Security: Worm Poses as FBI or CIA Email

A variant of the Sober worm disguised as an email from the intelligence agencies threatens computers.
By Priya Ganapati
November 22, 2005

The Sober email worm that first struck in 2003 has made another comeback through a variant disguised as an email from the U.S. Federal Bureau of Investigation or the Central Intelligence Agency, becoming one of the fastest-spreading security threats in the last 24 hours, security software companies said Tuesday.

The worm is not considered highly dangerous as it does not seek to steal personal or financial information, but it can make infected computers susceptible to future viruses, which could potentially be more worrisome.

The first incidence of the latest Sober variant was detected Monday, said Patrick Hinojosa, chief technical officer of Panda Software, a Spanish security software company.

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Security: Texas Sues Sony Over Spyware

By Priya Ganapati
Suit alleges Sony installed spyware through its antipiracy software on CDs.
November 21, 2005

The state of Texas sued Sony BMG Music Entertainment on Monday for allegedly installing spyware through its copyright protection software on music CDS, making it the first state to bring legal action against the music giant in the month-old controversy.

The lawsuit alleges New York-based Sony BMG violated a recently passed Texas law, the Consumer Protection Against Computer Spyware Act of 2005, that protects consumers from hidden spyware. The state’s attorney general’s office is seeking civil penalties of $100,000 for each violation of the law, attorneys’ fees, and investigative costs.

This is the second lawsuit that Sony faces over the issue, but the first action brought by a government agency.

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Searching for Security

Sorting though data collected by intelligence agencies could be the next big growth area for technology companies.
By Priya Ganapati
November 18, 2005

The Tower of Babel built by government snoops has sparked demand for entrepreneurs who can help make sense of it all, according to a report released Friday.

Government agencies and corporations are spending nearly $1 billion a year to sort, contextualize, and analyze data in one of the most important segments of homeland security, according to C.E. Unterberg, Towbin (CEUT), a New York-based consultancy in technology and global security sectors.

Advanced data analytics, which looks for useful intelligence in videotapes, voice messages, and text, is expected to grow at 20 percent over the next five years and become a $2-billion market by 2009, according to CEUT and the Chesapeake Innovation Center, a business accelerator for homeland and national security.

“There is an overload of data spearheaded by FBI and intelligence agencies, collecting information on terrorist activities,” said Scott Greiper, senior research analyst, global security at CEUT. “The challenge is that the data collection efforts are overwhelming the ability to analyze the data and get actionable intelligence.”

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Security: Spam for the Holidays

Computer users will see more viruses, spam, and phishing during this holiday season.
By Priya Ganapati
November 17, 2005

Online consumers should click their way carefully through the holiday season, security experts warned Thursday, because spam will double, computer viruses will multiply, credit card thefts will soar, and online scams will increase as cyber thieves intensify their efforts.

The volume of spam flooding email inboxes is likely to double, peaking on Wednesday—the day before Thanksgiving, according to AppRiver, a Gulf Breeze, Florida-based spam and virus filtering service provider.

The increase is part of an annual pattern that spam-filtering services providers have been seeing for the last three years.

“Spammers realize that this is the best time to advertise to users as shopping peaks during this season and users are looking to buy something,” said Joel Smith, co-founder and chief technical officer of AppRiver.

Among the products being touted are personalized Christmas ornaments, Santa letters, and gift cards from Sears, Costco, and Home Depot. Almost all of these are fakes, and users who do fall for them are unlikely to receive the products, said AppRiver.

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Oracle Buys Two Security Firms

Software firm boosts database products with identity management solutions.
By Priya Ganapati
November 16, 2005

Database software giant Oracle said Wednesday it’s buying two security software companies in a bid to offer its database customers a secure product that will take care of their identity and access management requirements.

Oracle plans to acquire Thor Technologies, a provider of identity and access management solutions, and OctetString, a provider of virtual directory software. Both companies focus on ensuring that only authorized users have access to read and make changes to sensitive data.

The two acquisitions will help complement Oracle’s existing database products by bolstering their security and offering customers a single point for their database-related needs, said Carmi Levy, an analyst with Info-Tech Research Group, an advisory services company focused on mid-sized firms.

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Security: Keylogger Threats Rise 65%

Secretly installed programs that track keystrokes represent a growing security threat to consumers using PCs.
By Priya Ganapati
November 15, 2005

Threats from keyloggers, the stealthily installed programs that record computer keystrokes to help steal personal information, grew 65 percent this year, a study said Tuesday, marking a growing trend in hackers using malware for financial gain.

About 6,191 keyloggers were recorded this year, up from 3,753 in 2004, said iDefense, a security intelligence provider that is part of VeriSign. iDefense recorded 3,753 keyloggers in 2004, a huge leap over the 300 released in 2000.

“Keylogging is a very effective method for hackers,” said Joe Payne, vice president, VeriSign iDefense Security Intelligence Services. “Fraudsters can launch hundreds of these attacks around the world in seconds, gathering sensitive data to conduct large-scale monetary transfers for their illegal activities.”

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Security: Symantec Shifts Focus to Lab

Maker of Norton Antivirus now wants to create technology instead of buy it.
By Priya Ganapati
November 12, 2005

Symantec, a company renowned for buying its way into emerging technologies, now says it will focus on developing technologies at the in-house research facility it built during the past year.

The new emphasis on the Symantec Research Lab, which combines the research teams of Symantec and Veritas, could affect the future of some security startups that consider an eventual acquisition by Symantec as an exit strategy.

Symantec, which makes the popular Norton Antivirus Software, recently met with analysts and the media to showcase some of the lab’s technology. Over the next few months, the company hopes to add more people to the team and create partnerships between the lab and its various product groups.

“You can call it the coming-out of the research lab,” said CTO Mark Bregman. “The question for us is how do we build a startup company within Symantec that can operate without all the costs and infrastructure associated with putting out a Symantec product.”

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Gates Memo Rocks Microsoft

Redmond chairman predicts a 'sea change' in the software giant's approach.
By Priya Ganapati
November 9, 2005

Bill Gates wants to overhaul the way Microsoft approaches the software market, shifting toward online services and the ad-supported model championed by rivals, according to an internal email that was broadly circulated on Wednesday.

In the email dated October 30, Mr. Gates urged the company he founded to better leverage web-based software and services to make up for missed revenue opportunities realized by competitors such as Google, Salesforce.com and Skype Technologies, which was recently acquired by eBay.

Over the next few months, analysts said the various business divisions inside Microsoft are likely to incorporate the services idea into their products. It could lead to some confusion, but by early next year, a clearer plan is likely to emerge.

“When Gates sent out the Internet memo [in 1995], every single group started putting Net-related features in their products, a lot which aren’t used today because they were not well thought of,” said Rob Helm, an analyst at Directions on Microsoft, an independent Microsoft-focused consultancy firm.

Analysts said the memo showed Microsoft’s realization that it has to move faster on product development to respond credibly to competitors.

In the last four years, Microsoft has faced severe criticism over its delayed software development cycles. For instance, updates to SQL Server 2005 came nearly five years after the release of the previous version. Similarly, a trial version of Windows Vista, formerly known as Longhorn, was released in July after missing multiple deadlines.

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Security: Workers Leak Data Via IM

Study reveals slack security on corporate instant message systems.
By Priya Ganapati
November 8, 2005

Whether intended or not, employees have started leaking confidential information through instant messaging systems as they try to avoid corporate email surveillance, according to a study released Tuesday.

About four out of five companies studied by Reconnex, an enterprise risk management company, had some form of confidential data pass through their instant messaging systems during the months of August and September. Just 10 to 13 percent of companies had sensitive data pass into secured email systems, Reconnex said.

“Instant messaging is commonplace but is not properly monitored,” said Kevin Cheek, vice president of marketing at Reconnex. “We are seeing a much smaller percentage of leaks through email and more through IM which has becomes an avenue for insiders to share nonpublic information.”

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Microsoft Updates Biz Products

Microsoft launches new versions of SQL, Visual Studio and Biz Talk Server products.
By Priya Ganapati
November 7, 2005

Microsoft updated its database and developer software Monday, increasing the ability of the products to integrate in a move that could give business customers greater incentive to standardize their platforms on the company’s products.

Updates were launched for database product SQL Server 2005, developer tool Visual Studio 2005, and the business process server, the BizTalk Server 2006. The three products are integrated for collaboration across different environments and faster software delivery, Microsoft said.

The Redmond giant said the updates are built on the foundations laid in place over the last several years with significant investments in Windows Server 2003 and the Microsoft .NET software development platform.

The updates showed Microsoft’s commitment to integration and creating a seamless experience for users by bringing its various products together, said analysts.

“The three products launched today are the first wave of a tide of tightly integrated products,” said Joe Wilcox, an analyst with Jupiter Research. “While some Microsoft executives have said that Microsoft bet the company on Windows Vista, the real bet is on integrated innovation."

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Internet: Firefox Share Rises Again

The No. 2 Internet browser rides on the news of an upgrade and of reaching a key benchmark of 100 million downloads.
By Priya Ganapati
November 7, 2005

After three months of stalled growth, Mozilla's Firefox, the No. 2 Internet browser after Microsoft’s dominant Internet Explorer, is increasing its market share, thanks to recent news it had logged 100 million downloads and the release of a trial version of its upgraded browser, a report said Monday.

In October, Firefox captured 8.65 percent of the browser market share, up from 7.55 percent in September, according to a report released by NetApplications, which offers applications that measure web sites for small and medium enterprises.

Other reports have pegged Firefox’s market share to be even higher, with web traffic analytics firm OneStat saying 11.5 percent of Internet surfers globally use Firefox.

Despite the improvement, Firefox is still a long way from seriously rivaling IE’s 86.52 percent.

Nevertheless, Firefox has come a long way fast. It launched in November 2004 and now has more than 45 million users, said the Mozilla Foundation, the nonprofit group that oversees the browser’s development. The browser started at 2.69 percent market share in January and peaked at 8.71 percent in June.

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Software: BroadVision Buyout in Trouble

The lack of shareholder approval for the struggling software company’s $29-million buyout could push it to bankruptcy.
By Priya Ganapati
November 4, 2005

Nearly three months after buyout specialist Vector Capital said it would buy struggling software firm BroadVision, just over 40 percent of BroadVision’s shareholders have voted for the deal, putting the buyout process and the publicly traded company in jeopardy, the companies said.

The issue isn’t so much that shareholders are against the deal but rather that the holders simply aren’t voting. Delaware-incorporated BroadVision needs 51 percent of all shareholders to vote before a motion can be approved or denied.

This is a tougher standard than in some other states, where a majority vote solely from actual votes—not necessarily all shareholders—is considered sufficient. In some other states, a non-vote is considered a vote against the proposal.

“The conventional wisdom is that shareholders will mostly vote for a buyout like this,” said Chris Nicholson, partner at Vector Capital in San Francisco. “But we are in a peculiar situation here where it is not like shareholders are voting ‘no,’ but they are just not voting.”

Founded in 1993, the once high-flying BroadVision makes software to help enterprises create portals and e-business infrastructure. Vector Capital agreed in July to buy BroadVision for $29 million, a big discount.

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Security: Symantec Posts Dour Outlook

Shares of the security company fell nearly 9 percent after company’s warning.
By Priya Ganapati
November 1, 2005

Stung by slowing growth in both consumer and enterprise anti-virus segments and costs related to its Veritas merger, Symantec on Tuesday said it lost $251 million in its second quarter and warned it will miss Wall Street expectations for the current quarter.

The net loss equaled $0.21 per share. In the year-ago quarter, the security software maker had a net income of $135 million, or $0.19 per share. The loss was mainly due to a $284-million write-off expense and other costs related to its recent acquisition of Veritas.

Some analysts are also concerned about the potential impact of competing security products from Microsoft.

“Growth in the consumer segment could turn sharply negative as Microsoft enters the space,” said Richard Williams, an analyst with Garban Institutional Equities, a brokerage firm based in New Jersey. “It could take away a significant chunk of the business from the big three security companies of today.”

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Microsoft: Gates’ $258M Grant for Malaria

Bill and Melinda Gates Foundation donates funds for malaria-related initiatives.
By Priya Ganapati
October 31, 2005

The Bill and Melinda Gates Foundation will give $258.3 million for the development of a malaria vaccine, drugs, and research to combat the disease that kills more than 1 million people worldwide every year, mostly children in Africa.

The latest grants bring the total spending on malaria-related initiatives by the Gates Foundation to about $718 million since its inception in 1998, the foundation said Monday. Two of the grants will be spent over five years and the third will be disbursed over six years.

The grants will cement the Gates Foundation’s position as one of the leaders in the fight against malaria.

Global funding in 2004 for malaria research and development totaled $323 million, according to a study by the Malaria R&D Alliance, an international coalition of malaria research groups. The U.S. National Institute of Allergy and Infectious Diseases and the Gates Foundation accounted for 49 percent.

The U.S. government invested $129 million in 2004, which comprised 70 percent of total public-sector support for the disease worldwide and almost 40 percent of the total investment.

Malaria represents just 0.3 percent of total health-related R&D spending. This is not proportionate to the havoc caused by malaria, which accounts for 3.1 percent of the global disease-related burden, the organization said.

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Microsoft’s Korea Threat

Software maker may pull Windows out of the Korean market over an antitrust case.
By Priya Ganapati
October 28, 2005

Microsoft said it may have to pull Windows out of the South Korean market if it receives an unfavorable ruling from a Korean agency investigating complaints the software giant breached the country’s antitrust laws.

The Korean Fair Trade Commission has been investigating whether the inclusion of streaming media technology or instant messenger in Windows violates Korean law. Microsoft’s decision to include Windows Media Services as an optional component of Windows Server is also under investigation.

In a filing to the U.S. Securities Exchange Commission on Thursday evening, Microsoft said, “If the KFTC enters an order requiring Microsoft to remove code or redesign Windows uniquely for the Korean market, it might be necessary to withdraw Windows from the Korean market or delay offering new versions in Korea unless the remedial order is stayed or overturned on appeal.”

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Microsoft Outlook Irks Street

Software maker’s results narrowly beat expectations, but its stock falls after Redmond lowers its sales forecast.
By Priya Ganapati
October 27, 2005

Microsoft said Thursday its first-quarter earnings rose 24 percent, narrowly beating expectations, but the software giant’s stock fell after disappointing guidance for the current quarter.

Net income rose to $3.14 billion, or $0.29 per share, from $2.53 billion, or $0.23, in the year-ago quarter. The 2005 results included a $0.02-per-share charge for the RealNetworks settlement while 2004 results included a charge of $0.03 per share to settle a dispute with Novell.

But analysts were disappointed with the guidance the company issued for the current quarter. For the second quarter ending December 31, Microsoft sees earnings per share in the range of $0.32 to $0.33 on revenue in the range of $11.9 billion to $12 billion. This fell far short of analyst expectations of $0.35 per share, according to Thomsom Financial.

The results came out after the market closed, but Microsoft shares fell $0.36 to $24.49 in after-hours trading.

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Security: Zotob Cost $97K per Company

The worm that struck in August was classified as a low risk but infected businesses had to pay a big price.
By Priya Ganapati
October 27, 2005

The Zotob worm that crippled corporate computer networks in mid-August cost infected businesses an average of $97,000 to clean up, but its impact was milder than the Slammer or Sasser worm outbreaks, a security software company said Thursday.

Some 61 percent of the organizations hit by Zotob reported that cleaning their systems required more than 80 hours of work, Cybertrust said. The healthcare industry experienced the greatest Zotob impact with 26 percent of companies experiencing problems from Zotob, compared to 7 percent of financial institutions.

Cybertrust surveyed 700 companies about the Zotob worm’s impact.

The financial losses caused by the Zotob worm and its impact on businesses, rather than on home users, revealed a new trend. Zotob heralded the rise of the “business worm,” with security threats aimed at businesses rather than at individual users, experts said. What’s more, these new worms are often driven by a strong motivation of financial gain

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VeriSign Buys Retail Solutions

The $24-million acquisition is expected to help VeriSign gain a foothold in the supply chain management business.
By Priya Ganapati
October 26, 2005

VeriSign said Wednesday it will pay $24 million to acquire Retail Solutions, a company that provides point-of-sale data about products, giving the infrastructure services company a foothold in the supply chain management business.

The deal marks VeriSign’s third acquisition in a month.

Lincoln, Rhode Island-based Retail Solutions specializes in operational point-of-sale data which gives detailed information about products sold through retailers. That information, when combined with data forecasting demand and identification technologies like RFID [Radio Frequency Identification], is designed to help retailers better manage their inventory. It is also expected to help increase sales and reduce costs.

VeriSign may be happy with its latest acquisition but it has left analysts like Richard Williams puzzled.

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Internet: VeriSign Settles with ICANN

The settlement is likely to raise the price of domain names though impact on users will be minimal.
By Priya Ganapati
October 25, 2005

VeriSign has agreed to settle a dispute with the Internet’s oversight agency that will allow the domain registrar and security company to retain its control over the .com and .net registry till 2012.

VeriSign sued the Internet Corporation for Assigned Names and Numbers in 2004, alleging the non-profit was interfering with the company’s ability to do business.

The settlement, announced late Monday, is also expected to increase prices of the .com domain lease by 7 percent and add at least $40 million in revenue for VeriSign in 2007, analysts said.

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Feds Want Better Net Security

A directive from federal banking regulators is expected to boost the market for two-factor authentication products.
By Priya Ganapati
October 21, 2005

For security startups in the business of offering authentication solutions, a recently issued letter by a U.S. government agency urging banks to take greater measures to protect online customers could result in a big boost in business.

The Federal Financial Institutions Examination Council recently sent a letter to banks asking them to use a more demanding identification system known as two-factor authentication.

The directive could mean big business for security startups serving financial institutions, executives said.

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Microsoft: Redmond's $1.2M IT Fund

Microsoft creates fund to spread IT in the developing world.
By Priya Ganapati
October 20, 2005

Microsoft has created a $1.2-million fund to help academic researchers tackle technology challenges related to improving health, education, and socioeconomic conditions, the company said Thursday.

Called the Digital Inclusion funding opportunity, the initiative is intended to reach people who have little or no access to technology, especially in developing countries. It is part of Microsoft Research, a computer research organization created by the Redmond giant in 1991.

Microsoft Research will call for proposals from researchers to explore how technologies such as mobile devices, cellular phones, and networking can make computing more affordable and accessible.

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Internet: Firefox Marks 100 Million Downloads

The milestone solidifies the position of the No. 2 browser after Internet Explorer
By Priya Ganapati
October 20, 2005

In less than a year after its launch, the Firefox browser has already clocked 100 million downloads, browser development officials said Thursday, marking a milestone that solidifies Firefox’s No. 2 position after Microsoft’s dominant Internet Explorer.

Firefox, which launched in November 2004, has now logged more than 45 million users, said the Mozilla Foundation, the non-profit group that oversees the browser’s development. That gives Firefox a 7.6 percent share of the browser market, according to September figures from Net Applications, a very distant second to IE’s 86.9 percent share.

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Security: Printers Sport Hidden Codes

The Electronic Frontier Foundation alleges some color printers can help track consumer information through hidden codes.
By Priya Ganapati
Oct 18, 2005

The Electronic Frontier Foundation, a consumer privacy and digital rights organization, alleged Tuesday that there are codes embedded in printouts made by some color laser printers that can be used to track the origin of a printed document.

The codes are ostensibly a part of anti-counterfeiting measures developed by government agencies to curb the creation of fake currency but could have serious implications for consumer privacy, according to privacy advocates.

A Secret Service spokesperson, Jonathan Cherry, said the organization does work with other government agencies and “industry partners on preventive technological countermeasures designed to discourage the illegal use of printers and copiers in the production of counterfeit currencies.”

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Security: FBI Thwarts Spam Tycoon

Authorities cripple the operations of a man alleged to be the world’s biggest spammer.
By Priya Ganapati
October 17, 2005

The FBI’s probe of a man purported to be the world’s biggest spammer demonstrates the seriousness with which law enforcement agencies are cracking down on spam, online security experts said Monday.

The FBI raided both the Detroit home of Alan M. Ralsky and the home of his son-in-law, Scott Bradley, seeking evidence he violated the CAN-SPAM act, which establishes the rules for sending out commercial email.

Authorities seized computers, servers, disks, and financial records as part of the raid, said Philip Kushner, an attorney who represents Mr. Ralsky. “The raid has had the effect of preventing him from doing business,” said Mr. Kushner.

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Security: Symantec Ups Software Prices

Hike could boost maker of popular Norton AntiVirus software’s bottom line, help counter rivals like McAfee.
By Priya Ganapati
October 13, 2005

Symantec has raised the price for renewing its popular Norton security software used on some 40 million computers around the world in a move that could net the company about $300 million in additional revenue, analysts said Thursday.

Symantec hiked the renewal price for its flagship Norton AntiVirus software 20 percent to $29.99 from $24.99. Meanwhile, the price to renew its Norton Internet Security is rising 34 percent to $39.99 from $29.95. This software includes a firewall and anti-spam protection. The renewals are good for one year.

The Cupertino, California-based security giant said the price hike is just one of the changes it’s making to its current subscription model. Among the changes, it will now deliver product updates throughout the year. A subscription to the Norton suite would ensure users not only get the most updated protection against existing viruses or worms but also feature updates ensuring their products remain current.

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Security: U.S. Tops Spammers List

But legal and legislative measures to stop unsolicited email seem to be having impact.
By Priya Ganapati
October 12, 2005

Despite legislative and legal pressure, the United States remains the world’s worst offender when it comes to the origin of spam, though South Korea and China are fast catching up, a software security company said Wednesday.

To identify the top 12 countries where span originates, London-based enterprise security software company Sophos looked at spam messages received in its network of spam traps.

The U.S. was responsible for 26.5 percent of the all spam trapped in Sophos’ networks between April and September 2005.

Still, there is some good news: this is significantly lower than the 41.5 percent chalked up during the same period last year.

South Korea ranked No. 2 on the list with a share of 19.73 percent of all spam. Meanwhile, China ranked No. 3 with 15.7 percent. But the Middle Kingdom nearly doubled its share in the spamming market.

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Security: Virus Targets Nintendo DS

Gaming systems are becoming the new targets of malicious Trojan viruses.
By Priya Ganapati
October 11, 2005

A Trojan virus disguised as a program that supposedly loads X-rated material is preying on the Nintendo DS handheld game console, security experts said Tuesday, making it the second security hazard to hit gamers in two weeks.

The malicious Trojan comes disguised as a program that promises to load “hentai,” a Japanese term for pornographic comics, cartoons, and games, onto the Nintendo DS. Once downloaded and run, the Trojan can delete system files in the gaming console and make it impossible to boot up, rendering it useless, security experts warned.

“These Trojans get onto a gaming system in the same way that malicious applications get onto a PC,” said Shane Coursen, senior technical consultant for Kaspersky Lab, a security software firm. “If an application has an underlying code that acts as a Trojan or virus, it can damage gaming systems if installed on it.”

So far, there are no clear numbers on how many gamers were infected as few victims report the infections. But the rate of infection is likely to be very low, said Dean Turner, senior manager of development at Symantec Security Response.

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Microsoft Draws E.U. Scrutiny

The European Union has asked Symantec for info following Redmond's move into security.
By Priya Ganapati
October 7, 2005

The European Union has requested information from security software maker Symantec to determine whether Microsoft’s recently announced security products may violate any antitrust regulations, analysts said Friday.

Symantec, the maker of the popular Norton antivirus software, said Friday it has responded to the E.U.’s request for information but denied that the company had lodged a formal complaint with the E.U. The discussions with the E.U. were in response to its queries, said Symantec spokesperson Genevieve Haldeman.

“As we’ve said in the past, we will compete with Microsoft in the markets, not in the courts, as long as there is a level playing field,” she said.

This is not the first time Microsoft’s actions have raised eyebrows among E.U. officials. Last year, Microsoft incurred the E.U.’s wrath after bundling its Windows media player with the company’s operating systems, which the E.U. said stifled competition. Microsoft was fined $613 million, the highest ever in any European competition case.

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Software: Senior Adobe Execs to Leave

Adobe shakes up its management in the midst of its merger with Macromedia.
By Priya Ganapati
October 6, 2005

As Adobe inches closer to completing its acquisition of Macromedia the company said three senior Adobe executives will leave the company by the end of the year as five Macromedia execs come on board.

Those leaving include Adobe’s senior vice president of human resources, Theresa Townsley, Digital Imaging Chief Bryan Lamkin, and Ivan Koon, senior vice president of the intelligent documents business unit.

The announcement reflects a changing power structure within Adobe as it prepares to complete the merger. “It looks like the Macromedia people are dominating the integration process,” said Samuel Saunders, an analyst with Fulcrum Global Partners, a securities firm based in New York City.

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Security: $100M Investment for Viisage

VC firm L-1 invests the money to help the identity authentication and biometrics specialist make acquisitions.
By Priya Ganapati
October 6, 2005

Identity authentication and biometrics specialist Viisage said Thursday venture capital firm L-1 Investment Partners will invest $100 million to help it make acquisitions, sending its stock up 40 percent.

Under the agreement, Stamford, Connecticut-based L-1 will buy 19 million newly issued shares of Viisage at $5.25 per share.

The news sent the company’s stock soaring on the stock market. Viisage shares rose $1.42, or 40 percent, on the Nasdaq to close at $5.06.

Viisage will initiate a one-for-two-and-a-half reverse stock split. Post-split, L-1 is expected to control 28 percent of the company. Based in Billerica, Massachusetts, Viisage has more than 200 employees.

Viisage expects to close the transaction by the end of 2005.

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Security: Hackers Attack Mozilla Site

The outfit that runs the popular Firefox browser sees its community marketing site get hacked again.
By Priya Ganapati
October 4, 2005

Mozilla Foundation, the group that runs the second-most-popular web browser after Microsoft’s Internet Explorer, said Tuesday that hackers broke into its marketing site where users can download the Firefox browser and discuss ideas on how to promote it.

It is the second time in less than three months that the community marketing site, Spread Firefox, has been hacked. The server hosting the community site had been accessed by unknown remote attackers who attempted to exploit a vulnerability in it, said Mozilla.

The attack was limited to SpreadFirefox.com and did not affect the outfit’s main mozilla.org web sites or Mozilla software, Mozilla said in a note to users.

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Security: Symantec to Buy BindView

Security software giant tries to get firmer hold in compliance security segment.
By Priya Ganapati
October 3, 2005

Symantec continued its acquisition spree on Monday with the $209-million buyout of BindView, a security compliance firm.

The deal comes barely two weeks after Symantec’s last acquisition and is the company’s third acquisition in as many months.

The all-cash transaction valued BindView at $4 per share, a 14 percent premium over Friday’s price, and is expected to be completed in the first quarter of 2006. BindView shares rose $0.37 to $3.87 in recent trading. Symantec shares climbed $0.34 to $23.00.

BindView focuses on the fast-growing area of compliance-related security. Companies are required to keep up with regulations imposed by the Sarbanes Oxley Act, HIPAA, and Federal Information Security Management Act, among others. Firms like BindView help them cover vulnerabilities, protect information, and provide secure access.

Founded in 1990, BindView had its initial public offering on Nasdaq in 1998. In 2004, it clocked revenue of $72.9 million from over 5,000 customers including many mid-sized companies across major industries. The Houston, Texas-based company has 550 employees worldwide.

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Security: Q&A: ScanAlert’s Ken Leonard

Computer security outfit's CEO discusses benefits of certifying web sites as ‘Hacker Safe’ via method developed by his firm.
By Priya Ganapati
September 30, 2005

As ScanAlert has discovered, being based in the wine country of Napa, California, has its perks, especially when there’s reason to celebrate. In September, the web site security company’s CEO Ken Leonard got his chance to uncork a favorite bottle of cabernet. Fittingly, the bottle carried a label marked “Hacker Safe,” which resembled the company’s certificate awarded to clients with secure web sites and networks.

The occasion marked ScanAlert inking one of its biggest deals ever. The three-year-old company is partnering with Visa International to offer its scanning service to all of the payment processing giant’s merchants in the Asia-Pacific region.

Under the deal, ScanAlert on a quarterly basis will check for security vulnerabilities on the web sites and networks of merchants in the region who handle Visa cardholder data. About 1,000 merchants are expected to be covered in the first year of the deal.

Launched in 2002, ScanAlert’s scanning process assesses the security of a web site and the network supporting it by looking for vulnerabilities and gaps. In the absence of any, it certifies the site as ‘Hacker Safe,’ a tag that web sites hang on their front doors.

The label can cut both ways. While it increases consumer confidence in the web site, critics have said that a ‘Hacker Safe’ emblem could infuriate some hackers and serve as an invitation to attack.

So far, that hasn’t happened, said Mr. Leonard. None of the more than 65,000 web sites that carry the certification today have experienced any attacks. The process is gaining momentum, as evidenced by the Visa deal, he said.

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Security: Symantec Wins Piracy Case

The security software company wins more than $1 million in restitution.
By Priya Ganapati
September 28, 2005

Symantec, maker of the popular Norton antivirus software, said Wednesday that it won more than $1 million in restitution in a case of software piracy, one of the largest amounts ever awarded to the company in a criminal case.

Li Chen, a Houston-based wholesale distributor of software products, agreed to pay the amount as part of a plea bargain in which he entered a guilty plea to one count of trademark infringement. Mr. Li was accused of distributing counterfeit versions of Symantec’s Norton Antivirus software and other popular security-related applications.

“He was a tier-1 distributor, moving millions of dollars worth of our products every year,” said William Baird, Symantec’s Global Investigations manager. “We had been watching him for nearly two and a half years before we could gather all the evidence needed to move against him.”

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Microsoft, IFC Back Chinasoft

The duo will invest up to $35 million in Chinasoft International.
By Priya Ganapati
September 27, 2005

Microsoft and International Finance Corporation, the World Bank’s private-sector arm, said Tuesday they will invest up to $35 million in Chinasoft International, a publicly traded IT company specializing in outsourcing and e-governance services.

The Redmond-based software giant will invest up to $20 million and IFC is expected to pump in $15 million. The investment is intended to help Chinasoft develop its existing business and accelerate its expansion in the international market, the company said.

Microsoft and Chinasoft also inaugurated a jointly built Online Lab that will conduct software outsourcing R&D and testing. The lab will try to enhance Chinasoft’s capabilities to undertake software outsourcing projects and its R&D services capabilities.

Chinasoft is a publicly traded company on the Hong Kong Stock Exchange.

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Security: FBI Gets Tough on Cyber-Crime

Fed’s cyber-squad, Silicon Valley defense contractors meet in cyber-crime crackdown.
By Priya Ganapati
September 26, 2005

The U.S. Federal Bureau of Investigation plans to meet with small- and medium-sized defense contractors in Silicon Valley to increase awareness about security risks to their IT infrastructure and encourage cooperation with law enforcement in the event of an IT break-in, the Bureau’s San Francisco-based agents said Monday.

The move represents the FBI’s efforts to reverse the decline in the number of computer intrusions that are reported to law enforcement, despite the increase in the number of cyber crime attacks. When it begins sometime in November, the outreach program will be the first time the FBI has set out to work on crime-fighting with a specific sector in the Valley.

With the program, the FBI plans to have its special agents personally visit companies and give presentations emphasizing the importance of creating secure networks and reporting security intrusions to law enforcement agencies.

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Security: Symantec Buys WholeSecurity

The makers of the popular Norton antivirus software add yet another security start-up to its portfolio.
By Priya Ganapati
September 22, 2005

Symantec made its second acquisition in two months Thursday with the buyout of WholeSecurity, a startup that offers an anti-phishing tool and a behavior-based analysis of security threats to block them as they occur.

Terms of the transaction, which is expected to close next month, weren’t disclosed. The companies announced the sale after the stock market closed, but Symantec’s stock fell $0.10 to $21.09 in after-hours trading. Prior to the announcement, Symantec shares fell $0.13 to $21.19.

WholeSecurity was founded in 2000 and has 80 employees. The company said it has over 100 customers for its products but declined to reveal its revenue. WholeSecurity had received $20 million in funding over two rounds from venture capitalists, New Enterprise Associates, Venrock Associates, Trellis Partners, and Parker Price Venture Capital.

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Microsoft: Redmond Reorg Skirts Problems

Microsoft’s restructuring fails to win the approval of analysts, who say it won’t solve the software giant's problems.
By Priya Ganapati
September 21, 2005

Microsoft’s reorganization of its business fails to tackle the bureaucracy and lack of agility that has plagued the software giant in recent years and is unlikely to revive the company’s comatose stock, analysts said Wednesday.

The restructuring will, however, put the focus on online services, shifting the company’s attention from desktops and better positioning it to take on rival Google, its strongest competitor since Redmond trounced Netscape during the browser wars of the mid-1990s.

Microsoft created three super groups in Tuesday’s reshuffling: Platform and Products Services, led by Jim Allchin and Kevin Johnson; Business Division, led by Jeff Raikes; and Entertainment & Devices, led by Robbie Bach. These three groups overlook the seven divisions within the company.

Although Microsoft said the realignment will “speed up execution,” analysts said that it adds another layer of bureaucracy.

“It seems like they are moving deck chairs around on the Titanic,” said Peter Cohan, founder of Peter S. Cohan & Associates, a management consulting and venture capital firm. “When I saw the announcement, it sounded like some large bureaucratic organization hiring McKinsey to move boxes around.”

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Internet: Opera Browser Is Now Free

To increase market share, the underdog browser company offers Opera for free.
By Priya Ganapati
September 20, 2005

Ten years after it launched the first version of its browser, Norwegian software company Opera Software said Tuesday it will start giving away its underdog browser Opera for free as it seeks to catch up with its nearest rival Firefox and capture greater market share.

The move means that Opera, which has a relatively small but fiercely loyal fan base, will remove the ads from the basic version of its browser and will no longer charge a licensing fee for the premium ad-free version.

“The idea is to get a lot more users than we have currently,” said Opera CEO Jon S. von Tetzchner. “Removing the ad banner and licensing fee will encourage many new users to discover the Opera browser.”

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Microsoft Files 8 Piracy Suits

The software giant sues eight alleged software pirates across the U.S.
By Priya Ganapati
September 19, 2005

Microsoft said Monday that it has filed lawsuits against eight software resellers for allegedly distributing pirated copies of its popular consumer and enterprise software products like Windows XP, Office 2000, Microsoft SQL Server, and FrontPage.

The lawsuits were filed over the past two weeks against companies in Arizona, California, Minnesota, and New York.

The Redmond-based software giant said it considers legal action against alleged software pirates to be a last but “effective” resort, and files lawsuits only after efforts to warn the alleged pirates do not succeed.

“Microsoft does not take legal action lightly,” said Mary Jo Schrade, a senior attorney at Microsoft. “Our customers want to know if they’ve received the product they paid for and our legal initiatives are based on leads from customers and Microsoft’s own investigation.”

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Microsoft Gets Flak for Zotob

By Priya Ganapati
A poll finds more than one-third of businesses blame the software giant for the worm that crashed computer networks

With frustrations mounting as the Zotob worm continues to crash computer networks, a poll Thursday found more than one-third of businesses blame Microsoft for the outbreak, and not the creators of the worm that exploits a vulnerability in the software giant’s Windows operating system.

In a web poll of more than 1000 users, 35 percent of the respondents held Microsoft responsible for the mess as Windows had a software flaw that allowed the worm to sneak in, Sophos, the IT security firm that conducted the survey, said.

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Security: Zotob virus strikes Windows

The last few days have been spent in covering the Zotob worm which attacks unpatched Windows 2000 machines.

Here's my complete coverage of the worm for Red Herring online

Zotob Worm Attacks Visa
August 17, 2005
The Zotob worm brought down computers at the payment giant’s headquarters in California.

Zotob Morphs into 11 Variants
August 17, 2005
The computer worm that infected Visa computers is mutating fast, leading security experts to raise threat levels.

Zotob Variant Hits Big Media
August 16, 2005
Internet worm variant attacks computers at CNN, ABC, and the New York Times .

Zotob Virus Strikes Windows
August 15, 2005
The Internet worm is aimed at soft spots in Microsoft Windows.

Internet: Bike Powers PCs in Africa

Former Silicon Valley execs bring cheap computing to remote African villages.
By Priya Ganapati
August 11, 2005

With help from former Silicon Valley execs, villagers in remote hamlets in Africa lacking power and phone lines are now making calls over VoIP, receiving voicemail, and sending email. The only hitch? Users must pedal on a stationary bike hooked up to a generator to get computer time.

Getting these hard-to-reach spots connected 21st century-style is the work of Inveneo, a San Francisco-based nonprofit started by a team of ex-tech industry workers. The outfit was started last year by Robert Marsh, a former entrepreneur and manager with more than 25 years of tech experience under his belt at companies including Innovwave and Document Tech.

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Vector to Buy Register.com

By Priya Ganapati
The private-equity firm said it is buying one of the oldest domain registration service providers for $200 million.
Aug 9, 2005

Vector Capital said Tuesday it will buy Register.com, a domain registration service provider, for $200 million in cash, marking the private-equity firm’s third acquisition of a struggling company in two months. San Francisco-based Vector Capital will pay $7.81 in cash for each Register share, a 21 percent premium over the closing price of $6.41 on June 8. That was the last trading day before another bidder, RCM Acquisition, made a hostile takeover attempt. That bid was thwarted.

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Network Solutions’ Small Idea

By Priya Ganapati
The domain registration services provider will revamp its product portfolio for small businesses.
Aug 9, 2005

Network Solutions, one of the leading domain registration service providers, said Tuesday it will reposition its brand and web site to focus on small businesses, the fastest-growing segment on the Internet. It has created a starter package for small businesses and is sprucing up its customer support to offer 24/7 service. Over the next 12 months, 2.5 million small businesses are likely to go online. Small business spending on web hosting is growing by 9.5 percent annually and will top $7.4 billion by 2009, said IDC

More at Red Herring Online

Microsoft Gets Blogging

By Priya Ganapati
The software giant’s MSN launches a community blogging service covering fashion, technology, television, music, and sports.
August 8, 2005

Seeking to raise its profile in the increasingly influential world of bloggers, software giant Microsoft said Monday it has launched a preview version of its new community blogging service called MSN Filter that will focus on topics like music and fashion in addition to technology.

MSN Filter (filter.msn.com) currently features blog posts written by six staff bloggers on various subjects that also include television and sports. The service is also looking to eventually become a community-driven site where readers can post in many categories, Microsoft said. But it won’t be a free-for-all. Microsoft staff bloggers will review the comments before they go live.

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Most CRM Buyers Unhappy

By Priya Ganapati
Buyers are dissatisfied as most products and services do not fully meet their needs
August 5, 2005

Companies that spend millions of dollars on customer relationship management products and services are a largely dissatisfied bunch as most of their purchases fail to fulfill their desire for easier integration and better vendor support, according to a Forrester Research report.

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Doubt Over Microsoft Dividend

By Priya Ganapati
Wall Street pressure aside, most tech companies remain wary of paying dividends
August 5, 2005

Some investors may be hoping that Microsoft and other cash-heavy tech companies will share their profits through additional dividends, but analysts say most companies will direct their money to long-term growth, rather than short-term payouts.

“Investors invest in technology companies for growth and not profitability,” said Samuel Saunders, an analyst for Fulcrum Global Partners. “So companies like Google that have a strong growth potential in the future find much higher valuations than those which have matured.”

In fact, Google shares climbed from $95.96 last August to $317.80 on July 21. With that kind of appreciation, who needs dividends?

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IT Spending Growth to Slow

By Priya Ganapati
A research firm has lowered its forecast for IT spending growth as optimism hits 2005 low point.
August 1, 2005

Information technology spending is expected to grow by just 4.8 percent over the next 12 months, according to a lowered forecast by research firm IDC Monday, as optimism about future demand for IT services has hit a low point for the year. IDC’s forecast earlier this year had put growth at 5 percent, which would have pegged growth at the same rate as 2004.

But August marked the fifth consecutive month of flat or falling buyer intent as CIOs realize that IT budgets for the year are tighter than they had originally estimated. Earlier this year, IT buyers had expected IT budgets to rise as much as 10 percent to 15 percent over the next 12 months.

More at Red Herring online

Microsoft Targets Google

By Priya Ganapati
Microsoft vows to “win on the web” as the company adds search to Office and doubles its product lineup in the coming year
July 28, 2005

Microsoft on Thursday suggested it will target Google’s dominance of the Internet search market by building search capabilities into the next version of its ubiquitous Office applications.

The announcement came during the company’s annual analyst day as Chairman Bill Gates and CEO Steve Ballmer also unveiled plans to virtually double Microsoft’s product pipeline during the coming year with new games, mobile software, and applications, as well as a new version of Windows.

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Vector Buys BroadVision

By Priya Ganapati
The private equity firm plans to revive fortunes of the company that makes portal and e-business software.
July 26, 2005

Private equity firm Vector Capital said Tuesday it’s buying BroadVision, a struggling company that makes software to help enterprises create portals and e-business infrastructure, for $29 million or a 36 percent discount.

BroadVision, which has faced liquidity issues among other problems, said its stockholders will receive $0.84 per share in cash, a 36 percent discount from Monday’s closing price of $1.32 on the Nasdaq. Shares of Broadvision fell 31 percent to $0.90 in recent trading.

BroadVision President and CEO Dr. Pehong Chen said the offer was the best the company could get in light of its financial woes.

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Microsoft Attacks Google Earth

By Priya Ganapati
When worlds collide: Microsoft launches MSN Virtual Earth to compete with Google Earth
July 25, 2005

Microsoft launched the beta version of MSN Virtual Earth on Monday, taking on Google with a search product that combines aerial imagery, maps, yellow pages, and search.

MSN Virtual Earth is similar to Google Earth, which was launched last month. It offers aerial photos overlaid with road networks and point-of-interest information, and a scratch pad that will save the search results so they can be emailed or copied into a document.

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VSNL Buys Teleglobe for $239M

By Priya Ganapati
Indian telecom operator will acquire telecom wholesaler, creating a global player
July 25, 2005

The Indian telecom company VSNL said on Monday it will pay $239 million for Teleglobe, one of the world’s largest wholesalers of international telecommunications services such as voice, data, and IP.

The acquisition will give VSNL, which stands for Videsh Sanchar Nigam Ltd., access to Teleglobe’s global telecom network along with ownership interests or capacity in more than 80 undersea and terrestrial cables. The Teleglobe network reaches 240 countries and territories.

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Profit Warning Hurts Microsoft

By Priya Ganapati
The software giant loses $8 billion in market cap after it disappoints Wall Street
July 21, 2005

Microsoft posted fourth-quarter profits that topped expectations, but the software giant’s stock fell Friday after the software giant lowered its guidance for the current quarter.

Excluding special items, the world’s No. 1 software maker posted earnings of $0.33 per share, while Wall Street had been expecting $0.31 per share, according to Thomson Financial’s survey of 30 analysts. Shares fell $0.76 to $25.68, erasing almost $8 billion in market value.

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Microsoft to Buy FrontBridge

By Priya Ganapati
The software giant is buying FrontBridge Technologies, which offers secure email and messaging services
July 20, 2005

Microsoft said it is buying FrontBridge Technologies, a secure email and messaging services provider, in a deal that sends a clear message that bolstering the security of the software giant’s products has become a top priority.

Microsoft declined to disclose any terms of the acquisition but an industry source estimated the deal was in the $150-million to $180-million range. Microsoft said it expects the deal to close by the end of September. Privately held FrontBridge offers outsourced services to companies in areas like email security, compliance, and disaster recovery.

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Vector Acquires WinZip

By Priya Ganapati
Vector Capital has acquired the maker of popular file compression software WinZip.
July 18, 2005

Private equity firm Vector Capital said Monday it has bought privately held WinZip Computing in a bid to reinvigorate the file compression software that generates little revenue despite its popularity.

Vector Capital said it closed the deal, for which terms weren’t disclosed, earlier this year. The deal was partly financed by a $15-million loan from Technology Investment Capital, a publicly traded company that offers capital to small to midsize technology-related companies.

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IBM Taps into Universities

By Priya Ganapati
IBM will offer universities free access to its emerging technologies research and labs
July 14, 2005

IBM said Thursday it will give universities free access to new technologies like games and applications that are being developed in its labs, as the computing giant looks to get younger users hooked on its products and to build expertise for its software platforms.
Universities will get access to more than 25 technologies, which include games and simulations, middleware tools that enable grid computing, and open standard technologies such as Java and Eclipse. All of the technologies come from IBM alphaWorks, a web-based lab that works on emerging technologies.

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Adobe-Macromedia Deal Probed

By Priya Ganapati
The U.S. Department of Justice wants more info on the proposed merger of the two design software firms
July 11, 2005

The U.S. Department of Justice wants to take a closer look at desktop publishing software firm Adobe’s pending $3.4-billion acquisition of Macromedia, requesting more information on the outfits’ web authoring/design and vector graphics illustration products. The DOJ’s demand is known as a second request because as in most mergers, Adobe and Macromedia, which makes web design software, have already submitted preliminary information about their proposed union.

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$250K reward to Sasser worm informants

By Priya Ganapati
Microsoft will pay $250,000 in reward to two informants who helped track down the creator of the Sasser worm.
July 8, 2005


After the creator of the Sasser Internet worm was convicted by a German court Friday, software giant Microsoft said the two individuals who helped track the “cracker” down will share a $250,000 reward, the first of its kind.

The money will come out of a $5-million antivirus reward fund Microsoft created in November 2003 with help from Interpol, the Federal Bureau of Investigation, and the U.S. Secret Service.

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Big Growth Seen for Storage

By Priya Ganapati
The market for external disk systems is expected to grow at a 60 percent rate, IDC reports
July 6, 2005

New regulatory requirements and the demand from smaller companies will lift shipments of external storage disk systems at a 60 percent rate through 2009, IDC reported Wednesday.

Shipments of internal terabyte systems are, however, expected to increase at a less aggressive 37 percent compound annual growth rate over the same period, said IDC. While the growth in terabytes is brisk, revenues are expected to grow at a slower pace. Worldwide disk storage system sales will increase to $26.3 billion in 2009 from $22.6 billion in 2004.

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Microsoft Cranks Up RFID

By Priya Ganapati
Microsoft plans to release some RFID products within months.
July 6, 2005

Microsoft demonstrated its RFID products Wednesday and said it would release an early version of the technology during the third quarter.

Microsoft also announced an alliance with Alien Technologies to support Alien’s RFID reader and tags that are available for applications like supply chain management, logistics, and anti-counterfeiting. Microsoft is displaying tags from the Morgan Hill, California-based company at the show, along with products from companies like SamSys Technologies of Ontario, Canada.

At the TechEd conference in Amsterdam, the company handed out RFID (radio frequency identification) tags and told attendees they would be contributing data just by walking around the show. The company said it used SQL Server 2005 and RFID readers placed throughout the conference to gather the data.

Red Herring Online

Big Growth Seen for Storage

By Priya Ganapati

The market for external disk systems is expected to grow at a 60 percent rate, IDC reports.
July 6, 2005.

New regulatory requirements and the demand from smaller companies will lift shipments of external storage disk systems at a 60 percent rate through 2009, IDC reported Wednesday.

Shipments of internal terabyte systems are, however, expected to increase at a less aggressive 37 percent compound annual growth rate over the same period, said IDC.

“Compliance-related issues like Sarbanes-Oxley and mandates for hospitals by HIPAA are adding to the growth. Companies have to store and maintain email inboxes for many years while hospitals have to store digital copies of patient’s medical records including X-Rays and MRI scans for 7-10 years,” said Dave Reinsel, director, storage research at the research firm.

Red Herring Online

Erotica site sues Amazon

By Priya Ganapati
Perfect 10 sues Amazon for providing sneak peek of its adult content.
July 1, 2005

The adult entertainment company Perfect 10 is suing Amazon and its search engine subsidiary, A9, for allegedly giving users a sneak peek of its erotica.

Perfect 10 charges its members $25.50 a month to pore over pictures of sultry nudes, and it claims the search engine allows web surfers to see some of the content for free.

Publisher Norm Zada claims his site, while erotic, is a world apart from sites offering pornographic content involving deviant sexual acts. Mr. Zada has alleged that search engines A9.com and Google are displaying links to pornographic sites that carry Perfect 10's copyright content without its permission.

Red Herring Online

Tech Industry cheers CAFTA

By Priya Ganapati
U.S. Senate approval of Central American trade pact heartens Microsoft and a key tech trade group.
July 1, 2005

Microsoft and a key technology trade group Friday applauded the U.S. Senate’s approval of the Central America Free Trade Agreement, as the pact could better protect the software giant and other tech firms from software piracy and intellectual property infringement in the region.

On Thursday, the Senate voted 54 to 45 to approve the pact, which would eliminate tariffs among the U.S. and the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. Microsoft and the Information Technology Industry Council had both lobbied heavily for the bill, which includes a commitment to intellectual property rights.

“It is particularly important for Microsoft and other U.S. technology companies that CAFTA and other free-trade agreements negotiated by the U.S. mandate strong intellectual property protections and fair treatments for products delivered online,” said Jack Krumholtz, Microsoft’s managing director for federal government affairs at Microsoft.

Red Herring Online

Microsoft, Vodafone Offer IM

By Priya Ganapati
Microsoft and Vodafone team up to offer PC to mobile instant messaging service for customers in Europe
June 30, 2005

Microsoft and Vodafone announced on Thursday they will team-up to allow MSN users and Vodafone subscribers in Europe to exchange instant messages between their PCs and the mobile phones.

The service will initially be launched in the Netherlands, Spain, and Italy in July and will be extended to other European markets later this year, an MSN spokesperson said Subscribers of the service will be able to see which of their contacts are available, start an exchange, and see the text of the entire conversation, the companies said.

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