The company also said it planned to cut another 13,000 jobs this year.

The company said it added 2.2 million wireless subscribers in the quarter, up substantially from the 1.2 million added a year earlier.

The quarterly loss came to 23 cents a share and contrasted with a profit of $1.24 billion, or 43 cents a share a year earlier. It took a charge of $3 billion, or 66 cents a share, related to severance expenses in the quarter.

Revenue rose to $27.1 billion, from $24.65 billion in the period a year earlier, much of it because of the acquisition of the Alltel Corporation. Still, the results fell short of Wall Street expectations. “Like all U.S. carriers, Verizon has felt the impact of the macro environment in 2009,” wrote Julien Blin, an independent analyst who keeps a keen eye on the wireless industry, in a note to clients Tuesday. “However, we should start to see signs of recovery in 2010.”

During a call to investors and analysts on Tuesday, Verizon’s chief financial officer, John Killian, said the company would continue to trim costs to combat the deterioration of its residential wireline phone business and its corporate business that is still recovering from the recession. Over the last two years, the company eliminated 26,000 jobs in its wireline sector. Verizon employs about 223,000 people.

“Verizon is doing everything they can to cut costs and they’re very capable operators, but the margins of this business keep getting worse,” said Craig Moffett, a senior research analyst with Bernstein Research. “It’s a pattern we should probably get used to.”

Revenue from Verizon’s traditional wireline services dipped 3.9 percent to $11.5 billion, compared with the fourth quarter of 2008, as more customers shift to cellphones.

But the company also said data revenue, from services like text messaging or browsing the Web, was up 31 percent, to $16 billion, largely driven by increased use of services and data plans by cellphone customers. Additionally, wireless data revenue represented a larger share of all service revenues, 32 percent compared with 26.5 percent a year earlier.

Verizon Wireless has struggled to keep up with the momentum of the rival carrier, AT&T, which has been adding subscribers at a rapid clip, in large part because of the popularity of the iPhone, for which it is the sole carrier in the United States.

But Verizon recently began selling smartphones like the Motorola Droid, the HTC Droid Eris and BlackBerry Storm 2, which are proving popular, Ivan G. Seidenberg, chief executive of the company, said during a call to investors on Tuesday. The company did not disclose specific figures, but analysts estimate that the Droid could have sold as many as a million units since it first went on sale in November. On Monday, Apple reported that it shipped nearly 9 million iPhones during its most recent quarter.

“We have a strong and growing smartphone portfolio, ” Mr. Seidenberg said. “We see plenty of opportunities for data growth, driven by new enhanced devices and innovative content. We’re very well positioned in 2010.”

He said Verizon had several new phones coming out, including two new devices from Palm, the Pre Plus and the Pixi Plus. It is widely expected that Verizon will sell a version of the iPhone that would work on Verizon’s enhanced network, but the company would not confirm the speculation.

Analysts were not impressed with the growth in wireless.

“For all of the spectacular growth of wireless data, it’s still no better than a break even offset for the declines in wireless voice,” Mr. Moffett said. “Revenue per customer isn’t growing. So while the wireless business is doing really well, it’s not the growth engine it used to be.”

For the year, Verizon’s net income was $3.6 billion, down from $6.4 billion in the comparable period a year earlier, on revenue of $107.8 billion.

Chinese Foreign Ministry spokeswoman Jiang Yu faced numerous questions about Google’s announcement that it is ready to leave China because of cyber attacks and censorship rules.

She told reporters at a briefing Thursday that China’s Internet is, in her words, “open.”

Jiang says Chinese law prohibits cyber attacks, including hacking.  She says China administers the Internet according to law and that its administrative measures comply with standard international practice.

She refused to comment on the specifics of the Google case, but said, generally, that China welcomes international Internet enterprises to conduct business in China, according to the law.

At the same time, Jiang stresses that Chinese law explicitly stipulates what content and information can be spread over the Internet.

Internet providers in China are required to filter out content that Beijing considers illegal, such as Web sites organized by outlawed group, Falun Gong.  It also blocks Web sites run by Tibet’s exiled spiritual leader, the Dalai Lama, and some international news sites, such as the Voice of America.

Earlier this week, Google made an unexpected announcement that is considering withdrawing from China because of cyber attacks and because it says it will no longer accept operating a filtered search engine in China.

Chinese authorities and Google are discussing the matter.

In a separate development, the law firm that represents American software maker CYBERsitter – Gipson, Hoffman and Pancione – says it has come under cyber attacks this week, and the attacks originated in China.

Attorney Greg Fayer says he was one of the first people in the firm to receive what he calls a Trojan e-mail, which is an e-mail that allows the sender to initiate malicious actions on the recipient’s computer.

“I can’t say too much about it because there is an FBI investigation that is going on, but there was a series of Trojan e-mails that were sent to different members of our firm, that made it appear as if they were sent by other members of our firm, on different pretenses, asking them to click on links, saying, ‘Look, I want to send you a file, it’s too big, can you click on this link and it will get to you?’” said Fayer.

Fayer’s firm last week helped CYBERsitter file a $2 billion software piracy lawsuit against the Chinese government and seven Chinese computer manufacturers.

The suit is in connection with the Green Dam censoring software program that was supposed to be unveiled in China in June.  CYBERsitter, which also has been targeted by hackers, is accusing the Chinese firms of copying more than three thousand lines of CYBERsitter’s code for the Green Dam software.

The Internet, it was believed, was soon to vaporize mainstream media business models on the spot. America Online’s frothy stock price made it worth twice as much as Time Warner’s with less than half the cash flow.

When the deal was announced on Jan. 10, 2000, Stephen M. Case, a co-founder of AOL, said, “This is a historic moment in which new media has truly come of age.” His counterpart at Time Warner, the philosopher chief executive Gerald M. Levin, who was fond of quoting the Bible and Camus, said the Internet had begun to “create unprecedented and instantaneous access to every form of media and to unleash immense possibilities for economic growth, human understanding and creative expression.”

The trail of despair in subsequent years included countless job losses, the decimation of retirement accounts, investigations by the Securities and Exchange Commission and the Justice Department, and countless executive upheavals. Today, the combined values of the companies, which have been separated, is about one-seventh of their worth on the day of the merger.

To call the transaction the worst in history, as it is now taught in business schools, does not begin to tell the story of how some of the brightest minds in technology and media collaborated to produce a deal now regarded by many as a colossal mistake.

How did it happen?

The romance between Mr. Case and Mr. Levin, they said in interviews with The New York Times, began in the fall of 1999 at a celebration of the 50th anniversary of the People’s Republic of China at Tiananmen Square.

MR. LEVIN I was seated for some reason in front of Steve Case and his wife and so we had a little chitchat. It was a stunning evening to be a part of that history. But this next thing that registered on me was that they seem to have a very sweet relationship and I liked that, and we had some fun, joked around, and so from a personality point of view we talked.

MR. CASE There was all kinds of hoopla and parades in Tiananmen Square and a state dinner at the Hall of the People, and I remember Jerry had decided to have the Time Warner board meet in China that week and they were on a trip but they also attended some of these functions, so at these different functions I talked to various Time Warner board members, but I don’t think I had any direct conversations with Jerry about the merger until probably a month later.

MR. LEVIN We’re now back in the United States and I think Steve Case called me on the phone and in that conversation more than alluded to putting the companies together. I had my traditional script and quasi-legal background that when someone calls you on the phone, make sure they understand you’re not for sale, which we certainly weren’t, and decline any overture, which I did over the phone.

In fact, Mr. Case and his team, including Robert W. Pittman, the company’s president, had been plotting for months about how to use its high-priced stock to make a big acquisition. The company hired the investment bank Salomon Smith Barney, and its top media banker Eduardo Mestre, to consider various targets.

MR. MESTRE It was one of the highlights of my career because I remember vividly sitting down with the AOL executives and going through with them their vision of how to combine AOL with a more traditional company in creating what at that time was going to be perceived as a company of the future.

MR. PITTMAN It was a very heady time because 1999 was the first year the thesis that everybody was going to be on the Internet and every business was going to be on the Internet and it was going to be a primary means of communication finally was accepted; 1999 was the year it sort of kicked in, and I think when it kicked in people started saying, “O.K., what’s the big dream, what’s the big idea, what do we need to do now?”

We were actually deep in discussions with eBay to buy eBay and add them, had a little bit of discussion with Larry Probst over at Electronic Arts, and Steve had an idea that we should merge with Time Warner and me and a couple other people said there’s no chance that’s ever going to happen and I sort of paid no attention to it.

Meanwhile, Mr. Levin was thinking deeply about how to transform Time Warner for the digital age.

MR. LEVIN We were emerging from not just old media but from an analog world into a digital world, and philosophically people were beginning to understand that the digital world was a transformational universe.

Before AOL, Mr. Levin, prodded by Gordon Crawford, senior vice president at Capital Research Global Investors in Los Angeles, then the largest institutional shareholder of Time Warner, discussed a merger with Yahoo’s founder, Jerry Yang.

MR. CRAWFORD I was involved in putting the two of them together and kind of following the course of those discussions over the year, and over the course of 1999 those discussions morphed from the discussion of a partial stake to a full merger, and then in the late fall Jerry Yang decided he did not want to pursue it any further and I think terminated the discussions.

Racking up exorbitant mobile charges is easy to do if you are not careful about using your cellphone internationally. AT&T charges 99 cents a minute to use your phone in Italy (rates vary by country), and that is if you pay for the carrier’s international calling plan. If you do not, the charge goes up to $1.29 a minute.

What my parents did not realize was that they could have nearly eliminated those charges if they had set up their (in this case) iPhone and BlackBerry to take advantage of mobile Internet calling services: That $1.29-a-minute charge would have gone down to a much more reasonable 2.4 cents a minute (or nothing at all if they were on a Wi-Fi network).

The Internet has been used to make calls for some time. One of the largest providers of the service, Skype, was founded in 2003 and has more than half a billion user accounts. And while many people gather around the PC to talk to far-flung friends and family, new apps and services can replicate that experience (and that savings) on cellphones.

To transform your mobile phone into a device capable of making cheap international calls, you need to consider a few things. Ideally, you have a smartphone that can access Wi-Fi, like an iPhone or a Droid. Wi-Fi ensures the best call quality, since it’s carried over a high-speed Internet connection rather than through third-generation, or 3G, cellular networks.

But if you don’t have a Wi-Fi-enabled smartphone, you are not out of luck. There are calling services that use local phone numbers rather than wireless data connections to place calls, making them compatible with a wide range of devices. Applications can dial a local access number as if you were placing a regular call; and your call is routed over the Internet at similarly discounted rates.

There are also free calling mobile applications, each with its own layout, feature list and call quality. In my tests of more than six different applications by calling friends in Europe and Africa, these stood out:

SKYPE FOR MOBILE Like the program for Mac and PCs, Skype Mobile lets you make free calls and send instant messages to fellow Skype users. You can also call non-Skype landlines and cellphones using Skype Credit, a fee-based service that charges pennies per minute for international calls.

Skype offers several mobile versions, including Skype for the iPhone and iPod Touch, Skype Lite for Java and Android phones, and Skype for Windows phones.

The application for the iPhone and iPod Touch most closely resembles Skype’s familiar desktop program. Though I could send text-based chat messages to my Skype-using friend in Belgrade over AT&T’s 3G network, I needed to connect the phone to a Wi-Fi network to make a call. (You currently cannot make Skype or other Internet-based calls on the iPhone via AT&T’s 3G network, though that could change soon.) After a simple tap of the call button, I could clearly hear his familiar accent without any noticeable lag or choppiness.

Similarly, a call I made to a friend’s cellphone in Senegal using Skype Credit was crystal clear in sound and connected in only 15 seconds. We chatted for 10 minutes, which cost me only $2.40. That same call on AT&T, even if I signed on to its international calling plan (which costs $4 a month), would have cost $8.80. Without the international calling plan, the fee would have climbed to $27.80.

For those without iPhones or Windows Mobile devices, Skype provides its Skype Lite application. Skype Lite cannot make calls over Wi-Fi or 3G networks, but instead routes calls through a local cellphone number.

It isn’t as complicated as it sounds: when using a MyTouch 3G phone, I selected a Skype contact in London. The application started the phone’s dialer and automatically routed the call to a local number. My British pal came through clear and static-free.

One thing to remember is that while calls made with Skype Lite are local and your carrier won’t exact a long-distance fee, you are technically making a call. So those calls will count against the minutes in your calling plan.

FRING Picking up where Skype Mobile leaves off, Fring provides an even richer experience on more phones. It supports calling over Wi-Fi and 3G on Android and Nokia devices; iPhone 3G calling is on the way. In addition to free calling to Fring members anywhere in the world, the service connects to Skype, Google Talk and MSN Messenger contacts.

After installing the Fring application from the Android Marketplace on Sprint’s HTC Hero, I tapped into my Skype account to call my Belgrade friend over Sprint’s network. Since I didn’t need to be in a Wi-Fi hotspot, I made the call while walking down a noisy New York street.

This is the third pillar in Toyota’s robust green technology strategy. Already, its Prius is the dominant brand in low-emissions vehicles. Whenever anyone thinks of hybrid cars, it immediately springs to mind, giving Toyota all the cred it will need to successfully launch the revamped, plug-in version of the Prius in 2012. Both Priuses have built a strong foundation for Toyota to move beyond battery technology to fuel cells.

“We plan to come to market in 2015 or earlier with a vehicle that will be reliable and durable, with exceptional fuel economy and zero emissions at an affordable price,” Toyota head of environmental affairs Irv Miller said during the announcement.

The major automaker started testing fuel cell technology in 2002 with a fleet of 20 vehicles in California. In the last eight years, it has more than doubled the range of its fuel cell hybrid vehicles (FCHVs). In late 2007, it took of the models on a seven-day road test between Fairbanks, Alaska and Vancouver, Canada. The cars are said to get 68 miles per gallon of gasoline and have a driving range of 431 miles while emitting zero greenhouse gases.

The one snag in Toyota’s plan? It might be hard to find a hydrogen station to fuel up. The company hopes its program, and those being explored by its competitors, will jump start the development of hydrogen fuel infrastructure. Producing the hydrogen fuel cells themselves isn’t too difficult. It only requires electricity and water. The trick will be to accelerate both car production and infrastructure development at the same right and at the right time to achieve rapid adoption, Toyota says.

In September, Daimler also came out with similar plans to get average consumers behind the wheel of hydrogen fuel cell cars by 2015 (and is looking to partner with Toyota in the endeavor). The big challenge, that company said, will be to make them cost-competitive with other automotive options. It hopes to commercialize a hydrogen version of its compact Mercedes Benz B class, which it unveiled at the auto show in Frankfurt in the fall.

It will be interesting to see how collaborative the companies involve get in order to make a hydrogen fuel cell hybrid a reality. Considering the hurdles ahead — both steep costs and the need for extensive, perhaps policy-motivated, changes to fuel infrastructure — it seems like even the biggest names in the car industry will be willing to partner so that more can benefit.

Google beta

HONG KONG — Google has agreed to hand over a list of books by Chinese authors that it has scanned in recent years, company executives said on Monday, in an apparent effort to placate writers who say their works were digitized without their permission.

In a letter sent to an association of 8,000 Chinese writers, Google also apologized for any misunderstanding that might have angered authors and said it would work to forge an agreement on digitizing books by early summer.

“We definitely agree that we haven’t done a sufficient job in communicating with Chinese writers,” Erik Hartmann, who runs the Asia-Pacific division of Google Books, wrote in a letter to the China Writers’ Association, which posted the letter Sunday on its Web site.

The clash between Google and the Chinese writers group mirrors similar strife that has accompanied the company’s Books Search project, an ambitious effort to digitize every known book and make the contents searchable online.

Writers in the United States, France and Germany have filed lawsuits seeking to stop the company from digitizing works without the explicit permission of copyright holders. Some litigants have demanded monetary compensation for scanned books.

Last month Mian Mian, a novelist in Shanghai, became the first Chinese writer to sue Google for copyright infringement. A judge has urged both sides to settle the litigation. Google insists it is following Chinese and American copyright law and says digitized books are deleted upon the request of an author or publisher. It also rejects assertions that the company has made some Chinese books available on the Internet in their entirety.

“In China like everywhere else, if a book is in copyright we don’t show more than a few snippets of text without the explicit permission of the rights holder,” Courtney Hohne, a Google spokeswoman, wrote in an e-mail message. “In addition, we have a longstanding policy of honoring authors’ wishes, and authors or publishers who wish to exclude their book may do so at any time.”

Ms. Hohne said that more than 50 Chinese publishers had agreed to allow 60,000 books to be included in the company’s scanning program.

Zhang Hongbo, the secretary general of the China Written Works Copyright Society, which manages Chinese copyrights, hailed the letter and the apology. “It is a result that all Chinese copyright holders have been waiting for,” he said. “We look forward to Google’s deeper understanding of this issue.”

Some media accounts suggested that the search engine giant had caved to the group’s demands, but Google insisted that it had agreed only to provide a list of scanned titles and to find a workable solution for both sides.

In his letter, Mr. Hartmann, the Google executive, described the agreement to release scanned book titles as “unprecedented” and asked Chinese writers to appreciate the company’s sincere interest in settling the issue amicably.

Facebook

Facebook founder Mark Zuckerberg told a live audience yesterday that if he were to create Facebook again today, user information would by default be public, not private as it was for years until the company changed dramatically in December.

In a six-minute interview on stage with TechCrunch founder Michael Arrington, Zuckerberg spent 60 seconds talking about Facebook’s privacy policies. His statements were of major importance for the world’s largest social network – and his arguments in favor of an about-face on privacy deserve close scrutiny.

Zuckerberg offered roughly 8 sentences in response to Arrington’s question about where privacy was going on Facebook and around the web. I’ll post those sentences on their own first, then follow up with the questions they raise in my mind. You can also watch the video below, the privacy part we transcribe is from 3:00 to 4:00.

Zuckerberg:

“When I got started in my dorm room at Harvard, the question a lot of people asked was ‘why would I want to put any information on the Internet at all? Why would I want to have a website?’

“And then in the last 5 or 6 years, blogging has taken off in a huge way and all these different services that have people sharing all this information. People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people. That social norm is just something that has evolved over time.

“We view it as our role in the system to constantly be innovating and be updating what our system is to reflect what the current social norms are.

“A lot of companies would be trapped by the conventions and their legacies of what they’ve built, doing a privacy change – doing a privacy change for 350 million users is not the kind of thing that a lot of companies would do. But we viewed that as a really important thing, to always keep a beginner’s mind and what would we do if we were starting the company now and we decided that these would be the social norms now and we just went for it.”

That’s Not a Believable Explanation

This is a radical change from the way that Zuckerberg pounded on the importance of user privacy for years. That your information would only be visible to the people you accept as friends was fundamental to the DNA of the social network that hundreds of millions of people have joined over these past few years. Privacy control, he told me less than 2 years ago, is “the vector around which Facebook operates.”

I don’t buy Zuckerberg’s argument that Facebook is now only reflecting the changes that society is undergoing. I think Facebook itself is a major agent of social change and by acting otherwise Zuckerberg is being arrogant and condescending.

Perhaps the new privacy controls will prove sufficient. Perhaps Facebook’s pushing our culture away from privacy will end up being a good thing. The way the company is going about it makes me very uncomfortable, though, and some of the changes are clearly bad. It is clearly bad to no longer allow people to keep the pages they subscribe to private on Facebook.

This major reversal, backed-up by superficial explanations, makes me wonder if Facebook’s changing philosophies about privacy are just convenient stories to tell while the company shifts its strategy to exert control over the future of the web.

Facebook’s Different Stories

First the company kept user data siloed inside its site alone, saying that a high degree of user privacy would make users comfortable enough to share more information with a smaller number of trusted people.

Now that it has 350 million people signed up and connected to their friends and family in a way they never have been before – now Facebook decides that the initial, privacy-centric, contract with users is out of date. That users actually want to share openly, with the world at large, and incidentally (as Facebook’s Director of Public Policy Barry Schnitt told me in December) that it’s time for increased pageviews and advertising revenue, too.

The Flimsy Evidence

What makes Facebook think the world is becoming more public and less private? Zuckerberg cites the rise of blogging “and all these different services that have people sharing all this information.” That last part must mean Twitter, right? But blogging is tiny compared to Facebook! It’s made a big impact on the world, but only because it perhaps doubled or tripled the small percentage of people online who publish long-form text content. Not very many people write blogs, almost everyone is on Facebook.

Facebook’s Barry Schnitt told us last month that he too believes the world is becoming more open and his evidence is Twitter, MySpace, comments posted to newspaper websites and the rise of Reality TV.

But Facebook is bigger and is growing much faster than all of those other things. Do they really expect us to believe that the popularity of reality TV is evidence that users want their Facebook friends lists and fan pages made permanently public? Why cite those kinds phenomena as evidence that the red hot social network needs to change its ways?

The company’s justifications of the claim that they are reflecting broader social trends just aren’t credible. A much more believable explanation is that Facebook wants user information to be made public and so they “just went for it,” to use Zuckerberg’s words from yesterday.

(Why didn’t Arrington press Zuckerberg on stage about this? The rise of blogging is evidence that Facebook needs to change its fundamental stance on privacy?)

This is Very Important

Facebook allows everyday people to share the minutia of their daily lives with trusted friends and family, to easily distribute photos and videos – if you use it regularly you know how it has made a very real impact on families and social groups that used to communicate very infrequently. Accessible social networking technology changes communication between people in a way similar to if not as intensely as the introduction of the telephone and the printing press. It changes the fabric of peoples’ lives together. 350 million people signed up for Facebook under the belief their information could be shared just between trusted friends. Now the company says that’s old news, that people are changing. I don’t believe it.

I think Facebook is just saying that because that’s what it wants to be true.

Whether less privacy is good or bad is another matter, the change of the contract with users based on feigned concern for users’ desires is offensive and makes any further moves by Facebook suspect.