HP-EDS Buy, Icahn Strikes Again, China Quakes

This was a big IT news week, with the massive earthquake in China on Monday showing once again the role that the Internet plays in connecting us all, in good times and bad, and the importance of telecommunication, particularly for rural areas. HP opened the week with word that it is buying EDS. And the Microsoft-Yahoo saga was back in headlines, thanks to investor Carl Icahn, who hasn't enjoyed a good proxy fight lately and so decided to try to shake up Yahoo's board.

1. Update: HP to buy EDS for $13.9B: Hewlett-Packard is buying IT outsourcer Electronic Data Systems for US$13.9 billion, in a deal that drew mixed reactions from customers and analysts alike. Some lauded the move, saying it makes a lot of sense, and others were left scratching their heads wondering why HP would make such a move now, given the state of the economy, and whether the combination will be as potent as HP CEO Mark Hurd insists it will be. Everyone seemed to agree that if the deal passes regulatory scrutiny and goes through -- and there's no suggestion it won't -- at the least it will keep IBM on its toes.

2. Icahn takes on Yahoo board; Update: Yahoo tells Icahn that its own board knows best: Investor Carl Icahn scooped up about 59 million shares and share-equivalents of Yahoo in the past couple of weeks, then put together a group of 10 buddies he proposes should replace all of Yahoo's board of directors. He spelled out his dismay that Yahoo rebuffed Microsoft's acquisition attempt in a snippy letter to Chairman Roy Bostock. Bostock responded with a stern missive, telling Icahn "unfortunately, your letter reflects a significant misunderstanding of the facts about the Microsoft proposal and the diligence with which our board evaluated and responded to that proposal." It also sought to remind Icahn that "there is currently no acquisition offer on the table from that company or any other party." Even so, Yahoo has been "crystal clear" that it will "consider any proposal ... that offers our stockholders full and certain value." Microsoft bid $44.6 billion for Yahoo on Feb. 1, but withdrew the offer on May 3 when the two companies couldn't agree on financial terms.

3. Big quake takes out mobile network in Chengdu, Did Twitter beat media with earthquake news? and Telecom: Nice to have or basic necessity?: A 7.9 earthquake (initially reported as 7.8) on the Richter Scale shook Sichuan province in China on Monday, hitting the city of Chengdu and outlying regions particularly hard. The mighty quake -- the largest in China in three decades -- knocked out mobile-phone service in some areas for a time, underscoring how vulnerable communication systems are in times of disaster, and yet how critical they are. The earthquake also highlighted the role that online social-networking communities can play in getting news out, with Beijing-based Twitter users among the first to post word that the ground was shaking. Initial media reports also were out of Beijing, some 1,500 kilometers from the epicenter, which experienced a 3.9 earthquake just after the major Sichuan temblor, which led to some immediate confusion about what was going on. By week's end the official death toll was 21,000, with at least 14,000 victims still buried in rubble. Some 4,400 aftershocks -- and still counting -- had been recorded.

4. CBS to buy CNET Networks for $1.8 billion: U.S. broadcasting company CBS bid $1.8 billion cash to snap up CNET Networks, the online media company that owns the news.com and TV.com domains, along with other Internet brands. The deal has yet to be approved by shareholders. CNET's largest shareholder, investment fund Jana Partners, has been engaged in a battle to replace board members and management. The premium-priced deal is expected to close in the third quarter.

5. Adobe refreshes Flash player: Adobe Systems asserted its dominance in the RIA (rich Internet application) arena with an update of its Flash Player technology released to developers through the company's Adobe Labs site. Code-named Astro, Flash Player 10 will be generally released later this year. It features custom filters and special effects capabilities that developers have clamored for, and is considered a "competitive response" to Microsoft's Silverlight technology and Sun's JavaFX platform.

6. Widespread iPhone outages fuel 3G rumors: AT&T limited iPhone sales to one per customer this week, but that assumes that shoppers can find a store that actually still has iPhones available. O2 ran out of the wildly popular Apple smartphones in the U.K., and Macworld called Apple stores all over the country to see where iPhones can be found and didn't have much luck either. Apple's online stores in the U.S. and U.K. were out as well. Reporters did find a few AT&T stores that were carrying both the 8G-byte and 16G-byte models. The shortage fueled speculation that an updated version of the iPhone -- possibly the hotly anticipated 3G model -- will hit stores soon.

7. Windows coming on dual-boot OLPC: The One Laptop Per Child Project and Microsoft have teamed to deliver a dual-boot XO laptop in August or September (to the certain dismay of open-source advocates and some developers). The low-cost dual-boot XO will have the Linux-based Sugar OS as well as a stripped-down version of Windows XP.

8. Bogus Grand Theft Auto IV contains Trojan: A reminder that if a deal seems too good to be true you should take a pass -- hundreds of people who were desperate to get a copy of the insanely popular "Grand Theft Auto IV" thought they were getting free copies of the game at peer-to-peer networks. But what they got instead was a Trojan program in bogus game files, stuck there by hackers. The popularity of the game, coupled with the number of people lured by free downloads of something they badly want, but either can't find in stores or don't want to pay for, "could bring mayhem to the Internet," said John Safa, chief technical officer at DriveSentry.

9. NASA moves to save computers from swarming ants: As further proof that insects will inherit the earth, ants are now going after computers in Gulf Coast counties in Texas. Ants have short-circuited home and business computers, shutting down systems at companies and leading the Johnson Space Center to call in ant-killing experts to keep the bugs out of critical systems. "These ants are raising havoc," said Roger Gold, a professor of etymology at Texas A&M University. "They're foraging for food and they'll go into any space looking for it. In the process, they make their way into sensitive equipment." Tom Rasberry, owner of Budget Pest Control in Pearland, Texas, has been fighting the ants since 2002 to such an extent that the insects are known as "Crazy Rasberry." The space center has called on his expertise, as have companies that have ant infestations in computers. "If you open a computer, you would find a cluster of ants on the motherboard and all over," he said. "You'd get 3,000 or 4,000 ants inside ... They'll wipe out any computer."

10. IT spending steady and strong for 2008, survey says: IT spending is holding steady so far this year, despite lingering worries about the U.S. economy. A survey of 1,000 IT pros by Enterprise Management Associates found that three-fourths of them expect that their budgets won't be trimmed this year, with 55 percent saying they plan to increase IT spending. Among market segments, 60 percent of those surveyed whose companies are in security say that their IT spending is going up, while two-thirds in high-tech reported bigger budgets this year.