Amidst rumors that Microsoft (MSFT) is making progress on the next version of its Windows operating system, which may be “Windows 8,” but which is being referred to at the moment as “Windows Next,” and which is expected to make changes to accommodate tablet computers, Citigroup’s Walter Pritchard this morning offers some thoughts on what to expect and what it means to Microsoft.

He sees a beta version by September 15th, he’s not sure if the software will have sufficient “eye candy,” and he thinks that it’s not too late for WIndows to become number two in tablet software behind Apple’s (AAPL) iOS.

Regarding the time frame, Pritchard bases his analysis on what seems to be publicly available commentary from the company, as well as his knowledge of Microsoft’s historical pattern of software releases:

Microsoft has announced “that the next version of Windows will support a new kind of hardware, system-on-a-Chip (SoC) architectures, that will power the next generation of devices” at CES 2011. […] We believe the product shown on stage employed working code and suggest to us that the Microsoft is farther along in the Windows “Next” development process than many expect. The company has repeatedly stated that “24-36 months” between releases is the appropriate timeframe to consider for the launch of the next Windows operating system. With Windows 7 having been released in October 2009, a strict mapping of the “24-36 month” timeline would suggest a release as early as October 2011 and as late as October 2012 release.

What’s more, Microsoft still has lots of “goodwill” among developers, so those coders may fall in line. The appeal for Microsoft’s enterprise customers would be stronger than for the consumer market, he thinks.

From a financial perspective, tablet prices are not so much the concern for Microsoft: “Are tablets a good business? Yes, but it all comes down to unit shipments. We don’t believe ASPs are the most important question.”

Pritchard is not sure the next Windows “will be a raving success,” as he puts it, but the stock is so cheap, the expectations so low, it’s worth a bet in his mind: he reiterates a Buy rating and a $35 price target.

Microsoft shares today are up 18 cents, or 0.7%, at $24.85.

Article courtesy of Tech Trader Daily

Barclays Capital hardware analyst Ben Reitzes today opines that PC makers need to rethink their business, because just taking market share or expanding profit margin through better component pricing will not be enough to improve their stock prices.

He’s really talking about Dell (DELL) and Hewlett-Packard (HPQ), which trade at 9 times and 8 times projected EPS, respectively.

What should they do? Reitzes offers some things to consider, without explicitly endorsing anything:

Shift from Intel (INTC) microprocessors to chips based on ARM Holdings (ARMH) designs. Those chips might cut processor cost by a third, which would save $25 per PC, 5% of the total cost of the machine, and would add 55 cents a share to HP’s annual profit and $0.45 to Dell’s profit, roughly 10% and 20%, respectively, of their total annual profit.

Switch from Windows to Chrome. Microsoft’s (MSFT) software is $75 per desktop and notebook, on average, for the vendor, and $50 for the average consumer PC. Switching to Google’s (GOOG) “Chrome” OS would save $45, 10% of the bill of materials. That would add $1 extra in profit per share per year for HP, and add 80 cents to Dell’s annual EPS.

HP has the added option of expanding its Web OS software to the PC from the smartphones and tablets it has announced, something it hinted at back in February.

Although Microsoft said at the Consumer Electronics Show in January that it will bring the next Windows (presumably version to ARM chips, this is more of a rearguard action on Microsoft’s part, Reitzes argues, a step that was only taken after the company had been “blindsided” by “the impact of the iPad, the ascent of [Apple's (AAPL)] iOS, and Android as de-facto mobile device platforms, and the inability of Intel to produce a low-cost, low-energy consuming processor.”

Hence, Windows on ARM faces issues, he thinks, even if it continues to dominate unit shipments: “There would be some question as to pricing and Microsoft’s ability to still command $50 per Windows license if overall costs of hardware were to come down by the savings of moving to an ARM processor.”

And, drum roll please …. “We believe that Apple will be the first in our sector to embrace ARM for some Macs, as early as C2H12,” writes Reitzes, with a nod to speculation last week Apple may ditch Intel chips for ARM chips.

We believe that Apple is already working hard on the software to accomplish this feat within the MacBook Air line-up. Through its own development of ARM-based processors and ARM-based iOS software, this migration would be rather natural for Apple. Apple is already moving toward enhanced battery life and ultra portability with its current MacBook Air line, which uses NAND instead of HDDs.

And since you’re probably wondering, no, there is no mention in the note of Intel’s momentous announcement last week of its “Tri-Gate” process technology, which even some bears on Intel stock think could give it an edge on ARM-based chips. A curious omission, on Reitze’s part, to be sure.

In any event, for a different perspective on Intel and Apple, see Piper Jaffray’s Gus Richard’s note this morning.

Article courtesy of Tech Trader Daily

Mobile payment system Mopay announced today that people charging online merchandise directly to their cell phones or landlines has nearly doubled over the last year in North America, putting local consumers on par with leading regions like Asia that have long been using the method.

The 11-year-old company lets you pay for physical merchandise with your cell phone in online transactions in 28 countries — a process also referred to as carrier billing.

As such, it now handles digital goods purchases for more than 400 customers, reaching 3.3 billion people — including well-known gaming brands like Bigpoint, Gameforge, Innogames, Sulake and Travian.

The Munich-based company said it attributes this rapid, recent adoption in North American users to improved carrier agreements, easier integration, optimized usability and growing general acceptance among consumers.

“Merchants are adapting to a trend where consumers are not using credit cards but phones to make online purchases, with games spearheading the implementations to make virtual goods available to unbanked and underbanked consumers,” Kolja Reiss, managing director of Mopay in the United States, told VentureBeat.

Mopay (which spells its name “mopay”) said it gathered the stats after analyzing specific data from its international mobile payments platform and based their conclusions on conversion rates, transaction values and transaction numbers accumulated in more than 80 countries.

The process works in three-steps: Once a service is selected as a form of payment, the consumer enters their mobile phone number when prompted.  Second, the consumer will receive a special pin number via text message. Third, a user will enter that pin number in the designated field on the website, which will complete the transaction. The purchase is then billed directly to the buyer’s mobile phone account.

The ability to have companies charge a consumer’s phone directly has long been popular in Asia, where phones come equipped with near-field communication (NFC) chips and retailers have scanners that can process the transactions. But now that global consumers are demanding the service, there has been a boom in companies interested in taking a slice of the billions to be made in the space, including American startups such as Boku, Zong and BilltoMobile.

Other findings from Mopay’s study included:

–Regardless of region, adults use mobile payments more deliberately, making the average global conversion rate of adults more than twice as high.

–Mobile payments work best within a value of $2.50 and $10. Global merchants have independently established a “sweet spot” of their mobile payment offers of around $8. Only three percent of all offers ranged below a value of $2.50 and two percent exceeded a value of $14.

–Within this price range, the average transaction value of mobile payments increased in 2010,  mirroring the growing trust of consumers in mobile payments.

–Although mobile payments are broadly considered “micropayments,” consumers regularly spend up to $50 per month using mobile payments.

This fact is apparently due to a high percentage of repeat customers, with the majority of consumers use mobile payments more than once a month — in 2010 almost 60 percent.

Hence, as low as the pricing range may seem, mobile payments regularly generate macro revenue per consumer.

So far, Mopay has raised $20 million to date from investors including T-Venture Mobile, Tempo Capital and Holtzbrinck Ventures, with its last round in 2004.

Photo via Ed Yourdon

This April 25-26, VentureBeat is hosting its inaugural VentureBeat Mobile Summit, where we’ll debate the five key business and policy challenges facing the mobile industry today. Participants will develop concrete, actionable solutions that will shape the future of the mobile industry. The invitation-only event, located at the scenic and relaxing Cavallo Point Resort in Sausalito, Calif., is limited to 180 mobile executives, investors and policymakers.

Tags: carrier billing, mobile payments

Companies: Bigpoint, BilltoMobile, Boku, Gameforge, Holtzbrinck Ventures, InnoGames, Mopay, Sulake, T-Venture Mobile, Tempo Capital, Travian, Zong

People: Kolja Reiss

Article courtesy of VentureBeat » deals

Intel said that its net income for the first quarter was $3.3 billion, up 34 percent from $2.4 billion a year ago. Revenue was $12.9 billion, up 25 percent.

The record results show that a full-blown tech recovery is in high gear despite worries about the state of various regional economies. And it also shows that smartphones and tablets — two markets where Intel doesn’t have huge business — aren’t taking away sales in the core PC market.

Intel is the world’s biggest chip maker and its results are a bellwether for the PC market and the tech economy as a whole.

Earnings per share were 59 cents, compared with 43 cents a share a year earlier. Analysts had expected 46 cents a share on revenue of $11.6 billion.

“The first-quarter revenue was an all-time record for Intel fueled by double digit annual revenue growth in every major product segment and across all geographies,” Intel chief executive Paul Otellini said in a statement. “These outstanding results, combined with our guidance for the second quarter, position us to achieve greater than 20 percent annual revenue growth.”

Intel credited the strength of enterprise server and PC sales for the big improvement. Data center chip revenue was up 32 percent compared to a year ago, while PC client division revenue was up 17 percent. Intel Atom revenue was up 4 percent. Average prices for microprocessors, which are the brains of personal computers, were up compared to the previous quarter.

For the second quarter, Intel projects revenue to be flat at $12.8 billion, plus or minus $500 million. It is also targeting a gross profit margin of 61 percent. For the full year, Intel expects to spend $10.2 billion on capital spending, such as new chip factories. Uncertainties include the situation in post-quake Japan, where a market slowdown could have an effect on Intel’s business.

Intel got a boost of $496 million in revenue during the quarter from its acquisitions of Infineon Wireless and McAfee. Both deals closed during the quarter. Interestingly, even though Intel spent more than $7.6 billion in cash on McAfee, the company still has $11.5 billion in cash after today’s report. That’s what you call a cash-generation machine. Intel also benefited from an extra week in the first quarter, compared to the usual 13 weeks. Intel’s goal is to grow earnings by double digit percentages this year.

Intel’s stock price rose 5 percent in after-hours trading. Intel now has 93,500 employees, compared with 79,900 a year ago.

While the consumer markets were slow in Europe and the U.S. in the first quarter, the enterprise strength and the growth of consumer markets in emerging regions made up for that. Emering markets such as China and Brazil now have more than 2 billion consumers who could buy a PC at a cost of one or two months of income.

Intel also had its best launch ever with the debut of its Sandy Bridge chip, which combined a microprocessor and graphics in the same chip. There was a flaw in the Cougar Point chip set that accompanied Sandy Bridge, but Intel said it recovered from that flaw more quickly than it anticipated.

[picture credit: world2do]

Tags: chips, microprocessors

Companies: Intel

People: Paul Otellini

Article courtesy of VentureBeat » deals

Intel said its net income for the first quarter was $3.3 billion, up 34 percent from $2.4 billion a year ago. Revenue was $12.9 billion, up 25 percent.

The record results show that a full-blown tech recovery is in high gear despite worries about the state of various regional economies. They also show that smartphones and tablets — two markets in which Intel doesn’t have huge business — aren’t taking away sales from the core PC market.

Intel is the world’s biggest chip maker and its results are a bellwether for the PC market and the tech economy as a whole.

Earnings per share were 59 cents, compared with 43 cents a share a year earlier. Analysts had expected 46 cents a share on revenue of $11.6 billion.

“The first-quarter revenue was an all-time record for Intel fueled by double digit annual revenue growth in every major product segment and across all geographies,” Intel chief executive Paul Otellini said in a statement. “These outstanding results, combined with our guidance for the second quarter, position us to achieve greater than 20 percent annual revenue growth.”

Intel credited the strength of enterprise server and PC sales for the big improvement. Data center chip revenue was up 32 percent compared to a year ago, while PC client division revenue was up 17 percent. Intel Atom revenue was up 4 percent. Average prices for microprocessors, which are the brains of personal computers, were up compared to the previous quarter.

For the second quarter, Intel projects revenue to be flat at $12.8 billion, plus or minus $500 million. It is also targeting a gross profit margin of 61 percent. For the full year, Intel expects to spend $10.2 billion on capital spending, such as new chip factories. Uncertainties include the situation in post-quake Japan, where a market slowdown could have an effect on Intel’s business.

Intel got a boost of $496 million in revenue during the quarter from its acquisitions of Infineon Wireless and McAfee. Both deals closed during the quarter. Interestingly, even though Intel spent more than $7.6 billion in cash on McAfee, the company still has $11.5 billion in cash after today’s report. That’s what you call a cash-generation machine. Intel also benefited from an extra week in the first quarter, compared to the usual 13 weeks. Intel’s goal is to grow earnings by double digit percentages this year.

Intel’s stock price rose 5 percent in after-hours trading. Intel now has 93,500 employees, compared with 79,900 a year ago.

While the consumer markets were slow in Europe and the U.S. in the first quarter, the enterprise strength and the growth of consumer markets in emerging regions made up for that. Emerging markets such as China and Brazil now have more than 2 billion consumers who could buy a PC at a cost of one or two months of income.

Intel also had its best launch ever with the debut of its Sandy Bridge chip, which combined a microprocessor and graphics in the same chip. There was a flaw in the Cougar Point chip set that accompanied Sandy Bridge, but Intel said it recovered from that flaw more quickly than it anticipated.

[picture credit: world2do]

Tags: chips, microprocessors

Companies: Intel

People: Paul Otellini

Article courtesy of VentureBeat » deals

nSphere, a company that aggregates online content, has bought mobile location-based deals company Peekaboo Mobile, it announced today. The company plans on leveraging Peekaboo Mobile’s application to provide local search information to its users.

Peekaboo Mobile, which participated in one of VentureBeat editor-in-chief Matt Marshall’s DEMO challenges just weeks after launching, began as an iPhone application that, when launched, would show users local deals around them. Deals were either entered by the company as it signed up local businesses willing to offer a coupon or by other users who might come across an already established deal. The company claims that it has since generated more than 50 million users across its iPhone and Android apps.

One perk from the acquisition is that any local businesses running coupons will now be able to do so for free. All monthly or yearly fees have been waived.

Specifics of the acquisition were not disclosed, but several publications noted it was in the seven figures. The Peekaboo Mobile team, including founder’s Michael Fruzzetti and Ben Dolgoff, will be joining nSphere to manage the company’s mobile initiatives, including several commerce apps that plan to launch in the coming months.

Though founder Ben Dolgoff wouldn’t provide a ton of information on the coming apps, he did say they would would be completely different from the deal app and will be created for different niche categories that will use nSphere’s massive database of information to help deliver an array of information back to the consumer. Dolgoff also noted the company plans on expanding its mobile team to around 15 people, mostly mobile developers.

The Boston-based Peekaboo Mobile, founded in March of 2010, recently secured an angel round of funding for an undisclosed amount from Apricot Capital.

Tags: applications, hyper-local, Local, local deals, location-based deals, mobile

Companies: nSphere, Peekaboo mobile

People: Apricot Capital, Ben Dolgoff, Michael Fruzzetti

Article courtesy of VentureBeat » deals

Today’s funding announcements include chargeable spectacles, Twitter optimization tools and robotic balls:

PixelOptics raises $45M for electronic lenses: The Roanoke, Va.-based company has raised $35M in equity and $10M in debt funding from Safeguard Scientifics and others to develop eyeglasses. The company’s core product, called emPower, has dynamically focusing lenses, allowing the user to turn a reading functionality on when close-up vision is needed.

SocialFlow brings in $7M to determine the best time to tweet: The social media optimization service has raised a first round of funding led by Softbank. A betaworks company, the New York-based startup helps media companies, brands and retailers determine the best topic and time for engaging users on Twitter. The company, which launched in June, has also announced a partnership with Twitter, allowing SocialFlow to incorporate Twitter’s data into its analytics.

Orbotix gets $5M for robotic toy: The maker of Sphero, a robotic ball developed for entertainment, has raised a second round of funding from the Foundry Group and Highway 12 Ventures. A TechStars alum, the Boulder, Colo.-based company debuted the Sphero at the Consumer Electronics Show in January and plans to launch the product next holiday season.

GoldSpot Media raises $12M for mobile ad tool: The developer of a self-serve solution for managing mobile ad campaigns has raised a second round of funding from Exa Ventures and Berg Enterprises. Based in Sunnyvale, Calif., the company lets publishers and advertisers create and track in-app and mobile web campaigns across all smartphones and tablets.

Companies: Berg Enterprises, Betaworks, emPower!, Exa Ventures, Foundry Group, Goldspot Media, Highway 12 Ventures, Orbotix, PixelOptics, Safeguard Scientifics, SocialFlow, Softbank, Sphero, techstars, Twitter

Article courtesy of VentureBeat » deals

Barclays Capital analyst Jeff Kvaal this afternoon reflects on what the implications might be of Cisco Systems’s (CSCO) apparent change of tone, judging by an internal memo from CEO John Chambers on Monday, admitting some problems Cisco needs to address. That memo has lifted Cisco shares today.

Kvaal, who has an Equal Weight rating on Cisco shares, writes that the most dramatic thing the company could do would be to divest its consumer businesses, such as the “Flip” video recorder products. “Our view, however, is that the “targeted moves” would be more moderate, with a de-emphasis on businesses like Consumer and modest opex reductions.”

Kvaal thinks several companies could benefit if Cisco were to “de-emphasize” the cable market (it owns Scientific Atlanta’s set-top business). Potential beneficiaries include Motorola Mobility (MMI), Arris (ARRS), Netgear (NTGR), and Britain’s Pace PLC.

Overall, Chambers’s insistence that “our strategy is sound,” implies to Kvaal that the company will put more emphasis in future on core networking and switching.

“We consider a heightened emphasis on enterprise markets in general, and networking in particular, to be a material positive,” writes Kvaal. “We would hope one element of an emphasis on these markets would be a recognition that Cisco’s push for growth has overextended the company and that it would lower its long-term growth target of 12%-17%.”

Cisco shares closed up 85 cents, almost 5%, at $18.07.

Article courtesy of Tech Trader Daily

Rajaratnam’s Wiretapped Call With Brother Bolsters Insider Case (Bloomberg)
And in testimony earlier this week, Goel said that Rajaratnam told him in 2003 that Rajaratnam had given BMW cars to two women in Intel’s sales department who leaked information to him. Lynam asked Goel if he thought Rajaratnam was joking. “I don’t think that was a joke, sir,” he responded. Wasn’t Rajaratnam kidding when he told Goel in a wiretapped conversation that he would kiss Goel on the cheek the next time he saw him? Lynam later asked. “I hope he was,” said Goel, to laughter in the courtroom. “If not, I had him figured out all wrong.”

Economy Grows 3.1%, Aided By Surge in Corporate Profits (Reuters)
Gross domestic product growth was revised up to an annualized rate of 3.1 percent, the Commerce Department said in its final estimate, close to its initial estimate of 3.2 percent published two months ago and up from its tally of 2.8 percent made in February.

Barclays Said to Be Investigated by Regulators in Libor Probe (Bloomberg)
U.S. and U.K. regulators are examining if communications between Barclays’s traders and its treasury broke regulations that stop information being shared across the bank.

S&P Warns Big Banks About ‘Excessive’ Dividends (NYT)
The credit rating agency said in a report that it “remains wary of banks aggressively increasing capital returns to shareholders at this juncture of the economic recovery.” S.&.P. indicated it might downgrade credit ratings at banks that made “excessive” payouts to investors.

Goldman Slides to 10th Spot in US M&A Rankings (Reuters)
Goldman advised on $71 billion worth of U.S. deals in the first quarter, far less than JPMorgan’s chart-topping $170 billion, and even lower than much smaller banks such as Rothschild, Evercore Partners and Lazard.

China-Focused Hedge Fund Assets Rise Despite Laggard Performance (DJ)
China funds added $3.5 billion in assets in 2010 to a total $18.68 billion, even as their 6.11% gains were short of the global industry average of 10.55%.

Warren Says Consumer Bureau Foes Should Look at Bank ‘Behemoths’ (Bloomberg)
“If we’re going to go out there and spill ink on accountability, we should also ask about how to hold powerful financial institutions accountable,” Warren said yesterday in an interview with Bloomberg News. “The idea that we should be worried that some agency that will speak up for consumers might get a little too loud is looking in the wrong direction.”

Bernanke To Hold Press Conferences 4 Times A Year (WSJ)
“The introduction of regular press briefings is intended to further enhance the clarity and timeliness of the Federal Reserve’s monetary policy communication,” the Fed said.

Spain’s Bank Rescue Hits Headwinds (WSJ)
Eight of Spain’s cajas must present their capital-raising plans to regulators by April 10. That has caused a flurry of activity in recent weeks as savings banks sounded out hedge funds and private-equity funds and others pursued initial public offerings. But the exercise has stirred questions from investors about the level of reserves that the banks hold against real-estate risk in their portfolios. The banks also have faced questions over whether their executives have distanced themselves sufficiently from local politics; in some cases, they have even been quizzed about managements’ own understanding of what is on their books. In general, “people don’t understand what they are buying,” said a Spanish banker who has tried to get investors interested in the cajas.

Reactor Core May Be Breached at Damaged Fukushima Plant (Bloomberg)
“It’s very possible that there has been some kind of leak at the No. 3 reactor,” Hidehiko Nishiyama, a spokesman at the Japan Nuclear and Industrial Safety Agency, said in Tokyo today. While radioactive water at the unit most likely escaped from the reactor core, it also could have originated from spent fuel pools stored atop the reactor, he said.

Fed Mulls Auction For AIG Bonds (WSJ)
The Federal Reserve is considering an auction for a large portfolio of subprime-mortgage bonds and is consulting with BlackRock Inc. about the process, according to people familiar with the matter.

Article courtesy of Dealbreaker

Bloomberg’s Cliff Edwards and Adam Satariano write this afternoon that Apple (AAPL) is considering licensing its software to consumer electronics makers to allow video to be streamed from an iPhone or iPad over a local area network to television sets and other devices, citing two anonymous sources.

Apple’s AirPlay allows the audio feed of content played on its “i” devices to be sent to a home speaker, and video and audio can also be played back through the $99 AppleTV device that the company sells.

Edwards and Sataranio cite an executive with Pioneer who remarks that ‘‘Apple connectivity in AirPlay is a blessing for an industry trying to move the needle forward on sales,” referring to the consumer electronics industry.

Previously: Apple Spending On ‘Massive’ Compute Capability, Says Bernstein, March 22nd, 2011.

Article courtesy of Tech Trader Daily