In brief: Microsoft greased skids for SCO

Plus: Proposes domain name registry for wireless; IBM’s Sam Palmisano’s $5.4m bonus; Intel won’t meet China’s deadline; Nortel delays 2003 annual filing; and, a survey on privacy-related initiative spending.

• Microsoft executives introduced The SCO Group  to an investment fund that provided the company with a $50 million investment last October, a spokesman for the fund confirmed last week. Microsoft executives talking to BayStar Capital suggested the investor should look into SCO as an investment opportunity, said Bob McGrath, a BayStar spokesman. “BayStar was introduced to SCO by executives at Microsoft,” McGrath said. “We talk to individuals all the time about investment.” SCO says the Linux operating system contains code that violates its intellectual property rights, and it has launched lawsuits against IBM and Novell in connection with those claims. Microsoft, whose Windows operating system monopoly is threatened by Linux, has paid SCO in the past. A 2003 Unix licensing deal between the two companies earned SCO $16.6 million last year, according to Securities and Exchange Commission filings. The software giant’s role in the BayStar financing, however, had been unknown until recently.

• Nine leading network vendors have proposed a new registry that would sell domain names for wireless  devices. This proposal is one of several new domain name extensions that the Internet Corporation for Assigned Names and Numbers is expected to receive by March 16, the deadline for submitting proposals for new specialized top-level domains. Nokia, Microsoft and Vodafone lead the wireless industry group, and it has the backing of HP, Samsung, Sun and others. The group hopes to create a top-level domain that would be available only to companies that offer Web pages or other Internet services designed for use with wireless devices. For several years, Nokia has been pushing the idea of a dedicated top-level domain for the wireless industry. In 2000, Nokia submitted a proposal to ICANN for a new top-level domain and offered eight possible extensions, including .mobile and .mobi. ICANN rejected Nokia’s original proposal, saying that it lacked a strong marketing plan.

• Sam Palmisano was paid a $5.4 million bonus for leading IBM  in 2003, making his total compensation for the year $6.95 million, the company said in a regulatory filing last week. IBM’s chairman and CEO was awarded the compensation for navigating the company through “several challenges” and increasing its share in the server and small and midsize business markets, according to documents filed with the Securities and Exchange Commission. Palmisano’s 2003 pay was more than $1 million greater than what he earned in 2002, when he was awarded a salary of $1.43 million and a bonus of $4.5 million.

• Intel  last week said it won’t meet the June 1 deadline that China has imposed to require all wireless LAN equipment with encryption that’s sold in China to make use of a Chinese government-developed encryption standard known as WAPI. WAPI (see related story) is a secret encryption scheme developed by the Chinese government that will only be made available to a handpicked number of Chinese manufacturers for license to other companies. The Chinese government’s approach to WAPI and WLANs has rankled U.S. manufacturers, who would be forced into close co-production relationships with Chinese competitors. Intel said its decision not to support WAPI in its products by the June 1 deadline means it could be forced to stop selling some computer chips in China.

• Nortel  last week said it would delay filing its 2003 annual report with the Securities and Exchange Commission as it continues an internal review begun in October. Nortel’s audit is currently re-examining the “establishment, timing of, support for and release to income” of certain accruals and provisions in prior periods. The company said it believes it will need to revise its previously announced unaudited results for the full year and results in some of its quarterly reports for 2003. The company also said it would restate its previously filed financial results for one or more earlier periods.

• A study from Ponemon Institute, a Tucson, Ariz., think tank that focuses on how businesses establish privacy policies and execute them, last week released the results of a survey with 44 U.S.-based multi-national companies. “The Cost of Privacy Study,” underwritten by IBM, shows that companies spend between $500,000 and $22 million each year on their privacy initiatives, with an average of about $5 million. According to the report, technology companies incur the highest privacy costs, and transportation and hospitality the least. The report states that direct and indirect spending by these large corporations over the next year will total about $2.7 billion.