Facebook is battling a lawsuit filed by a New York man who claims he owns 84 percent of the social-networking company.

Paul D. Ceglia of Wellsville, N.Y., claims in a lawsuit (see below) that he entered into a contract with Facebook founder Mark Zuckerberg in 2003 to design and develop a Web site that would ultimately become the social-networking giant. The contract entitled Ceglia to a $1,000 fee and a 50 percent stake in the final product, which eventually launched as TheFacebook.com, according to the suit, which was filed in the Supreme Court of New York’s Allegany County on June 30.

The suit also claims Zuckerberg agreed to pay Ceglia an additional 1 percent stake per day until the Web site is completed, giving Ceglia an 84 percent stake in the company as of February 4, 2004.

Judge Thomas Brown issued a temporary restraining order blocking any transfer of assets earlier this month after Facebook requested the case be dismissed.

Privately held Facebook dismissed the suit as frivolous.

“We believe this suit is completely frivolous and we will fight it vigorously,” Facebook spokesman Barry Schnitt said in a statement.

The company, which has nearly 500 million users, is estimated to be worth $6.5 billion after receiving a $200 million investment from the Russian firm Digital Sky Technologies in 2009. Zuckerberg’s fortune was estimated by Forbes magazine earlier this year to be $4 billion.

In 2009, New York Attorney General Andrew M. Cuomo obtained a restraining order against Allegany Pellets, a western New York wood pellet company owned by Ceglia and his wife Iasia. Cuomo accused the company of defrauding consumers by taking $200,000 in orders but not delivering any products or issuing any refunds. That case is reportedly ongoing.

Ceglia did not immediately return a call requesting comment.

Ceglia v. Zuckerberg complaint

Consumer sales of Windows 7 buoyed Microsoft to report record earnings, even after deferrals were figured in. Microsoft reported net income of $6.66 billion, or 74 cents a share, on revenue of $19.02 billion, which included $1.71 billion in Windows 7 deferred revenue for the quarter.

As part of that announcement, Microsoft reported that it has sold more than 60 million Windows 7 licenses to date. The combined Windows and the Windows Live division had operating income of $5.39 billion on revenue of $6.9 billion, compared to the year-ago quarter’s operating income of $2.71 billion on revenue of $4.06 billion.

Business sales of Windows 7 — unsurprisingly, given typical enterprise sales, testing and deployment cycles — have yet to kick in for Windows 7. That isn’t because business users are waiting for Windows 7 Service Pack (SP) 1, which is widely expected to ship some time this calendar year, Microsoft officials said. In fact, Microsoft is seeing more business activity around upgrades to the latest version of Windows than it has with previous launches, according to Microsoft’s new Chief Financial Officer Peter Klein.

“People want Windows 7 on all devices on all form factors,” said Klein during today’s call with Wall Street analysts. (In case you were wondering, that question wasn’t prompted by a question about the Apple iPad. Nobody asked about it during the Q&A session.)

Klein noted that netbooks currently comprise about 11 percent of the PC market and Windows is currently on 90 percent of these machines. Windows 7 is more than half of that base (XP, and to a much lesser extent, Vista) are on the rest of the Windows netbooks.

Yes, Office is still the other big Microsoft cash cow (with revenues of $4.74 billion for the Business DIvision this quarter), and that unit ended up really kicking in for Microsoft when the economy and Vista sales were down. But in Q2, But Business Division revenues and operating income were both down, compared to the year-ago quarter. Microsoft officials attributed the decline, in part, to the imminent arrival of Office 2010. (Office sales comprise more than 90 percent of the Business Division’s revenues; Dynamics products are the other 10 percent.)

(Detailed breakdowns for each division can be found in Microsoft’s latest 10-Q, filed on January 28.)

Server and Tools held its own (revenues up two percent, primarily because of Enterprise Client Access License (CAL) suites, System Center and SQL Server). But services/consulting revenues were down two percent, or $32 million. The Online Services Division (the search/advertising unit) is still in the red. Online access (dial-up) continues to plummet, and online advertising was off. In Entertainment and Devices, gaming console and game sales were down, but Xbox Live revenues were up.

Here’s a more detailed breakdown by division of revenue and operating income (click on the image below to enlarge).

Microsoft cut 800 jobs in the second quarter of FY 2010 and spent $59 million in severance payments. No analyst on today’s call asked whether there would be more layoffs planned for this year. The Softies did say they planned to continue to keep a tight rein on costs. While the Windows division spent more than usual on sales/marketing because of Windows 7 launch-related activities and ads, other divisions cut back on not just headcount, but also sales and marketing, as well as research and development expenses.

Today’s announcement by Hewlett-Packard and Microsoft is a good example. The two tech giants announced a partnership today that is valued at $250 million.

Why are these ventures getting such an influx of revenue? If content is king, then infrastructure in the castle in the cloud.

Profit excluding certain items was 1 cent a share in the fourth quarter, trailing the 6-cent average estimate of analysts, New York-based Alcoa reported yesterday. Sales fell 4.5 percent to $5.43 billion.

Revenue exceeded the average estimate of $4.84 billion in a Bloomberg survey, and Alcoa said most of the difference, or about $490 million, came from metal trades that generated no profit. Alcoa had to buy 207,000 tons of aluminum on the open market to satisfy customer purchase agreements while coping with higher costs from energy and currency exchange.

“This is a little disappointing because aluminum prices had been pretty strong for the quarter,” said John Stephenson, who helps manage C$1.5 billion ($1.45 billion) including Alcoa shares at First Asset Investment Management in Toronto. “One thing I thought they had done well was turn the corner operationally, but now energy costs are getting away from them and they are buying metal on the open market.”

Including some costs the quarterly net loss of $277 million, or 28 cents a share, narrowed from a loss of $1.19 billion, or $1.49, a year earlier, the company said in a statement.

Aluminum Prices

Alcoa, the first company in the Dow Jones Industrial Average to report results for the three months through December, fell 44 cents, or 3.7 percent, to 11.385 euros as of 9 a.m. in Frankfurt. The shares increased 43 percent on the New York Stock Exchange last year.

Alcoa’s sales benefited from aluminum prices that rose 18 percent in the quarter to $2,230 a ton on the London Metal Exchange. The price Alcoa charged customers for the metal increased 9.3 percent from the previous quarter, the company said.

Alcoa produced 897,000 tons of aluminum, up 1.8 percent from the previous quarter, in addition to the 207,000 tons it bought on the open market. Aluminum resale volume in the fourth quarter was almost triple the 70,000 tons from the prior quarter, the company said.

Resale Volume

Alcoa has to buy and resell aluminum every quarter, Kevin Lowery, a company spokesman, said in a phone interview. “It’s a matter of meeting customer commitments,” he said.

Alcoa wasn’t very clear about why the volume of such trades surged in the quarter, Michael Gambardella, an analyst with JPMorgan Chase & Co., said in an interview yesterday.

“Maybe they had problems with production and had to buy material on the spot market,” Gambardella said.

The zero-profit trading volume was equal to about 9 percent of total sales in the quarter.

“Disregard the sales figure,” said Charles Bradford, a partner at New York-based Affiliated Research Group LLC. “The reason sales did better than expected is they did trading at no margin. There was a substantial portion of revenue that came from that, much more than improvement versus consensus.”

Energy costs increased $23 million in Italy during the quarter, after a European Commission ruling that special electricity tariffs Alcoa received there didn’t comply with state-aid rules. Alcoa posted a $250 million charge to idle two smelters in Italy while the company appeals the ruling.

Cost Cuts

Chief Executive Officer Klaus Kleinfeld cut about 21,500 jobs from June 2008 through December 2009 as the deteriorating global economy reduced demand for aluminum. In March, he pledged to eliminate $2.4 billion in annual costs for items from raw materials to transportation, and that target was achieved, he said on a conference call yesterday.

This year, Alcoa is looking forward to a 10 percent improvement in global aluminum demand, led by China, Kleinfeld said on the call.

“We expect to see relative improvement from 2009,” Kleinfeld said. “Levels will still be below historic norms, but they are up.”