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SEOUL (Reuters) - Samsung Electronics (005930.KS), the world's top maker of memory chips, beat expectations with a 37 percent rise in quarterly net profit, fuelled by sparkling performances in display panels and mobile phone handsets.

Samsung's outlook remains solid thanks to expectations of strong sales for its display screens and handsets, fuelled by a softer won, robust demand and the weakness of key rivals in the mobile phone market.

Strong sales and margins in flat screens and mobile phones outweighed weakness in chips at Samsung, while earlier on Friday smaller home rival Hynix (000660.KS) disappointed the market with a net loss that was almost 50 percent steeper than consensus.

“Samsung's competitiveness in memory chips and LCD reached a level that none of the rivals can aim to match. Samsung will continue to post outstanding results,” said Park Hyun, an analyst at Prudential Investment & Securities .

“Hynix on the contrary is entering a slump. Insufficient investment so far is taking toll. Japanese makers will post poor results too.”

DRAM maker Elpida (6665.T) and NAND flash maker Toshiba (6502.T) of Japan are slated to release results later on Friday.

Makers of dynamic random access memory (DRAM) worldwide are hoping that spending cutbacks from cash-starved chip makers and improving demand ahead of the back-to-school and gift-giving seasons later in the year will help them back into the black.

Supporting their hopes, market research firm iSuppli in a note dated Thursday upgraded its rating on the DRAM market to “neutral” from “negative,” citing indications that the worst was over for DRAM suppliers.

Samsung, also the world's top maker of large liquid crystal displays (LCD) screens and flat TV sets, on Friday posted a net profit of 2.19 trillion won ($2.20 billion) in the first quarter to March 31, beating a 2.01 trillion won forecast from 10 analysts polled by Reuters.

The technology powerhouse earned a 1.6 trillion won net profit a year earlier and 2.2 trillion won in the fourth quarter.

Shares in Samsung, valued at more than $100 billion, rose more than 4 percent, outpacing the wider market's (.KS11) gains.

Operating margin in Samsung's semiconductor unit fell to 4 percent in the quarter from 9 percent in the fourth quarter, but the figure was better than expectations.

By contrast, Hynix reported a larger-than-expected quarterly loss, with an overall operating loss margin of 30 percent.

Steep price drops have also hurt makers of NAND flash memory chips, used in gadgets such as digital cameras and portable music players.

SAMSUNG SAVED BY SCREENS, PHONES

Samsung's LCD and mobile communications units posted better-than-expected results that easily outweighed the weakness in chips.

The display division posted another strong quarter, fuelled by a shortage of flat screens amid surging demand for sleek TVs ahead of the Beijing Olympics. Margins in the unit rose to 23 percent after the fourth quarter's already sparkling 21 percent.

Samsung said that a total of 2.74 trillion won would be invested in a new LCD line by Samsung and Japan's Sony (6758.T).

It also said it would respond “case by case” to Sony's TV price cuts as another round of price reduction is seen in the fourth quarter.

“We would like to avoid price competition … But the bottom line is that we don't want to lose our ground of leadership,” a Samsung executive said during a conference call.

Samsung, which trails only Finland's Nokia (NOK1V.HE) in the handset market, sold 46.3 million phones in the first quarter, equaling the record number sold in the fourth. Margins in the unit rose to a strong 16 percent from the fourth quarter's 11 percent.

“It depends on how Motorola (MOT.N) and Sony Ericsson (ERICb.ST) react to the current situation they are in, but because Samsung is doing fine in both the high-end and mid-price handsets, I believe there won't be any immediate changes in its good performance,” said An Sung-ho, an analyst at Hannuri Sec.

Samsung's operating profit surged 82 percent from the year-ago quarter to 2.15 trillion won, compared with an average forecast of 1.74 trillion won.

Sales came in at 17.1 trillion won, up from a 16.86 trillion won forecast.

In 2008, Samsung is expected to earn 9.18 trillion won, up from an expected 7.4 trillion won last year, according to Reuters Estimates.

Samsung shares rose 12 percent in the first quarter, against the KOSPI's percent loss, on expectations of strong earnings.

(Editing by Keiron Henderson and Louise Heavens)

SEATTLE - Microsoft Corp.’s third-quarter profit fell 11 percent, the software maker reported Thursday as executives renewed their warning that they may go hostile or walk away from their $44 billion-plus offer for Yahoo Inc. if Yahoo doesn’t agree to a deal by Saturday.

Before diving into quarterly results, Microsoft Chief Financial Officer Chris Liddell spent a few minutes on a conference call with analysts reiterating the company’s stance on its stalled bid to buy Web portal Yahoo.

“Unless we make progress with Yahoo towards an agreement by this weekend, we will reconsider our alternatives,” he said. “These alternatives clearly include taking an offer to Yahoo shareholders or to withdraw our proposal and focus on other opportunities.”

Yahoo’s board rebuffed the February offer — then worth $44.6 billion — saying it undervalued the company. The bid’s value has fluctuated with Microsoft’s share price ever since, settling at $44.06 billion at the close of trading Thursday.

Liddell said Microsoft will issue an update on the Yahoo situation next week, once the Saturday deadline that it set almost three weeks ago has passed.

Microsoft’s net profit for the three months ended March 31 fell to $4.39 billion, or 47 cents per share, from $4.93 billion, or 50 cents per share, in the same period last year, the company reported.

Revenue edged up to $14.45 billion from $14.4 billion in the year-ago quarter.

The results came in ahead of Wall Street’s expectations on both measures. Analysts surveyed by Thomson Financial forecast a profit of 44 cents per share on $14.4 billion in sales.

“Despite a difficult economic environment, it was a very good performance,” Liddell said in an interview.

But investors, chewing over the company’s guidance and a drop in sales in the divisions that produce Windows and Office, sent shares down $1.60, or 5 percent, to $30.33 in after-hours trading. Earlier in the day, the stock had gained 35 cents, or 1.1 percent, to close at $31.80.

Sales of Windows software were not as strong as Microsoft or analysts had predicted in the quarter, despite Microsoft’s comments that sales of Vista licenses — now at 140 million, up from the 100 million mark reached in January — are on track.

Revenue in that division fell 24 percent to $4.02 billion. While the miss wasn’t quite that grand — that figure doesn’t take into account a tough comparison with the year-ago quarter, when Microsoft booked $1.67 billion in deferred Vista revenue — analysts were disappointed.

“It just seems like people, including myself, everybody kind of got a little too comfortable with them being conservative,” said Cowen and Co. analyst Walter Pritchard, who expected the company to sail past guidance as it has done in recent quarters.

Microsoft’s miss was fueled by a few factors. Even though research groups like Framingham, Mass.-based IDC reported that PC shipments were better than expected in the quarter, Microsoft’s independent calculation showed fewer PC shipments than it had expected.

The company has also seen increases in revenue in the last two quarters as people who once would have bought pirated software spent money on genuine Microsoft software instead. But in the third quarter, Microsoft wasn’t able to get the bump it had expected. Liddell said a rash of unlicensed software in China kept Microsoft from meeting its targets.

Finally, Microsoft said inventory levels were high among some computer sellers at the end of the second quarter, which may have kept them from restocking as much as expected in the third quarter.

Sales in the segment that sells the Office productivity suite and other business applications edged down 2 percent to $4.75 billion from a year ago. Liddell said weak sales of Office to consumers and in Japan overall hurt the segment.

Server and tools sales rose 18 percent to $3.3 billion, helped by the launch of new versions of Windows Server and other major software franchises.

Revenue from the division responsible for the Xbox 360 video game system ballooned 68 percent to $1.58 billion, which Microsoft attributed to robust demand for game consoles.

Microsoft’s online services business, which makes money primarily by selling advertising online, saw sales rise 40 percent to $843 million, but the division’s operating loss grew in the quarter compared with a year earlier.

The company upped its fiscal fourth-quarter guidance to a profit of 45 cents to 48 cents per share, matching Wall Street’s current view for 48 cents per share only in the best case.

The software maker forecast $15.5 billion to $15.8 billion in sales. Analysts are expecting revenue of $15.56 billion.

Microsoft also gave its first guidance for next fiscal year, which ends in June 2009. The company predicts a profit of $2.13 to $2.19 per share, on sales from $66.9 billion to $68.0 billion. Wall Street is currently looking for a profit of $2.10 per share on $66.52 billion in sales.

Sun Microsystems acquired microprocessor startup Montalvo Systems for an undisclosed sum, the company confirmed Thursday.

“We believe acquiring these assets will enhance the current and future products we are developing and expect them to contribute to future generations of Sun's microprocessor technology which will in turn drive additional differentiation for Sun's Systems products,” said Dana Lengkeek, a Sun spokeswoman, in an e-mail.

Sun is one of the few companies that continues to design microprocessors for use in its own servers. For example, the company's UltraSparc T2, formerly known as Niagara 2, is an octal-core chip that integrates other components of a computer on the same chip. The processor is capable of running Sun's own Solaris operating system and Linux.

Montalvo is believed to working on a low-power processor that aims to compete with chips from Intel and Advanced Micro Devices. The unique feature of Montalvo's design is the use of asynchronous processor cores. Instead of multiple, identical cores found in Intel's chips, Montalvo reportedly plans to use different types of cores, some more powerful than others, on the same chip to improve performance and keep power consumption low.

Little information about Montalvo is available on the company's Web site, which describes the company as just ” a well funded fabless semiconductor startup funded by prominent Silicon Valley venture capital firms.”

Among observers in the microprocessor industry, Montalvo was watched with a level of interest similar to that of PA Semi, which was acquired by Apple earlier this week in a deal reported to be worth US$278 million. Unlike Montalvo, PA Semi has a chip in production, a dual-core processor based on the Power architecture licensed from IBM.

Apple has not detailed its plans for PA Semi.

SEOUL, South Korea - Samsung Electronics said Friday that net profit jumped 37 percent in the first quarter amid strong demand for mobile phones in emerging markets.

Samsung earned 2.19 trillion won ($2.2 billion) in the three months ended March 31, compared with 1.6 trillion won in the same period last year, the company said in a statement to South Korea’s financial regulator.

Sales rose 19 percent to 17.11 trillion won ($17.19 billion), the company said.

Samsung said in a separate statement that mobile phone sales “achieved similar volume” to the fourth quarter’s record sales of 46.3 million handsets, despite contraction of about 13 percent in the global market.

“Our handset business is growing very strong,” Chu Woo-sik, executive vice president for investor relations, told analysts on a conference call.

Chu cited 33 percent growth in handset sales year-over-year. Emerging markets, including China and India “continued to be the main driver of growth,” he said.

Samsung’s mainstay semiconductor business suffered due to weak pricing due to supply increases and slow seasonality, Chu said. Slow seasonal demand for personal computers hurt sales of dynamic random access memory, or DRAM, chips, he added.

Samsung is the world’s largest manufacturer of computer memory chips and flat screen televisions and is the world’s second-largest manufacturer of mobile phones behind Finland’s Nokia Corp.

Samsung is the flagship of Samsung Group, the country’s biggest industrial conglomerate.

On Tuesday, the group’s long-serving chairman announced his resignation over a scandal that led to his indictment on tax evasion and other charges.

CLEVELAND (AP) — Alicia Keys has scrapped a concert in Cleveland after canceling her show in Pittsburgh earlier this week. A message posted on her Web site says the 27-year-old R&B singer has swollen vocal cords. She was scheduled to perform Thursday night at Cleveland State University’s Wolstein Center.

Keys plans to perform in Columbus on Saturday night.

Fans with tickets to the Cleveland show will have their tickets honored at Value City Arena in Columbus. They can also get a refund.

Keys isn’t the only one on her tour with vocal problems. “American Idol” winner Jordin Sparks was one of the opening acts, but she’s now under a doctor’s care and resting her voice, probably until next month.

___

On the Net:

Alicia Keys:

http://www.aliciakeys.com/

SAN FRANCISCO - Yahoo Inc. plans to make its Web site a social hub by hosting applications from other online services, part of the Internet pioneer’s effort to spawn more advertising opportunities.

“We are going to rewire the entire experience at Yahoo to make it social in every dimension,” Ari Balogh, Yahoo’s chief technology officer, said Thursday at a “Web 2.0″ conference that drew a crowd of more than 1,000.

The more open platform copies a concept that already has been embraced by Internet search leader Google Inc. and a variety of online social hangouts, including Facebook Inc. and News Corp.’s MySpace.com.

Yahoo’s new look will give its roughly 500 million users greater flexibility to customize Web pages. They will be able to pick from a variety of mini-applications, known as “widgets,” and plant them just about anywhere on the site, including their personal version of the front page.

Hoping to capitalize on the social networking craze, Yahoo also is making it easier to connect with friends and family through its Web site. For example, it will highlight messages from e-mail users’ most frequent connections let them track the activities and opinions of online buddies.

The makeover’s timing hasn’t been determined, but it will happen before the end of the year, Balogh said. It could still be derailed if Yahoo is taken over by Microsoft Corp., which has offered to buy its rival for more than $44 billion in cash and stock.

Maintaining that Microsoft’s bid is insufficient, Yahoo has been implementing a long-promised turnaround strategy designed to boost revenue growth after more than two years of financial lethargy. Management has promised the Sunnyvale-based company’s revenue will climb more than 20 percent in 2009 and 2010.

Yahoo also announced on Thursday a three-year advertising and content-sharing partnership with CNet Networks Inc., an online entertainment and technology news service.

Like Yahoo, CNet is trying to snap out of a prolonged funk and fend off an unwelcome advance. A group of dissident shareholders led by New York investment fund Jana Partners LLC wants to overthrow CNet’s current board because of the company’s struggles.

Empowering friends and family to track each other has raised privacy concerns at Facebook, but Balogh said Yahoo will take steps to ensure users retain control over their personal information.

This isn’t Yahoo’s first attempt to become a bigger player in the Internet’s social scene. The company launched a social network called “360″ in 2005, but recently closed the service down because it never caught on. Yahoo also offered to buy Facebook for $1 billion in 2006 only to be rebuffed.

Privately held Facebook last year sold a 1.6 percent stake to Microsoft for $240 million.

Now Microsoft wants to buy Yahoo in an effort to chip away at Google’s huge lead in Internet search and advertising. If Yahoo’s board doesn’t agree to a sale by Saturday, Microsoft has threatened to try to replace the 10 directors in an attempt to complete the deal.

Still thinking about building a social-networking site for your employees? Sure they haven't started without you? Check Facebook, you might get a surprise.

As companies grapple with whether, and how, to offer a social-networking platform for their workers, some are realizing that if they don't act quickly, their workers will go ahead and do it anyway. And that can mean forfeiting control over what content gets posted where, and who can see it.

“Do you really want Facebook to manage it for you in the outside world, or do you want to do it yourself so you have control?” said Duane Nason, a lead Web engineer with The Gap clothing retailer. “If someone posts something to MySpace and you want it taken down, what's their policy on that?”

Nason was at the Web 2.0 Expo this week to learn more about how social networking, mashups and other new technologies can be applied at his company. He's one of many representatives from large companies at the conference who are grappling with similar questions.

Nason, who helps run The Gap's Web site and intranet portal, threw up a wiki recently for use by his small circle of colleagues. He was surprised to discover later that other employees in the company– mostly younger staff in junior positions, he said– had been entering their profiles and using the wiki, even though it hadn't been marketed internally. “They just found it and started using it,” he said.

He also noticed that, as with many large companies, employees at The Gap have started to form their own groups on Facebook. Big companies should develop a social-networking strategy before their employees do it for them, he advised.

An IT manager with another well-known retail company agreed. “If you don't do it for them, there are enough tools out there that they're going to do it themselves,” said the manager, who asked not to be identified because he is not authorized to speak publicly for his company, and because his company is still unsure of its strategy.

He was at Web 2.0 to explore ways of using social networking to build a closer bond with customers. E-commerce sites are not good for building a community, he said, but a social network could allow customers to form their own groups and discuss products they are interested in. He is also interested in widgets that provide updated information about special offers, for example, to a user's desktop.

Among the issues for the retailer is whether to build its social-networking platform on an established site like Facebook, or whether to set up an independent site with the retailer's own brand. External sites like Facebook and MySpace might become less important if big companies can attract audiences to their own sites, he said.

The retailer has only just started to explore these issues. “It's still very early; we're still in perspective-gathering mode,” he said.

An assistant marketing manager from a U.S. tobacco company also was at the show to explore how social networking could help attract a community around his company's products. Some smokers are passionate about their brand and have registered at the company's site, helped by offers such as vouchers for cheap cigarettes, he said.

However, tobacco companies face particular challenges. The U.S. government has been passing tougher regulations for the industry, and some tobacco companies expect new laws that will require them to ensure that visitors to their Web sites are of legal age, by collecting names and even Social Security numbers, said the manager, who also asked not to be named.

“We have to be very careful about who we attract to our site,” he said, adding that new regulations could make using third-party Web 2.0 platforms more difficult.

SEATTLE (Reuters) - Weak quarterly sales of Windows software and a below-target profit forecast for the current quarter overshadowed a strong outlook for the year ahead from Microsoft Corp (MSFT.O), driving its shares down 5 percent on Thursday.

The world's largest software maker also pressed its attack on takeover target Yahoo Inc (YHOO.O) as Chief Financial Officer Chris Liddell told analysts time was of the essence for a deal and he saw no evidence that a $44 billion offer undervalued the faded Web star.

Microsoft, which is considering the launch of a hostile takeover campaign, has set a Saturday deadline for Yahoo to reach a deal.

Liddell also shrugged off fears that the weak U.S. economy would hamper Microsoft's business, saying he had seen no significant spillover from the weak U.S. economy.

“We're being cautious just like everybody else,” Liddell told Reuters. He also said the fact that quarterly Windows revenue missed company expectations was due partly to inventory build-up of computers and was a “quarter-specific” issue.

Net profit was $4.39 billion, or 47 cents per diluted share, for its third quarter ended March 31, compared with $4.93 billion, or 50 cents per diluted share, in the year-ago period. Revenue rose 0.4 percent to $14.45 billion.

Analysts, on average, were expecting 45 cents per share on revenue of $14.49 billion, according to Reuters Estimates.

“Revenues came in a little bit light. The main culprit there was the (Windows) client business. The division that did really well was the entertainment business,” said Tom Telford, portfolio manager at American Century Investments, which owns Microsoft shares.

The third-quarter profit a year ago got a one-time bump from revenue deferred by delays in releasing upgrades to the company's Windows and Office software.

The company projected earnings per share in fiscal 2009 starting in July to be in a range of $2.13 to $2.19 per share, and called for revenue of $66.9 billion to $68.0 billion.

Wall Street analysts, on average, had forecast $2.10 per share in fiscal 2009, right in the middle of their estimate range, on revenue of $66.5 billion, according to Reuters Estimates.

“It's nice that they're raising guidance for the rest of the year,” said Kim Caughey, senior analyst at Fort Pitt Capital Group. “Microsoft is an extremely conservative company with respect to guidance. That's always positive that they're raising guidance.”

As for Yahoo, Ballmer had reiterated in the last few days that Microsoft has no plans to raise its cash-and-stock offer, saying the software company would even walk away from a deal if the two sides could not agree on a price.

Liddell said Microsoft would update its intentions next week.

Yahoo's board has said Microsoft's offer undervalues the company, while its management insists it is not against selling to Microsoft, just not at the price it is offering.

Microsoft's March-quarter figures last year included 11 cents per share of extraordinary profit and $1.6 billion in additional Windows and Office revenue for coupons issued to consumers affected by development delays.

Its shares had risen 6 percent this week on expectations of a strong result. In after-hours trade, Microsoft shares fell to $30.22 after closing at $31.80 on the Nasdaq.

(Editing by Braden Reddall)

San Francisco - Sun continues to pursue talks with Apple Computer to have Java applications run on Apple's iPhone while acknowledging a third party's efforts toward the same goal.

“We've expressed our intent to do this and our desire, really, to work with Apple to build a JVM (Java Virtual Machine) for the iPhone and we're sort of moving forward with that,” said Eric Klein, Sun vice president of Java marketing, this week. The JVM could run Java applications.

Apple has not been publicly receptive to having Java on its popular new device. There have been questions about whether Apple's iPhone SDK agreement would permit this. The JVM potentially could sidestep Apple's App Store program for dispensing iPhone applications.

Meanwhile, Sun also is working with Innaworks to bring Java applications to the iPhone.

“They're actually working on a solution that allows developers to compile [Java Micro Edition or Java ME] applications into native iPhone applications,” said Klein. Companies can submit these applications for inclusion in App Store. Innaworks will show its solution at the JavaOne conference in San Francisco in two weeks, Klein said.

The Innaworks product, alcheMo for iPhone, is initially targeted at games publishers. Now in a beta release, alcheMo for iPhone can be used to port Java ME mobile games to iPhone and iPod touch without the need for further manual adjustments. The product features an optimizing translator to convert Java ME application source code to equivalent source code for iPhone, according to the Innaworks press statement on the product.

But Sun still wants to put a JVM on iPhone through the iPhone SDK. “[Apple is] well aware of what we're doing, and we're in discussions,” Klein said. The two companies need to discuss clauses in the SDK license agreement.

“There's no question one of our goals from the Java platform perspective is to allow our developers to get to as many phones as possible, and obviously, the iPhone has turned out to be a very successful platform, and we want to be on it,” said Klein. There has been much excitement about Sun's plans, he stressed.

Apple declined to provide a spokesperson to comment on the issue. But an industry analyst cited Apple's desire to maintain control of the iPhone.

“They believe that they can deliver a better product by exerting a great deal of control over their platform,” said Ezra Gottheil, analyst for Technology Business Research (TBR). The license agreement for Apple's SDK apparently allows Apple to prevent a program that runs other programs, such as a JVM, from being used on iPhone, according to Gottheil.

He wondered whether having Java on the iPhone would offer a lot of value. “It doesn't seem like it adds a lot,” Gottheil said.

While Gottheil acknowledged Java's large presence on handheld phones, he added, “I'm not aware of any big-winner Java applications on those phones. I could be wrong.”

A Sun representative countered that applications like the mobile versions of Google Maps and Google Mail as well as the RIM application suite are written in Java.

Two weeks after discovering that its Web site had been used by hackers to flog fancy wedding rings, Southern Connecticut State University is notifying 11,000 current and former students that their Social Security numbers may have been compromised.

The personal data was in a file on the university's Web server, which was accessed by criminals who were using the university's site as part of a spam operation, said Patrick Dilger, the university's director of public affairs. “The hackers were using our Web server as a host for their own Web site,” he said.

Pages on the university's site contained ads for diamond rings, Viagra and Cialis. After noticing the ads on April 9th, IT staff discovered the file containing the sensitive information. “When we were doing the security review after the hacker incident, we saw this file there and it wasn't properly secured, so it could have been targeted by someone,” Dilger said.

The university believes that the hackers came from outside the U.S., and it is working with Connecticut's attorney general's office to investigate, Dilger said.

The file on the Web server contained names, addresses and Social Security numbers of students who had registered to graduate from the school, dating back to 2002.

Students affected by the breach are being offered identity protection services for two years.

There has been a raft of Web-based attacks lately. On Tuesday, security vendor Websense reported that thousands of Web sites– including sites hosted by the United Nations and U.K. government– had been compromised in the latest round of so-called “mass injection” attacks. This is the second widespread Web attack reported this month by Websense.

The university's attack does not appear to be connected with these widespread attacks, however. In those hacks, attackers had been using the Web sites to attack other computers and infect them with malware. With Southern Connecticut, the motive appears to have been tied to spam.