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Technology Stock Roundup: FB, MSFT Rouse the Bulls

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There was a whole lot of excitement last week as Facebook (FB - Free Report) announced a consortium to increase global connectivity, Microsoft's (MSFT - Free Report) Steve Ballmer announced his departure and Yahoo sites overtook Google sites in terms of the number of unique visitors.  

Facebook: Connectivity Reaches Next Level

Facebook is taking steps to ensure that its services are available to all. So even if you live in a developing country or remote area where Internet connectivity is difficult and/or expensive, CEO Mark Zuckerberg is thinking about you.

Facebook has put a billion dollars into a consortium that will work toward the increase of connectivity in these areas. Naturally, this is going to be no easy task, so it has roped in other interested parties, such as Samsung, Nokia (NOK - Free Report) , Qualcomm (QCOM - Free Report) and Ericsson (ERIC - Free Report) . It is expected that others will soon join the party.

Facebook is already popular among the Internet population in these regions, so suitable infrastructure should support further growth. While the company’s proliferation in emerging markets may not yield the kind of revenues and profits it typically generates from the relatively mature markets, it should gain significantly from the sheer volume.

Zuckerberg estimates that just a third of the global population (roughly 2.7 billion people) is connected to the Internet. Over 42% of the connected population use Facebook every month. So if the remaining 5.4 billion can be connected, Facebook’s user base has the potential to grow 96%. Add to that the fact that population keeps growing (at a faster rate in developing countries) and Facebook’s own growth initiatives, and the growth potential seems staggering.

Google, which also thrives on connectivity, is likely to be a major beneficiary, but it’s unclear yet whether it will join in. That’s because it is already part of several initiatives to spur connectivity across the world.

Back in 2008, it invested in O3b Networks to bring satellite connectivity to all, joining companies like SES (a satellite operator with 50 geostationary satellites), Liberty Global (LBTYA - Free Report) (a cable company with international operations) and other financial institutions and banks. A couple of months back, O3b launched its first four medium earth orbit (translation: cheaper) satellites.

The initial $1.3 billion raised will fund 12 satellites and support the company until it generates sufficient revenue. O3b has already signed up several telecom providers and ISPs including Maju Nusa of Malaysia and West Africa Telecom of Liberia.

Google is also working on Project Loon, which is basically a network of balloons shot up into the sky transmitting signals that can be picked up by special rooftop antennas. A beta run is in progress in New Zealand.

Microsoft: Riding Ballmer’s Departure

Investors applauded Ballmer’s decision to retire from the company after 33 years. When Ballmer took the helm, Microsoft was a flourishing software business. The company has come a long way since then, but there have been many hiccups along the course. Earlier this year, Ballmer spearheaded a major restructuring that streamlined operations and was probably the first step toward finally letting go.

Ballmer has said that his decision hinged on his belief that he was doing what was best for the company. Which seems to indicate that the following year (to be spent looking for a replacement) will see a dynamic personality with experience and understanding of the trends taking over.

While an internal candidate (Julie Larsen-Green, Satya Nadella, Kevin Turner) may be chosen, an outside candidate seems more likely. Not someone like Oracle CEO Mark Hurd, but someone lower down the ranks with a suitable personality. It will be interesting to see if Microsoft poaches a young Google executive the way Yahoo did.

Yahoo! The New Cool

Yahoo has been doing everything it can to get itself into the limelight and its CEO is playing a leading role (in more ways than one). Marissa Mayer recently did a much talked-about photo shoot for the Vogue. Her reclining, sexy pose looks designed to show off a different facet of her personality. But for the most part, it seems to be directed at spiking conversation around her and thereby directing attention to Yahoo.

Mayer is emerging as Yahoo’s strongest brand ambassador, a woman driven by both family and ambition and more importantly, combining both strength and beauty. In short, a charisma that Yahoo needed.

In the last few months, she has managed to draw a lot of attention to the company, helped by new products, redesigns and acquisitions. Mayer has also made a considerable effort to associate Yahoo with Apple (AAPL - Free Report) . Apple praised Yahoo’s weather app and its new finance app will be tailored for Apple’s new OS. If the association continues, Yahoo products may share the elite image that Apple products enjoy.

ComScore’s latest report has Yahoo sites edging past Google sites with the highest number of unique visitors in the U.S. What’s more significant is the fact that Yahoo sites have been rather close to Google sites over the last few months, so this may not be an isolated case and may be more indicative of a trend.

The downside is that this data does not include mobile, where Google is much stronger than Yahoo. So including Tumblr for Yahoo and mobile for both, Google might still be in the leadership position.  



Last Week

Last  6 Months























This week-

Ø  Microsoft and Google’s Motorola are pitted against each other in the second jury trial to determine whether Motorola breached its agreement to license its standard essential patents to Microsoft at a reasonable and non-discriminatory rate. Motorola initially asked for $4 billion a year, which Microsoft said should be $1 million and U.S. District Judge James Robart estimated to be $1.8 million. Accordingly, Microsoft offered to pay $6.8 million to Motorola, which it refused. Jury selection begins today.

Ø  Most of the big technology companies have reported, but this week will see a cloud computing solution provider (CRM - Free Report) announce results. As always, our preview is available in the “Ëarnings Preview” section.

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