Brian King

Adobe has agreed to buy Web analytics company Omniture for US$1.8 billion in cash, the companies said Tuesday. On a conference call Thursday, executives wouldn't say if there was a bidding war with other companies to buy Omniture. The price San Jose, California-based Adobe is paying for the company, which is $21.50 per share, is at a 45 percent premium over Omniture's average closing price for the last 30 trading days, Adobe said.

Adobe, known for multimedia design, Web-development and document-creation software such as Flash, Dreamweaver and Acrobat, said the purchase will help the company add Web analytics and optimization capabilities directly to those products. He said a recent Forrester study found that 73 percent of companies doing business on the Web had some kind of analytics technology in place. "It's a ubiquitous technology that is in high demand at companies that are placing any parts of their business online," he said. This kind of ability to measure what kinds of media, Web applications or Web pages are popular with users is becoming essential as more and more business is being done on the Web, particularly in the area of online advertising, said Forrester senior analyst John Lovett. For designers, developers and online marketers using its tools, this new capability will help them streamline how they create and deliver relevant content and applications, Adobe said. On a conference call Tuesday, Adobe CEO and President Shantanu Narayen said that the idea for a merger grew out of conversations with Omniture's CEO, Josh James, and with customers who wanted more out of the digital media they were creating using Adobe's products.

Advertisers, advertising agencies, publishers and online retailers can improve the experience of their end users and get more out of their digital media through the new analytical capability, the company said. For example, Narayen said people were using Flash to create online advertisements, but wanted a way to better understand click-through rates so they could see which ones were working. Similarly, Adobe, too, found it wanted more information from the ads and digital media it was putting up on its own site. They thought there might be a way for Adobe to build that into their products, and "a number actually wanted us to integrate with solutions like Omniture," he said. Omniture had been an Adobe partner for some time, and in conversations with James, Narayen said the two realized their companies had "the same vision" for how digital media and rich Internet applications could include Web analytics and optimization technology.

The deal creates a "big opportunity" to allow content creators to potentially measure the impact of everything they do, Lovett added. Forrester's Lovett said the deal will put Adobe a step ahead of other companies creating tools for developing digital content. "The combination of these two technologies makes sense - it's the creative meeting the measurement side of things," he said. Following the close of the deal, Omniture will become a new unit within Adobe, the company said. The companies expect the deal to close in the fourth quarter of Adobe's fiscal year, which ends Nov. 27. Omniture's CEO James will join Adobe as senior vice president in charge of that business unit, reporting to Adobe President and CEO Shantanu Narayen.

The U.S. Department of Homeland Security is looking at a report by a research scientist in China that shows how a well-placed attack against a small power subnetwork could trigger a cascading failure of the entire West Coast power grid. Wang and another colleague then investigated how a major outage in one subnetwork would affect adjacent subnetworks, according to an article in New Scientist . The aim of the research was to study potential weak spots on the West Coast grid, where an outage on one subnetwork would result in a cascading failure across the entire network. Jian-Wei Wang, a network analyst at China's Dalian University of Technology, used publicly available information to model how the West Coast power grid and its component subnetworks are connected.

A cascading failure occurs when an outage on one network results in an adjacent network becoming overloaded, triggering a similar set of failures across the entire network. Wang's research was expected to show that an outage in a heavily loaded network would result in smaller surrounding networks becoming overwhelmed and causing cascading blackouts. The massive blackouts in the Northeast in August 2003 , which affected close to 10 million, were the result of such a cascading failure. Instead, what the research showed was that under certain conditions, an attacker targeting a lightly loaded subnetwork would be able to cause far more of the grid to trip and fail, New Scientist reported quoting Wang. Wang did not reply to an e-mailed request for comment seeking details on the report.

The article does not describe Wang's research (paid subscription required) or any further details of the attack. Wang's report, which appears to have been largely overlooked until the publication of the New Scientist article last week, was completed last November and has been available online since March. The so-called "inherently fault current limiting" (IFCL) superconductor technology is part of the DHS' Resilient Electric Grid project. John Verrico, a spokesman for the DHS' science and technology directorate, said the DHS has not reviewed the research but is "very interested in the findings." In an e-mailed comment, Verrico said the DHS is working on a "self-limiting, high-temperature superconductor" technology that is designed to prevent power surges in one network from affecting surrounding networks. According to a DHS description, the technology is capable of carrying 10 times as much power as current copper wires of the same size, while also being able to automatically adapt to massive power surges and outages. The effort, which is funded by the DHS' science and technology directorate, involves teams from American Superconductor Corp., Southwire Co. and Consolidated Edison Co. The technology was successfully tested at the Oak Ridge National Laboratory in Tennessee earlier this year.

A single such IFCL cable will be capable of replacing 12 copper cable bundles. Pilot tests of the IFCL cable in New York are expected to start in 2010, Verrico said. In April, The Wall Street Journal , citing anonymous national security officials, reported that cyberspies from China, Russia and elsewhere had gained access to the U.S. electrical grid and had installed malware tools that could be used to shut down service. News about Wang's research comes at a time when there are considerable concerns about the security of the U.S. power grid. Though the access hasn't been used to disrupt service, the concern is that the malicious hackers could do so with relatively short notice during a time of crisis or war.

The letter lamented the apparent lack of awareness within the power sector of the cyber and noted how the horizontal nature of networked technology could allow attackers to take down multiple power sector assets at once, and from a distance. In a letter sent to industry stakeholders in April, Michael Assante , chief security officer at the North American Electric Reliability Corp., drew attention to the need for operators, suppliers and distributors in the power sector to properly identify and protect critical assets and associated critical cyber assets.

Logitech's only video products are commodity Web cams, but that will change when the company closes a deal to buy high-definition videoconferencing vendor LifeSize Communications. But if the purchase closes, it won't change the competitive landscape much, says Henry Dewing, an analyst with Forrester Research. You might not need telepresence for HD videoconferencing The acquisition, announced Tuesday, will put Logitech in competition with Cisco, HP, Polycom and Tandberg, among others - a high-powered group Logitech has never faced while selling its array of mice, keyboards, speakers, earphones, game controllers and other PC peripherals. Logitech plans to operate LifeSize as a separate business unit that will continue to compete against the same group of players.

The company has a reseller deal with Siemens, which sells LifeSize gear as part of its OpenScape unified communications line. LifeSize video gear ranges from a desktop video client that supports HD up to a three-screen telepresence system that approximates a live meeting with remote participants seeming to sit across a conference table. Logitech says in a press release that it plans to pursue more such deals with other UC vendors. The Cisco-Tandberg deal is up in the air after Tandberg stockholders balked, hoping to increase the $3 billion offer. Logitech's interest took industry observers by surprise. "It seems odd because Logitech is so consumer oriented," Dewing says. "LifeSize has been more of a kit-focused videoconferencing vendor." The telepresence and HD video market has been in flux since Cisco announced its plan to buy Tandberg, which would broaden Cisco's offerings toward the low end of the line, but not so low as LifeSize, whose desktop client is compatible with third-party video cameras.

Cisco has given them until Nov. 18 to consider its offer. That offer may have prompted Logitech to go after LifeSize at a price its investors could not ignore. The Cisco-Tandberg deal may have influenced LifeSize's decision to accept Logitech's offer of $405 million, Dewing says. The Wall Street Journal reports that the company is running on $80 million in venture funding, so the sale price is five times the investment.

Legislators are trying to encourage cooperation among universities and businesses to develop technology needed to carry out a strategic government effort to fight cyber attacks.  Find out what is going on in university network security in our Alpha dogg blog. The Cybersecurity Research and Development Amendments Act of 2009 was approved today by the House Committee on Science and Technology's Research and Science Education Subcommittee. A U.S. House subcommittee is recommending a bill that calls for a university-industry task force to coordinate joint cybersecurity research and development projects between business and academia. The legislation would set up a scholarship program that pays college bills for students who study in fields related to cybersecurity.

In return the students would agree to work as cybersecurity professionals within the federal government for a period equal to the number of years they received scholarships. They would also get summer internships in the federal government. If there aren't any jobs there, they would work for state or local governments in the same capacity or teach cybersecurity courses. The task force would devise a way to build and maintain the infrastructure needed to create, test and implement new secure networking and IT systems. Language in the bill calls for fewer quick-fix actions and more strategic cybersecurity plans. 'In a series of hearings before Congress in 2009 experts testified that the federal cybersecurity research and development portfolio was too focused on short-term, incremental research," the bill says, "and that it lacked the prioritization and coordination necessary to address the long-term challenge of ensuring a secure and reliable information technology and communications infrastructure." A government task force would have to come up with a strategic plan within one year to prioritize research and development projects in cybersecurity that involve private businesses. It would also provide detailed spending priorities for federal agencies to meet these goals.

The program would also shepherd innovations from the research phase to implementation as new technologies and applications. The goal is to improve the security, reliability, resilience and trustworthiness of the national digital infrastructure. The legislation would give the president 180 days to list government cybersecurity staffing needs and to figure out how to meet them taking into consideration pay, the hiring process and hiring flexibility. The program would go beyond researching technology threats to address "social and behavioral factors including human-computer interactions, usability, user motivations and organizational cultures."

Three data storage start-ups have landed more than $28 million in first-round funding from venture capitalists, a rare feat in an economy that has punished new vendors looking to obtain financing. 10 biggest network venture capital deals from Q2 The multi-million dollar financing rounds went to Avere Systems, a Pittsburgh-based network-attached storage (NAS)  company; GreenBytes, a de-duplication vendor in Ashaway, R.I.; and Sonian of Needham, Mass., maker of a cloud-based e-mail archiving and disaster-recovery service. Early stage vendors have suffered as much as anyone, because a lack of successful IPOs and acquisitions has forced investors to put resources into existing companies longer than expected, leaving little left over for true start-ups. Venture capitalists have dramatically reduced spending on computer networking companies in the past couple years. There seems to be good reason to lower investments in storage companies: Storage software revenue is down worldwide compared to last year and storage hardware revenue is down 18%. But Avere, GreenBytes and Sonian were able to secure Series A financing in funding rounds announced this week: $15 million went to Avere, $8 million went to GreenBytes and $5.6 million went to Sonian. "In the current economy, the bar on new investments is extremely high," says John Jarve, Menlo Ventures managing director, in the Avere announcement.

Avere was founded in January 2008 and is led by CEO Ronald Bianchini, a former senior vice president at NetApp and co-founder of Spinnaker Networks, a storage grid company acquired by NetApp. All three start-ups are focused on making storage use more efficient, a key concern for enterprises grappling with expanding data volumes. Avere calls its technology "Demand-Driven Storage" and says it will consist of NAS products that let customers "scale storage network performance independently of capacity," reducing costs and space and power requirements. GreenBytes, featured in Network World's Companies to Watch series last year, makes de-duplication storage appliances designed for both primary and secondary storage tiers. Avere, which received its funding from Menlo and Norwest Venture Partners, says it will release its technology in the fall of this year. The company, founded by CEO Robert Petrocelli in 2007, says its GB-X Series appliances allow "real-time, on-the-fly de-duplication of file blocks as they are stored, expanding the scope of applications into primary storage, as well as backup." GreenBytes' funding round was led by Battery Ventures.

The company offers a 99.99% data retention service-level agreement. Sonian, founded in 2007 by CTO Greg Arnette, built its hosted e-mail archive platform with a grid computing architecture designed to eliminate single points of failure. Sonian, which received funding from Prism VentureWorks and Summerhill Venture Partners, was named a "cool vendor" in archiving by Gartner this year. Follow Jon Brodkin on Twitter: www.twitter.com/jbrodkin

With quarterly IT sales results pouring in, vendors including IBM, Google, Advanced Micro Devices and Intel appear more confident than ever that the global recession's depressing effects on the tech market are lifting. IBM, the second-biggest IT company in the world behind Hewlett-Packard, reported better-than-expected third-quarter results Thursday. Major U.S. market indexes including the tech-heavy Nasdaq dipped Friday, however, as investors absorbed mixed macroeconomic news.

Though revenue dropped 7 percent from a year earlier to US$23.6 billion, it rose 1 percent sequentially from the second quarter and bested the $23.4 billion consensus forecast of analysts polled by Thomson Reuters. The company reported its third-quarter net earnings rose to $3.2 billion from $2.8 billion a year earlier. IBM's diverse portfolio of services and its global footprint helped it weather the economic storm this year. More important - in terms of signs of recovery - is that Chief Financial Officer Mark Loughridge, in a conference call, forecast a return to revenue growth in the fourth quarter. IBM shares slipped by $5.80 to $122.18 in midday trading Friday, however, as investors questioned the extent to which foreign exchange rates factor into the revenue figures.

Revenue increases are often seen as the real signal of growth for any company, since earnings can be boosted by cost cuts. Google, also reporting results Thursday, said revenue for the quarter ending in September jumped 7 percent to $5.94 billion - the Internet ad giant's fastest sales growth rate so far this year. Google, which generates more than 90 percent of its revenue from search-related advertising, is widely seen as a barometer for Internet commerce. It said net earnings were $1.64 billion, a 27 percent jump from last year and on a per-share basis, higher than analyst expectations. "The worst of the recession is clearly behind us," proclaimed CEO Eric Schmidt in a company statement. Google shares bucked the downward market trend Friday, hitting a 52-week high for the company at $554.75 in midday trading.

Analysts have for several months forecast a return to growth for the hardware sector. On the hardware components front, AMD said Thursday that revenue fell in the third quarter, but that it expects sales in the last three months of the year to rise "modestly." Revenue in the quarter dropped 21.3 percent to $1.4 billion from a year ago, but beat the $1.26 billion expected by analysts. IDC said Wednesday that global PC shipments in the third quarter did in fact rise 2.3 percent from the same quarter a year earlier, to 78.1 million units - the first quarter this year in which PC shipments increased compared to 2008. Gartner also said this week that PC shipments rose during the quarter. Rising PC sales are boosting the fortunes of chip companies. Though Gartner's estimate of a 0.5 percent year-over-year growth was smaller than IDC's, its figure for total shipments was higher, at 80.3 million units. "These are good results especially given that PC shipments for the third quarter of 2009 are being compared to a very strong third quarter from 2008," said Mikako Kitagawa, principal analyst at Gartner, in the report. Intel on Tuesday reported strong quarterly results and forecasts that beat industry expectations.

Intel forecast fourth-quarter revenue of $10.1 billion "plus or minus $400 million," while analysts had been expecting $9.5 billion. "The timing of Windows 7 is favorable for the industry due to expected economic improvements and an overdue hardware replacement cycle," Gartner's Kitagawa noted. Intel's revenue of $9.39 billion was up by $1.4 billion compared to the prior quarter, though it was lower than the $10.2 billion in the third quarter last year. Not all vendors are upbeat, however. Though Nokia now expects global, industrywide mobile-device sales to fall by only 7 percent this year - compared to its prior forecast of 10 percent - CEO Olli-Pekka Kallasvuo injected a note of caution in an otherwise upbeat earnings week. "Let's be clear, uncertainty in end-consumer demand remains," said Kallasvuo on a conference call. Nokia on Thursday reported a third-quarter loss of €559 million (US$833 million) mainly due to charges related to its Nokia Siemens networking infrastructure business, which has been losing market share.

That uncertainty spooked investors Friday, as markets tumbled. The Dow Jones Industrial Average slumped by 67.9 points to hit 9997.35 in midafternoon trading, while the Nasdaq Composite dipped 13.08 to 2160.21. IT companies have been riding a wave of optimism recently. Though most tech leaders were upbeat this week, news about financial and consumer companies - including disappointing earnings results from Bank of America and General Electric - spooked investors. Shares of Nasdaq computer companies are as a group up by 38.25 percent from a year ago, when the U.S. financial sector was crumbling. Whether this trend continues will depend to a large degree on quarterly results from other tech leaders such as Microsoft, BMC, Yahoo and AT&T in the next few weeks.

Nasdaq telecom shares are up 32.74 percent from a year ago.