rivalry

Video: Angel Investor Dixon Would Have Preferred IPO by Skype

by on May 14, 2011

May 13 (Bloomberg) — Chris Dixon, co-founder of Hunch Inc. and an angel investor, talks about the rivalry between Google Inc. and Facebook Inc., Microsoft Corp.’s agreement to buy Skype Technologies SA and the outlook for the technology industry. Dixon talks with Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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Video: Angel Investor Dixon Would Have Preferred IPO by Skype

Harrah’s, Hard Rock Compete as East Europeans Put up $8 Billion for Casino

by on June 2, 2010

By James M. Gomez and Radoslav Tomek (Corrects to make clear developers are investing in the project from first paragraph.) June 2 (Bloomberg) — On the verdant pastureland where razor wire used to divide Europe, local developers are placing an $8 billion bet at the roulette wheel. Harrah’s Entertainment Inc. and Hard Rock International Inc. have been selected as casino operators in a competition to overcome local opposition and open the first U.S.-style casino resort in eastern Europe. The aim is to draw gamblers from London to Moscow and counter shrinking revenue at home. The complexes would stand where the borders of Slovakia and Hungary, former Soviet satellites, and Austria, once the European Union’s frontier, converge. “You just have to look at eastern Europe,” Jan Jones , senior vice president for government relations at Harrah’s, the world’s biggest casino company, said by phone from Las Vegas. “It has hundreds of millions of people, but little gambling product. Their casinos are small, so we have an opportunity.” While it’s more than two decades since the demise of communism in the region, economic output lags behind the European Union average and companies are still betting on an increase in consumer spending. Governments also are keen to promote tourism, jobs and investment to help mitigate the worst economic climate since they embraced capitalism. ‘EuroVegas’ The proposed Harrah’s-branded 1.5 billion-euro ($1.85 billion) casino resort and the planned Hard Rock-branded 5 billion-euro “ EuroVegas ” complex would be about 20 kilometers (12 miles) from each other on the highway between Bratislava and Budapest, making them reachable from the main Vienna and Bratislava airports within 20 minutes. They would have hotels, convention centers, shopping and swimming pools. The “future of the gaming sector lies in bigger multifunctional resorts,” said Indrek Jurgenson , chief executive officer of Estonia’s Olympic Entertainment Group AS , which runs a chain of 67 smaller casinos from the Baltic to the Black Sea. The addition of a U.S. presence will “benefit the gaming market in the region,” he said in an e-mail. Pavel Lupandin , who covers Olympic for Swedbank AB in Tallinn, said the company will survive the rivalry as many gamblers may still opt for smaller, more sedate gaming. “If the U.S. companies give it a hard go, Olympic will lose a bit,” said Lupandin. “But overall, for Olympic itself, it won’t be a big problem. The concept is new, and there is a reason why this thing has not gone on in the past. It is cultural.” Social Ills The U.S. companies need to overcome opposition from residents, and clear legal and political hurdles. Some locals are concerned about drugs, prostitution and traffic, while others welcome prospects of new jobs in a downtrodden area. “There is a lot of it here already,” said Sona Belajova, 65, who was taking a smoke break outside her cramped grocery store as streetwalkers lounged alongside a road 50 yards away, looking for noontime business. “Nothing is going to stop it. I’m just saying it will bring a lot of jobs.” Angry residents gathered 110,000 signatures to force a debate in the Slovak Parliament, said petition organizer Eleonora Mackova. “It will be a huge catastrophe,” said Sarka Kamocsaiova, who lives on the fourth floor of a communist-built apartment building that faces the wheat fields where the casino would stand. “It will destroy my beautiful green view. And who needs more hookers around here?” Viera Kimerlingova , the deputy mayor of Bratislava’s Petrzalka district, which lies along the southern edge of the city and is one of the capital’s poorest neighborhoods, said the Harrah’s application lacks assurances that the developer will stick to the plan. “A mega-casino doesn’t have a place in Europe,” she said. ‘Nerves and Endurance’ Gabor Zaszlos, the head of the Slovak unit of TriGranit Development Corp., the developer for Harrah’s, said he hopes local government opposition will wane. “We are not giving up on this,” said Zaszlos. “This is all about nerves and endurance.” Harrah’s and Hard Rock need to counter a two-year slump at home, said Ben Bubeck , a director at Standard & Poor’s Corporate Ratings in New York. In Las Vegas, the No. 1 U.S. gambling destination, 2009 gaming revenue dropped 9.4 percent, while in Atlantic City, New Jersey, revenue fell 13.2 percent. “Americans are certainly pulling back on discretionary spending,” said Bubeck. “It’s not a good time in the U.S. right now. So they have to look abroad.” Economic Outperformance While eastern Europe also suffered from the global crisis that crimped consumer demand, Slovakia and Hungary will outperform the U.S. and the EU next year as a whole, according to the International Monetary Fund’s April outlook . Per-capita gross domestic product, as measured by purchasing-power parity, in the EU was 29,729 euros last year, versus 21,244 euros in Slovakia and 18,566 euros in Hungary. Jones at Harrah’s said in the end, it’s up to gambling executives to win over the skeptics. “We are not trying to take from the community, but give to them” jobs and investment, she said. “They’re afraid because they don’t understand. We have a responsibility to teach them.” To contact the reporters on this story: James M. Gomez in Prague jagomez@bloomberg.net Radoslav Tomek in Bratislava at rtomek@bloomberg.net

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Harrah’s, Hard Rock Compete as East Europeans Put up $8 Billion for Casino

Harrah’s, Hard Rock Compete as East Europeans Put up $8 Billion for Casino

June 2, 2010

By James M. Gomez and Radoslav Tomek (Corrects to make clear developers are investing in the project from first paragraph.) June 2 (Bloomberg) — On the verdant pastureland where razor wire used to divide Europe, local developers are placing an $8 billion bet at the roulette wheel. Harrah’s Entertainment Inc. and Hard Rock International Inc. have been selected as casino operators in a competition to overcome local opposition and open the first U.S.-style casino resort in eastern Europe. The aim is to draw gamblers from London to Moscow and counter shrinking revenue at home. The complexes would stand where the borders of Slovakia and Hungary, former Soviet satellites, and Austria, once the European Union’s frontier, converge. “You just have to look at eastern Europe,” Jan Jones , senior vice president for government relations at Harrah’s, the world’s biggest casino company, said by phone from Las Vegas. “It has hundreds of millions of people, but little gambling product. Their casinos are small, so we have an opportunity.” While it’s more than two decades since the demise of communism in the region, economic output lags behind the European Union average and companies are still betting on an increase in consumer spending. Governments also are keen to promote tourism, jobs and investment to help mitigate the worst economic climate since they embraced capitalism. ‘EuroVegas’ The proposed Harrah’s-branded 1.5 billion-euro ($1.85 billion) casino resort and the planned Hard Rock-branded 5 billion-euro “ EuroVegas ” complex would be about 20 kilometers (12 miles) from each other on the highway between Bratislava and Budapest, making them reachable from the main Vienna and Bratislava airports within 20 minutes. They would have hotels, convention centers, shopping and swimming pools. The “future of the gaming sector lies in bigger multifunctional resorts,” said Indrek Jurgenson , chief executive officer of Estonia’s Olympic Entertainment Group AS , which runs a chain of 67 smaller casinos from the Baltic to the Black Sea. The addition of a U.S. presence will “benefit the gaming market in the region,” he said in an e-mail. Pavel Lupandin , who covers Olympic for Swedbank AB in Tallinn, said the company will survive the rivalry as many gamblers may still opt for smaller, more sedate gaming. “If the U.S. companies give it a hard go, Olympic will lose a bit,” said Lupandin. “But overall, for Olympic itself, it won’t be a big problem. The concept is new, and there is a reason why this thing has not gone on in the past. It is cultural.” Social Ills The U.S. companies need to overcome opposition from residents, and clear legal and political hurdles. Some locals are concerned about drugs, prostitution and traffic, while others welcome prospects of new jobs in a downtrodden area. “There is a lot of it here already,” said Sona Belajova, 65, who was taking a smoke break outside her cramped grocery store as streetwalkers lounged alongside a road 50 yards away, looking for noontime business. “Nothing is going to stop it. I’m just saying it will bring a lot of jobs.” Angry residents gathered 110,000 signatures to force a debate in the Slovak Parliament, said petition organizer Eleonora Mackova. “It will be a huge catastrophe,” said Sarka Kamocsaiova, who lives on the fourth floor of a communist-built apartment building that faces the wheat fields where the casino would stand. “It will destroy my beautiful green view. And who needs more hookers around here?” Viera Kimerlingova , the deputy mayor of Bratislava’s Petrzalka district, which lies along the southern edge of the city and is one of the capital’s poorest neighborhoods, said the Harrah’s application lacks assurances that the developer will stick to the plan. “A mega-casino doesn’t have a place in Europe,” she said. ‘Nerves and Endurance’ Gabor Zaszlos, the head of the Slovak unit of TriGranit Development Corp., the developer for Harrah’s, said he hopes local government opposition will wane. “We are not giving up on this,” said Zaszlos. “This is all about nerves and endurance.” Harrah’s and Hard Rock need to counter a two-year slump at home, said Ben Bubeck , a director at Standard & Poor’s Corporate Ratings in New York. In Las Vegas, the No. 1 U.S. gambling destination, 2009 gaming revenue dropped 9.4 percent, while in Atlantic City, New Jersey, revenue fell 13.2 percent. “Americans are certainly pulling back on discretionary spending,” said Bubeck. “It’s not a good time in the U.S. right now. So they have to look abroad.” Economic Outperformance While eastern Europe also suffered from the global crisis that crimped consumer demand, Slovakia and Hungary will outperform the U.S. and the EU next year as a whole, according to the International Monetary Fund’s April outlook . Per-capita gross domestic product, as measured by purchasing-power parity, in the EU was 29,729 euros last year, versus 21,244 euros in Slovakia and 18,566 euros in Hungary. Jones at Harrah’s said in the end, it’s up to gambling executives to win over the skeptics. “We are not trying to take from the community, but give to them” jobs and investment, she said. “They’re afraid because they don’t understand. We have a responsibility to teach them.” To contact the reporters on this story: James M. Gomez in Prague jagomez@bloomberg.net Radoslav Tomek in Bratislava at rtomek@bloomberg.net

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SAP Management Upheaval Pits Plattner Against Ellison in Market Share Spat

February 8, 2010

By Ragnhild Kjetland Feb. 9 (Bloomberg) — SAP AG Co-Founder Hasso Plattner may have a bigger challenge as he picks up his rivalry with Oracle Corp. — again. The 66-year-old supervisory board chairman, who’s also the company’s biggest shareholder, is assuming a greater management role at the world’s largest business-management software maker, helming what he said yesterday was an effort to “re-establish trust inside and outside” the company. The Walldorf, Germany-based company’s chief executive officer, Leo Apotheker , unexpectedly resigned on Feb. 7 after SAP’s board decided not to renew his contract that was set to expire at the end of the year. He was replaced by two co-CEOs. The board asked Plattner to advice the new managers on technology and product development, giving him a hands-on role seven years after he stepped down as co-CEO to take on fellow- billionaire Larry Ellison’s Oracle, which says it’s taking business away from SAP. “SAP is still a major actor but it has lost its positive contact to customers,” said Frank Niemann , a SAP software consultant at Pierre Audoin Consultants in Munich. “Hasso is a software guru, a little like the Bill Gates of Europe. He’ll work more on developing technology. He has a very clear understanding of what’s going on in the market. But he can’t force the company in a new direction. That’ll be a challenge.” Apotheker, 56, resigned amid customer and employee discontent, and a failure to boost revenue. He was replaced by board members Bill McDermott and Jim Hagemann Snabe . Both Snabe and McDermott have decades of industry experience, “but neither has been a CEO before and the relationship between them will be interesting and challenging,” said Ross MacMillan , an analyst with Jefferies & Co. in New York. ‘Happy Company’ That may mean a more significant role for Plattner, who in 1972 joined Dietmar Hopp to create SAP with three former colleagues from International Business Machines Corp. “For a public company, profit is everything, but in order to be profitable it must be a happy company, and I will do everything in my power to make us a happy company again,” Plattner said yesterday on a conference call with analysts and journalists, his first in seven years. The management change means SAP is acknowledging the “depths” of its current issues, said JMP Securities analyst Patrick Walravens in San Francisco. “These issues include a convoluted product strategy, loss of market share to Oracle,” as well as trouble adapting to selling software as an online-service, Walravens said. He has an underperform rating on SAP. Product Innovation SAP shares , which reached an all-time high of 71.58 euros in March 2000 — on Plattner’s watch — have since halved. They traded yesterday at 32.56, giving the company a market value of about 40 billion euros ($54.7 billion). Redwood City, California-based Oracle , the world’s second-biggest software maker, has a market value more than double that at $116 billion. Plattner and his two new co-CEOs need to increase software license sales, which dropped 28 percent in 2009 after rising for years. They will also have to improve relationships with clients, which were hurt by an attempt to elbow in an increase in the price of maintenance contracts, said Saverio Papagno , an analyst at AZ Fund Management SA in Luxembourg. “SAP should bring its focus back on product innovation, to avoid losing market share to competitors, rather than cost cuts,” he said. SAP, whose customers include McDonald’s Corp., General Motors Co. and Wal-Mart Stores Inc., slashed more than 3,000 jobs last year, its first such major cut since its creation, helping it beat its own forecast for operating margin. ‘Trim Exposure’ In the near term, the management changes may create turmoil and may backfire, some analysts said. It may slow things down, rather than speed things up as Plattner wants, they said. “These organizational changes tend to freeze activity inside the company, as everyone tries to grab and defend turf,” said Thomas Otter , a Gartner Inc analyst in Ladenburg, Germany. Otter said SAP, whose strategy has been “murky” recently, needs to have a “more compelling technological vision.” “Can this board deliver that? I just don’t know.” On the call yesterday, Plattner said there will be a change in management style, to a “flat” structure; that management will strive to implement “radical changes” when opportunities present themselves; and that changes will be communicated better externally and internally. Michael Nemeroff , an analyst at Wedbush Securities Inc. in New York is not convinced. He said investors should “trim exposure” to SAP until it becomes clear that the potential problems don’t run deeper. ‘Fresh Air’ “Major changes to SAP’s senior leadership could create significant near-term operational risk,” Nemeroff said. To be sure, some analysts called the management shakeup a welcome change. Snabe, currently head of product development, has been credited with improving the productivity in development. McDermott was the head of one of the “stronger sales forces in the software industry,” said Credit Suisse analyst Philip Winslow , in New York. Robert Jakobsen , a Silkeborg, Denmark-based analyst at Jyske Bank A/S said the two new co-CEOs could turn out to be a breath of “fresh air.” He said they will need to build a momentum for SAP inside and outside the organization, through better customer satisfaction and a clearer vision. The company also needs to win market share from Oracle, Jakobsen, said. Battling Billionaires Plattner, who according to Forbes Magazine was the 110th richest person in 2009 with a net worth of $4.5 billion, will be taking on Oracle, whose CEO, Ellison, was ranked fourth-richest by Forbes with a net worth of $22.5 billion. Berlin-born Plattner started at IBM in Mannheim, Germany, after graduating from Karlsruhe University and left four years later with his colleagues. The SAP founders first worked in their homes and on the IBM computer of customer Imperial Chemical Industries Plc to make software to tie together business functions. “There’s lots of debate as to whether Hasso is the right person to bring the company back,” said Ray Wang , a partner at Altimeter Group in San Mateo, California said. “For the next three to six months he brings the vision and direction. To improve the treatment of employees and customers, Hasso is the right person. If there is no turnaround in the next 12-18 months, SAP will be in real trouble,” he said. To contact the reporter on this story: Ragnhild Kjetland in Frankfurt rkjetland@bloomberg.net

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Eagles’ Reid Signs Three-Year Contract Extension to Stay Coach Until 2013

December 9, 2009

By Aaron Kuriloff Dec. 9 (Bloomberg) — Philadelphia Eagles coach Andy Reid signed a three-year contract extension, four days before a showdown with the New York Giants with a possible postseason spot on the line. Financial terms of the deal weren’t disclosed in a news release from the Eagles, who are 8-4 and tied for first place in the National Football Conference East with the Dallas Cowboys. The extension, which keeps Reid with the National Football League franchise through 2013, comes a season after his team reached the NFC championship game, eliminating the top-seeded Giants in the first round. The previous season, Reid took a leave of absence to deal with family matters following the arrest of his two sons on drug and weapons charges. Reid, 51, is a two-time NFL Coach of the Year, the second- longest tenured coach in the league behind the Tennessee Titans’ Jeff Fisher and the longest-tenured coach in Eagles history. He has led the Eagles to five division titles, five conference championship games and the Super Bowl title game after the 2004 season. Philadelphia reached the postseason in seven of Reid’s first 10 years. The Eagles play the Giants (7-5) on Dec. 13 at Giants Stadium in East Rutherford, New Jersey. A loss would drop the Giants two games behind Philadelphia in the race for a playoff spot, while a win would lift New York back a tie with at least Philadelphia, three weeks before the regular season ends. Local Rivalry The rivalry of two clubs separated by about 100 miles has produced some memorable moments over the years. Hall of Fame linebacker Harry Carson , who played for the Giants from 1976 through 1988, calls it a respectful, “friendly rivalry,” saying the players often meet in the offseason or at charity events. “You walk off the field, you pat each other on the rear end,” he said. In January, the Eagles intercepted Giants quarterback Eli Manning twice and held New York without a touchdown on the way to eliminating the Giants from the postseason. New York became the first top-seeded defending Super Bowl champion to lose its first playoff game. New York coach Tom Coughlin called it “a disappointing end to our season.” When the teams met in November, Eagles quarterback Donovan McNabb threw three first-half touchdown passes in a 40-17 victory, handing the Giants, who started the season 5-0, their third straight loss. ‘Miracle’ In a November 1978 game, Giants quarterback Joe Pisarcik and running back Larry Csonka fumbled a handoff, leading to a last-second Eagles’ victory that became known as “The Miracle at the Meadowlands.” In November 1960, Eagles Hall of Fame linebacker Chuck Bednarik hit Giants running back Frank Gifford in the chest so hard that Gifford didn’t play in the next 1½ seasons. Reid, who also is the Eagles’ executive vice president of football operations, has a 12-12 record against the Giants, while Coughlin is 8-7 against Philadelphia. To contact the reporter on this story: Aaron Kuriloff in New York at akuriloff@bloomberg.net .

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Kenney Will Always Have Yale Football Now That Merrill Is Gone

November 20, 2009

By Curtis Eichelberger Nov. 20 (Bloomberg) — Jerome Kenney spent three decades at Merrill Lynch & Co. , where he helped transform a retail brokerage into an investment bank and became vice chairman before it went out of business last year. But he’ll always have Yale University football. Kenney earned his bachelor’s degree from the New Haven, Connecticut, school, and between him and his three brothers, a member of his family was on the team from the 1957 season through the 1970 season. A nephew, who graduated in 1993, also played. Tomorrow, the Kenney Center, a three-story athletic building with meeting rooms and offices financed with donations from the family, will be dedicated before the game against Harvard University. Kenney, 68, said the school can become a football power again. Yale produced two Heisman Trophy winners and in 1960 shared the title as best college football team in the east with the U.S. Naval Academy, beating out nationally ranked teams such as Penn State, Pittsburgh and Syracuse. Merrill, once the largest U.S. securities firm, suffered more than $55 billion of losses and writedowns before being sold to Bank of America Corp . “The long-term goal is to restore what you had earlier; world-class facilities, which enable you to hire the best coaches and you are competing for the brightest athletes to consider Yale among any other choice,” Kenney, now a senior adviser at BlackRock Inc ., the largest publicly traded U.S. money manager, said in an interview about his family’s contribution. “That’s the broader goal.” 30-Year Career Kenney joined Merrill Lynch as part of its 1978 merger with White, Weld & Co., where he was director of research. He was chief executive officer of Merrill’s capital markets business from 1984 to 1990, helping lead the firm’s expansion into stock underwriting and investment banking. He was head of Merrill’s corporate strategy and research until 2002, advising three different CEOs during that time. He also was vice chairman, senior adviser and a member of the executive client coverage group until he left last year. The Kenneys are the only family to have five members play football at Yale and the only four-brother football combination in school history. The brothers are Brian from the class of 1960, Jerome ‘63, Robert ‘67 and Richard ‘71. Robert’s son, Jeffrey ‘93 also played for the Bulldogs. $30 Million Program Neither the Kenneys nor the school would disclose the size of their donation. The Kenney Center is part of a $30 million improvement program that includes a plaza and renovations to the 64,000-seat Yale Bowl. Yale now plays in the National Collegiate Athletic Association’s Football Championship Subdivision, which does not send its members to bowl games or play for the Bowl Championship Series national title against the likes of the University of Florida. The Bulldogs produced two Heisman Trophy winners , Larry Kelley in 1936 and Clint Frank in 1937. Yale has won at least a share of 14 Ivy League titles. Back then, the top student athletes either went to Harvard or Yale, Kenney said. Now they are picking schools like Stanford, Northwestern and Duke universities. All three play in the college football Bowl Championship Subdivision, making them eligible for postseason games like the Rose Bowl. They also offer full athletic scholarships. It costs about $47,000 a year to go to Yale, and like the rest of the Ivy League, it doesn’t offer full athletic scholarships. Standards That’s something that may need to be changed, said Brian Kenney, who earned a masters of business administration from Harvard. “I’m all for the highest academic standards,” he said. “But it doesn’t have to be mutually exclusive.” Yale was ranked the third-best school in the nation by U.S. News & World report , behind Princeton and Harvard. Stanford was No. 4, Duke No. 10 and Northwestern No. 12. Stanford, meanwhile, beat the University of Southern California, then ranked ninth, 55-21 on Nov. 14. Northwestern beat Iowa, then ranked No. 8, on Nov. 7. The Kenney Center is attached to the 95-year-old Yale Bowl and includes areas dedicated to honoring the school’s Heisman Trophy winners, All-Americans, Rhodes Scholars and Academic All- Americans. Robert was a fixed-income salesman for Morgan Stanley , retired at 50 and started a real estate business in Martha’s Vineyard, Massachusetts. Brian started an investment company, Kenney Investments in Northfield, Illinois, and Richard became a social worker. Irish Immigrant “My father was from an Irish immigrant family and no one had gone to college, so there was no pedigree to start with,” Kenney said. “It was a family that you worked hard and striving for the best education and being loyal to your institutions and your family,” said Jerome Kenney. He credits the lessons he learned on the playing field with helping him succeed in business. Football game film forced him to analyze his mistakes and make adjustments, he said. Track taught him to take an honest look at his potential and set a course that would make the best use of his abilities. And the overall experience demonstrated that he could go farther as part of a team than as an individual. “It’s not just the players, it’s how you mobilize people; how do you get a collective advantage? Wall Street firms are collective advantage firms,” he said. Yale might need more than teamwork to beat Harvard this year. The Crimson have a 6-3 record and have a chance at a share of the Ivy League title with a win. Yale is 4-5 and has lost seven of the past eight games against Harvard. This is the 126th year of the rivalry. Yale first-year coach Tom Williams says the Bulldogs have already won. The improvements the university has made to support the program will pay dividends in years to come. “The facilities puts us in the upper echelon of the Ivy League,” Williams said. “We think it will be a boon for us in recruiting.” To contact the reporters on this story: Curtis Eichelberger in Washington at ceichelberge@bloomberg.net Michael J. Moore in New York at mmoore55@bloomberg.net .

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Palm’s Colligan Said to Reject Steve Jobs Proposal to Stop Employee Hiring

August 20, 2009

By Connie Guglielmo Aug. 20 (Bloomberg) — Former Palm Inc. Chief Executive Officer Ed Colligan rejected a proposal from Apple Inc. ’s Steve Jobs to refrain from hiring each other’s employees two years ago, calling it wrong and “likely illegal,” according to their communications. Colligan, who stepped down as CEO in June, discussed the matter with Jobs in August 2007, as the mobile-phone war heated up, according to the communications. Apple had introduced the iPhone two months earlier, just as Palm hired a former Apple executive, Jon Rubinstein , to develop new smart phones. Jobs, Apple’s CEO, told Colligan he was concerned that Rubinstein was recruiting Apple employees. “We must do whatever we can to stop this,” Jobs said in the communications. The U.S. Justice Department is investigating possible collusion in hiring among technology companies, a person familiar with the probe said in June. Derick Mains , a spokesman for Palm, said the company hasn’t been contacted by the Justice Department. Bloomberg News reviewed the communications between Jobs and Colligan. The exact details of what Jobs proposed to Colligan aren’t known; Jobs didn’t mention a proposal in the communications reviewed by Bloomberg. Jobs said Apple had patents and more money than Palm if the companies ended up in a legal fight, according to the communications. Apple, maker of the Macintosh personal computer, declined to comment, said Katie Cotton , a spokeswoman for the Cupertino, California-based company . Jobs didn’t respond to an e-mail seeking comment. Escalating Tension The discussion highlights the tension between the companies as Rubinstein took over product development to help lead a turnaround at Palm, a pioneer in handheld computing. Rubinstein was head of Apple’s iPod unit before he left the company in 2006 and had worked with Jobs for more than 15 years. Palm hired him as executive chairman in 2007 and he succeeded Colligan, 48, as CEO this year. “Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal,” Colligan said to Jobs, 54, according to the communications. Colligan said he thought about Jobs’s proposal and considered offering hiring concessions, before deciding against it, according to the exchanges. Employees are entitled to seek work wherever they want, including at rival firms, said Donald Russell , an antitrust lawyer who worked at the Justice Department for more than two decades before going into private practice in Washington. Competing offers may result in higher salaries and better benefits, he said. Hiring Competition “It’s a form of competition that is usually protected by antitrust laws that prohibit agreements that restrict competition,” said Russell, who wasn’t commenting specifically on Apple or Palm. The Justice Department may investigate the exchange between the companies even though Palm rejected Apple’s proposal, said Daniel Rubinfeld , a former deputy assistant attorney general for antitrust. “If I were at DOJ, I would definitely be interested,” said Rubinfeld, who is now a law professor at the University of California at Berkeley. Palm, based in Sunnyvale, California, declined to comment, as did Colligan and Rubinstein, Mains said. Colligan didn’t respond to a separate phone call seeking comment. Gina Talamona , a spokeswoman for the Justice Department, declined to comment. Pre Software Under Rubinstein, Palm created a new mobile operating system called WebOS . In June, the company introduced the Pre, a smart phone that competes against the iPhone. Rubinstein, 53, joined Palm as part of an investment deal by Elevation Partners, a private-equity firm in Menlo Park, California. The company has received $425 million in funding from Elevation , which helped steer development of the Pre. When Colligan stepped down in June, Palm said he would take some time off and then join Elevation. Palm and Apple, based about 5 miles (8 kilometers) apart in Silicon Valley, have a history of hiring each another’s employees. Around December 2007, Mike Bell joined Palm as senior vice president of product development. He spent 16 years at Apple, where he oversaw microprocessor software. Public Rivalry In his August 2007 communications with Jobs, Colligan said Apple had hired at least 2 percent of Palm’s workforce as the company developed the iPhone. Apple released the iPhone in June 2007. Apple rose 60 cents to $164.60 yesterday in Nasdaq Stock Market trading. The shares have gained 93 percent this year. Palm, whose shares have risen fourfold this year, declined 34 cents to $13.54. The government stepped up its scrutiny of technology companies this year under President Barack Obama ’s administration. In addition to the Justice Department’s hiring probe, the Federal Trade Commission is looking into whether Apple and Google Inc. broke antitrust law by sharing board members. Google CEO Eric Schmidt resigned from Apple’s board this month because of growing competition between the companies, Jobs said at the time. The spat between Jobs and Colligan has given way this year to an increasingly public rivalry between Apple and Palm. Both the Pre and the iPhone are touch-screen devices that let users swipe their fingers to navigate the software, make calls and select applications. Touch Gestures “There are a lot of features in the Pre that mimic features in the iPhone, namely touch gestures,” said Charlie Wolf , an analyst at Needham & Co. in New York. In January, the month Palm first unveiled the Pre, Apple Chief Operating Officer Tim Cook said Apple would go after companies that copy the iPhone’s features. “We’ll use whatever weapons we have at our disposal” to protect Apple’s intellectual property, Cook said on a conference call with analysts in January. Apple hasn’t sued Palm over the Pre’s technology. In the past two months, the companies have sparred over a feature that lets Pre owners access their music in Apple’s iTunes software. Last month, Apple updated iTunes to prevent it from working with the Pre. About a week later, Palm released an update to the Pre’s operating system that re-established the link to iTunes. Palm stepped up its campaign to woo software developers for the Pre this week, releasing details of its applications store. Developers will get 70 percent of the royalties for software sold for the Pre, with Palm retaining 30 percent, Palm said. To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

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