LightSquared reported assets and debts each exceeding $1 billion, according to the petition it filed with the U.S. Bankruptcy Court in Manhattan.

Read the rest of this post on the original site »

The two sides still have until 5 p.m. Monday to reach a deal that would keep LightSquared out of bankruptcy court, and there were some indications over the weekend that a final decision hadn’t yet been reached on the company’s fate. Still, the two sides remained far apart and people involved in the negotiations expected LightSquared to begin making bankruptcy preparations in earnest.

Read the rest of this post on the original site »

It was Yahoo legal head Mike Callahan who had the thankless task yesterday of calling Facebook’s general counsel Ted Ullyot to tell him the Silicon Valley Internet giant was intent on pursuing patent lawsuits against the social networking giant.

The charge was being led by Callahan, as well as Chief Product Officer Blake Irving and, especially, Yahoo’s new CEO Scott Thompson.

Much of Yahoo’s senior leadership had no idea of the impending move until Callahan informed them it was about to happen at meeting Monday.

Facebook had known of the patent concerns of Yahoo for some months — the issue had also gotten some coverage in the media — but had not engaged formally on the topic, several sources said.

So, the suddenly aggressive call also apparently blindsided Facebook, even though it had been aware of the possibility of such an outcome.

Thus, it had little time to respond, since Yahoo was also simultaneously briefing the New York Times, according to numerous sources at both companies, and then released an astonishing statement to the newspaper:

“Yahoo has a responsibility to its shareholders, employees and other stakeholders to protect its intellectual property. We must insist that Facebook either enter into a licensing agreement or we will be compelled to move forward unilaterally to protect our rights.”

Apparently, Yahoo’s new motto: If you can’t beat ‘em — and it can’t — sue ‘em.

That would be Yahoo — the perpetual 98-pound weakling of the Internet these days — threatening powerful Facebook, which had cleanly bested it by attracting hordes of users with a plethora of popular products and services.

Yahoo has already lost its audience to Facebook, which was most recently followed by its frittering away a commanding lead in display advertising, too.

That would also be the Yahoo whose most recent success in improving its increasingly tenuous connections with customers was, in fact, by deeply integrating Facebook’s social hooks into its Web properties.

That would be the Yahoo which has failed time and again to innovate its own offerings so drastically over the years that it has now apparently decided that its first and best strategic move under Thompson’s rule is a shakedown.

Such a cynical move on rights Yahoo has long held seems more a play for the cheap seats of Wall Street, given that the company needs to look like it is doing everything it can to turn things around right now as it faces a proxy challenge.

First, it ended difficult talks with its Asian partners, Alibaba Group and SoftBank, over selling back lucrative stakes there.

Now, according to sources, Yahoo’s Thompson has actually been trying to make very nice with activist shareholder Daniel Loeb of Third Point — on-the-down-low chitchats that might have played a part of this latest unusual move.

At least Kodak had a good excuse. The once iconic camera company had recently been trying to take advantage of its trove of patents as a way to stave off declaring bankruptcy.

That didn’t work for Kodak, and it will also not work for Yahoo, whose only real option is to try to innovate its way out of the mess it has landed itself in.

You know, with good ideas.

Instead, the company’s leadership has opted for a road that could rain down trouble and paint Yahoo as a company bereft of talent to win any other way.

And while a range of intellectual property lawsuits have broken out all over the digital sector, involving Apple, Microsoft, Google and many others, such a strategy for Yahoo could be dangerous if it fails in its legal effort to take advantage of its 1,000-plus patents, including those related to search and advertising.

Others — including such tech luminaries as LinkedIn’s Reid Hoffman, who co-owns the seminal Six Degrees patent for constructing a networking database and system — hold a number of critical social networking patents, too, so who knows where this thing will go.

Nonetheless, Yahoo has decided to emulate those companies with one of the few valuable assets it might have, waging its little war, right as Facebook is in the midst of its initial public offering period.

Yahoo has done this before, of course, having wrangled with Google until right before it went public in 2004 over search patents from its Overture acquisition. The pair settled 10 days before the Google IPO, with Yahoo getting several million more shares of that stock (which it then, of course, sold too soon).

That certainly could happen here, with Yahoo managing to grab a chunk of Facebook’s pre-IPO stock.

That would mean that Yahoo’s most valuable asset would be those shares, as well as its stake in Asian companies it bought a while back for a bargain and now makes up a bulk of the company’s valuation.

As to Yahoo’s core business — investors consider it almost entirely worthless.

And let’s not forget: Facebook could also sue right back, which it very well might do. Or, perhaps, cut off agreeable ties that have aided Yahoo in recent years.

In other words, in poking Facebook, Yahoo might now learn what it is really like to be de-friended.

Elpida, which employed about 6,000 people world-wide as of September, is struggling with the effects of the strong yen, as well as competition from South Korean rivals. The company said its liabilities totaled ¥448.03 billion, or $5.52 billion, at the end of March 2011. It has posted a net loss for five consecutive quarters through December.

Read the rest of this post on the original site »

The move, which had been expected, follows years of struggle by the film giant to transition to a digital imaging company. In recent months, the company has sought to capitalize on its patents and, in recent days, has sued Apple, HTC and Samsung.

Kodak said it hopes to emerge from bankruptcy in 2013 and intends to conduct business during the restructuring using $950 million in financing from Citigroup. As part of the move, the company said it has named Dominic DiNapoli, vice chairman of FTI Consulting, as its Chief Restructuring Officer.

Here’s the full text of the company’s press release:

ROCHESTER, N.Y.–(BUSINESS WIRE)– Eastman Kodak Company (“Kodak” or the “Company”) announced today that it and its U.S. subsidiaries filed voluntary petitions for chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York.

The business reorganization is intended to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines. The Company has made pioneering investments in digital and materials deposition technologies in recent years, generating approximately 75% of its revenue from digital businesses in 2011.

Kodak has obtained a fully-committed, $950 million debtor-in-possession credit facility with an 18-month maturity from Citigroup to enhance liquidity and working capital. The credit facility is subject to Court approval and other conditions precedent. The Company believes that it has sufficient liquidity to operate its business during chapter 11, and to continue the flow of goods and services to its customers in the ordinary course.

Kodak expects to pay employee wages and benefits and continue customer programs. Subsidiaries outside of the U.S. are not subject to proceedings and will honor all obligations to suppliers, whenever incurred. Kodak and its U.S. subsidiaries will honor all post-petition obligations to suppliers in the ordinary course.

“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Antonio M. Perez, Chairman and Chief Executive Officer. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company.”

“After considering the advantages of chapter 11 at this time, the Board of Directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak,” Mr. Perez continued. “Our goal is to maximize value for stakeholders, including our employees, retirees, creditors, and pension trustees. We are also committed to working with our valued customers.

“Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio: our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses.”

Mr. Perez concluded, “The Board of Directors, the senior management team and I would like to underscore our appreciation for the hard work and loyalty of our employees. Kodak exemplifies a culture of collaboration and innovation. Our employees embody that culture and are essential to our future success.”
Kodak has taken this step after preliminary discussions with key constituencies and intends to work toward a consensual reorganization in the best interests of its stakeholders. Kodak expects to complete its U.S.-based restructuring during 2013.

The Company and its Board of Directors are being advised by Lazard, FTI Consulting Inc. and Sullivan & Cromwell LLP. In addition, Dominic DiNapoli, Vice Chairman of FTI Consulting, will serve as Chief Restructuring Officer to support the management team as to restructuring matters during the chapter 11 case.
More information about Kodak’s Chapter 11 filing is available on the Internet at www.kodaktransforms.com. Information for suppliers and vendors is available at (800) 544-7009 or (585) 724-6100.

Kodak will be filing monthly operating reports with the Bankruptcy Court and also plans to post these monthly operating reports on the Investor Relations section of Kodak.com. The Company will continue to file quarterly and annual reports with the Securities and Exchange Commission, which will also be available in the Investor Relations section of Kodak.com.

Late Tuesday, the company filed suit against Apple and HTC claiming they’ve infringed upon a handful of patents on technologies for transmitting digital images from cameras and other devices.

Kodak’s complaint covers Apple’s iPad 2, iPhone 3G, iPhone 3GS, iPhone 4, iPhone 4S, and iPod touch, and a number of HTC tablets and phones — the Flyer, EVO View 4G, Vivid, Hero S, etc. And it seeks a proscription against further infringement as well as damages. But what Kodak’s really looking for here are the royalties.

As Tim Lynch, Kodak’s Chief IP officer, notes in a statement announcing the suit, “We remain open to negotiating a fair and amicable agreement with these companies, which has always been our preference and our practice with other licensees.”

News of the suits comes amid reports that Kodak is contemplating Chapter 11 bankruptcy protection.

The struggling photography icon, which employs about 19,000 people, is in discussions with potential lenders for around $1 billion in so-called debtor-in possession financing that would keep it afloat during bankruptcy proceedings, the people said. A filing could occur as soon as this month or early February, one of the people said.

Read the rest of this post on the original site »

Borders, which employs about 10,700 people, scrapped a bankruptcy-court auction scheduled for Tuesday amid the dearth of bids.

The chain said it will ask a judge Thursday to approve a sale to liquidators led by Hilco Merchant Resources and Gordon Brothers Group.

The liquidation of the company’s remaining 399 stores could start as soon as Friday, and the chain is expected to go out of business for good by the end of September, the company said.

Read the rest of this post on the original site »

Bids for Borders were due at 5:00 p.m. EDT Sunday ahead of a bankruptcy-court auction scheduled for Tuesday.

Still, Borders is likely to entertain offers right up until the scheduled auction in the hopes a white knight will emerge to save the chain.

Read the rest of this post on the original site »

“Following a very robust auction, we are pleased at the outcome of the auction of this extensive patent portfolio,” Nortel Chief Strategy Officer George Riedel said in a statement. “The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio among major companies around the world.”

The winning bid requires approval of both U.S. and Canadian courts, which the company will seek at a joint hearing expected to take place on July 11. Nortel said it will work with the winning bidders in an effort to close the sale in the third quarter.

The consortium won the bidding, but a number of other players had publicly expressed interest or were believed to be interested in the patents, including one of the eventual winners — Ericsson — and Google, which had placed the initial $900 million bid to begin the auction process. Google had justified its initial bid by saying that patents are necessary given the increasingly litigious environment these days.

Google, as well as its hardware partners, face a number of lawsuits related to Android. Apple, for example, has sued HTC, while Oracle has sued Google directly and Microsoft also has claimed Android hardware infringes on its patents, suing both Motorola and Barnes and Noble.

The patents covered a broad range of areas, Nortel said, including all manner of telecommunications and networking technologies — wireless and 4G wireless, among others — as well as additional areas such as Internet search and social networking.

Even with the cash haul, Nortel said it still doesn’t expect to have any remaining value for common shareholders once it completes its bankruptcy protection hearings.

Bids for the movie-rental chain were due Thursday evening, and a handful of potential suitors have been considering whether to square off against a group of hedge funds that already offered to buy Blockbuster for about $290 million, the people said.

The hedge funds, led by Monarch Alternative Capital, hold a big chunk of Blockbuster’s senior bonds and made a so-called “stalking horse” bid in February, setting a floor that other suitors must top to win the video-store chain.

Read the rest of this post on the original site

The official declined to say why SK Telecom, South Korea’s largest mobile carrier by revenue, might bid for Blockbuster, but the company has been seeking ways to broaden its business portfolio and tap new sources of growth overseas to overcome the limited opportunities to expand in one of the world’s most saturated and fiercely competitive telecom markets.

Market watchers were uncertain whether a successful bid would benefit SK Telecom, although some said that acquiring Blockbuster could provide a source of visual content for its mobile-service business.

Read the rest of this post on the original site

The fact that they’re now rare makes them valuable. In fact, Microsoft has just paid $7.5 million to buy some 666,000 addresses from the assets of the bankrupt Canadian networking company Nortel.

You may remember that the world ran out of these addresses last month when the Internet Assigned Numbers Authority handed out the last batch of the 4.5 billion or so addresses under its control. Who knew the Internet would ever need so many?

A new numbering system called IP version 6 or IPv6 is coming soon with lots more room for addresses. The theoretical number of addresses that should be available is 340 undecillion. (Yes that’s a real number, a 340 followed by 36 zeros.) That ought to be plenty of space. The problem is that it’s taking forever to get it up and running.

But in the meantime, the world is still relying upon the old-school IPv4 addresses and they’re scarce, hence valuable. Microsoft paid $11.25 each for these addresses, and it stands to reason that there are scores of companies and entities out there with blocks of addresses that are in various states of disuse. Something tells me this isn’t the last deal of this kind.

The troubled Ann Arbor, Mich., bookseller could file for Chapter 11 bankruptcy-protection as soon as Monday or Tuesday, paving the way for hundreds of store closings and thousands of job losses, said people familiar with the matter.

Borders’s finances crumbled amid declining interest in bricks-and-mortar booksellers, a broad cultural trend for which it offered no answers. The bookseller suffered a series of management gaffes, piled up unsustainable debts and failed to cultivate a meaningful presence on the Internet or in increasingly popular digital e-readers.

Read the rest of this post on the original site »

Being the largest e-commerce company is an obvious barrier to entry, but there are at least two opportunities in 2011 that will drive even more traffic to its site and others: Social and mobile.

A 78-page presentation by J.P. Morgan on the Internet Sector Outlook of 2011, which focuses a lot on the e-commerce market, predicts that the big losers will be physical retailers as more spending shifts online.

If you’ve been reading eMoney, you already knew this. Last month, we referred to these trends as the so-lo-mo trifecta, referencing the impact of social, local and mobile on e-commerce.

In 2010, J.P. Morgan found that nearly 8 percent of Amazon’s traffic was coming from Facebook, compared to 20 percent coming from Google, and that e-commerce revenues are expected to grow by 13.2 percent in 2011.

But as more consumers discover products and services through social networks, like Facebook, and compare prices on their smartphones in stores, traditional brick-and-mortars will lose market share and face bankruptcy, J.P. Morgan concludes. (It’s a small coincidence that Macy’s said it expects to add about 725 new positions over the next two years to beef up its Macy’s and Bloomingdale’s Web sites).

Here’s how J.P. Morgan makes the case for the future of e-commerce:

–U.S. e-commerce revenues totaled $28 billion in 2000, soaring to $166 billion in 2010. Revenues are expected to grow by 13.2 percent in the U.S. this year alone.

–In 2010, 36 percent of people said they bought something online at least once a month. Slightly less, or 32 percent of people, said they purchased one to two items online a month. However, less than 2 percent of folks bought more than 10 items a month.

–Traffic to Amazon’s sites is increasingly coming from Facebook, jumping 328 percent over the past year to almost 8 percent. That compares to almost 20 percent of referrals coming from Google.

–Facebook is driving less traffic to eBay than to Amazon, or roughly 4.7 percent, compared to 11.4 percent from Google.

–E-Commerce 2011 Top Picks: Amazon, Priceline and Latin American e-commerce provider MercadoLibre.

Alan Sklar feels it. The 61-year-old has stood behind the counter of Alan’s Alley Video in Manhattan’s Chelsea neighborhood for 22 years. Revenue is down, and his staff, which reached 10 a few years ago, is now about five. “If we pay the bills we’re happy,” he said.

Many nights, like last Thursday, are very quiet.

He lists the culprits. “Netflix (NFLX), Redbox and on demand,” he said, over Audrey Hepburn’s voice emanating from a television in the corner playing “Funny Face.”

“People like things being given to them. We don’t see as many warm bodies.”

Since the first video-rental shops emerged in the late 1970s, they have served as shrines to films and created new social spaces for neighborhoods, often reflecting their personalities. They drew cinephiles, rebellious teens seeking movies of which their parents might not approve, and budding young actors and directors who canonized them in their work.

Read the rest of this post on the original site

That may well have been the case, but they don’t seem to have done much good, because Blockbuster filed for bankruptcy today, beaten into submission by nearly $1 billion in debt, growing competition from Netflix, Amazon and Apple, and consumers’ developing affinity for streaming and on-demand video services.

Blockbuster CEO Jim Keyes said the move will allow Blockbuster to “continue to transform our business model to meet the evolving preferences of our customers.”

Which presumably means further retail store closures as the company reduces its nearly $1 billion debt to about $100 million.

Hardly a surprise–particularly since the company alerted the six major movie studios of its plans to enter a “pre-planned” bankruptcy in mid-September.

Incidentally, the companies that have been instrumental in landing Blockbuster in the dire straits in which it finds itself are all doing quite well on the stock market today. At $162.13, Netflix (NFLX) is up 3.31 percent; at $155.20 Amazon (AMZN) is up 2.19 percent; and at $291.80 Apple (AAPL) is up 1.39 percent.

“We’re either right or we’re not. If we’re wrong, we deserve people throwing rocks at us.”

– Former SCO CEO Darl McBride in 2003

SCO’s long-running campaign against Linux may have finally been dealt a death blow. Late Thursday, the judge presiding over the company’s legal battle with Novell (NOVL) rejected its request for a new trial and upheld an April jury decision that determined Novell, not SCO, is the rightful owner of key Unix copyrights.

“SCO argues that it is entitled to judgment as a matter of law because the ‘verdict cannot be squared with the overwhelming evidence and the law,’” Judge Ted Stewart wrote in his decision. “The Court respectfully disagrees. The jury found Novell’s version of facts to be more persuasive. This conclusion is well supported by the evidence. There was substantial evidence that Novell made an intentional decision to retain ownership of the copyrights….Therefore, SCO is not entitled to a new trial.”

So it seems that after seven years, this charade by SCO is finally over. What will it tell the bankruptcy court now? Earlier this year, former U.S. District Judge Edward Cahn, the company’s bankruptcy trustee, told the Salt Lake Tribune that the jury decision will not dissuade it from pursuing its lawsuit against IBM (IBM). Said Cahn: “The copyright claims are gone, but we have other claims based on contracts.”

Thursday’s ruling would seem to be a setback for those plans, but SCO has a history of pressing on in the face of repeated defeats. We’ll have to wait to see if one of its Iraqi Information Minister-style press releases is forthcoming.

In any event, the stoning has begun on Wall Street, where SCO stock is trading around five cents a share.

The recovery in consumer spending and auto sales is evidently giving Sirius (SIRI) quite a lift, enough for it to boost projected new subscriptions to approximately 750,000 from about 500,000, its revenue to $2.75 billion and its profit to $575 million.

Quite a change from last year, when the company seemed headed toward almost certain bankruptcy. Its shares are up some 75 percent this year.

Though the company’s fast-declining fortunes might suggest its endgame is either buyout or bankruptcy, things aren’t quite so dour–not according to Rubinstein, anyway. The commercial success that has so far eluded Palm isn’t unobtainable, he says, it’s just, you know…a bit farther off than than the company and its investors would like.

“I believe Palm can survive as an independent company,” Rubinstein told the Financial Times. “We have a plan that gets us to profitability.”

Sadly, Rubinstein didn’t provide much detail about the plan beyond the just-you-wait-and-see promises we’ve heard from him before. “[We're working] fast and furious on new handsets,” he said. “We do have a strong pipeline of products in the future.”

Rubinstein also noted that Palm (PALM) would consider licensing its webOS mobile operating system to other companies, given the right circumstances. “Of course we would licence webOS because obviously the more scale we get the more the benefit there is to us.”

Obviously.

But this, too, is something we’re heard from Rubinstein before. And without any insight into how such licensing deals would be structured or who might be interested in them, it’s tough put much faith in them.

To me, these claims, and some others made in this “upbeat” MarketWatch interview, read like simple posturing–the CEO of a foundering company positioning it for a sale with some always-look-on-the-bright-side-of-life proclamations. Conjure a vision of new killer handsets and lucrative licensing deals, do your best to breathe some life into the stock and hope for a good price when you’re finally up on the block.

Maybe I’m wrong. We’ll see.

Great news for the open-source community and for the long-suffering Novell (NOVL), which has been battling SCO for quite some time now.

“Novell is very pleased with the jury’s decision confirming Novell’s ownership of the Unix copyrights, which SCO had asserted to own in its attack on Linux,” the company said in a statement. “Novell remains committed to promoting Linux, including by defending Linux on the intellectual property front.”

Which is great, because SCO, while obviously struck low by today’s verdict, evidently intends to forge on with its suit against IBM (IBM), which it also claims misappropriated Unix and built it into Linux. Former U.S. District Judge Edward Cahn, the trustee for SCO’s bankruptcy, told the Salt Lake Tribune that the jury decision will not dissuade it from pursuing its lawsuit against Big Blue. Said Cahn: “The copyright claims are gone, but we have other claims based on contracts.”

Astonishing. As I wrote of SCO back in 2004:

“There’s a scene at the end of Martin Scorsese’s remake of ‘Cape Fear’ in which villain Max Cady, having been shot, stabbed, burned and beaten, continues to threaten his victims even as he’s drowning, handcuffed to a sinking houseboat. I think of that scene every time I read that SCO has filed another motion in its ill-starred copyright infringement suits.”