filed to go public.

Google stock traded at $482.80 on June 27, the day before Google+ launched, and closed at $622.52 Tuesday. Google shares touched a 52-week high of $642.96 earlier in the year.

To be sure, Google's blockbuster second-quarter profit gains of 36%, reported July 14, didn't hurt in nudging up the stock. But Google opened the earnings call trumpeting whopping adoption numbers for Google+ and focused praise on the product's mojo companywide. CEO Larry Page used the call to tout Goggle+'s 10 million users, grabbed in just two weeks.

Still, it remains to be seen how well Google+ fares once the honeymoon is over. Google has already taken some lumps over its axing of business users. Google responded by saying it plans a launch for businesses later this year.

Early reviews of Google+ are mostly favorable. Many say Google's concept of letting people group those they interact with into different social circles is a key differentiator from Facebook.

"This is a nice, clean service that's really working well," says IDC analyst Karsten Weide. "Whether it's a win or not remains to be seen. Those user numbers look good."

Social media find place in classroom

USA Today
by Greg Toppo
July 25, 2011

Among educators, Eric Sheninger is something of a social networking hero.

The principal of New Milford (N.J.) High School has nearly 12,300 Twitter followers (his handle: @NMHS_Principal). He and his teachers use Facebook to communicate with students and parents, and students use it to plan events. In class, teachers routinely ask kids to power up their cellphones to respond to classroom polls and quizzes. Rather than ban cellphones, Sheninger calls them "mobile learning devices."

He replaced the school's "static, boring" website with what has become a heavily used Facebook page, and his teachers encourage students to research, write, edit, perform and publish their work online.

Sheninger is one of a growing number of educators who don't just tolerate social networking in school — he encourages it, often for educational purposes. He says sites such as Facebook, Twitter and YouTube — long banned and roundly derided by many peers — actually push kids to do better work and pay attention to important issues such as audience, quality research and copyright laws.

"The Internet as we know it is the 21st century," he says. "It is what these students have known their whole lives. They're connected, they're creating, they're discussing, they're collaborating."

He and others say working online also pushes education beyond the confines of school, allowing kids to broaden discussion of their work. And it forces them to do "authentic" work that gets tested out in the real world, as outside viewers see it and respond to it.

Challenging a new generation

"Being literate in 2011 means being digitally literate," says Chris Lehmann, principal of Science Leadership Academy, a public high school in Philadelphia that has been using social media since it opened in 2006.

Sheninger and others also say it is naïve to think that kids raised online will respond to school the same way as previous generations. "Kids are coming to us bored, disconnected, and it's a challenge for us to figure out how to leverage the tools inherent in the real-time Web," he says.

The American Library Association encourages schools and libraries to think twice before keeping kids off social media, saying such prohibition "does not teach safe behavior and leaves youth without the necessary knowledge and skills to protect their privacy or engage in responsible speech." Their policy statement on the topic says that instead of restricting access, librarians and teachers "should educate minors to participate responsibly, ethically and safely."

Federal regulations have long kept most popular social networking sites off-limits, since school districts that receive federal E-rate funds to wire schools to the Internet must block material that's obscene or "harmful to minors." But as more educators discover the virtues of social networking sites, they're using a variety of approaches to get around the rules: Often they ask kids to access the sites at home or on mobile devices; sometimes they tweak in-school Internet filters to allow blocked sites that they find appropriate (the regulations allow schools to make this call). Still others simply look the other way when kids inevitably find a way around the filters.

Karen Cator, the U.S. Department of Education's director of educational technology, says it's important to find a good middle ground.

"The Internet is not going away," she says. "We need to do everything we can to make it safe and really a wonderful place for children."

Providing structure, guidance

Perhaps the biggest objection to widespread use of social sites is the likelihood that kids will encounter irrelevant or even offensive material — a fear that many teachers say is overblown. While the Web can seem like "a sea of pornography and idiots," says James Lerman, the author of several books on educational technology, schools must help students figure out how to navigate it so they "can get to the good stuff" that's applicable to school.

"We as educators need to do a better job of advertising and sharing the meaningful work done with social media," says Matt Levinson of Marin Country Day School in Corte Madera, Calif. He writes about the struggles schools face using social media in his 2010 book, From Fear to Facebook. "If you keep it out, kids are creating their own cultures in this space with no guidance from adults — and that's not responsible."

The other big misconception: that schools with open Web access are simply letting kids "play freely as if there's no structure," says Lisa Highfill, a 5th-grade teacher in Pleasanton, Calif. A longtime devotee of YouTube — she used it recently to show her Oakland-area students videos of tornadoes and mudslides — Highfill says she chooses videos in advance.

"I don't just search in front of the kids," says Highfill, who also uses a YouTube add-on that strips "related videos" off the right-hand side of the page.

She admits that even with careful planning, learning online carries risks. But the risks shouldn't be overstated. "When we go on a field trip, when we go anywhere," she says, "we warn (students) of the dangers of where we're going."

How to: Use Google+ for your job search

USA Today
by Erica Swallow, Mashable
July 25, 2011

Google+ hit 20 million unique visitors this week, and the company launched a mobile app. The stats are impressive, but the new social network has room to grow in catching up with its massive competitors Twitter and Facebook.

Early adopters of Google+ are captivated by the network's growth, as many tech elites — including Mark Zuckerberg, Robert Scoble and Kevin Rose — have amassed large followings in just weeks.

Google+ hasn't hit a mainstream audience yet, but it does seem to be romancing the tech geeks with strong force. Yes, I'm talking about you, fellow Mashable readers. Early adopters, social influencers, tech innovators, digital natives — call yourselves what you will. The bottom line is, you understand the value of digital tools and how they can connect you to people and ideas all over the world.

With so many influential techies flocking to Google+, it's a great place to showcase expertise and learn from others. Here are some tips for using Google+ for your job search.

Announce your availability

Once your profile is completely filled out, and you've begun growing and interacting with your network, don't be shy about letting your contacts know you're on the prowl for work.

This could be as subtle as mentioning it in the "About" section of your Google+ profile, or as public as posting an update to announce that you're looking for new challenges on the career front. If you choose the latter, be original with your post and how you frame it. Try not to sound hopeless — make sure you are confidently communicating your unique skill set and the value you can add to a project or company.

Organize contacts with circles

The key to a fulfilling Google+ experience is Circles, the heart of this social network's organization system. Circles give users control over who sees their content. To connect with another user on Google+, you must add him or her to a Circle, such as "Friends," "Family," "Work" or "Softball Team." Users can create as many Circles as they'd like, though we'd recommend limiting them to a manageable number — having too many can dilute the experience.

For the purposes of seeking a job, it's important to denote which Circles you want to see your messages when you post. If you're posting about your job search, it makes sense to include your industry contacts — which you might put into "Social Media" or "Tech" Circles, for example — but that same post might not be as relevant to your "Friends" or "Family," where a more personal post may be more appropriate.

On the flip side, make sure you're not sharing unprofessional content with your business network. As usual, just use common sense when dealing with privacy and sharing settings.

Host a relevant hangout

John Havens, formerly of Porter Novelli, plans to enhance his job search with Hangouts, Google+'s group video-chat service. Instead of focusing his chat on getting a job, Havens plans on inviting a number of influential contacts to discuss relevant topics, such as the state of social media and virtual currency. He says he'll let participants know that he has been "digitally downsized," and that he's open to discussing new positions afterwards, but that his Hangout will focus on generating intelligent conversation.

"Essentially, I'm trying to think of the best ways to show potential employers that by running a campaign to get myself hired, I'm showing them how I'd bring value to their organizations," Havens says.

Share and follow relevant expertise

In order to be seen as an industry expert, you need to showcase that you know what you're talking about. Tech enthusiasts tend to use Twitter and blogging for this purpose, but Google+ is quickly becoming another outlet for sharing and discovering tastemaker opinions and interesting content.

If you're not a natural at finding and sharing content that connections in your Circles may find valuable, check out Sparks, the product's content recommendation engine. You can define topics you're interested in — or that you want to learn more about — and it will bring up content the algorithm believes you'll find useful. You can add your favorite sparks to the left-hand navigation for easy perusal when you're on your Google+ homepage.

Choosing the right mix of sparks to read each day may lead to you becoming more informed about news and conversation in your industry.

Web restrictions draw ire of some educators

USA Today
by Greg Toppo
July 25, 2011

Book banning has long been a controversial issue in the nation's schools. Now some educators say banned websites pose as great a threat to kids' education and intellectual freedom.

Filtering software and school rules designed to keep out violence and pornography are also blocking key educational and otherwise useful sites, teachers say, including Facebook, Twitter and YouTube — not to mention Google and National Geographic.

The Pinellas County (Fla.) School Board in June voted unanimously to block teachers from communicating with students via Facebook or Twitter, even about school-related matters. The school board said it hopes to prevent the appearance of inappropriate contact between students and teachers via social media.

This fall, a handful of schools and libraries across the USA plan to celebrate Banned Sites Day to draw attention to the issue, according to New Canaan (Conn.) High School librarian Michelle Luhtala. The day was her idea. She says the same issues of censorship, fear and free speech that make banned books resonate also apply to social-networking sites that most public schools block.

"Teaching with social media shows students how to responsibly use those platforms," Luhtala says. "Blocking access in schools denies kids the chance to practice sharing their knowledge with the real world in a supervised setting."

Many schools use "brute force" tools that block good educational sites, says Karen Cator, the U.S. Department of Education's director of educational technology. Cator says she has urged schools to use more sophisticated, updated software and to educate themselves on the actual filtering rules, which are less restrictive than many educators believe.

"The Internet is not going away," she says.

Along with social networking, many schools block teachers' personal e-mail and seemingly harmless sites. In a survey for the education website MindShift, Editor Tina Barseghian found that teachers at some schools couldn't access National Geographic or Flickr, as well as the video- conferencing site Skype.

Google Bows to Web Rivals

Wall Street Journal
by AMIR EFRATI
July 23, 2011

Google Inc. has made changes to the way its search engine displays information about local businesses, a move that follows the disclosure of a U.S. antitrust investigation of its business practices.

The company said it removed snippets of customer reviews that were taken from other Web firms for its Google "Places" service, which has millions of pages for local businesses. Google's practices have drawn fire from some of those Web companies, and is believed to be among the issues the Federal Trade Commission is investigating.

Since last year, TripAdvisor, Yelp and Citysearch—sites with local-business reviews generated by their visitors—have complained Google effectively stole their content and posted it on Google's own pages. Google Places competes with those sites and provides information on millions of restaurants, hotels and other businesses, including store hours, location and photos.

Following Thursday's change, Google Places showed a marked decline in the number of reviews listed for some businesses. For example, Keens Steakhouse in New York displayed 60 reviews Friday, compared with more than 3,000 last month.

While some rivals welcomed the change, they continued to support the antitrust investigation into Google and complained the company still gives preferential placement to Google Places over links to their sites in search results.

Stephen Kaufer, TripAdvisor's chief executive, said in an interview Friday he will "continue to object to" Google's promotion of Places pages above TripAdvisor and other competitors.

Mr. Kaufer said he has responded to requests for information from the FTC that included questions about the service. He said the agency also asked questions about Google's search-advertising business as well as how Google is "leveraging its dominance as a search engine" to promote other Google services. He didn't elaborate.

Vince Sollitto, a Yelp spokesman, said Google had essentially been building its business on the back of others' efforts. "It's too bad it took an antitrust investigation for them to do something people have been clamoring for for more than a year," he said.

Google, which hasn't been accused of wrongdoing by the FTC, has denied anticompetitive practices while stating that it creates services to benefit users rather than other websites. Copyright lawyers have said Google's use of reviews from other sites could potentially be protected under the so-called fair-use doctrine, which Google has cited as a reason it can excerpt news articles in its Google News service.

Earlier this year, a Google product management director said in an interview that Places helps users reach sites such as Yelp and TripAdvisor because each excerpt includes a link to the source of the content. Google wants to "shuttle you to the best sources as quickly as possible," he said.

In its blog post Thursday explaining the changes to Places, Google doesn't mention the FTC investigation, which the company disclosed last month. A Google spokeswoman declined to comment on Friday.

"Based on careful thought about the future direction of Place pages, and feedback we've heard over the past few months, review snippets from other web sources have now been removed from Place pages," wrote Avni Shah, director of product management, in the post.

The company launched Places in April 2010 as an improvement to the prior business listings displayed by its search engine. Besides posting excerpts of reviews from other sites, the service aggregated multiple reviews from Yelp, TripAdvisor and other sites to produce a kind of average review score for individual businesses.

Over the past year, however, Google has been able to get more of its own users to write reviews. Ms. Shah said the service will be changed so that "rating and review counts reflect only those that've been written by fellow Google users."

Google sells some ads on individual Place pages, which creates a connection between the company and merchants around the world.

Links to the pages often appear near the top of the search results page when people search for information on local businesses, in part because they aren't subject to the same Google algorithm that ranks other websites in search results.

Google Places links often are ranked above links to Yelp, TripAdvisor and UrbanSpoon and Citysearch, which are owned by IAC.

Since last year those sites have called on Google to stop posting excerpts of their user-generated reviews and to stop directing Google users to Places rather than their sites. Part of the FTC's antitrust probe of Google involves such complaints by Google's competitors, people familiar with the matter have said.

TripAdvisor's Mr. Kaufer said Google's move Thursday "is a positive sign, but I'd love for them to come out with a statement that 'we promise not to do it again."' He said Google was "stealing our content to create a competitor to TripAdvisor" and other local-business information sites.

Mr. Sollitto, of Yelp, said the alleged preferential ranking that Google gives to its own services, such as Places, continue to "warrant the numerous investigation into Google's practices."

Oracle's $6.1 Billion Google Damage Estimate Excluded by Judge

Bloomberg News
by Karen Gullo
July 23, 2011

July 23, 2011 -- Oracle Corp.’s $6.1 billion damage estimate in its patent infringement lawsuit against Google Inc. over the use of Java technology in the Android operating system was thrown out by a federal judge.

U.S. District Judge William Alsup in San Francisco ruled yesterday that a new damage estimate should start as low as $100 million, a figure Google was offered, and rejected, in 2006 to license Java from Sun Microsystems Inc., before Sun was acquired by Oracle, according to a court filing. The $6.1 billion estimate assumed that all of the seven patents Oracle is suing over were used in Android and the company didn’t present sufficient facts to support that, Alsup said.

“The court is strongly of the view that the hypothetical negotiation should take that $100 million offer as the starting point,” Alsup said in his written ruling.

Oracle, the largest maker of database software, sued the Internet search-engine company last year, claiming Google didn’t obtain a license for the patents infringed by Android. Besides seeking damages, Oracle wants the court to order destruction of all products that violate its copyrights.

A trial is scheduled for Oct. 31. Deborah Hellinger, an Oracle spokeswoman, and Aaron Zamost, a Google spokesman, declined to comment on the ruling.

‘A Substantial Possibility’

Alsup said that if a jury determines that Oracle’s patents were infringed, there is “a substantial possibility” Google will be ordered to permanently stop selling any infringing products. A new damage estimate should address assumptions that an injunction may be granted and can be based on a portion of Google’s advertising revenue garnered from Android devices, he said.

The $100 million “starting point” can be adjusted upward to assume that all parts of the patents that Oracle cited in its complaint are valid and infringed, Alsup ruled.

Oracle’s new damage report is due 35 days before an Oct. 17 pretrial conference, Alsup said.

Google, based in Mountain View, California, denies infringing and asked Alsup at a July 21 hearing to throw out Redwood City, California-based Oracle’s damage estimate.

The case is Oracle America Inc. v. Google Inc., 10-03561, U.S. District Court, Northern District of California (San Francisco).

Pandora CEO Says Mobile Use Exceeding Demand for Advertising

Bloomberg News
July 22, 2011

Pandora Media Inc. Chief Executive Officer Joe Kennedy said the streaming-radio service isn't finding enough advertisers to buy all the space created by mobile-phone users, underscoring concerns about its ability to convert popularity into revenue.

"The sheer level of aggregate advertiser demand for mobile is limited," said Kennedy, 51. "Pandora is one of the top five players in mobile, so we generate a lot of inventory and are ahead on where aggregate demand is for mobile advertising."

The online-radio company, which held its initial public offering last month, is getting most of its growth from users of mobile devices, such as smartphones and tablet computers. Sixty percent of Pandora listening comes from the mobile market, up from just 12 percent two years ago, according to the company.

Pandora isn't profitable, with losses of $92 million since 2000, the Oakland, California-based company said earlier this year. Pandora's costs continue to grow because of higher licensing fees for the rights to music. Increasing mobile ad sales will be needed to help offset those expenses, said Rich Tullo, an analyst at Albert Fried & Co. in New York.

"They're in a tight spot right now," said Tullo, who recommends selling Pandora shares. "If your content costs are going to accelerate, then the management and monetization of your ad inventory is mission-critical in becoming a profitable company."

IPO Rebound

When Pandora's stock made its June 15 debut on the New York Stock Exchange, it joined a wave of Internet businesses going public this year. Pandora's shares fell 55 cents, or 2.9 percent, to $18.21 at 10 a.m. on the New York Stock Exchange, and earlier dropped as much as 4.9 percent to $17.85. Before today, the stock had climbed 17 percent since the IPO.

Pandora generated $119.3 million last year from advertising, or 87 percent of its sales, and another $18.4 million from subscriptions to an ad-free version of the service and other revenue sources.

Brands such as Anheuser-Busch InBev NV's Budweiser, Yum Brands Inc.'s Taco Bell and A&E Television Networks LLC's History Channel have run ads targeting Pandora's mobile users. In all, marketers will spend $2.55 billion on mobile ads in 2014, according to New York-based research firm EMarketer Inc. That's more than double the $1.1 billion in spending this year.

In the long run, Pandora stands to gain from advertiser interest in mobile, said James Boyle, an analyst at Gilford Securities Inc. in New York.

Gradual Shift?

"As advertising demand on the Internet keeps surging and the logical ad demand for the explosive mobile-device universe also dramatically increases, the supply-demand equation should consequently shift, long term in Pandora's favor," Boyle said in an e-mail. He has a "hold" rating on shares of Pandora.

While Pandora already competes with Sirius XM Radio Inc., a subscription-based satellite-radio service, it may face a bigger challenge from Apple Inc. and other established technology companies, which are investing in their own online-music offerings.

Startups such as San Diego-based Slacker Inc. and San Francisco-based Rdio Inc. also offer music through the Internet. CBS Corp.'s Last.fm competes in the market as well.

Much of the growth from mobile advertising will come from small businesses looking to reach prospective customers when they're nearby, said Rich Greenfield, an analyst at BTIG LLC in New York. Pandora has more experience selling ads to bigger brands and may not be equipped to reach those smaller, local businesses, he said.

"They don't have a sales force to sell local ads the way your local radio station does," said Greenfield, who recommends selling the stock. "We think it's one of the biggest problems of the story."