Today: Facebook introduces Home, a new Android app that layers on top of Google's (GOOG) mobile operating system. Also: Hewlett-Packard (HPQ) shuffles its board, Wall Street gains slightly ahead of jobs report.

Facebook introduces a new app that could challenge Google's openness with Android

Facebook's announcement Thursday was not a Facebook phone, per se, but rather a new Facebook app that can turn any compatible Android phone into such a device, with Home -- as the app has been dubbed -- able to layer atop Android apps and functions for messaging and other functions. The new effort proves that Facebook is fully focused on mobile, but it also tests the openness of Android in a new way, which could strain an already barely-existent relationship between the two Silicon Valley tech titans.


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Facebook Home opens up a new realm of mobile multitasking for Android users, allowing Facebook functions to run atop other apps instead of forcing a smartphone user to exit out of a browser or other application in order to message a Facebook friend. It also utilizes the Android homepage, layering Facebook content on the most prevalent "face" of a smartphone; the Menlo Park social network's creator and CEO Mark Zuckerberg also said Facebook would eventually sell ads for that space, a potentially lucrative venture.

That nugget could be a big sticking point for Google, which offers Android as open-source software to hardware manufacturers, but competes with Facebook for mobile- and online-advertising revenue.

"Google should be very worried," Global Equities analyst Trip Chowdhry said in an email Thursday, later adding "Google is going to lose mobile monetization to Facebook because if Home is the first interaction that a user makes, then that is where the maximum monetization occurs."

"Google missed a huge opportunity in social mobile phones, no wonder Andy Rubin was fired," Chowdhry concluded.

The reason for pessimism on Google after Thursday's announcement Facebook's ability to use its new Android app to beef up its revenue-generation through targeted advertising, in direct opposition to Google's own similar efforts.

"This is about becoming more deeply embedded in the operating system on mobile devices, and creating a broader platform," Ovum chief telecoms analyst Jan Dawson told Reuters. "It will allow Facebook to track more of a user's behavior on devices, and present more opportunities to serve up advertising."

Zuckerberg told Fortune in a one-on-one interview that he had no idea how Google would respond to the effort, but praised the company for its openness, specifically drawing a parallel with the more closed environment offered by Apple (AAPL).

"I'm not sure how (Google is) going to react. ... I think that Google has this opportunity in the next year or two to start doing the things that are way better than what can be done on iPhone through the openness of their platform. We'd love to offer this on iPhone, and we just can't today," Zuckerberg said.

In a separate interview with Wired, Zuckerberg admitted that the two companies have few ties, but again praised its open-source nature: "There aren't a lot of bridges between us and Google, but we are aligned with their open philosophy."

The Mountain View search giant expressed no hard feelings in a statement about Facebook Home on Thursday, while also mentioning the open-source nature of its software.

"The Android platform has spurred the development of hundreds of different types of devices. This latest collaboration demonstrates the openness and flexibility that has made Android so popular. And it's a win for users who want a customized Facebook experience from Google Play -- the heart of the Android ecosystem -- along with their favorite Google services like Gmail, Search and Google Maps," a Google spokesman said in an email Thursday.

While both companies took pains to praise the open nature of Android, Facebook Home could test that, as Farhad Manjoo suggested on Twitter: "They're really challenging Google on openness. They're almost daring Google to close it," the tech reporter wrote.

Simon Mansell, CEO of advertising technology provider TBG Digital, agreed.

"Google has made Android open, but as they release the next version, are they going to be as open?" he asked Reuters. "Facebook is hiding all the Google stuff with their own stuff, and how Google will respond is interesting."

Investors seemed to immediately understand the implications for both firms Thursday, as Facebook gained 3.1 percent to $27.07 while Google dropped 1.4 percent to $795.07.

Hewlett-Packard boots directors after they survived coup attempt

Just a couple of weeks after some observers expected Hewlett-Packard to jettison directors to satisfy bloodthirsty investors, only to see them survive the coup attempt, the company shook up its board anyway Thursday, demoting Chairman Ray Lane and accepting the resignations of two other directors.

After surviving a contentious annual shareholders meeting last month, John Hammergren and G. Kennedy Thompson agreed to step down from the board Thursday, while Lane will cede his chairmanship to director Ralph Whitworth.

"After reflecting on the stockholder vote last month, I've decided to step down as executive chairman to reduce any distraction from HP's ongoing turnaround," Lane said in the Palo Alto company's statement.

That turnaround is the years-long plan spearheaded by CEO Meg Whitman, who praised the trio Thursday.

"Their leadership is reflected in the early success we've had turning the company around," she said.

A segment of HP shareholders have been agitating for heads to roll in the wake of the Palo Alto PC giant's admission that it paid far too much for British software company Autonomy. Whitman's predecessor, Leo Apotheker, agreed to pay $11 million for the company in 2011, but the company was forced to write down $8.8 billion of that just a year later, three months after writing down a similar amount for another failed acquisition.

Shareholders have also been upset by the company's rapidly declining stock price, though that trend seems to turn around in the first quarter of 2013, when HP shares gained 67.3 percent to help push the Dow Jones industrial average to record highs. Investors did not seem to be overjoyed by Thursday's news -- after gaining 1.8 percent to $22.30 in regular trading, shares dipped as low as $22.08 in after-hours trading, following the announcement.

Apple falls as Silicon Valley stocks can't join Wall Street's gains

Stocks rallied following Wednesday's downturn, with all three U.S. stock indexes increasing on economic optimism ahead of Friday's release of the March jobs report. Silicon Valley stocks were not as fortunate, however: The SV150 index of the region's largest tech companies declined 0.2 percent as Apple joined Google with a daily decline.

The tech giant dropped another 1 percent Thursday to close at $427.72, and fell as low as $425.25, perilously close to its 52-week low of $419. The company could have been damaged in investors' eyes by reports that it is over budget and behind schedule in building its new Cupertino headquarters, with a feature story in Bloomberg Businessweek detailing the company's efforts to construct Steve Jobs' vision.

Netflix (NFLX) also continued this week's steep descent, dropping another 1.8 percent to $166.69 despite announcing a release date for the highly anticipated relaunch of "Arrested Development." After a big gain on the back of its new online-gambling venture Wednesday, Zynga fell back a bit Thursday, declining 2.3 present to $3.45.

LinkedIn (up 3.2 percent) and Yelp (up 2.7 percent) joined social-networking cousin Facebook in gaining Thursday, and Tesla recovered slightly from Wednesday's decline with a 2.2 percent increase.

Silicon Valley tech stocks

Up: Intel (INTC), Cisco (CSCO), HP, eBay (EBAY), VMware, Facebook, LinkedIn, Tesla

Down: Apple, Google, Oracle (ORCL), Juniper, Netflix, Zynga

The tech-heavy Nasdaq composite index: Up 6.38, or 0.20 percent, to 3,224.98.

The blue chip Dow Jones industrial average: Up 55.76, or 0.38 percent, to 14,606.11.

And the widely watched Standard & Poor's 500 index: Up 6.29, or 0.40 percent, to 1,559.98.

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.