Also: Supreme Court backs FCC on sharing rules; Gates: Don’t outsource core business or staff; CA files amended financial results; Oracle reports big revenue jump
Advanced Micro Devices last week filed a wide-ranging anti-trust suit that accused Intel of maintaining its monopoly in the PC processor market by illegally coercing customers into using its products. The suit identifies 38 companies on three continents that were allegedly coerced by Intel, including large-scale computer makers, small system builders, wholesale distributors and retailers, according to a statement from AMD. The 48-page complaint alleges that Intel used illegal subsidies to win sales, and in some cases threatened companies with “severe consequences” for using or selling AMD products. Intel denied the allegations. “We unequivocally disagree with AMD’s claims,” said Paul Otellini, Intel’s president and CEO. “Intel has always respected the laws of the countries in which we operate. We compete aggressively and fairly. . . . This will not change.”
Cable companies that offer broadband Internet access do not have to open their high-speed lines to competitors, owing to a U.S. Supreme Court ruling last week that overturned a lower court decision and affirmed how the FCC classifies cable-modem services. Justices voted 6-3 to overturn the 9th U.S. Circuit Court of Appeals ruling in FCC v. Brand X, which is tied to a complicated FCC policy regarding access regulations for telecom carriers and ISPs. The FCC in March 2002 ruled that cable-modem service is an “information” service not subject to the same regulation as telecom services. Incumbent regional telecom carriers, or RBOCs, are required to share parts of their networks with competitors at wholesale prices. The FCC suggested at the time of its cable-modem ruling that less regulation would foster the growth of broadband and therefore the Internet. Telecom carriers predictably hailed last week’s decision, while Brand X said it should be a “wake-up call to Congress on both procedural and policy grounds.”
Companies should not outsource their core business functions and staff, Microsoft Chief Software Architect Bill Gates last week told a group of Japan’s top businessmen in a speech in Tokyo. Gates urged IT companies to beware of outsourcing too much to save costs and to keep their key engineering resources and intellectual property at home. “If you rely too much on people in other companies and countries . . . you are outsourcing your brains where you are making all the innovation,” he said. The need to maintain a competitive edge by investing rather than cost cutting was a theme that Gates returned to several times in his address. Too many U.S. companies are cutting their research and development budgets at a time when investment in these areas is needed to cope with an increasingly competitive global market economy, he said.
Computer Associates last week filed its delayed annual financial report, formalizing another round of financial restatements that the software vendor hopes will let it finally leave behind the shadows of its troubled past few years. CA warned last month that it would need to once again tweak its reported results as it works to mop up the aftermath of an accounting scandal that had the company prematurely booking more than $2 billion in sales. Last week’s filing includes amended results for CA’s fiscal years 2001 through 2005, which ended March 31. The latest reclassifications are small, however: For 2005, CA reduced its revenue by $6 million, to $3.53 billion. Its net income for the year rose by $1 million, to $13 million. In a call with analysts last month to discuss CA’s quarterly results, executives including CEO John Swainson and COO Jeff Clarke said CA felt even minor adjustments were important to make, to demonstrate the new management team’s commitment to accurate accounting.
Oracle last week reported a big jump in revenue for its fiscal fourth quarter, driven by its merger with PeopleSoft and strong sales from all product categories. Revenue for the period, which ended May 31, came in at $3.88 billion, up 26% from a year ago. Sales of new applications were particularly strong, growing 52% to $350 million. Net income for the quarter was $1.02 billion, up 3% from a year earlier. Total software revenue increased by 24% from a year ago to $3.1 billion. Of that, new license revenue grew 23% to $1.6 billion and license updates and product support revenue grew 26% to $1.5 billion. Revenue from services grew 35% to $755 million, Oracle says.
