Inadequate IT security allowed a trader at French bank Société Générale to make a series of unauthorized transactions that ultimately cost the bank ¬4.9 billion ($7.2 billion), an internal investigation has found.

To prevent a recurrence, the bank should immediately introduce stronger security systems, including biometric authentication of trading staff, a special committee has recommended in its preliminary report to the bank's board of directors on Wednesday.

Between Jan. 18 and Jan. 20, the bank discovered that trader Jérôme Kerviel had established trading "positions" -- bets that the price of securities and warrants would move in a particular direction -- worth more than the bank itself. He bet wrongly, and unwinding those positions over the following three days cost the bank ¬4.9 billion as it sold the stocks into a falling market.

As an arbitrage trader, Kerviel should have been making transactions in pairs, buying and selling similar assets to exploit the minute and fleeting differences in prices that exist in markets. Arbitrage trading is considered less glamorous than the one-way bets he secretly made from time to time by faking one half of a pair of transactions.

Kerviel had previously worked in the bank's IT department, and so had in-depth knowledge of its systems and procedures.

Staff mostly followed those procedures, the investigating committee found, but the procedures were not in themselves sufficient to identify the fraud before Jan. 18, partly because of the effort Kerviel made to avoid detection, and partly because staff did not systematically conduct in-depth investigations when warnings flags were raised.

Among the tricks Kerviel used to hide his activities, the bank's General Inspection department highlighted the use of fake e-mail messages to justify missing trades, and the borrowing of colleagues' log-in credentials to conduct trades in their name.

Investigators identified at least seven occasions on which Kerviel faked messages between April 2007 and Jan. 18, four of them referencing trades that never existed. The deception was eventually uncovered when they could find no trace of Kerviel receiving the purported messages in the bank's e-mail archival system, Zantaz.

Between July 2006 and September 2007, internal control systems raised 24 alerts when the value of Kerviel's trades exceeded authorized limits, the General Inspection department reported. At the time, the bank's risk monitoring unit put the anomalies down to recurrent problems with the way the trading software recorded operations, and asked Kerviel's superiors to make sure he didn't exceed limits again.

The special committee made a number of recommendations, including the use of stronger, biometric authentication systems to prevent traders from accessing one another's accounts, and the improvement of alert procedures so that warnings reach the appropriate managers. In addition, it suggests the tightening of trading controls, which do not cover cancelled or modified transactions, two of the tricks Kerviel used to conceal his bets.

Auditors are still looking for suspect trades to make sure all have been uncovered, and investigators have yet to review Kerviel's use of an IM service for evidence of his activities, the special committee said.

It will present a final report to shareholders at the annual general meeting on May 27.

BlackBerry users in North America were complaining of service problems again on Wednesday morning.

Users of the BlackBerry outage newsgroup began reporting problems at around 6 a.m. on the East Coast of the U.S. related to scheduled maintenance on Research In Motion's network. The issue appeared to get progressively worse, initially affecting about half of users in the Americas but eventually affecting all users, according to users of the newsgroup.

RIM said it was not a system-wide outage. "RIM did perform regularly scheduled maintenance on BlackBerry Internet Service that took longer than originally expected and some BlackBerry Internet Service customers may have experienced slower delivery of e-mail earlier today," the company said in a statement.

The problem affected only users of BlackBerry Internet Service and not BlackBerry Enterprise Server customers, RIM said. BIS customers sign up for the service through their mobile operators. Enterprises often use a different setup, installing a BES to deliver corporate e-mail to BlackBerry devices.

While messages to and from both BIS and BES users pass through RIM's network operations centers, in this case, only the network components that handle BIS customers were affected.

One BlackBerry user posted a note on the newsgroup that he said came from his AT&T representative. The note called it a national BlackBerry outage that could affect e-mail delivery for up to half of new BlackBerry users.

At noon on the East Coast, one user reported that AT&T said the problem was fixed but that e-mail messages might still be delayed until the backup of messages was sent out.

Some users of the newsgroup said that they were able to receive messages all morning, although they were often delayed.

RIM had an outage just last week that lasted for about three hours and left users unable to send or receive messages or access the Internet. That outage followed one that occurred in January, but that one was due to a problem with AT&T's network, so it affected BlackBerry users as well as iPhone and other AT&T mobile data customers.

RIM's most notorious network problem happened last year, with an outage that lasted overnight for many users in North America.

This story was updated on February 20, 2008

The teams developing ODF (OpenDocument Format) and OOXML (Office Open XML) standards should work together, evolving the two in parallel, the editor of the ODF standard said Tuesday in an open letter to the standards-setting community.

The Microsoft-sponsored OOXML document format is just days away from a critical meeting that will influence whether the International Organization for Standardization (ISO) will adopt it as a standard as its rival ODF was adopted in May 2006. Relations between supporters of the two formats are, for the most part, combative rather than cordial.

Patrick Durusau, ISO project editor for ODF, or ISO/IEC 26300 as it is known there, thinks supporters of the two formats would be more productive if they allowed the formats to co-evolve, he wrote in his open letter . Durusau thoughtfully avoided the ODF and OOXML formats for his letter, choosing instead PDF, itself adopted as an ISO standard in December.

"If we had a co-evolutionary environment, one where the proponents of OpenXML and OpenDocument,

their respective organizations, national bodies and others [sic] interested groups could meet to discuss the

future of those proposals, the future revisions of both would likely be quite different," Durusau wrote.

"Peaceful co-evolution will mean better standards at lower costs in a more timely fashion," he said.

ODF, based on a file format used by Sun's StarOffice application and the open-source productivity suite OpenOffice.org, won the support of OASIS, the Organization for the Advancement of Structured Information Standards, which fast-tracked it through the ISO standardization process.

Microsoft offered its OOXML file format to ECMA International, which adopted it as one of its standards before proposing it to ISO for the same fast-track process.

An ISO committee rejected OOXML at a first vote last year. Since then, ECMA has been responding to the objections expressed in that vote, and the ISO committee will consider the revisions it proposed at a so-called ballot resolution meeting next week. There are 1,100 comments to process during the five days of the meeting. National standards bodies will then have one month to decide whether to change their vote in light of the changes made.

ISO accepts recommendations for fast-tracking from industry standards bodies. Specifications that take this route can become standards much more quickly and with less debate than by the regular route.

The two groups need a neutral forum where they can meet and learn from each other, Durusau suggested.

He expects his calls for cooperation to raise eyebrows, given that he is editor of the ODF standard at OASIS and project editor for it at ISO.

"Why am I advocating such cooperation? The answer is fairly simple. The difficulties we face today are the result of not talking to each other in the past and we can't change the past. But we can decide to act differently today," he said.

"Creating such an environment is going to take time and effort," Durusau said, offering a series of concrete steps the two groups can take, including talking to people working on the "other" standard, working toward a common meeting place and sponsoring conferences on multiple standards.

He suggested more companies should follow Novell's example: It participates in both the TC 45 committee working on Office Open XML and the ODF Technical Committee.

Lawrence Lessig, the cyberlaw author and advocate for free software and online civil liberties, is considering a run for the U.S. Congress, he announced on his blog Wednesday.

Lessig, author of books such as "Free Culture" and "Code 2.0," would run for the open House of Representatives seat in California created by the death of Rep. Tom Lantos, a Democrat, earlier this month. A "draft Lessig" movement has popped up online since Lantos died.

Lessig said he plans to make the decision about whether to run by about March 1. "This is a very difficult decision," he wrote on his blog. "Thank you to everyone who has tried to help -- both through very strong words of encouragement and very, very strong words to dissuade."

Lessig, a self-described progressive, would run as part of his Change Congress campaign. The Stanford University law professor announced in January that he would shift his focus to political corruption and away from free software and free culture.

He called on lawmakers to stop accepting money from political action committees and lobbyists, and to stop adding so-called earmarks for special projects in appropriation legislation. Politicians need to change "how Washington works" and to end a culture of corruption that's based on political contributions, he said in a video at Lessig08.org.

"You know about this corruption in Washington, a corruption that doesn't come from evil people, a corruption that comes from good people working in a bad system," he said in the video. Progressives should work to change the way money influences decisions in Washington, he said, "not because this is, in some sense, the most important problem, but because it is the first problem that has to be solved if we're going to address these more fundamental problems later."

During a Lessig speech at Stanford in January, one audience member challenged him to "do something" about the problems in Washington, he said. Lessig is considering a run for Congress "with lots of fear and uncertainty," he said.

Already in the race for Lantos' seat is Jackie Speier, a former Democratic state senator in California. A primary election in the heavily Democratic Silicon Valley district is scheduled for April 8.

Some visitors to Lessig's blog expressed support for his candidacy, but one said Speier would be a strong candidate as well. "I think that your anti-corruption movement, and your effort to reform Congress, would be more likely to succeed from the outside, and could be damaged by a partisan campaign in which you oppose a good candidate," someone wrote.

Others repeated calls for him to run. "My only hope for the future of the Internet and our digital life in general is that we start electing candidates from this new generation, who think differently about issues like digital freedom and copyright," one person wrote. "Lessig certainly is one of those candidates."

Lessig served as a special master in the U.S. government's antitrust case against Microsoft. He's the founder of the Creative Commons, which attempts to give copyright holders additional options for licensing their work beyond all rights reserved.

Lessig has served on the boards of the Free Software Foundation, the Electronic Frontier Foundation, the Public Library of Science, and Public Knowledge.

Microsoft revealed on Wednesday details of the next version of its Windows OS for small businesses and formally introduced a new product line aimed at SMBs.

Microsoft Windows SBS (Small Business Server) 2008, formally code-named "Cougar," is one of two software bundles in Microsoft's new Windows Essential Server Solutions line; it also includes Windows Essential Business Server 2008, formerly code-named "Centro" and aimed at mid-sized companies. Both products are based on the same code as Windows Server 2008, the next version of Microsoft's enterprise server OS.

The products in the Essential line bundle a server OS with other software products that Microsoft deems necessary to running a business -- such as Microsoft's messaging software, Exchange Server, and security products -- to provide what Microsoft describes as an all-in-one, easy-to-install software stack for companies that may only have a small IT support staff.

SBS 2008 is aimed at companies with up to 50 PCs and includes one-year trial subscriptions to Microsoft Forefront Security for Exchange Server Small Business Edition and Windows Live OneCare for Server.

The software also provides integration with Microsoft's Web-based service, Microsoft Office Live Small Business, to help companies set up and manage Web sites and Web-based collaboration workspaces for employees. Support for Windows Mobile devices, so employees can access business information and e-mail remotely, also is bundled in.

According to Microsoft, it designed SBS 2008 for simplified deployment, set-up, and administration from one management console that administrators can access remotely. The software also comes in a premium edition for companies that need more heavy lifting from their business software.

SBS 2008 will be demonstrated on hardware from Dell at Microsoft's Feb. 27 event in Los Angeles, in which Microsoft will highlight a triptych of releases -- Windows Server 2008, Visual Studio 2008, and SQL Server 2008. Both SBS 2008 and Windows Essential Business Server 2008 are scheduled to be available in the second half of 2008.

Windows Essential Business Server 2008, which Microsoft has previously discussed, also is intended to make it simpler for businesses with limited IT management resources to install and control critical software tools. The product is aimed at businesses with 25 to 250 PCs and is currently in beta.

Like SBS 2008, Windows Essential Business Server 2008 also has a single management console for administrators. However, unlike SBS 2008, third parties can integrate their products into the console so they can be managed from it as well. In fact, Microsoft has already said that Symantec, Citrix, CA, Trend Micro, FullArmor, McAfee, and Quest are among the companies that will integrate products with the software.

"Based on our conversations with customers and partners, we felt the mid-market IT is a much different customer than a small-business owner, so we wanted to respect that in the way we designed the management UI for each product," said Steven VanRoekel, senior director in the server and tools division at Microsoft.

More information about SBS 2008 and Windows Essential Business Server 2008 can be found on Microsoft's Web site.

Responding to reports of endlessly rebooting PCs that flooded support newsgroups last week, Microsoft said on Tuesday it had pulled an update designed to prep Windows Vista for Service Pack 1.

Although the update -- actually a pair of prerequisite files that modify Vista's install components -- has been temporarily pulled from Windows Update, Microsoft has not yet produced a fix for users whose machines either won't boot or reboot constantly.

"Immediately after receiving reports of this error, we made the decision to temporarily suspend automatic distribution of the update to avoid further customer impact while we investigate possible causes," said Nick White, a Vista program manager, in a post to the company's blog Tuesday afternoon.

White downplayed the problem. "So far, we've been able to determine that this problem only affects a small number of customers in unique circumstances. We are working to identify possible solutions and will make the update available again shortly after we address the issue."

According to White, Update 937287 was the cause of the problem. In a support document, Microsoft describes that update as one for Vista's installation software, "the component that handles the installation and the removal of software updates, language packs, optional Windows features and service packs." Along with a companion update pushed to users starting Feb. 12 and another that was offered to machines running Vista Ultimate and Vista Business in January, the guilty update is required before Vista can be upgraded to Service Pack 1 (SP1).

Shortly after the two prerequisites hit Windows Update last week, users began reporting problems on Microsoft's support newsgroups. Most said that the update hung as the message "Configuring Updates Step 3 of 3 -- 0% Complete" appeared on the screen. When users rebooted hoping to clear the error, their PCs went into an endless cycle of reboots. A smaller number of users said that their computers refused to boot normally.

Some users have been able to regain control by booting from a Vista install DVD and selecting the "Restore from a previous restore point" option.

What's it doing in there?It's uncertain whether Microsoft knows exactly why Update 937287 is hammering PCs. Even after White posted the company statement to the Vista blog, Darrell Gorter, a Microsoft employee, was asking users to send him system logs. "I still need more log files for the investigations that we are doing," Gorter said in a message on the support newsgroup. Late last week, Gorter made a similar request on the same message board.

Also unclear is the actual extent of the problem. Although White called the number "small," the traffic on the Vista SP1 newsgroup is heavy. One thread had been viewed more than 35,500 times by late Tuesday.

But the problem is not new. Computerworld has found messages describing the endless reboot problem dated Dec. 13, one day after it first offered a Vista SP1 release candidate to the general public. That build of SP1 also required the prerequisite updates, including 937287.

Microsoft was not available for comment Tuesday night to answer questions about whether, and if so how, the snafu will impact its plans to start offering SP1 to most users next month. Currently, only beta testers, Volume Licensing customers, and subscribers to TechNet Plus and Microsoft Developer Network have been able to download legal versions of the service pack.

That will change in mid-March when SP1 is set to land on Windows Update as an optional update, and again in mid-April when Microsoft said it would start installing SP1 automatically on most PCs running Vista.

Computerworld is an InfoWorld affiliate.

A deal for Bain Capital Partners and China's Huawei Technologies to buy 3Com is on hold because the companies were unable to come to agreement with the U.S. Committee on Foreign Investment in the United States (CFIUS) about security concerns.

The three companies have withdrawn their joint filing with CFIUS, although they remain committed to continued discussions, they announced Wednesday.

The proposed $2.2 billion deal, announced in September, raised security concerns because of networking giant Huawei's close ties with the Chinese government. Under the proposed deal, Bain would have gotten an 83.5 percent stake in 3Com and Chinese networking giant Huawei Technologies would have gotten the remaining piece. CFIUS, part of the U.S. Department of Treasury, is investigating whether the investment by Huawei poses a risk to U.S. national security after Bain voluntarily submitted the deal for review in October.

"We are very disappointed that we were unable to reach a mitigation agreement with CFIUS for this transaction," Edgar Masri, president and CEO of 3Com, said in a statement. "While we work closely with Bain Capital Partners and Huawei to construct alternatives that would address CFIUS' concerns, we will continue to execute our strategy to build a global networking leader."

Among the critics of the deal was U.S. Representative Thaddeus McCotter, a Michigan Republican. Huawei's stake in 3Com, which markets intrusion detection systems, would "gravely compromise" U.S. national security, he said in a House floor speech in October. The U.S. Department of Defense uses 3Com intrusion detection products, and Chinese hackers have targeted the agency, McCotter said.

The companies had argued that Bain Capital, based in Boston, would have a controlling interest in 3Com. "Bain Capital will be able to make all operational decisions for the company, to set budgets, to spend money, to make investments, and to hire and fire personnel," 3Com said in an October filing with the U.S. Securities and Exchange Commission. "Huawei will not have any control over the operation of the business."

The companies could still put together a new proposal and take it back to CFIUS, said Christopher Wall, a partner in the international trade practice at the Pillsbury Winthrop Shaw Pittman law firm who is based in Washington, D.C. With cases like the 3Com one, there are often concerns about technology transfer to other countries, but Bain, Huawei, and 3Com could come back with a proposal to limit tech transfer, said Wall. Neither Wall nor his firm is involved in this case.

The companies could also work out a deal with less Huawei involvement, he added.

Wall wasn't surprised about the security concerns surrounding the deal, given that the U.S. Department of Defense uses 3Com networking products, and U.S. officials have accused Chinese hackers of attacking U.S. government sites. "People are obviously going to be on high alert when it comes to China and computer security issues," he said. "I can easily see why people would be very concerned about any Chinese role in a transaction involving that kind of technology."

This story was updated on February 20, 2008

Toshiba's announcement to end production of HD DVD players and recorders will not affect the Xbox 360, even though Microsoft offers an optional stand-alone HD DVD drive for the game console, Microsoft said in a statement Tuesday.

"We do not believe Toshiba's announcement about HD DVD will have any material impact on the Xbox 360 platform or our position in the marketplace," Microsoft said. The gaming function of the console is its main attraction, the company added.

The company did not say whether or not it will stop manufacturing the HD DVD drive for the Xbox 360.

Earlier Tuesday, Toshiba formally announced an end to its support of HD DVD, a high-definition optical disc format meant to replace DVDs. Toshiba was the developer and main backer of HD DVD, and its capitulation handed victory to rival format Blu-ray Disc, which has been championed by Sony.

Toshiba said its decision came after careful analysis of the long-term impact of continuing the format war, and said a swift decision was called for to help the high-definition market develop.

For game consoles, high-definition discs are growing in importance. Sony put Blu-ray Disc drives in the PlayStation 3 as a way to spread popularity of the high-definition discs. PlayStation 3 owners can play HD movies on the drives as well as advanced games. Blu-ray discs can hold far more data than conventional DVDs, and they give players high-definition graphics on games.

At a recent game show in Taipei, Sony showed off a display of more than 100 game titles created using Blu-ray Disc. A nearby Xbox 360 booth displayed the HD DVD logo and showed movies and just a few games made for the format.

Recent changes in the market prompted Toshiba's decision to phase out HD DVD. Early this year, Warner Bros. said it would stop issuing movies on HD DVD in the coming months and rely exclusively on Blu-ray Disc. The Hollywood studio was one of three major studios remaining in the HD DVD camp, and its defection created widespread belief that the battle between HD DVD and Blu-ray Disc was now over.

More recently, major U.S. retail chain Wal-Mart announced it would phase out the sale of HD DVD products, moving to exclusivity with Blu-ray Disc. Electronics retailer Best Buy also said it would back Blu-ray Disc, but it did not say it would stop offering HD DVD.

Verizon Wireless set off a stampede to unlimited voice plans among U.S. mobile operators on Tuesday.

After the carrier said it would let subscribers talk for as long as they want within the U.S. for $99.99 per month, rivals AT&T and T-Mobile USA followed suit. Sprint Nextel, which offers 2,000 anytime minutes per month for $99.99, did not.

Verizon's unlimited individual plan, as well as a shared family plan starting at $199.98, is available now.

T-Mobile's plan, becoming available Thursday, will allow unlimited voice as well as messaging. That carrier, which targets youth as a key demographic, has been offering several plans for big talkers, including an Individual Ultra plan with 2,500 minutes for $99.99 and Individual Supra with 5,000 minutes for $129.99. AT&T likewise had offered such plans, including a 6,000-minute service for $199.99.

The major U.S. carriers haven't traditionally offered unlimited minutes. The rush to match Verizon's plan indicated the level of competition in the mobile market, where carriers are now pushing e-mail, Web access, and other data services as the price of voice minutes has fallen.

But the new plans will probably appeal to only a small segment of the market, analysts said. Realtors and small-business owners who spend a lot of time on the road might find it useful, they said. Most carriers already offer free calls on nights and weekends and plans that include free calling to frequent contacts or people on the same network. Mobile data services such as Verizon's BroadbandAccess 3G will cost extra. And the $99.99 unlimited products are separate from family plans with shared minutes, which cost more.

Also Tuesday, Verizon revamped its data offerings to reach different types of customers. A $39.99 plan will allow for 50MB of data traffic per month, and a $59.99 offering will cover 5GB. The new data plans will become available March 2.

Sprint offers unlimited data on its EvDO (evolution, data optimized) network, which is similar to Verizon's, for $59.99 per month. There are some uses that aren't allowed, including continuous heavy data traffic and Web hosting. AT&T places a 5GB limit only on plans for mobile data cards to be used in notebook PCs, not on phone plans. Verizon and some other carriers have been criticized in the past for advertising unlimited data while actually cutting off users who went over a certain limit.

Some of the top technology companies, including Intel, Microsoft, Dell, and Advanced Micro Devices joined forces Tuesday to form the PC Gaming Alliance, which will try to promote the PC as a gaming platform.

The alliance will bring hardware makers, software companies, and game publishers under one roof to "accelerate innovation, improve the gaming experience for consumers and serve as a collective source of market information and expertise on PC gaming," the alliance said in a statement.

The companies will work together on challenges facing the PC gaming industry, including piracy and the establishment of hardware requirements for PC games, the alliance said. PCGA also hopes to accelerate growth of the PC gaming industry and standardize the development of gaming PCs and software by developing and promoting guidelines.

The alliance comes at a time when PC video game sales are falling. PC games sales in the United States were $910.7 million in 2007, down from $970 million in 2006, according to research from NPD Techworld. PC game sales in 2007 dwarfed in comparison to the sale of software for video game consoles like Sony's PlayStation and Nintendo's Wii, which were $6.6 billion.

Unit shipments of PC game software totaled 36.4 million in 2007, compared to video game software unit shipments of 153.9 million, according to NPD.

The U.S. gaming industry already has the Entertainment Software Association, which represents vendors that publish games for both computers and consoles. About 90 percent of the $7.4 billion revenue of PC and console gaming software in 2006 belonged to ESA members, giving the association a dominant presence.

Other PCGA members include Acer, Epic, Nvidia, and Razer USA.

The announcement comes during the Game Developers Conference, which is being held in San Francisco. During the show PCGA member Intel launched a new gaming platform formerly code-named "Skulltrail." The Intel Dual Socket Extreme Desktop Platform includes two quad-core microprocessors, totaling eight processing engines, and supports graphics cards from ATI or Nvidia.

Hewlett-Packard reported solid financial results for its fiscal first quarter, driven by growth in PCs and enterprise hardware. The results prompted HP to raise its forecast for the year ahead.

Revenue for the quarter, which ended Jan. 31, was $28.5 billion, up 13 percent from a year earlier, HP announced Tuesday. Pro forma net income was $2.3 billion, or $0.86 per share, up from $1.8 billion, or $0.65 per share, a year earlier.

The figures beat the expectations of financial analysts, who had forecast revenue of $27.6 billion and pro forma earnings per share of $0.81, according to Thomson First Call. The pro forma figure excludes one-time items that slightly inflated the results. Using generally accepted accounting principles, HP's profit was $2.1 billion, or $0.80 per share.

HP's Personal Systems Group, which produces its laptop and desktop PCs, grew its revenue 24 percent from the same period a year earlier, to $10.8 billion, with unit shipments up 27 percent. Notebook sales climbed fastest, up 37 percent, while desktop sales climbed 15 percent.

The division had already been doing well. HP extended its lead over Dell in PC sales last year, according to figures from Gartner. HP ended the year with 18.2 percent of the market, compared with 14.3 percent for Dell. The PC market overall grew 13.4 percent.

HP may find it hard to sustain that growth rate, in part because it has to make comparisons with increasingly successful quarters in the year before, CEO Mark Hurd said on a conference call. Still, Hurd said, "when you look at 24 percent growth, I think that's pretty darned strong."

HP's imaging and printing group performed slightly less well, with revenue climbing 4 percent to $7.3 billion. Printer unit sales declined by 1 percent from a year earlier, thanks to weakness in the consumer market. Revenue from supplies, which includes HP's profitable ink business, climbed 6 percent, however.

Revenue from the servers and storage group climbed 9 percent to $4.8 billion. Sales of blades and industry-standard servers were strong, while HP's PA-RISC and Alpha chip businesses continued to shrink. Services revenue climbed 11 percent year-over-year to $4.4 billion, while software sales climbed 11 percent to $666 million, HP said.

Hurd said he was pleased with the results overall. He attributed them to successful cost-cutting efforts, the addition of 2,000 new HP sales staff in the past year, and a diverse product portfolio.

HP generates an increasing amount of its business overseas, he said. Its biggest market continued to be Europe, the Middle East and Africa, where revenue grew 15 percent to $12.3 billion. Asia-Pacific revenue climbed 22 percent to $4.9 billion. Growth in the Americas was a sluggish 8 percent, generating $11.2 billion.

"We generated 69 percent of our revenue outside the U.S., with emerging markets driving significant growth," Hurd said.

The company now expects second-quarter revenue of $27.7 billion to $27.9 billion, and pro forma earnings per share of $0.83 or $0.84. That's above what analysts polled by Thomson had been estimating: pro forma profit of $0.82 and revenue of $27.4 billion.

Determined to utilize mobile applications to improve operational efficiency, food chain Au Bon Pain is taking the outsourcing route to save time and money in getting wireless tools into its employees' hands.

Faced with the prospect of managing the enterprise mobility equation on its own, from device acquisition to applications development, the company of more than 200 bakery and sandwich shops decided to hire an outsourcing specialist to handle almost every aspect of its strategy.

In a move that some market watchers contend will represent an increasingly popular model for launching and maintaining wireless business tools, executives with the company said that it made more sense to offload as much of the process as possible onto its partner, startup Enterprise Mobile, than it would have made to drive its mobile plans internally.

At the core of the company's strategy is the development and distribution of a proprietary business management application delivered over Microsoft's Windows Mobile architecture.

"There's only so much we can do with almost unlimited demand on IT resources. Some projects you simply have to outsource," said Ed Mockler, senior vice president of IT at Au Bon Pain. "This is very nascent technology; we believe it will be very powerful for us in the long run, but we don't have the same level of access to carriers or Microsoft that a dedicated outsourcing partner could offer."

Enterprise Mobile is handling everything from device selection and service contract negotiation to working with the eateries' internal development teams to port its business application, dubbed the Daily P&L, from the PC to the handheld environment.

In addition to its ability to oversee nearly every aspect of its project, Mockler said that Enterprise Mobile's specialization around the Windows Mobile platform was a crucial factor influencing its commitment to outsourcing.

While Research In Motion's Blackberry products remain the de facto leader in the enterprise mobility space, Mockler said that embracing Windows Mobile made the most sense for Au Bon Pain for a variety of different reasons.

Because Au Bon Pain already works with a number of Microsoft technologies, in particular its .NET applications development environment, the executive said it made far more sense to build around the software giant's wireless products.

"Everyone makes a judgment call regarding technologies that will last and prove cost-effective. We thought that.NET would be that platform and felt that it was a prudent decision to continue in that direction with our mobile plans," Mockler said. "We felt that there would be cohesion on all the platforms down the road and wanted to avoid challenges that could be created by a lot of handoffs between different technologies."

By pushing the Daily P&L application from the laptop to the handheld, the executive said that Au Bon Pain's field managers can respond to business challenges more quickly and shift their travels among the chain's locations on the fly to address any emerging problems.

When the application was tied to the PC, managers typically planned their routes ahead of time based on where they expected to be needed. Now the workers can garner detailed operational information in real time and move to cut off any business issues as they emerge, he said.

Moving forward, Au Bon Pain is hoping to port other internal applications, including staffing management and forecasting tools onto handheld devices. Mockler said that the decision to adopt a mobile outsourcing strategy has already allowed the company to accelerate its planning for those future projects.

Mort Rosenthal, chief executive of Enterprise Mobile, said that most businesses are only now getting to the stage in their wireless initiatives where the prospect of using outsourced services makes sense.

IT departments and line-of-business teams have handled the process of selecting devices and negotiating calling plans up until now, but as customers grow into more mature, applications-driven aspects of their planning, acquiring the services of a dedicated mobility partner is becoming a more appealing alternative to keeping operations in-house, he said.

"There are so many moving pieces that as companies attempt to take more of their business applications to the handheld platform, they're realizing that the whole process can become very time-consuming and expensive," Rosenthal said. "As with any outsourcing decision, when companies reach the point where mobility is becoming too much of a burden on IT departments, more customers will decide to head in this direction."

As for Windows Mobile, Rosenthal said that the Microsoft platform is also benefiting from growing maturity among companies regarding the types of applications they hope to push to the handheld. Prior to launching Enterprise Mobile in late 2007, Rosenthal founded Corporate Software, considered one of the earliest and most successful resellers of Microsoft's Windows and Office technologies.

"Blackberry carved out a great market based primarily on mobile e-mail, but as companies move to push more complex applications into the wireless domain, in particular those already built and running on Microsoft technologies, there will be growing adoption of Windows Mobile," Rosenthal said. "Companies want to take advantage of their existing investments in other Microsoft products."

The WordPress.com blog-hosting service suffered a DoS (denial-of-service) attack that began Saturday and was still preventing users from logging in or posting to their blogs on Tuesday.

Matt Mullenweg, spokesman for Automattic, confirmed that the service experienced a DoS attack with spikes of up to 6 gigabits of incoming traffic, which was making some blogs inaccessible for about five to 15 minutes on Tuesday. Though service had mostly been restored, Automattic, which maintains WordPress.com, was still working on returning service to normal levels on Tuesday afternoon, he said.

"Obviously that [is not good] and is pretty unusual for our service," he said. "All our people who can are working on the issue."

However, an employee at a New York-based company that has blogs hosted by WordPress.com suggested that some users were experiencing outages for longer than 15 minutes. The source, who asked not to be identified, said on Tuesday afternoon that users there were unable to log in to their blogs and post comments for "most of the day." However, the blogs were still able to be viewed publicly.

"It's starting to come back to life now, slowly," said the source on Tuesday afternoon.

WordPress.com users were notified via e-mail about the DoS attack. In the e-mail, the service provider said that the attack was affecting user log-in and causing some forums to be offline.

Mullenweg said that the main Wordpress.com page was down longer than some blogs because "we sacrificed it in order to keep blogs and our users up." However, the site's home page and Web site were up and running on Tuesday.

He also provided a link to a graph that shows the traffic spikes to WordPress.com on the graph, where the service's traffic is displayed in a brown line.

A DoS attack is an attempt to make a Web site or service unavailable to intended users by flooding the service or site with incoming data requests, such as e-mails. Motives for DoS attacks vary, but perpetrators mostly target companies with high-profile, highly trafficked Web sites.

Joris Evers, a spokesman for security research and software company McAfee, said DoS attacks are still fairly common, although they have tapered off in recent years because technology has been developed that can head off such attacks before they affect service.

Though he had not heard specifically of the WordPress attack, Evers said that it's possible the attack was mounted by someone "who was upset about something that was written on a WordPress blog, and they decided to take action against that."

The world's top PC vendor, Hewlett-Packard, beat competitors Dell, Lenovo, and Apple to provide the best online customer support, according to a survey released on Tuesday by The Customer Respect Group.

HP was also rated as providing the best online customer service among a sample of 18 technology companies surveyed, ahead of Intuit, Xerox, Microsoft, and Lexmark, according to the survey, which rated online support for the first quarter of 2008.

Using metrics, including Web site usability, content accessibility, and responsiveness to queries, the survey independently measured a customer's interaction with a technology company via the Internet, the company said.

Dell lagged in 12th place behind hardware vendors HP, Lenovo, Apple, and Gateway, according to the survey. Dell has a good community site linked from the home page, but the support pages are difficult to locate, said Terry Golesworthy, president of The Customer Respect Group.

"I think the story with Dell is that they have excellent materials and content, but it is not always as usable by the more naive users," Golesworthy said. Dell needs to mature support to cater to new users without neglecting the self-service experts, Golesworthy said.

Apple's product offerings are fairly simple compared to Dell's, and so is its online support, Golesworthy said. Apple provides no chat or e-mail support options and encourages users to contact Apple through stores and by telephone to resolve issues.

Apple's message may be about being simple, but a major glitch could become a big problem as self-help provided by Apple is minimal, Golesworthy said. Apple has plenty of technical articles on its Web site, which could be hard to locate at critical times.

While some issues linger, vendors are finding better use of technologies such as RSS, online chat, e-mail, forums, and self-support Web content to support novice and expert PC users, the survey said.

Technical customers are generally well serviced on location, so companies are looking to provide more basic information to support novice PC users, Golesworthy said. The documentation on some Web sites is being aligned for novice users to first identify a problem, then download the relevant drivers and programs to solve problems.

Companies are also adopting more interactive and real-time techniques to provide customer support, the survey said. Online chat is challenging e-mail as a support option, with more than 50 percent of companies surveyed including online chat, an improvement from 30 percent six months ago.

Online chat provides quicker response, cuts down on customer support costs, and eliminates user concerns about speaking to support agents with foreign accents, Golesworthy said.

Some Web sites had data-intensive home pages that took time to load, but it could become commonplace as companies try to provide better and more interactive support to users, the survey said.

Two upcoming technologies -- remote support and intelligent monitoring -- could help improve customer support provided by vendors, Golesworthy said. With remote access, technicians will assume control of a machine from a remote location to fix a problem. Instead of wading through pages of content to diagnose an issue, intelligent monitoring will provide a clearer choice for users to diagnose and resolve issues.

Sun was rated as having the simplest Web site, followed by Xerox, Microsoft, and Apple. Intuit was rated as being most responsive to customers' problems, followed by Microsoft, Symantec, and HP.

Microsoft appears to be looking for new ways to tie Windows Mobile phones and Zune media players together, although a Zune phone remains unlikely.

Over the weekend, Microsoft developer "Mel" asked an open question on the Windows Mobile blog: "What are some ways the Zune player and a Windows Mobile device can work better together?"

Since then, more than 50 commenters have suggested ways that Microsoft might converge the two devices. The most common idea is to essentially replace the Windows Media Player on Windows Mobile devices with Zune software.

"I proposed that WMP should be fazed out in favor of a combined WMP/Zune player which will synch with both Windows Media AND Zune, instead of having to have two separate apps with two different libraries for each device," wrote one commenter using the name Colin Walker.

Peter Henning, another commenter, also suggested making just one media player that works on both devices. "Currently you are just making our lives much more difficult with this parallel development and incompatibilities," he wrote.

A single media player would solve some of the problems that other users complained about in syncing music between a Windows Mobile phone and a Zune. Another commenter going by the name Charlie Quidnunc noted that he has to create new playlists once he transfers music from Zune to his phone because Windows Media Player can't read Zune playlists.

Another complained that he can't transfer music that he downloaded under his Zune subscription plan to his Windows Mobile device because of DRM restrictions.

Offering Zune software on Windows Mobile phones could be one simple way for Microsoft to converge the two, said Michael Gartenberg, a research director with Jupiter Research. "There are any number of ways that Microsoft could go about Zune integration. We might see a Zune application for Windows Mobile devices."

But what we most likely won't see is a Zune phone, despite many Zune phone rumors. "On one hand, the Zune is a closed proprietary system not built around a partner ecosystem," Gartenberg noted. "On the other hand, the phone business is built on a partner ecosystem." Microsoft develops the Windows Mobile software, but hardware makers build the phones. By contrast, Microsoft develops the hardware and software for the Zune.

If Microsoft started making a Zune phone, it would compete with its phone hardware partners. "It's the same reason we don't see a Microsoft-branded PC," he said.

On the Windows Mobile blog, "Mel" emphasized that wasn't looking for more suggestions of a Zune phone. "I'm not referring to an imaginary 'Zune phone,' and I'm certainly not hinting or speculating about a converged device," he wrote.

Building a better music playing experience into Windows Mobile will be important for Microsoft, which is increasingly trying to make Windows Mobile phones appeal to consumers and not just business users. "For the most part, Windows Mobile has ignored consumers," Gartenberg said.

Microsoft recently announced plans to buy Danger, the developer of mobile phone software that runs the youth-oriented Sidekick device from T-Mobile. Microsoft has also made some executive changes in the Windows Mobile group designed to better focus on consumers.

U.S. government employees have a telecommuting gap -- nearly all of them could work from home at least part time, but only about 20 percent do, according to a survey released Tuesday.

More than four in 10 survey respondents were unaware if they were eligible to telecommute, according to the survey released by Telework Exchange. But 96 percent of the U.S. government employees who filled out an online quiz from the group could telework at least part time, and 79 percent could telework full time, the survey said.

A three-day-a-week government telecommuter could save an average of $5,878 a year in commuting costs and avoid putting 9,060 pounds of pollutants into the environment, according to Telework Exchange.

If the 79 percent of U.S. government employees eligible to telework full time actually did, they would save $13.9 billion in commuting costs and spare the environment 21.5 billion pounds of pollutants, the study said.

"The point here is that telework saves money, it saves the environment," said Joel Brunson, president of Tandberg Federal, a video conferencing software and services vendor that helped fund the survey. "Telework is the panacea for a lot of the ills out there."

The U.S. Congress passed a law in 2000 requiring federal agencies to offer telecommuting as an option to many employees, but it's been slow to catch on in practice. Advocates of telework say it can provide government agencies several benefits, including a way to remotely continue operations during a natural disaster or terrorist attack. Telecommuting can also ease the enormous traffic problems in the Washington, D.C., area, advocates say.

Government employees need access to a good broadband connection and support such as a help desk in order to telecommute successfully, Brunson said. But it's easier than ever to telework, with broadband, mobile e-mail, easy-to-use video conferencing and other services readily available, he added.

"Telework has grown leaps and bounds from five years ago," he said. "With the prevalence of broadband service out there, there are a lot of tools we have that we didn't have five years ago. With today's technology, [video conferencing] is pretty rock solid and almost utility-like."

Employees have some responsibility to show they can telework, he added. They must prove they can work without on-site supervision and still meet deadlines, Brunson said.

This is the third government-focused telework survey done by Telework Exchange and Tandberg Federal since early 2007. The most recent survey had 664 responses, 70 percent from civilian government agencies, and 30 percent from Department of Defense employees.

Microsoft is moving to counter some scathing comments regarding a security paper authored by researchers at its Cambridge, England, facility.

The paper, "Sampling Strategies for Epidemic-Style Information Dissemination," looks at how worms sometimes inefficiently spread their code.

The research explores how a more efficient method could, for example, be used for distributing patches or other software. The advantage would be that patches could be distributed from PC to PC, rather than from a central server.

That method would reduce the load on a server, and patches would be distributed faster. But the patches would have the same qualities as a computer worm, a generally malicious file.

Since a story about the paper appeared on Thursday in the New Scientist magazine, the paper has been roundly assailed.

"This is a stupid idea," wrote Bruce Schneier, a security expert, author and CTO of Mountain View, Calif.-based enterprise security vendor BT Counterpane, on Tuesday, before quoting a passage from the New Scientist story on his blog.

Schneier wrote that the idea of so-called "benevolent worms" comes up every few years.

However, a worm is designed to run without the consent of a user, which doesn't make it a good method of software distribution, Schneier wrote. The worm patching technique could also make the patches hard to uninstall or interrupt during installation, he wrote.

Worms designed to distribute software patches could also be hacked to distribute malicious software, wrote Randy Abrams, director of education for security vendor Eset, in his regular e-mail commentary.

Forced patching is also troublesome since some patches may not be compatible with critical software, Abrams wrote.

"Breaking into computers is a bad idea," Abrams said.

A Microsoft spokesman said on Monday that the New Scientist story is not inaccurate. However, the writer of the story "sexed" up the research paper a bit, particularly with the headline that used the phrase "friendly worms," the spokesman said.

In response to the criticism, Microsoft said it doesn't intend to develop patch worms.

"This was not the primary scenario targeted for this research," according to a statement.

The company also said it will continue to let customers decide how and when they apply security updates.

One of the paper's authors, Milan Vojnovic, said in a statement that there were no plans to incorporate the ideas into Microsoft's products. Efforts to reach Vojnovic for comment were unsuccessful.

Microsoft plans to intensify its pursuit of Yahoo this week when it authorizes a proxy fight to oust Yahoo's board, meaning the 19-day old acquisition attempt will soon turn a darker shade of ugly, according to The New York Times.

The proxy fight will cost Microsoft between $20 million and $30 million, much less than having to significantly up its offer for Yahoo, The Times reported Tuesday morning, quoting anonymous sources.

The aggressive move would be consistent with Microsoft's statements hinting that it's willing to acquire Yahoo via hostile means if necessary. Yahoo's board rejected unanimously Microsoft's offer, calling it too low.

Yahoo declined to comment about The Times' article. Microsoft didn't immediately reply to requests for comment.

Yahoo and Microsoft declined to comment on The Times' article.

If Microsoft plans to wage a proxy fight, that would reveal that the company is getting impatient with Yahoo's resistance, said industry analyst Greg Sterling of Sterling Market Intelligence.

"Microsoft feels that it made a fair and very generous offer, and that Yahoo doesn't have a lot of options," Sterling said.

Entering into a proxy battle has its downsides, he said. It will delay the acquisition process and, by making the process nastier, could prompt valuable employees to flee, Sterling said. "To what extent does this aggressiveness poison the well? I don't know," he said.

But clearly, Microsoft is ready to shift into an alternative plan if it's convinced that the best-case scenario of wrapping up the acquisition promptly won't happen with Yahoo's current board, he said. "Microsoft had probably factored this step into its strategy. I'm sure it's a calculated decision," Sterling said.

On Feb. 1, Microsoft offered to pay $31 per share for half of Yahoo's outstanding shares in cash -- about $22.3 billion -- and 0.9509 of a Microsoft share for the other half. Microsoft's half-cash/half-stock offer to Yahoo was valued at about $44.6 billion at the time it was made; Yahoo's share price was $19.18 at the time.

However, the bid's value has dropped to about $41 billion as the price of Microsoft's stock has fallen from $32.60 at the time the offer was made. It was trading at $28.77 on Tuesday morning. At the same time, Yahoo's stock has surged, erasing the bid's original premium. It was trading at $29.32 on Tuesday morning.

In the proxy fight, Microsoft would hire a proxy solicitor to urge Yahoo investors to kick out board directors, The Times reported, adding that all Yahoo directors are up for nomination this year.

After investing heavily in recent years in its Internet business and failing to achieve its desired goals, Microsoft is now convinced that it must acquire Yahoo in order to compete against common rival Google, especially in search advertising, the largest online advertising market pie, and one that Google dominates.

As of the end of 2007's third quarter, Google had almost 25 percent of the U.S. Internet advertising market, up from almost 21 percent in 2006's third quarter, according to IDC. Meanwhile, Yahoo's share during this period dropped to 11.3 percent from 12.3 percent, while Microsoft's declined to 5.2 percent from 5.8 percent, according to IDC.

In search usage, Google held a commanding 62.4 percent of queries worldwide, followed by Yahoo in a very distant second place with 12.8 percent, according to comScore. Microsoft ranked fourth with 2.9 percent, after Baidu (5.2 percent).

Unquestionably, Yahoo would be a major win for Microsoft in the display ad market. In November, Yahoo ranked first in the U.S. in display ad impressions with a 19 percent share, while Microsoft came in third with 6.7 percent, after News Corp.'s Fox Interactive (16.3 percent), according to comScore. Google took seventh place with 1 percent.

However, skeptics question whether acquiring Yahoo will yield the expected benefits, considering the complexity of integrating the two businesses, cultures and technology platforms and the fact that Yahoo has had severe internal problems that have stumped its most seasoned executives. In addition, some aren't sure that a unified Microsoft/Yahoo will have a better chance to compete against Google.

Yahoo co-founder and CEO Jerry Yang, who is also on the board of directors, has been urgently looking for and considering alternatives to a Microsoft acquisition soon after Ballmer and company made their bid.

Reports -- all attributed to anonymous sources in various media outlets -- have emerged in the past two weeks that Yang has held conversations with Google, AOL and News Corp., exploring various deals that would allow him to reject Microsoft's offer.

The key is that the shareholder value created by a competing deal would have to at least match the value of Microsoft's deal. Otherwise, Yahoo would make itself liable to shareholder lawsuits that alleged the board had failed to perform its fiduciary duty.

So far, as experts have analyzed the potential value to Yahoo of outsourcing its search advertising to Google, merging with AOL or selling a 20 percent stake to News Corp. in exchange for MySpace, the consensus has been that none of those scenarios comes close to matching Microsoft's offer.

This story was updated on February 19, 2008

Sybase Tuesday launched its strike in the cluster-database market, releasing Adaptive Server Enterprise Cluster Edition to compete with the likes of Oracle's Real Application Clusters.

Sybase's offering is aimed at IT shops that require high availability from their datacenters. It uses shared-disk clustering, where a number of ASE server instances is grouped into a cluster seen as a single system managing the same set of data. This allows application workloads to be balanced among the instances. The software automatically migrates connections if a node fails, according to the company.

Noel Yuhanna, a Forrester Research analyst covering database technologies, said Sybase has made a wise move.

"They've realized they need to innovate to stay competitive and they're doing that," he said. "I think it's a good move and makes them comparable in certain situations with Oracle RAC."

While most companies employ some type of failover technology in their data centers, it may take effect in minutes, not seconds, Yuhanna said. "Companies who want it to happen really fast, that's when shared-disk clustering can really help," he said.

"It's only about five to 10 percent of the applications in an organization that would really need that up-to-the second [performance]," Yuhanna added.

Sybase hasn't necessarily surpassed Oracle's capabilities, according to Yuhanna. Its new product might be more suitable for "smaller environments, or those that are only focused around Linux and Solaris," he said, adding that word hasn't yet circled back from customers regarding the product's performance.

David Jonker, senior product marketing manager in the ASE group at Sybase, said the company worked with 12 large companies on a technology preview version of the software. He declined to name them, and said none had agreed to speak to the media.

ASE Cluster Edition is compatible with systems running Red Hat Enterprise Linux 4 and 5 (x86_64); Solaris 9 and 10 on Sparc (64-bit); and SUSE Linux 9 and 10 (x86_64). Sybase did not release pricing information.

Boasting of a one-of-a-kind solution for the application development lifecycle, Bungee Labs is launching the public beta Tuesday of Bungee Connect, an on-demand platform for Web application development and deployment.

Featured is a full gamut of tools and services to build and host applications. "Bungee Connect is a single platform for the development, testing, deployment, and hosting of rich Web applications," said Lyle Ball, Bungee Labs' vice president of marketing.

With the platform, developers can collaborate to build Web applications leveraging multiple Web services and databases. Applications are deployed on Bungee Labs' multi-tenant grid infrastructure and can be SaaS-based or offered as stand-alone Web destinations. They are accessed via popular browsers.

Rather than developers having to assemble disparate pieces such as IDE, an AJAX (Asynchronous JavaScript and XML) toolkit, and testing and collaboration tools, Bungee provides all these capabilities.

"Developers log onto Bungee Connect. It's in the cloud and it's a hosted environment," Ball said.

Bungee describes its product as a platform-as-a-service system, in which the entire software development lifecycle can be supported on the same computing environment to reduce costs, risks, and time to market.?

Because Bungee Connect is entirely based on-demand, users can build and deploy applications without installing or configuring servers and can connect to multiple Web services from within a single environment, said Brad Hintze, Bungee director of product marketing.

"I think it's got some very interesting benefits because it's managing to integrate development and deployment but in a service environment, so it allows for a developer to [have] access to tools," said Dana Gardner, principal analyst at Interarbor Solutions. "It also at the same time gives them a place to deploy their applications without having to worry," about run-time choices and operational issues," he said.

Bungee also provides a way to mash up with other Web services, Gardner said. Bungee is "on to something" that is a harbinger of things to come in creating a seamless relationship between development and deployment, he said.

As part of its launch, Bungee is offering reference applications, including a calendar application, WideLens, which integrates Microsoft Exchange, Salesforce.com, Google Calendar, and other sources. These applications serve as examples of integration offered on Bungee Connect; source code for the applications can be imported into any Bungee Connect account, modified, and used in commercial endeavors.

AJAX-enabled applications can be built and embedded within other Web applications, in SaaS solutions, or offered as a stand-alone Web destination.

Interactivity is delivered via AJAX but developers themselves do not write any AJAX. They use the Bungee Logic programming language for building application logic while the UI is built using a drag-and-drop metaphor. Bungee Logic features a C-style syntax and acts like Microsoft's Visual Studio development platform, Hintze said.

"We automate AJAX interactivity," while developers focus on creating applications and value, Ball said.

Development, collaboration and test deployment are free of charge on Bungee Connect; developers only pay when applications are used. Through a utility-based pricing model, businesses can expect to pay between $2 to $5 per user per month for a heavily used business productivity application or fractions of a cent per e-commerce transaction.

Bungee's grid infrastructure provides data on application usage patterns. Applications are hosted free during the Bungee Connect Public Beta program. The public beta program is expected to continue until the end of 2008, whereupon Bungee would launch the general release of its service.

"And [then] the world is a different place," Ball said. Some 40 developers worked to deliver Bungee Connect, according to Bungee Labs.