Showing posts with label Technology. Show all posts
Showing posts with label Technology. Show all posts

Judge cuts Apple award versus Samsung, sets new damages trial


(Reuters) - Apple Inc had a major setback in its mobile patents battle with Samsung Electronics on Friday, as a federal judge slashed a $1.05 billion jury award by more than 40 percent and set a new trial to determine damages.


Apple won the award last year against Samsung in what was the biggest and highest-profile of a number of legal trials around the world, centered on the use and alleged abuse of patents in a highly competitive mobile market.


The iPhone maker convinced the jury that the Korean company, which in 2012 overtook Apple as the global smartphone leader, had infringed on its iPhone and iPad patents.


"We are pleased that the court decided to strike $450,514,650 from the jury's award," the Korean company said in a statement. "Samsung intends to seek further review as to the remaining award."


Apple declined to comment.


Friday's ruling by Judge Lucy Koh of the U.S. District Court Northern District of California in San Jose means the two mobile electronics companies may once again square off in a California court to decide how much of the $450.5 million struck from the damages, associated with 14 Samsung products, should stand.


Koh said the jury had incorrectly calculated part of the damages and that a new trial was needed to determine the actual, final dollar amount. That could end up less than or more than the original $450.5 million set by the jury.


Koh, rejecting Apple's motion for an increase in the jury's damages award, ordered a new trial on damages for the 14 devices, which include the Galaxy SII. The jury's award to Apple for 14 other separate products, totaling almost $599 million, was maintained.


"The court has identified an impermissible legal theory on which the jury based its award and cannot reasonably calculate the amount of excess while effectuating the intent of the jury," Koh said in her ruling.


Apple and Samsung account for one in two mobile phones sold. They also rely on each other for components and business.


Their legal tussle has been viewed as a proxy war between Apple and Google Inc as Samsung's flagship Galaxy smartphones and tablets run on Google's Android operating system.


Shares in Apple closed down 2.5 percent at $430.47 on Nasdaq.


(Reporting by Ben Berkowitz; Editing by Gary Hill and Richard Chang)



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Judge cuts Apple award versus Samsung, sets new damages trial


(Reuters) - Apple Inc had a major setback in its ongoing mobile patents battle with Samsung Electronics on Friday, as a federal judge slashed a $1.05 billion jury award by more than 40 percent and set a new trial to determine damages.


Apple won the award last year against Samsung in what was the biggest and highest-profile of a number of legal trials around the world, centered on the use and alleged abuse of patents in a highly competitive mobile market.


The iPhone maker convinced the jury that the Korean company, which in 2012 overtook Apple as the global smartphone leader, had infringed on its iPhone and iPad patents.


"We are pleased that the court decided to strike $450,514,650 from the jury's award," the Korean company said in a statement. "Samsung intends to seek further review as to the remaining award."


Apple declined to comment.


Friday's ruling by Judge Lucy Koh of the U.S. District Court Northern District of California in San Jose means the two mobile electronics companies may once again square off in a California court to decide how much of the $450.5 million struck from the damages, associated with 14 Samsung products, should stand.


Koh said the jury had incorrectly calculated part of the damages and that a new trial was needed to determine the actual, final dollar amount. That could end up less than or more than the original $450.5 million set by the jury.


Koh, rejecting Apple's motion for an increase in the jury's damages award, ordered a new trial on damages for the 14 devices, which include the Galaxy SII. The jury's award to Apple for 14 other separate products, totaling almost $599 million, was maintained.


"The court has identified an impermissible legal theory on which the jury based its award and cannot reasonably calculate the amount of excess while effectuating the intent of the jury," Koh said in her ruling.


Apple and Samsung account for one in two mobile phones sold. They also rely on each other for components and business.


Their legal tussle has been viewed as a proxy war between Apple and Google Inc as Samsung's flagship Galaxy smartphones and tablets run on Google's Android operating system.


Shares in Apple closed down 2.5 percent at $430.47 on Nasdaq.


(Reporting by Ben Berkowitz; Editing by Gary Hill and Richard Chang)



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Apple CEO says he feels shareholders' pain, urges long view


CUPERTINO, California (Reuters) - Apple Inc CEO Tim Cook on Wednesday acknowledged widespread disappointment in the company's sagging share price but shared few details about its secretive product pipeline and touched only briefly on a raging debate about how best to reward shareholders.


The world's most valuable technology company headed into its annual shareholders' meeting at its headquarters on shakier ground than it has been accustomed to in years, since the iPhone and iPad helped vault the company to premier investment status.


A declining share price has lent weight to Wall Street's demand that it share more of its $137 billion in cash and securities pile - equivalent to Hungary's Gross Domestic Product, and growing - a debate now spearheaded by outspoken hedge fund manager David Einhorn.


Einhorn was not spotted at the meeting at the company's headquarters at 1 Infinite Loop in Cupertino. Cook repeated that the company's board remained in "very very active" discussions about options for cash sharing, and said he shared investors' dissatisfaction over the stock price.


"I don't like it either. The board doesn't like it. The management team doesn't like it," Cook told investors.


"What we are focused on is the long term. This has always been a secret of Apple."


By focusing on the long term, revenue and profit will follow, he said.


Apple had the "mother of all years" last year with growth, in terms of dollars, outpacing that of Microsoft Corp, Google Inc, Nokia and several other major technology companies combined, Cook said.


Cook -- who was re-elected to the board with 99.1 percent of shareholder votes -- added that the company was working on new product categories, but, as usual, would not elaborate.


Speculation is rife on Wall Street and in Silicon Valley that the iPhone maker is working on a project to revolutionize the television and TV content, or a smart "iWatch."


Apple's stock was down 0.25 percent to $447.86 in afternoon trade. It is now down more than 35 percent from its $702.10 September peak.


SHARE AND SHARE ALIKE


Cook presided over Wednesday's staid affair in his typically even-keeled manner. Despite a slipping share price, dissatisfaction on the Street over its cash allocation and uncertainty over its product pipeline, shareholders re-elected the entire board, and Cook won more than 99 percent of the vote in preliminary results.


Cook got the most votes, followed by Walt Disney Co's Bob Iger, who won re-election with 99 percent of shareholder votes. Former Avon Products Inc CEO Andrea Jung, who stepped down after botching several attempts at restructuring the cosmetics company, received the fewest votes of the group, with 84.6 percent of shareholders voting yea.


Carol Shoaff, an Apple shareholder for about the past five years, said after the meeting that she was confident in Apple's leadership and the company was on the right path.


"I think he's good," she said, referring to Cook. "I don't think Steve Jobs would have left him in charge if he didn't believe in him."


Members of the Service Employees International Union protested outside the headquarters to get Apple to reconsider hiring of securities contractor SIS.


Apple's annual shareholder meetings have seemed more like celebrations in recent years. Since the company came out with its first iPhone in 2007, the company multiplied in market value until it peaked in September.


Then Samsung Electronics and Amazon.com Inc began seriously eroding its market share in 2012, powered by arch-rival Google Inc's Android software. On March 14, Samsung will launch the Galaxy SIV smartphone, the latest iteration of a flagship smartphone that helped it dethrone Apple from the top of the industry.


Institutional investors want Apple to share a greater chunk of its cash and securities pile, a demand growing increasingly strident with the company's stock wallowing at levels untested since the start of 2012.


Einhorn is advocating "iPrefs," preferred stock that will carry a perpetual 4 percent dividend to boost returns while not hampering cash flow.


On Friday, Einhorn won an important legal victory that strengthened his hand. His Greenlight Capital secured an injunction that invalidated shareholder voting on a proposal to scrap Apple's power to issue preferred stock at its discretion.


Apple says this would enhance governance. But the hedge fund manager argued it could complicate efforts to issue preferred securities in the future.


Cook said again on Wednesday that Einhorn's lawsuit - regardless of its efficacy - was a "silly sideshow." The underlying principle of cash distribution was something he and the board took seriously, he added.


The proposal was not put forth on Wednesday but Apple shareholders and representatives from the California Public Employees Retirement System and the Nathan Cummings Foundation spoke in favor of it at the meeting.


CalPers, owner of 2.7 million Apple shares, had supported the so-called Proposal 2. Senior Portfolio Manager Anne Simpson said it was unfortunate the measure could not be put forward.


"We know there is hot debate going on with cash," Simpson told the assembled shareholders. "We are willing and happy to wait."


NEW HQ TO BE DELAYED


Cook, who took over from late company co-founder Steve Jobs in 2011, answered a variety of questions from shareholders, including some on Apple's new headquarters, labor conditions in its factories and product plans.


One shareholder also asked why there was no bathroom in an Apple retail store in Santa Monica, Calif. Cook, acknowledging that it was an important point, said he will look into it.


On the new headquarters, Cook said the company plans to break ground later this year and occupy the facilities in 2016, a delay from the original 2015 target date.


The meeting largely followed the script with no distractions. Shareholders voted down two shareholder proposals, both of which were opposed by Apple's board. One wanted Apple leadership to hold more stock, the other was a proposal to create a board committee on human rights.


(Writing by Edwin Chan; Editing by Lisa Von Ahn, Tim Dobbyn and Dan Grebler)



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Pentagon unveils plan to tap potential of mobile devices


WASHINGTON (Reuters) - The Pentagon unveiled a plan on Tuesday to ultimately enable the Defense Department's 600,000 users of smartphones, computer tablets and other mobile devices to rapidly share classified and protected data using the latest commercial technologies.


The system aims to quickly enable the latest technologies to be securely used by the military while remaining "device agnostic," said Major General Robert Wheeler, a Defense Department deputy chief information officer.


That sets the stage for an intensified struggle for Pentagon customers among BlackBerry devices, Apple's iPhones or iPads, and units using Google's Android platform.


The Defense Department currently has more than 600,000 mobile device users, including 470,000 with BlackBerries, 41,000 who have Apple operating systems, and 8,700 who use Android devices.


The new plan will result in the use of a much wider variety of mobile devices across the military. Currently most devices using Apple and Google platforms are in pilot or test programs, officials said.


Few commercial devices are used for classified communications, whereas the new system aims to bolster security of commercially available devices so they can be used for classified information, they said.


Wheeler said the implementation plan aimed to ensure that mobile devices, wireless infrastructure and mobile applications remain "reliable, secure and flexible enough to keep up with the fast-changing technologies of today."


He said the department has a broad range of mobile device users, from the chairman and planners on the Joint Chiefs of Staff to policymakers and soldiers on the battlefield, all of whom would be affected by the implementation plan.


The military services would decide which devices to buy and provide to users based on need. The system would not initially enable an individual service member to purchase their own mobile devices and use them on the Pentagon's networks, but that is a longer-range goal if security can be assured, officials said.


The plan is a step toward implementing the "mobility strategy" the Pentagon released last June. The strategy aims to use smartphone, tablet and other mobile technologies to improve information sharing and collaboration across the department.


The plan aims to "align the various mobile devices, pilots and initiatives across the department under common objectives to ensure the war fighter benefits from these activities," Teri Takai, the Pentagon's chief information officer, said in a statement.


"This is not simply about embracing the newest technology - it is about keeping the department's workforce relevant in an era when information accessibility and cybersecurity play a critical role in missions," she said.


As part of the implementation plan, the department has asked companies to submit proposals for creating a mobile device management platform and an applications store where users can get the programs they need for their devices.


The mobile device management platform would need a number of security features, such detecting malware and enabling officials to remotely delete data from the device, according to documents outlining the plan.


(Reporting by David Alexander; Editing by Eric Beech)



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HP sells webOS operating system to LG Electronics


SAN FRANCISCO (Reuters) - Hewlett-Packard Co said on Monday it will sell the webOS operating system to South Korea's LG Electronics Inc, unloading the smartphone software it acquired through a $1.2 billion acquisition of Palm in 2010.


LG will use the operating software, used in now-defunct Palm smartphones years ago, for its "smart" or Internet-connected TVs. The Asian electronics company had worked with HP on WebOS before offering to buy it outright.


Under the terms of their agreement, LG acquires the operating software's source code, associated documentation, engineering talent, various associated websites, and licenses under HP's intellectual property including patents covering fundamental operating system and user interface technology.


HP will retain the patents and all the technology relating to the cloud service of webOS, HP Chief Operating Officer Bill Veghte said in an interview.


"As we looked at it, we saw a very compelling IP that was very unique in the marketplace," he said, adding that HP has already had a partnership with LG on webOS before the deal was announced.


"As a result of this collaboration, LG offered to acquire the webOS operating system technology," Veghte said.


Skott Ahn, President and CTO, LG Electronics, said the company will incorporate the operating system in the Smart TV line-up first "and then hopefully all the other devices in the future."


Both companies declined to reveal the terms of the deal.


LG will keep the WebOS team in Silicon Valley and, for now, will continue to be based out of HP offices, Ahn said.


HP opened its webOS mobile operating system to developers and companies in 2012 after trying to figure out how to recoup its investment in Palm, one of the pioneers of the smartphone industry.


The company had tried to build products based on webOS with the now-defunct TouchPad tablet its flagship product.


HP launched and discontinued the TouchPad in 2010, a little over a month after it hit store shelves with costly fanfare after it saw poor demand for a tablet priced on par with Apple's dominant iPad.


WebOS is widely viewed as a strong mobile platform, but has been assailed for its paucity of applications, an important consideration while choosing a mobile device.


(Additional reporting By Paul Sandle and Alistair Barr; Editing by Gerald E. McCormick, Tim Dobbyn and M.D. Golan)



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BlackBerry launches first BB10 device in India at $800


MUMBAI (Reuters) - BlackBerry launched its first smartphone from its BlackBerry 10 line in India on Monday, pricing the phone at 43,490 rupees ($800).


The touch-screen BlackBerry Z10 phone, which goes on sale in India from Tuesday, will compete with Apple Inc's iPhones and Samsung Electronics Co Ltd's high-end Galaxy series phones.


The Z10 has already gone on sale in the United Kingdom and Canada, and is expected to hit the United States in mid-March.


(Reporting by Aradhana Aravindan; Editing by Devidutta Tripathy)



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Analysis: The near impossible battle against hackers everywhere


SAN FRANCISCO (Reuters) - Dire warnings from Washington about a "cyber Pearl Harbor" envision a single surprise strike from a formidable enemy that could destroy power plants nationwide, disable the financial system or cripple the U.S. government.


But those on the front lines say it isn't all about protecting U.S. government and corporate networks from a single sudden attack. They report fending off many intrusions at once from perhaps dozens of countries, plus well-funded electronic guerrillas and skilled criminals.


Security officers and their consultants say they are overwhelmed. The attacks are not only from China, which Washington has long accused of spying on U.S. companies, many emanate from Russia, Eastern Europe, the Middle East, and Western countries. Perpetrators range from elite military units to organized criminal rings to activist teenagers.


"They outspend us and they outman us in almost every way," said Dell Inc's chief security officer, John McClurg. "I don't recall, in my adult life, a more challenging time."


The big fear is that one day a major company or government agency will face a severe and very costly disruption to their business when hackers steal or damage critical data, sabotage infrastructure or destroy consumers' confidence in the safety of their information.


Elite security firm Mandiant Corp on Monday published a 74-page report that accused a unit of the Chinese army of stealing data from more than 100 companies. While China immediately denied the allegations, Mandiant and other security experts say the hacker group is just one of more than 20 with origins in China.


Chinese hackers tend to take aim at the largest corporations and most innovative technology companies, using trick emails that appear to come from trusted colleagues but bear attachments tainted with viruses, spyware and other malicious software, according to Western cyber investigators.


Eastern European criminal rings, meanwhile, use "drive-by downloads" to corrupt popular websites, such as NBC.com last week, to infect visitors. Though the malicious programs vary, they often include software for recording keystrokes as computer users enter financial account passwords.


Others getting into the game include activists in the style of the loosely associated group known as Anonymous, who favor denial-of-service attacks that temporarily block websites from view and automated searches for common vulnerabilities that give them a way in to access to corporate information.


An increasing number of countries are sponsoring cyber weapons and electronic spying programs, law enforcement officials said. The reported involvement of the United States in the production of electronic worms including Stuxnet, which hurt Iran's uranium enrichment program, is viewed as among the most successful.


Iran has also been blamed for a series of unusually effective denial-of-service attacks against major U.S. banks in the past six months that blocked their online banking sites. Iran is suspected of penetrating at least one U.S. oil company, two people familiar with the ongoing investigation told Reuters.


"There is a battle looming in any direction you look," said Jeff Moss, the chief information security officer of ICANN, a group that manages some of the Internet's key infrastructure.


"Everybody's personal objectives go by the wayside when there is just fire after fire," said Moss, who also advises the U.S. Department of Homeland Security.


HUNDREDS OF CASES UNREPORTED


Industry veterans say the growth in the number of hackers, the software tools available to them, and the thriving economic underground serving them have made any computer network connected to the Internet impossible to defend flawlessly.


"Your average operational security engineer feels somewhat under siege," said Bruce Murphy, a Deloitte & Touche LLP principal who studies the security workforce. "It feels like Sisyphus rolling a rock up the hill, and the hill keeps getting steeper."


In the same month that President Barack Obama decried enemies "seeking the ability to sabotage our power grids, our financial institutions, our air traffic control systems," cyber attacks on some prominent U.S. companies were reported.


Three leading U.S. newspapers, Apple Inc, Facebook Inc, Twitter and Microsoft Corp all admitted in February they had been hacked. The malicious software inserted on employee computers at the technology companies has been detected at hundreds of other firms that have chosen to keep silent about the incidents, two people familiar with the case told Reuters.


"I don't remember a time when so many companies have been so visibly 'owned' and were so ill-equipped," said Adam O'Donnell, an executive at security firm Sourcefire Inc, using the hacker slang for unauthorized control.


Far from being hyped, cyber intrusions remain so under-disclosed — for fear leaks about the attacks will spook investors — that the new head of the FBI's cyber crime effort, Executive Assistant Director Richard McFeely, said the secrecy has become a major challenge.


"Our biggest issue right now is getting the private sector to a comfort level where they can report anomalies, malware, incidences within their networks," McFeely said. "It has been very difficult with a lot of major companies to get them to cooperate fully."


McFeely said the FBI plans to open a repository of malicious software to encourage information sharing among companies in the same industry. Obama also recently issued an executive order on cyber security that encourages cooperation.


The former head of the National Security Agency, Michael Hayden, supports the use of trade and diplomatic channels to pressure hacking nations, as called for under a new White House strategy that was announced on Wednesday.


"The Chinese, with some legitimacy, will say 'You spy on us.' And as former director of the NSA I'll say, 'Yeah, and we're better at it than you are," said Hayden, now a principal at security consultant Chertoff Group.


He said what worries him the most is Chinese presence on networks that have no espionage value, such as systems that run infrastructure like energy and water plants. "There's no intellectual property to be pilfered there, no trade secrets, no negotiating positions. So that makes you frightened because it seems to be attack preparation," Hayden said.


Amid the rising angst, many of the top professionals in the field will convene in San Francisco on Monday for the best-known U.S. security industry conference, named after host company and EMC Corp unit RSA.


Several experts said they were convinced that companies are spending money on the wrong stuff, such as antivirus subscriptions that cannot recognize new or targeted attacks.


RSA Executive Chairman Art Coviello and Francis deSouza, head of products at top vendor Symantec Corp, both said they will give keynote speeches calling for a focus on more sophisticated analytical tools that look for unusual behavior on the network — which sounds expensive.


Others urge a more basic approach of limiting users' computer privileges, rapidly installing software updates, and allowing only trusted programs to function.


Some security companies are starting over with new designs, such as forcing all of their customers' programs to run on walled-off virtual machines.


With such divergent views, so much money at stake, and so many problems, there are perhaps just two areas of agreement.


Most people in the industry and government believe things will get worse. Coviello, for his part, predicted that a first-of-its kind - but relatively simple - virus that deleted all data on tens of thousands of PCs at Saudi Arabia's national oil company last year is a harbinger of what will come.


And most say that the increased mainstream attention on cyber security, even if it fixes uncomfortably on the industry's failings and tenacious adversaries, will help drive a desperately needed debate about what do to internationally and at home.


(Reporting by Joseph Menn in San Francisco; Additional reporting by Jim Finkle in Boston and Deborah Charles in Washington; Editing by Tiffany Wu and Jackie Frank)



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Einhorn scores legal victory versus Apple in cash scuffle


NEW YORK (Reuters) - A U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with Apple Inc on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.


U.S. District Judge Richard Sullivan in Manhattan granted a motion by Einhorn's Greenlight Capital for a preliminary injunction stopping a vote on that proposal, scheduled for the company's February 27 stockholders' meeting.


The decision could hand Einhorn more leverage as he pursues his pitch for Apple to issue what he has called the "iPref": preferred stock with a perpetual dividend that he contends would reward investors and help boost the company's share price.


Greenlight sued Apple on February 7 as part of a broader pitch to unlock more of its $137 billion in cash. The hedge fund manager has lobbied Apple to issue preferred stock with a perpetual 4 percent dividend, and on Thursday made a direct appeal to shareholders on a teleconference.


Apple Chief Executive Tim Cook last week dismissed the lawsuit as a "silly sideshow."


The lawsuit itself challenged a measure called Proposal No. 2 that Apple put forward, which would eliminate its power to issue preferred shares without a shareholder vote.


At issue is Apple's "bundling" of that measure with two other unrelated matters into a single proxy proposal.


Greenlight said it supported two of the proposed amendments, but not the one on preferred shares.


In his ruling, Sullivan said Greenlight and another investor who also sued Apple "are likely to succeed on the merits and face irreparable harm if the vote on Proposal No. 2 is permitted to proceed."


"We are disappointed with the court's ruling. Proposal No. 2 is part of our efforts to further enhance corporate governance and serve our shareholders' best interests," Apple spokesman Steve Dowling said. "Unfortunately, due to today's decision, shareholders will not be able to vote on Proposal No. 2 at our annual meeting next week."


A spokesman for Greenlight called the ruling a "significant win for all Apple shareholders and for good corporate governance."


But not all shareholders were happy. California pension fund Calpers, a major Apple investor and public supporter of Apple's proposal, said implementation of "majority voting and shareholder approval for the issuance of new stock - preferred or otherwise - is worth waiting for."


"We encourage Apple to reintroduce these measures as soon as is practical so that all investors can be heard," Anne Simpson, Calpers' director of global governance, said in a statement.


BUNDLES


The ruling could be a warning for other companies when issuing proxy proposals, said James Cox, a professor at Duke University School of Law.


"It's going to make managers reluctant to bundle things together, because you're never going to know when you send them out if there's an Einhorn out there," he said.


The lawsuit was centered on a narrow issue of whether Apple violated U.S. Securities and Exchange Commission rules by "bundling" the preferred shares item with two other unrelated matters into one proxy proposal.


Greenlight's lawyers contended the SEC rules were intended to protect shareholders from being forced to vote for a proxy proposal involving materially different issues that the investors might not entirely support.


Apple had argued Proposal No. 2, which only dealt with amendments to its charter, constitute a single matter and wasn't bundled. Sullivan called the company's arguments "unavailing."


"Given the language and purpose of the rules, it is plain to the Court that Proposal No. 2 impermissibly bundles 'separate matters' for shareholder consideration," Sullivan wrote.


Judge Sullivan also found that Greenlight would be irreparably harmed without the injunction, since it would be forced to vote against its own interests. Denying Greenlight's motion would prevent it and other investors from exercising their rights to a fair vote, Sullivan said.


Sullivan separately declined to block a vote from going forward on a separate proxy proposal, Proposal No. 4, which sought an advisory "say on pay" vote on Apple executives' compensation.


The proposal had been challenged by investor Brian Gralnick of Pennsylvania, who contends Apple did not disclose enough details about how it made its compensation decisions.


Sullivan rejected that argument, saying Apple's disclosures were "plainly sufficient under SEC rules."


Arnold Gershon, a lawyer for Gralnick at Barrack, Rodos & Bacine, said he was "very pleased" with Sullivan's decision to the extent it enjoined the Proposal No. 2 vote, though said he would have to decide what to do next with regard to the say-on-pay proposal.


Sullivan directed the parties to submit a joint letter by March 1 outlining the next contemplated steps in this case.


Apple shares closed up 1.1 percent at $450.81 on Friday.


The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.


(Reporting by Nate Raymond in New York; Additional reporting by Poornima Gupta in San Francisco; Editing by Martha Graybow, Gary Hill, Leslie Adler, Carol Bishopric and Lisa Shumaker)



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Facebook blocks access to NBC.com after reports site is infected


BOSTON (Reuters) - Facebook Inc has blocked users from accessing the NBC.com website following reports that the site is infected with a computer virus.


Facebook users were told "This link has been reported as abusive" on Thursday when they attempted to access the NBC.com website.


Several security bloggers warned on Thursday that the site was infected with malicious software, advising computer users to avoid the site.


Officials with NBC could not immediately be reached for comment.


(This story is corrected with changes in paragraph 3 to Thursday from Tuesday)


(Reporting By Jim Finkle and Jennifer Saba; Editing by Gary Hill)



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Sony seeks head start over Microsoft with new PlayStation


NEW YORK (Reuters) - Sony Corp said it will launch its next-generation PlayStation this year, hoping its first video game console in seven years will give it a much-needed head start over the next version of Microsoft's Xbox and help revive its stumbling electronics business.


The new console will have a revamped interface, let users stream and play video games hosted on servers, and allow users to play while downloading titles as well as share videos with friends. Its new controller, dubbed DualShock 4, will have a touchpad and a camera that can sense the depth of the environment in front of it.


Sony, which only displayed the controller but not the console, said on Wednesday the PlayStation 4 would be available for the year-end holiday season and flagged games from the likes of Ubisoft Entertainment SA and Activision Blizzard Inc, whose top executives also attended the glitzy launch event.


It did not disclose pricing or an exact launch date.


Sony's announcement comes amid industry speculation that Microsoft Corp is set to unveil the successor to its Xbox 360 later this summer. The current Xbox 360 beats the seven-year-old PlayStation 3's online network with features such as voice commands on interactive gaming and better connectivity to smartphones and tablets.


But all video game console makers are grappling with the onslaught of mobile devices into their turf.


Tablets and smartphones built by rivals such as Apple Inc and Samsung Electronics Co Ltd already account for around 10 percent of the $80 billion gaming market. Those mobile devices, analysts predict, will within a few years be as powerful as the current slew of game-only consoles.


"It looks good and had a lot of great games but the industry is different now," Billy Pidgeon, an analyst at Inside Network Research, said of the new PlayStation.


"It'll be a slow burn and not heavy uptake right away."


MIGRATION TO MOBILE


Console makers will also have to tackle flagging video game hardware and software sales, which research firm NPD group says have dropped consistently every month over the last year as users migrate to free game content on mobile devices.


PlayStation 4 will have an app on Android and Apple mobile devices that connects to console games and can act as a second screen, Jack Tretton, President and CEO of Sony Computer Entertainment of America, said in an interview.


"Playstation 4 ... really connects every device in the office and the smartphone and the tablet out there in the world," Tretton said.


The console, which has been in development for the last five years, will have 8 GB of memory and will instantly stream game content from the console to Sony's handheld PlayStation Vita through a feature called "Remote Play," the company said.


"What Sony is banking on is the ease of the use of this system," Greg Miller, PlayStation executive editor at video game site IGN.com, said.


After six years, Sony PlayStation sales are just shy of Xbox's 67 million installed base and well behind the 100 million Wii consoles sold by Nintendo Co Ltd, according to analysts.


Tretton said it would be a big undertaking to manufacture and distribute the console in Sony's four major markets by the end of the year, adding that it would be a "phased rollout" that starts before the end of the year.


Sterne Agee analyst Arvind Bhatia predicted Sony would probably get a couple of million units of the PlayStation 4 out by the 2013 holiday season and 7 million or 8 million out a year later.


Sony also announced a strategic partnership with video game publisher Activision Blizzard to take its Diablo III game to the PlayStation 4 and PlayStation 3 consoles.


Activision's upcoming sci-fi shooter game "Destiny" in development by its Bungie Studio will also be available on PlayStation consoles.


(Editing by Gary Hill, Bernard Orr and Edwina Gibbs)



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Exclusive: Apple, Macs hit by hackers who targeted Facebook


BOSTON/SAN FRANCISCO (Reuters) - Apple Inc was recently attacked by hackers who infected Macintosh computers of some employees, the company said Tuesday in an unprecedented disclosure describing the widest known cyber attacks targeting Apple computers used by corporations.


Unknown hackers infected the computers of some Apple workers when they visited a website for software developers that had been infected with malicious software. The malware had been designed to attack Mac computers.


The same software, which infected Macs by exploiting a flaw in a version of Oracle Corp's Java software used as a plug-in on Web browsers, was used to launch attacks against Facebook, which the social network disclosed on Friday.


The malware was also employed in attacks against Mac computers used by "other companies," Apple said, without elaborating on the scale of the assault.


Twitter, which disclosed that it had been breached February 1 and that hackers might gave accessed some information on about 250,000 users, was hit in the same campaign, according to a person close to the investigation.


Another person briefed on the case said that hundreds of companies, including defense contractors, had been infected with the same malicious software. Though this person said that the malware could have originated from China, there was no proof.


"This is a new campaign. It's not like the other ones you read about where everyone can tell it's China," the first person said.


Investigations into the breaches are ongoing. It was not immediately clear when the attacks had begun, the extent to which the hackers had succeeded in stealing data from targeted systems, or whether all infected machines have been identified.


The malware was distributed at least in part through a site aimed at iPhone developers, which might still be infecting visitors who haven't disabled Java in their browser, the person close to the case said. There is a version that infects computers running Microsoft Windows as well.


Security firm F-Secure wrote that the attackers might have been trying to get access to the code for apps on smartphones, seeking a way to infect millions of end-users. It urged developers to check their source code for unintended changes.


Apple disclosed the breach as tensions are heating up over U.S. allegations that the Chinese military engages in cyber espionage on U.S. companies.


U.S. cyber security firm Mandiant reported over the weekend that it has uncovered evidence that the Chinese military is behind a slew of cyber attacks on U.S. businesses. The White House said it has repeatedly raised concerns about Chinese cyber theft with Beijing.


The breaches described by Apple mark the highest-profile cyber attacks to date on businesses running Mac computers. Hackers have traditionally focused on attacking machines running the Windows operating system, though they have gradually turned their attention to Apple products over the past couple of years as the company gained market share over Microsoft Corp.


"This is the first really big attack on Macs," said the source, who declined to be identified because the person was not authorized to discuss the matter publicly. "Apple has more on its hands than the attack on itself."


Charlie Miller, a prominent expert on Apple security who is co-author of the Mac Hacker's Handbook, said the attacks show that criminal hackers are investing more time studying the Mac OS X operating system so they can attack Apple computers.


For example, he noted, hackers recently figured out a fairly sophisticated way to attack Macs by exploiting a flaw in Adobe Systems Inc's Flash software.


"The only thing that was making it safe before is that nobody bothered to attack it. That goes away if somebody bothers to attack it," Miller said.


NATIONAL SECURITY


Cyber security attacks have been on the rise. In last week's State of the Union address, U.S. President Barack Obama issued an executive order seeking better protection of the country's critical infrastructure from cyber attacks.


White House spokesman Jay Carney told reporters on Tuesday that the Obama administration has repeatedly taken up its concerns about Chinese cyber theft with Beijing, including the country's military. There was no indication as to whether the group described by Mandiant was involved in the attacks described by Apple and Facebook.


An Apple spokesman declined to specify how many companies had been breached in the campaign targeting Macs, saying he could not elaborate further on the statement it provided.


"Apple has identified malware which infected a limited number of Mac systems through a vulnerability in the Java plug-in for browsers. The malware was employed in an attack against Apple and other companies, and was spread through a website for software developers," the statement said.


"We identified a small number of systems within Apple that were infected and isolated them from our network. There is no evidence that any data left Apple," it continued.


The statement said Apple was working closely with law enforcement to find the culprits, but the spokesman would not elaborate. The Federal Bureau of Investigation declined to comment.


Apple said it plans to release a piece of software on Tuesday that customers can use to identify and repair Macs infected with the malware used in the attacks.


(Editing by Andre Grenon, Edwin Chan and Richard Chang)



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Burger King takes down Twitter account after hack attack


NEW YORK (Reuters) - Hackers breached the Twitter account of fast-food chain Burger King, posting the online equivalent of graffiti and sometimes making little sense.


Burger King Worldwide Inc suspended its Twitter account about an hour after it learned of the attack at 12:24 p.m. EST on Monday, company spokesman Bryson Thornton said in an email.


"It has come to our attention that the Twitter account of the BURGER KING® brand has been hacked," the company said in a statement. "We have worked directly with administrators to suspend the account until we are able to re-establish our legitimate site and authentic postings."


Several tweets carried the logo of Burger King's larger rival McDonald's, but spelled the latter company's name incorrectly. Others sought to tarnish Burger King, the third-largest U.S. hamburger chain, and its employees.


"Just got sold to McDonalds," one tweet said, adding "FREDOM IS FAILURE".


(Reporting by Ilaina Jonas; Editing by Dale Hudson)



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Intel Israel more than doubles exports, mulls new investment


TEL AVIV (Reuters) - Intel's Israeli subsidiary more than doubled its exports in 2012 to $4.6 billion and is seeking to bring manufacturing of the company's next generation of chips to Israel.


Intel's exports, which rose 109 percent from $2.2 billion in 2011, were boosted by the start of production of chips using 22 nanometer technology at its Kiryat Gat plant in southern Israel, which is now operating at full capacity.


Intel, the world's No. 1 chipmaker, will build chips over the next two to three years with features measuring just 14 nm in Ireland and the United States but the company is already thinking about where it will produce 10 nm chips. The narrower the features, the more transistors can fit on a single chip, improving performance.


Intel Israel executives said they would like to see 10 nm production in Israel.


"The average life of a technology is two to six years so we need to be busy to get the next technology, 10 nanometer," Maxine Fassberg, general manager of Intel Israel, told a news conference on Sunday. "We need to get a decision far enough in advance to be able to upgrade the plant. So for 10 nanometer, decisions will need to be made this year."


Fassberg said upgrading the existing Fab 28 plant in Israel would require a lower investment than building a new plant but would still involve several billion dollars.


Intel Israel has in the past received government grants to help with the costs of its investments and Fassberg told Reuters the company was "constantly in talks with the government".


Intel has invested $10.5 billion in Israel in the past decade, including $1.1 billion in 2012, and has received $1.3 billion in government grants.


The company accounted for 20 percent of Israel's high-tech exports last year and 10 percent of its industrial exports, excluding diamonds.


"If Intel had not increased its exports, Israel's high-tech exports would have shrunk by 10 percent," Intel Israel President Mooly Eden said.


Most of Intel Israel's exports - $3.5 billion - came from its chip manufacturing activities.


Intel is Israel's largest private employer, with 8,542 workers, up 10 percent from 2011. The company has two plants - in Jerusalem and Kiryat Gat - as well as four research and development centers.


Eden said Intel was also committed to investing in start-ups, having invested in 64 Israeli companies since 1996. In July its global investment arm Intel Capital said it would expand its operations in Israel.


(Reporting by Tova Cohen; Editing by Helen Massy-Beresford)



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Facebook hacked, social media company says


(Reuters) - Facebook said on Friday that it been the target of a series of attacks by an unidentified hacker group, but it had found no evidence that user data was compromised.


"Last month, Facebook security discovered that our systems had been targeted in a sophisticated attack," the company said in a blog post. "The attack occurred when a handful of employees visited a mobile developer website that was compromised."


The social network, which says it has more than one billion active users worldwide, added: "Facebook was not alone in this attack. It is clear that others were attacked and infiltrated recently as well."


Facebook's announcement follows recent cyber attacks on other prominent websites. Twitter, the microblogging social network, said this month that it had been hacked, and that approximately 250,000 user accounts were potentially compromised, with attackers gaining access to information including user names and email addresses.


Newspaper websites including The New York Times, The Washington Post, and The Wall Street Journal have also been infiltrated, according to the news organizations. Those attacks were attributed by the news organizations to Chinese hackers targeting their coverage of China.


(Reporting By Tim Reid; Editing by Gary Hill)



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Facebook says it was a target of sophisticated hacking


SAN FRANCISCO/LOS ANGELES (Reuters) - Facebook Inc said on Friday hackers had infiltrated some of its employees' laptops in recent weeks, making the world's No.1 social network the latest victim of a wave of cyber attacks, many of which have been traced to China.


It said none of its users' data was compromised in the attack, which occurred after a handful of employees visited a website last month that infected their machines with so-called malware, according to a post on Facebook's official blog released just before the three-day U.S. President's Day weekend.


"As soon as we discovered the presence of the malware, we remediated all infected machines, informed law enforcement, and began a significant investigation that continues to this day," Facebook said.


It was not immediately clear why Facebook waited until now to announce the incident. Facebook declined to comment on the reason or the origin of the attack.


A security expert at another company with knowledge of the matter said he was told the Facebook attack appeared to have originated in China.


The attack on Facebook, which says it has more than 1 billion members, underscores the growing threat of cyber attacks aimed at a broad variety of targets.


Twitter, the micro blogging social network, said earlier this month it had been hacked and that about 250,000 user accounts were potentially compromised, with attackers gaining access to information, including user names and email addresses.


Newspaper websites, including those of The New York Times, The Washington Post and The Wall Street Journal, have also been infiltrated. Those attacks were attributed by the news organizations to Chinese hackers targeting coverage of China.


Earlier this week, U.S. President Barack Obama issued an executive order seeking better protection of the country's critical infrastructure from cyber attacks.


"INFILTRATED"


Facebook noted in its blog post that it was not alone in the attack, and that "others were attacked and infiltrated recently as well," although it did not specify who.


The Federal Bureau of Investigation declined to comment, while the U.S. Department of Homeland Security did not immediately return a call seeking comment.


In its blog post, Facebook described the attack as a "zero-day" attack, considered to be among the most sophisticated and dangerous types of computer hacks. Zero-day attacks, which are rarely discovered or disclosed by their targets, are costly to launch and often suggest government involvement.


While Facebook said no user data was compromised, the incident could raise consumer concerns about privacy and the vulnerability of personal information stored within the social network.


Facebook has made several privacy missteps in the past because of the way it handled user data. It settled a privacy investigation with federal regulators in 2011.


According to one person familiar with the situation, the type of information on the employee laptops that were compromised included "snippets" of Facebook source code and employee emails.


Facebook said it spotted a suspicious file and traced it back to an employee's laptop. After conducting a forensic examination of the laptop, Facebook said it identified a malicious file, then searched company-wide and identified "several other compromised employee laptops".


Another person briefed on the matter said the first Facebook employee had been infected via a website where coding strategies were discussed.


The company also said it identified a previously unseen attempt to bypass its built-in cyber defenses and that new protections were added on February 1.


Because the attack used a third-party website, it might have been an early-stage attempt to penetrate as many companies as possible.


If they followed established patterns, the attackers would learn about the people and computer networks at all the infected companies. They could then use that data in more targeted attacks to steal source code and other intellectual property.


Another fear for such a popular website is that hackers could use central controls to infect wide swathes of its user base at once.


In January 2010, Google reported it had been penetrated via a "zero-day" flaw in an older version of the Internet Explorer Web browser. The attackers were seeking source code and were also interested in Chinese dissidents. Google reduced its operations in China as a result.


(Additional reporting by Alexei Oreskovic in San Francisco and Tim Reid in Los Angeles; Editing by Paul Tait)



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Big hedge funds fueled fourth-quarter dive in Apple shares


BOSTON (Reuters) - Some of the biggest hedge funds that helped make Apple Inc a stock market darling lost faith and dumped their stakes in the fourth quarter, fueling the massive drop in the iPhone maker's share price.


Noted stock pickers including Leon Cooperman, Eric Mindich and Thomas Steyer unloaded billions of dollars of Apple shares between September 30 and December 31, according to disclosure documents filed on Thursday.


Shares of Apple rose to an all-time high of $705.07 on September 21 but ended 2012 down more than 24 percent from that peak as investors worried about increasing competition and declining profit margins.


The shares also may have dropped because their price rose too much, too fast.


"The stock just went up so much in early 2012 and then was coming back to earth," said Justin Walters, co-founder of Wall Street research firm Bespoke Investment Group. "Three months from now, we'll be seeing a lot of the people who sold starting to pick it up again."


The fourth-quarter sellers avoided even deeper losses. Apple's shares have lost 12 percent so far this year. The shares lost 42 cents, or 0.1 percent, to close at $466.59 on the Nasdaq on Thursday.


Cooperman's Omega Advisors fund dumped its entire stake of more than 266,000 shares during the fourth quarter, according to its required quarterly disclosure form filed with the Securities and Exchange Commission.


Mindich, named the youngest partner ever at Goldman Sachs before starting his Eton Park Capital Management fund in 2004, got out of Apple entirely in the fourth quarter after making big sales in the third quarter as well. Eton owned 600,000 shares at the beginning of 2012.


Farallon Capital, the hedge fund founded by Steyer, sold 137,000 shares. Steyer, who once worked on the Goldman Sachs risk arbitrage desk under Robert Rubin, stepped down at the end of the year from the firm, which he founded in 1986. Rubin served as U.S. Treasury secretary from 1995 to 1999.


Jana Partners, an activist fund run by Barry Rosenstein, also unloaded its entire Apple stake of more than 143,000 shares. Other notable sellers included Third Point LLC, which had owned 710,000 shares, Viking Global Investors, which dumped 1.1 million shares and Lone Pine Capital, which sold over 800,000 shares.


A much smaller line up of funds bought shares amid the stock's crash. David Tepper's Appaloosa Management nearly doubled its stake during the quarter to about 913,000 shares. George Soros more than doubled his stake to about 184,000 shares. And David Einhorn, who last week sued Apple in a bid for higher dividends, added 20 percent to his holdings to end the quarter with 1.3 million shares.


PROFITABLE TRADES


Despite the plunge in Apple's stock price, most of the managers likely exited their positions with substantial profits because they bought years earlier.


Rosenstein and Cooperman, for example, both started gathering their stakes in the middle of 2010, when Apple shares traded below $300.


At the time, the company's iPhone 4 was beset by alleged faulty reception, a problem that became known as "antennagate." Apple's then-chief executive, the late Steve Jobs, famously dismissed the issue, saying "we don't think we have a problem." But Apple offered customers a free bumper case that was supposed to minimize any issues.


Customers did not seem to care, snapping up millions of iPhones and sending Apple's share price up almost 50 percent over the next year.


Apple came under further scrutiny last week from Greenlight's Einhorn. Einhorn filed a lawsuit to block changes in Apple's policy for issuing preferred stock. Instead, Apple should issue a new class of preferred stock to share more of its $137 billion cash hoard with shareholders, Einhorn said.


Apple Chief Executive Tim Cook dismissed the moves as a "silly sideshow" on Tuesday.


SOME TRIMMED


Not all well-known hedge fund fans of Apple cut ties in the fourth quarter. Some only trimmed their holdings.


Philippe Laffont, who worked under famed hedge fund manager Julian Robertson before striking out on his own at Coatue Management, sold about 18 percent of his Apple shares. Coatue ended the year with a still sizable 643,000 shares.


Chase Coleman, another manager who worked for Robertson, reduced the Apple stake at his Tiger Global Management fund by 19 percent to just over 1 million shares.


Robertson's own Tiger Management LLC fund trimmed its Apple stake by 28 percent to about 42,000 shares.


Large hedge funds are required to disclose their U.S. stock holdings within 45 days after the end of each quarter.


But the filings may not give a complete picture of each fund's moves, since only U.S.-listed shares and options must be revealed. Bonds, foreign shares and derivatives are not included, and short positions, or bets that a stock will fall in price, are not listed.


(Reporting by Aaron Pressman; Additional reporting by Katya Wachtel, Svea Herbst, Sam Forgione and Jennifer Ablan in New York; Editing by Steve Orlofsky and David Gregorio)



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Apple loses right to use iPhone trademark in Brazil: WSJ


(Reuters) - Brazil's copyright regulator on Wednesday stripped Apple Inc of the right to use its iPhone trademark in that country, the Wall Street Journal reported on its website on Wednesday.


The agency that oversees patents in Brazil said Gradiente Electronica SA, a Brazilian consumer electronics maker, already owned the rights to the iPhone name, according to the report.


Apple will be able to challenge the ruling in the Brazilian courts.


Earlier this month, sources told Reuters that the regulator, the Brazilian Institute of Intellectual Property, was likely to make the decision that Apple did not have the rights to the trademark.


Gradiente Electronica registered the "iphone" name in 2000, seven years before Apple launched its popular smartphone.


A spokesperson for Apple in the United States was not immediately available to comment.


(Reporting By Erin Geiger Smith)



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Yahoo CEO says Microsoft search deal underperforms


SAN FRANCISCO (Reuters) - Yahoo Inc Chief Executive Marissa Mayer said the company's search partnership with Microsoft Corp was not delivering the market share gains or the revenue boost that it should.


"One of the points of the alliance is that we collectively want to grow share rather than just trading share with each other," Mayer said at the Goldman Sachs Technology and Internet Conference in San Francisco on Tuesday.


In her first appearance at an investor conference since taking the reins of the struggling Web portal in July, Mayer said she planned to prune a sprawling lineup of mobile apps and she reiterated her focus on enticing consumers to spend more time on Yahoo's online properties, in order to display more money-making ads.


"I'm not confused. Our biggest business problem right now is impressions. Basically can we grow impressions, can we get growth happening here," Mayer said.


Yahoo shares finished Tuesday's regular trading session up 31 cents at $21.21.


Mayer, 37, took over after a tumultuous period at Yahoo in which former CEO Scott Thompson resigned after less than 6 months on the job over a controversy about his academic credentials and in which Yahoo co-founder Jerry Yang resigned from the board and cut his ties with the company.


Yahoo's revenue in 2012 was flat year-over-year, at roughly $5 billion, and down from roughly $6.3 billion in 2010.


"We need to see monetization working better because we know that it can and we've seen other competitors in the space illustrate how well it can work," Mayer said of the search deal with Microsoft.


Yahoo and Microsoft entered into a 10-year search partnership in 2010, hoping their combined efforts could mount a more competitive challenge to Google Inc, the world's No.1 search engine. But the partnership has not lived up to expectations.


Google remains the dominant search engine, with a 66.7 percent share of the U.S. market in December, almost unchanged from its 66.6 percent share two years earlier, according to online analytics firm comScore.


Microsoft had 16.3 percent share and Yahoo had 12.2 percent share in December, a reversal of two years earlier when Yahoo's U.S. search share was 16 percent and Microsoft had 12 percent share.


Yahoo's stock has risen more than 30 percent since Mayer took the helm in July, reaching its highest levels since 2008.


Analysts say that part of the stock's rise has been driven by significant stock buybacks, using proceeds from a $7.6 billion deal to sell half of its 40 percent stake in Chinese Internet company Alibaba Group.


Mayer said that she viewed the company's relationship with Yahoo Japan, which is partly owned by Softbank, as "strategic" to the company. Under previous CEOs, Yahoo had engaged in unsuccessful discussions to "monetize" its roughly 35 percent stake in Yahoo Japan.


(Reporting by Alexei Oreskovic; Editing by Phil Berlowitz)



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Judge speeds up schedule in Apple versus Einhorn case


SAN FRANCISCO (Reuters) - A judge approved Apple Inc's request to speed up the schedule in a lawsuit filed by star hedge fund manager David Einhorn's Greenlight Capital, part of an effort to get the company to share its huge cash reserves with investors.


U.S. District Judge Richard Sullivan of the Southern District of New York on Monday brought forward the legal schedule by a few days at Apple's request, which argued that the issue would have a big impact on the upcoming shareholder meeting on February 27.


Apple told the judge that the request to modify the schedule had the support of Einhorn's counsel.


Einhorn, a well-known short-seller and Apple gadget fan, shocked Wall Street last week by suing Apple to stop the iPhone maker from eliminating from its charter the ability to issue preferred stock without shareholder approval.


He wants Apple to return a bigger piece of its $137 billion cash pile to investors, through the issuance of perpetual preferred shares that pay dividends to existing shareholders.


Einhorn is objecting to how the proposed charter change is bundled together with two other corporate governance-related proposals in the proxy document for the annual meeting.


The lawsuit contends Apple violated Securities and Exchange Commission rules that prohibit companies from "bundling" unrelated matters into a single proposal for a shareholder vote.


Apple says removing the board's ability to issue preferred stock at its discretion heightens governance, because future issuances would then require shareholder approval.


The company will file its response to the lawsuit by the end of Wednesday while Greenlight will file its own response papers by Friday. The judge ordered both parties to appear for oral arguments on February 19.


Apple has said that the proposal in its proxy had the support of many shareholders, and striking such a "blank check" provision from its charter would not preclude preferred share issuances in future.


The law firm of O'Melveny & Myers LLP is representing Apple in the case, with San Francisco-based partner George Riley arguing for Apple.


(Reporting By Poornima Gupta; Editing by Tim Dobbyn)



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Australia to grill Apple, others on pricing


CANBERRA (Reuters) - Apple Inc has been ordered to appear before Australia's parliament with fellow technology giants Microsoft Inc and Adobe Systems Inc to explain why local consumers pay so much for their products, despite the strong Aussie dollar.


Broadening a row between the world's most valuable company and Australian lawmakers over corporate taxes paid on Apple's operations, Apple executives were formally summonsed on Monday to front a parliamentary committee in Canberra on March 22.


"In what's probably the first time anywhere in the world, these IT firms are now being summoned by the Australian parliament to explain why they price their products so much higher in Australia compared to the United States," said ruling Labor government MP Ed Husic, who helped set up the committee.


High local prices and soaring cost-of-living bills for basic services are hurting the popularity of the minority Labor government ahead of a September 14 election it is widely tipped to lose, giving political momentum to the inquiry.


All three companies have so far declined to appear before the special committee set up in May last year to investigate possible price gouging on Australian hardware and software buyers, despite the Australian dollar hovering near record highs above the U.S. currency around A$1.03.


A 16GB WiFi iPad produced by Apple with Retina display sells in Australia for A$539, $40 above the price in the U.S., despite the stronger local currency. Microsoft's latest versions of office 365 home premium cost A$119 in Australia versus $99.99 in the United States.


IT firms and other multinationals have blamed high operating costs in Australia including high local wages and conditions, as well as import costs and the relatively small size of the retail market in the $1.5 trillion economy.


Failure to appear before the committee as ordered could leave all three firms open to contempt of parliament charges, fines or even jail terms.


"For some time consumers and businesses have been trying to work out why they are paying so much more, particularly for software, where if it's downloaded there is no shipping or handling, or much of a labor cost," Husic told Reuters.


Adobe and Microsoft have previously provided separate written statements and submissions to the inquiry. But executives have been reluctant to explain their pricing before a public inquiry.


Apple executives in Australia declined to comment when contacted by Reuters.


"The companies have blamed each other for not appearing. One will say 'we're not going to appear if the other is not going to appear'. So we've cut straight to the chase and said we'll just summons you," Husic said.


Price gouging in IT for hardware and software, Husic said, could be costing Australia's more than 2 million small and medium businesses as much as $10 billion extra.


Husic took aim at Apple last week over local taxes paid by the company, telling parliament that Apple generated A$6 billion in revenue in Australia in 2011, but paid only A$40 million in tax - less than one percent of turnover.


"While they generated A$6 billion in revenue, they apparently racked up from what I understand A$5.5 billion in costs. How?" Husic said. "They do not manufacture here. They have no factories here."


He accused Apple executives of maintaining a "cloak of invisibility", while dodging scrutiny of operations. Apple has been criticized elsewhere for its zealous secrecy.


"Ask anyone who has sought answers from them about their Australian operations and you will hear a common theme. They will not talk," he said.


(Editing by Shri Navaratnam)



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