As Mozilla Corp. began the final push on Firefox 3.0 Beta 3 this week, it also announced that at least one more beta will be necessary before it starts building release candidates.
On Tuesday, Mozilla "froze" the code for Firefox 3.0 Beta 3. Testing of the beta is scheduled to start on Monday.
At the same time, in a message to the mozilla.dev.planning newsgroup, Mike Beltzner, Mozilla's interface designer, said that a fourth beta would be required.
"[We] will be adding another milestone before moving on to Release Candidate builds," Beltzner said. "Our goal is to do a quick turnaround on Firefox 3 Beta 4, but we cannot provide a good estimate until we know the size and scope of blockers remaining after the Beta 3 code freeze."
As of Beta 3, all efforts will turn to addressing bugs that could stymie the preview's release, Beltzner added. "We will be driving the list of blocking+, P1, target=beta 3 bugs to zero," he said. As of Thursday at 9 p.m. EST, there were three bugs that met his criteria; in Mozilla's nomenclature, such bugs are dubbed "blockers," meaning they are crucial enough that they require solutions before the beta is allowed to ship.
According to notes from a Tuesday meeting, Beta 3's tentative schedule points toward a release on or about Feb. 13.
Those same notes also indicated the status of efforts to make the browser's add-ons compatible with the upcoming preview. Approximately 41% of all extensions, by usage, have been modified so that they will work with Beta 3, Mozilla reported. Several widely used add-ons, however, do not yet support Firefox Beta 3, including IE Tab, Forecastfox, Fasterfox and Firebug.
Mozilla released Firefox 3 Beta 2 on Dec. 18, beating a self-imposed deadline by several days. The company regularly declines to set a release date for the final version of the browser.
Saturday, February 2, 2008
Rackspace backtracks over virtualization
Global hosting company Rackspace has performed a volte-face on its virtualization position, and will be hosting virtual servers after all. It controversially said in August 2007 that virtualization was not yet ready for the big time and wouldn't save money.
Its recently announced virtualization initiative has started with a dedicated virtualized server offering. The company said: "Virtualization is the newest service offering signalling Rackspace's shift to IT hosting, transforming traditional IT functions into consumable services via the web. As more enterprises transition from purchasing in-house computing assets to leveraging service providers, Rackspace now offers a suite of hosted IT services that are more reliable and provide better value, including virtualization, hosted mail, custom application support, back-end IT and storage."
This contrasts with Rackspace's statement six months ago that 87 percent of its customers said they would not share a server with other hosting customers. This prompted Rackspace to suggest that hosting providers offering virtual servers could be barking up the wrong tree, that virtualization was not yet ready for the big time, and was unlikely to save its users money. Now the company says that a recent customer survey found that 51 percent were not willing to share a physical server with other virtualization hosting customers, and only 13 percent were certain they were willing to share a physical server with other customers.
"Our product development approach focuses first and foremost on Fanatical Support readiness," said CTO John Engates. "We also ask 'Is the technology ready to use in a production environment?' We believe that our new virtualization offering now meets these requirements and pushes the envelope, giving customers a virtualized environment ready for mission-critical applications, supported by our wealth of experience, expertise and Fanatical Support."
The company reckoned that it already nearly 300 virtual machines under its management, using the virtualization infrastructure for internal IT operations as well as providing infrastructure for its spin-offs, Mosso cloud computing and Mailtrust hosted email. The company's also offering a server consolidation service.
Rackspace will use VMware's Virtual Infrastructure 3 (VI3), whose benefits Rackspace described as "flexibility and scalability, as well as simplified infrastructure management with new data protection options and on-demand provisioning".
The offering will be based on dedicated physical hardware for each customer and will include the option of hybrid virtual and physical hosted environments.
Rackspace's Engates added, "Virtualization is still an evolving technology, and we believe this is just the beginning for Rackspace. Our RackLabs research and development department plans to continue to work with partners like VMware, Microsoft and XenSource to make generational leaps in the virtualization hosting arena. We expect future releases of Rackspace Virtualization Hosting to include enhanced disaster recovery, storage and scaling capabilities."
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Its recently announced virtualization initiative has started with a dedicated virtualized server offering. The company said: "Virtualization is the newest service offering signalling Rackspace's shift to IT hosting, transforming traditional IT functions into consumable services via the web. As more enterprises transition from purchasing in-house computing assets to leveraging service providers, Rackspace now offers a suite of hosted IT services that are more reliable and provide better value, including virtualization, hosted mail, custom application support, back-end IT and storage."
This contrasts with Rackspace's statement six months ago that 87 percent of its customers said they would not share a server with other hosting customers. This prompted Rackspace to suggest that hosting providers offering virtual servers could be barking up the wrong tree, that virtualization was not yet ready for the big time, and was unlikely to save its users money. Now the company says that a recent customer survey found that 51 percent were not willing to share a physical server with other virtualization hosting customers, and only 13 percent were certain they were willing to share a physical server with other customers.
"Our product development approach focuses first and foremost on Fanatical Support readiness," said CTO John Engates. "We also ask 'Is the technology ready to use in a production environment?' We believe that our new virtualization offering now meets these requirements and pushes the envelope, giving customers a virtualized environment ready for mission-critical applications, supported by our wealth of experience, expertise and Fanatical Support."
The company reckoned that it already nearly 300 virtual machines under its management, using the virtualization infrastructure for internal IT operations as well as providing infrastructure for its spin-offs, Mosso cloud computing and Mailtrust hosted email. The company's also offering a server consolidation service.
Rackspace will use VMware's Virtual Infrastructure 3 (VI3), whose benefits Rackspace described as "flexibility and scalability, as well as simplified infrastructure management with new data protection options and on-demand provisioning".
The offering will be based on dedicated physical hardware for each customer and will include the option of hybrid virtual and physical hosted environments.
Rackspace's Engates added, "Virtualization is still an evolving technology, and we believe this is just the beginning for Rackspace. Our RackLabs research and development department plans to continue to work with partners like VMware, Microsoft and XenSource to make generational leaps in the virtualization hosting arena. We expect future releases of Rackspace Virtualization Hosting to include enhanced disaster recovery, storage and scaling capabilities."
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Privacy groups vow to fight Microsoft-Yahoo deal
Privacy groups are promising a fight before U.S. regulatory agencies if Microsoft's offer to buy Yahoo for $44.6 billion is accepted, and the deal could face significant hurdles in Europe as well.
Microsoft announced that it sent an offer to Yahoo's board of directors on Thursday, going public with the news Friday morning. Immediately, the executive directors of the Center for Digital Democracy (CDD) and the Electronic Privacy Information Center (EPIC) said the acquisition would raise serious privacy concerns.
CDD will press the U.S. Department of Justice, the Federal Trade Commission and Congress to "scrutinize this deal and impose the needed safeguards for it -- and the industry," said Jeffrey Chester, CDD's executive director. CDD and EPIC tried to stop Google's proposed acquisition of online ad service DoubleClick on privacy grounds before the FTC last year, but the FTC approved the deal in December.
The Microsoft-Yahoo deal, if consummated, would "create a powerful interactive Internet duopoly in online media," Chester said. "Google and Microsoft will have inordinate power to shape the online communications marketplace, including journalism, entertainment and advertising. There are consequences to democratic societies everywhere, as two digital gatekeepers are likely to control how the Internet and other interactive media evolve."
The proposed deal also underscores a need for new laws or regulations that protect consumer data, Chester added. "In an era when individuals are increasingly conducting their personal, social and political lives online, the corporations that control the digital experience will have a far-reaching influence over every aspect of society," he said. "Consumers will be more vulnerable to having their personal information become the property of the GoogleClick's and Microhoo's."
But the DOJ and FTC may have little grounds to oppose a Microsoft/Yahoo merger, said Professor Keith Hylton, who specializes in antitrust issues at the Boston University law school. While Microsoft and Yahoo compete in some areas, Microsoft could argue this a "vertical" merger that largely expands its online services, but largely doesn't eliminate competition, he said.
"I think Microsoft is trying to ramp up in the online services/online ad revenue business," Hylton said. "Microsoft is a small player in that area, and Google is a big player. This is a merger of two firms trying to compete against a big monster out there -- Google."
But the deal could face more hurdles in Europe. If the deal allows Microsoft to take components of Windows online, and "in the process increases Microsoft's dominance of the market for PC operating systems," then the European Commission would have to prohibit the deal, said an antitrust lawyer in Europe who asked not to be identified.
European Union merger rules prohibit dominant companies from increasing their dominance, the lawyer said.
The combined company would likely have to sell off an instant-messaging service, added a European Commission official familiar with the competition department. "I can't see how Microsoft/Yahoo would be allowed to keep both instant-messaging services," said the official, who also asked not to be identified.
Microsoft campaigned for federal regulators to block the Google-DoubleClick deal, partly on antitrust grounds. But Google argued the acquisition would join two companies operating in different online markets.
This week, Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia extended antitrust scrutiny of Microsoft for two years. But the U.S. government's antitrust case against Microsoft was based on its desktop and server operating systems, not online services. If anything, the old antitrust case could help Microsoft make the case for approval of its acquisition of Yahoo, Hylton said.
"I assume Microsoft people can say, 'Look, we're already under a microscope, doesn't this suggest we're less likely to do anticompetitive things?'" Hylton said.
But a consolidating online market means users will have their data held by a small number of companies, said Professor Joseph Turow, at University of Pennsylvania school of communication.
"Microsoft's decision to buy Yahoo is a direct result of the decision by the FTC to allow Google to purchase DoubleClick," he said. "It is further evidence that despite the appearance of unlimited choice in the new media environment, people's activities will be tracked and shaped by a very small number of companies who care far more about surveillance and targeted advertising than the public interest."
The public needs to demand privacy scrutiny in the proposed deal, he said. "The federal government, which should have been the guardian of the public interest, has dropped the ball."
(Additional reporting by Paul Meller in Brussels.)
Microsoft announced that it sent an offer to Yahoo's board of directors on Thursday, going public with the news Friday morning. Immediately, the executive directors of the Center for Digital Democracy (CDD) and the Electronic Privacy Information Center (EPIC) said the acquisition would raise serious privacy concerns.
CDD will press the U.S. Department of Justice, the Federal Trade Commission and Congress to "scrutinize this deal and impose the needed safeguards for it -- and the industry," said Jeffrey Chester, CDD's executive director. CDD and EPIC tried to stop Google's proposed acquisition of online ad service DoubleClick on privacy grounds before the FTC last year, but the FTC approved the deal in December.
The Microsoft-Yahoo deal, if consummated, would "create a powerful interactive Internet duopoly in online media," Chester said. "Google and Microsoft will have inordinate power to shape the online communications marketplace, including journalism, entertainment and advertising. There are consequences to democratic societies everywhere, as two digital gatekeepers are likely to control how the Internet and other interactive media evolve."
The proposed deal also underscores a need for new laws or regulations that protect consumer data, Chester added. "In an era when individuals are increasingly conducting their personal, social and political lives online, the corporations that control the digital experience will have a far-reaching influence over every aspect of society," he said. "Consumers will be more vulnerable to having their personal information become the property of the GoogleClick's and Microhoo's."
But the DOJ and FTC may have little grounds to oppose a Microsoft/Yahoo merger, said Professor Keith Hylton, who specializes in antitrust issues at the Boston University law school. While Microsoft and Yahoo compete in some areas, Microsoft could argue this a "vertical" merger that largely expands its online services, but largely doesn't eliminate competition, he said.
"I think Microsoft is trying to ramp up in the online services/online ad revenue business," Hylton said. "Microsoft is a small player in that area, and Google is a big player. This is a merger of two firms trying to compete against a big monster out there -- Google."
But the deal could face more hurdles in Europe. If the deal allows Microsoft to take components of Windows online, and "in the process increases Microsoft's dominance of the market for PC operating systems," then the European Commission would have to prohibit the deal, said an antitrust lawyer in Europe who asked not to be identified.
European Union merger rules prohibit dominant companies from increasing their dominance, the lawyer said.
The combined company would likely have to sell off an instant-messaging service, added a European Commission official familiar with the competition department. "I can't see how Microsoft/Yahoo would be allowed to keep both instant-messaging services," said the official, who also asked not to be identified.
Microsoft campaigned for federal regulators to block the Google-DoubleClick deal, partly on antitrust grounds. But Google argued the acquisition would join two companies operating in different online markets.
This week, Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia extended antitrust scrutiny of Microsoft for two years. But the U.S. government's antitrust case against Microsoft was based on its desktop and server operating systems, not online services. If anything, the old antitrust case could help Microsoft make the case for approval of its acquisition of Yahoo, Hylton said.
"I assume Microsoft people can say, 'Look, we're already under a microscope, doesn't this suggest we're less likely to do anticompetitive things?'" Hylton said.
But a consolidating online market means users will have their data held by a small number of companies, said Professor Joseph Turow, at University of Pennsylvania school of communication.
"Microsoft's decision to buy Yahoo is a direct result of the decision by the FTC to allow Google to purchase DoubleClick," he said. "It is further evidence that despite the appearance of unlimited choice in the new media environment, people's activities will be tracked and shaped by a very small number of companies who care far more about surveillance and targeted advertising than the public interest."
The public needs to demand privacy scrutiny in the proposed deal, he said. "The federal government, which should have been the guardian of the public interest, has dropped the ball."
(Additional reporting by Paul Meller in Brussels.)
Flag Telecom to start repairing undersea cable Tuesday
Flag Telecom will start repairs next week on a damaged submarine telecommunications cable linking Egypt and Italy. A repair ship is expected to reach the site of the damage, 8.3 kilometers from Alexandria, Egypt, on Tuesday. The repair will take a week to complete, Flag Telecom said Friday.
Breaks on Wednesday in the Flag Telecom Europe-Asia cable, owned by India's Reliance Communications, and on the South East Asia-Middle East-West Europe 4 (SEA-ME-WE 4) cable, owned by a consortium, disrupted Internet and other communications to the Middle East and India.
Flag said the Europe-Asia cable was cut at 8 a.m. GMT on Wednesday. The company also said it was able to restore circuits to some customers and was switching to alternative routes for others.
A large number of customers in India were shifted by their service providers from the Middle East links to Asia-Pacific routes. But the new routing increased the time-lag heard on long-distance telephone calls, and also led to degradation of Internet service to the U.K. and the East coast of the U.S., said Rajesh Chharia, president of the Internet Service Providers' Association of India (ISPAI).
Some analysts said that consumers and smaller customers were suffering even as providers tried to meet their service-level agreements (SLAs) with large corporate customers.
The Indian government announced late Thursday that Indian service providers, including members of the SEA-ME-WE 4 consortium, are in constant touch with Telecom Egypt to ensure the speedy repair of the SEA-ME-WE 4 and Flag cables connecting India to Western Europe. Repairing this type of submarine optical fiber cable typically takes 15 days, but the Indian ministry of communications and information technology expects this link will be completely restored within 10 days.
Another submarine Internet cable owned by Flag Telecom, the Falcon cable between the United Arab Emirates and Oman, was cut on Friday at 6 a.m. GMT, at a location 56 kilometers from Dubai, Flag said Friday. A repair ship has been notified, and is expected to arrive at the site of the damage in the next few days, the company said.
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Breaks on Wednesday in the Flag Telecom Europe-Asia cable, owned by India's Reliance Communications, and on the South East Asia-Middle East-West Europe 4 (SEA-ME-WE 4) cable, owned by a consortium, disrupted Internet and other communications to the Middle East and India.
Flag said the Europe-Asia cable was cut at 8 a.m. GMT on Wednesday. The company also said it was able to restore circuits to some customers and was switching to alternative routes for others.
A large number of customers in India were shifted by their service providers from the Middle East links to Asia-Pacific routes. But the new routing increased the time-lag heard on long-distance telephone calls, and also led to degradation of Internet service to the U.K. and the East coast of the U.S., said Rajesh Chharia, president of the Internet Service Providers' Association of India (ISPAI).
Some analysts said that consumers and smaller customers were suffering even as providers tried to meet their service-level agreements (SLAs) with large corporate customers.
The Indian government announced late Thursday that Indian service providers, including members of the SEA-ME-WE 4 consortium, are in constant touch with Telecom Egypt to ensure the speedy repair of the SEA-ME-WE 4 and Flag cables connecting India to Western Europe. Repairing this type of submarine optical fiber cable typically takes 15 days, but the Indian ministry of communications and information technology expects this link will be completely restored within 10 days.
Another submarine Internet cable owned by Flag Telecom, the Falcon cable between the United Arab Emirates and Oman, was cut on Friday at 6 a.m. GMT, at a location 56 kilometers from Dubai, Flag said Friday. A repair ship has been notified, and is expected to arrive at the site of the damage in the next few days, the company said.
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Microsoft's offer to Yahoo's board
Below is the text of the letter that Microsoft sent to Yahoo's Board of Directors:
January 31, 2008
Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Roy Bostock, Chairman
Attention: Jerry Yang, Chief Executive Officer
Dear Members of the Board:
I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft's closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.
Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, non-controlled assets and cash. By whatever financial measure you use - EBITDA, free cash flow, operating cash flow, net income, or analyst target prices - this proposal represents a compelling value realization event for your shareholders.
We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!'s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26%, and a return on equity of 35% on average for the last three years. Microsoft's share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500. It is our view that Microsoft has significant potential upside given the continued solid growth in our core businesses, the recent launch of Windows Vista, and other strategic initiatives.
Microsoft's consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.
In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that "now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction." According to that letter, the principal reason for this view was the Yahoo! Board's confidence in the "potential upside" if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved.
While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:
Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.
Expanded R&D capacity: The combined talent of our engineering resources can be focused on R&D priorities such as a single search index and single advertising platform. Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own.
Operational efficiencies: Eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity.
Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.
We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company with exceptional display and search advertising capabilities. You should also be aware that we intend to offer significant retention packages to your engineers, key leaders and employees across all disciplines.
We have dedicated considerable time and resources to an analysis of a potential transaction and are confident that the combination will receive all necessary regulatory approvals. We look forward to discussing this with you, and both our internal legal team and outside counsel are available to meet with your counsel at their earliest convenience.
Our proposal is subject to the negotiation of a definitive merger agreement and our having the opportunity to conduct certain limited and confirmatory due diligence. In addition, because a portion of the aggregate merger consideration would consist of Microsoft common stock, we would provide Yahoo! the opportunity to conduct appropriate limited due diligence with respect to Microsoft. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.
In light of the significance of this proposal to your shareholders and ours, as well as the potential for selective disclosures, our intention is to publicly release the text of this letter tomorrow morning.
Due to the importance of these discussions and the value represented by our proposal, we expect the Yahoo! Board to engage in a full review of our proposal. My leadership team and I would be happy to make ourselves available to meet with you and your Board at your earliest convenience. Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal.
We believe this proposal represents a unique opportunity to create significant value for Yahoo!'s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply.
Sincerely yours,
/s/ Steven A. Ballmer
Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation
January 31, 2008
Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Roy Bostock, Chairman
Attention: Jerry Yang, Chief Executive Officer
Dear Members of the Board:
I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft's closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.
Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, non-controlled assets and cash. By whatever financial measure you use - EBITDA, free cash flow, operating cash flow, net income, or analyst target prices - this proposal represents a compelling value realization event for your shareholders.
We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!'s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26%, and a return on equity of 35% on average for the last three years. Microsoft's share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500. It is our view that Microsoft has significant potential upside given the continued solid growth in our core businesses, the recent launch of Windows Vista, and other strategic initiatives.
Microsoft's consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.
In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that "now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction." According to that letter, the principal reason for this view was the Yahoo! Board's confidence in the "potential upside" if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved.
While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:
Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.
Expanded R&D capacity: The combined talent of our engineering resources can be focused on R&D priorities such as a single search index and single advertising platform. Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own.
Operational efficiencies: Eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity.
Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.
We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company with exceptional display and search advertising capabilities. You should also be aware that we intend to offer significant retention packages to your engineers, key leaders and employees across all disciplines.
We have dedicated considerable time and resources to an analysis of a potential transaction and are confident that the combination will receive all necessary regulatory approvals. We look forward to discussing this with you, and both our internal legal team and outside counsel are available to meet with your counsel at their earliest convenience.
Our proposal is subject to the negotiation of a definitive merger agreement and our having the opportunity to conduct certain limited and confirmatory due diligence. In addition, because a portion of the aggregate merger consideration would consist of Microsoft common stock, we would provide Yahoo! the opportunity to conduct appropriate limited due diligence with respect to Microsoft. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.
In light of the significance of this proposal to your shareholders and ours, as well as the potential for selective disclosures, our intention is to publicly release the text of this letter tomorrow morning.
Due to the importance of these discussions and the value represented by our proposal, we expect the Yahoo! Board to engage in a full review of our proposal. My leadership team and I would be happy to make ourselves available to meet with you and your Board at your earliest convenience. Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal.
We believe this proposal represents a unique opportunity to create significant value for Yahoo!'s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply.
Sincerely yours,
/s/ Steven A. Ballmer
Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation
Terry Semel quits Yahoo board
Terry Semel is stepping down as Yahoo's non-executive chairman, six months after handing over his CEO title to Jerry Yang.
Semel is leaving the board effective immediately, Yahoo announced Thursday. He will be replaced as non-executive chairman by another board member, Roy Bostock, the company said.
Semel was chairman and CEO of Yahoo for six years until he was replaced in a management shuffle last June. Yang, one of Yahoo's co-founders, was made CEO, and Semel was demoted to non-executive chairman.
As CEO, Semel helped to build Yahoo's audience from 170 million to more than 500 million users. But he was also blamed for missteps that allowed Google to build a commanding lead in online search and advertising, prompting last year's reorganization.
"With the Company moving forward under new leadership, I believe this is an appropriate time for me to step down from the board," Semel said in the statement.
He approached the board several months ago about leaving once a replacement could be found, Yahoo said.
Bostock has a long history in the advertising industry, "an area that is more important than ever to Yahoo's business and our long term success," the company said.
On Tuesday Yahoo reported that net income for its fourth quarter declined to $206 million, from $269 million a year earlier. It also announced plans to lay off about 1,000 staff.
Semel's departure from the board appears to mark the end of his tenure at Yahoo. Yang thanked him for "his many contributions to Yahoo over the years – and for helping to lay a firm foundation for future success and improved financial performance.”
Bostock has been a board member at Yahoo since May 2003 and was elected unanimously by the board to replace Semel. From 1990 to 2000 he was chairman and CEO of D'Arcy Masius Benton & Bowles, and its successor advertising company The MacManus Group.
Semel is leaving the board effective immediately, Yahoo announced Thursday. He will be replaced as non-executive chairman by another board member, Roy Bostock, the company said.
Semel was chairman and CEO of Yahoo for six years until he was replaced in a management shuffle last June. Yang, one of Yahoo's co-founders, was made CEO, and Semel was demoted to non-executive chairman.
As CEO, Semel helped to build Yahoo's audience from 170 million to more than 500 million users. But he was also blamed for missteps that allowed Google to build a commanding lead in online search and advertising, prompting last year's reorganization.
"With the Company moving forward under new leadership, I believe this is an appropriate time for me to step down from the board," Semel said in the statement.
He approached the board several months ago about leaving once a replacement could be found, Yahoo said.
Bostock has a long history in the advertising industry, "an area that is more important than ever to Yahoo's business and our long term success," the company said.
On Tuesday Yahoo reported that net income for its fourth quarter declined to $206 million, from $269 million a year earlier. It also announced plans to lay off about 1,000 staff.
Semel's departure from the board appears to mark the end of his tenure at Yahoo. Yang thanked him for "his many contributions to Yahoo over the years – and for helping to lay a firm foundation for future success and improved financial performance.”
Bostock has been a board member at Yahoo since May 2003 and was elected unanimously by the board to replace Semel. From 1990 to 2000 he was chairman and CEO of D'Arcy Masius Benton & Bowles, and its successor advertising company The MacManus Group.
Flash price drop spurring innovation
A massive decline in the price of NAND flash memory, the chips that store photos in digital cameras and music in iPods, is prompting innovation among companies trying to increase sales.
A few of the items users are likely to see more widespread in gadgets this year include greatly expanded storage capacity in SD (secure digital) cards, USB (universal serial bus) flash sticks and internal storage, as well as new, lower-cost SSDs (solid-state discs) in notebook computers.
The price of mainstream 4G bit SLC (single-level cell) NAND flash memory chips has fallen 73 percent since mid-August to US$4.96 late Thursday, according to DRAMeXchange Technology, which runs an online clearinghouse for the chips. The chips hit a high of $18.50 on Aug. 14. The price of 4G bit MLC (multi-level cell) NAND flash chips have taken a slightly worse dive, 75 percent down to $2.23 on Thursday, compared to its summer high of $8.85 per chip.
The difference between SLC and MLC is cost and life span. SLC normally costs about three times more than MLC, and has a lifetime of 100,000 write cycles. MLC has a lifetime of only 10,000 write cycles.
Toshiba and Samsung have both developed new 128G byte SSDs based in MLC NAND to expand their use in notebook PCs. The new SSDs are less expensive, giving notebook PC designers more choices in storage.
"At 128G bytes, you're giving consumers the kind of storage space they expect in a notebook," said Jim Elliott, director of flash marketing at Samsung, in an interview.
To work around the lifespan issue, Toshiba and Samsung use controller chips to spread writes across the drive to avoid wearing out any one portion too quickly.
The new MLC-based drives are an important step forward for SSDs in the battle against hard disk drives (HDD). At 128G bytes, an SSD stands are far better chance of replacing an HDD in laptop computers because it removes some of the high-capacity advantage HDDs hold.
SSDs have several advantages over HDDs; they're lighter, more rugged, consume less power, make no noise and enable a computer to start up and load software faster than HDDs. But SSDs are a lot more expensive than HDDs, which is why they're mainly used in the business laptop market, where users are willing to pay more for performance and reliability.
Elliott believes SSDs for PCs will account for 27 percent of NAND consumption by 2011, particularly in business laptops and mobile devices.
SanDisk has taken a slightly different route in SSDs than Toshiba and Samsung. The company made a 72G byte SSD in a thinner form factor aimed at mobile devices. The drive takes up less space, so it could be used in a range of mobile devices, said Iri Trashanski, director of strategic business development at SanDisk.
He doesn't believe there will be a market for 128G byte SSDs for a while.
Brian Kumagi, senior business development manager NAND flash memory business at Toshiba, believes the lower cost of MLC NAND chips will play a major role in seeing 128G byte SSDs gain market share.
Toshiba is also offering MLC NAND SSDs in 32G byte and 64G byte capacities to entice laptop PC makers and makers of digital music players and other devices requiring more storage.
There are several other products where companies are adding NAND flash to increase storage capacity and improve devices. One, thanks to the iPhone, is handsets, said Elliott.
Multimedia handsets will likely see 8G bytes of embedded flash memory become the standard this year, and card slots are being added to a host of mobile phones to increase storage and for added content delivery, including movies, games, software and more.
Plus, low prices are encouraging new innovation, just as low NAND prices helped put the chips into more iPods earlier this decade. One area is in video cameras, namely, Flip video and similar devices.
For $119.99, users can buy a Flip video camcorder that uses NAND flash memory to store 30 minutes of recordings.
In addition, devices such as GPS (global positioning system) for cars will need more flash when 3D (three dimensional) digital maps start replacing 2D maps.
The good news for users is that there are so many NAND flash memory makers in the world today that prices will remain low or at least reasonable for a long time.
In a report titled "Flash to crash," Macquarie Securities chip analyst Warren Lau wrote that NAND flash memory prices will likely remain low throughout the first half of this year, with little room for upside until the third quarter.
"We continue to warn that NAND flash will see excess supply in the first half of 2008 owing to aggressive production ramp (at IM Flash and Toshiba) and the seasonally weaker period for consumer products (digital still cameras, handsets and MP3)," he wrote.
Much of the possible price movements in NAND flash actually depend on Apple because of the widespread popularity of the iPod and iPhone.
The company announced it has already shipped over 4 million iPhones and continues to ramp shipments. iPod shipment growth has dropped a bit, according to market researcher Gartner, but higher capacity iPod products such as the Touch have done well in the market.
"Apple is a critical driver of NAND flash consumption and will continue to yield great influence on NAND flash vendors," Gartner said in a report on Monday.
A few of the items users are likely to see more widespread in gadgets this year include greatly expanded storage capacity in SD (secure digital) cards, USB (universal serial bus) flash sticks and internal storage, as well as new, lower-cost SSDs (solid-state discs) in notebook computers.
The price of mainstream 4G bit SLC (single-level cell) NAND flash memory chips has fallen 73 percent since mid-August to US$4.96 late Thursday, according to DRAMeXchange Technology, which runs an online clearinghouse for the chips. The chips hit a high of $18.50 on Aug. 14. The price of 4G bit MLC (multi-level cell) NAND flash chips have taken a slightly worse dive, 75 percent down to $2.23 on Thursday, compared to its summer high of $8.85 per chip.
The difference between SLC and MLC is cost and life span. SLC normally costs about three times more than MLC, and has a lifetime of 100,000 write cycles. MLC has a lifetime of only 10,000 write cycles.
Toshiba and Samsung have both developed new 128G byte SSDs based in MLC NAND to expand their use in notebook PCs. The new SSDs are less expensive, giving notebook PC designers more choices in storage.
"At 128G bytes, you're giving consumers the kind of storage space they expect in a notebook," said Jim Elliott, director of flash marketing at Samsung, in an interview.
To work around the lifespan issue, Toshiba and Samsung use controller chips to spread writes across the drive to avoid wearing out any one portion too quickly.
The new MLC-based drives are an important step forward for SSDs in the battle against hard disk drives (HDD). At 128G bytes, an SSD stands are far better chance of replacing an HDD in laptop computers because it removes some of the high-capacity advantage HDDs hold.
SSDs have several advantages over HDDs; they're lighter, more rugged, consume less power, make no noise and enable a computer to start up and load software faster than HDDs. But SSDs are a lot more expensive than HDDs, which is why they're mainly used in the business laptop market, where users are willing to pay more for performance and reliability.
Elliott believes SSDs for PCs will account for 27 percent of NAND consumption by 2011, particularly in business laptops and mobile devices.
SanDisk has taken a slightly different route in SSDs than Toshiba and Samsung. The company made a 72G byte SSD in a thinner form factor aimed at mobile devices. The drive takes up less space, so it could be used in a range of mobile devices, said Iri Trashanski, director of strategic business development at SanDisk.
He doesn't believe there will be a market for 128G byte SSDs for a while.
Brian Kumagi, senior business development manager NAND flash memory business at Toshiba, believes the lower cost of MLC NAND chips will play a major role in seeing 128G byte SSDs gain market share.
Toshiba is also offering MLC NAND SSDs in 32G byte and 64G byte capacities to entice laptop PC makers and makers of digital music players and other devices requiring more storage.
There are several other products where companies are adding NAND flash to increase storage capacity and improve devices. One, thanks to the iPhone, is handsets, said Elliott.
Multimedia handsets will likely see 8G bytes of embedded flash memory become the standard this year, and card slots are being added to a host of mobile phones to increase storage and for added content delivery, including movies, games, software and more.
Plus, low prices are encouraging new innovation, just as low NAND prices helped put the chips into more iPods earlier this decade. One area is in video cameras, namely, Flip video and similar devices.
For $119.99, users can buy a Flip video camcorder that uses NAND flash memory to store 30 minutes of recordings.
In addition, devices such as GPS (global positioning system) for cars will need more flash when 3D (three dimensional) digital maps start replacing 2D maps.
The good news for users is that there are so many NAND flash memory makers in the world today that prices will remain low or at least reasonable for a long time.
In a report titled "Flash to crash," Macquarie Securities chip analyst Warren Lau wrote that NAND flash memory prices will likely remain low throughout the first half of this year, with little room for upside until the third quarter.
"We continue to warn that NAND flash will see excess supply in the first half of 2008 owing to aggressive production ramp (at IM Flash and Toshiba) and the seasonally weaker period for consumer products (digital still cameras, handsets and MP3)," he wrote.
Much of the possible price movements in NAND flash actually depend on Apple because of the widespread popularity of the iPod and iPhone.
The company announced it has already shipped over 4 million iPhones and continues to ramp shipments. iPod shipment growth has dropped a bit, according to market researcher Gartner, but higher capacity iPod products such as the Touch have done well in the market.
"Apple is a critical driver of NAND flash consumption and will continue to yield great influence on NAND flash vendors," Gartner said in a report on Monday.
Microsoft offers to buy Yahoo for $44.6 billion
Microsoft has offered to buy Yahoo for around US$44.6 billion in cash and shares, to better compete with Google in the market for online services.
CEO Steve Ballmer made the offer in a letter to Yahoo's board of directors on Thursday, telling the board that he would release the letter Friday morning.
On a conference call Friday, Ballmer called a combination of Microsoft and Yahoo a more "credible" alternative to Google in the online advertising and services market.
"By combining the assets of Microsoft and Yahoo we can offer a more competitive choice for consumers, advertisers and publishers," he said.
It was Yahoo's board that first approached Microsoft, in February 2007, Microsoft said.
Yahoo, in a statement, said its board will carefully evaluate Microsoft's proposal, which it described as unsolicited.
Microsoft expects the market for online advertising to almost double in size over the next three years, from $40 billion in 2007 to $80 billion by 2010. A merger will allow it to realize economies of scale and reduce capital costs as it addresses this market, it said.
"The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own," said Ray Ozzie, chief software architect at Microsoft, in a statement.
Microsoft expects to cut costs by $1 billion a year by realizing synergies with Yahoo in four areas: obtaining economies of scale as its audience increases; combining its research and development efforts with Yahoo's to innovate faster; eliminating operational redundancy to cut costs, and pooling expertise to innovate in video and mobile.
The companies will work together to develop the merger plan, Microsoft said.
It intends to pay key Yahoo engineers and other staff to stay following the merger.
The offer represents a 62 percent premium over Yahoo's closing price on Thursday. Microsoft expects to receive all necessary approvals in the second half of this year.
Despite the potential for short-term gain, Yahoo, in its statement, said its goal will be to maximize long-term value for shareholders.
At this premium, even if Yahoo's top managers were opposed to the acquisition, Yahoo's board of directors has an obligation to consider the offer on behalf of shareholders, said industry analyst Greg Sterling from Sterling Market Intelligence.
At the same time, now that Microsoft has made its move, it wouldn't be surprising to see other suitors jump in and make competing bids for Yahoo, Sterling said.
Unless Microsoft were to run Yahoo like an independent unit, there will be significant areas of overlap that would need to be integrated.
"If Microsoft were to seek a more integrated company [with Yahoo], certain products or brands would be favored and others discontinued," Sterling said.
Still, a joint Microsoft-Yahoo would from day one be a formidable player in display advertising and mobile Internet services, he said.
Ever since the first rumblings about a possible acquisition of Yahoo by Microsoft, things have gone downhill for Yahoo, including several reorganizations and management shakeups, so the deal appears more plausible today, Sterling said.
At the same time, despite considerable investments, Microsoft hasn't made as much progress in search engine advertising and usage as it had hoped, he said.
A combined Microsoft-Yahoo would improve their respective positions in the search market, but still wouldn't top Google, which has a dominant lead both in search engine usage and advertising, he said.
Yahoo didn't immediately reply to requests for comment.
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CEO Steve Ballmer made the offer in a letter to Yahoo's board of directors on Thursday, telling the board that he would release the letter Friday morning.
On a conference call Friday, Ballmer called a combination of Microsoft and Yahoo a more "credible" alternative to Google in the online advertising and services market.
"By combining the assets of Microsoft and Yahoo we can offer a more competitive choice for consumers, advertisers and publishers," he said.
It was Yahoo's board that first approached Microsoft, in February 2007, Microsoft said.
Yahoo, in a statement, said its board will carefully evaluate Microsoft's proposal, which it described as unsolicited.
Microsoft expects the market for online advertising to almost double in size over the next three years, from $40 billion in 2007 to $80 billion by 2010. A merger will allow it to realize economies of scale and reduce capital costs as it addresses this market, it said.
"The combination of these two great teams would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own," said Ray Ozzie, chief software architect at Microsoft, in a statement.
Microsoft expects to cut costs by $1 billion a year by realizing synergies with Yahoo in four areas: obtaining economies of scale as its audience increases; combining its research and development efforts with Yahoo's to innovate faster; eliminating operational redundancy to cut costs, and pooling expertise to innovate in video and mobile.
The companies will work together to develop the merger plan, Microsoft said.
It intends to pay key Yahoo engineers and other staff to stay following the merger.
The offer represents a 62 percent premium over Yahoo's closing price on Thursday. Microsoft expects to receive all necessary approvals in the second half of this year.
Despite the potential for short-term gain, Yahoo, in its statement, said its goal will be to maximize long-term value for shareholders.
At this premium, even if Yahoo's top managers were opposed to the acquisition, Yahoo's board of directors has an obligation to consider the offer on behalf of shareholders, said industry analyst Greg Sterling from Sterling Market Intelligence.
At the same time, now that Microsoft has made its move, it wouldn't be surprising to see other suitors jump in and make competing bids for Yahoo, Sterling said.
Unless Microsoft were to run Yahoo like an independent unit, there will be significant areas of overlap that would need to be integrated.
"If Microsoft were to seek a more integrated company [with Yahoo], certain products or brands would be favored and others discontinued," Sterling said.
Still, a joint Microsoft-Yahoo would from day one be a formidable player in display advertising and mobile Internet services, he said.
Ever since the first rumblings about a possible acquisition of Yahoo by Microsoft, things have gone downhill for Yahoo, including several reorganizations and management shakeups, so the deal appears more plausible today, Sterling said.
At the same time, despite considerable investments, Microsoft hasn't made as much progress in search engine advertising and usage as it had hoped, he said.
A combined Microsoft-Yahoo would improve their respective positions in the search market, but still wouldn't top Google, which has a dominant lead both in search engine usage and advertising, he said.
Yahoo didn't immediately reply to requests for comment.
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Motorola may spin off mobile phone division
Motorola may spin off its handset business, the weakest part of a wireless giant that has seen hard times and a management shakeup in recent months.
The company is "exploring the structural and strategic realignment of its businesses to better equip its Mobile Devices Business to recapture global market leadership and to enhance shareholder value," Motorola said in a statement Thursday. "The company's alternatives may include the separation of Mobile Devices from its other businesses."
The handset unit has had trouble coming up with a successor to the popular Razr phone and in last year's third quarter it fell to third place in worldwide sales behind Samsung. But spinning off the division, which forms the largest part of Motorola's business, would be a drastic move.
Motorola had 13 percent of the worldwide handset market in last year's third quarter, down from a 21 percent share a year earlier, according to Gartner. Samsung had 15 percent and Nokia 38 percent.
Thursday's announcement doesn't guarantee the handset business will be spun off. CEO Greg Brown said in the statement that Motorola was exploring ways in which the unit can recover faster and retain and attract talent, plus help shareholders "realize the value of this great franchise."
In its fourth-quarter results announced last week, Motorola said the Mobile Devices Business lost US$388 million on revenue of $4.8 billion, down from a profit of $341 million on revenue of $7.8 billion a year earlier. Fourth-quarter sales were up in both the Home and Networks Mobility group, which makes set-top boxes and wireless infrastructure, and in Enterprise Mobility, which benefitted from Motorola's acquisition of Symbol Technologies early last year.
Motorola as a whole lost $49 million for the year. CEO Ed Zander stepped down in late November, replaced by Brown.
Such a spinoff is overdue, according to Samuel Wilson, an analyst at JMP Securities in San Francisco.
The phone unit's problems go deeper than a drought of hit products. It needs to act more like Nokia, he said.
"The business model they need to develop is one where they don't try to outguess the market, but instead launch a lot of products and let the market decide what's a hit," Wilson said. Nokia succeeds at this by integrating its supply chain so it can quickly speed up production of products that catch on, he said.
Though the Mobile Devices Business stands out as the "sucking chest wound" at Motorola, the whole company could stand to be broken into three entities, he said. The other two would be the home networking group and the enterprise group.
"There are no synergies between the divisions," Wilson said.
Motorola's stock (MOT) was up $1.24 at $12.74 in after-hours trading late Thursday.
The company is "exploring the structural and strategic realignment of its businesses to better equip its Mobile Devices Business to recapture global market leadership and to enhance shareholder value," Motorola said in a statement Thursday. "The company's alternatives may include the separation of Mobile Devices from its other businesses."
The handset unit has had trouble coming up with a successor to the popular Razr phone and in last year's third quarter it fell to third place in worldwide sales behind Samsung. But spinning off the division, which forms the largest part of Motorola's business, would be a drastic move.
Motorola had 13 percent of the worldwide handset market in last year's third quarter, down from a 21 percent share a year earlier, according to Gartner. Samsung had 15 percent and Nokia 38 percent.
Thursday's announcement doesn't guarantee the handset business will be spun off. CEO Greg Brown said in the statement that Motorola was exploring ways in which the unit can recover faster and retain and attract talent, plus help shareholders "realize the value of this great franchise."
In its fourth-quarter results announced last week, Motorola said the Mobile Devices Business lost US$388 million on revenue of $4.8 billion, down from a profit of $341 million on revenue of $7.8 billion a year earlier. Fourth-quarter sales were up in both the Home and Networks Mobility group, which makes set-top boxes and wireless infrastructure, and in Enterprise Mobility, which benefitted from Motorola's acquisition of Symbol Technologies early last year.
Motorola as a whole lost $49 million for the year. CEO Ed Zander stepped down in late November, replaced by Brown.
Such a spinoff is overdue, according to Samuel Wilson, an analyst at JMP Securities in San Francisco.
The phone unit's problems go deeper than a drought of hit products. It needs to act more like Nokia, he said.
"The business model they need to develop is one where they don't try to outguess the market, but instead launch a lot of products and let the market decide what's a hit," Wilson said. Nokia succeeds at this by integrating its supply chain so it can quickly speed up production of products that catch on, he said.
Though the Mobile Devices Business stands out as the "sucking chest wound" at Motorola, the whole company could stand to be broken into three entities, he said. The other two would be the home networking group and the enterprise group.
"There are no synergies between the divisions," Wilson said.
Motorola's stock (MOT) was up $1.24 at $12.74 in after-hours trading late Thursday.
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