Featured links from the CNET Blog Network

Exploring the music industry's other alternatives -- Don Reisinger has some ideas for the music industry. Do you have others?

Audioengine 2: Audiophile grade computer speakers for $199 -- Let's face it, most PC speakers sound pretty awful, but Audioengine's $199 a pair speakers are good enough for persnickety audiophiles.

SMS on the rise in the US -- While Gartner study predicts a steep rise in SMS text messages among U.S. mobile-phone subscribers, integrated IM in the iPhone might be a game changer.

Update: events on Imeem -- Through Imeem's events monitor, I found out that 70s jazz fusion legends Return to Forever are coming to my local theater in two weeks.

Reuters - China raised the number of dead or missing from a devastating earthquake to more than 70,000 on Tuesday, as rescuers found more survivors eight days after the huge tremor hit.

DVD renter Netflix has started selling set-top boxes that allow its subscribers to watch streamed movies.…

Also on Portfolio

Microsoft's Supreme Search Screw-up

AOL's Blast From the Past

Selling Off the Pennsylvania Turnpike: A Good Idea?

Three weeks before it embarked on its blundering attempt to acquire Yahoo, a Google-obsessed Microsoft agreed to pay a juicy $1.23 billion for a Norwegian tech company mired in enough accounting problems, regulatory probes and conflicts of interest that it had become known as the Enron of Norway.

Fast Search and Transfer, which for a while was also known as the Google of Norway, had developed search engine technology that, according to industry experts, surpassed that of Google and could handle truly massive corporate projects. Goldman Sachs estimated last year that the company would grow its revenue 27 percent in 2007. Over the years, Fast appeared to benefit from big contracts with customers such as AT&T, Comcast and Disney.

Enter Microsoft. It has shifted its M&A strategy to an ethos distilled in the words of Microsoft chief executive Steve Ballmer, who reportedly told a defecting executive that he would "f***ing kill Google."

It announced a stunningly expensive $6 billion deal last May for digital advertising company aQuantive, just one month after Google said it would pay $3.1 billion for DoubleClick. And it sought to address a weakness in the crucial enterprise market by acquiring Fast, and ponying up a pricey 8.6 times revenue to do it.

Microsoft's M&A strategy reflects costly hair-trigger reactions to pressure from Google, according to I.T. consultant Stephen Arnold. The Fast deal, and the $6 billion acquisition of aQuantive, are just two examples, he said.

"Microsoft is a world-class knee-jerker in its response to Google. Google has been doing its thing unencumbered since 1998," Arnold said. "Microsoft has a great track record of flopping in online. Google just keeps rubbing it in and edging ever closer to Microsoft's crown jewel — enterprise revenue."

But aside from looking past the accounting woes that led to Fast's delisting from the Oslo exchange, the brain trust in Redmond ignored a host of other problems. The press in Norway said one director, Tomas Fussell, bought an unprofitable company called Hercules Communications and sold it to Fast for a huge profit, creating an apparent conflict of interest. Director Robert Keith reportedly said last year that he should have "shot" fellow director Oystein Spay Spatelan the first time he saw him. The Norwegian conglomerate Orkla ASA, a large Fast shareholder, forced Keith and Fussell from the board late last year.

Fast may have found a savior in Microsoft, which was intent on buying its way into the fast-growing enterprise search market. Its SharePoint product had a beachhead in the middle market but was being threatened by Google, which has quickly racked up $400 million in annual revenue from the business.

Fast, like Google, has its roots in academia. It was launched in 1997 by faculty and students from the computer and information science department at the Norwegian University of Science and Technology in Trondheim, led by chief executive John Markus Lervik, an intense former graduate student with a Ph.D. but not prone to small talk or jokes.

"He's never referred to as John, always, always John Markus," says Susan Feldman, a search expert at researcher Interactive Data Corp. who has known Lervik on a professional basis. Arnold, an industry consultant in the U.S., said Lervik, now 38, sometimes seemed bewildered by the ways of big, unfamiliar clients such as the U.S. government.

Still, Lervik's business appeared to grow steadily until the second quarter of 2007. The company reported revenues of $35 million, $20 million below forecasts, and an operating loss of $38 million. Financial regulators in Norway investigated, and the losses widened the following quarter. When trading in Fast was suspended on December 12, the company said it would review accounting for all of 2006 and 2007. The latest unaudited results show revenue growth of 7 percent for last year, which is far below Goldman's forecast. Steve Papa, CEO of rival search firm Endeca, characterized 2007 as "the frothiest year for enterprise search since 2000." Endeca, he said, grew 70 percent last year.

Goldman Sachs criticized Fast's habit of capitalizing an unusually high level of research and development costs and booking sales based on future licensing revenue, calling it "aggressive."

Consultant Arnold theorized that Fast's problems were related to the nature of large enterprise accounts typically worth $500,000 over a period of about three years. It can take a team of engineers three to six months to install the complex search software, but Fast was short of installation experts, in part because so many joined for Google, Arnold said. That led frustrated clients to delay payments that Fast had already booked as revenue, leading to huge revenue shortfalls and earnings restatements.

Rivals are resentful of Fast's accounting troubles. "It was tedious competing with a company whose success, growth and profitability were built on incorrect accounting. We obviously knew on the ground our technology was crushing them, and now it's clear in the numbers," said Andrew Kanter, chief operating officer of Autonomy Corp., a rival search company based in Cambridge, Britain.

A Microsoft representative said, "Through publicly available information, Microsoft was aware of the review of Fast's historical accounting practices and their efforts to implement improved financial controls. With the closing of the acquisition, we will continue to review the company's financial reporting systems and make any additional changes that are necessary to bring the company's systems into line with Microsoft's high standards for financial reporting and controls."

Fast suffered staff problems too. Former president Ali Riaz left in 2006 after six years and has started his own company, Attivio. "I left because after six years of outperformance, I and many other people did not have an equitable stake in the company. It was heavily weighted toward earlier investors, instead of people who actually built the company. I didn't feel it was right," Riaz says. Many of the employees he brought on board and trained left shortly after he did, some having since joined Attivio.

Controversy notwithstanding, Fussell and Keith made a killing on the sale of Fast, closing out their positions in April. Fussell owned 3.2 percent of the company and Keith owned 3.47 percent of the company, according to the 2006 annual report. That means their direct ownership, minus the value of any options of stakes in funds that might have owned Fast shares, was about $40 million each. Lervik, now vice president of enterprise search at Microsoft, had direct ownership of just over 1 percent as of 2006, worth a little more than $12 million.

Also on Portfolio

Microsoft's Supreme Search Screw-up

AOL's Blast From the Past

Selling Off the Pennsylvania Turnpike: A Good Idea?

Three weeks before it embarked on its blundering attempt to acquire Yahoo, a Google-obsessed Microsoft agreed to pay a juicy $1.23 billion for a Norwegian tech company mired in enough accounting problems, regulatory probes and conflicts of interest that it had become known as the Enron of Norway.

Fast Search and Transfer, which for a while was also known as the Google of Norway, had developed search engine technology that, according to industry experts, surpassed that of Google and could handle truly massive corporate projects. Goldman Sachs estimated last year that the company would grow its revenue 27 percent in 2007. Over the years, Fast appeared to benefit from big contracts with customers such as AT&T, Comcast and Disney.

Enter Microsoft. It has shifted its M&A strategy to an ethos distilled in the words of Microsoft chief executive Steve Ballmer, who reportedly told a defecting executive that he would "f***ing kill Google."

It announced a stunningly expensive $6 billion deal last May for digital advertising company aQuantive, just one month after Google said it would pay $3.1 billion for DoubleClick. And it sought to address a weakness in the crucial enterprise market by acquiring Fast, and ponying up a pricey 8.6 times revenue to do it.

Microsoft's M&A strategy reflects costly hair-trigger reactions to pressure from Google, according to I.T. consultant Stephen Arnold. The Fast deal, and the $6 billion acquisition of aQuantive, are just two examples, he said.

"Microsoft is a world-class knee-jerker in its response to Google. Google has been doing its thing unencumbered since 1998," Arnold said. "Microsoft has a great track record of flopping in online. Google just keeps rubbing it in and edging ever closer to Microsoft's crown jewel — enterprise revenue."

But aside from looking past the accounting woes that led to Fast's delisting from the Oslo exchange, the brain trust in Redmond ignored a host of other problems. The press in Norway said one director, Tomas Fussell, bought an unprofitable company called Hercules Communications and sold it to Fast for a huge profit, creating an apparent conflict of interest. Director Robert Keith reportedly said last year that he should have "shot" fellow director Oystein Spay Spatelan the first time he saw him. The Norwegian conglomerate Orkla ASA, a large Fast shareholder, forced Keith and Fussell from the board late last year.

Fast may have found a savior in Microsoft, which was intent on buying its way into the fast-growing enterprise search market. Its SharePoint product had a beachhead in the middle market but was being threatened by Google, which has quickly racked up $400 million in annual revenue from the business.

Fast, like Google, has its roots in academia. It was launched in 1997 by faculty and students from the computer and information science department at the Norwegian University of Science and Technology in Trondheim, led by chief executive John Markus Lervik, an intense former graduate student with a Ph.D. but not prone to small talk or jokes.

"He's never referred to as John, always, always John Markus," says Susan Feldman, a search expert at researcher Interactive Data Corp. who has known Lervik on a professional basis. Arnold, an industry consultant in the U.S., said Lervik, now 38, sometimes seemed bewildered by the ways of big, unfamiliar clients such as the U.S. government.

Still, Lervik's business appeared to grow steadily until the second quarter of 2007. The company reported revenues of $35 million, $20 million below forecasts, and an operating loss of $38 million. Financial regulators in Norway investigated, and the losses widened the following quarter. When trading in Fast was suspended on December 12, the company said it would review accounting for all of 2006 and 2007. The latest unaudited results show revenue growth of 7 percent for last year, which is far below Goldman's forecast. Steve Papa, CEO of rival search firm Endeca, characterized 2007 as "the frothiest year for enterprise search since 2000." Endeca, he said, grew 70 percent last year.

Goldman Sachs criticized Fast's habit of capitalizing an unusually high level of research and development costs and booking sales based on future licensing revenue, calling it "aggressive."

Consultant Arnold theorized that Fast's problems were related to the nature of large enterprise accounts typically worth $500,000 over a period of about three years. It can take a team of engineers three to six months to install the complex search software, but Fast was short of installation experts, in part because so many joined for Google, Arnold said. That led frustrated clients to delay payments that Fast had already booked as revenue, leading to huge revenue shortfalls and earnings restatements.

Rivals are resentful of Fast's accounting troubles. "It was tedious competing with a company whose success, growth and profitability were built on incorrect accounting. We obviously knew on the ground our technology was crushing them, and now it's clear in the numbers," said Andrew Kanter, chief operating officer of Autonomy Corp., a rival search company based in Cambridge, Britain.

A Microsoft representative said, "Through publicly available information, Microsoft was aware of the review of Fast's historical accounting practices and their efforts to implement improved financial controls. With the closing of the acquisition, we will continue to review the company's financial reporting systems and make any additional changes that are necessary to bring the company's systems into line with Microsoft's high standards for financial reporting and controls."

Fast suffered staff problems too. Former president Ali Riaz left in 2006 after six years and has started his own company, Attivio. "I left because after six years of outperformance, I and many other people did not have an equitable stake in the company. It was heavily weighted toward earlier investors, instead of people who actually built the company. I didn't feel it was right," Riaz says. Many of the employees he brought on board and trained left shortly after he did, some having since joined Attivio.

Controversy notwithstanding, Fussell and Keith made a killing on the sale of Fast, closing out their positions in April. Fussell owned 3.2 percent of the company and Keith owned 3.47 percent of the company, according to the 2006 annual report. That means their direct ownership, minus the value of any options of stakes in funds that might have owned Fast shares, was about $40 million each. Lervik, now vice president of enterprise search at Microsoft, had direct ownership of just over 1 percent as of 2006, worth a little more than $12 million.

Also on Portfolio

Microsoft's Supreme Search Screw-up

AOL's Blast From the Past

Selling Off the Pennsylvania Turnpike: A Good Idea?

Three weeks before it embarked on its blundering attempt to acquire Yahoo, a Google-obsessed Microsoft agreed to pay a juicy $1.23 billion for a Norwegian tech company mired in enough accounting problems, regulatory probes and conflicts of interest that it had become known as the Enron of Norway.

Fast Search and Transfer, which for a while was also known as the Google of Norway, had developed search engine technology that, according to industry experts, surpassed that of Google and could handle truly massive corporate projects. Goldman Sachs estimated last year that the company would grow its revenue 27 percent in 2007. Over the years, Fast appeared to benefit from big contracts with customers such as AT&T, Comcast and Disney.

Enter Microsoft. It has shifted its M&A strategy to an ethos distilled in the words of Microsoft chief executive Steve Ballmer, who reportedly told a defecting executive that he would "f***ing kill Google."

It announced a stunningly expensive $6 billion deal last May for digital advertising company aQuantive, just one month after Google said it would pay $3.1 billion for DoubleClick. And it sought to address a weakness in the crucial enterprise market by acquiring Fast, and ponying up a pricey 8.6 times revenue to do it.

Microsoft's M&A strategy reflects costly hair-trigger reactions to pressure from Google, according to I.T. consultant Stephen Arnold. The Fast deal, and the $6 billion acquisition of aQuantive, are just two examples, he said.

"Microsoft is a world-class knee-jerker in its response to Google. Google has been doing its thing unencumbered since 1998," Arnold said. "Microsoft has a great track record of flopping in online. Google just keeps rubbing it in and edging ever closer to Microsoft's crown jewel — enterprise revenue."

But aside from looking past the accounting woes that led to Fast's delisting from the Oslo exchange, the brain trust in Redmond ignored a host of other problems. The press in Norway said one director, Tomas Fussell, bought an unprofitable company called Hercules Communications and sold it to Fast for a huge profit, creating an apparent conflict of interest. Director Robert Keith reportedly said last year that he should have "shot" fellow director Oystein Spay Spatelan the first time he saw him. The Norwegian conglomerate Orkla ASA, a large Fast shareholder, forced Keith and Fussell from the board late last year.

Fast may have found a savior in Microsoft, which was intent on buying its way into the fast-growing enterprise search market. Its SharePoint product had a beachhead in the middle market but was being threatened by Google, which has quickly racked up $400 million in annual revenue from the business.

Fast, like Google, has its roots in academia. It was launched in 1997 by faculty and students from the computer and information science department at the Norwegian University of Science and Technology in Trondheim, led by chief executive John Markus Lervik, an intense former graduate student with a Ph.D. but not prone to small talk or jokes.

"He's never referred to as John, always, always John Markus," says Susan Feldman, a search expert at researcher Interactive Data Corp. who has known Lervik on a professional basis. Arnold, an industry consultant in the U.S., said Lervik, now 38, sometimes seemed bewildered by the ways of big, unfamiliar clients such as the U.S. government.

Still, Lervik's business appeared to grow steadily until the second quarter of 2007. The company reported revenues of $35 million, $20 million below forecasts, and an operating loss of $38 million. Financial regulators in Norway investigated, and the losses widened the following quarter. When trading in Fast was suspended on December 12, the company said it would review accounting for all of 2006 and 2007. The latest unaudited results show revenue growth of 7 percent for last year, which is far below Goldman's forecast. Steve Papa, CEO of rival search firm Endeca, characterized 2007 as "the frothiest year for enterprise search since 2000." Endeca, he said, grew 70 percent last year.

Goldman Sachs criticized Fast's habit of capitalizing an unusually high level of research and development costs and booking sales based on future licensing revenue, calling it "aggressive."

Consultant Arnold theorized that Fast's problems were related to the nature of large enterprise accounts typically worth $500,000 over a period of about three years. It can take a team of engineers three to six months to install the complex search software, but Fast was short of installation experts, in part because so many joined for Google, Arnold said. That led frustrated clients to delay payments that Fast had already booked as revenue, leading to huge revenue shortfalls and earnings restatements.

Rivals are resentful of Fast's accounting troubles. "It was tedious competing with a company whose success, growth and profitability were built on incorrect accounting. We obviously knew on the ground our technology was crushing them, and now it's clear in the numbers," said Andrew Kanter, chief operating officer of Autonomy Corp., a rival search company based in Cambridge, Britain.

A Microsoft representative said, "Through publicly available information, Microsoft was aware of the review of Fast's historical accounting practices and their efforts to implement improved financial controls. With the closing of the acquisition, we will continue to review the company's financial reporting systems and make any additional changes that are necessary to bring the company's systems into line with Microsoft's high standards for financial reporting and controls."

Fast suffered staff problems too. Former president Ali Riaz left in 2006 after six years and has started his own company, Attivio. "I left because after six years of outperformance, I and many other people did not have an equitable stake in the company. It was heavily weighted toward earlier investors, instead of people who actually built the company. I didn't feel it was right," Riaz says. Many of the employees he brought on board and trained left shortly after he did, some having since joined Attivio.

Controversy notwithstanding, Fussell and Keith made a killing on the sale of Fast, closing out their positions in April. Fussell owned 3.2 percent of the company and Keith owned 3.47 percent of the company, according to the 2006 annual report. That means their direct ownership, minus the value of any options of stakes in funds that might have owned Fast shares, was about $40 million each. Lervik, now vice president of enterprise search at Microsoft, had direct ownership of just over 1 percent as of 2006, worth a little more than $12 million.

The risk of eavesdropping has driven the Dutch government to ban electronic voting computers from future elections.…

Anti-Scientology campaigners are up in arms after it emerged that City of London police issued a court summons to a teenager for displaying a sign that branded the Hollywood-bothering, UFO-fancying sect a "cult".…