Column: eBay tries a Hail Mary

Here’s a column I posted at globeandmail.com about the eBay takeover of Skype:

“There’s only one real question that springs to mind in the wake of eBay’s takeover bid for voice-over-Internet provider Skype — which could cost the on-line auction company up to $4-billion (U.S.) — and it is this: Is the dot-com bubble back, or has eBay chief executive officer Meg Whitman lost her mind?

As is typical with such deals, there was plenty of talk on Monday about the “synergies” between the auction provider and the VoIP company started by Swedish entrepreneur Niklas Zennstrom — who also co-founded the notorious Kazaa file-sharing network. Ms. Whitman, for example, talked about “leveraging” Skype’s software and services along with eBay’s on-line payment service PayPal to create an “unparalleled e-commerce engine.”

Even if you agree that there are synergies between the two companies, however — and that takes a little thinking outside the box, not to mention a few leaps of faith — $4.1-billion is a lot of cash to pay for benefits that remain purely theoretical. Does eBay have so much money that it can afford to bet $4-billion on a company that has less than $100-million in revenue and no profits? Or is it so desperate for growth, and so afraid of losing ground to competitors such as Google, Yahoo and Microsoft, that it is willing to mortgage its future on such a deal? Continue reading “Column: eBay tries a Hail Mary”

Column: Is it Skype or hype?

Here’s a column I posted to globeandmail.com about the speculation that Skype will be bought:

“First it was Yahoo. Then it was Microsoft. Then it was Rupert Murdoch’s media conglomerate News Corp. Now eBay is supposedly in talks to take over Skype, the voice-over-Internet company started by Swedish entrpeneur Niklas Zennstrom. According to a recent report in the Wall Street Journal, the on-line auction site is considering paying between $2-billion (U.S.) and $3-billion for the VOIP provider, while a report in the New York Post says the deal is worth $5-billion. Oh yes, and Skype has also reportedly hired an investment bank to look into an initial public offering, which sources say could raise billions.

Is it a coincidence that the name of this voice-over-Internet company rhymes with “hype?” Perhaps. It’s certainly possible that eBay is having takeover talks with Skype, just as it’s possible that Yahoo, Microsoft and News Corp. had talks — or even Google, Amazon or Time Warner, for that matter. Talking doesn’t cost anything. But does it make any sense for eBay to pay $2-billion, $3-billion or $5-billion for the company at this point in its development? Not in any universe that obeys the laws of financial reality.

That doesn’t mean it won’t happen, of course. With eBay and other maturing tech companies looking for sources of growth wherever they can find them, almost any combination you can think of has probably been considered by someone, somewhere. But that doesn’t mean such a deal would make any sense. Continue reading “Column: Is it Skype or hype?”

Column: Kazaa fight continues

Here’s a column I posted at globeandmail.com about the Kazaa lawsuit:

“What a hydra-headed monster Shawn Fanning gave birth to. The Napster founder’s company didn’t single-handedly create the digital music revolution — German researchers arguably did that when they came up with the MP3 standard — but the Napster network poured fuel on the flames, and helped to make the terms “peer-to-peer” and “file-swapping” part of the public consciousness.

By the time Napster was crushed by a U.S. court, of course, it had already been usurped by Kazaa and Morpheus, a new breed of file-sharing network. And as the record and movie industries have shifted their focus to those newer threats, those networks too have been overtaken, by BitTorrent and eDonkey and Limewire, and other P2P systems that are still in their infancy. Like nailing Jell-O to a wall or trying to push a string, getting a handle on digital file-sharing is something that’s easier said than done.
The recent ruling against Kazaa by an Australian court is the latest attempt to grapple with the P2P threat, and like a similar decision by a U.S. court earlier this year it tries to walk a fine line between dealing with illegal activity on one hand and criminalizing an entire technology. Continue reading “Column: Kazaa fight continues”

Column: ATI and the big picture

Here’s a column I posted at globeandmail.com about ATI:

“By now, anyone who follows the computer-graphics chip market — which is effectively a triumvirate made up of Toronto’s ATI Technologies, U.S-based Nvidia Corp. and computer-chip giant Intel — knows that it can be a roller-coaster of a business. Since both ATI and Nvidia are constantly coming out with newer leading-edge chips, who is on top can change rapidly. In one quarter, ATI will have the hottest chip (which in turn usually commands the highest profit margins) and Nvidia will be playing catch-up; a couple of quarters later, the positions will often be reversed.

Last year, for example, Nvidia was the one who was late to market with a competing chip, and ATI was getting all the glory. Now, ATI looks like it is behind the eight ball on the high end of the graphics market and its margins are suffering as a result, which led to the company’s latest sales and profit warning. Meanwhile, Intel is hammering away at the lower end of the market — “integratedâ€? chips used in laptops and desktops — which has been one of ATI’s core businesses. And since newer chips come out so frequently, older products have little longevity, which means they have to be discounted heavily just to get them out the door. Continue reading “Column: ATI and the big picture”

Some little-known facts about the space shuttle

(Note: This was originally published on the Globe and Mail’s website)

The Canadarm ice scraper

It’s well known that the shuttle’s robotic arm is used to lift satellites out of the cargo bay, and that on the current mission a new version will be used to check the surface of the orbiter with a special camera. But the arm has also been used to “knock the ice off the shuttle’s crapper,” as one NASA scientist put it, and to smack the occasional balky communications satellite whose solar panels didn’t unfurl properly.

“I think the arm has been used more for things it wasn’t designed for than things it was designed for,” one senior engineer said.

The shuttle twang

At the point that NASA calls “T minus 6.6 seconds,” or launch time minus 6.6 seconds, the shuttle’s massive engines fire. But it only takes about three seconds for them to get to full throttle, so why do they start at 6.6 seconds?

This is because when the engines start up, the force of that thrust actually bends the upper part of the external fuel tank backward by up to one metre, and it takes several seconds for it to swing back to vertical – a process NASA engineers call “the twang.”

Once the twang is done, the shuttle is ready to go.

Bad jokes come in handy

Astronauts know a lot of bad jokes. During the launch countdown, they spend several hours lying flat on their backs, in full flight gear and space suit, unable to move. To pass the time, they often compete to come up with the dirtiest or stupidest joke — and there is plenty of competition, members of the space program say. Because the only people listening to the audio channel at that point are the other crew members and NASA physicians, they don’t have to worry about offending anyone. “You just have to make sure you don’t hit the wrong button and put it on the public channel by mistake,” one astronaut said.

Prone to pain

The amount of time astronauts spend on their backs in the orbiter before launch (up to six hours if there are problems or weather delays) can be hardest on the fighter pilots among the crew. This is because when pilots fly their high-speed manoeuvres, they are subject to severe gravitational forces that put a strain on their vertebrae. “We’ve had fighter pilots actually break their necks while they were flying” because of the gravitational pull, one astronaut who is also a pilot, said. This leads to back problems that are aggravated by lying motionless in a heavy flight suit for several hours.

The ice that wouldn’t melt

You might think nothing could survive on the surface of the shuttle after its re-entry into the atmosphere when it is subjected to temperatures of up to 1,650 degrees Centigrade, but you’d be wrong, a NASA insider said.

On one mission, the liquid waste expelled from the toilet while in orbit created a giant, horn-like icicle that stuck up from the top of the shuttle. As the orbiter cruised to a landing after re-entry, a large frozen chunk of the horn slid off and landed with a thunk on the runway. “I guess we don’t need any more insulation on that part of the shuttle,” one of the NASA engineers said with a laugh.

Out of the depths of despair and into flight

(Note: This was originally published on the Globe and Mail website)

Can an entire country heave a single, collective sigh of relief? If so, then that’s what the United States did yesterday morning when the space shuttle Discovery lifted off from Kennedy Space Center in Florida at 10:39 a.m. and soared skyward, 2½ years after an explosion destroyed its sister ship Columbia as it was returning to Earth, killing its entire crew and bringing the U.S. shuttle program to a screeching halt.

As Discovery’s massive engines fired yesterday, the ground rumbled and shuddered as far as six kilometres from the launch pad, setting off car alarms throughout the space centre’s parking lot. Within seconds, the shuttle was just a glowing ember at the end of a giant column of smoke, and less than 10 minutes later it was coasting through space — at almost 30,000 kilometres an hour — on its way toward a hookup with the International Space Station.

Although it appeared to be a relatively flawless launch, there was some initial concern about a couple of small pieces of debris seen on videos of the liftoff, and NASA’s senior engineers admitted the agency won’t really have closed the door on the 2003 disaster until the Discovery crew lands safely on Aug. 7.

“I ask you all to take note of what you saw here today — the power and the majesty of launch, of course, but also . . . the pluckiness, the grittiness of this team, who pulled this program out of the depths of despair 2½ years ago and made it fly,” NASA administrator Michael Griffin told reporters after the launch. The mood in the launch control room “was giddy,” said NASA flight director Mike Leinbach. “People were slapping each other on the back.” The only thing better than a successful launch, he said, “will be landing in 12 days.” Only then, he said, can NASA “say that we’ve come full circle” from the Columbia disaster.

Canadian Space Agency director Marc Garneau, who has been in space three times, said he also wants to wait until the mission is over before describing it as a success. “I want to see how things go in the next few days,” he said in an interview. “They’ve got to inspect all those tiles, analyze all those camera videos that were used at liftoff to see that nothing damaged the tiles, and so I’ll reserve judgment on that.”

Mr. Garneau is also keen to see how the orbiter boom sensor system works, as well as the sensor or laser camera that scans the tiles. Both pieces were built by Canadian companies.

NASA has spent the past two years investigating the cause of the Columbia explosion — which turned out to be a piece of foam that came off the external fuel tank and damaged the shuttle’s wing — and then redesigning both the spacecraft itself and the culture at the space agency.

More than 100 still and video cameras were trained on the Discovery yesterday. Although two cameras showed two small pieces of debris — one that missed the shuttle, and another that appeared to be about 3.8 centimetres wide — NASA said it would need to study the footage before it could say whether they were important. “We’re seeing areas of the shuttle . . . that we’ve never seen before,” said NASA flight operations manager John Shannon.

“The launch was fantastic. We had perfect weather and a flawless launch,” said Canadian astronaut Dave Williams, who went into space in 1998 and is expected to fly again next year.

Canadian astronaut Chris Hadfield, who has been in space twice, said that he felt “relieved and very happy and proud” after the launch. “It’s been a long time getting to this point. . . . We are back in the shuttle business.”

Mr. Hadfield also noted, however, that the mission “is by no means over.” Discovery was originally supposed to lift off in May, but problems with ice on a fuel line and a faulty sensor in the external tank caused NASA to reschedule the mission for July 13. That launch was scrubbed a little more than two hours before liftoff, after a prelaunch test revealed another faulty fuel sensor in the shuttle’s external tank.

Today, Discovery’s crew will use the Canadarm and the Canadian-made inspection boom with its 3D laser camera to examine the surface of the shuttle. Although cameras spotted the piece of foam that broke off the Columbia, NASA didn’t have a way to detect how much damage it had done.

“This is a big day for Canada, and a big day for NASA,” Mr. Williams said. “Getting back to space is tremendously important.” He and other Canadian astronauts say a return to space is also a way of paying tribute to the crew of the Columbia”They would want us to continue,” Mr. Williams said.

‘Return to Flight’ shuttle mission has much to prove

(Note: This was originally published at the Globe and Mail, where I worked)

Chris Hadfield, the first Canadian to walk in space and now the director of NASA’s robotics program, is standing at a podium, ready to talk about the Canadian technology that will help ensure the safety of the next shuttle, Discovery, which is set to launch on Wednesday. But first there is something he wants to do. “These are the seven people we killed 2½ years ago,” he says, pointing at a picture of the crew killed when the Columbia shuttle exploded Feb. 1, 2003, scattering their remains and the pieces of NASA’s shattered reputation over much of Texas.

Is there a catch in Mr. Hadfield’s voice as he says this? Of course not. He is, after all, a former test pilot and Canadian Air Force colonel who has flown on two shuttle missions and worked as ground support for dozens of others, and so the words are spoken in a firm, fighter-pilot kind of voice. At the same time, it’s clear he wants to recognize those who lost their lives that day.

And so he says a few words about the men and women on STS-107: about Kalpana Chawla, who was born in a small town in rural India and was her country’s first astronaut; and about Ila Ramon of Israel, son of a Holocaust survivor and the first Israeli in space. And the rest of the crew: mission commander Rick Husband; flight surgeon Laurel Salton Clark; specialist David Brown, who put himself through college by working as a circus acrobat; Air Force Lieutenant-Colonel Michael Anderson, one of the first black Americans to join the space program; and shuttle pilot Willy McCool.

In an interview later, Mr. Hadfield said the coming flight isn’t meant as a tribute to the crew; it’s a resupply mission for the International Space Station, he said, and a chance to see if the upgrades and changes made to the shuttle since the Columbia explosion work. In other words, the “Return to Flight” mission is about doing just that: getting back to business. “The purpose of a spaceship is to fly in space,” he said. “We’re not in the business of just dreaming about space flight, we’re in the business of space flight.”

At the same time, it is clear that Mr. Hadfield feels a deep sense of responsibility toward the Columbia crew. “It’s true, we did kill them,” he said in his blunt, no-nonsense way. “And I’m just as responsible as anyone else here. It was not a random act of God, it was a sequence of incorrect decision-making. I made my own particular best judgment based on what I knew and I was wrong.” NASA, he said, “decided based on all our engineering judgment and knowledge that [the damage caused by a piece of foam]wouldn’t be a problem. And we were wrong.”

Former astronaut Marc Garneau, the first Canadian aboard a shuttle and now director of the Canadian Space Agency, said he believes some of those involved in the current mission will see a successful launch as a kind of tribute to the crew of the Columbia, a way of showing that NASA has learned from the accident that led to their deaths. “I think once the shuttle is proceeding with its mission, there will probably be some comments made in that regard, that this means they did not die in vain,” he said.

Like the Challenger explosion some 17 years earlier, the Columbia disaster transformed the shuttle program in an instant. Instead of a heartwarming story of man’s ability to rise above his earthbound existence, it became a story about how NASA had become complacent about the risks. The next two years were spent in a frenzy of self-examination, as the agency tried to determine how such an event could have taken so many experts by surprise.

During that time, NASA has struggled to do three things: first, find out why the Columbia exploded when it was assumed to be resistant to damage; second, change its design so that nothing similar can happen again; and third, launch another shuttle to prove that the program can still accomplish its fundamental task of getting astronauts to space and back safely.

“Everybody wants to just get past this and get back to doing what they do for a living, which is send people into space and bring them back,” said Iain Christie of Ottawa-based Neptec, whose company made the camera that will inspect the shuttle. Unlike its sister ship Challenger, which blew up shortly after launch in 1986, the Columbia was destroyed just a few minutes away from its scheduled landing at Johnson Space Center in Houston.

A suitcase-sized piece of foam came off the shuttle’s external fuel tank and hit the wing, leaving a hole — which NASA didn’t think was all that important at the time. But when the shuttle was re-entering the atmosphere, Mr. Hadfield said, “a blowtorch of superheated plasma came screaming in through that hole and melted the wing,” and the shuttle exploded. NASA says it is satisfied it understands how the incident occurred and can prevent it in the future.

However, the shuttle must be sent up again to prove conclusively that it is safe to fly. And even after all the modifications — including more than $1.4-billion (U.S.) spent to add heaters to the fuel tank to prevent a buildup of ice that could break off, and to change the way that the protecting foam is applied to the tank — something unexpected could still put the shuttle in harm’s way.

“There is no magic spaceship that is 100-per-cent safe,” Mr. Hadfield said. “We know this is not a perfect vehicle or a vehicle without risk — you can’t ever say something is without risk. But NASA has decided that we understand the risks and that we are prepared to fly again.” The seven astronauts, however, will strap themselves in knowing that a recent task force report found NASA had failed to fulfill three of the goals set out after the Columbia accident.

Those goals were to: ensure that no ice or foam would come loose from the fuel tank; make sure that if anything did hit the shuttle, it wouldn’t cause any serious damage; and if there were any damage, find a way for the astronauts to repair it before their return. According to Mr. Hadfield, those three goals were virtually impossible to meet completely. “We can’t take it to zero,” he said of the chances that something might damage the shuttle. “We can try to minimize it, but we can’t get rid of it completely. And if we do get some kind of damage, there are some holes that we simply can’t repair once we’re up there.”

If something knocks a hole the size of a stop sign in the shuttle’s wing, as the piece of foam did to the Columbia, “we can’t just get out there and throw a bunch of Bondo on it,” he said. Mr. Hadfield and others in the space program say so much study and analysis has been done over the past 2½ years that this shuttle launch could be one of the safest in the aircraft’s 25-year history. “I am confident that this is the safest launch ever attempted,” he said. “Far safer than a shuttle mission has ever been before.” In fact, he said, “I would be far more comfortable flying on this one than I should have been flying on the first two.”

Even the members of the Stafford-Covey task force (otherwise known as the Independent Return to Flight Task Group, set up by the Columbia Accident Investigation Board and staffed by former astronauts) said that the shuttle was safe to launch, Mr. Hadfield said — “safer than the ones they flew on.”

Perhaps the biggest struggle for NASA since the Columbia explosion has been coming to grips with all the things that it suddenly realized it didn’t know. According to Mr. Hadfield, “there have been over 10,000 incidents of debris hitting the shuttle during launch” over the 112 flights leading up to the Columbia mission. Why did a piece of foam cause so much damage that one time?

Paul Cooper, a vice-president at MDA Ltd. of Brampton — which built the Canadarm — says the piece of foam would have had to be exactly the right size and come off at exactly the right time to hit the shuttle’s wing in such a way as to damage it so badly. The odds of that are almost impossible to calculate.

“I watched the footage of that foam over and over,” Mr. Hadfield said, “and I decided that we didn’t need to do anything.” So did most of the other NASA engineers who saw it. Now, NASA says it has come as close as it can get to ruling out a similar accident. NASA administrator Michael Griffin — a physicist and engineer — said the shuttle will still be at risk, but at least the risk is known. “Before, we were flying at risk of foam and ice,” he said, but “we really did not know how serious it was. Now we know, and we hope it will be much less because of the changes we have made. But the risk will not be zero.”

The Ingram Christmas Letter for 2004

Another Christmas arrives to find Toronto largely snowless – although we got just enough to make the lights look pretty, after what was one of the warmest Novembers since the Pleistocene Era (not to be confused with the more malleable Plasticine Era). Many of the T-shirt-clad people lining the street for the annual Santa Claus parade no doubt felt sorry for poor old St. Nick, in his ermine-trimmed coat and boots (synthetic ermine, of course), but I expect that plenty of others were more than a little thankful for some global warming. Everyone into their SUVs – and whatever you do, don’t stop idling!

The various members of the Ingram family (eastern Toronto division) made it through the year with their usual aplomb, thanks to careful planning, a few lucky breaks, and the occasional 20-dollar bill slipped to a teacher along the way. We had quite the generation gap this year, with Zoe in Grade One (she’s six) and Caitlin in Grade 10 (she’s 15) – Zoe was learning that the round part of a “b” goes to the right and the round part of a “d” goes to the left, and Caitlin was learning about polynomials (whatever those are). Meaghan, meanwhile, was playing the flute and learning French and all the other joys of Grade 6.

We spent some time in sunny Florida, courtesy of Becky’s mother and father, where the girls learned to play shuffleboard, Zoe enthralled the gathered throng at the weekly sunset “drum circle” on the beach with her interpretive dance (that’s her on the right) and we saw the famed Lipizzaner stallions. Caitlin experienced the rollercoaster at Busch Gardens while on a school trip to Virginia Beach (that’s her on the right), Zoe learned to ride a two-wheeler (she didn’t hit that car, in case you’re worried) and Meaghan made some new friends at camp. Oh yes, and she also turned eleven. The girls practiced their diving and puttered around in boats, and even chipped in to do some painting at the cottage.

In between there was plenty of jumping in the pool (not our pool, alas), some beautiful sunsets, and a little golf (thanks Bob), not to mention naps for both young and old. In the fall, Meaghan and Zoe got dressed up for Hallowe’en (Caitlin’s too old for that sort of thing, of course) and so did some people who should know better. Later, there was time set aside for squeezing through caves and walking in the woods, or sitting in trees and the wearing of pretty hats. And now we are quite ready for Christmas, with all the various treats prepared, including the ginger cookies and the star-cookie Christmas trees. And the girls have decorated not just their own Christmas tree but their cousin Jessica’s too and have met Santa.

And so it goes, as Kurt Vonnegut Jr. used to say. Another year filled for the most part with fun and frolic (and the occasional splinter, bee sting, hacking cough, vomiting spell, heart surgery, etc. — but let’s not talk about that). If you have a lot of free time on your hands and feel like surfing through some more pictures of the Ingrams, you can find some at mathewingram.com/photos. If you want to drop us a line using that newfangled e-mail thing all the kids are talking about, Mathew is at [email protected] and you can reach Becky at [email protected]. We here at Ingram and Co. wish you and yours all the best of the season.

RIM must settle

About the only people who might have been happy to see the court ruling against Research In Motion Wednesday — apart from pharmacists selling motion-sickness pills — were options traders, who love a volatile stock the way a mouse loves cheese. RIM shares leaped by almost 15 per cent on huge volume after the news was released, then fell back, were halted for an hour or two, and then plummeted.

While the complicated decision by the U.S. federal court took some time to figure out, since it did three different (and even somewhat contradictory) things at once, the underlying message is a fairly obvious one: Research In Motion is guilty of patent infringement, period. The company should settle with its accuser, NTP, and the sooner the better.

The U.S. Circuit Court ruled on an appeal launched by RIM of an earlier, lower-court decision in favour of NTP, a company that holds a number of patents, including some filed by Thomas Campana in the early 1990s. These patents refer to the wireless transmission of e-mail to a mobile device, which is the foundation of RIM’s BlackBerry handheld business — one that is growing so quickly RIM has a market value of $15-billion (U.S.), despite the fact that it has sales of less than $1-billion.

The initial judgment by the lower court found that RIM’s products infringed on the Campana patents in a number of different ways, and ordered the Waterloo, Ont.-based company to pay NTP $53-million in damages. The court also awarded NTP an injunction preventing RIM from selling BlackBerrys in the United States. When the Canadian company appealed, the decision of the lower court was suspended until the appeal was over. Now the appeal is over, but the case hasn’t quite come to an end yet.

The reason the stock market got so confused about the appeals court ruling — and the reason why some analysts have described the decision (wrongly) as a “partial win” for RIM — is that the court upheld the lower court’s ruling in part, vacated it in part and sent another part back to the original court to re-hear the case, because of a misinterpretation. The part the appeals court upheld, however, amounted to the bulk of NTP’s case: 11 out of 16 claims.

The appeals court ruled that five of the claims involved a misinterpretation by the court of the phrase “originating processor.” Because of this, the lower court will have to reconsider those claims, and hear arguments as to whether the misinterpretation was so unreasonable that it prejudiced the jury. If it did, the court might decide to reduce the award.

James Hurst, a patent lawyer at Winston & Strawn in Chicago who has been following the case, said the ruling was “a big victory for NTP.” He said the lower court re-hearing of the five claims is “insignificant” and “almost an afterthought,” because even winning on one claim (let alone 11 of 16) would be enough to justify the injunction and some damages. Even if the damages were lowered, NTP would have enough ammunition to force the Canadian company to pay a licensing fee.

Since the judgment in 2002, RIM has been putting money into a reserve in order to pay for such an eventuality, at a rate of 8.6 per cent of its revenues. As more than one analyst has pointed out, however, there is nothing that says NTP has to agree to license its patents to RIM for 8.5 per cent of its sales. The decision by the appeals court theoretically gives the patent holder enough leverage to force RIM to agree to a fee much higher than that — and even the 8.6-per-cent rate would cut RIM’s earnings by about 20 per cent, analysts estimate.

Banc of America Securities cut its target price on the stock to $86 from $99 and reiterated a “neutral” rating after the court ruling, saying the five claims being sent back would likely not alter the ultimate outcome, and that “our discussions lead us to believe that NTP can now ask for a higher royalty and/or threaten to shut Research In Motion down in the U.S.” The brokerage firm said the 8.6-per-cent royalty rate “could be a floor, not a ceiling.”

Several analysts noted that RIM still has another avenue of appeal outside of the current case: At the company’s request, the U.S. Patent and Trademark Office is reviewing the five patents held by NTP to see whether they were awarded properly. If they are changed or thrown out, then RIM might not have to pay NTP anything at all. Stanford Group noted, however, that the district court found RIM’s evidence on “prior art” — one of the criteria the U.S. PTO would use for a review — unconvincing, and the appeals court upheld this finding.

Research In Motion has been trying for some time to give the impression that its fight with NTP is just a nuisance, and that it shouldn’t really affect its successful handheld business. The company has done its best to portray NTP as an interloper without a legal leg to stand on, and yet — according to Mr. Campana (who is now deceased) — RIM ignored letters warning the company of the patents he held before the legal action was started by NTP.

RIM’s BlackBerry is a great product with a lot of popular appeal and a growing market. The company should swallow its pride and settle with NTP as soon as possible, in order to put the issue behind it once and for all.

Black to the wall

If arrogance were the only attribute required in order to triumph in a legal battle with disgruntled shareholders, Lord Black of Crossharbour would already be celebrating his victory. Unfortunately, there’s the pesky matter of minority rights and a growing number of legal challenges to His Lordship’s omnipotence at Hollinger Inc. With each move he makes, another possible exit route is cut off, another flank attacked.

In the latest skirmish, Lord Black resigned his positions as chairman and chief executive officer of Hollinger Inc. – which he controls through his private holding company, Ravelston Corp. – just hours before a Canadian court was expected (by some) to force him to step down. At the same time, the press baron is trying to mount a takeover offer for the shares of Hollinger Inc. that he doesn’t already own, and that gambit could also be thwarted by minority shareholders.

Various investors of Hollinger Inc. have been trying to get Lord Black to leave the helm of Hollinger for more than a year now, ever since the operating unit of the company – Hollinger International, which owns the Chicago Sun, the Jerusalem Post and used to own London’s Daily Telegraph – became embroiled in a legal battle between Lord Black and its own minority shareholders. In November, four independent directors on Hollinger Inc.’s audit committee resigned en masse after urging Lord Black and his associates to step down.

The more recent attempts to oust Lord Black have come from Catalyst Fund General Partner I, a limited partnership investment fund that owns about 37 per cent of Hollinger Inc.’s series II preferred shares. Catalyst was also the one that convinced an Ontario court to appoint an independent investigator to look into various payments, transfers, loans and other agreements between Hollinger Inc. and Ravelston. The firm of Kroll Lindquist Avey was appointed to do so in September but later resigned due to a dispute over alleged conflicts of interest, and Ernst & Young was then given the job. Its report to the court is expected later this month.

Catalyst has been asking for Lord Black to resign because of what it alleges are a number of conflicts stemming from the inter-relationship between Ravelston and Hollinger Inc. (Ravelston controls 68 per cent of the unit’s voting stock). Among other things, the fund management company has complained about a $1.1-million payment to Ravelston from Hollinger Inc. that wasn’t properly approved by the company’s independent directors. Lord Black said in an affidavit that the payment was “an error” made by Hollinger executive Peter White. According to Catalyst, Ravelston also allegedly owes Hollinger Inc. over $25-million.

At the same time Lord Black was planning his resignation from Hollinger Inc. late last week, minority shareholders of Hollinger International were re-filing their lawsuit against Lord Black and his associates. The original suit, which claimed more than $1.2-billion in damages, was thrown out because the court ruled that it was improperly filed under the Racketeer Influenced and Corrupt Organizations (RICO) Act. The latest filing, which asks for damages of $542-million, contains effectively the same allegations – widespread improper payments and transfers to Lord Black and his associates (these allegations haven’t been proven in court).

To sum up, Lord Black has resigned as chairman and chief executive officer of his operating company, Hollinger International, and now has resigned from those positions at its parent, Hollinger Inc. as well. He faces a $542-million lawsuit from Hollinger International shareholders, and a court-appointed investigator is looking into Hollinger Inc.’s finances as well, raising the possibility of future liability.

In addition, while the special committee in charge of Hollinger International recently agreed to allow Lord Black to receive his share of the proceeds from the $1.2-billion sale (after debt) of the London Telegraph, most of that money will go to Hollinger Inc. rather than to Lord Black, which makes all the difference. Minority shareholders and independent directors would have to approve any use of those funds. Lord Black’s buyout offer to Hollinger Inc. will also have to be approved by minority shareholders, as well as securities regulators.

The bottom line is that Lord Black finds himself hemmed in on all sides, with a rapidly-vanishing amount of territory on which to make his final stand. In one of the more pointed e-mail comments that turned up in the report from Hollinger International’s special committee, Lord Black said Hollinger “served no purpose as a listed company other than [the]relatively cheap use of other peoples’ capital.” The press baron’s experience with Hollinger and its minority shareholders, however – at two different levels – has been anything but cheap. And it could get a lot more expensive before it’s over.