Microsoft’s Facebook stake influenced ConnectU case

Interesting article concerning Facebook and Connect U by Greg Sandoval:

SAN JOSE, Calif.–What is Facebook really worth?

One of the burning questions in the technology business during the past year also played a major role in the dispute between social networks ConnectU and Facebook, according to documents obtained by CNET News.com.

Some interesting details about Facebook’s valuation were revealed in partially redacted court records released Wednesday by federal district judge James Ware. The documents were a transcript of a June 23 hearing in the case, which Ware had closed to the public. The judge released the redacted transcripts after CNET Networks, parent company of News.com, objected to the closing and launched an effort to have relevant documents unsealed.

ConnectU, founded by brother Cameron and Tyler Winklevoss and Divya Narendra, filed suit against Facebook founder Mark Zuckerberg in 2004 and accused him of stealing their business plan. The two sides reached a settlement, but ConnectU’s side tried to pull out of the deal after alleging that Facebook fraudulently misrepresented the value of its stock. Ware disagreed and last week ordered that the settlement be enforced. That means Facebook is nearing the end of the ConnectU case.

But what the transcripts show was just how much Microsoft inadvertently influenced the proceedings.

Last fall, Microsoft paid $240 million to acquire a 1.6 percent share of Facebook. The day that news of the deal broke, headlines screamed that Facebook was worth $15 billion based on Microsoft’s investment.

Analysts said all along that the money Microsoft paid was more a reflection of the company’s need to strengthen ties to Facebook than what Microsoft thought the company was really worth. Judging from the transcripts, the Microsoft money may have gotten ConnectU’s founders seeing dollar signs. But it shouldn’t have, according to statements made during the June 23 hearing by Facebook attorney Neel Chatterjee.

The value of Facebook shares
As part of the settlement, Facebook agreed to give ConnectU’s four principals–Narendra, the brothers Winklevoss, and their father, Howard Winklevoss, who had invested in ConnectU–an undisclosed amount of cash and Facebook stock. In exchange, ConnectU’s principals agreed to give Facebook all the stock they held in ConnectU. The settlement was essentially an acquisition.

In a statement to the court, a small portion of which was redacted, it’s obvious that Chatterjee wanted to make clear that Microsoft’s investment in Facebook had little in common with ConnectU’s deal. The transcript indicates that ConnectU received common stock while Microsoft received preferred stock.

“ConnectU didn’t get that and they knew they weren’t getting that,” Chatterjee said. “What Microsoft got out of the deal…are fundamentally different than what ConnectU is getting, or the principals of ConnectU, which was subject to the fair-market valuation.”

Chatterjee pointed out that Facebook provided ConnectU with fair-market valuations it obtained when it considered using stock for other partnerships. But he also noted that if ConnectU wanted to know what Facebook was worth it could have obtained its own “independent appraisal,” which it did not do before agreeing the the settlement.

Getting an accurate Facebook valuation was not why ConnectU had sought to challenge the settlement, said the company’s attorney, David Barrett. ConnectU argued that the settlement was unenforceable for several reasons, the first being that Facebook withheld vital information.

“The point is that (Facebook’s) duty is to disclose all material information,” Barrett said, noting that Facebook is a privately held company but comes under security laws when selling shares. “If they decide to engage in a private trade of their stock, they do have to disclose material information.”

Specifically, Barrett said that Facebook’s board of directors obtained an evaluation of their company’s worth following the Microsoft sale but before the settlement was reached. ConnectU claimed that Facebook never handed over that valuation. The transcript of the hearing didn’t reveal the amount of Facebook’s valuation.

Chatterjee, Facebook’s attorney, told the court he suspected that the reason ConnectU’s founders had changed their mind about the settlement was because of a dispute with the company’s former law firm, Quinn Emanuel. The reality of legal fees “was affecting the economics in some way they don’t like,” Chatterjee said.

Lawyers from Quinn Emanuel have filed a lien against ConnectU’s settlement money, and appeared before Ware on Wednesday to request that he not release any of the company’s funds until they got paid.

 

Microsoft’s never-ending battle to obtain Yahoo

Humorous article by Larry Dignan on Microsoft’s constant pursuit of Yahoo:

Microsoft still has the hots for Yahoo and now wants to enlist partners to win the target’s search business. Yes, folks the Microhoo saga continues and boy are these two crazy kids awkward.

According to The Wall Street Journal, Microsoft is still trying to airlift the search business out of Yahoo and is enlisting Time Warner and News Corp. to make a run at Yahoo. The general idea is to break up Yahoo and pair non-search assets with MySpace or AOL. But the real meat of the story is the narrative behind Microsoft’s courtship of Yahoo and how executives from these companies just couldn’t get it right. Microsoft is hell-bent on buying Yahoo. Yahoo balks. Microsoft gets cold feet. Yahoo CEO Jerry Yang’s face hangs when Microsoft walks. Then this awkward pair hooks up later to no avail. These two companies are flighty when it comes to deal making.

It’s like an episode of Beauty and the Geek (partial cast right). Good luck figuring out whether Microsoft chief Steve Ballmer or Yang is the beauty.

In any case there are more than a few morsels to ponder in the Journal story, which if I were to guess was mostly told from Yahoo’s side of the fence. After all, Yahoo made its case to shareholders on Monday and rolled out a timeline of events designed to show that Microsoft was the flighty party. Yahoo has been on a PR offensive about the Microsoft deal–a move that comes as the Washington Post reports that the Department of Justice is sniffing around the company’s search advertising deal with Google. Both parties are telling selective versions of the story.

Fiji not happy with Microsoft’s ‘Fiji’

Interesting that Fiji is not happy to hear that there was a Windows version called Fiji.  This is a great story that both Ina Fried and Mary Jo Foley both cited:

Microsoft is used to having governments get upset over its products. But usually it’s not the name they are complaining about.

ZDNet blogger Mary Jo Foley spotted a local story from Fiji saying the island nation’s government was unhappy to learn there was a version of Windows called Fiji. Microsoft reportedly sent a letter to the government stating that Fiji was just the code name for the product.

Foley rightly zeroes in on the more important issue–in trying to pacify the Fijians, Microsoft reportedly said more than it ever has about the product, which is a near-term update to Windows Media Center.

The Fiji paper says that Windows Client Business Group manager Ben Green said that Fiji was a product “designed to add new television standards support, enhance the user interface and set-up experience, and add interactive TV features to Windows Media (Center).”

It was one of several great stories Monday from ZDNet blogger Mary Jo Foley, who also had the scoop on J Allard being named a chief technology officer at Microsoft as well as the “chief experience officer” for the company’s entertainment and devices unit.

Microsoft adds licensing option for businesses

Interesting article by Ina Fried on Microsoft’s addition of a new licensing option that is for midsize businesses:

Microsoft said Monday that it is adding a new licensing option, this one dubbed Select Plus and targeted largely at midsize firms.

The program’s two main attractions are the fact that it is not tied to a specific term and it makes it easier for different subsidiaries of a company to take advantage of their combined purchasing power.

The additional option runs counter to the trend at Microsoft, which has been working to scale back the number of different licensing plans. The company had managed to shrink its number of options–from 107 programs in 2006 to 23 as of last year. With Select Plus, the number of Microsoft licensing programs has crept back up to 26.

Although it adds yet another option, Joe Matz, corporate vice president at Microsoft, said that Select Plus fills a need.

“Many customers end up with multiple agreements because Select is not as flexible as customers would like,” he said. Microsoft isn’t getting rid of Select, but expects that over time, customers will choose the new option.

The software maker has come under criticism from some customers and analysts for both the cost and the complexity of its licensing programs.

In a recent report, Forrester advised its clients to plan months ahead to figure out which Microsoft licensing option made the most financial sense. The analysis firm also said that Microsoft’s Software Assurance support program is more expensive compared with rivals.

“Microsoft’s software maintenance agreement is among the industry’s most expensive–25 percent for server products and 29 percent for desktop products,” Forrester said in the report. “In terms of upgrade rights–the major element–this is only cost-justified by a three- to four-year upgrade cycle, but Microsoft has undermined Software Assurance’s value proposition by missing delivery dates for new versions.”

Why is Microsoft sponsoring the Open Source Census?

Good article by Mary Jo Foley on Open Source Census:

The Open Source Census, a collaborative project endeavoring to quantify the use of open-source software in enterprises, got a new sponsor on June 16: Microsoft.

(Other sponsors of the Census include ActiveState, CollabNet, EnterpriseDB, IDC, OpenLogic and Unisys, among others.)

Whether you are in the camp that believes a contingent inside Microsoft is attempting to get the company to turn over a new leaf about open-source software, or you remain a skeptic, believing Microsoft is trying to embrace and extinguish the open-source flame (or are somewhere in between), the first question that comes to mind is why Microsoft is joining the census.

The official Microsoft sound bite, courtesy of Sam Ramji, head of Microsoft’s open-source and Linux team:

“Our customers, partners and developers are working in increasingly heterogeneous environments, and our participation in industry projects like The Open Source Census are relevant for the ecosystem in which we participate.”

The Census does not require users to identify themselves or their companies with real names. According to the Frequently Asked Questions (FAQ) document on the Census site, “we currently do not track IP addresses.” (The word “currently“might be a tad alarming for those who prefer some semblance of privacy.)

Instead, the Census allows users to collect information on open source usage by running an open-source tool from OpenLogic, OSS Discovery, on machines in their organization. According to the Open Source Census site:

“For each machine scanned, a scan report will be produced, containing a list of open source software packages and versions found. Companies can review these scan reports before deciding whether to contribute them to The Open Source Census….

“The Open Source Census website provides Census reports that show the prevalence of each open source package. Registered participants can see their own open source inventory and benchmark themselves against others with similar demographics. This data enables companies to determine how to support the open source software they are using, ensure they comply with open source licenses, and identify where they are behind or ahead of the adoption curve.”

Back to the original question. I’d assume sponsors of the Census would get more detailed reports than the average participant. When the Census was launched last year, this was a bone of contention among some in the open-source community.

And note the mention of license compliance here — a hot button for Microsoft, the company which has alleged that open-source software violates more than 200 of Microsoft’s patents. The Census discovery tool doesn’t search for open-source software on Linux boxes only; it also scans for open-source installed specifically on Windows machines.

Microsoft officials are emphasizing that Microsoft wants to know about open-source adoption levels and trends because the company is interested in helping its customers’ Windows systems better interoperate with open-source systems. I’m sure that Microsoft also wants a better understanding of where/how open-source software is gaining traction in enterprises in order to better fight it.

What’s your take? What does Microsoft stand to gain from backing the Open Source Census?

Microsoft buys Navic Networks, a TV ad service

Interesting article by Ina Fried on Microsoft buying Navic Networks.  This should give Microsoft a large hand in the communication medium where advertisers spend the most:

 

Microsoft said late Tuesday that it has bought Navic Networks, a company that helps television advertisers manage their ad campaigns.

The move will gives Microsoft a broader reach into the spot where advertisers spend the most.

“Television media represents the largest percentage of advertisers and agencies’ media budget today,” Microsoft Senior Vice President Brian McAndrews said in a statement. “Together, Navic and Microsoft will deliver addressable television advertising solutions to help our partners better manage media spend by increasing advertiser reach and ROI, and maximizing publisher yield on television advertising.”

The move comes just six days after the company failed to reach an accord with Yahoo, leading the Internet giant to strike an ad deal with Google instead.

Based in Waltham, Mass., Navic has raised $43 million in three rounds of funding, according to its Web site. Investors include: Pilot House Associates, Highland Capital Partners, Himalaya Capital Ventures, and Pequot Ventures.

Register for the June webcast of Tech Time With Tom

Dear resellers, it’s that time again. (Time for some tech chat with the one and only Tom Jones!)

June is planning to be a huge month with not only SYNNEX but for Microsoft as well.  It is the end of Microsoft’s fiscal year and sales for all product lines will be pushed through the channel.  To help with the questions and deals that will be brought to you, I will be delivering  webinars this month around some of the hottest Microsoft moving lines. 

Please sign up for the below webinar and see what SYNNEX and Microsoft can do for your sales revenue in June. 

Topic: Office Enterprise

Date: June 18

Time: 2:00pm EST

Register: https://synnex.ilinc.com/register/cxczkv

 

Please call or send any questions you have around Microsoft products to me at the below.

Tom Jones
Systems Configuration Engineer
Synnex Corp.
800-756-2888
tomj@synnex.com
MCSE
MCP+I
CCA
Lotus Notes Domino CAS
IBM Blade Center Specialist

Just two more weeks before Windows XP goes bye-bye.

Just in case you guys were living under a rock and missed the reminders, here’s another one: Microsoft XP stops shipping on June 30. (Yep, that’s just two weeks away.) Don’t worry though, this is actually a good thing.

What this means (from CNet):

As of June 30, large PC makers will no longer be able to sell Windows XP-based PCs, at least on mainstream notebooks and desktops. Retailers will also have only until their current supply is exhausted to sell boxed copies of the operating system.

Despite a brief “Save XP” movement (and continued criticism of Windows Vista from many corners), it appears that Microsoft is not going to change the deadline, which is now just two weeks away.

Although XP will disappear as an option for most computer buyers, the operating system will live on in several key ways.

• XP will be available on PCs from smaller computer makers known as “system builders” until January 31, 2009.

• XP will be available for so-called ultra-low-cost-PCs until June 30, 2010.

• The low-end Windows XP Starter Edition will continue to be available in emerging markets until June 30, 2010.

• Windows Vista Ultimate and Windows Vista Business come with downgrade rights. Some computer makers are using this option to offer machines that appear as Windows XP products but are “factory downgraded” to XP. The downside is that only pricier versions of Vista qualify, but the benefit is that the machines come with the option to eventually move to Vista for no added fee. Microsoft says it will continue to make XP discs available to computer makers to enable downgrade rights through at least January 31, 2009.

• No worries, Microsoft is not ending support for Windows XP. Mainstream support continues until 2009, while extended support is not due to end until April 2014.

What this means for PC/laptop vendors:

Hewlett-Packard: “All of HP’s latest consumer and business computing products currently ship with Windows Vista. But we do still offer XP on a select number of our existing consumer notebook, gaming, and business products. This will continue through the XP end-of-life date on June 30, 2008.

“HP has been offering business desktops, notebooks, and workstations with the option to downgrade to Windows XP Pro from Vista since August 2007, and will continue to offer this option on its business systems through at least July 30, 2009. These systems are pre-installed with XP Pro, and the customer receives the Vista license so that they can upgrade to the new OS when they are ready, as well as restore discs for both operating systems. After June 30, if a customer already has the XP image and license, HP also can also install that customer’s image on their Vista Business systems through our HP PC Customization Services.”

Lenovo: “In line with our agreement with Microsoft, Lenovo will not offer any PC’s preloaded with XP after June 30, 2008. Lenovo offers select Vista models that ship with a downgrade XP CD in the box. Microsoft will allow us to continue putting these downgrade CDs in the box until January 31, 2009. However, the majority of PCs we ship don’t have the downgrade CD in the box. If a customer purchases a Vista system and wishes to downgrade and doesn’t have the CD, they can contact our Help Center to get an XP downgrade CD.”

Acer: An Acer representative said that the company plans to stop selling XP June 30. “Acer will offer CD downgrades to XP–based on customers order requests–until the Microsoft deadline, January 31, 2009.”

Dell: Unlike the other three, Dell plans to stop selling standard XP machines via its Web site on Wednesday. “Dell systems with XP as the only OS will no longer be available after June 18 on Dell.com,” the company said. It will offer a downgrade program for a number of its machines, including all OptiPlex desktops, all Latitude laptops, all Precision workstations and most of its Vostro systems for mid-size businesses. Two consumer gaming systems–the XPS 630 and the XPS M1730–are already eligible for the program with a third, the XPS 730, to be added soon.

The downgraded machines will ship with XP installed, plus an XP restore disc with drivers as well as a copy of Vista and its Vista drivers. It said it will keep shipping XP media until the Microsoft mandated end date of January 31, 2009.

If you have any questions, contact your reseller or SYNNEX rep.

“Microsoft: Ask us for driving directions”

Microsoft has decided to launch NavReady 2009 which is specifically designed to power in-car navigation systems.  Ina Fried wrote an interesting article on this new version:

Microsoft wants to take Windows in a new direction.

The software maker announced on Monday its plans for NavReady 2009, a customized version of Windows Embedded that’s specifically designed to power in-car navigation systems. The software is based on Windows CE, the slimmed-down version of Windows that is used for Windows Mobile.

Some GPS makers, such as Mio, already use Windows CE, though Microsoft says it is adding support for several new features with this navigation-specific release. New features include support for Live Search, Bluetooth, and MSN Direct, which allows real-time traffic and gas prices. NavReady 2009 should start showing up in devices starting this holiday season, Microsoft said.

This is not the first time Microsoft has tried to tailor its general-purpose Windows Embedded operating system to the needs of a particular market. Most recently, it created a version for cash registers. But even Windows Mobile itself was an attempt to tailor the generic operating system for a specific market.

The next version of the point-of-sale software, dubbed POSReady, is due out some time next year, Microsoft said Monday.

“Microsoft switches one gaming chief for another”

Great article by Mary Jo Foley on Xbox and Microsoft games switching over to a new leader:

Microsoft has turned responsibilities for first-party Xbox and Microsoft Games for Windows over to a new leader.

The new head of Microsoft Game Studios, according to a June 12 announcement on the Microsoft Web site, is Phil Spencer, the former general manager of Microsoft Game Studios Europe.

Kim, who has led Microsoft Games Studios for the past four and a half years, is being moved into a newly created position: Corporate Vice President of Strategy and Business Development, which will be focused on “future external relationships and partnerships, as well as developing growth strategies for the entire business.”

Spencer and Kim will both report directly to Don Mattrick, the Senior Vice President of Microsoft’s Interactive Entertainment business.

Mattrick has been cleaning house and reorganizing his division since he joined Microsoft’s Interactive Entertainment business last summer. I’d had heard more than once rumors that Kim might be moved as part of the ongoing shuffle.

Update: Missed this piece. Jeff Bell, the corporate vice president in charge of marketing in its Interactive Entertainment Business is leaving the company to pursue unspecified “other opportunities,” some time after the summer ends.

Mattrick replaced Peter Moore, the Corporate Vice President of Microosft’s Interactive Entertainment Business — and the point guy on Xbox and Games for Windows — who left Microsoft to become President of Electronic Arts’ Sports label.