Looks like 2008 is starting off with a bang or two. First is the news that Motorola may spin off its wireless division, then we hear that Microsoft has finally made a serious move to acquire Yahoo. Not to mention the C-Block auction action. There's also the rumors of Sprint finally paying the piper for its Nextel blunder. Qwest and chip maker AMD also have rumors swirling around their possible demises.

Motorola, Sprint, AMD, and Qwest's problems have been mentioned on this site already.


I'm no industry insider or analyst, so I have to say that Motorola's wireless woes are kinda surprising. My first couple cellphones were Motorolas. I also remember the popularity of the StarTAC and, more recently, the RAZR. But I have read that a least part of Motorolas problems stem from a lack of innovation and a failure of its recent offerings to catch on. And that's not counting trying to compete with the current technophile darling, Apple's iPhone. LG and others have come out with some innovative handsets in order to compete with the almighty iPhone. Motorola has been conspicuously absent from the buzz mill when it comes to creating excitement in the sector. I mean, how many new RAZR variations can you come out with?

After grabbing world market share of 23% in 2006 on momentum led by its Razr phone, the company has lost nearly half that as rivals outpaced it with successful new products. The company said it is looking at ways to "better equip its mobile devices business to recapture global market leadership and to enhance shareholder value." It wasn't clear whether that means a spinoff, sale or joint venture is more likely. According to Morningstar analyst Jordan Zounis "It sounds like everything's on the table."

The revised strategy comes just one month after Greg Brown succeeded Ed Zander as CEO and a year and a day since Carl Icahn initiated a proxy fight to shake up a company that was already in the throes of a severe decline in sales and profits. Icahn apparently still isn't happy with the spin-off idea either: "“We believe Motorola is finally moving in the right direction, but certainly still has a long way to go.”

I don't know what Icahn is thinking, but Motorola's handset division is clearly not headed anywhere near the right direction, judging by Motorola's weak fourth-quarter results. The company's profit fell a whopping 84%, handset sales were down 38%, and its share of the world handset market continues to fall after being reduced by nearly half since hitting that 23% mark at the end of 2006. Motorola's share price was over $25 in late 2006. It is now below $13. Analysts seem to think an Asian buyer would be the best fit for Motorola's handset division, and rumor has it Samsung might be the one to snatch the ailing company. Another possible buyer could be Sony-Ericsson.

In addition, Motorola's enterprise telecom and home set-top businesses could be acquired by Cisco or Nortel. A tech-oriented private equity firm might also buy the set-top box unit. As an independent company, it may be that Motorola has no future. We'll just have to wait and see how things develop as the new year gets started.

Sprint, on the other hand, has been in obvious trouble ever since it bought Nextel. It traded above $23 about a year ago and recently fell to close to $8. While AT&T and Verizon post enviable wireless numbers, Sprint struggles to keep current subscribers. And Sprint was just in the news after announcing a huge layoff of employees. SK Telecom, a big Korean operator, has already come to Sprint with a proposed investment. The board did not listen. But, the company's shares were not at $10 then. SK may well be back. Rumors continue to swirl about a possible Comcast buy out. I don't even want to think about that, considering Comcast's less than stellar performance, especially with Concast's position as the poster child for bad customer service (seen any sleeping Comcast techs, anyone?). However, it would be a clear gambit on Comcast's part for some quadruple play action: Internet, TV, Phone, and cellular service. Something that, if succuessful, would be highly desirable in the race for convergence.

There have been recent rumors that Sprint and ClearWire are again in talks and may be close to a deal to get Sprints much ballyhooed Xohm Wimax service off the ground. You may recall that this venture was pretty much put on the backburner after Sprint's chief executive Gary Forsee, the architect of Sprint's WiMax plan, was forced out. However, IF Sprint and Clearwire can work out a deal, and IF Xohm takes off like hoped, then Sprint may be able to save its skin yet. On the bad side, Sprint said Thursday it might have to write off all of the $30.7-billion goodwill value from its purchase of Nextel Communications and smaller deals as it struggles with customer losses.

Another surprise to some, but apparently not to industry insiders and followers, is the possible demise or absorption of AMD. Word has it that AMD is falling father and father behind rival Intel in the chip making business. The company had a pretty rough 2007 with the bug-plagued Barcelona and the ongoing success of Intel’s Xeon processors. But perhaps the company is back on track with new chips coming out and new customers on board. AMD recently pulled in longtime Intel customer Gateway, which has agreed to use the new Phenom quads for the GM and GT series desktops. Gateway will still use Intel quads, but this deal shows that AMD can still get its foot in the door.

Word has it that the fix for the translation-lookaside buffer (TLB) is ahead of schedule, with a possible release this spring or summer. AMD still has egg on the face because they had to issue a temporary patch, but at least the problem was not so severe that corrected chips were delayed until next fall, or later. The same TLB bug showed up in the Phenoms, but corrected Phenoms are due out this spring as well, along with the new three-core Phenom 8000 series. The rumors is that a 2.1 GHz Phenom 8400 and a 2.3 GHz 8600 could show up as early as March, with a 2.4 GHz 8700 available by the summer.

The company is also making headway on the graphics front. The new ATI Radeon HD 3870 X2 is the first to hit 1 Teraflop and the first to support DirectX 10.1 that not only offers enhanced graphical display but comes with a new toolkit for developers.

Qwest CEO Edward Mueller envisions in-home integration. Unlike his fellow CEOs, he’s not building Qwest into a company that will deliver its own voice, data, video and wireless services to its consumer customers. Instead, Mueller is pointing Qwest toward a different kind of future, based on delivering massive amounts of bandwidth into each home, partnering where needed for wireless and video services and trying to keep a finger on the pulse of the up and coming markets.

The last of the Baby Bells standing from the break-up of the old AT&T and the dominant phone company in 14 states shares have fallen from a 52-week high of $10.45 to below $6. Qwest has two problems which it cannot solve. The first is that it has no real wireless operations. Cellular service is what is driving the market valuation of rivals AT&T and Verizon. Qwest also does not have the balance sheet to upgrade all of its infrastructure to fiber like Verizon is doing. AT&T has started the fiber build-out process. There are rumors that it will get into the TV business by buying one of the satellite TV companies. Either way, Qwest does not have the balance sheet to run fiber across its service area. Qwest is content not owning content or even network infrastructure where wireless is concerned, as long as it can partner with companies that do. By owning the network into the home and the customer, Qwest can make money from both consumers and content companies that want to reach those consumers.

Says Mueller of Qwest's current situation:

Be careful Mr Mueller. That last part sounds suspiciously like the proverbial 'famous last words'. Verizon may be knocking on your door soon in order to after that customer base to push its own wireless services in bundles. Not to mention building out its FIOS network in such a large and desirable geographic area.

By far the biggest two issues at the beginning of the new year are the spectrum auction and the surprise $44.6 billion bid made by Microsoft for search giant Yahoo. Not surprisingly, both these issues involve Google. But analysts have said that Yahoo was not going to make it as a standalone, especially after Q4 earnings

Microsofts $44.6 billion bid came as a surprise to most, though MS says they have been engaged in talks for several months now. Adding fuel to the coming firestorm is the recent news that Yahoo thinks that MS's bid undervalues the worth of its stock and has started talks with Google about a possible alliance.

According to Reuters, Yahoo is considering an alliance with Google to counter a $44.6 billion take over bid from Microsoft. Google and Yahoo had held talks several months ago about such an alliance. Reuters reports that at $31 a share, Yahoo feels MS's bid undervalues the company. Another source tells that Yahoo has also been contacted by a number of media, technology, financial, and telephone companies - though it seems that few companies besides Google and MS could really engage in a bidding war for Yahoo. And, if Yahoo feels it has to sell or ally itself with another company, playing MS and Google to induce a bidding war could be just what the company is intending in order to inflate its possible selling price.

Google's chief legal officer, David Drummond, has fired back at MS's sudden bid for Yahoo, saying that:
Microsoft responded to Google's arguments by saying that a merger with Yahoo would create a "compelling number two competitor for Internet search and online advertising" to market leader Google. Microsoft's proposed merger with Yahoo would combine the No. 1 and No. 2 suppliers of Web-based e-mail, instant messaging (IM) and portals.

I think its a fair assumption that Yahoo is trying to spark a bidding war between the two Internet giants. But I'm not sure if we, the average Internet using Joe's, would benefit from either MS or Google winning an alliance with Yahoo. That means one less company, one less choice, and less competition. Everyone picks on MS as the evil monopoly, but in this case, does the possibility of Yahoogle make Google any better than MS in the 'kill all competition and rule the world' category? When does Google start coming under attack for trying to become an Internet monopoly as MS became an evil PC monopoly?

Google probably pushed the auction over the open access top, but I agree that they really don't want to win. Sure, Google is seen as some sort of Internet Robin Hood, especially after getting the spectrum auction to require open access. But Google isn't going to spend the money to build their own network. Thats what Android is for. Many are guessing that Verizon is the one who put up the winning bid. I don't know if this was something Google was banking on, or if they had talks with Verizon or another company.

Google wants their platform on every phone. Its a clever strategy, really. They're punting in order to get that last minute drive for the TD. In this case, getting their platform on every phone they can would be a major victory. Right now, Google is like Mozilla and Firefox... seen as rescuers and the alternative to evil mopoly holders. But when do the rescuers turn into what they are fighting against? I don't think Mozilla is going to oust IE any time soon, but Google certainly has the clout to become the very thing they are fighting against.

It may be soon that we will be down to two search/IM/portal/etc. choices. MS and Google. How does this benefit us? I don't see any - especially in this day and age when 'competition' is a buzz word heard around the industry and a cry from Internet users around the world.