Top tech stories of 2005
It was a banner year for Google and Apple, and the start of a new chapter at HP.
NEW YORK (CNNMoney.com) - While no one will say 2005 was a throwback to tech's heyday, some of the year's happenings -- AOL becoming a sought-after Internet property, Google's stock price zooming to $400 and Apple soaring to similar heights -- looked a little bit familiar.
Here is a look at some of the top tech stories of the year.
A new era at HP
Former Hewlett-Packard (Research) chairman and CEO Carly Fiorina's biggest bet – buying Compaq in 2002 – proved her undoing in 2005, when HP ousted its "rock star" CEO and plucked the far less flashy Mark Hurd from ATM maker NCR to replace her.
So far, HP's new Hurd mentality appears to be paying off: Hurd has slashed costs, improved margins and steered HP to better-than-expected earnings and revenues for two consecutive quarters, and the stock has risen from below $20 to a 52-week high of $30.25 since he took the job in late March. But some say part of that good news came from initiatives started during the Fiorina era that finally began to take off.
Fiorina, roundly criticized for her role in HP's disastrous merger with Compaq, among other things, had led the company since 1999 before her ouster in February. Fiorina walked away from HP with a $21 million severance package, including stock options, but that figure could double when factoring in her pension and the value of her stock. She has since joined the board of Revolution Health Group, a privately held company started by AOL founder Steve Case.
Google zooms up to $400
Like Apple, Internet search company Google (Research) spent 2005 shattering expectations. Since it started trading in August of last year, Google's stock has zoomed, hitting landmark after landmark in 2005 and eventually surpassing the $400 mark. Thanks to barn-burner ad revenues -- $1.58 billion in the third quarter alone -- Google beat already high expectations for earnings and revenues in its most recent quarter, posting $1.05 billion in revenue and $1.51 in earnings per share.
Google's earnings are expected to increase by 44 percent in 2006, and the company is testing new features such as a messaging service, Internet calling and video search. Google seems blessed with a Midas touch, with analysts and investors noting that when Google launches a new feature, it's rarely the first, but is often the best. But Fortune writer David Kirkpatrick thinks Google will stumble in 2006, in part because it will lose ground to competitors like Yahoo! in some areas, such as "community powered search," or search results based on other users' information.
Apple soars to ever-loftier heights
People who deemed Apple (Research) stock too expensive at $31.65 -- its closing price on Jan. 3 -- are likely kicking themselves today. The stock closed yesterday at $70.95 and rose more than 120 percent in 2005, a year of milestones for the company. Sales of the iPod reached almost 18 million through the end of the third quarter, downloads from the iTunes music store topped half a billion by mid-year, downloads of videos from the iTunes store surpassed one million within a month of that feature's launch, and the company launched a slew of sleek new products, including the flash-memory based nano, the video iPod and the iPod shuffle. Goldman Sachs analysts predict the company will have sold another 11.6 million more in the current quarter alone.
Apple also struck some high-profile deals with media companies for content to play on those video iPods – ABC, NBC, USA and the Sci Fi network agreed to offer programming for sale through Apple's iTunes store, with honchos from HBO, Fox and ESPN publicly saying they want in on the action too.
Next year the Cupertino, Calif.-based company is set to launch a new line of Macs with Intel processors, which are expected to boast better performance and improved power efficiency. Goldman Sachs analysts predict Intel chips will first show up in its consumer lines, the iMac, iBook and Mac mini computers. Next up for Apple? Many analysts and Mac watchers say the company is gunning to take over consumers' living rooms, making Apple products the focal point for digital entertainment.
Oracle announces Siebel deal
Oracle's acquisition proved Oracle is diversifying beyond databases in an attempt to gain market share over chief rival SAP. Siebel (Research) and other acquisitions, such as PeopleSoft and Retek, give the company a footing in application software, which helps businesses automate routine corporate tasks like customer service, payrolls and supply chains. Application software is a more lucrative business for the company than its database business.
Analysts said the move also heralded the onset of long-needed consolidation in the enterprise software industry. The deal marked Oracle's second major acquisition of another software company by Oracle in the last 12 months, though the Siebel deal was far more friendly than the hostile bid it used to buy PeopleSoft in a deal that closed in January.
Oracle CEO Larry Ellison said at the time that while Oracle is not done making acquisitions, the company would likely take a breather after the Siebel deal. Oracle also announced a management change: Co-president and chief financial officer Greg Maffei left to become CEO of Liberty Media; Oracle executive vice president Safra Catz assumed his role.
AOL hot again
Thanks to its high-traffic Internet portal and heavily used instant messenger service, America Online started to look good again, making itself over from a failing Internet service provider to a hot Internet destination with heavy advertising revenue potential. A move to make AOL content free boosted traffic throughout 2005. In the process, AOL, which, like CNN/Money, is a division of Time Warner (Research), attracted suitors from Microsoft (Research) to Yahoo! (Research) before pairing off with Google, which announced a deal to acquire a 5 percent stake in AOL for $5 billion.
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