AMD: New year, same worries

Bank of America analyst Sumit Dhanda is projecting anything but a happy New Year for AMD.

The analyst in a research note Monday, kicked off 2008 by downgrading AMD to “sell” and projected “more pain ahead.” Dhanda’s rating change comes amid a broader call on the semiconductor industry, but AMD took the brunt of the hit.

Here’s Dhanda’s argument:

It can get worse and Barcelona isn’t a savior. Dhanda says that AMD is likely to lose more market share. The analyst writes:

Irrespective of whether AMD will be able to deliver on its promise to ramp the much-delayed Barcelona platform in volumes by 1Q08/2Q08, we believe Barcelona will do very little to stem the share losses AMD will likely witness in servers and desktops vs. Intel’s more competitive line-up.

Add it up and AMD shares are expected to get whacked in 2008 even though the stock fell 62 percent in 2007.

AMD’s costs are too high. Higher material costs and depreciation are likely to put the kibosh on profitability, says Dhanda. On the parts front, Dhanda notes that quad-core components are more expensive. This point is notable since it implies that quad-core chips from AMD won’t command enough of a premium to offset an increase in component inflation.

AMD’s current profit target is too optimistic for 2008. Dhanda expects a motherboard correction and a weaker than expected first half outlook.
That final point from Dhanda is in stark contrast with AMD’s management tone at its analyst meeting. AMD’s biggest issue in 2008 is that it could overpromise and underdeliver again. Instead of playing to the pessimistic crowd and then topping expectations AMD management says it doesn’t understand how people can’t be optimistic. That shtick never works with Wall Street. Here’s the playbook: Take the hit, acknowledge you stink, lower expectations, keep your optimism to yourself and then surprise people.

Meanwhile, AMD may hit economic headwinds. Dhanda also downgraded his outlook for the semiconductor market in 2008. In a nutshell, Dhanda argues that the chip recovery in 2007 has “run its course,” inventories “are slightly above equilibrium levels,” global growth is in question and the first half is seasonally weak.

Dhanda also cut his chip sales growth forecast in 2008 to 7 percent from 11 percent. Demand issues are expected to appear first in the PC supply chain and then spread to the chip sector. He downgraded five chipmakers to neutral (including Analog Devices, Intel, Texas Instruments, Power Integrations and Semtech) and three to sell (AMD, LSI and National Semiconductor).

Nokia Siemens Buys Network Managment Firm Apertio

Nokia Siemens Networks will buy Apertio, which specializes in network management applications for telecommunications operators, for €140 million (US$205 million), the companies said Wednesday.

Apertio, in Bristol, England, sells a software application suite with components for managing mobile phone subscribers. Features allow operators to authenticate and deliver applications to users, shut off lost handsets and collect real-time data on subscribers.

The management and consolidation of subscriber data is becoming more important, particularly as operators offer "converged" services, the term for offerings that combine mobile, fixed-line and Internet-based services, the companies said.

The deal is expected to close by May. When complete, Paul Magelli, Apertio's CEO, will head a new section within the Converged Core business of Nokia Siemens.

Apertio's software and equipment is used by operators such as Orange, T-Mobile, O2 and Vodafone. Apertio, a private company, estimates its 2007 revenue at €28 million.

US-CERT Warns of Flaw in Latest RealPlayer

A possible problem with the latest version of RealPlayer surfaces after a Russian security company claimed to have found a way to exploit a critical flaw.
Robert McMillan, IDG News Service
The US-CERT is warning computer users of a possible problem with the latest version of RealPlayer after a Russian security company claimed to have found a way to exploit a critical flaw in the multimedia software.

US-CERT (United States Computer Emergency Readiness Team) published its warning on Wednesday, the day after Gleg Ltd.Chief Technology Officer Evgeny Legerov announced the exploit code in a posting to the Daily Dave security discussion list.

The flaw affects the latest version 11 of RealPlayer running on Windows XP, service pack 2, according to Gleg. A Flash demonstration of the vulnerability has been posted to the Gleg Web site, but the company has not released its attack code or any technical details of the flaw.

Legerov discovered the flaw, called a stack overflow bug, during an audit of the RealPlayer source code, he said via e-mail.

Gleg sells "penetration testing" software that can be used by security professionals to find holes in computer networks. The RealPlayer flaw was added to Gleg's VulnDisco SA software on Dec. 16, which means that subscribers have had access to the code for more than two weeks. VulnDisco SA is sold as an add-on to Immunity's Canvas penetration testing platform.

There have been no reports of the code being released to the general public so far. US-CERT has not been able to study the exploit code and confirm that it works, said Art Manion, vulnerability analysis team leader at US-CERT.

Real is working to confirm whether the exploit code actually works, a company spokesman said Wednesday.

US-CERT is doing the same thing, Manion said. In the meantime, RealPlayer users should be cautious. "If one wants to assume the most cautious possible stance, you don't use it," Manion said.

In October, criminals exploited another flaw in RealPlayer in order to sneak unauthorized software onto victim's computers. That bug has been patched.

'Ransomware' Extorts Payment With Phone Call

New "ransomware" that locks up your PC and demands $35 to return control to you is on the prowl, a security researcher said this week.
Gregg Keizer, Computerworld
New "ransomware" that locks up a person's PC and demands US$35 to return control to its user is on the prowl, a security researcher said this week.

The extortionists tell victims of the Delf.ctk Trojan horse to dial a 900 number, said Alex Eckelberry, CEO of Sunbelt Software Distribution Inc., a Clearwater, Fla.-based security developer. That number can be traced to "passwordtwoenter.com," a payment processor also used by hardcore pornography Web sites to charge for access to their content, added Eckelberry.

Users infected with the Trojan horse see a full-screen message posing as an error generated by Windows, according to screenshots posted by Eckelberry on the Sunbelt company blog on Monday. "ERROR: Browser Security and Antiadware [sic] Software component license exprited [sic]," the message reads. "Surfing PORN, ADULT and some other kind of sites you like without this software is dangerous and threatens with infection of your computer by harmful viruses, adware, spyware, etc."

The bogus update window includes a "Click to activate new license" button that in turn brings up another screen, this one telling U.S. users to dial a 900 telephone number and enter a personal identification number (PIN). If the 900 number doesn't work, the page instructs users to dial alternate numbers -- one in the West African nation of Cameroon, the other a satellite telephone number.

"You're completely locked out of the system" after the Delf.ctk Trojan horse installs and runs, said Eckelberry. The only way to regain control is to pay up by dialing.

A search on Google for the 900 number returns results pointing to passwordtwoenter.com, a Web site registered to Global Voice SA, a company based in the Republic of Seychelles, an island nation in the Indian Ocean. The IP address used by passwordtwoenter.com is shared with similar domains, including "pintoenter.com" and "chargemyphonebill.com," which are also registered to Global Voice.

Global Voice did not respond to e-mail sent to the address listed in the domain registration information for passwordtwoenter.com.

Ransomware, a term used to describe malware that tries to extort money from users after an infection -- usually to return access to suddenly-encrypted files -- is rare, but not unknown. The last outbreak of any note was in July 2007, when another Trojan horse, dubbed "GpCode," demanded $300 to unlocked frozen files.

Computerworld
For more enterprise computing news, visit Computerworld. Story copyright © 2007 Computerworld Inc. All rights reserved.