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Austin job losses continue
The Austin area continued to lose jobs last month, but is in better shape than other large Texas cities.
Central Texas had 0.4 percent fewer jobs in October than a year earlier,or 3,200 overall. Steep losses continued in manufacturing and construction, offset by hiring by school districts and state and local governments.
The picture was worse in Dallas, with a 2.5 percent annual job loss; Houston, down 3 percent, and Fort Worth and San Antonio, both down 0.7 percent.
The Austin area unemployment rate was 7.2 percent, unchanged from October but up from 4.6 percent a year earlier.
Statewide, the unemployment rate rose to 8.3 percent from 8.2 percent in September and 5.2 percent in October 2008.
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Dell’s quarterly results fall short
Investors clobbered Dell Inc. shares late Thursday after the computer maker reported third quarter results that fell short of analysts’ estimates.
The computer maker reported a profit of $337 million, or 17 cents a share, on revenue of $12.9 billion for the quarter ended Oct. 30, compared with income of $727 million or 37 cents a share, on revenue of $15.2 billion for the same quarter last year.
Analysts had expected earnings of 28 cents per share on revenue of 13.2 billion, according to Thompson Reuters. The company noted that most investors would look at its adjusted earnings, which were 23 cents per share.
The results were announced after the close of regular trading Thursday, but shares plunged in the after-hours market.
Dell shares closed regular trading at $15.87, down 19 cents, or 1.2 percent. But the share price dropped another $1 a share, or 6.3 percent to $14.87 in 45 minutes in the first 40 minutes of after-hours trading.
Dell said its sales to commercial customers improved as the quarter went on, but Chief Financial Officer Brian Gladden said the computer maker balked at some deals where it deemed profit margins to be too slim.
“It is important to understand the mix of our business,” Gladden said. “Today 80 percent of our business is commercially oriented and the growth in the market is very much driven by consumer demand.
“We are losing share in the aggregate. And we are trying to manage profitability in this challenging market. There were cases in the consumer business where we didn’t take deals and walked away from some retail business because the (profit) margins weren’t acceptable to us.”
The company said its shipments of computers were flat from the second quarter and down 5 percent from a year ago. But it said its shipments were up from Q2 on sales to large enterprise customers and to small and medium-sized businesses.
The company said its cash flow from operations was strong, totaling $801 million. Dell has generated $3.4 billion in cash over the past four quarters, which is up more than 40 percent from the previous four quarters. The company also said it has reduced its total operating expenses by $1.6 billion a year since committing to a $4 billion reduction by the end of fiscal year 2011 or sooner. Dell took a charge of $123 million for “organizational effectiveness” in the quarter that was primarily tied to the closing of its factory in Winston-Salem, N.C.
Company CEO Michael Dell said that sales momentum is picking up and Dell expects improved revenue in the fourth quarter with stronger consumer sales.
“We are seeing improvement in overall IT demand that is continuing into the fourth quarter,” he said. “The same is true with momentum in Dell’s business, specifically n our large enterprise and small to mid-sized business segments. The launch of (Microsoft Corp.’s) Windows 7 is being very well received by SMBs and consumers and we’ll see the benefits of that more fully in our fiscal Q4.”
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Stanford receiver seeks millions from financier’s former employees
More than 300 former employees of R. Allen Stanford — including some who worked in Austin — benefited substantially from their relationship with the disgraced financier, according to the court-appointed receiver in charge of recovering money for investors who were victims of Stanford’s alleged $7 billion Ponzi scheme.
Now the receiver is seeking the return of bonuses those employees made selling certificates of deposits for Stanford.
The former employees were incentivized “with big commissions and other compensation relating to the sale of CDs,” receiver Ralph Janvey said in a court filing earlier this month.
“When Stanford paid CD proceeds to former Stanford employees, he did no more than take money out of investors’ pockets and put it into the hands of the former Stanford employees,” according to the suit. “For the more than 20,000 investors who have thus far received little or nothing from their investment in Stanford CDs, money recovered from wherever it resides today is likely the only money they will ever receive in restitution.”
Those proceeds, the receiver charged, were in form of loans, quarterly bonuses and other compensation paid to brokers. He estimates that, at minimum, the proceeds totaled more than $217 million.
Some former Stanford employees who worked in Austin are named in the filing.
Among them are Patrick Cruickshank, who made $2.9 million; Ray Deragon, who made $1.15 million; Nigel Bowman, who made $922,000; Shawn Morgan, who made $425,000; and Carol McCann, who made more than $441,000, according to the receiver’s complaint.
Michael Stanley, a Houston attorney who is representing Deragon, McCann and Morgan, said that none of his clients have been charged with a crime and said they had no inclination of any wrongdoing.
The receiver, Stanley said, is being “very aggressive” in his attempt to reclaim former employees’ bonus money.
“There’s no difference in saying the utility company should pay back the light bills or the landlord should pay back the rent, because in some way it can be traced to investors’ funds,” he said. “We don’t think that’s a legitimate legal claim.”
Bradley Foster, a Dallas attorney representing Cruickshank and Bowman, also didn’t return a call for comment.
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AMD takes steps to reduce debt
Advanced Micro Devices Inc. is using its $1.25 billion lawsuit settlement with Intel Corp. to reduce its debt. The news sent its shares up almost 6 percent in early trading, to $6.95.
The chipmaker announced two tender offers designed to reduce its debt that matures in 2012.
Last week, AMD announced the settlement of its four-year antitrust lawsuit against rival Intel Corp., which included Intel paying AMD $1.25 billion and change some of its business practices.
AMD will use cash to redeem and retire about $390 million in 7.75 percent high-yield debt due in 2012.
It also will use cash and a new private debt offering of $500 million of senior notes to make tender offers for up to $1 billion on the $1.5 billion of 5.75 percent convertible notes due in 2012.
Depending upon the total amount of convertible notes tendered, the company could reduce its total debt by $890 million and lower the debt due in 2012 to $485 million.
Before these tender offers, the company’s combined long-term debt was nearly $3.7 billion.
Meanwhile, the MarketWatch Web site quotes a Barclays analyst as saying AMD’s next move could be to fully spin off its manufacturing affiliate, GlobalFoundries Inc., as an independent company.
The spinoff began in February, but AMD remains a minority shareholder in the company, which is mostly owned by an Abu Dhabi-based investment company.
A completed spinoff, said Barclays analyst Tim Luke, would make the core AMD, which designs and sells processors and graphics chips, a more financially sound company.
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Ranger stays in top 10 supercomputer list
The Ranger supercomputer at the University of Texas remains one of the 10 fastest in the world, according to the latest ranking of the world’s most powerful computers.
Ranger debuted on the list a year ago at No. 4 in June, 2008. It’s now No. 9.
The fastest computer is Jaguar, at the Oak Ridge National Laboratory. In supercomputer speed terms, it can handle 1,759 teraflops per second — or 1,759 trillion operations per second.
A Chinese computer is new to the list, coming in at No. 5. The Tianhe-1 at that country’s supercomputing center in Tianjin can handle 563.1 teraflops.
Ranger clocks in at 433.2 teraflops.
The top six computers are all new or upgraded this year.
Eight of the top 10 computers are in the United States.
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AMD chip powers top computer
Two Tennessee computers using six-core Opteron processors designed by Advanced Micro Devices Inc. have placed first and third in the latest Top500 supercomputing list issued Monday.
The computer called Jaguar at the Oak Ridge National Laboratory finished first, displacing the Department of Energy’s Roadrunner computer based in Los Alamos, N.M. In third place was Kraken, another Opteron-based computer at the National Institute for Computational Sciences at the University of Tennessee.
The six-core Opteron, nicknamed Istanbul, was completed by AMD earlier this year. It was largely designed in Austin.
The Jaguar posted a benchmark performance of 1.75 petaflops, which is equal to 1,750 thousand trillion operations per second.
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Goldman analyst rates Dell shares a buy
Shares of Dell Inc. were up 3.5 percent midday after Goldman Sachs raised its rating on the company’s shares to “buy.”
Dave Bailey, a Goldman analyst, said the company is likely to report higher quarterly revenue Thursday than Wall Street analysts expected. Bailey said he’s looking for fiscal third-quarter revenue of $13.3 billion, about $250 million higher than street forecasts.
And Bailey expects Dell’s shipments next year will rise 12 percent, driven by customers who are replacing older computers, he said in a research note to clients.
Dell shares were trading at about $15.94 in midday.
The company reports its quarterly financial results on Thursday.
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Vonage resolves attorney general complaints
Texas and 31 other states reached an agreement with Vonage Inc. over the company’s advertising of its Internet-based long-distance phone service.
Texas Attorney General Greg Abbott said the company failed to inform customers that they needed high-speed Internet service in order to use Vonage. The company allowed customers without high-speed Internet to order its service, then charged them for cancellation and equipment-return fees when they could not use it.
The attorney general said Vonage also charged customers numerous fees for its “free trials” and made it difficult to cancel the service after the promotional term ended.
Vonage responded with an emailed statement: “Vonage is pleased to have reached a settlement with various state attorneys general of their investigation into certain of the company’s business practices. Vonage fully cooperated in the investigation and, as part of the settlement, has agreed to maintain or implement enhancements to its business practices that will improve customer experience and satisfaction, many of which the company implemented prior to completion of the settlement.
The company also said that it will pay $3 million to the states participating in the settlement to cover legal and investigative fees.
Under the agreement, Vonage must clearly disclose to customers the need to have high-speed Internet access in order to use its calling service.
The company also must clearly explain all costs and terms associated with promotional offers.
It will pay refunds to customers who experienced problems, according to Abbott’s office.
Texans who think they’re eligible for a refund can file a complaint with the Attorney General’s office by calling 800-252-8011 or going to www.texasattorneygeneral.gov
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Sprint launched 4G in Austin
Sprint Nextel Corp. has launched its Sprint 4G mobile broadband service in Austin.
Sprint said its new service can deliver download speeds up to 10 times faster than 3G under optimal conditions.
Sprint is also launching 4G service today in San Antonio, and earlier this year the company launched it in: Dallas, Fort Worth and other Texas cities.
Sprint launched 4G in Baltimore in September 2008.
Although Sprint currently doesn’t have a 4G phone in its lineup (that’s expected next year), Wi-Fi-enabled phones using a specific mobile broadband card and a modem can access the network, company officials said.
Verizon officials have said that the company will begin testing its own service this year and plans to launch it commercially next year. AT&T will begin testing its 4G service next year and will begin rolling it out in 2011.
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Sematech names IBM exec as new CEO
The Sematech semiconductor research consortium has named IBM executive Daniel Armbrust as its new president and CEO, effective immediately.
Armbrust succeeds Michael Polcari, Sematech’s CEO for the past six years. Polcari, also a veteran IBM executive, remains as chairman of the board.
Polcari said Sematech’s boards chose Armbrust based on his track record of leadership and execution in developing leading edge chip manufacturing technologies, directing factory operations and managing complex alliances.
“Dan came to our attention because of his proven ability to lead top performing teams, his strong credentials in both R&D and manufacturing, and his experience in driving strategic alliances.” Polcari said in a press press release.
Armbrust, a 25 year IBM employee, previously was vice president of 300 millimeter chip operations for Big Blue, where he was responsible for that company’s most advanced factory and research complex in East Fiskhill, N.Y. IBM and its various technology alliance partners all have researchers at the complex.
The 22-year-old research consortium is headquartered in Austin, but it has substantial and growing operations Albany, N.Y., where it has research operations located in the University of Albany’s Nanotech center. The consortium is considered to be a leading player in collaborative research aimed at developing next-generation chips and equipment and in running existing semiconductor factories more efficiently.
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Dell confirms smartphone for China, Brazil
Dell Inc. confirmed this morning that it will sell a smartphone in China and Brazil, its first entry into the smartphone market.
The Mini 3 will be powered by Google’s Android operating system.
Dell has signed distribution deals with China Mobile, the biggest telecom company in China, and Claro, which is part of the America Movil network in Brazil.
“Our entry into the smartphone category is a logical extension opf Dell’s consumer product evolution over the past two years,” said Ron Garriques, president of Dell’s consumer division.
Dell is widely expected to introduce a smartphone for the U.S. market soon.
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SolarWinds prices secondary offering
Austin-based SolarWinds Inc. said Friday it priced a 12 million share secondary stock offering at $18.75 per share.
The price is a 3 percent discount to the stock’s Thursday closing price of $19.28. The shares are being offered by several stockholders.
SolarWinds, which develops and sells network management software, went public in May. It raised an estimated $112.5 million with its offering of 12.1 million shares.
The company said Friday that underwriters have a 30-day option to buy up to 1.8 million additional shares of common stock.
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Intel and AMD settle antitrust dispute
Advanced Micro Devices Inc. and Intel Corp. have settled their long-running antitrust dispute.
Under the terms of the agreement, Intel has agreed to pay AMD $1.25 billion and extend the patent cross-license agreement between the two for another five years and agreed to stop certain business practices aimed at thwarting AMD.
In a joint statement, they said, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”
As a result of the agreement AMD will drop its four-and-a-half-year-old federal lawsuit against Intel and two other cases in Japan. The U.S. case had been set to go to trial in late March.
Intel is the largest and richest chip company in the world and it dominates the world market for PC processors that AMD competes in.
AMD had accused Intel of abusing its market power to bully or bribe Dell Inc. and other PC makers into not buying AMD chips.
A recent lawsuit by the State of New York alleges the same thing, and said that Intel had paid Dell alone $6 billion in rebates over a four-year period to keep it from adding AMD chips to its products.
Regulators in Europe, Japan and South Korea also had concluded that Intel had abused its dominance. Intel is appearling a proposed $1.5 billion fine from the European Union.
But it still faces the New York State lawsuit and an investigation by the Federal Trade Commission.
Both companies are important high-tech players in Austin, where AMD employs about 2,200 people and Intel employs more than 900.
Here’s Intel’s release on the settlement: www.10kwizard.com/filing.php?g=3974419524afc3bbfc6e50&backparam=&ipage=6598447&DSEQ=0&SEQ=0&SQDESC=SECTIONENTIRE&qsession=&qsessid=&exp=advanced+micro+devices”>http://www.10kwizard.com/filing.php?g=3974419524afc3bbfc6e50&backparam=&ipage=6598447&DSEQ=0&SEQ=0&SQDESC=SECTIONENTIRE&qsession=&qsessid=&exp=advanced+micro+devices
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Applied Materials plans job cuts
Applied Materials Inc. said Wednesday it will cut its global workforce by 1,300 to 1,500 jobs over the next 18 months as the company reorganizes in reaction to changing market conditions.
Those job reductions are expected to include 69 job cuts in Austin, which is Applied’s largest manufacturing center for chip-making equipment. The local cuts, which affect a variety of jobs across the Austin operations, are expected to take effect within several days.
Company CEO Mike Splinter said changes in the geographic and customer concentration of its various businesses led to the reorganization.
The company expects to generate savings of $450 million with the latest reorganization, in addition to the $460 million in expense reductions it has already made in the past year.
The company is the world’s leading maker of equipment to produce semiconductors and it also makes gear to produce flat-panel displays for computers and solar-power panels.
“We are adapting our operating structure to align with these changes and enhance the value we provide to our customers and stockholders,” Splinter said.
Applied began cutting jobs worldwide last fall in reaction to the global downturn in business.
The company presently employs about 2,000 in Austin and about 1,500 permanent workers, which is down several hundred from a year ago.
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Free wireless Internet comes to airport
Google has launched temporary, free wireless Internet service at Austin-Bergstrom International Airport as part of national program being offered at select airports this holiday season.
The move will save Austin travelers a few bucks: passengers without a special membership normally pay $7.95 for a 24-hour pass.
Google’s free program is part of a national holiday marketing scheme also offered by other providers such as Yahoo, eBay and Microsoft to offer the free service at airports, airplanes and other public places, according to the Associated Press.
In Google’s case, the program should be available in Austin and other select airports from now until Jan. 15.
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Austin biomedical company raises $3.5 million in backing
An Austin biomedical company has received $3.5 million in funding from the Texas Emerging Technology Fund and venture firms.
Ortho Kinematics has developed an investigational, non-invasive technology that allows surgeons to evaluate spine function in patients. Two U.S. hospitals and one in the United Kingdom have installed the technology, and the company said more hospitals will be adding it in the next six months.
“We are pleased to raise these funds in today’s challenging financing environment,” said Adam Deitz, CEO of Ortho Kinematics. “Our company now has the resources and commitment necessary to expand commercialization plans.”
Aside from the state Emerging Technology Fund, the new money is coming from PTV Sciences and Gatebridge Investments.
Deitz is a University of Texas alumnus and former consultant with Booz-Allen & Hamilton. He joined the company in 2006.
Related story: State tech fund seeding a new crop of Austin startups
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LifeSize Communications is sold for $405 million
Austin-based LifeSize Communications Inc. has agreed to be bought by Logitech International for $405 million in cash, making it one of the largest buyouts of an Austin company in recent years.
LifeSize, a six-year-old startup, is a leader in high-definition videoconferencing technology. LogiTech is a Swiss company that makes video communications devices.
Logitech plans for LifeSize to operate as a separate Austin-based division under the leadership of co-founder Craig Malloy.
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Nonprofits and techies come together this weekend
Nonprofit organizations are experts at raising money and doling it out to those in need. But they don’t necessarily understand social media, the latest technology and ways to get the word out there. On Saturday, a group of civic-minded techies hope to help change that with the first-ever Austin Non Profit Bar Camp.
The “bar camp” idea, which is common in the tech world, is a conference that is participant-driven and somewhat disorganized by design. Bar camps are free flowing and are meant to foster idea-sharing and creation. This is thought to be the first time that the bar camp method will be applied to the nonprofit sector.
More than 175 people have signed up for the free event, which will run from 10 a.m. to 4 p.m. at ACC’s Eastview campus on Webberville Road.
For volunteer and organizer Matt Glazer, the bar camp is a chance to fill a gap for nonprofits.
He said nonprofits are generally not good with tech. “Very few can do e-mail marketing, Google apps, social-media marketing … ROI of the cloud,” Glazer said. “We just want to make sure that people are familiar with this new way of doing things.”
Glazer said the event has created a good buzz.
“The reason I’m involved is to get techies to know that there are nonprofits that need them,” Glazer said. “On the flip side, (I want) nonprofits to realize this isn’t just some sort of thing for someone else to do.”
Besides Glazer, other organizers for the event are David Neff, Jon Lebkowsky and Maggie Duval. Lunch will be provided for free. For more information, including a list of speakers, you can check out the bar camp’s Web site.
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Driskill Hotel to close for 2 1/2 days
The Driskill Hotel downtown will close from midday Nov. 22 through Nov. 24 in order to update the electrical system.
The historic hotel has undergone a $7 million renovation since Destination Hotels & Resorts bought it in 2005, and that work has been done as the hotel remained open. The most recent phase was a $3.8 million renovation of the rooms.
But managing director John Sponer said closing the doors for a few days would assure that the electrical work would get done quickly.
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NY attorney general sues Intel over antitrust claims
New York Attorney General Andrew Cuomo has filed a lawsuit charging that Intel Corp. illegally abused its dominance in the chip industry in an effort to thwart gains by Advanced Micro Devices Inc.
Intel already faces an AMD antitrust lawsuit in the United States, antitrust investigations by governments in Asia and a proposed $1.5 billion fine by the European Commission over its actions.
The Cuomo lawsuit covers similar ground as the other cases, alleging that Intel offered payments or pressured companies such as Dell Inc. if they agreed to choose Intel chips over AMD’s.
The complaint alleges that Intel paid Dell billions of dollars in order to keep the company from putting AMD chips in its computers.
Dell began offering AMD chips in 2006. “We do provide customer choice,” Dell spokesman David Frink said Wednesday. “We work both with Intel and AMD.” Regarding the lawsuit, Frink said “We’re not going to have any comment on the allegations against Intel.”
According to the complaint, Dell received $6 billion in Intel “rebates” between February 2002 and January 2007. The payments were couched as legitimate discounts to meet AMD price offers.
An internal Dell document cited in the lawsuit said the payments had been called “a monogamy tax for Intel.”
The complaint says that Intel threatened Dell if it started to use AMD chips, as it periodically considered doing.
In 2002, then-CEO Kevin Rollins told Chairman Michael Dell that Intel was willing “to do whatever it takes” to keep Dell out of the AMD camp, the lawsuit says.
In 2005, however, Michael Dell told Intel CEO Paul Otellini that the computer maker was losing customers by not having AMD chips. “We are losing the hearts, minds and wallets of our best customers,” he said in an email cited in the lawsuit.
The following year, Michael Dell told other Dell executives that the company would start using AMD chips “to provide the choice our customers are asking for,” according to the lawsuit.
In retaliation, the lawsuit says that Intel slashed the payments to Dell.
“Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market,” Cuomo said in a statement. “Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices.”
Intel has denied the charges and is appealing the European Commission ruling.
The AMD lawsuit is set to go to trial early next year.
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NetStreams is sold to Utah company
Austin-based NetStreams Inc. has been sold to a Salt Lake City, Utah, company that develops audio conferencing systems.
ClearOne will pay $2 million in cash and assume $2 million in debt. The Utah company also will make payouts over the next two years, based on NetStreams achieving certain performance targets.
NetStreams, which develops digital media networks, will remain in Austin, where it has 20 employees. The company is expecting revenues this year of more than $5 million.
ClearOne had revenues of $35.7 million for its fiscal year that ended June 30.
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Once again everyone blames Bush, but everyone fails to remember that it was Democrats Bill Clinton, Harry Reed and Christopher Dodd who touted the statement that “everyone should be able to own a home” and opened up the sub-prime lending market
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I always like how the local Austin unemployment rate news always ends with “BUT Austin’s unemployment rate is still lower than the national unemployment rate” or “Austin’s unemployemtn rate is lower than other large Texas
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We keep hearing Dems say don’t blame Obama. The trouble is Obama was a Senator while this crisis was building. And while the Dems were in a majority he joined them in denying an investigation of the housing crisis. Probably because Dems forced
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I really hate to keep going back to the former Bush Administration years about anything but when an issue that started back then effects us today using a duck as an illustration: if it looks a duck, walks like a duck and sounds like a duck - - guess what
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