Google's scare on Wall Street

It was already a wild day on Wall Street. Then it got even wilder today on the Nasdaq for Google investors.

At first, all was right with the tech world. Stocks were swimming in a sea of green, recovering from a bloody red Monday. Google was trading up slightly most of the day, staying in a fairly narrow but very respectable range.

Then suddenly in the final few minutes, the stock began to soar and plummet like an out-of-control yo-yo. Google Finance lists the day's high as $488.43 and the low as $25.80.

Felix Salmon's reaction: Say what? We knew we were in the middle of a financial meltdown, but come on.

Nasdaq's surveillance arm got on the case at, ahem, Internet speed. It turns out "erroneous orders" that were routed to Nasdaq from another market center had triggered the plunge, a Nasdaq spokesman said in an e-mail. He did not say which exchange was responsible.

Nasdaq canceled all trades at or above $425.29 and trades at or below $400.52 that were executed between 3:57 and 4:02 EDT. Nasdaq set the closing price at $400.52, which was a 5% gain after Monday's 12% loss. The decision cannot be appealed, he said.

A Google spokesman declined to comment.

Wiping out trades is not a happy business at Nasdaq. It's both rare and embarrassing. But at least fund managers' hearts are no longer in their throats. Google's closing price is far below the company's all-time high. But today investors will take it and like it.

-- Jessica Guynn

Photo: A passerby in Times Square checks out the Nasdaq Marketsite studio. Credit: Julie Jacobson / Associated Press

Electronic Arts pulls plug on Tiberium game*

Electronic Arts Inc. today canceled Tiberium, a spinoff of its popular Command & Conquer franchise of shooter games, and said it would lay off an unspecified number of employees at its Playa Vista office.

"The game was not on track to meet the high quality standards set by the team and by the EA Games Label," said EA spokeswoman Mariam Sughayer.

EA declined to say how many workers would be lose their jobs or how many employees had worked on the project. Sughayer said the Redwood City, Calif., developer would strive to place most of the affected workers into other EA projects. "This is not about cutting back financially," she said. "We still have tons of positions open, and we're hiring throughout the company."

Earlier this year, EA pushed back the launch of Tiberium to 2009. After spending more than a year developing the game, EA said it decided to cut its losses rather than put out a mediocre product that could mar the company's recent efforts to revitalize its reputation for producing high-quality titles in an increasingly crowded market for video games.

"There were fundamental problems with the design of the game, which the team struggled to correct," Sughayer said. "In the end, we didn't feel we can reach a higher level of quality with the time and resources left."

EA's shares gained 99 cents to $36.99 today after slipping $3.22, or 9%, on Monday amid the general stock market avalanche, especially among tech companies.

"The Command & Conquer brand has gotten stale over the years," said Jesse Divnich, director of analytical services at Electronic Entertainment Design and Research in San Diego, who said sales of the series had been dwindling.

Michael Pachter, an analyst with Wedbush Morgan Securities, said the decision to cancel a major title was a departure from previous practice at EA. "The old EA would have shoveled it out anyway," he said. "They're showing that they have the discipline to not throw good money after bad."

-- Alex Pham

Tiberium image by Electronic Arts

* Updated with comments from analysts.

EBay bids for future with Andreessen joining board

Call it a big win for online auctioneer EBay. The San Jose company announced today that Netscape Communications co-founder and all-around golden geek Marc Andreessen had joined its board of directors.

In a statement, EBay Chief Executive John Donahoe said Andreessen's insights would be invaluable as the company seeks to "drive further innovation on our platform, invest in growth opportunities and develop technology that will further benefit our customers, build powerful communities and enhance e-commerce."

Translation: EBay is counting on Andreessen's mojo to help outmaneuver Amazon and Google, which have been siphoning some of its merchants. Things are only bound to get tougher with the economy preparing for what Andreessen last year predicted would be a financial "nuclear winter."

Andreessen, who through a representative declined to comment, pioneered today's Internet as the co-creator of the first widely used browser. He pulled off another major coup with Opsware (formerly known as Loudcloud), which he sold to Hewlett-Packard for more than $1.6 billion in 2007.

He's currently working on social networking site Ning. He's also a widely followed blogger and investor. He has invested in Digg, Del.icio.us, Twitter, Qik, LinkedIn, Meebo and Scribd, among others. Earlier this year, he joined the board of social networking phenom Facebook.

-- Jessica Guynn

Andreessen photo by Randi Lynn Beach / Special to The Times

Clearspring buys AddThis Web sharing service

Clearspring Technologies says it just bought the biggest little thing on the Web.

The McLean, Va.-based company, which connects publishers and advertisers to audiences, is trying to generate more traffic by buying AddThis for an undisclosed amount. AddThis, from a Princeton, N.J. company of the same name, puts those little icons for Digg, Facebook, MySpace and other online services on hundreds of thousands of websites, including Time magazine and TechCrunch. So if you're reading a story you want to submit to Digg or post on your Facebook page, you click the icon.

Whether buying AddThis will eventually help Clearspring make money is not yet clear.

Ted Leonsis, a former AOL big shot who serves as chairman of the Clearspring board, and Clearspring Chief Executive Hooman Radfar say the deal adds up. Clearspring makes it easy for consumers to move content between websites. AddThis makes it easy for consumers to save and share Web pages. Clearspring estimates that together the two services will reach more than 200 million users.

"We view social media, as does the industry, as the next big thing where the consumers get to control their media consumption," Leonsis said.

Clearspring should have plenty of runway. Since it was founded in 2004, the company has raised more than $35 million from such investors as former AOL chieftain Steve Case and New Enterprise Associates. And, Leonsis says, its customers already include NBC, Paramount and the NBA.

An example of Clearspring technology: Leonsis' project, SnagFilms, a new online service that allows anyone to embed documentary films on blogs, websites or social networking pages and show them for free. Leonsis, who is also a documentary film producer, took over AOL's TrueStories service and turned it into SnagFilms.

-- Jessica Guynn

MPAA vs. RealNetworks

How funny is this?: The MPAA is suing RealNetworks for releasing a DVD copying program that replaces the ineffective DRM on Hollywood movie discs with a DRM that might actually work. Seems like the wrong people are bringing the lawsuit (download a copy) -- it should be the consumer foolish enough to have paid for a crippled piece of software. Nevertheless, the fact that RealDVD enables people to make a copy of standard-definition discs that they do not own, no matter how hobbled that copy may be, is enough for Hollywood to spring into action. That's because consumers might use RealDVD to make permanent copies of movies they borrow from the library or rent from Netflix, costing Hollywood untold billions of dollars. In theory, of course. 'Cause you know, people often run out to Target to buy a movie they just rented. Or something like that.

I'd planned to skip over the legal issues here, but I have to ask: What were Real's lawyers thinking?!? Didn't they read the DeCSS decisions? The 321 Studios ruling? Did they really bet the farm on the Kaleidescape case, which didn't involve the Digital Millennium Copyright Act (the Terminator of copyright laws)? Regardless of whether Real has a leg to stand on in court, the fact that a company like that would create a product like RealDVD speaks to the market opportunity. Increasingly, movie fans are becoming interested in storing their movie collections on a home computer, just as they've done with their music collections. Some studios are starting to accommodate this and include rippable files on their DVDs, but these, too, are wrapped in a DRM that can present compatibility issues for their customers. But the vast majority of movies released on disc can't be copied onto a PC, just as most downloadable movies from Hollywood can't be burned onto a DVD that can be played on a standard DVD player. The IT industry has been pushing a proposal that would enable consumers to make a limited number of copies of the discs they buy, without fueling a runaway rent-and-rip problem, but the studios have balked at the details. Sigh. Meanwhile, a growing number of consumers resort to illegal copying programs that place no limits on ripped files. Eventually, Hollywood is going to have to offer a solution that works easily for consumers, or they'll keep turning to companies like RealNetworks for help.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

RealNetworks, Hollywood studios sue each other over DVD copying software*

The six major Hollywood movie studios sued RealNetworks today, asking a federal court in Los Angeles to stop the digital media company from distributing new software that they claim allows consumers to copy movies illegally.

RealNetworks also sued, asking a court to declare that the company's new RealDVD software program, which allows users to copy DVDs to their computer hard drives, is legal and complies with the DVD Copy Control Assn.'s license agreement.

The software, which was announced earlier this month, goes on sale today for $30 at www.realdvd.com. The company's claim that it is the first software program to give consumers a simple and legal way to copy movies and TV shows from DVDs onto their computers now seems in doubt.

Although the company said its product is for copying movies one owns, nothing stops someone from using it to copy rented DVDs. The studios said that the software allows someone to "rent, rip and return" a movie from a rental store such as Netflix or Blockbuster.

The studios are seeking a temporary restraining order to ban the sale of RealDVD, which they say illegally bypasses the copy protection built into DVDs.

"RealNetworks' RealDVD should be called StealDVD," Greg Goeckner, general counsel for the Motion Picture Assn. of America, said in a statement.  “RealNetworks knows its product violates the law and undermines the hard-won trust that has been growing between America’s movie makers and the technology community. "

In its own statement, RealNetworks defended its software, saying "it does not enable users to distribute copies of their DVDs."

"RealNetworks took this legal action to protect consumers' ability to exercise their fair-use rights for their purchased DVDs," the company said. "We are disappointed that the movie industry is following in the footsteps of the music industry and trying to shut down advances in technology rather than embracing changes that provide consumers with more value and flexibility for their purchases."

* You can download a PDF of the MPAA lawsuit here, and the RealNetworks lawsuit here.

-- Michelle Quinn and Dawn C. Chmielewski

Photo: The Hollywood sign. Credit: Don Ryan / Associated Press
     

Around the Web 9.30.08: Security holes, Web celebs and gaming the App Store

-- Move over Niko Belic. Here comes Sackboy. Wired

-- Princeton researchers find a security hole on websites that would let hucksters transfer money out of bank accounts. Slashdot

-- Game on. Developers engage in AppStore optimization. Touchmeme

-- Business Week names this year's 25 top Web celebs. BW

-- Is Nintendo introducing a pedometer to its Wii lineup? Joystiq

-- WiMax fails road test. InfoWorld

-- Facebook serves up a new motto alongside a new iPhone App. TechCrunch

-- Wal-Mart wins an AC/DC Rock Band exclusive. New York Times

-- Alex Pham

Sackboy photo by Media Molecule and Sony Computer Entertainment of America

Apple stock tumbles on worries about consumer belt-tightening

Apple's shares plunged almost 18% today, the largest one-day drop in eight years, after two brokerage firms predicted that consumer belt-tightening would hurt sales of the company's Mac computers.

The stock markets were sharply down today on worries about the fallout from the House's rejection of the $700-billion bailout plan, but Cupertino, Calif.-based Apple's shares took a much steeper dive. They fell $22.98 to $105.26, a 52-week low.

RBC Capital Markets analyst Mike Abramsky and Morgan Stanley analyst Kathryn Huberty each cut their ratings on Apple's stock and predicted slowing earnings growth for the current quarter and fiscal year, which end Tuesday. Abramsky said that a recent RBC survey found a drop in the number of consumers intending to buy Macs and that "a worsening consumer spending environment" would hurt Apple. Huberty said the computer industry's brightest spot would be in PCs that cost less than $1,000 -- a market that Apple largely ignores.

The sell-off triggered a debate over how vulnerable Apple is to declining consumer confidence. Historically, even as they cut back on buying cars or other big-ticket items, consumers keep buying electronics through economic downturns, said Nathan Safran, JupiterResearch's digital home analyst.  "People don't view buying a computer or an iPod as a large purchase, and they are passionate about the consumer electronics they bring home," he said.

But other analysts said Apple's fate, and the fate of all consumer electronics companies, depends on how badly people are hurt if the economy contracts in a big way.  "No one is immune," said Shaw Wu of American Technology Research. "What I’m hearing from the distribution chain is that while people didn’t stop buying Macs, iPods and iPhones, they are opting to buy the lower end. At some point, we worry that even that is impacted."

Apple might be better able to weather tough economic times than other consumer electronics companies  such as Sony and even Best Buy, the giant consumer electronics retailer. Trends that have worked in Apple's favor -- the popularity of the Mac with high school and college students, the push into the corporate world and the opening of Apple stores internationally -- will probably continue even in a downturn.

"They can’t continue to grow at the pace they have grown at, but they will continue to gain share," said Andy Hargreaves of Pacific Crest Securities.

As Apple's stock fell today, Michelle Leder at footnoted.org reminded us that two months ago, Apple used the word "depressed" in a regulatory filing to describe the economy. The stock then was trading around $160.

-- Michelle Quinn

Photo: Consumers in an Apple store in New York. Credit: Andrew Harrer / Bloomberg News

Mattel says it will appeal Scrabulous ruling

Mattel, which owns the international rights to Scrabble, said today it would appeal last week's court ruling in India that the Scrabulous online word game did not violate Mattel's copyrights.

The court did, however, say Scrabulous infringed on the El Segundo toy company's Scrabble trademark, handing both parties a mixed victory.

"Clearly, we’re pleased with the trademark decision in India regarding Scrabulous," Mattel spokeswoman Julia Jensen said. "We disagree with the ruling on the copyright portion of the decision and plan to appeal."

Jensen noted that the court's jurisdiction does not reach outside India, although Mattel has so far filed suit only in that country.

Mattel first sued the creators of Scrabulous, Indian brothers Jayant and Rajat Agarwalla, in February. Hasbro, which owns the rights to Scrabble in North America, filed its Scrabulous lawsuit in July, prompting the Agarwallas to remove their popular game from Facebook and replace it with a new version called Wordscraper.

Until recently, some players were still able to access the old version on a website called Scrabulous.com, which the brothers took down and replaced with a new site, Lexulous.com.

-- Alex Pham

Images courtesy of RJ Softwares

Around the Web 9.29.08: WiMax goes up, Apple goes down, 'Fringe' goes way out

-- Apple shares plummet in early trading on two analyst downgrades. Tech Trader Daily

-- Apple risks alienating software developers if it doesn't start explaining why it's rejecting some iPhone programs they make and turning the App store into more of a free market. Macworld

-- New software turns your PC into a TiVo. CNet

-- Venture capitalists and start-ups won't be immune to the financial markets' pain. TechCrunch

-- The Web offers a treasure trove of insight into the thinking and values of people called for jury duty. Los Angeles Times

-- This year is on track to be the worst for initial public offerings since 1974. San Francisco Chronicle

-- WiMax, the great hope for mobile broadband, begins its first test today in Baltimore. Sprint calls its new service Xohm. USA Today

-- Weird science: The Fox TV show "Fringe" busts past the limits of science and technology. USA Today

-- Michael Moore's "Slacker Uprising," the first major feature film to be released for free online, is burning up the Web. Wired

-- Mobile malware? As many phones become more like PCs, virus and spyware creators see new opportunities for mischief. Mercury News

-- Chris Gaither

Photo: A scene from "Fringe," the Fox science fiction show. Credit: Ben Mark Holzberg / Fox Broadcasting