Microsoft News Tracker

Today was the first full business day after the news of the Google AOL deal broke and reactions varied.

Predictably, Carl Icahn was not amused:

Time Warner will do the deal at the displeasure of 3% shareholder Carl Icahn, who has engaged Lazard to look at strategic alternatives for the large media company and propose an alternate slate of directors in time for its annual meeting next spring.

In an open letter to the Time Warner board released Monday, Icahn wrote: “I am not opposed to Time Warner entering into an AOL transaction that creates long-term value. However, I am deeply concerned that the Time Warner board may be on the verge of making a disastrous decision concerning an agreement with Google if this agreement would make it more difficult in any way or effectively preclude a merger or other type of transaction with companies such as IAC/InterActive (IACI:Nasdaq), eBay (EBAY:NYSE), Yahoo! (YHOO:Nasdaq), or Microsoft (MSFT:Nasdaq) etc., etc. …”

Icahn said that while he believes there are major opportunities to enhance value at Time Warner with future combinations, such transactions “might not be achievable if Time Warner enters into such a long-term relationship” and later questions whether Google is the best partner for unlocking the value of the AOL asset.

“On the eve of a proxy contest, I believe it would be a blatant breach of fiduciary duty to enter into an agreement with Google that would either foreclose the possibility of entering into a transaction that would be more beneficial for Time Warner shareholders or make such a transaction more difficult to achieve,” Icahn wrote.

The full text of the Icahn letter is here. On the other hand, investors seemed pleased as the stock hit a 52 week high and Google’s Market Value Surges Past That of IBM as Shares Rise, although it ended the day with a loss. The Wall Street reaction seemed positive too:

Wall Street analysts approved of the deal. Merrill Lynch analyst Lauren Rich Fine left her rating on the stock at Peer Perform, and wrote that it would be a wise move given the fact that AOL is Google’s largest customer, accounting for an estimated $600 million, or 10 percent, of 2005 revenue.

Bear Stearns analyst Robert Peck not only liked the AOL deal, he also speculated Google could be on the verge of entering the hardware space, with some sort of “Google Cube,” a small box with various wireless ports, which could be used to connect a personal computer, stereo, or personal video recorder.

“In fact, Google could over time become more of a hardware company than anything else,” Peck wrote in a research note.

The last part casts rather a pall over Mr. Peck’s analysis, but you get the idea. However, there were also more of those pesky voices of doubt I mentioned over the weekend ([1], [2]) saying that perhaps Google gave up too much credibility in order to do the deal.

Preston Gralla at Networking Pipeline - Has Google Become More “Evil” Than Microsoft?:

Up until now, Google has very clearly separated advertising from non-ad content. That’s been one of the reasons for its success — people have thought the site’s searches were not for sale. But no longer.
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Internet search is a rough-and-tumble business, and niceties aren’t always observed. But Google has crossed the line here, and the AOL deal makes clear it should finally give up its “do-no-evil” charade.

Alyce Lomax at The Motley Fool - Google Falls for AOL?

However, chatting with my Foolish colleague Seth Jayson did bring up an interesting point related to Google’s well-known mission statement: “Don’t be evil.” That won’t get any easier as the company and its stock price continue to expand. Given the preferential treatment it will now provide AOL, it’s not hard to imagine that Google’s do-no-wrong reputation may quickly start to tarnish — especially in such close association with AOL, which has committed a few previous blunders that arguably alienated some of its users.

It’s a strange turn of events between these two companies, and while the short-term logic behind their expected agreement is clear, the far-reaching ramifications may not be. Google’s share price hit a new 52-week high in Monday’s trading (what else is new?), but personally, I see many reasons for Google fans — and shareholders — to feel uneasy as this agreement speeds closer to reality.

The next step is presumably Wednesday’s (some news reports say Tuesday - ed.) Time Warner board meeting, followed by a public release of the details.

Update: Paul Thurrott - AOHell: Google Sells Soul to Stop Microsoft:

The deal, which was done solely to hurt Microsoft, will not financially benefit Google in any perceptible way. But as part of the deal, Google will do that one thing they’ve always promised not to do: It will present AOL-sponsored search results on its main search results page, complete with the AOL logo. That’s right, folks. Google has sold out. And it did so to harm a competitor that has less than one third its marketshare.

Unexpectedly, Microsoft provided a CTP of Windows Longhorn Server (due to ship in 2007) along with the December CTP of Windows Vista released today. Paul Mooney has the details including that both the Vista and Longhorn CTPs are build 5270 and information on the downloads for the MSDN subscribers and official beta testers:

- Both Vista and Longhorn Server are available in the same image you only need a separate image if you wish to test Longhorn Server Core.

- The initial release is English only, German and Japanese are planned to follow within 2 weeks

The following are available with this release:

Windows Vista (x86 and x64)
Windows Longhorn Server (x86 and x64)
Windows Longhorn Server Core (x86 and x64)
Windows Platform SDK (Available Shortly)
Windows Driver Development Kit

Recall that Longhorn has been redesigned to be modular with the barebones Server Core only having a few services and no GUI. Functionality can be added modularly to perform various specific roles like File Server, Print Server, Web Server, etc. The regular Longhorn Server is similar to today’s server packaging.

(Via Tom Archer) The much anticipated December Community Technical Preview of Windows Vista has been released. It’s build 5270, available in x86 and x64 versions, and the downloads are listed here. They include:

WinFX Runtime Components (RTC) - WinFX redistributables (runtime binaries) for executing WinFX applications

Windows SDK - Includes the header files, libraries and help documentation for developing the next generation of Windows applications. Note that this release (and all future releases of the Windows SDK includes the WinFX SDK).

Visual Studio Code Name “Orcas” CTP WinFX Development Tools - provides developers with support for building WinFX applications using the final released version of Visual Studio 2005. This support includes XAML Intellisense support through schema extensions for the editor, project templates for the Windows Presentation Foundation and the Windows Communication Foundation, and WinFX SDK documentation integration. New to this CTP is a preview of the Visual Designer for Windows Presentation Foundation (code name “Cider”).

Windows Vista - substantial advance in Windows with significant innovations in the developer platform. Combining Windows Vista and the Windows SDK makes it easier than ever before to build applications that are more secure, reliable, and manageable.

There’s more by following the link, but note that all of the above except Windows Vista itself are publicly downloadable. Vista is only available to MSDN Universal subscribers and official beta testers. Robert McLaws reports that it may be a couple of days before it actually appears on MSDN. ActiveWin has some screenshots and a detailed list of new features.

Update: Nate Mook has a good overview of new features at BetaNews.

Todd Bishop of the Seattle PI notes the rumor at Barron’s:

There is chatter on Wall Street that Microsoft may be readying a new hardware initiative by producing its own digital media player to garner a piece of the market that Apple’s iPod has defined.

Drew Brosseau, an analyst at SG Cowen, says he believes that Microsoft will — and should — build its own digital media device. There are at least some intriguing hints that the brass in Redmond, Wash., are moving toward giving the go-ahead to such an effort.
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Brosseau thinks Microsoft strongly wants to enter the online music business and to explore the software/hardware/service nexus. The analyst also points out that, with the recent release of the Xbox 360, Microsoft has a hardware-design group with time and energy to spare until the next videogame hardware cycle.

This isn’t necessarily a profound threat to the iPod juggernaut, which has enormous momentum. But the $8 billion digital music and media business — growing 15% a year — includes $2.5 billion of non-iPod revenue, much of which Microsoft could sop up with a strong entry in the segment, says Brosseau.

That’s not a major slug of cash, in the context of the software giant’s expected $45 billion in revenue this year. But it fits with the company’s desire to layer on products in fast-growing businesses not tied to the PC cycle.

More by following both the links. Aside from the question of the return to Microsoft from trying to crash the portable media player market, such a move would be exceedingly inconvenient for Microsoft partners already producing players based on Microsoft’s Windows-centric Portable Media Center specification. The folks at Creative, Samsung, and iriver are going to be more than a little grumpy if Microsoft tries to elbow them out of the way. On the other hand, their players haven’t been a rousing success and perhaps with a little “coaxing” they would be willing to leave the field to Microsoft. And of course, if the Xbox crew runs the effort, the Microsoft player wouldn’t necessarily be Windows-centric.

Update: Rick Aristotle Munarriz considers the pros and cons at The Motley Fool.

MSNBC (the TV network) and MSNBC.com (they are separate) get rather short shrift in discussions of Microsoft since these ventures into the content business fell rather flat. However, things should be looking up at MSNBC.com with the resurgence of the Web advertising business. In any case, MSNBC.com Selects HouseValues as the Network’s Exclusive Home Buying and Selling Service:

HouseValues Inc. (NasdaqNM:SOLD) today announced the company has signed a two-year strategic partnership with MSNBC.com, a top Internet news site, that designates HomePages(TM) as its exclusive home buying and selling service.

Under the terms of the deal, real estate related content and services from HouseValues and the company’s new home buying and selling service, www.HomePages.com, will be featured throughout MSNBC.com, which features content from NBC’s “Dateline NBC,” “Today,” “NBC Nightly News,” and others. HomePages also will be the exclusive sponsors of the real estate classified section on MSNBC.com.
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As part of the arrangement, HomePages will have a dedicated placement on MSNBC.com.

More details by following the link.