Going by the numbers, Nokia (NYS: NOK) just delivered a horrible quarter. I mean, a terrible, brutal performance. Sales fell 21% year-over-year, led by 31% fewer smartphones finding new homes. Average selling prices also declined across the board. All told, earnings fell 73% to $0.08 per American Depositary Receipt, and operating cash flows crashed just as hard.

But Nokia shares are floating up today nonetheless. Wall Street analysts would have settled for earnings of about $0.06 per ADR, though the $13.4 billion revenue target still proved a bit steep.

More importantly, the much-heralded partnership with Microsoft (NAS: MSFT) is starting to pay dividends. The first Windows Phone models have made their way to markets in Europe and Asia. The Lumia line is also trickling into North American stores as T-Mobile and AT&T (NYS: T) have gotten their mitts on one model each. Support from the network providers is crucial to mobile success, and Nokia never had much of that TLC in America before.

So far, Nokia has sold over 1 million Lumia handsets, That may not sound impressive next to the millions and millions of iPhones Apple (NAS: AAPL) ships every quarter, but every journey has to start with a single step. One million units amounts to over 5% of Nokia’s smartphone sales in the quarter, using a totally new brand to present an unproven platform. That’s not a bad start. Recall that Apple sold 1.1 million iPhones in that storied handset’s first quarter, and you get the positive picture.

Reality check
So is the optimism totally justified? I’m not so sure.

Despite the similarities, this is a very different situation than what Apple was facing five years ago. Apple was essentially inventing the smartphone market, and had never before sold a phone; Nokia can fall back on a decade of global market dominance, and smartphones are now as common in the global marketplace as sand on a beach. Under these circumstances, even a brand-new platform should be able to get up to speed faster.

But the real litmus test will come in the next couple of quarters. Will Lumia gain traction and build the Windows Phone brand, the way Microsoft intended? Or will Nokia find itself spinning its wheels without moving anywhere? These phones need to replace Nokia’s old Symbian smartphones very quickly, and at a price premium at that. And the combined unit sales must bounce back to overall growth right away.

Otherwise, the Lumia will be known as a failed experiment in rebranding and Nokia will join fellow old-school phone titan Research In Motion (NAS: RIMM) in the race to the bottom. Who can sell more micro-margin handsets in Africa and South America? I don’t really care. Neither should you.

The challenges in Nokia’s path
So we’re looking at a polar outcome here: Nokia will sink or swim with the Lumia line. Today, investors see some light at the end of that tunnel. But it’s a big gamble. Nokia is fighting multiple headwinds:

* Windows-powered phones haven’t been cool since, oh, 2006. The new platform is very different, but the brand damage may linger.
* Nokia was never big in North America, even at the height of its powers. This market sets the tone for the mobile space on a global level, because most of the innovation comes from our continent.
* It may be better to have loved and lost than never to have loved at all, but that isn’t necessarily true for brand strength. Nokia has been a well-known cell phone giant for years, and consumers have seen it reduced to a minor bit player. Does that backstory make you long for a Nokia phone? Didn’t think so.

Nokia has a lot of work to do here. I’m not willing to bet against the Finns today, because they might just pull it off. But the company is on notice: I’ll sing a very critical tune unless the next two quarters show real signs of a Lumia-driven turnaround. This might just be the next RIM or Palm disaster in the making.

Source:http://www.dailyfinance.com/2012/01/26/a-software-reboot-might-just-save-this-ailing-phon/

Russian citizen Andrey Sabelnikov “wrote and/or participated in creating” the harmful software which infected thousands of machines, Microsoft said.

Kelihos was used for sending out spam and spreading malware until it was “neutralised” in September 2011.

In a blog posting, the Microsoft’s lead attorney warned that thousands of PCs remain infected with Kelihos’ software.

The firm said that it had filed an amended complaint with the US District Court for the Eastern District of Virginia regarding the matter.

Richard Domingues Boscovich wrote: “Microsoft presented evidence to the court that Mr Sabelnikov wrote the code for and either created, or participated in creating, the Kelihos malware.

“Further, the complaint alleges that he used the malware to control, operate, maintain and grow the Kelihos botnet.

“These allegations are based on evidence Microsoft investigators uncovered while analysing the Kelihos malware.”

‘Wrong route’
Mr Boscovich urged users who were worried that they might have been affected by the botnet to visit Microsoft’s website for advice.

Microsoft said Mr Sabelnikov is currently working on a freelance basis with a software development and consulting firm.

Prior to this, Mr Sabelnikov is said to have worked as a software engineer and project manager at “a company that provided firewall, antivirus and security software”.

Microsoft did not name the company – however Mr Sabelnikov’s LinkedIn profile lists St Petersburg-based antivirus firm Agnitum among Mr Sabelnikov’s former employers.

Agnitum’s sales and marketing director Vitaliy Yanko told the BBC: “I have checked the info and may confirm that Andrey Sabelnikov worked at Agnitum from 2005 till 2008.

“Afterwards our ways parted. Seems that he chose the wrong route afterwards.”

The BBC has sent a message to Mr Sabelnikov’s LinkedIn account asking him to respond to the accusations.

Vulnerabilities
Botnets like Kelihos are created by the spread of malicious software, often via infected emails or web browser vulnerabilities.

Each “bot”, as they are known, is a hijacked computer which can be used by hackers for any number of illegal activities.

Many botnet owners make money by utilising their botnets to send large amounts of spam email.

At Kelihos’ peak, it was said to have been in control of 41,000 infected machines and able to send over 3.8 billion spam emails in a day.

In October last year, a Czech hosting company, Dotfree Group SRO, settled with Microsoft after it was found to be hosting domains responsible for Kelihos’ distribution.

As part of the settlement, Dominique Alexander Piatti, the group’s owner, agreed to delete or transfer all of the affected domains to Microsoft.

He vowed to work closely with the company to prevent future abuse.

Source:http://www.bbc.co.uk/news/technology-16700192

Microsoft has filed lawsuits against two Chinese electronics retail chains for allegedly allowing computers installed with pirated Windows and Office products to be sold at their stores.

The software giant said it filed the lawsuits against Gome Electrical Appliances and Buynow last week in separate courts located in Beijing and Shanghai.

A Gome store in Shanghai had sold PCs with unlicensed versions of Windows and Office, according to Microsoft. In Beijing, two vendors at a PC market operated by Buynow had also sold PCs installed with pirated products, the company alleged.

Microsoft did not specify how much it is seeking in damages. It is demanding in the lawsuits that both Gome and Buynow compensate Microsoft’s losses and cease selling PCs with the pirated products.

Gome declined to comment on the lawsuit. Buynow said in a statement that the company is committed to protecting intellectual property rights, and already takes steps to ensure its vendors do not violate them. In this case, Microsoft failed to understand Buynow’s procedures, and rashly filed a lawsuit, the company said.

The lawsuits mark the latest legal action Microsoft has taken to try and stop vendors in the country from selling pirated versions of its software. About 78 percent of software installed on China’s PCs is pirated, according to a 2010 report from the Business Software Alliance.

Microsoft said it has made repeated attempts to resolve the problems with Gome and Buynow, but that pirated versions of its products continue to be sold at their stores. The company said it hoped the lawsuits would serve as a warning to other PC vendors involved in software piracy.

Source:http://www.pcworld.com/businesscenter/article/247698/microsoft_sues_chinese_electronics_firms_for_software_piracy.html