Posted by: Olga Kharif on November 20
T-Mobile USA's parent Deutsche Telekom is looking for U.S. partners to help fund the U.S. wireless carrier's network build-out, according to a report from Reuters and a German newspaper. Potential partners may include Clearwire, MetroPCS or Leap, according to the report.
Neither of these partners may have the funds for such a deal, however. Clearwire has just raised more than $1.5 billion in funding; but that's less than half of what it needs for its own network build-out through 2013, according to analysts. MetroPCS and Leap are still small companies, struggling to keep growing amidst rising competition. MetroPCS's subscriber additions in the third quarter were less than a third of what they were a year ago.
Yes, it is possible that all these struggling, smaller competitors will decide to band together and to fund one network, to be used by all -- say, Clearwire's. Most of them address a different market segment, so they won't compete with each other too much: T-Mobile goes after the hip, young crowd (though it's also pursuing prepaid customers). Clearwire offers mobile broadband services for laptops. MetroPCS and Leap have made their names on prepaid wireless plans.
But I would argue that what T-Mobile USA needs is to be paired up with a cash-rich, well-to-do giant, instead. After all, you put a bunch of struggling companies together, and you often end up with a large struggling company.
It seems to me that DT should, instead, look in a different direction -- to AT&T, for example. AT&T is healthy and has the funds to help T-Mobile out. It also currently uses the same type of networking equipment as T-Mobile, and could help T-Mobile migrate to next-generation technology more smoothly. While such an alliance could, potentially, raise the anti-trust flag, a deal could, perhaps, be structured in such a way as to overcome such concerns.
Posted by: Aaron Ricadela on November 19
Dell missed even modest expectations for its fiscal third quarter ended Oct. 30, but CFO Brian Gladden pointed to a sequential rise in fourth-quarter sales helped by the launch of Windows 7.
In its Nov. 19 earnings report, Dell said sales fell 15% to $12.9 billion. Net income fell by 54% to $337 million, or 23 cents per share after excluding certain one-time items. Wall Street analysts had expected Dell to earn 28 cents a share on sales of $13.1 billion. A year ago, Dell reported earnings of $727 million, or 37 cents per share, on $15.2 billion in sales.
Shares of Dell fell by nearly 6% in extended trading after the report. At the end of regular trading Nov. 19, Dell’s stock closed down 19 cents, or 1.2%, at 15.87.
The weakness was spread across nearly all of Dell’s businesses. Sales to large businesses bore the brunt of the declines as information technology departments continue to keep a tight rein on costs. Nearly 80% of Dell’s sales are to businesses and government customers. “We are losing share in the aggregate” because of a heavy reliance on commercial sales, Gladden told reporters during a conference call after the results were announced.
Dell didn’t see much benefit from Microsoft’s launch of its new Windows 7 operating system on Oct. 22, since Dell’s quarter ended eight days later. In the two weeks leading up to the launch, customers put off PC purchases to avoid buying machines with older software running on them, Gladden said. “We built a little backlog as a result, and we’ll ship through that in the fourth quarter,” he said.
Dell’s gross profit margin came in at 17.3%, or 18.3% after excluding one-time expenses related to the closure of a plant in North Carolina. Shaw Wu, an analyst at Kaufman Bros., said he was expecting an 18.6% profit margin in a Nov. 19 research note.
Dell’s consumer sales fell by 10% during the quarter, but Gladden said Dell “walked away from some retail business during the quarter” that wasn’t acceptably profitable in order to preserve margins.
Turn back to BusinessWeek.com later tonight for a full report on Dell’s third quarter, and a look at what’s ahead for the company.
Posted by: Aaron Ricadela on November 18
Salesforce.com Chief Executive Marc Benioff has never been shy about borrowing a bit of other companies’ mojo. On Nov, 18, he introduced the software company’s latest product, a business collaboration tool that takes pages from the playbooks of Facebook and Twitter.
Salesforce will begin selling the new software, called Chatter, next year at a price of $50 per user each month. The software works with Salesforce’s core customer management software to display “profiles” of employees and posts about projects they’re working on or customers they’ve visited. “I know more about these strangers on Facebook than I do about my own employees and what they’re working on,” Benioff said during a speech at the company’s Dreamforce conference in San Francisco. “I know when my friends went to the movies, but not when my VP of sales visited our top customer.”
Chatter pushes Salesforce, expected to reach $1.3 billion in revenues this year, into the crowded field for collaboration software. Salesforce is trying to expand beyond the customer management software that’s been its bread and butter. Microsoft’s SharePoint Server, an IBM product called Atlas that works with its Lotus e-mail software, and Google’s recently introduced Wave all offer business users the ability to share information and hold conversations on the Web.
Software developers will be able to use Chatter to build their own applications, Salesforce said. The move comes as some of the tech industry’s largest vendors are releasing tools that let programmers create cloud computing applications delivered over the Internet. Microsoft on Nov. 17 launched Windows Azure, software for letting Windows developers build cloud computing applications using familiar Microsoft technologies. Google and Amazon.com also offer tools for developers to build cloud applications.
Look for updated coverage on BusinessWeek.com, including excepts from an interview I’ll conduct with Benioff later today.
Posted by: Stephen Wildstrom on November 18
With network neutrality rules in the works and an investigation into handset exclusivity deals underway, the Federal Communications Commission has not been a great favorite of the wireless industry of late. But today the FCC threw carriers a badly wanted sop with new rules that require state and local governments to speed up action on applications for wireless tower locations.
The unanimous "declaratory ruling" made good on a promise FCC Chairman Julius Genachowski made in an otherwise coolly received speech at an industry conference in early October. Under the new rules, state and local governments must act within 90 days of receiving an application for a co-location, that is, a tower site to be shared with other operators, and 150 days for other applications. Carriers have complained that governments are frustrating their efforts to improve coverage by sitting on tower applications indefinitely.
The FCC also ruled that state or local governments may not use the fact that wireless service is available from another carrier as ground for rejecting an application. And they may not require a zoning variance for every cell site.
Posted by: Olga Kharif on November 18
By 2013, carriers will sell 31% of all notebooks, according to a Nov. 18 report from consultant In-Stat. What this means is, in three years, nearly a third of new laptop buyers will be paying carriers like Verizon Wireless and AT&T a monthly laptop service fee, which stands at around $60 in the U.S. today. That fee would come in addition to what consumers pay for their mobile phone service.
For carriers, this additional fee spells a revenue bonanza. An average American pays $50 in wireless service fees today, according to industry association CTIA. As consumers tuck on additional data services, such as those for their new laptops, netbooks and smartphones, that amount could begin to climb, even if voice minute charges keep on shrinking. Average monthly bill amount has been essentially flat since 2003.
