Business highlights

SAN JOSE — Apple Inc. has issued a software patch to fix some security holes that independent security researchers recently discovered for the company’s vaunted iPhone.

The software update that Apple said it released late Tuesday addresses several bugs and security issues, but most notably, a flaw that could have allowed hackers to take control of the multimedia cell phone to spread spam or steal data if its owner was to visit a doctored Web site or Internet Wi-Fi hotspot.

The iPhone hijacking vulnerability was only theoretical; there were no reports of criminals taking advantage of the glitch.

Still, such findings — and their subsequent patches — often help to make it more difficult for malicious attacks on computers and other gizmos like the iPhone, which hook up to computers or the Internet.

The much-hyped iPhone — a combination cell phone, iPod player and wireless Web gadget — quickly became a popular research target after its June 29 launch. Its first-ever software update came just two days before analysts at Independent Security Evaluators were set to discuss the iPhone’s hijacking hole at a hackers convention in Las Vegas.

"One of the great things about iPhone is that we can easily deliver software updates and bug fixes through iTunes when necessary,” Apple spokeswoman Jennifer Bowcock said Wednesday from a prepared statement.

Napster narrows 1Q loss; posts 15 percent boost in revenue

LOS ANGELES — Napster Inc. reported Wednesday its fiscal first-quarter loss narrowed as it generated record revenue and managed to lower customer acquisition costs.

For the quarter ended June 30, the online music service had a loss of $4.2 million, or 10 cents per share, after a loss of $9.8 million, or 23 cents per share, in the year-ago period.

Revenue increased 15 percent to $32.3 million from $28.1 million in the same quarter last year.

Analysts surveyed by Thomson Financial expected a quarterly loss of 15 cents per share on sales of $32.5 million in the latest period.

"Napster began fiscal 2008 by posting the strongest financial results in our history,” Chris Gorog, Napster’s chairman and chief executive, said during a conference call with Wall Street analysts.

Gorog was referring to cash flow, which was positive for the first time in company history. Napster has never reported a profit since its inception in 2003.

"We expect to continue our progress to profitability by producing positive cash flow in (the second quarter) as well,” he said.

Schwab to pay $20.50 per share in stock buyback

Charles Schwab Corp. will pay $20.50 per share to buy back about 102 million shares of its stock, distributing a portion of the proceeds from the stock brokerage’s recently completed sale of its wealth management subsidiary.

The purchase price announced Wednesday represents a 5 percent premium above the San Francisco-based company’s current market value. Schwab shares fell 62 cents Wednesday to $19.51.

Schwab had offered to pay as much as $22.50 per share when it announced the buyback plan in early July. Investors who tendered their shares were apparently willing to accept less because of the recent volatility that has lowered stock prices. Schwab’s stock price has fallen by 11 percent since management announced the buyback plan.

Under the plan, Schwab will spend about $1.7 billion to purchase 84 million shares from stockholders who tendered their holdings. The company will spend another $369 million to buy back 18 million shares from its founder and chief executive, Charles Schwab.

The stock brokerage is flush with cash after completing the $3.3 billion sale of its wealth management subsidiary, U.S. Trust Corp., to Bank of America Corp. last month. The deal generated an after-tax windfall of $2.7 billion.

Besides buying back stock, Schwab also plans to distribute $1.2 billion through a special dividend of $1 per share scheduled to be paid later this month.