SAN FRANCISCO: For decades, Silicon Valley has been the land of eternal optimism and high anxiety, traits that pitch into overdrive anytime a seismic business event washes across the corporate and entrepreneurial landscape here ? like, for example, Microsofts blockbuster $45 billion bid for Yahoo on Friday.

The legions of high-tech entrepreneurs who have set up camp here with clever ideas, a willingness to scramble for financing and the energy to weather round-the-clock days have typically tethered their dreams to a singular outcome: getting fabulously rich by selling to one of the three Internet giants, Microsoft, Google or Yahoo.

But if Microsofts takeover bid for Yahoo succeeds, that calculus becomes more harrowing because of a simple reality: the field of large, lushly endowed suitors will narrow by one. And that is a fact sure to jangle nerves already strained by growing fears of an economic recession.

“From a start-up and investor perspective, if there are more companies trying to vie for the same businesses, there are more exits,” said Bismarck Lepe, a former Google employee and now chief executive of Ooyala, a year-old video host and advertising company. “Its not great for competition if there are only two acquisition targets instead of three.”

To be sure, a Microsoft-Yahoo deal could be good for Silicon Valley, funneling money into the economy and triggering a round of copycat deals as other players like Google and the News Corporation look to keep up.

But Microsoft is buying Yahoo because it has steadily fallen behind Google in the lucrative online search market and because the future of computing may not be forever linked to the desktop market that Microsoft now dominates. Apparently unable to keep up with Google through internal efforts, the legendary software giant in Redmond, Washington State, has gone outside to solve its problems by trying to buy Yahoo.

So the rationale for the proposed mega-deal is based on Microsofts own particular corporate needs and may not be a harbinger of rampant deal-making in the Valley.

Moreover, with an economic recession looming in the United States, the unsolicited bid for Yahoo comes at a difficult time for the normally cocksure world of high tech. Visibly, much of the region maintains an almost obstinate belief that it can weather any economic storm that emerges. Consumers are still flocking online, advertising is following, and the current generation of start-ups has been built frugally ? with lessons from the dot-com bust of several years ago still very much in mind.

Venture capitalists also raised nearly $35 billion last year, more than at any other time since before the dot-com crash, according to the National Venture Capital Association. Those financiers are ready to make bets on countless entrepreneurs who hope to build the next Google, Facebook or YouTube.

But as the stock market lolls and an outsider, Microsoft, bids to gobble up a company that once was one of Silicon Valleys crown jewels, the regions innovators and corporate stewards appear to be growing ever more anxious. That trait is most visible in the top executives at public companies whose eyes are trained on parallel declines in consumer confidence and public equities.

Shares of Google had dropped nearly 20 percent since the beginning of the year ? and then they fell an additional 8.6 percent on Friday after Microsoft made the play for Yahoo. Apple has dropped 33 percent since the start of the year. That was enough to prompt Steven Jobs, Apples chief executive, to send a reassuring memo to options-sick employees last week that concluded: “Hang in there.”

Many in the typically overconfident venture capital world say it is foolish to believe the technology sector is somehow sheltered from the storm.

“All markets are linked,” says Peter Rip, a general partner at Crosslink Capital, adding that the pain might trickle down from the public markets to large private companies and eventually to smaller start-ups. “We just asked every one of our companies to take a sharp pencil to their hiring plan this year. It is going to be a bumpy ride for a while.”

In a blog posting last week titled “Downturn, Now What?,” Will Price, a partner at the San Francisco venture capital firm Hummer Winblad, said the recession could punish technology investors for succumbing yet again to investment fads and high valuations for companies without proven business models.

He calls these companies “Field of Dreams” start-ups, because their entrepreneurs believed that if they built popular online services, advertisers would inevitably come. Now that might not necessarily be the case.

Treasury Secretary Henry Paulson revealed plans for the most sweeping overhaul of financial regulation since the Great Depression.

Work on the 218-page “blueprint” began before markets unraveled last August. It offers no quick fix for the credit crisis that has roiled Wall Street and left millions of Americans in danger of losing their homes. And it’s sure to face stiff resistance from Capitol Hill, within the financial sector and from various government bureaucratic interests, analysts said.

Paulson said most of the proposals would not be enacted until after the current troubles, maybe long after President Bush leaves office.

He proposed vesting new powers in the Federal Reserve as a “market stability regulator” formalizing a role the central bank has started to perform recently by expanding the list of financial firms who can borrow directly.

It would give the Fed authority to require full disclosure from financial firms. The central bank also could work with other regulators in setting rules.

Paulson Wary Of Tough Rules

Many critics blame lax oversight for the mortgage mess. But Paulson, a 30-year Wall Street vet, said regulation must be light enough to keep markets innovative.

The plan, which would need congressional action for many changes, seeks to streamline a hodgepodge of overlapping jurisdictions that date back to the Civil War.

It would give the Fed more power to protect the stability of the entire financial system while merging daily bank supervision into one agency, down from five now.

It would create a superagency for business conduct and consumer protection, performing many duties of the current Securities and Exchange Commission.

It also would scrap the Office of Thrift Supervision and the Commodity Futures Trading Commission [CFTC], merging their functions into other agencies.

It would ask Congress to create a Mortgage Origination Commission to recommend minimum licensing standards for mortgage brokers, many of whom now are outside of federal regulation. It also would take a first step toward federal insurance regulation by asking Congress to establish an Office of Insurance Oversight inside the Treasury.

Dems Say Plan Too Timid

Paulson said the Bush administration’s focus would remain on the credit crisis. But he rejected Democratic charges that poor regulation of mortgage brokers and the financial industry caused today’s mess.

“I do not believe it is fair or accurate to blame our regulatory structure for the current market turmoil,” he said. “I am not suggesting that more regulation is the answer or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years.”

Sen. Charles Schumer, D-N.Y., though, said in a statement that deregulation “did much to contribute to the meltdown in our housing market and the accompanying spillover to our financial markets. The administration’s ‘deregulation-above-all-else’ attitude helped cause the problems we now face.”

House Financial Services Committee Chairman Barney Frank, D-Mass., who is working on his own regulatory revamp, called Paulson’s proposal a “constructive step” but said it wouldn’t give the Fed enough authority.

Some state officials criticized what they saw as unwanted federal intrusion on their turf.

Massachusetts Secretary of the Commonwealth William Galvin blasted Paulson’s plan as “a disastrous backward step that would put the investor in jeopardy” because it would pre-empt state regulation of securities and insurance.

Banks raised strong objections.

“Dismantling the thrift charter and crippling state banking charters will weaken banking in America,” said Edward Yingling, head of the American Bankers Association.

CME, parent of the top U.S. futures exchange, voiced doubts about merging the CFTC and SEC.

But Tim Ryan, head of the Securities Industry and Financial Markets Association, representing over 650 securities firms, banks and asset managers, praised the proposals. He said there was widespread agreement on the need for modernization in an era “where billions of dollars race across the globe with the click of a mouse.”

If smartphones morph into computing devices, as pundits predict, there may be one long-standing PC issue not in play: dealing with spam. At least, that is, as long as wireless carriers continue to do most of heavy lifting in keeping messages spam-free.

That’s good news, given that most mobile users aren’t too «www.internetnews.com» about device and messaging security. A recent McAfee survey reported that more than three quarters of users don’t have any security programs on mobile devices. In fact a majority (six of 10) surveyed expect mobile operators to take primary responsibility for protecting devices and data.

But enterprises shouldn’t ignore the potential headaches mobile spam could create. After all, there is the possibility that carriers could shirk their spam fighting duties as filtering costs increase and spammers get smarter. There have already been signs of sophisticated phishing and spoofing events in which spammers are hacking carriers’ internal messaging transit methods.

North American cell phone users, unlike those abroad and in Asia, pay for text messaging, so it behooves carriers to keep spam low. But if receiving messages becomes a free service, there could be a real onslaught scenario — the likes of which 200 million Chinese subscribers experienced just a week ago.

“Right now we’re in the very early stages of mobile spam issues because users are paying for text messaging both ways, and carriers view stopping spam as an important customer service,” Jamz Yaneza, Trend Micro’s research project manager, told InternetNews.com.

Last Monday, almost half of China’s mobile phone user population began receiving spam messages from online advertising firms. The huge attack, now under investigation by China’s State Council, impacted customers of the leading carrier, China Mobile, and China Unicom. In response, the providers have established support hotlines to handle consumer complaints.

Such a spam event is unlikely in the U.S. for several reasons, according to experts. One is increasing competition and keeping customer service levels high.

“A spam message here and there is mildly irritating and while people pay for it, they’re likely not calling up and screaming for remittance. But carriers are cognizant of the fact that once users start to become dissatisfied they’ll just switch rather than complain,” Richi Jennings, lead analyst for e-mail security at Ferris Research told InternetNews.com. “Right now the wireless carriers are keeping a lid on it as they’re motivated to keep the user experience good.”

That lid is pretty tight at this point, despite what may appear to be huge figures when it comes to spam.

In 2006, U.S. consumers received about 800 million text messages identified as spam, according to Ferris Research. Last year that figure hit 1.1 billion.

“Our estimate for 2008 is 1.5 billion,” said Jennings, explaining the figure represents spam that survived carrier filtering efforts.

But factor in the current 200 million mobile user base, and 365 days of the year, and the average spam impact is minimal.

The biggest spam threat with mobile devices, explained a security expert, is the transit of e-mails that are forwarded onto mobile devices. Lax security and a lack of good filtering on the enterprise network end could spur spam on the device end.

“The IT organization has to educate users about keeping on eye on suspicious messaging and it has to do a good job of securing its own e-mail and messaging systems that may be pushing e-mail to devices,” Jamie de Guerre, CTO at messaging security firm Cloudmark, told InternetNews.com. de Guerre said that at least 25 percent of e-mails in transit to mobile devices are being detected as spam.

“Malicious attacks are coming. It’s critical that companies make sure they’re securing that e-mail heading to mobile devices.”

Without a chief executive until Trevor Matthews arrives from Standard Life in the summer, Friends has endured a terrible year.

It turned a profit of 491m in 2006 into a loss of 113m for 2007 and has faced scepticism from the City about its strategy and long-term future.

Today it confirmed that JC Flowers made an offer of 150p a share, but insists that this proposal ’significantly undervalues Friends Provident and its prospects and does not represent a basis for discussion’.

JC Flowers, run by former Goldman Sachs banker Chris Flowers, has made several offers for Friends - at lower levels on each occasion. Last year it tabled a bid at 175p a share, which Friends also rejected out of hand.

Friends entered a merger deal with Resolution Life before Christmas, but it quickly collapsed after better offers arrived for Resolution.

Chief executive Philip Moore was ousted in the fallout. Last month finance director Jim Smart said he would leave in August, giving Matthews an immediate hole to fill when he starts the new job.

Friends Provident shares have halved in the last year but gained today 4.4p to 124p. The Friends’ board, led by chairman Sir Adrian Montague, feels it cannot sell the company for less than 160p. It believes that any lower would be less than the insurer’s embedded value - or the long-term value of its policies.

However, so many customers have cashed in their policies due to poor investment performance that this embedded value is said by analysts to be in doubt. Friends is looking to sell its stake in F&C Asset Management as well as subsidiaries Lombard and Pantheon Financial. Critics of the company say that pushing through this strategy before Matthews arrives will leave the new chief executive in an awkward position.

FREE: ORDER COMPANY REPORTS

You can find out how companies mentioned in this story earn their profits by getting their official report and accounts for free. . Here are direct links to the most popular sectors:

«thisismoney.ar.wilink.com»
«thisismoney.ar.wilink.com»
«thisismoney.ar.wilink.com»
«thisismoney.ar.wilink.com»

Flowers could yet return with another bid. It has a near 3% stake in the insurer. Friends is headquartered in London and employs 4,000 across the UK. It is cutting 600 of those jobs as part of its strategic review.

Other stories:
Friends to tell Flowers ‘put up or shut up’
In-the-red Friends to lose top money man
Friends Provident destroyed by a good idea
600 jobs go as Friends plans 1bn sell-off
Friends Provident seals its shake-up plans
City focus: Friends comes to the end of its innings
JC Flowers hits Friends Provident bid road
L&G won’t be making Friends with rivals

Since 2002, the Dollar has lost 70% of its value, relative to the Euro. Meanwhile, the same factors that signaled bearishness in 2002 persist in 2008, or even worsened in some aspects. The twin deficits are still growing, though the current account deficit may be leveling off. The US economy is headed towards recession. Inflation is set to rise due to soaring commodity prices and a loosening of monetary policy. As a result, many investors are betting that the Dollar’s slide will continue well into the near future.

However, prudent investors would be wise to “handle with care.” While not entirely applicable to forex markets, efficient markets theory dictates that inherent in a security’s current valuation is all relevant, publicly available information. Thus, all of the bad news listed above has already been priced into the Dollar, to some degree at least. The rule of diversification is in full effect when betting on forex. Thus, rather then putting all of one’s chips directly behind one currency, an investors could buy foreign securities (stocks and bonds) instead, which also capture any currency appreciation (and depreciation). Investors can also purchase Treasury Inflation Protected Securities (TIPS), whose yield is linked to inflation and, thus, acts as a hedge against a declining Dollar. The Wall Street Journal reports:

While some market watchers believe the six-year dollar bear market isn’t over yet, investors should recognize that trends in the currency markets are typically marked by volatile ups and downs along the way.

Read More: «online.wsj.com»