AFP – Smartphones and tablet computers will help push worldwide consumer electronics spending over $1 trillion this year but growth is sluggish compared to last year, according to industry analysts.
“Most product categories are slowing down or going into contraction,” Steve Bambridge, global business director for GfK Boutique Research said Sunday ahead of the annual Consumer Electronics Show (CES) in Las Vegas.
“Really there’s two main exceptions: tablets and smartphones,” Bambridge said at a briefing for reporters before the official opening Tuesday of the high-tech gadget extravaganza.
GfK and CES sponsor the Consumer Electronics Association (CEA) forecast that global spending on technology products will grow five percent in 2012 to $1.04 trillion compared to eight percent growth last year and $993 billion in sales.
GfK and CEA said they expect smartphone sales to grow 22 percent this year compared with 59 percent last year while overall tablet sales are expected to double to more than 100 million this year.
As demand slackens in the United States and Western Europe grapples with an economic crisis and wobbly euro emerging markets such as Brazil, China and India will increase their share of spending on consumer electronics, GfK and CEA said.
Emerging economies are expected to account for 46 percent of global tech sales revenue in 2012, up from 37 percent in 2008, while developed economies will see their share fall to 54 percent from 63 percent over the same period.
CEA chief economist Shawn Dubravac said he expects more than 20,000 new products to launch at CES, which brings together over 2,700 exhibitors from around the world to the cavernous Las Vegas Convention Center.
Last year, more than 100 tablet computers alone were unveiled at CES as rival manufacturers sought to capture the magic of Apple’s hot-selling iPad.
Dubravac said he expects to see about 50 new tablets this year and a plethora of snazzy smartphones which he described as “more like full-fledged computers.”
Another hot product category at CES this year is expected to be the sleek, lightweight laptop computer known as the “ultrabook,” DuBravac said.
He said he expected to see between 30 and 50 ultrabooks launched at CES as computer makers again seek to make up ground on Apple and its popular MacBook Air.
Getting the jump on the competition, Taiwan’s Acer on Sunday took the wraps off what it said was the world’s thinnest laptop computer, the Acer Aspire 5, which has a 13.3-inch (34-centimeter) screen and is 0.59 inches (15 millimeters) at its thickest point.
It weighs less than three pounds (1.35 kilograms).
Desktop personal computers on the other hand are a category of device which is “in decline if not completely dead,” said CEA director of industry analysis Steve Koenig.
Television sales, meanwhile, are expected to be flat with whatever growth there is coming from emerging markets.
DuBravac said he expects to see more televisions capable of connecting to the Internet as the convergence of the Web and the TV set “evolves quite rapidly.”
DuBravac said 12 percent of the TV sets sold in the United States in 2010 were Internet-enabled but nearly half of all televisions shipping in the US in 2012 will be able to tap into the Web.
He said he expected more products to incorporate gesture or voice control — features of Microsoft’s Kinect game console or Apple’s iPhone 4S voice assistant Siri — providing a “much more natural experience for many users.”
There also may be hope for anyone ever faced with the bewildering array of buttons on a television remote control.
“I think 2012 will be the year of the interface,” DuBravac said, with an emphasis on moving from “complexity to simplicity.”

Financial Post – Veteran investor Laszlo Birinyi appeared on CNBC on Tuesday morning to provide his annual stock picks for the coming year, and Research In Motion Ltd. made the short list. This helped drive the stock up roughly 7%.

His five picks for 2012 are BlackRock Inc., People’s United Financial Inc., General Motors Co., Hermes International SCA and RIM.

“It’s been beaten down. It’s a brand, it’s got its fans, and it’s got its products,” Mr. Birinyi said of the BlackBerry maker. “I think it is a long shot. These are not widows and orphans stocks, but like we did last year, we want to pick some stocks that have the potential to do well, and aren’t necessarily a portfolio, but they are a good start.

Mr. Birinyi reminded viewers that he picked Apple Computer in 1997 when it was a $7 stock. However, his more recent performance also suggest investors should probably pay attention to his selections.

Last year, Mr. Birinyi highlighted BP Prudhoe Bay Royalty Trust, Cummins Inc., Hermes, Priceline.com Inc. and Ralph Lauren Corp. as his picks for 2011.

The group has averaged a gain of 17.89% as of Monday’s close, compared to the S&P 500′s loss of roughly 1% this year.

Mr. Birinyi’s picks for 2012 were chosen regardless of risk, diversification or suitability, his research firm, Birinyi Associates, said in a note.

Here is what he had to say about the other stocks:

BlackRock
“In a world of ETFs, I want to buy the people who are writing the ETFs.”

People’s United
“I don’t like banks, but I like 5.25% yield. This is a bank that shouldn’t really be suffering from Ireland or Portugal.”

General Motors
“The auto business is doing a little bit better than most people perceive. Detroit is starting to pick up.”

Hermes
“Hermes is the most iconic brand in the world. It was up 60% last year. At one point it was the best-performing stock in the Stoxx 600.”

NEW YORK (CNNMoney) – For a company that relies so heavily on government spending, Cisco — surprisingly — managed to squeeze out some good news for a change.
The networking giant made significant progress in its cost-cutting initiatives, and its outlook for the current quarter, though still tepid, was far better than Wall Street analysts had expected.

Shares of Cisco (CSCO, Fortune 500) rose 9% after hours.
“We are a very strong company with a very strong balance sheet, leading in many healthy markets,” Cisco CEO John Chambers said a conference call with analysts on Wednesday, following the company’s lastest quarterly earnings release. “However, we must address the market shift and changing competitive environment. Changes we have made allow us to evolve our business models and enhance our leadership.”
For the past several quarters, Cisco has been working to streamline its business and clarify the company’s role in the tech world. As part of its new strategy, the company has rejiggered its management structure, killed several product lines like Flip video players, and laid off 6,500 employees, totaling 9% of its workforce.
Chambers said the cost-cutting maneuvers are making significant progress, freeing up $1 billion in operating expenses on an annualized basis.
As a result, Cisco said it expects revenue to grow by up to 4% in the current quarter, double the 2% growth that Wall Street analysts surveyed by Thomson Reuters had expected.
The stronger-than-anticipated guidance comes despite an ice-cold market for networking products in the government space, one of Cisco’s key markets. Public-sector orders decreased 4% worldwide and 7% in the United States. Sales to the U.S. federal government fell 18%.
With across-the-board spending cuts taking place as part of the government’s debt ceiling agreement, Cisco said it anticipates that public sector spending will continue be a struggle going forward.

Tepid government spending dragged down sales of switches, which make up 31% of the company’s revenue. Switching sales fell 4%. Chambers said they would have grown 13% if not for the public sector swoon.
Yet Chambers said Cisco lost no market share in switching, and it still managed to sell 36 million switch ports — a company record.
The good news, Chambers said, is that business isn’t so great for Cisco’s competitors either. Juniper Networks’ (JNPR) stock has fallen 44% this year, and its shares have tumbled nearly 50% since the company issued a weak outlook on July 26. F5 Networks (FFIV)’ stock has tumbled 44% this year.
Chambers said that Cisco’s diversity and growing reliance on new products puts the company in a good position to take advantage of its smaller rivals’ struggles. Revenue in Cisco’s new products segment, including collaboration, data center, wireless and video products, grew 7%.
New products also account for 31% of the company’s total sales, so growth in those businesses is key to Cisco’s future success.
“We’ve made significant progress on our comprehensive action plan to position ourselves for our next stage of growth and profitability,” Chambers said. “As we start our next fiscal year, you will see a very focused, agile, lean and aggressive company.”
By the numbers
The San Jose, Calif., company said its net income in the fiscal fourth quarter, which ended July 30, fell to $1.2 billion, or 22 cents per share, down 36% from a year earlier. Results included $1 billion worth of one-time charges, totaling 18 cents per share, related to cost-cutting expenses like severance pay and selling off business units.
Without the charges, Cisco earned 40 cents per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, had forecast earnings of 38 cents per share.
Sales rose 3% to $11.2 billion, topping analysts’ forecasts of $11 billion.

MarketWatch – SAN FRANCISCO (MarketWatch) — It’s official. Apple Inc. is No. 1.

After days of back-and-forth with Exxon Mobil Corp., Apple AAPL +0.47% on Wednesday ended the trading day with a market capitalization greater than that of the oil-services giant. By the time the market closed, Apple’s shares had fallen $10.32, or 2.8%, to $363.69, giving the company a market cap of $337.2 billion.

Exxon’s XOM +0.21% shares retreated by $3.14, or 4.4%, to close at $68.03, leaving it with a market cap of $330.8 billion, according to data from FactSet Research.

Apple briefly surpasses Exxon Mobil as the company with the largest market cap, but a classic contrarian investor is betting on beaten-down Bank of America, not the maker of iPhones and iPads, according to MarketWatch’s Mark Hulbert.

Apple had briefly overtaken Exxon during Tuesday’s trading session, but Exxon’s shares rallied late to help the company remain the world’s most valuable company for one more day. However, with Wednesday’s big selloff, Exxon fell behind Apple early and never regained its footing.

William Koehler, chief investment officer of ETF Portfolio Partners, in Leawood, Kansas, called Apple’s overtaking of Exxon “really fascinating, particularly if one looks at where Apple was, say, 10 years ago.”

At that time, Apple was ranked No. 287 on the S&P 500 Index SPX -4.42% and was still about two months away from unveiling the first iPod, the digital music device that many credit with saving Apple and setting it on the path toward the iPhone, the iPad and its current dominant market position.

Despite Apple’s shares costing as much as $400 recently, Koehler said the stock remains popular because “on a price-to-earnings ratio, it really doesn’t look overly expensive.”

Apple currently trades at about 11.5 times its next projected earnings for the next 12 months. Over its previous 12 months, Apple earned $23.6 billion on revenue over more than $100 billion. Exxon has a P/E ratio of almost 8 over the next year, and during the past year, earned almost $38 billion on nearly $393 billion in sales.

(Reuters) – Microsoft Corp has told chipmakers who want to use the next version of Windows for tablet computers, to work with only one manufacturer to speed up delivery, Bloomberg said, citing people with knowledge of the matter.

Chipmakers who agree to Microsoft’s terms will get incentives in exchange for the restrictions, which tie a single chipmaker to one tablet design, the news agency reported.

The program only applies to the version of Windows which is being made for mobile computers and the regular version of Windows for desktop PCs will have no limits, Bloomberg added.

Microsoft did not immediately respond to requests seeking comment on the matter.

(Reporting by Renju Jose in Bangalore; Editing by Louise Heavens)

SEATTLE (Reuters) – Microsoft Corp’s board stood behind Chief Executive Officer Steve Ballmer on Thursday, defending its longtime leader after influential hedge fund manager David Einhorn touched off a debate by calling for his dismissal.

The fund manager, who made his name warning about Lehman Brothers Holdings Inc’s financial health before the investment bank’s collapse, accused Ballmer on Wednesday evening of being stuck in the past, launching the sharpest attack yet by a high-profile investor against the company’s leadership.

Einhorn’s comments, which echo what some investors have said for some years in private, caused a stir on Wall Street and helped Microsoft shares climb 2.4 percent on Thursday to $24.76.

“His continued presence is the biggest overhang on Microsoft’s stock,” Einhorn told fellow fund managers at the annual Ira Sohn Investment Research Conference in New York.

Microsoft’s nine-person board, including Chairman and co-founder Bill Gates, supports Ballmer, a source close to the board told Reuters on Thursday.

Microsoft — the largest U.S. company by market value in the late 1990s — has been overtaken by Apple Inc and International Business Machines Corp in market value, and is no longer seen as a dominating force in technology after a failure to capitalize on Internet and mobile markets.

Before Thursday’s gain, the stock had been down 6 percent in the past two weeks after Microsoft agreed to pay $8.5 billion for Internet phone service Skype, a move that mystified many investors.

Einhorn said it was time for Microsoft to consider strategic alternatives for its money-losing online business, which has so far failed to win share from Google Inc.

“Clearly, some people are calling for a change,” said Sid Parakh, analyst with McAdams Wright Ragen. “If you look at the financial performance, that’s been fine. But I think the issue is broader than that.

“If you look at search, mobile, tablet, these are areas they should have been investing in, and they have — but they weren’t able to get it right,” he added. But: “If there was any reason to believe the board was not with Steve, it would be a different situation. But the board seems to be behind Steve.”

IT’S ON

The online services unit, which runs the Bing search engine and MSN Web portal, had a loss of $726 million last quarter and has now lost $7 billion in four years.

“What it boils down to is that Microsoft has had a load of initiatives which haven’t shown traction yet,” said one U.S. equity fund manager at an investment house featuring on the list of Microsoft’s top 40 largest shareholders. “The most recent one is to buy Skype, and the perception on that is that it is overvalued. We won’t know what revenue synergies are until two, three years down the road.”

“Microsoft created the platform on which Google and the Internet can go forward, and it’s not exactly yesterday’s technology; but they do have to connect more with the mobile computing world and they haven’t really done that.

BGC Partners Colin Gillis credited the rise in Microsoft’s stock price Thursday to “fast money,” or investors looking to take advantage of an undervalued stock.

“It’s on. David Einhorn likes to shake things up,” Gillis said. As for Microsoft’s stock staying flat over a decade, “the question is, is it because of Ballmer, or is it because people are concerned about a post-PC era?”

(Reporting by Bill Rigby, Edwin Chan, Sinead Carew and Paul Thomasch, writing by Edwin Chan; Editing by Gerald E. McCormick, Dave Zimmerman)

NYTimes – Apple faced questions on Wednesday about the security of its iPhone and iPad after a report that the devices regularly record their locations in a hidden file.

The report came from a technology conference in San Francisco, where two computer programmers presented research showing that the iPhone and 3G versions of the iPad began logging users’ locations a year ago, when Apple updated its mobile operating system.

After customers upgraded the software, a new hidden file began periodically storing location data, apparently gleaned from nearby cellphone towers and Wi-Fi networks, along with the time.

The data is stored on a person’s phone or iPad, but when the device is synced to a computer, the file is copied over to the hard drive, the programmers said. The data is not normally encrypted; although users can encrypt their information when they sync their devices, few do.

To some privacy advocates, the storing of the data was a clear breach. “The secretive collection of location data crosses the privacy line,” said Marc Rotenberg, executive director of the Electronic Privacy Information Center, a privacy policy organization based in Washington. “Apple should know better than to track iPhone users in this way.”

Others said the discovery of the hidden file was unlikely to have a major practical impact on privacy and security.

“It is more symbolic than anything else,” said Tim O’Reilly, a longtime technology pundit and founder of O’Reilly Media. “It is one more sign of how devices are collecting data about us and potentially sharing it with others. This is the future. We have to figure out how to deal with it.”

Law enforcement officials can already get this type of location information from cellphone companies, Mr. O’Reilly said; there are, however, conflicting rulings in federal courts about whether they need a search warrant.

But sitting on a home computer, the data could now be more vulnerable to access by hackers or others, he said. And information about a person’s locations over time could be accessible to strangers if a phone or iPad was lost or if it was attacked by malware.

The news of what appeared to be a security problem immediately ricocheted across the Internet as bloggers on technology and Apple-centered sites debated the many questions left unanswered by the report.

It is unclear, for example, whether Apple is gaining access to the information in any way. It is also unclear how precise the location data is and why it is being stored at all.

The programmers said they had asked Apple’s product security team about their findings but did not receive a response. Apple also did not respond to a request for comment from The New York Times.

The report even attracted attention from political figures, like Senator Al Franken, Democrat of Minnesota, who sent Apple’s chief executive, Steven P. Jobs, a letter asking why Apple was “secretly compiling” the data and what it would be used for.

Some privacy experts said the issue was not the legality of storing this information but whether Apple was playing fair with its customers.

“Collecting this data is not illegal, but it does matter whether or not this is explicitly spelled out in Apple’s terms of use,” said Christina Gagnier, a lawyer specializing in privacy and copyright. “Apple constantly changes their privacy policy, and it’s questionable whether most users are aware this is happening.”

Apple has an obligation to its customers to allow them to opt out of being tracked, said Ian Glazer of Gartner Research, who is a director in the company’s identity and privacy group. “There is no way to really turn this tracking off,” he said. “It needs to be visually obvious, or in the settings, to see that this is happening on your phone.”

Alasdair Allan and Pete Warden presented the paper at the O’Reilly Where 2.0 conference, a gathering of experts on location technology. Mr. Allan said in a blog post that beyond the issue of storing the information is the question of “how Apple intends to use it — or not.”

Mr. Allan, who has written books that teach people how to program, also said that the data being collected would be transferred to a new product when customers buy a new phone or iPad, and then sync it.

Mr. Warden, a former Apple employee, posted a free downloadable application on his Web site for Mac computers that allows users to see their stored location data on a map.

Whatever the privacy implications, the report was a burst of bad publicity for Apple on a day when it again reported stellar earnings results.

“It doesn’t matter how Apple explains its way out of this, just the fact that consumers know that their phone is being tracked is a very big deal,” said Chenxi Wang, a vice president of Forrester Research who specializes in security and risk.

Miguel Helft and John Markoff contributed reporting.

Reuters – Intel Corp (INTC.O) forecast quarterly revenues well above Wall Street’s estimates, defying fears the world’s top chip maker is struggling to find its footing as personal computer sales growth wanes.

Sales held up strongly despite a hiccup in sales of its Sandy Bridge processors after the discovery of a chipset design flaw. This eased fears that the growing popularity of smartphones and tablets would begin to eat into the PC chip business.

Shares of Intel rose 3.5 percent in extended trading after closing up 1.22 percent on Nasdaq.

“The PC Client Group revenue was much higher than anyone anticipated. Everyone expected some poor numbers there due to the Sandy Bridge delays,” said Avian Securities analyst Win Cramer.

The company reported a 25 percent jump in first-quarter revenue to $12.8 billion, beating estimates. First-quarter net income was $3.2 billion, up 29 percent over the year-ago period. Earnings per share were 56 cents.

Analysts had expected first-quarter revenue of $11.59 billion, according to Thomson Reuters I/B/E/S.

Concerns that Apple Inc’s (AAPL.O) iPad tablets are squeezing sales of traditional PCs have hung over Intel, along with worries across the electronics industry about supply constraints after Japan’s March 14 earthquake and tsunami.

Computer sales in the first quarter fell for the first time since 2009 as Apple’s iPad attracted buyers in droves and Japan focused on recovering from the earthquake and tsunami, according to research firm Gartner.

Tuesday’s report was the first to include results from Intel’s $7.68 billion acquisition of data security firm McAfee and its $1.4 billion purchase of Infineon’s (IFXGn.DE) wireless unit. The fiscal first quarter also had one more week to it than usual.

Helped by those additions, Intel said revenue in the current quarter would be $12.8 billion, plus or minus $500 million.

Analysts had expected revenue of $11.59 billion for the first quarter and $11.87 billion for the second quarter, according to Thomson Reuters I/B/E/S.

In February, shipments of Intel’s new cutting-edge Sandy Bridge processors were interrupted after a flaw was discovered in a chipset used alongside them.

Intel said the defect would mean $300 million less in revenue for the first quarter, and cost $700 million to repair and replace. But it expects the lost sales to be made up for in later quarters.

CFO Stacy Smith said he saw no hindrance to their production despite supply constraints that are limiting the shipment and availability of electronics parts from Japan.

“We don’t see anything that limits our ability to produce to (meet) demand, and we’re not seeing anything that limits the ability to make PCs,” Smith told Reuters in an interview.

(Reporting by Noel Randewich; Editing by Richard Chang)

WSJ – Bill Gates schemed to take shares in Microsoft Corp. (NASDAQ: MSFT – News) from his co-founder during the early days of the software company following his partner’s treatment for cancer, according to a new memoir by the billionaire co-founder, Paul Allen.

The allegation is part of a critical portrait in the book of Mr. Gates, with whom Mr. Allen formed a friendship in grade school that evolved into one of the iconic partnerships of American business. The book, “Idea Man: A Memoir by the Co-founder of Microsoft,” is scheduled to go on sale on April 17. A draft of the memoir was viewed by The Wall Street Journal. An excerpt of the book appeared on Vanity Fair’s website early Wednesday.

The book gives a revisionist take on some details of Microsoft’s history and the relationship between Mr. Gates and his former partner, the two of whom have long been viewed as cordial if not close friends. The book has created a rift between Messrs. Gates and Allen, say people who know both men. In the book’s acknowledgments section, Mr. Allen thanks Mr. Gates along with 17 other people for “general and logistical assistance.”

The book is “a very balanced portrayal of their relationship,” said David Postman, a spokesman for Mr. Allen. “Paul clearly values the input and the ideas and energy of Bill Gates.”

“While my recollection of many of these events may differ from Paul’s, I value his friendship and the important contributions he made to the world of technology and at Microsoft,” Mr. Gates said in a written statement.

Mr. Allen’s unflattering account of Mr. Gates in the book is already making waves within the tight circle of early Microsoft alumni, with several people who know both men privately expressing confusion about Mr. Allen’s motivations for criticizing his old business partner and questioning the accuracy of Mr. Allen’s interpretation of certain events. Mr. Allen, for instance, puts himself in meetings that people familiar with the meetings say he never attended. In one case, Mr. Allen visits Palo Alto, Calif. to help woo a computer scientist who would later become one of the Microsoft’s most important programmers. People familiar with the meeting said it was Mr. Gates who made the visit. Mr. Postman said that he isn’t aware of any errors in the book.

In the book, Mr. Allen also positions himself as the spark of many of Microsoft’s most important ideas, playing down Mr. Gates’s role in some cases. Woven throughout the book is a bitterness Mr. Allen expresses for not receiving more credit for his work throughout his career and more shares in Microsoft.

[More from WSJ.com: Tech Giants Look Forward to Cloudy Days]

Mr. Allen became one of the world’s richest people from the success of Microsoft under Mr. Gates’s leadership, with the vast majority of his wealth created in the years after he left the company.

“I am surprised that Paul would have felt that it helps his legacy to express dissatisfaction with the share of Microsoft he received,” said Carl Stork, who joined Microsoft in 1981 as a technical assistant to Mr. Gates and worked there for two decades. “While all of us considered Paul a friend and valued his contribution, there is no question that Bill had a far larger impact on the growth and success of Microsoft than did Paul.”

Much of the book focuses on the philanthropic and entrepreneurial efforts of Mr. Allen since he left Microsoft as an officer in the early 1980s. His early stake in the company created one of the world’s greatest fortunes—he ranks 57th on Forbes magazine’s list of billionaires, with an estimated $13 billion fortune—and funded everything from his acquisition of multiple professional sports teams to a successful quest to win a prize for building a reusable spacecraft.

Throughout the history of the technology industry, one co-founder often plays an outsized role in the success of their companies. Mr. Gates, Apple Inc.’s (NASDAQ: AAPL – News) Steve Jobs and Facebook Inc.’s Mark Zuckerberg all saw their co-founders leave before their companies truly took off. Yet the importance of those early partnerships can’t be overlooked, said David Yoffie, a professor at Harvard Business School.

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“I’m not sure Bill would ever have dropped out of Harvard if it wasn’t for Paul,” Mr. Yoffie said, referring to Mr. Allen’s role in encouraging Mr. Gates to leave college to start Microsoft. “I don’t know whether Steve Jobs, without Wozniak, would have ever gotten things together.”

Messrs. Gates and Allen were widely thought by associates to have a warm relationship in the years since Mr. Allen, 58 years old, left Microsoft. Even Mr. Allen says Mr. Gates was one of his “most regular visitors” when Mr. Allen was recovering from chemotherapy two years ago from non-Hodgkin’s lymphoma, describing him as “everything you’d want from a friend, caring and concerned.”

Yet, in the book, Mr. Allen also reveals that his decision to leave Microsoft was prompted largely by his growing disenchantment with the behavior of Mr. Gates, whom he portrays as a confrontational taskmaster who clashed with Mr. Allen’s low-key style. Past histories of Microsoft have said Mr. Allen’s departure from the company was sparked by his first brush with cancer in 1982, when he was diagnosed with Hodgkin’s disease.

In that year, Mr. Allen says he eavesdropped on a discussion in the Microsoft offices in Bellevue, Wash., between Mr. Gates and Steve Ballmer, now the company’s CEO, in which he heard the two men talking about Mr. Allen’s recent lack of productivity and how they might dilute his equity in the company by issuing options to themselves and other shareholders. Mr. Allen said he burst into the room and confronted Messrs. Gates and Ballmer, both of whom later apologized to him and backed down from their plan.

“I had helped start the company and was still an active member of management, though limited by my illness, and now my partner and my colleague were scheming to rip me off,” he says in the book. “It was mercenary opportunism, plain and simple.”

A spokesman for Microsoft said Mr. Ballmer had no comment.

Earlier efforts by Mr. Gates to whittle down his partner’s stake in Microsoft were successful though, according to Mr. Allen. In the mid-1970s, when the two college dropouts were based in New Mexico, Mr. Allen says Mr. Gates asked for 60% of their partnership because of his greater contributions to the creation of software for running the BASIC programming language on an early PC, the MITS Altair 8800.

Mr. Allen says he had assumed that their partnership was evenly split, but he agreed to Mr. Gates’s request.

Several years later when Messrs. Gates and Allen established Microsoft as a formal partnership, Mr. Gates asked to change their respective shares in the business to a 64-36 split, a demand to which Mr. Allen again agreed. But in the early 1980s Mr. Gates rebuffed Mr. Allen after the latter man asked for an increase in his own Microsoft shares after his work on a successful Microsoft product called SoftCard, Mr. Allen writes.

Mr. Allen was deeply disappointed in the response from Mr. Gates, whom he had known since Mr. Allen was a tenth grader and Mr. Gates was an eighth grader at a prestigious private school in Seattle.

“In that moment, something died for me,” Mr. Allen writes. “I’d thought that our partnership was based on fairness, but now I saw that Bill’s self-interest overrode all other considerations. My partner was out to grab as much of the pie as possible and hold on to it, and that was something I could not accept.”

Mr. Allen said he sucked it up and thought, “OK…but one day I’m out of here,” the book says.

Mr. Gates’s attempts to lower Mr. Allen’s stake in the company reflected concerns that Mr. Allen wasn’t working hard enough and wasn’t commitment to the company, say people familiar with the relationship. That was one reason, these people say, that Mr. Gates put a provision in their first partnership agreement that would allow him to buy out Mr. Allen if he thought there were “irreconcilable differences” between the two men.

Mr. Allen mentions the agreement in the book, without saying why Mr. Gates inserted the clause.

As Microsoft grew, it attracted more people like Mr. Gates who were single-mindedly focused on building Microsoft. They were willing to work around the clock, sleep in the office and battle each other over strategy and technical decisions. Mr. Allen, these people say, grew increasingly tired of that life and lagged the rest of group, they said. He gradually lost interest in remaining at the company. In the book, Mr. Allen says that fights with Mr. Gates took a toll on him. “My sinking morale sapped my enthusiasm for my work, which in turn could precipitate Bill’s next attack,” he wrote. He noted that Mr. Gates tried to keep him at the company.

Mr. Allen has spent the decades since his departure from Microsoft using his wealth to carve a somewhat whimsical path for himself. Many of his business investments, like the cable company Charter Communications (NASDAQ: CHTR – News), software company Asymetrix Corp. and set-top box maker Digeo Inc., have either flopped or fared poorly for him.

Mr. Allen devotes portions of his book to investments like the Portland Trailblazers NBA franchise and the Seattle Seahawks NFL team. He financed the creation of rock n’ roll and science fiction museums in Seattle designed by architect Frank Gehry, while he invested $100 million in 2003 to form a non-profit organization called the Allen Institute for Brain Science to study how brains work.

Even before Microsoft made him wealthy, it appeared to people who knew him that Mr. Allen had broader interests than running a software business. David Bunnell, who worked in New Mexico in the 1970s with Messrs. Allen and Gates at the pioneering PC maker Micro Instrumentation and Telemetry Systems, better known as MITS, said Mr. Allen was more passionate about music and culture than his business partner.

“He was more interested, in a broader sense, in the world,” Mr. Bunnell says. “I think Bill is more single-minded.”

___

NY Times – SAN FRANCISCO — Strong sales to businesses lifted Dell’s fourth-quarter net income and revenue, the computer company said Tuesday, but it has not yet been able to get consumers to buy more personal computers and other electronics.

Dell reported that net income in the fourth quarter more than doubled to $927 million, or 48 cents a share, from $334 million, or 17 cents, in the year-ago quarter.

The company said revenue for the quarter, which ended Jan. 28, climbed 5 percent to $15.69 billion from $14.9 billion.

The adjusted net income of 53 cents was above Wall Street analysts’ expectations of 37 cents a share, according to a survey by Thomson Reuters. Revenue fell short of analysts’ estimates of $15.72 billion.

“I’m very pleased with our fiscal year results and the strong performance we’re seeing in our commercial businesses ,” Michael S. Dell, Dell’s chief executive, said in a statement.

Dell’s results show a rebound in business spending on technology. The company, based in Round Rock, Tex., said that sales to large companies grew 12 percent to $4.7 billion in the fourth quarter compared with the period a year ago. Among small and medium sized businesses, sales rose 12 percent to $3.7 billion. But for Dell, the consumer market has yet to respond to the same degree. Dell’s consumer sales, in contrast, fell 8 percent to $3.3 billion.

Like many large technology companies, Dell is hampered by a slowdown in government spending. Dell’s public sector sales grew 4 percent in the fourth quarter to $4 billion.

Dell is trying to expand beyond its roots in personal computers to products with higher profit margins like data storage, servers and mobile devices. But it has made limited progress and those areas taken together remain smaller than the company’s traditional desktop and laptop business.

Mobile, in particular, has failed to gain much traction despite several new products like the Streak tablet. Mr. Dell’s has been optimistic about the new sector making pronouncements in the past that the sector offers “great opportunities for us.”

Dell’s shares fell 1.2 percent in regular trading on Tuesday to $13.91. In after-hours trading following the earnings announcement, they rose nearly 7 percent to $14.83.