TechFlash: Seattle's Technology News

January is nearing an end. But before the month closes out, we wanted to share the top 10 most read stories on TechFlash. It was a busy month, from Microsoft layoffs to the Minecode scandal to news that Hearst may pull the plug on the Seattle P-I. February is shaping up as an interesting month, and we'll continue to cover our beats in full force. Thanks to everyone for reading.

Online file storage from ... Dilbert?

Laid-off Microsofties offered free office space, linux servers

Microsoft: Mac Office use is 77%

Marianne Marck, a vice president of engineering at Disney Interactive Media Group in Seattle, has jumped to online jeweler Blue Nile as senior VP of technology, the equivalent of CTO.

Reuters is now reporting that Paul Allen's Charter Communications is preparing a bankruptcy filing. AP's Deborah Yao recently did an in-depth story on Allen. Here's the hard-hitting lead: "How do you lose $7 billion? That's a question for Microsoft Corp. co-founder Paul Allen, who has seen his massive investment in cable TV operator Charter Communications Inc. all but vanish." [More after the jump.]

Ekos Corp. has scored $12.5 million in new funding, with plans to raise another $2 million as it strives for profitability in late 2010. The Bothell medical device company sells a $2,700 ultrasound-based catheter that is used to dissolve blood clots in the legs. Chief Executive Bob Hubert said the 115-person company has sold about 10,000 of the devices since it was commercialized three years ago.

Matt McIlwain

Two years ago, I took Forbes to task for not including any Seattle area venture capitalists on its "Midas List." At the very least, I noted that Madrona Venture Group's Matt McIlwain -- an early investor in Isilon Systems -- should have been considered. Well, maybe the editors of Forbes finally listened. McIlwain appears on the latest  "Midas List" of the top tech deal makers, debuting in the 57th slot. He's the only Seattle area VC to make the list this year.

Microsoft says a startup founder took a job at the Redmond company under false pretenses, then used his inside access to download confidential documents for a patent complaint his company has since filed against major computer makers.

For the second time in the past two months, Marchex is cutting staff. The Seattle domain name operator and local advertising company announced that it is cutting four percent of its staff -- about 15 positions -- as part of a larger reorganization.

It is tough times in the Seattle technology industry as nearly every other day brings news of more layoffs. From big players such as Microsoft, Attachmate and RealNetworks to small, venture-backed startups, the climate appears rather bleak.

But not every company is cutting back. In fact, some Seattle area technology companies are using the downturn to grab market share and gobble up talent. Microsoft -- despite announcing layoffs of 5,000 people last week -- has even said it plans to continue hiring in key areas. And tech entrepreneurs who were lucky enough to raise capital in recent months also are expanding payrolls, albeit at a more cautious pace than this time last year.

"You have to start companies now to take maximum advantage of the upswing when it happens," said PetraVM co-founder Mark Oskin, whose company recently pulled in $1.5 million in venture funding.  The stealthy Seattle software startup plans to double its staff of four this year, with plans to expand to 15 to 20 workers by 2010.

Seattle's deteriorating economy is the subject of a piece on NBC Nightly News tonight, with Brian Williams noting that the region known for companies like Boeing, Microsoft, Starbucks and WaMu is "really feeling the pain." I know, just what you wanted to hear.

(Disclaimer: The two Seattle P-I reporters featured in the piece are friends of mine)

It's been a tough month for workers in the Seattle area high-tech industry, with cuts at big companies like Microsoft and small startups like Cozi. We've been tracking them all along, which isn't necessarily a fun part of the job. 

We've tabulated some 16,650 layoffs since we started keeping track back in early October, including the 15,000 workers who are slated to lose jobs at Boeing and Microsoft. That compares to more than 22,000 cuts during the dot com bust era. If you can't stomach to look at the list below, let us reassure you. Tomorrow, we'll tell you about some tech companies that are actually hiring amid this downturn. First, the layoff numbers.

The transformation at the University of Washington's TechTransfer department continues, with news that two experienced technology executives have joined the research and licensing organization. Todd Alberstone, who most recently served as chief privacy officer and associate general counsel at RealNetworks, is joining the department next week in the new role of director of intellectual property management. Meanwhile, former Microsoft manager David Cummings is joining as a licensing officer with a specialty in engineering and computer science.

A group of 14 investors who lost nearly $1 million on Entellium are suing former executives of the Seattle software company for allegedly selling securities based on fraudulent accounting data.

The lawsuit -- filed in King County Superior Court on January 14 -- names former Chief Executive Paul Johnston, former Chief Financial Officer Parrish Jones and former Vice President of Customer Experience Terry Murphy as defendants. Johnston and Jones pleaded guilty to wire fraud last month for inflating revenues at the maker of customer relationship management software. Both are awaiting sentencing in March.

"Entellium, by and through its agents and representatives, failed to institute processes to ensure that financial statements made by the CEO and CFO of Entellium were not materially deceptive or grossly inaccurate," the suit says.

Just how far has online journalism come? Check out this 1981 KRON report on computer users receiving an electronic edition of The San Francisco Examiner. The newscaster notes: "It takes over two hours to receive the entire text of the newspaper over the phone and with an hourly usage rate of $5, the new telepaper won't be much competition for the 20 cent street edition."

Hallie Goertz: Finally! After three months of application submissions and informational meetings, I landed a real honest-to-goodness interview for a real honest-to-goodness paying job. It’s not a stretch to say I was ecstatic when I saw the request in my inbox. (Coincidentally the email arrived the morning after the inauguration. Maybe Barack really is going to save us!? If not “us” maybe just me?)

The thrill, however, dissipated quickly. I had quite a bit of preparation ahead.

Michael Sievert

It's always fascinating when stealthy technology companies get acquired before announcing what they are doing. It happened earlier this month when eBay quietly purchased Positronic, a Seattle startup led by former Microsoft search chief Christopher Payne. And now it has happened again with yet another former Microsoft big shot. Lenovo -- the personal computer giant -- today announced the purchase of Seattle-based Switchbox Labs for an undisclosed price.

Led by former Windows marketing vice president Michael Sievert,  Switchbox was relatively unknown until two weeks ago when my TechFlash colleagues uncovered the startup's name and corporate documents.

Terry Drayton

Count Me In may be down for the count -- permanently. Today, the troubled Bellevue online payments and registration company issued a statement saying that an involuntary Chapter 7 bankruptcy will proceed, meaning that a court-appointed trustee is expected to seize assets of the company.

All of the company's staff have been let go. And the 220 clubs that were owed about $5 million were notified of the change earlier today. Count Me In Chief Executive Terry Drayton was not made available today through a spokesman. In a statement, the former CEO of HomeGrocer.com said it was an "incredibly sad day."

“It was my intention to repay every penny we owed to our clients," said Drayton.