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Week in review: Tech rebound?

The earnings news from several leading technology companies is positive, raising hopes that the industry may finally be getting out of its slump.

The earnings news this week from several leading technology companies is positive, raising hopes that the industry may finally be getting out of its slump.

Motorola was first out of the gate--actually releasing its earnings statement a day ahead of schedule. The company on reported third-quarter revenue that rose 5 percent and a profit that exceeded analysts' expectations by 2 cents, thanks to an improving market for products such as cellular phones. The company said its third-quarter balance sheet was the strongest it has had in 20 years

Intel followed with third-quarter profits that also exceeded analysts' expectations, as revenue jumped 20 percent on strong demand for computer processors. The strong results were fueled by the Intel Architecture Group, which produces PC processors and related products. The group set records for unit shipments of processors, chipsets and motherboards during the quarter.

Not everything is rosy for Intel, however. The chipmaker's Wireless Communications and Computing Group and the Intel Communications Group, which build flash memory chips for cellular phones and also chips for networking gear, both posted losses for the period.

IBM met analysts' average earnings estimate for the third quarter and said it saw the need for about 10,000 new jobs next year. Although the company has been cutting jobs, CEO Sam Palmisano indicated that it is also looking to add positions.

"We are beginning to see signs that the economy has stabilized," Palmisano said in a statement. "As we look to 2004, more customers are expected to increase their investments in information technology."

But things were gloomier at Sun Microsystems, whose revenue declined for the 10th consecutive quarter. The company also failed to meet one of its key financial objectives, generating cash from operations.

Also this week, investment firm Credit Suisse First Boston released a survey finding that 47 percent of chief information officers project at least a moderate spending increase in 2004, while research firms Gartner and IDC said that PC shipments in the third quarter increased 14 percent and 16 percent, respectively, rates that were higher than expected.

Tuning in
Apple Computer also reported strong earnings, thanks in large part to Power Mac G5, PowerBook and iPod sales. It may have been a hot quarter for Apple, but "hell froze over," CEO Steve Jobs said in unveiling the Windows version of its closely watched iTunes music jukebox software and song store.

As with iTunes for the Macintosh, unveiled last April, the new jukebox software for Windows is free and offers a one-click access to downloads of an expansive music catalogue, with most songs priced at 99 cents. The new Windows iTunes jukebox, which is compatible with Windows 2000 and XP, has the look and feel of the Mac version.

But Apple said it doesn't have any illusions that it can make great profits from selling songs over the Internet. Instead, Apple is counting on the store as a key part of an overall music business for the company that can produce substantial profits--mainly through sales of the iPod digital music player.

"The iPod makes money. The iTunes Music Store doesn't," Apple Senior Vice President Phil Schiller told CNET in an interview after the launch of the Windows version of the store. Schiller said the music store is close to profitability but is still losing money.

Gadgets galore
Dell is taking two roads with its new slim handhelds: one version of the device connects to Wi-Fi networks, and the other is geared toward customers on a budget. The two gadgets in the Axim X3 family--the X3 itself, and the X3i--use the same slim case and Microsoft's Windows Mobile 2003 for Pocket PC operating system along with Pocket versions of Outlook, Word, Excel, Internet Explorer, MSN Messenger and Media Player.

The $379 Axim X3i will come with a 400MHz Intel XScale processor for handhelds, 64MB of memory, an 802.11b chip for wirelessly connecting to networks, a 3.5-inch color screen with a resolution of 320 pixels by 240 pixels and a Secure Digital expansion slot. The $229 Axim X3 comes with a 300MHz Intel XScale processor for handhelds, 32MB of memory and a USB cable for connecting with a PC, instead of a cradle like the Axim X3i.

The humanoid robot Qrio will soon be knocking on your door, if Sony's plans fall into place. Nobuyuki Idei, CEO of Sony, gave the first North American demonstration of Qrio as part of a speech he delivered to the Japan Society of Northern California.

Qrio--a toddler-size machine in an aluminum sleeper and a space helmet--can navigate an obstacle course, right itself after a fall, sense heat and surfaces, recognize people through their voice or face, and respond with gestures or words to questions.

Coming attractions
The Longhorn edition of Microsoft's Windows operating system is at least two years away, but the company revealed some details on how it intends to create a smooth transition from today's Windows PCs.

One of the most significant enhancements to Longhorn is a data storage system called WinFS, technology designed to make information easier to find and view. Clearing up long-standing confusion, a Microsoft senior vice president said that WinFS will work with--not replace--the existing file system in Windows, called NTFS, when WinFS debuts in late 2005 or in 2006.

Successful co-existence of different file systems is important to ensuring a clean--and potentially quicker--transition to Longhorn. A new file system that breaks with the storage system in Windows PCs today could be disruptive to end users.

Big changes are afoot at America Online, too. The Internet service provider is planning to launch a discount version of its proprietary online service in an effort to tap into a cost-conscious market for dial-up Internet access, according to a source familiar with the company's plans.

AOL will call the service Netscape and will charge $9.95 a month for unlimited dial-up access, the source said. That is a far cry from AOL's standard price of $23.90. The service is currently more of a concept than a developed product and will not be made available until early 2004, the source said.

For AOL, the launch of a new Internet service would be an attempt to address the current pressures facing the online giant.

Also of note
Federal prosecutors asked a San Francisco appeals court to reverse a computer-crime conviction that punished a California man for notifying a company's customers of a flaw in the company's e-mail service...VeriSign said it is selling its Network Solutions domain registration business for roughly $100 million, but plans to retain control over the database that directs people to .com and .net addresses...The SCO Group backed off a plan to send invoices to corporate users in order to prod them into buying licenses for their use of Linux, an operating system that the company argues violates its Unix intellectual property.