3 of This Week's Biggest Surprises
Say what you want about the tech sector, but it's never boring. Any given week will keep tech investors flooded with product announcements, earnings surprises, and crazy strategy shifts that absolutely nobody saw coming.
These are three of the most shocking pieces of tech news this week.
1. Common sense prevails
Red Hat was a busy bee near the end of the week. First it published fourth-quarter results that left investors scratching their heads overnight, and then the company helped a friend in need.
Cloud-computing expert Rackspace Hosting was sued on charges of patent infringement last year. Licensing outfit Uniloc claimed that Rackspace's virtual machines trampled all over its description of how to do math on floating-point numbers more efficiently. Some of the machines involved run Red Hat Linux, and Red Hat stepped in to defend its customer. The company has after all agreed to indemnify its paying customers against intellectual-property claims.
On Thursday morning, Judge Leonard Davis of the Eastern District Court in Texas found Red Hat's arguments persuasive and sent Uniloc home empty-handed. Judge Davis noted that Uniloc was trying to patent a mathematical formula, making Claim No. 1 "unpatentable even if it is an improvement" over existing methods, and nothing in the other claims could overcome this fatal flaw.
I would agree with Judge Davis that such patents are dangerous mistakes by the Patent Office. They "would cover vast end uses, impeding the onward march of science," he wrote.
Red Hat and Rackspace get to continue processing complicated numbers with the rounding step taking place before or after any mathematical operations
In a perfect world, this news wouldn't belong in a rundown of major shocks. In this world, however, such a swift and decisive smackdown of patently offensive legal tactics is pretty rare. That's particularly true in the Eastern District of Texas, where patent wranglers swarm to a generous helping of plaintiff-friendly judges and juries.
A golf clap is in order for the esteemed judge. Eastern Texas may not be a favorite venue for patent plaintiffs much linger.
2. Facebook in your pocket?
Remember the last time Facebook decided to make a phone? Me, neither. The 2011 handset sold like frozen molasses and was canceled just weeks after its introduction. Here's a picture to remind you what you missed:
Well, Facebook seems ready to try again. The company announced a get-together for April 4, where another Android-based product or service will see the light of day.
Nobody knows exactly what Facebook will present on Thursday, but it seems reasonable to guess at a custom Android version or even an entire hardware-and-software package with Essence of Facebook drizzled all over. An undated version of Facebook's Android app would be a serious letdown, given the press attention this event will get.
This device (or Android-based software platform, perhaps) could be a game changer if it replaces regular voice calls with the voice chatting that's built into Facebook's messaging system nowadays. That feature would make voice lines obsolete while placing more importance on data plans. Keep an eye out for that possibility.
Then again, both Apple and Google already sport voice-enabled messaging apps that can be used over mobile data connections, not to mention a host of third-party alternatives. But you don't see the industry turning upside down because you can voice-chat over Facetime or Google Chat, do you? A Facebook version of the same thing would just be another convenient option in a sea of me-too options. The only way Facebook would really make waves is if its products did away with old-fashioned voice lines altogether and forced us to tap into its own messaging system instead.
I didn't expect another Android-themed Facebook product, given the abject failure of the first try. Now the company gets another chance to shock me -- Facebook will be back in this column if Thursday's announcement actually makes a difference.
3. Stop for this earnings beat
GameStop closed out the short week with a 5.8% gain on Thursday. As it turns out, rumors of GameStop's death have been somewhat exaggerated.
The company beat analyst expectations with earnings of $2.16 per share on $3.6 billion in revenue. The core business of dishing out game discs for traditional gaming consoles was weak, but GameStop made up for that weakness with a 60% year-over-year jump in digital sales. Mobile games accounted for $100 million of the quarter's revenue and may soon become a significant factor in the company's overall results.
So GameStop is adapting to a new era in video gaming. Even so, the company pins expectations of second-half strength on another helping of the Grand Theft Auto series as well as a new Sony PlayStation console system slated for a fourth-quarter release. The high end of management guidance for the full year assumes that Microsoft will introduce the next Xbox system in time for the holidays. So GameStop is still clinging to traditional gaming as hard as it can.
GameStop shocked analysts and investors this quarter. The heavy reliance on traditional console gaming makes me wonder how much longer the company will stick around, though. A wholesale strategy shift seems to be in order, and none has been announced. Add GameStop to your Foolish watchlist and keep an eye on this space.
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The article 3 of This Week's Biggest Surprises originally appeared on Fool.com.Fool contributor Anders Bylund owns shares of Rackspace Hosting and Google, but he holds no other position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+.The Motley Fool recommends Amazon.com, Apple, Facebook, Google, and Rackspace Hosting and owns shares of Amazon.com, Apple, Facebook, GameStop, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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