Facebook and Yahoo settle patent and form ad alliance

Yahoo had sued the social network in March claiming 10 of its intellectual properties had been infringed.

Facebook subsequently bought 750 patents from IBM and counter-sued. It later bought hundreds more patents from Microsoft to strengthen its defence.

The firms said they would now cross-license innovations from each other and collaborate on future projects.

Yahoo's u-turn

The AllThingsD blog - which broke the news ahead of the official announcement - reported that Yahoo's interim chief executive Ross Levinsohn had begun moves to resolve the dispute immediately after taking over from his ousted predecessor.

It added that Facebook's chief operating officer Sheryl Sandberg soon became involved in the resulting negotiations.

A press release quoted Mr Levinsohn as saying: "We are excited to develop a deeper partnership with Facebook, and I'm grateful to Sheryl and her team for working hard together with our team to develop this dynamic agreement... Combining the premium content and reach of Yahoo as the world's leading digital media company with Facebook provides branded advertisers with unmatched opportunity."

Ms Sandberg added: "Yahoo's new leaders are driven by a renewed focus on innovation and providing great products to users. Together, we can provide users with engaging social experiences while creating value for marketers."

Counting the cost

The move may help secure Yahoo's top job for Mr Levinsohn. He had been competing for the role against Hulu's boss Jason Kilar.

But, the video streaming service announced Mr Kilar had "graciously declined" to be considered for the role shortly after news of the patent agreement leaked.

Although no money appears to have exchanged hands, the row has still proven to be expensive.

Facebook had paid Microsoft $550m (£355m) to buy 650 patents and license a further 275. It has not disclosed the cost of its deal with IBM, although the tech site Cnet has suggested the sum was $83m.

Apple’s share price iRational?

THE new iPad, which was released on March 16th, is the most popular version of the tablet yet. Apple sold 3m of them in just four days. But some buyers took to discussion forums to report that it has a tendency to heat up. A similar debate exists about Apple’s stock.
The company’s share price has risen by 83% in the past year, and by almost 50% so far in 2012. Apple is now easily the largest company in the world by market capitalisation, at some $565 billion. It looms over Exxon Mobil, which is worth a mere $408 billion. Since the start of this year it has added $187 billion to its valuation, roughly equivalent to the entire market caps of companies like Procter & Gamble, Johnson & Johnson and Wells Fargo. Apple is larger than the American retail sector combined.
It accounts for 4.5% of the S&P 500 and 1.1% of the global equity market (see chart 1). Some bank analysts have started to report America’s corporate earnings without Apple, because including the firm so skews results. Fourth-quarter earnings are expected to have risen by 6.7% from the prior year for companies in the S&P 500, but by a much more modest 3.6% if Apple is excluded, according to UBS.
Around a third of all hedge funds own it, including big names like SAC Capital and Greenlight. Some have made very big bets. Citadel’s $5.1 billion stake in Apple (as of December 31st) accounted for around 12% of its equity portfolio. Many hedge funds that have done well in the past year owe much to this single position.
The stock’s gains this year have not only boosted the spirits of shareholders but also brightened the whole equity market. Apple is responsible for more than 10% of the S&P 500’s rise this year (see chart 2), and for 39% of the NASDAQ 100’s gains. No other stock has ever grown to have such a significant impact on an index so quickly, says Howard Silverblatt of Standard & Poor’s, a ratings agency.
The share price keeps soaring. On March 20th, a day after Apple announced it would use some of its cash hoard (estimated at $97.6 billion at the end of 2011) on a quarterly dividend and a $10 billion share buy-back, its shares closed at a record high of $605.96. This is the first time in 17 years that Apple will pay a dividend. Dividend funds, which had not considered investing in Apple before, could pile in, potentially pushing the price higher still.