Archive for July, 2010

SaaS Market Growth Means SaaS Jobs Growth

July 31st, 2010

The perfect storm for software workers is forming.

The software as a service (Saas) sector of enterprise software is expected to jump by about $1 billion by 2014, according a new report from technology research analysts Gartner. Developers and coders should be paying attention to these technologies for career growth and job opportunities.

In 2009, annual sales topped out at $7.5 billion, but they will expand to $8.5 billion by 2014 forecasts Gartner analyst Sharon Mertz in the report. It’s not only about and the CRM market, but that is one area that has been and will continue to mature with adoption. CRM SaaS apps were roughly a quarter of all CRM sales in 2009 and will be slightly above that in 2010.

The market landscape for on-demand CRM continues to evolve and mature as the availability and use of SaaS solutions becomes more pervasive. Greater market competition and increased focus by the mega-vendors reinforces the legitimacy of on-demand, mitigating initial objections about security and availability for many, as acceptance of SaaS as a viable model for enterprise computing services grows.

By mega-vendors, Mertz means the likes of Microsoft, IBM, SAP and Oracle who see on-demand applications and cloud computing services as the next wave in enterprise applications and are geared up to capitalize.

With national averages for software engineers at $101,000 according to, Web services, SaaS development, and information architects should get your job experience, training and certifications now.


RealNetworks Announces Second Quarter 2010 Results

July 31st, 2010

“We made strong progress transforming RealNetworks during the second quarter,” said Bob Kimball, President and CEO of RealNetworks. “Our restructuring efforts are ahead of plan. In the first six months of the year, we cut more than $30 million in annualized operating expenses from our ongoing businesses. Now it is time to focus on growing the business by improving our sales and marketing of existing products and building a strong pipeline of innovative products for the long term.”

Second Quarter Results

Beginning in the second quarter of 2010, revenue and other operating results of Real’s music business from its Rhapsody joint venture are not consolidated in Real’s financial statements as a result of the restructuring of Rhapsody completed on March 31, 2010.

For the second quarter of 2010, revenue from Real’s Technology Products and Solutions, Media Software and Services, and Games businesses was $88.9 million compared with $95.3 million for the second quarter of 2009. Total revenue in the second quarter of 2009 was $135.7 million, which included revenue from Real’s music business of $40.5 million. Foreign currency exchange rate fluctuations positively affected 2010 second quarter revenue by approximately $800,000 compared with the year-ago quarter. Revenue trends in each of Real’s businesses in the second quarter of 2010 compared with the year-earlier quarter were: a 2% increase in Media Software and Services revenue to $19.6 million, a 5% decrease in Games revenue to $28.1 million and an 11% decrease in Technology Products and Solutions revenue to $41.1 million.

Net loss for the second quarter of 2010 was $(25.9) million, or $(0.19) per share, compared with a net loss of $(188.3) million, or $(1.40) per share, in the second quarter of 2009. Net loss for the second quarter of 2010 included restructuring charges of $11.9 million primarily for employee severance costs and loss on excess office facilities, while the net loss in the year-ago quarter included goodwill impairment charges of $175.6 million. Adjusted EBITDA for the second quarter of 2010 was $604,000, compared with $4.4 million for the second quarter of 2009. A reconciliation of GAAP net loss to adjusted EBITDA is provided in the financial tables that accompany this release.

As of June 30, 2010, Real had $313.2 million in unrestricted cash, cash equivalents and short-term investments compared with $335.2 million at March 31, 2010. In addition, Real had $51.8 million in restricted cash and equity investments, including an approximate 47.5% equity interest in its Rhapsody joint venture. A majority of the $22.0 million decrease in cash, cash equivalents and short-term investments from March 31, 2010, was related to working capital changes, including a reduction in accrued liabilities and payables, primarily royalties. During the quarter, total liabilities declined by $22.1 million.

Gross margin in the second quarter rose to 67%, compared with 59% for the second quarter a year earlier, primarily due to the deconsolidation of the lower-margin music business. Income tax expense was $281,000 compared with $1.2 million in the year-earlier period. Interest income in the second quarter of 2010 was $551,000 compared with $754,000 in the year-earlier period.


Towards the end of the second quarter of 2010, RealNetworks announced a significant reorganization of its business and operational structure. The reorganization is a key milestone in Real’s execution of its previously announced strategy to simplify, restructure and grow.

As part of the second-quarter reorganization, the company eliminated about 85 positions, including about 25% of its executive ranks. The new organizational structure is designed to reduce the spans and layers of management to create greater efficiency, teamwork and accountability.

In addition, Real today announced that it has named Matt Hulett as the head of the Games business, replacing John Barbour. Mr. Hulett, formerly Chief Revenue Officer of Games, has more than 20 years of experience in digital games and other online businesses, including executive roles at Expedia and online games pioneer “Given the urgent need to pivot our Games business to social and online games, we think it is critical to have a leader based here in Seattle,” said Mr. Kimball. “Matt has the right combination of leadership skills, online business experience and support from the team to refocus our Games business on the growth markets, including social games.”

During the second quarter, Real also reduced its use of office space in Europe and its Seattle headquarters. As a result of the reorganization and reduction in office space, the company recorded restructuring charges of approximately $11.9 million for the quarter. Of these charges, approximately $4.8 million is primarily related to the reduction in force and approximately $7.1 million is related to the loss on excess office facilities.

Beginning with the third quarter, Real consolidated its Technology Products and Solutions and Media Software and Services business units and organized them into functional teams that represent product development, sales and marketing, and service delivery. Therefore, Real’s third-quarter financial results will reflect the new corporate reorganization with the following reporting segments: (1) Core products, which will include existing and evolving SaaS services of ringback tones, music on demand, and intercarrier messaging; professional services and systems integration; Helix software; and SuperPass; (2) Emerging products, which will include RealPlayer and new products and services that will be introduced over time for consumers or enterprise customers; and (3) Games. We will present Music results on a historical basis only.

Additionally, Real is changing how it allocates shared corporate costs. Historically, common corporate general and administrative costs, including facilities, were allocated to each business segment. In the future, these costs will be shown in the aggregate and not allocated to segments. Direct business unit costs such as R&D and marketing will continue to be reflected in the business unit results. The changes will ensure that business unit results will be directly attributable to that unit’s specific performance and that shared costs will be centrally managed to ensure focus and accountability on the overall corporate cost structure. Starting with the third-quarter earnings release, Real will report historical results that reflect this new presentation to provide comparability across quarters. In advance of Real’s third quarter earnings release, the company expects to file with the Securities and Exchange Commission a current report on Form 8-K with a description of the new segments and historical results for these new segments.

Business Outlook

For the third quarter of 2010, Real expects overall revenue to be slightly lower sequentially, primarily due to softness in Games, and to decline year-over-year compared with total revenue for the third quarter of 2009, excluding music. Real expects adjusted EBITDA for the third quarter of 2010 to increase slightly sequentially and to decline year-over-year.

Approximately 35% of Real’s revenue is denominated in currencies other than the U.S. dollar, most notably the euro and Korean won. Real expects reported revenues in future periods to be affected by foreign currency trends.

The foregoing forward-looking statements reflect Real’s expectations as of July 29, 2010. It is not Real’s general practice to update these forward-looking statements until its next quarterly results announcement.

Dominique Trempont joins RealNetworks Board of Directors

RealNetworks also announced that it has named Dominique Trempont, a former CEO and an executive with extensive public-company board experience, to its Board of Directors effective July 23. The addition brings the board composition to eight members, including six independent directors.

“We are excited to have Dominique’s extensive experience with software, Internet, mobile applications and SaaS companies to help broaden our board’s understanding of these industries and trends,” said Kalpana Raina, chairperson of Real’s Nominating and Corporate Governance Committee. “His background in both finance and executive leadership makes him especially valuable as RealNetworks has embarked on a transformation that involves major strategic and operational decisions.”

“I am pleased to be joining the RealNetworks board at this very important time in the company’s history,” said Mr. Trempont. “This opportunity allows me to bring my experience in many kinds of organizations – from start-ups to Fortune 500 companies – to assist in the company’s strategic transformation.”

Mr. Trempont, 56, currently serves on the boards of Finisar Corp. and Energy Recovery, Inc. and on24 (SaaS). He also was a board member of 3Com Corp. prior to its acquisition by Hewlett Packard earlier this year. Over the past 25 years, he has been CEO-in-Residence at Battery Ventures, a venture capital firm; chairman, president and CEO of Kanisa, Inc., a software company (SaaS); CEO of Gemplus Corp., a smart card application company; CFO and head of operations at NeXT Software; and a senior executive at Raychem Corp.

Mr. Trempont earned an undergraduate degree in Economics from College St. Louis (Belgium), a B.A. with high honors in Business Administration and Computer Sciences (LSM) from the University of Louvain (Belgium) and a master’s degree in Busi


Informant says WikiLeaks suspect had civilian help

July 31st, 2010

An Army private charged with leaking classified material to the whistleblower website WikiLeaks had civilian help, a key figure in the case said Saturday.

The development, first reported in the New York Times, suggests an expansion of the government’s investigation into leaks including more than 76,900 secret Afghanistan war records posted on WikiLeaks in the past week.

Army and FBI officials didn’t immediately return calls and e-mails from The Associated Press asking if they are looking at possible civilian accomplices of Army Pfc. Bradley E. Manning, who’s charged under military law with leaking classified material.

Adrian Lamo, the Sacramento, Calif.-based computer hacker who turned in Bradley to military authorities in May, claimed in a telephone interview Saturday he had firsthand knowledge that someone helped Manning set up encryption software to send classified information to WikiLeaks.

Lamo, who’s cooperating with investigators, wouldn’t name the person but said the man was among a group of people in the Boston area who work with WikiLeaks. He said the man told him “he actually helped Private Manning set up the encryption software he used.”

Lamo said the software enabled Manning to send classified data in small bits so that it would seem innocuous.

“It wouldn’t look too much different from your average guy doing his banking on line,” Lamo said.

He said Manning sent the data to get the attention of WikiLeaks founder Julian Assange.

Assange didn’t immediately respond to an e-mailed query from AP about Lamo’s claim.

Also on Saturday, a New York Times reporter who has been the newspaper’s liaison with Assange, dismissed Assange’s claim that WikiLeaks had offered to let U.S. government officials go through leaked documents to ensure that no innocent people were identified. Assange told the Australian Broadcasting Corp. in an interview that aired Thursday that the New York Times had acted as an intermediary and that the White House hadn’t responded to the offer.

Times reporter Eric Schmitt told the AP that on the night of July 23, at White House spokesman’s Robert Gibbs’ request, he relayed to Assange a White House request that WikiLeaks not publish information that could lead to people being physically harmed.

The next evening, Schmitt said, Assange replied in an e-mail that WikiLeaks was withholding 15,000 documents for review. Schmitt said Assange wrote that WikiLeaks would consider recommendations made by the International Security Assistance Force “on the identification of innocents for this material if it is willing to provide reviewers.”

Schmitt said he forwarded the e-mail to White House officials and Times editors.

“I certainly didn’t consider this a serious and realistic offer to the White House to vet any of the documents before they were to be posted, and I think it’s ridiculous that Assange is portraying it that way now,” Schmitt wrote to the AP.

On Friday, White House spokesman Tommy Vietor said it was “absolutely, unequivocally not true” that WikiLeaks had offered to let U.S. government officials go through the documents to make sure no innocent people were identified.

Manning is being held at the Quantico Marine Corps Base in northern Virginia, awaiting possible trial on 12 offenses.

He is accused of leaking a helicopter cockpit video from Iraq that WikiLeaks posted in April, and a classified cable from the U.S. embassy in Reykjavik, Iceland, dated Jan. 13, 2010, that also has appeared on WikiLeaks.

Manning is also charged with illegally obtaining more than 150,000 classified State Department cables and leaking more than 50 of them. It’s not clear from the charges, though, whether the allegedly diverted documents were those published on the WikiLeaks site.


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