News briefs

Cisco files suit against Huawei; acquires Okena. Plus news from Microsoft, AT&T and XO.

Cisco has filed a lawsuit against Chinese network equipment maker Huawei Technologies and its subsidiaries, claiming unlawful copying of Cisco’s intellectual property. Huawei has emerged recently as a significant low-cost competitor to Cisco. Filed in the U.S. District Court for the Eastern District of Texas, the suit alleges that Huawei unlawfully copied and misappropriated Cisco’s IOS software, including source code, copied Cisco documentation and other copyrighted materials, and infringed numerous Cisco patents. Huawei said it is consulting with legal advisers to resolve the matter, and does not have any comment at this time.

Cisco last week moved to strengthen its position as a network security software provider by acquiring privately held Okena for $154 million in Cisco stock. Okena makes the StormWatch intrusion-detection software. Marketed as an “intrusion-prevention” program, StormWatch uses intelligent agents running on user desktops and servers to monitor those systems. The program intercepts and approves or rejects a resource request from an application to the operating system based on a customer’s application security policy, for example.

Microsoft has made progress on its “Trustworthy Computing” promise, but more needs to be done, Bill Gates wrote in an e-mail made public last week. “While we’ve accomplished a lot in the past year, there is still more to do – at Microsoft and across our industry,” Gates wrote. The assessment comes a year after Gates announced the Trustworthy Computing initiative, a Microsoftwide focus on securing its products. As part of that initiative, Microsoft halted the development work of thousands of software engineers for 10 weeks to train them to look at software as hackers do. Microsoft created new product design methodologies, coding practices, test procedures, incident handling and support processes to improve the security of its products, according to Gates. Microsoft spent about $200 million on improving Windows security, he wrote.

It looks as though AT&T isn’t winning as much business from WorldCom as some had expected while the latter struggles through bankruptcy reorganization. AT&T announced its fourth-quarter and year-end financial results last week. While revenue was in line with analysts’ predictions, AT&T’s lower-than-expected results on its business-services side of the house surprised most. The carrier saw its business-services revenue fall 3% in the fourth quarter to $6.6 billion. Business services revenue fell 4.1% for the year to $26.6 billion. Overall, revenue for AT&T last year was $37.8 billion, a drop from $42.2 billion in 2001.

Competitive telecom provider XO Communications has emerged from Chapter 11 bankruptcy having reduced its debt from more than $5 billion to a more manageable $500 million. Billionaire financier Carl Icahn controls the restructured company and is the chairman of the board. XO filed for Chapter 11 in June. Under the company’s original restructuring plan, investment firm Forstmann Little and Mexican telecom firm Telefonos de Mexico were set to invest $800 million in the bankrupt provider in return for a 39% stake each. Forstmann and Telefonos ultimately decided to not pursue their restructuring plan, leaving the door open for Icahn.