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SAN FRANCISCO (AFP) - Microsoft and Yahoo began takeover talks Friday with the US software giant open to raising its 44.6-billion-dollar bid for the struggling Internet pioneer, a source close to the situation told AFP.

Yahoo and its unsolicited suitor are privately discussing the buyout bid after months of negotiating indirectly with public comments, emails and online postings, the source said.

“They are talking — there are no guarantees,” the source told AFP.

“Microsoft signaled it might raise the price and the question is how far. It could still fall apart.”

Microsoft has indicated it might raise its ante from 31 to 33 dollars per share and the Yahoo board has signaled it might accept an offer of 37 dollars per share, according to Canaccord Adams analyst Colin Gillis.

“They are close enough now that to sit down and talk about it makes sense,” Gillis said of Microsoft and Yahoo.

The negotiations appeared to break tension that has built since Yahoo rejected the offer Microsoft put on the table on February 1 and ignored an April 26 deadline the software maker gave the California firm to accept.

“It's what they should have done from day one,” Silicon Valley analyst Rob Enderle told AFP.

“This raises the possibility that things will end amicably, even if Microsoft ends up walking away.”

Microsoft is eager to merge online resources with Yahoo to take on Google, which dominates the lucrative Internet search advertising market that is expected to grow to 80 billion dollars annually worldwide in the next two years.

Yahoo's stock price leapt nearly seven percent to 28.67 in late trading as investors bet that Microsoft will raise its offer instead of “going hostile” and trying to oust Yahoo's deal-blocking board of directors.

Microsoft chief executiveSteve Ballmer told employees Thursday he would not pay “a dime above” what he thinks Yahoo is worth and they would know the next move in the takeover quest “in very short order.”

“I know exactly what I think Yahoo is worth and I won't go a dime above,” Ballmer said during an in-house exchange posted on the Internet, without specifying his self-imposed price cap.

Microsoft's chief financial officer, on the other hand, told analysts a week earlier that he was opposed to paying more for Yahoo.

“With the right circumstances it'll happen,” Ballmer is quoted as saying in a Wall Street Journal interview published Friday. “Without the right circumstances it won't happen.”

The two companies remained far enough apart on price to make analysts wary that a takeover deal is imminent, but negotiations raise the potential for them to make an alliance of another sort.

Microsoft and Yahoo might consider making an online advertising deal similar to the one Yahoo recently tested with Google.

Yahoo had Google handle targeting online ads on some of its pages in a trial run that confirmed Google does a better job of generating cash from “click-through” advertising targeted at Yahoo users.

An advertising deal with Google is something Yahoo “has in its back pocket” in case things turn nasty and Microsoft tries a hostile takeover, according to Gillis.

“Once you sit down you see there are more than two paths,” Enderle said of the promise of talks between Yahoo and Microsoft. “They might part ways on a takeover but it opens doors to other things.”

Even if Microsoft seals a takeover deal with Yahoo this weekend, it could take a year or more for it to be consummated given regulatory hurdles in Asia, Europe and the United States, according to Gillis.

“Even if we get a 35-dollar-per-share deal by Monday, this doesn't mean it's over,” he said. “It is the beginning of the next stage. We certainly hope it gets done for the Yahoo shareholders' sake.”

Dell on Friday said it has stopped shipment of two Vostro laptop models in Europe after discovering a faulty keyboard design with a few keys out of place.

A Dell customer in the U.K., who ordered the Vostro 1310, noticed that the bottom row of letters on the keyboard was shifted to the right. That's because the left Shift key is oversized and a new key, \, is placed between the Shift and Z keys, moving the entire row so that it doesn't comply with a traditional keyboard layout.

“This is not a US/UK layout issue, just a general monumental flaw,” wrote the U.K. customer in an online post, deliberately retaining spelling errors in other parts of his message to highlight the design problem.

A limited number of Vostro 1310 and 1510 laptops with the wrong keyboard layout were shipped in Europe in the middle of April, said Jennifer Davis, a Dell spokeswoman. The company has suspended further shipments of the laptop models until the problem is fixed, she said.

Dell will replace the keyboards for customers who have received the laptops with faulty keyboards, Davis said.

“Customers will be given a choice to receive the keyboard kit or have a tech [representative] come on-site,” Davis said. The new keyboard is easy to install, Davis said.

The laptops haven't shipped in other parts of the world, so other regions aren't affected by the glitch, Davis said.

ALBANY, N.Y. - Amazon.com is suing New York over a new law that requires out-of-state online companies to collect sales tax from shoppers in New York.

“We are challenging the constitutionality of the recently enacted legislation in New York,” Amazon spokeswoman Patricia Smith said.

Officials estimated the state would gain about $50 million by requiring Internet giants such as Amazon.com to collect state sales tax. New Yorkers, like residents of many states, are currently on an honor system to report their online spending when they file state tax returns.

The law applies to companies that don’t have a brick-and-mortar presence in New York but have at least one person in the state who works as an online agent — basically someone who links to a Web site and receives commissions for related sales.

Businesses with a physical presence in New York already collect the state sales tax on online purchases. The proposed law would apply to companies that have $10,000 or more in New York sales.

The suit argues the change unfairly targets Amazon, is overly broad and vague, and violates the commerce clause of the constitution because it imposes tax-collection obligations on out-of-state entities.

New York state has argued that the law closes a “tax loophole.”

Tom Bergin, a spokesman for the state Department of Taxation and Finance, said the change is a necessary update for modern times.

“Everyone in New York state either pays sales tax on articles that they buy or is required to pay sales tax on articles that they buy,” he said. “This is not a new law, this is just amending the law to bring some of the new technology — the Internet — into compliance.”

Bergin would not comment on the lawsuit.

Spam - the scourge of every e-mail inbox - celebrates its 30th anniversary this weekend.

The first recognisable e-mail marketing message was sent on 3 May, 1978 to 400 people on behalf of DEC - a now-defunct computer-maker.

The message was sent via Arpanet - the internet’s forerunner - and won its sender much criticism from recipients.

Thirty years on, spam has grown into an underground industry that sends out billions of messages every day.

Statistics gathered by the FBI suggest that 75% of net scams snare people through junk e-mail. In 2007 these cons netted criminals more than $239m (?121m).

Statistics suggest that more than 80%-85% of all e-mail is spam or junk and more than 100 billion spam messages are sent every day.

The majority of these messages are being sent via hijacked home computers that have been compromised by a computer virus.

Quick complaint

The sender of the first junk e-mail message was Gary Thuerk and it was sent to advertise new additions to DEC’s family of System-20 minicomputers.

It invited the recipients, all of whom were on Arpanet and lived on the west coast of the US, to go to one of two presentations showing off the capabilities of the System-20.

Reaction to the message was swift, with complaints reportedly coming from the US Defense Communications Agency, which oversaw Arpanet, and took Mr Thuerk’s boss to task about it.

Despite Mr Thuerk’s pioneering spam it took many years for unsolicited commercial e-mail to become a nuisance.

It took until 1993 before it won the name of spam - a name bestowed on it by Joel Furr - an administrator on the Usenet chat system.

Mr Furr reputedly got his inspiration for the name from a Monty Python sketch set in a restaurant whose menu heavily featured the processed meat.

The sketch ended with everyone in the restaurant, encouraged by a troupe of chanting Vikings, shouting: “Spam. Spam. Spam. Spam. Spam.”

April 1994 saw another pioneering moment in the history of spam when immigration lawyers Canter and Siegel sent a commercial spam message to more than 6,000 Usenet discussion groups.

The Canter and Siegel e-mail is widely seen as the moment when the commercialisation of the net began and opened the floodgates that led to the deluge of spam seen today.

Since those days spam has grown to be a nuisance and is now used by many hi-tech crime gangs as the vehicle for a variety of scams and cons.

“Spam is a burden on all of us,” said Graham Cluley, senior technology consultant at Sophos. “What’s worse is that a lot of spam is deliberately malicious today, aiming to steal your bank account information or install malware.”

The One Laptop Per Child Project appointed a new president and chief operating officer on Friday to run daily operations at the nonprofit effort, sending a signal that it could be recovering from the loss of top personnel over the past few months.

Charles Kane will move from the part-time role as chief financial officer to oversee the organization's operational matters and distribution of the XO laptop on a day-to-day basis. Kane will provide OLPC the leadership needed to deliver on its commitments to partners and governments, said Nicholas Negroponte in a statement.

Negroponte will “focus on fund-raising and promoting the project to governments worldwide,” OLPC said.

The new appointment could curb damage caused by the loss of important personnel over the past few months. In January, OLPC lost Chief Technology Officer Mary Lou Jepsen, who started an organization to commercialize parts of OLPC's technology, including the screen and battery. In February, Director of Security Architecture Ivan Krstić resigned to protest the organization's restructuring and “radical” change in goals.

Last month, Walter Bender, the president of software and content, quit to promote the use of open-source software in the face of OLPC's goal to load Windows XP on the laptop. Bender was said to be running the day-to-day operations of OLPC while Negroponte focused on fundraising and promotion of the project.

OLPC recently restructured into four departments– development, technology, deployment and learning– and the organization is now focusing on making the XO laptop more appealing to customers.

The organization is in negotiations with Microsoft to load Windows on dual-boot versions of the XO laptop, which is being marketed as a learning tool for children in developing countries. In an open letter, Negroponte criticized the development of Sugar, XO's user interface, and asked developers to stop bickering, unite and jointly develop a Windows user interface to make XO laptops more appealing to customers.

The letter drew anger from open-source developers writing applications for the Linux-based laptop, who called Negroponte's vision “vague” and “demoralizing” for the future of Sugar.

Negroponte needs to clarify his vision to deliver a more sophisticated product, Krstićwrote in an April blog entry.

If Sugar is a problem, Negroponte has no one but himself to blame, Krstić said. “Nicholas' recent claim of Sugar growing amorphously because it 'didn't have a software architect who did it in a crisp way' is similarly muddy: convincing him of the need for an architect is a battle Walter and I fought for months without success,” Krstić wrote.

Negroponte offered Krstić the spot of chief software architect, which was rescinded several weeks later “for reasons he refused to explain to anyone,” Krstić wrote.

Google and IBM committed to working more closely on cloud computing Thursday at IBM's Business Partnership Leadership Conference in Los Angeles. The companies said they were extending a joint research project that started last October.

“Cloud computing is the story of our lifetime,” Google CEO Eric Schmidt said. “Eventually all devices will be on the network.”

He was joined onstage by IBM CEO Sam Palmisano, who said the relationship marks a new avenue for Big Blue. “It is the first time we have taken something from the consumer arena and applied it to the enterprise,” he said.

Blurring Boundaries

Especially through its Docs and Apps online applications, Google is pioneering a consumer-facing cloud in which applications run and data is saved on Google's servers. On the business side, software as a service and hosted business applications are gaining increasing support.

While IBM and Google are currently in fairly distinct markets, Schmidt said the boundaries are rapidly blurring. “There's not that much difference between the enterprise cloud and the consumer cloud,” Schmidt said. There is one big difference, though. “The cloud has higher value in business; that's the secret to our collaboration,” Schmidt added.

“It's a really intriguing partnership,” said Charles King, principal analyst with Pund-IT, in a telephone interview. Google, with its young cofounders, is perceived as defining the “next wave of IT attitude and solutions,” King said, while IBM is the “oldest of the old wave.” But the companies actually have a lot in common, “not the least of which is a dedication to innovation and building superior research groups.”

Cloud and Plumbing

One other thing the companies have in common is competition with Microsoft, although IBM works closely with Redmond in certain areas. “The key issue here is exactly what place does the operating system have in the future of desktop computing,” King said. “As the Web becomes more ubiquitous and high-speed Internet connections become widespread, there are new opportunities in Web-based applications and software as a service.”

As much as Google has popularized the notion of cloud computing, it's big-iron companies like IBM that have created the enabling infrastructure. “The whole emerging class of Web 2.0 and cloud-computing applications and services requires a very, very robust infrastructure to support them,” King said. Without these strong underpinnings, cloud computing is like a fancy apartment building without plumbing or electricity, he added.

Thus, IBM and Google can make gains by “combining their forces to extend hardware and software infrastructure,” King said. “Google needs to figure out a way to extend their reach into business. They have the ambition and the product assets, but they haven't figured out how to reach into business.”

While large companies frequently announce cooperative initiatives, only to have them wither on the vine, this agreement will likely bear fruit, King said. “The fact they're still talking about this a year after the cloud-computing project codeveloped makes me optimistic. They're not the two companies you would think would work together, but they're both engineering-centered organizations,” he said.

LOS ANGELES - It’s safe to say Jeremy Snyder gets a charge out of the two-seat Tesla Roadster whenever he pulls one off the lot — and not because it’s equipped with an all-electric engine.

As he pulled one of the sleek new automobiles down a side street Thursday and put the pedal to the metal, its lithium-ion battery-powered engine didn’t give off sparks. It just emitted a powerful hum, something like a much quieter version of a jet taking off.

“Accelerate pretty good?” asked Snyder, head of client services for Tesla, who knew the answer.

“I call it a turbine sound,” he said of the sound. “Because it’s an electric motor it’s got 100 percent torque all the time. So it just pulls you like when you’re taking off in an airplane.”

After several years of development, the Roadster — with sleek lines like a Ferrari or Porsche and a sticker price of $109,000 — officially moves from the drawing boards to the market next week when Tesla’s first store opens. It’s near the University of California, Los Angeles, in the city’s toney Westwood neighborhood where Beverly Hills, Brentwood and Hollywood practically intersect.

“Because it’s Hollywood and glamorous, this is the flagship store,” Snyder said.

The next store is to open in a couple months near Tesla’s headquarters in the Silicon Valley city of San Carlos, where the car was developed with venture capital of more than $40 million from such investors as Google Inc. founders Larry Page and Sergey Brin. More stores are planned for Chicago, New York and other cities by early next year.

Although a fully loaded model can set a buyer back as much as $124,000, that’s still cheap compared with a high-end Ferrari. And its 6,831-cell lithium-ion battery pack gives off no emissions.

The car goes from 0 to 60 mph in just under four seconds and tops out at 125 mph. It goes 225 miles on one charge and can be fully recharged in 3.5 hours, which Tesla officials say should allow most people to drive it to work and back and recharge it at night like a cell phone.

Driving from Los Angeles to San Francisco, however, would require stopping in, say, Fresno and plugging its adapter cord into a motel room wall socket.

Some critics have expressed concerns about the durability and safety of the lithium-ion battery, which weighs about 1,000 pounds, more than a third of the entire weight of the 2,700-pound Roadster, whose body is made up of carbon fiber materials. Tesla officials respond that the car has passed all required safety tests. They say the battery should last for about 100,000 miles of driving.

The company, formed in 2003, is named for inventor Nikola Tesla, an early pioneer in the field of electricity. The people buying its cars so far, said national sales manager Doreen Allen, are celebrities, early adopters, wealthy people and environmentalists.

Tesla officials say Gov. Arnold Schwarzenegger, actors George Clooney and Kelsey Grammer and musicians Will.i.am and Flea have each ordered a Roadster.

It will be awhile before anyone can walk in and drive a Tesla home off a lot, however.

“Delivery is running about 15 months,” Allen said, adding the company was surprised by the demand.

Tesla began taking orders last year for the 600 Roadsters it planned to produce in 2008 and had sold all of them by October, Allen said. The first ones began rolling off the production line six weeks ago, and Allen said all of the 2008 models should be delivered to their owners by March of next year. The first ones should begin going out the door later this month.

Meanwhile, orders are being taken for 2009 models, with plans calling for production of about 1,500 cars.

Eventually Tesla also plans to produce cheaper, family vehicles.

“There’s a model in the works right now, a five-passenger sedan that will be styled comparable to the roadster but a lot roomier to accommodate families, and that is slated for 2010,” Snyder said.

San Francisco - Tibco Software plans a number of technology enhancements based on its ActiveMatrix service platform for SOA, including accommodations for IBM's WebSphere application server and the Ruby programming language.

Detailing improvements planned for the next 12 to 18 months, Tibco's Raghu Thiagarajan, director of product management and strategy, cited the planned release of an ActiveMatrix management agent for WebSphere. This will provide the ability to manage policies on the WebSphere platform from within the application server as opposed to outside the application server. This offers security benefits, Thiagarajan said at the Tibco User Conference (TUCON) in San Francisco on Thursday afternoon.

Via the company's Virtualized SOA strategy, the company plans to support ActiveMatrix inside of an application server to bolster Java support as well. “The main benefit of that would be the ability to make your EJBs (Enterprise JavaBeans) much more transport- and location-independent,” Thiagarajan said.

If an EJB is created as a Web service, it is a concrete service tied to a specific location. “If you virtualize it using ActiveMatrix, you get to move it around very efficiently,” said Thiagarajan. Policy management can be built right into the application server, he said.

To bolster Ruby development, Tibco plans to add Ruby as a service type supported on ActiveMatrix. “We see Ruby as one of the key service types of the new breed of developer,” Thiagarajan said.

Currently, Tibco supports Java and .Net service types, while Ruby developers lack a deployment environment, he said.

“ActiveMatrix provides a deployment environment for Ruby as well,” said Thiagarajan.

SOA enablement for C++ as native container for ActiveMatrix also is eyed. “The point is that you should be able to take C++ code and be able wrap to it in an ActiveMatrix container,” said Thiagarajan.

Extension of SCA (Service Component Architecture ) capabilities to Microsoft's Windows Communication Foundation Web services platform is eyed. SCA is an SOA specification for transformation of IT assets into reusable services. WCF services could be composed in SCA.

“Right now, SCA is kind of a Java standard,” Thiagarajan said.

WASHINGTON - A federal appeals court on Friday said regulators were reasonable in sticking to a June deadline that requires Sprint Nextel Corp. to vacate some wireless channels that will be used by public safety agencies.

The Federal Communications Commission is requiring Sprint, the nation’s third-largest wireless carrier, to clear certain channels by June 26, a move designed to eliminate radio interference with thousands of public safety agencies across the country. The company would essentially swap spectrum with the public safety agencies.

The deadline was set three years ago in an initial order. But last September the FCC, unhappy with the slow progress, told Sprint it must clear out regardless of whether public safety agencies are ready to move out of their spectrum.

Sprint, which said the FCC’s new position was unreasonable, claimed if regulators enforce the deadline it would cripple the network. The FCC has not established any fines and telecommunications analysts said they expect the deadline would be extended.

Sprint, which has spent more than $1 billion in its spectrum relocation efforts so far, said the initial 2005 order considered a simultaneous swap with public safety agencies. But the FCC argued in September that the deadline applies to Sprint regardless of whether public safety agencies are ready to swap.

Reston, Va.-based Sprint, which has operational headquarters in Overland Park, Kan., appealed to the U.S. Court of Appeals for the D.C. Circuit, which ruled that the FCC’s June 26 deadline was reasonable.

“That deadline — which was never premised on a synchronized spectrum swap — has not changed,” according to the court’s ruling. “What has changed are the implications of the deadline: it now appears Nextel might have insufficient spectrum come June because numerous … (public safety) licensees won’t be ready to relocate.”

The court said if Sprint vacates those channels then it’s likely it will immediately reduce radio interference that public safety agencies have experienced.

Jessica Zufolo, an telecom analyst with Medley Global Advisors, said in a note that the court’s decision is a “significant defeat” for Sprint, but expects the FCC will extend the deadline by at least another six months.

Shares of Sprint dipped 15 cents to $7.87 in afternoon trading.

The Chinese government is demanding that U.S.-owned hotels there filter Internet service during the upcoming Olympic Games in Beijing, U.S. Senator Sam Brownback has alleged.

The Chinese government is requiring U.S.-owned hotels to install Internet filters to “monitor and restrict information coming in and out of China,” Brownback said Thursday. “This is an insult to the spirit of the games and an affront to American businesses,” he said. “I call on China to immediately rescind this demand.”

Brownback, a Kansas Republican, made the allegation during a Thursday press conference on China's human rights record. Brownback joined six other lawmakers and several human rights groups in criticizing China's human rights record.

Brownback said he got the information on Internet filtering from “two different reliable but confidential sources.” Brownback's media office didn't immediate return a phone call on Friday asking for more details.

A spokesman for the Chinese embassy in Washington, D.C., also did not immediately return a phone call seeking comment. Spokeswomen for two U.S. hotel chains popular in China, Hyatt and Starwood, were also not immediately available.

Asked Thursday about Brownback's allegations, U.S. State Department spokesman Tom Casey said he wasn't aware of those specific requests from the Chinese government.

“Certainly, we have been concerned by a number of efforts to restrict people's freedom of information,” Casey said at a news conference. “We would hope that people in China would be able to have access to all forms of information that are out there, including those that are available online, and that would apply to those who are full-time residents of China as well as those who might be visiting for the Olympics.”

The State Department has a continuing dialog with China about freedom of expression, Casey said.

The Olympics are scheduled for Aug. 8 to 24.