The largest chipmaker also announced that it has posted revenues of $10.6 billion during the quarter, up by 28 percent from last year and up 13 percent from last quarter.

It also posted an operating income of $2.5 billion; and while it was up 62 percent from last year, it was down quarter-to-quarter by 3 percent.

While its revenue continues to come mostly from the Asia-Pacific region, with 57 percent of the revenue; the Americas region made up 20 percent of the revenue, while Europe and Japan made 14 percent and 9 percent of the revenue respectively.

However, for the entire year, its revenue was down 7 percent to finish $35.1 billion, from $37.6 billion from 2008; and its net income was down 17 percent, to $4.4 billion. This could be because of a European Commission fine of $1.45 billion and a settlement with rival AMD of $1.25 billion; along with revenue was down in its groups, with the exception of the Intel Atom processor revenue as that increased 167 percent.

It predicts revenue to be $9.7 billion in the first quarter of 2010, which is above estimates from Wall Street; and with more and more companies releasing their numbers, hopefully we see the end of the economic downturn.

Image from: Josh Bancroft/Flickr

The founders, Niklas Zennstrom and Janus Friis, will take on a 14 percent stake of the company, while eBay will still hold a 30 percent stake. The investment firms will now take a 56 percent stake in the communications company, lower than the original 65 percent stake that was announced previously.

The agreement sees Zennstrom and Friis dropping their lawsuits over intellectual rights over Skype’s core technology, via Joltid and Joost, and will transfer that core technology to the new Skype. The deal also gives them two seats in the board, possibly being filled by the two.

“Skype will be well positioned to move forward under new owners with ownership and control over its core technology,” eBay President and CEO John Donahoe said. “ At the same time, eBay continues to retain a significant stake in Skype and will benefit from its continued growth. We look forward to closing the deal and focusing on growing our core ecommerce and payments businesses.”

“At the same time, eBay continues to retain a significant stake in Skype and will benefit from its continued growth. We look forward to closing the deal and focusing on growing our core ecommerce and payments businesses,” said Managing Director for Silver Lake, which is an investor in the new company, Egon Durban said.

As part of the settlement, the company will give 10 percent to the founders in the new venture, and the founders paid US$83 million for another four percent stake in the company. The deal is expected to close by the end of this year.

It has also been announced that Index Ventures has withdrawn their participation in the new investor group. “Although Skype has the potential to be a great investment, the deal terms changed for Index such that it no longer matches our investment criteria and thus we have decided not to participate in the transaction,” Index partner Danny Rimer said in the statement.

The new deal will value Skype at US$2.75 billion with eBay expected to receive at least US$1.9 billion in cash once it is completed.

“We are realigning our expenses with a global economy that continues to weaken,” TI’s chairman, president and chief executive Rich Templeton said in a statement. “By reducing expenses now, we keep TI financially strong and able to invest for future growth.”

“Most of the reductions will come in our internal support functions and non-core product lines so that a greater percentage of the dollars we spend will go directly toward developing and supporting Analog and Embedded Processing products,” he continues.

“We believe these are the areas that will drive TI’s future growth and allow us to achieve our financial objectives.”

Even with the tiny profit (and that may still be a blessing in disguise), the company is sending 12 percent of its workforce into unemployment. 1,800 will be laid off, while the other 1,600 will be done through “voluntary retirements and departures”.

Excluding any one-time items, Google has said that it earned $5.10 a share in Q4 2008, even though analysts expect it to make a profit of $4.95 a share.

Indicating that the company was able to stop most of its free-spending ways to offset the slowdown in revenue from the ad market that has made Google profitable, it does not mean that the recession isn’t going to hit Google – but it’s starting to emerge.

The downturn forced Google to make a write down of $1.1 billion of the $1.5 billion that has been invested in AOL and Clearwire; and has allowed its 20,222 employees swap their outstanding stock options for new ones that will carry a lower exercise price, but will give them a better chance to make money.

Google closed at $306.50, on a high of 1.13 percent. In after-hours trading, it is currently up at 311.23, with an increase of 1.54 percent.

In response to the realities of a deteriorating economy, we’re taking important steps to realign Microsoft’s business. I want to tell you about what we’re doing and why.

Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 percent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations.

The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off.

But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.

Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.

During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result.

Now we need to do more. We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities. The current environment requires that we continue to increase our efficiency.

As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We’ll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.

Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency.

To increase efficiency, we’re taking a series of aggressive steps. We’ll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We’ve scaled back Puget Sound campus expansion and reduced marketing budgets. We’ll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.

Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we’ll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don’t, we will also offer severance pay and other benefits.

The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company’s cost structure so that we have the resources to drive future profitable growth. I encourage you to attend tomorrow’s Town Hall at 9am PST in Cafe 34 or watch the Webcast.

While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach.

With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft.

With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today.

Thank you for your continued commitment and hard work.

Steve

Source: CNET News

Microsoft has announced that it will axe 5,000 jobs, or 5 percent of its workforce, after posting revenue of $16.63 billion, or $0.47 per share. It also announced that it will cease giving forecasts for its earnings for the rest of the year due to the current economic climate.

People in research & development, marketing, sales, finance, legal, human resources and IT will be axed; though it is not known which group got the most cuts. Out of the 5,000 jobs that will be axed – 1,400 will be axed today. The job cuts are said to reduce its operating expenses to approximately $1.5 billion.

While revenue were up from $16.4 billion a year ago; Microsoft has said that its earnings fell to $4.17 billion, or 47 cents a share; from earnings over a year ago of $4.71 billion, or 50 cents a share – a 2 percent increase.

“While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach,” chief executive Steve Ballmer said in a statement.

“We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today.”

In its earnings report, its sales for its consumer operating systems (like Vista) declined by 8 percent because of the result of the reducing PC market and the shift to netbooks, lower priced notebooks; but its Server & Tools and Entertainment & Devices division grew in revenue, 15 percent and 3 percent respectively.

Also the other divisions that grew in revenue were the Online Services Business, which includes Windows Live, and its Business Division. However, the Online Services Business underperform to meet expectations of $923 million, according to CNBC; only making $866 million.

But it’s not the only division that underperform to meet expectations; as only the Servers & Tools division managed to outperform.

It has also said that it will not bring out any of its forecasts for its earnings for the rest of the year, saying in the statement:

Due to the volatility of market conditions going forward, Microsoft is no longer able to offer quantitative revenue and EPS guidance for the balance of this fiscal year. Microsoft offers operating expense guidance of approximately $27.4 billion for the full year ending June 30, 2009.

Microsoft will also embark on aggressive steps to cut costs during the economic crisis; including making significant reductions “in spending on vendors and contingent staff”. In an internal e-mail to Microsoft employees, Steve Ballmer wrote:

To increase efficiency, we’re taking a series of aggressive steps. We’ll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We’ve scaled back Puget Sound campus expansion and reduced marketing budgets. We’ll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.

Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we’ll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don’t, we will also offer severance pay and other benefits.

The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company’s cost structure so that we have the resources to drive future profitable growth

Microsoft’s shares on the NASDAQ fell to 17.11, or an 11.71 percent drop, from yesterday. However, in after-hours trading, it managed to pick up 0.7 percent, and currently is trading at 17.23.

[1:41 PM AEDT] Edited Title to reflect on story changes.

Nokia reported that in its earnings report that its net sales were 26 euro cents (or 33 US cents) per share during Q4 2008, with sales at 12.7 billion euros; below the market expectations made by Reuters to have earnings of 30 euro cents per share and sales of 13.3 billion euros.

It’s net profit was at 576 million euros, below from the 1.84 billion euros it made in the same period in 2007; and carrying on the bad news was that its market share fell to 37 percent, down from the 38 percent market share it had in Q3 of 2008.

It also notes that it expects the mobile industry to fall by 10 percent compared to levels in 2008, and the decline should happen in the first half of the year. Previously, it predicted that the industry will decrease by 5 percent in 2009.

It’s operating cash flow for the fourth quarter was in the negative, with a loss of 0.3 billion euros; mainly because of a one-off payment to Qualcomm that was 1.7 billion Euros. Without the payment to Qualcomm, it would be at 1.4 billion euros.

This has been the first time, as CFO Peter Oppeheimer said in a conference call, that Apple has surpassed the $10 billion mark, thanks to favourable prices in computer parts like DRAM and LCD displays.

Apple also announced that it has sold 2.5 milion Macs, 22 million iPods and 4.3 million iPhones during the first quarter. While the Mac sales were in line with expectations, the iPod shipments were higher than previously thought. iPhone sales, however, were slightly less than what it estimated.

While its portable notebooks continue to grow, its desktop line fell – with COO Tim Cook saying comparison was tough since the new iMacs were updated in December 2007, and a general ‘disenchantment’ with desktop computers in general. It also said it is looking at the netbook market, but it still is undecided in entering it or not.

iTunes sales saw an increase, with Christmas Day and the following week where music sales peaked; while iPod units growth can be contributed to overseas markets, as units decreased in the US market.

Apple also announced its prediction for the next quarter, and will follow in a similar pattern in having a guidence well below predictions from analysts, saying that they expect revenue between $7.6 billion and $8 billion, with a earnings per share between 90 cents and $1.

The source, who wasn’t named since this wasn’t made to the public yet, also said that while Apple is being examined, it does not mean that it has seen evidence that Apple committed any wrongdoing.

This comes as Apple is set to announce its fourth quarterly earnings report today after when the market closes.

The two will be titled the “Device Solution” division and the “Digital Media and Communications” division. The Device Solutions division will be headed by current CEO of Samsung Electronics, Lee Yoon-woo, and will take the semiconductor and LCD business.

The new Digital Media and Communications division will take control of several of its consumer technology businesses; including televisions, mobile phones, printers, computers and home appliances. This division will be headed by Choi Gee-sung.

This comes as net profit for the company fell 44 percent in Q3 2008 from the same period in 2007; and is expected to bring out its Q4 2008 earnings on January 23. Also announced was a pay cut on the salaries of the top executives by up to 20 percent.

The biggest maker of semiconductors worldwide has also said that it earned 4 cents a share in Q4 to make $8.2 billion, down from last year’s 38 cents a share to make a profit of $10.71 billion. This year’s amount were also $2 billion short of its initial estimates.

The massive writedown was from its investment in Clearwire, which specialises in WiMax technology that Intel is building in its chips, after fears that the economic climate will derail its ambitions to roll out the network around the United States.

Also, the profits come as IDG and Gartner report that sales in PC have been the worst in six years, and also say that the slump might continue until 2010 – which could bring pressure to Microsoft’s Windows 7 to perform better than Vista.

Intel has said that it forecasts to make in this first quarter of 2009 a value of around $7 billion in sales, most likely to soothe investor’s worries about the company.

However, the bad news wasn’t enough to batter the stock, with stocks rising 21 cents, or 1.6 percent, to close at $13.29; and in after-hours trading, it hit $13.58.

Verizon was downgraded from “market perform” to “underperform”, while AT&T was downgraded from “outperform” to “market perform”.

In a note to clients, analyst Craig Moffett said that they “believe the TelCo stocks have come too far, too fast. With strong Q4 outperformance, the sector has traded as a strong defensive/staple. But the sector is more appropriately viewed as a late-stage cyclical, in our view."

Though asking for only $6 million; more than 125,000 have raised more than $6.2 million since July 1st. This is partly due to a personal letter made by founder Jimmy Wales that helped closed the gap. Out of the $6.2 million, $2 million was given as major gifts from companies.

"This campaign has proven that Wikipedia matters to its users, and that our users strongly support our mission: to bring free knowledge to the planet, free of charge and free of advertising. We deeply appreciate the generosity of our supporters,” Wales said in a statement.

According to the thank you letter, the money is going to be spent on:

• Day-to-day operations: servers, hosting, bandwidth, our staff of just 23 people.
• Continued development & improvements of open source software that powers all Wikimedia projects.
• Outreach events like Wikipedia Academies: in-person workshops where you can learn more about how to use and edit Wikipedia.
• Volunteer support: helping our international volunteer community to grow and to continue to do amazing work.

Along with Wikipedia, the foundation has other sites based around the ideology of Wikipedia; including Wikinews and Wikitionary. While donations are still accepted, they will be kept in a reserve fund to cover expenses for the next fiscal year.

The restructure, which includes slashing 8,000 jobs, has come after its stock had dived more than 60 percent in 2008, during the economic crisis. Both executives were signed up by Michael Dell after wooing them with sign-on bonuses of $250,000 for Jarvis and $2 million for Cannon.

Dell has asked employees to take a voluntary unpaid vacation for five days to lower costs.

However, Shannon Cross, from Cross Research, told Reuters that it expects the company to announce more layoffs after it is struggling to keep sales up.

Telstra is also set to lose its status as the “best safe haven” for investors because of the financial crisis that plagues economies around the world, including Australia, Asia, Europe and more importantly, the United States of America. Many of the analysts have been slashing their target prices, with Citi analysts slashing Telstra’s target price from $4.20 to $3.40.

Additionally, Goldman Sachs JB Were downgraded its recommendations from “buy” to “hold”, and Deutsche Bank pulled its target price from $5.30 to $5. However, Nomura analyst Sachin Gupta has not ruled out a possibility of Telstra building a similar infrastructure in Australia, telling The Australian, “Telstra is now excluded from the NBN bid. However, this does not necessarily mean Telstra will not build this infrastructure in Australia.”

“The RFP (request for proposals) process would lead to recommendations by the Expert Task Force, but the final tender could be awarded to anyone. We think Telstra is now more likely to start discussing this with the Minister on more co-operative terms – be that on returns, pricing or structure.”

Telstra was rejected from the NBN bid after failing to meet the criteria of the proposals, with its proposal being a 13 page letter saying that it wants several Government demands removed from the bid, and also wanted to use the money to upgrade its own existing network, claiming that it was the only bid that had “real financial commitment”. It has not ruled out suing the Government, but some analysts are saying that they are 100% percent certain that Telstra will go down that path.

Standards & Poor (S&P) have lowered Motorola’s long-term credit rating to junk status, making it one level below investment grade, as the company continues to decline. As well, Moody’s Investors Service is also considering downgrading the company’s debt rating to two levels above non-investment grade.

These downgrades in Motorola’s credit and debt rating come as the handset division continues to face serious trouble after two years; and it doesn’t look any better soon with co-CEO Sanjay Jha telling investors that the division won’t get back on track until early 2010. It is so bad that Motorola was forced to delay the planned spinoff of the division and a planned restructure in hope that it can actually create a product that would get some hype.

The main problem is that it has not been creating a hit phone since the RAZR was introduced in 2004. While it creates other phones, those did not live up to the RAZR name. Even the RAZR successors had a difficult time to create a similar hype compared to the ultra-thin phone. According to CNET, the company has also missed the “paradigm shift” in the market, where customers like “sophisticated smartphones” and not traditional feature-based phones.

And this could be true, with the iPhone taking over RAZR’s place as the most popular phone in the US market for Q3 of 2008, according to the NPD Group.

While it has not ignored the smartphone market (all powered by Windows Mobile), all have not faired well with competitors from Apple, Nokia (which is the leader in the worldwide market) and Research in Mobile (RIM)’s BlackBerry smartphone.

The company also said that it had lowered expectations of all handset sales for Q4 of 2008 and the entire year of 2009 because of the worsening economic climate. But it isn’t alone; Nokia was forced to lower expectations twice in November, while RIM announced that its Q3 sales would be lower than expected due to the economy.

Shares of technology companies have taken a huge beating on Monday (US time) as the House of Representatives failed to pass a bailout plan for the financial sector, with the vote for the rejection was 228 to 205, with two-thirds of the Republicans rejecting the bill with a significant number of Democrats. More information can be found at The Journal.

When the announcement happened, the shares on the Dow Jones fell more than 777.68, nearly 7 percent down from Friday, with the S&P 500 Index dropping 8.8 percent, or 106.46 points; and the tech-heavy Nasdaq Composite Index dropped more than 9 percent, or 199.61 points, to 1,983.73 – the first time it had reach below the 2,000 mark since 2005.

Among the hardest hit were Apple, who shares closed $105.26, 18 percent (or $22.98) down from Friday; AMD, who shares were nearly 17 percent down; and Google, who shared dropped more than 11 percent to close at $381. Those who managed to survive the storm of mass losses where Hewlett-Packard, Intel and Microsoft – with all of their shares fell more than 5 percent.

IBM, however, managed to have one of the narrowest percentage losses. They closed down 4 percent from Friday to $114.46.

While many companies declined to comment on the market plunge, Microsoft’s Senior Vice President and General Counsel Brad Smith released a statement, urging that the US House of Representatives reconsider their decision about rejecting the bailout plan:

“Microsoft strongly urges members of the U.S. House of Representatives to reconsider and to support legislation that will re-instill confidence and stability in the financial markets. This legislation is vitally important to the health and preservation of jobs in all sectors of the economy of Washington State and the nation, and we urge Congress to act swiftly.”

Financial Data Image from Yahoo Finance