Microsoft ups Surface production, to sell in more stores

SEATTLE (Reuters) – Microsoft Corp has stepped up manufacturing of the Surface tablet, its new device designed to counter Apple Inc‘s iPad, and will introduce it to third-party retailers this week.

The moves suggest Microsoft is seeing some demand for its first own-brand computer in the crucial holiday shopping season, although it has yet to divulge any sales figures.

“The public reaction to Surface has been exciting to see,” said Panos Panay, general manager of Microsoft’s Surface project, which forms part of the company’s Windows unit.

“We’ve increased production and are expanding the ways in which customers can interact with, experience and purchase Surface,” said Panay, but gave no details of how many extra units were being produced.

Panay did not mention names of retailers that will sell the Surface, but separately office equipment retailer Staples Inc said it would stock the tablet from Wednesday.

He said the Surface would also be on sale at retailers in Australia from mid-December, with more countries to follow in the next few months.

Since launch in late October, the Surface has only been sold by Microsoft itself, in its own brick and mortar stores in the United States and Canada and online in Australia, China, France, the UK and Germany.

The only Surface model available now – officially called Surface with Windows RT – runs a version of Windows created to work on the low-power chips designed by ARM Holdings, which dominate smartphones and tablets but are incompatible with old Windows applications.

It starts at $ 499 for the 32 gigabyte version plus $ 120 for a thin cover that doubles as a keyboard.

A larger, heavier tablet – called Surface with Windows 8 Pro – will be introduced in January, running on an Intel Corp chip that works with all Microsoft’s Windows and Office applications. Microsoft plans to price the new Surface from $ 899 for a 64 gigabyte version.

The world’s largest software company also said it would keep its chain of ‘pop-up’ holiday stores open into the new year and will convert them into permanent retail outlets or what it called “specialty store locations”.

Microsoft’s recent push into physical retail – following Apple’s great success – has resulted in 31 permanent stores plus 34 holiday ‘pop-up’ stores in the U.S. and Canada.

If Microsoft converted each of the temporary stores into permanent outlets it would have 65 stores, still well below Apple with almost 400 worldwide.

(Reporting by Bill Rigby in Seattle, Sruthi Ramakrishnan in Bangalore)

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‘Skyfall’ launches back to top spot with $10.8M

LOS ANGELES (AP) — The James Bond blockbuster “Skyfall” has risen back to the No. 1 spot at the weekend box office, taking in $ 10.8 million.

That brought its domestic total to $ 261.4 million and its worldwide haul to a franchise record of $ 918 million.

The top 20 movies at U.S. and Canadian theaters Friday through Sunday, followed by distribution studio, gross, number of theater locations, average receipts per location, total gross and number of weeks in release, as compiled Monday by Hollywood.com are:

1. “Skyfall,” Sony, $ 10,780,201, 3,401 locations, $ 3,170 average, $ 261,400,281, five weeks.

2. “Rise of the Guardians,” Paramount, $ 10,400,618, 3,639 locations, $ 2,858 average, $ 61,774,192, three weeks.

3. “The Twilight Saga: Breaking Dawn — Part 2,” Summit, $ 9,156,265, 3,646 locations, $ 2,511 average, $ 268,691,029, four weeks.

4. “Lincoln,” $ 8,916,813, 2,014 locations, $ 4,427 average, $ 97,137,447, five weeks.

5. “Life of Pi,” Fox, $ 8,330,764, 2,946 locations, $ 2,828 average, $ 60,948,293, three weeks.

6. “Playing For Keeps,” FilmDistrict, $ 5,750,288, 2,837 locations, $ 2,027 average, $ 5,750,288, one week.

7. “Wreck-It Ralph,” Disney, $ 4,859,368, 2,746 locations, $ 1,770 average, $ 164,402,934, six weeks.

8. “Red Dawn,” FilmDistrict, $ 4,236,105, 2,754 locations, $ 1,538 average, $ 37,240,920, three weeks.

9. “Flight,” Paramount, $ 3,130,305, 2,431 locations, $ 1,288 average, $ 86,202,541, six weeks.

10. “Killing Them Softly,” Weinstein Co., $ 2,806,901, 2,424 locations, $ 1,158 average, $ 11,830,638, two weeks.

11. “Silver Linings Playbook,” Weinstein Co., $ 2,171,665, 371 locations, $ 5,854 average, $ 13,964,405, four weeks.

12. “Anna Karenina,” Focus, $ 1,544,859, 422 locations, $ 3,661 average, $ 6,603,042, four weeks.

13. “The Collection,” LD Entertainment, $ 1,487,655, 1,403 locations, $ 1,060 average, $ 5,455,328, two weeks.

14. “Argo,” Warner Bros., $ 1,482,346, 944 locations, $ 1,570 average, $ 103,160,015, nine weeks.

15. “End of Watch,” Open Road Films, $ 751,623, 1,259 locations, $ 597 average, $ 39,989,766, 12 weeks.

16. “Hitchcock,” Fox Searchlight, $ 712,544, 181 locations, $ 3,937 average, $ 1,661,670, three weeks.

17. “Talaash,” Reliance Big Pictures, $ 449,195, 161 locations, $ 2,790 average, $ 2,397,909, two weeks.

18. “Taken 2,” Fox, $ 387,227, 430 locations, $ 901 average, $ 137,700,304, 10 weeks.

19. “Pitch Perfect,” Universal, $ 305,765, 387 locations, $ 790 average, $ 63,517,408, 11 weeks.

20. “The Sessions,” Fox, $ 218,973, 197 locations, $ 1,112 average, $ 4,948,342, eight weeks.

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Online:

http://www.hollywood.com

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Universal and Focus are owned by NBC Universal, a unit of Comcast Corp.; Sony, Columbia, Sony Screen Gems and Sony Pictures Classics are units of Sony Corp.; Paramount is owned by Viacom Inc.; Disney, Pixar and Marvel are owned by The Walt Disney Co.; Miramax is owned by Filmyard Holdings LLC; 20th Century Fox and Fox Searchlight are owned by News Corp.; Warner Bros. and New Line are units of Time Warner Inc.; MGM is owned by a group of former creditors including Highland Capital, Anchorage Advisors and Carl Icahn; Lionsgate is owned by Lions Gate Entertainment Corp.; IFC is owned by AMC Networks Inc.; Rogue is owned by Relativity Media LLC.

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Egypt army given temporary power to arrest civilians

CAIRO (Reuters) – Egypt’s Islamist president has given the army temporary power to arrest civilians during a constitutional referendum he is determined to push through despite the risk of bloodshed between his supporters and opponents accusing him of a power grab.

Seven people were killed and hundreds wounded last week in clashes between the Islamist Muslim Brotherhood and their critics besieging Mohamed Mursi’s graffiti-daubed presidential palace. Both sides plan mass rallies on Tuesday.

The elite Republican Guard has yet to use force to keep protesters away from the palace, which it ringed with tanks, barbed wire and concrete barricades after last week’s violence.

Mursi, bruised by calls for his downfall, has rescinded a November 22 decree giving him wide powers but is going ahead with a referendum on Saturday on a constitution seen by his supporters as a triumph for democracy and by many liberals as a betrayal.

A decree issued by Mursi late on Sunday gives the armed forces the power to arrest civilians and refer them to prosecutors until the announcement of the results of the referendum, which the protesters want cancelled.

Despite its limited nature, the edict will revive memories of Hosni Mubarak’s emergency law, also introduced as a temporary expedient, under which military or state security courts tried thousands of political dissidents and Islamist militants.

But a military source stressed that the measure introduced by a civilian government would have a short shelf-life.

“The latest law giving the armed forces the right to arrest anyone involved in illegal actions such as burning buildings or damaging public sites is to ensure security during the referendum only,” the military source said.

Presidential spokesman Yasser Ali said the committee overseeing the vote had requested the army’s assistance.

“The armed forces will work within a legal framework to secure the referendum and will return (to barracks) as soon as the referendum is over,” Ali said.

Protests and violence have racked Egypt since Mursi decreed himself extraordinary powers he said were needed to speed up a troubled transition since Mubarak’s fall 22 months ago.

The Muslim Brotherhood has voiced anger at the Interior Ministry’s failure to prevent protesters setting fire to its headquarters in Cairo and 28 of its offices elsewhere.

Critics say the draft law puts Egypt in a religious straitjacket. Whatever the outcome of the referendum, the crisis has polarized the country and presages more instability at a time when Mursi is trying to steady a fragile economy.

On Monday, he suspended planned tax increases only hours after the measures had been formally decreed, casting doubts on the government’s ability to push through tough economic reforms that form part of a proposed $ 4.8 billion IMF loan agreement.

“VIOLENT CONFRONTATION”

Rejecting the referendum plan, opposition groups have called for mass protests on Tuesday, saying Mursi’s eagerness to push the constitution through could lead to “violent confrontation”.

Islamists have urged their followers to turn out “in millions” the same day in a show of support for the president and for a referendum they feel sure of winning with their loyal base and perhaps with the votes of Egyptians weary of turmoil.

The opposition National Salvation Front, led by liberals such as Mohamed ElBaradei and Amr Moussa, as well as leftist firebrand Hamdeen Sabahy, has yet to call directly for a boycott of the referendum or to urge their supporters to vote “no”.

Instead it is contesting the legitimacy of the vote and of the whole process by which the constitution was drafted in an Islamist-led assembly from which their representatives withdrew.

The opposition says the document fails to embrace the diversity of 83 million Egyptians, a tenth of whom are Christians, and invites Muslim clerics to influence lawmaking.

But debate over the details has largely given way to noisy street protests and megaphone politics, keeping Egypt off balance and ill-equipped to deal with a looming economic crisis.

“Inevitability of referendum deepens divisions,” was the headline in Al-Gomhuriya newspaper on Monday. Al Ahram daily wrote: “Political forces split over referendum and new decree.”

Mursi issued another decree on Saturday to supersede his November 22 measure putting his own decisions beyond legal challenge until a new constitution and parliament are in place.

While he gave up extra powers as a sop to his opponents, the decisions already taken under them, such as the dismissal of a prosecutor-general appointed by Mubarak, remain intact.

“UNWELCOME” CHOICE

Lamia Kamel, a spokeswoman for former Arab League chief Moussa, said the opposition factions were still discussing whether to boycott the referendum or call for a “no” vote.

“Both paths are unwelcome because they really don’t want the referendum at all,” she said, but predicted a clearer opposition line if the plebiscite went ahead as planned.

A spokeswoman for ElBaradei, former head of the U.N. nuclear watchdog, said: “We do not acknowledge the referendum. The aim is to change the decision and postpone it.”

Mahmoud Ghozlan, the Muslim Brotherhood’s spokesman, said the opposition could stage protests, but should keep the peace.

“They are free to boycott, participate or say no, they can do what they want. The important thing is that it remains in a peaceful context to preserve the country’s safety and security.”

The army stepped into the conflict on Saturday, telling all sides to resolve their disputes via dialogue and warning that it would not allow Egypt to enter a “dark tunnel”.

A military source said the declaration read on state media did not herald a move by the army to retake control of Egypt, which it relinquished in June after managing the transition from Mubarak’s 30 years of military-backed one-man rule.

The draft constitution sets up a national defense council, in which generals will form a majority, and gives civilians some scrutiny over the army – although not enough for critics.

In August Mursi stripped the generals of sweeping powers they had grabbed when he was elected two months earlier, but has since repeatedly paid tribute to the military in public.

So far the army and police have taken a relatively passive role in the protests roiling the most populous Arab nation.

(Additional reporting by Edmund Blair and Yasmine Saleh; editing by Philippa Fletcher)

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With Chavez Ailing, Venezuela is Front and (More) Center

Is Chavismo, the brand of export-ready, nose-thumbing leftism practiced by Venezuelan President Hugo Chavez, much possible with him no longer in power?

Unlikely, says the market, which has bid up Venezuelan debt, sending benchmark yields to a five-year low, on speculation that the ex-paratrooper will be unable to complete his third term after acknowledging the return of his cancer. The country’s bonds are up 45 percent this year, the second-best showing in all emerging markets, next to tiny Côte d’Ivoire. The Caracas stock exchange—oxymoronic, if you think about it—is up nearly 300 percent year-to-date.

Since taking office in 1998, Chavez, 58, has expropriated more than 1,000 companies and pushed through price controls to turn South America’s biggest oil producer into an example of socialism.

On Monday, Chavez shuttled back to Cuba for further surgery after exhorting his countrymen to vote for Vice President Nicolas Maduro if he is unable to stay in office. Just two months after winning re-election for a third six-year term,“El Comandante” was out of the public eye for three weeks leading up to Dec. 7.

“Any successor, whether from the opposition, or handpicked by him, will be more moderate, more market-friendly than Chavez has been,” says Kathryn Rooney Vera, a macroeconomic strategist with Miami-based Bulltick Capital Markets.

The average yields on the South American country’s dollar debt fell to 9.4 percent on Dec. 6, the lowest since February 2008, after rising as high as 11.51 percent following Chavez’s reelection, according to the JPMorgan EMBI Global Index (JPM). The yield on Venezuela’s dollar bonds due 2027 is at its the lowest since November 2007, according to data compiled by Bloomberg.

“This is not Cuba, nor is it a monarchy where a king designates the next king,” remarked Henrique Capriles, the economically more moderate candidate who opposed Chavez in October, on Sunday. “The last word belongs to the people.” Translation: Capriles is raring for another chance at the presidency.

Venezuelan law stipulates that if Chavez cannot carry out his duties, his vice president would take over until the beginning of a new presidential term on Jan. 10. Should Chavez then not be able to attend his inauguration, the president of Venezuela’s National Assembly would assume power while elections are arranged within 30 days. If Chavez does take office but falls too ill within his first four years, his vice president would assume the presidency for 30 days while elections are held.

Venezuela remains one of the more peculiar stories in all emerging marketdom. Thanks to underinvestment by Chavez and state-owned Petróleos de Venezuela, the country has experienced declining oil production despite having the world’s largest proven reserves—an especially costly missed opportunity for an economy with such high fiscal deficits, under a ruler whose time in office has coincided with oil prices soaring from $ 10 a barrel to triple digits. Even so, Chavez has never defaulted on the nation’s external debt.

Bulltick’s Vera thinks a change of presidential power—particularly a Capriles ascension—could keep pushing down Venezuela’s benchmark borrowing costs to as little as a third of the yield they hit last year.

That speaks volumes about the clout one man has had on a nation’s reputation with markets. “To oversee 14 years of economic decay and still remain so popular …,” she says, “well, no one has Chavez’s charisma.”

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Behind the New Modern Seinfeld Twitter Account, Which Is Not About Nothing

Seinfeld has never left our pop culture lexicon. Just recently we’ve seen it referenced in the presidential race and in Game of Thrones parodies. But what would the seminal “show about nothing” be like if its characters could use cell phones or Facebook? The @SeinfeldToday Twitter account, which popped up Sunday evening, ventures to propose of-the-moment plots for a modern Seinfeld. For example:  

Kramer is under investigation for heavy torrenting. Jerry’s new girlfriend writes an extremely graphic blog. George discovers Banh Mi.

— Modern Seinfeld (@SeinfeldToday) December 10, 2012

The man behind the account, BuzzFeed’s sports editor Jack Moore, started tweeting out scenarios with his friend, comedian Josh Gondelman, and then decided that the joke merited its own account. Moore is a Seinfeld fanatic himself: “I’m pretty much constantly watching episodes in the background while I’m doing anything,” he told us in an email. “I have a thumb drive with the whole series on it that I keep in my bag pretty much all the time.” 

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So far, the modern-day episode summaries ring true, despite warnings from Gawker last year that classic episodes wouldn’t have worked if the characters just had the use of newfangled technology. “It would be different but not as different as everyone acts like,” Moore wrote to us. “People always say that ‘if they had cell phones Seinfeld couldn’t exist,’ which is true for a certain type of Seinfeld episode, but not as a general rule (which I think the account shows).” 

RELATED: Jon Huntsman Finds His Voice by Sounding Like a Dad on Twitter

The account makes it obvious that Internet apps and 2012 trends would create the same awkward situations that Seinfeld thrived on. For example: 

Kramer uses grinder to meet new friends, doesn’t know it’s a gay hook-up app. Jerry refuses to admit he cried on @wtfpod.

— Modern Seinfeld (@SeinfeldToday) December 10, 2012

Elaine has a bad waiter at a nice restaurant, her negative Yelp review goes viral, she gets banned. Kramer accidentally joins the Tea Party.

— Modern Seinfeld (@SeinfeldToday) December 10, 2012

George thinks his GF is faking a gluten-intolerance, feeds her real cookies, sending her to the ER. Autocorrect ruins Jerry’s relationship.

— Modern Seinfeld (@SeinfeldToday) December 10, 2012

We kind of really want to see some of these made, actually. Reunion special? 

Social Media News Headlines – Yahoo! News

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Bond movie “Skyfall” beats “Lincoln” at box office

(Reuters) – James Bond showed remarkable staying power as the latest installment of the spy series, “Skyfall,” captured the box office title and collected $ 11 million in its fifth week in U.S. and Canadian movie theaters, outgunning Steven Spielberg‘s “Lincoln” and “The Twilight Saga: Breaking Dawn – Part 2,” the final installment of the blockbuster vampire series.

“Skyfall,” the 23rd film in the series featuring Agent 007, also led movies at the box office when it first opened on November 2 and is already the best-selling movie in the 49-year old series. This weekend, it became the highest grossing movie in Sony Pictures‘ history with $ 918 million in ticket sales worldwide. The film distributed by Sony‘s Hollywood studio, has collected nearly $ 262 million in domestic sales, according to the movie tracking site Hollywood.com.

The animated “Rise of the Guardians” from Dreamworks Animation was second with $ 10.5 million in ticket sales. The movie, which was made for $ 145 million, opened with a disappointing $ 23.8 million when it first hit movie theaters on November 21. Since then, it has been steadily working its way toward becoming a solid family hit this season.

“Rise of the Guardians, which features Santa Claus, the Easter Bunny and other childhood favorites who join together to save the world, was one of two family movies in a season traditionally heavy in family films. The other, Disney’s “Wreck-it Ralph,” collected $ 4.9 million for seventh place.

“Breaking Dawn – Part 2,” the box office leader for the past three weeks, tallied $ 9.2 million in ticket sales. The five-movie series, released by Lions Gate Entertainment, is based on Stephenie Meyer‘s best-selling book about young vampire love and has collected more than $ 1.3 billion in overall domestic ticket sales.

“Lincoln,” which chronicles the 16th president’s successful fight to pass a constitutional amendment outlawing slavery, had total ticket sales of $ 9.1 million, according to studio estimates provided by the box office division of Hollywood.com.

“Life of Pi,” director Ang Lee’s movie about a boy who escapes a shipwreck but then shares his lifeboat with a tiger, sold $ 8.3 million in tickets to finish in fifth place. The movie, released by the Fox studio, is based on a best-selling 2001 novel by Yann Martel.

Hollywood studios shied away from scheduling major movies this weekend, steering clear of the expected blockbuster “The Hobbit: An Unexpected Journey,” which Warner Brothers will release on December 14. The movie, based on the J.R.R. Tolkien fantasy novel about wizards and dwarves, features many of the same actors from the blockbuster “The Lord of the Rings” trilogy.

The only new major release, the romantic comedy “Playing for Keeps” starring Gerard Butler and Jessica Biel, opened with a lackluster $ 6 million, which was on target with forecasts by industry experts.

(Reporting by Ronald Grover and Andrea Burzynski; Editing by Bill Trott and Jackie Frank)

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Health workers march in Spain’s capital against cuts, reforms

MADRID (Reuters) – Thousands of health workers, on strike since last month, marched on Sunday in Madrid to protest against budget cuts and plans from the Spanish capital’s regional government to privatize the management of public hospitals and medical centers.

It was the third time doctors, nurses and health workers have rallied since the local authorities put forward a plan in October to place six hospitals and dozens of medical practices under private management. The plan also calls for patients to be charged a fee of 1 euro for prescriptions.

Workers launched an indefinite strike last month against the plan, which has not been endorsed by the centre-right government of Prime Minister Mariano Rajoy. Health workers in the capital are striking Monday-Thursday each week and seeing patients only on Fridays, while also responding to emergencies.

Spain’s 17 autonomous regions control health and education policies and spending. They have all had to implement steep cuts this year as the country struggles to meet tough European Union-agreed deficit targets.

Dressed in white scrubs, the protesters shouted slogans such as “Health is not for sale” and “Health 100 percent public, no to privatizations”.

“Of course, privatization can be reversed. Actually the question is not if it can be reversed, because privatization should never have a future,” said Luis Alvarez, an unemployed man from Madrid attending the demonstration.

Belen Padilla, a doctor at Madrid’s hospital Gregorio Maranon, said one million citizens had already signed a petition rejecting the plan.

(Reporting by Reuters Television; Writing by Julien Toyer; Editing by Peter Graff)

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EU leaders in Norway to pick up Nobel Peace Prize

OSLO, Norway (AP) — European Union leaders on Sunday hailed the achievements of the 27-nation bloc, but acknowledged they need more integration and authority to solve problems, including its worst financial crisis, as they arrived in Norway to pick up this year’s Nobel Peace Prize.

Conceding that the EU lacked sufficient powers to stop the devastating 1992-95 Bosnia war, European Commission President Jose Manuel Barroso said that the absence of such authority at the time is “one of the most powerful arguments for a stronger European Union.”

Barroso spoke to reporters with EU Council President Herman Van Rompuy and the president of the EU Parliament, Martin Schulz, in Oslo, where the three leaders were to receive this year’s award, granted to the European Union for fostering peace on a continent ravaged by war.

Nobel committee chairman Thorbjoern Jagland will present the prize, worth $ 1.2 million, at a ceremony in Oslo City Hall, followed by a banquet at the Grand Hotel, against a backdrop of demonstrations in this EU-skeptic country that has twice rejected joining the union.

About 20 European government leaders, including German Chancellor Angela Merkel, French President Francois Hollande and British Deputy Prime Minister Nick Clegg, will be joining the ceremonies. They will be celebrating far away from the EU’s financial woes in a prosperous, oil-rich nation of 5 million on the outskirts of Europe that voted in 1972 and 1994 in referendums to stay out of the union.

The decision to award the prize to the EU has sparked harsh criticism, including from three peace laureates — South African Archbishop Desmond Tutu, Mairead Maguire of Northern Ireland and Adolfo Perez Esquivel from Argentina — who have demanded the prize money not be paid out this year. They say the bloc contradicts the values associated with the prize because it relies on military force to ensure security.

The leader of Britain’s Independence Party, Nigel Farage, in a statement described rewarding the EU as “a ridiculous act which blows the reputation of the Nobel prize committee to smithereens.”

Hundreds of people demonstrated against this year’s prize winners in a peaceful torch-lit protest that meandered through the dark city streets to Parliament, including Tomas Magnusson from the International Peace Bureau, the 1910 prize winner.

“This is totally against the idea of Alfred Nobel who wanted disarmament,” he said, accusing the Nobel committee of being “too close to the power” elite.

Dimitris Kodelas, a Greek lawmaker from the main opposition Radical Left party, or Syriza, said a humanitarian crisis in his country and EU policies could cause major rifts in Europe. He thought it was a joke when he heard the peace prize was awarded to the EU. “It challenges even our logic and it is also insulting,” he said.

The EU is being granted the prize as it grapples with a debt crisis that has stirred deep tensions between north and south, caused soaring unemployment and sent hundreds of thousands into the streets to protest austerity measures.

It is also threatening the euro — the common currency used by 17 of its members — and even the structure of the union itself, and is fuelling extremist movements such as Golden Dawn in Greece, which opponents brand as neo-Nazi.

Barroso acknowledged that the current crisis showed the union was “not fully equipped to deal with a crisis of this magnitude.”

“We do not have all the instruments for a true and genuine economic union … so we need to complete our economic and monetary union,” he said, adding that the new measures, including on a banking and fiscal union, would be agreed on in coming weeks.

He stressed that despite the crisis all steps taken had been toward “more, not less integration.”

Van Rompuy was optimistic saying that EU would come out of the crisis stronger than before. “We want Europe to become again a symbol of hope,” he said.

The EU says it will donate the prize money to projects that help children in conflict zones and will double it with EU funds.

The European Union grew from the conviction that ever-closer economic ties would ensure century-old enemies like Germany and France never turned on each other again, starting with the creation in 1951 of the European Coal and Steel Community, declared as “a first step in the federation of Europe.”

In 60 years it has grown into a 27-nation bloc with a population of 500 million, with other nations eagerly waiting to join, even as its unity is being threatened by the financial woes.

While there have never been wars inside EU territory, the confederation has not been able to prevent European wars outside its borders. When the deadly Balkans wars erupted in the 1990s, the EU was unable by itself to stop them. It was only with the help of the United States and after over 100,000 lives were lost in Bosnia was peace eventually restored there, and several years later, to Kosovo.

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Behind Alcatel-Lucent’s Desperate Search for Cash

Alcatel-Lucent, the Paris-based telecom gear maker born of a 2006 transatlantic merger, has entered a desperate new phase in its struggle to stay afloat. As Bloomberg News reported on Dec. 4, it is in talks with Goldman Sachs (GS) and other banks to obtain at least €1 billion ($ 1.3 billion) in financing.

The deal would buy the company some time as it faces €2.3 billion in debt repayments over three years. It probably would have to sell off some major assets and pledge others, however—such as patents held by its venerable Bell Labs subsidiary—as collateral, the corporate equivalent of hocking the family jewels. “Alcatel-Lucent (ALU) is now using more or less last-resort financing options,” says Alexander Peterc, an analyst at Exane BNP Paribas (BNP) in London.

It would be a humbling blow—yet it may already be too late for Alcatel-Lucent to repair its fundamental problem: It is simply too inefficient and starved for cash to compete successfully against rivals.

Its weakness was further underscored this week, when Chinese gear maker ZTE (763) obtained a record $ 20 billion credit facility from China Development Bank. Already the world’s fifth-largest supplier of wireless equipment, ZTE is likely to surpass Alcatel within two years and move into third place worldwide behind China’s Huawei Technologies and Sweden’s Ericsson (ERIC).

Chief Executive Ben Verwaayen, who took over in 2008, has struggled to get the company back on track through a series of job reductions and smaller asset sales. Even so, its costs are out of whack with competitors’. Even taking into account 5,500 job cuts announced in October, revenue per employee was €49,700 ($ 65,000), at least 14 percent less than those of rivals Ericsson and Nokia Siemens Networks, according to a Bloomberg News analysis.

To reach similar levels of productivity, Alcatel-Lucent would have to shed another 10,000 workers, about 15 percent of its workforce. Verwaayen said earlier this year that such drastic cuts were “out of the question” and the French government and labor unions would fiercely oppose them.

Meanwhile, Alcatel-Lucent is burning through an average €700 million euros in cash annually and had made a profit only one year out of the past six. On Dec. 4, its already junk-rated debt was downgraded further by Moody’s Investors Service (MCO), which said it didn’t believe the company could “materially” reduce its cash burn this year.

The financing plan being negotiated with banks would involve Goldman Sachs and Credit Suisse (CS) providing a first tier of financing, with a second tier including Citigroup (C) and possibly JPMorgan Chase (JPM) and European banks such as Barclays (BCS), Bloomberg News reported. Collateral could include its patent portfolio, partly inherited from Bell Labs, which was part of Lucent Technologies at the time of the 2006 merger. Alcatel-Lucent is considering the sale of such assets as its undersea fiber-optic cable unit.

Some other gear makers are downsizing in the face of competition from China as well as weak sales in Europe. Finnish-German joint venture Nokia Siemens, for example, is cutting 23 percent of its ranks. Verwaayen told analysts last month that Alcatel-Lucent would “look at the reality of the market from a cost point of view, not assuming that Europe will come back next year.”

Cutting costs will be particularly challenging for Alcatel-Lucent, though, because it’s involved in so many businesses—a fact the company bragged about in the 2006 merger, when it said it had “the most comprehensive wireless, wireline, and services portfolio in the industry.”

With reporting by Marie Mawad, Adam Ewing, Matthew Campbell, and Beth Jinks

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Amazon’s Android Appstore explodes, downloads increase 500% over last year

Amazon’s (AMZN) Appstore is on fire. While the marketplace may not boost as many apps as Google’s (GOOG) Play Store, it has seen substantial growth in the past year. In fact, the company announced on Thursday that its Appstore has seen downloads increase more than 500% since last year. Amazon also revealed that the number of developers utilizing in-app purchasing doubled in the third quarter and that 23 of the top 25 grossing apps now incorporate the technology.

“Amazon offers the best end-to-end solution for app and game developers,” said Aaron Rubenson, Director of Amazon Appstore for Android. “Developers can use Amazon Web Services’ building blocks as the infrastructure for their games. To enhance customer engagement, they can add features like GameCircle’s Leaderboards, Achievements, Friends, and Whispersync. Amazon’s In-App Purchasing allows developers to generate additional income. Finally, since discovery can be a major challenge for app developers, we’re providing more and more ways to help developers reach customers on Amazon, Kindle Fire devices, and in our Appstore. We’re working hard to make lives easier for developers, and to give them more ways to grow their business.”

The success of Amazon’s Appstore is directly related to the success of its Kindle Fire line of tablets. Unlike most Android devices, the Kindle Fire does not include access to Google Play and instead must rely solely on Amazon’s offering for content and applications.

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