Week in review: Behind the earnings

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Meanwhile, on the other side of the continent, in a case with far-reaching implications for Silicon Valley, former top executives of Brocade Communications Systems are facing civil and criminal charges relating to allegations of stock-option backdating.

Federal officials announced the charges against Gregory Reyes, Brocade's chief executive until 2005, and Stephanie Jensen, the company's vice president of human resources from 1999 to 2004.

Also, a federal judge rejected both the U.S. government's and AT&T's requests to dismiss a class action suit accusing the telephone giant of assisting the National Security Agency in a sweeping, allegedly illegal, terrorist surveillance program.

U.S. District Judge Vaughn Walker in San Francisco disagreed with the government's assertion that the case should be thrown out because its subject matter and evidence involved "state secrets."

The judge also dealt a blow to AT&T's request to dismiss the case on three separate grounds. Heading south, a journalist and well-known helicopter pilot in Los Angeles has filed suit against video-sharing site YouTube, claiming that it encouraged users to violate copyright law.

Robert Tur says the video he shot of the beating of trucker Reginald Denny during the 1992 Los Angeles riots was posted at YouTube without his permission and viewed more than 1,000 times. Tur says in his lawsuit, filed Friday in U.S. District Court, that YouTube is profiting from his work while hurting his ability to license his video.

Across the globe, British police have arrested a U.K. citizen on charges that he operated Islamic fundamentalist Web sites that preached "violent jihad."

The vista from Redmond
Microsoft, which released a slightly updated test version of Windows Vista this week, has vowed to play fair by setting itself rules for development of the new browser and all future versions of Windows to bolster competition and customer choice.

The move comes as the expiration date approaches on antitrust provisions imposed on Microsoft by a U.S. federal court. The company also recently was hit by a massive antitrust-related fine by the European Union.

That news came on the heels of a report from security rival Symantec that draws attention once again to Microsoft's goal of improved security and the hurdles the software giant faces in getting there.

On the subject of security, Microsoft is readying a fix for a zero-day flaw in PowerPoint that has been exploited in targeted cyberattacks.

Microsoft also this week announced an alliance with networking specialist Nortel Networks, which will in many cases put it in direct competition with networking-gear provider Cisco Systems, as the companies pursue the markets for Internet Protocol telephony and other IP services.

Cisco, the No. 1 networking gear company, has a long track record in communications services, as does No. 3 Nortel. Nortel's partnership with Microsoft, whose software is ubiquitous, could offer significant strategic advantages as the companies pitch their products to business customers.

Redmond is also teaming up with XenSource, a smaller commercial software maker, to ensure its Viridian virtualization technology works with Xen, Viridian's open-source virtualization counterpart. This represents another Microsoft effort to improve how well Windows and Linux interoperate, a reflection of the software giant's slow realization that open-source software is not going away.

Microsoft announced its purchase of Winternals Software, a small maker of Windows utility programs, in a deal that Microsoft hopes will add key technical talent to its operating system development team.

And taking a page out of a science-fiction novel, Microsoft's research labs have come up with a way for people to navigate computer images using their hands to change their visual point of view. However, borrowing in equal measure from its business handbook, Microsoft is not going to develop the technology itself, but is instead licensing the technology, known as TouchLight, to a start-up.

Also of note
The World Cup head butt was used as Trojan bait...A Google executive challenged a Net pioneer on his ideas for a so-called Semantic Web...Retail stores will sell software for running Windows and Mac OS side by side on an Intel Mac...Adobe Systems released the first Windows beta version of Lightroom...Rootkits are getting better at hiding...the Internet phone service industry still has quality issues to address...Best Buy eyes early August for Core 2 Duo PCs...Yahoo sells Jessica Simpson single sans DRM...A worm lurks behind MySpace profiles...Next year fuel cells could take a significant step forward.