March 5, 1999
IBM and Dell Computer Enter Into $16 Billion Technology Alliance
IBM and Dell Computer Corp. announced a $16 billion strategic technology alliance in which Dell will purchase storage, microelectronics, networking and display technology from IBM for integration into Dell computer systems. By aligning itself with IBM, the company will gain a powerful services organization enabling it to operate internationally. Dell's lack of services had been a hindrance because its main PC rivals, including Compaq, IBM and Hewlett Packard Co. have well-established businesses that operate internationally. Dell Computer with a powerful services organization to sell its computers. In the future, the agreement is expected to include IBM's copper, silicon-on-insulator, and other advanced technologies. The seven-year agreement also calls for broad patent cross-licensing between the two companies and collaboration on the development of future product technology. Initially, Dell will have access to IBM's high capacity disk drive, network adapter cards, flat panel displays, high performance static random access memory and custom chips.
US West Realigns Strategy and Reduces '99 Estimate
US West announced that it would increase spending on its communications network this year, forging near-term profit growth to prepare for aggressive competition as AT&T begins to offer local phone service. The company said its profit this year would grow by about 10 percent, down from its earlier estimate of 12 to 14 percent. To keep itself up as a worthy competitor, the company will spend about $100 million to improve its existing network and to train network technicians, as well as $200 million to develop a faster and more advanced network.
Alcatel to Acquire Assured Access Technology for About $350 Million
Alcatel and Assured Access Technology, Inc. have entered into a definitive agreement under which Alcatel will acquire Assured Access Technology for $350 in cash. The acquisition of Assured Access, together with the Xylan acquisition announced earlier this week and the completed Packet Engines deal, provides Alcatel with next-generation IP technologies to further its effort to expand its presence in the U.S. As part of the agreement, the two companies will engage in a technology development incentive plan. The incentive plan will leverage Assured Access' Internet remote access knowledge to develop new products broadening Alcatel's networking solutions for the carrier market. Assured Access will retain its name and continue to be headquartered in Milpitas, CA. Martin de Prycker, recently appointed President of Alcatel's Internet Division, will serve as chairman of the company, while Arthur Klein, a founder of Assured Access, will remain as CEO.
AMCC to Acquire Cimaron Communications for $115 Million
Applied Micro Circuits Corp. signed a definitive agreement to acquire Cimaron Communcations Corp. for $115 million. Under the terms of the agreement, AMCC will issue 3 million shares of its common stock in exchange for all outstanding shares of Cimaron preferred and common stock, including shares issuable upon exercise of employee stock options and other rights. Based on AMCC's closing price Tuesday of $38.50 per share, the transaction is valued at approximately $115 million. The merger transaction is expected to close in March and is expected to be accounted for as a pooling of interests. The agreement has gained approval by the board of directors of both companies.
AT&T Canada and MetroNet Communications to Merge in Seven Billion cad Deal
AT&T Canada Corp. and MetroNet Communications Corp. have executed a definitive agreement to merge the companies in a transaction valued at approximately 7 billion cad. MetroNet and AT&T Canada will be merged into a new company called AT&T Canada Corp. The boards of directors of both companies have approved the transaction, which MetroNet shareholders will be asked to approve at a shareholder meeting expected to be held next May. If approved by MetroNet shareholders, the merger of the companies is expected to be completed by the second quarter. Following the merger, AT&T Canada will have combined annual revenues of approximately 1.4 cad, more than 4,000 employees, and over 3.5 billion cad in assets. As part of the agreement, MetroNet shareholders will indirectly own 69 percent of the merged company and AT&T Corp. owning 31 percent. The merged company, which will include ACC TelEnterprises, will market its services under the AT&T Canada brand.
MCI WorldCom and Bell Canada Enter Joint Voice and Data Alliance
MCI WorldCom Inc. and Bell Canada have entered into an alliance which will provide seamless voice and data services. The companies expect the alliance to become effective in the first quarter of next year. The alliance will replace MCI WorldCom's existing alliance with Stentor.
France Telecom Mobile Subscriber Base to Reach 6 Million
Didier Quillot, commercial director of France Telecom Mobiles, said the number of subscribers to its Itineris service will reach 6 million during the next few days. The number of Itineris subscribers has risen 2.5 million in the last year. The exact number of mobile telephone subscribers is scheduled to announced soon by ART, the telecommunications regulation authority.
Brazil's Telesp Celular Sees Rise in Fourth Quarter Earnings
Brazil's Telesp Celular, the largest cellular telephone operator in the state of Sao Paulo, registered earnings of 414.7 million reals ($194.7 million) in 1998, representing earning per 1,000 shares of 7.23 reals.
Telecom Italia's Finance Chief Fulvio Conti Resigns
In the midst of Telecom Italia's battle with Olivetti's hostile takeover bid, Telecom Italia SpA's chief financial officer announced his resignation. Analysts view the resignation as part of Managing Director Franco Bernabe's effort to realign the company. At this time, neither Telecom Italia nor Conti would comment on the resignation which had been rumored since last week. Conti will remain as the head of Finsiel, a small software division that is expected to be sold as part of Telecom Italia's restructuring process, which Managing Director Franco Bernabe's is accelerating in an effort to raise value quickly enough to persuade shareholders to ignore Olivetti's takeover bid.
March 4, 1999
Siemens to Form New U.S Facility to Expand Presence in Data Communications Market
To expand its presence in the growing data market, Siemens of Germany, will acquire privately-owned Castle Networks for $300 million and Argon Networks for $240 million. In addition, the company will purchase a $30 million stake in Accelerated Networks, Inc., a private company based in Moorpark, CA. Siemens plans to use these acquisitions as part of a new subsidiary that will be based in Boston. The company plans to hire Martin C. Clague, general manager of IBM, to become chief executive of the new venture. The proposed board of the new subsidiary will include Mr. Clague; Fred Fromm, chief executive of Siemens's American operations; Thomas Rambold, president of Siemens's current data networking group; Dan Smith, chief executive of Sycamore Networks, and George H. Conrades, former chairman of BBN Corporation.
TV Guide Inc. Plans to Sign Agreement with TCI for Digital Television Service
TV Guide Inc., a spin-off company combined of United Video Satellite Group and a unit of News Corp., has announced plans to sign an agreement with TCI for digital television service. Under the terms of the proposed deal, TV Guide Inc. could complete a 10 year deal with TCI that would offer the TV Guide interactive digital service to TCI cable-television subscribers. Upon completion of the deal, TV Guide would gain a strong stance to attract other cable television operators. TV Guide Interactive offers a supplementary package to subscribers including more channels, extended pay-per-view operations and even music transmission. The company plans to sell merchandise such as celebrity branded gear , TV show soundtracks and movies with the ease of clicking a remote control.
AT&T and AOL to Enter Possible Marketing Alliance
AT&T Corp. and America Online Inc. have been holding a series of talks that could lead to a marketing alliance. AOL is said to be looking for an up-front payment of about $500 million, which would fund network construction. The deal would allow AT&T to sell its long-distance phone service with AOL's online service, which has currently 15 million subscribers. If such an alliance is successfully implemented, consumers could sign up for AT&T phone service and pay their AT&T bills on AOL. An agreement, however, would not be able to take effect until July 2000 as Tel-Save.com has exclusive rights to market long-distance phone service on AOL through June 2000. AOL has been in negotiations with other long-distance carriers, but AT&T appears the most serious about the deal.
3Com's Third Quarter Earnings Fall Below Expectations
3Com Corp. expects that its third quarter earnings will fall below expectations, coming in at only 23 cents per share, below analysts' expectations of 37 cents. The company sees the shortfall as a result of an unexpected slowdown in the U.S. and European corporate markets and lower than expected sales to PC makers. Sales for the third quarter are likely to be between $1.140 to $1.415 billion, translating earnings of 23 cents. In addition, 3Com chief executive office Eric Benhamou said that the weakness in the company's two-tier distribution model also contributed to weak third-quarter earnings.
Global Crossing Expands Pan European Network to 24 Cities and Secures Additional Rights of Way
Global Crossing Ltd. will add an eastern ring of six new cities including Berlin, Munich, and Stuttgart to its previously announced Pan European network. In addition, it has contracted to secure rights-of-way and conduits for four key routes for the Pan European Crossing system in France, adding approximately 1,300 kilometers to routes already in place. In Great Britain Global Crossing will award construction on certain key routes to Mcnicholas Construction Company Ltd. which will secure rights of way and build conduits for the company in the United Kingdom. Global Crossing has also reached an agreement in principle with various providers of conduits on its remaining routes in the United Kingdom. Pan European Crossing is being developed in several phases, initially providing connectivity among 19 cities in 1999: London, Paris, Amsterdam, Rotterdam, Antwerp, Brussels, Hamburg Hanover, Dusseldorf, Cologne, Frankfurt, Berlin, Dresden, Leipzig, Nuremburg, Munich, Stuttgart, Strasbourg, and
Copenhagen. In 2000, planned expansions of the network will include connections to Lyon, Marseilles, Turn, Milan and Zurich. And addition network expansion may extend the Pan European Crossing network to Rome, Barcelona, Madrid, Vienna, and major cities in Scandinavia, eastern Europe and Russia.
Bell South to Purchase Cellular License from Chile's Entel for $90 Million
BellSouth Corp. has agreed to purchase the telephone license currently held by Engel Telfonia Personal SA of Chile for $90 million. BellSouth said the license covers all area of Chile outside Santiago, and that it expects to provide digital service in the area by the end of 1999. BellSouth already has a license to serve Santiago.
Cox Communications and Media One Sign System Trade Agreement
Cox Communications and MediaOne have signed a definitive agreement to trade selected cable television systems in Massachusetts, Rhode Island and Connecticut representing a total of 105,000 customers. The transaction is expected to close in the third quarter of this year, pending legal and regulatory review. Under the terms of the agreement, Cox would trade its cable television systems in Taunton, North Attleboro, Franklin, Millis, Norton, Plainville, Somerset, Swansea and Blackstone, Mass, serving approximately 54,000 customers, for MediaOne properties in Enfield, Conn., and Westerly, RI, serving 51,000 customers, and an undisclosed amount of cash.
Digital Teleport Announces $22 Million Fiber Optic Facilities Swap Agreement
Digital Teleport, Inc. has entered into a $22 million binding memorandum of understanding with a major telecommunications company for the swap of fiber optic network facilities of the parties. Under the terms of the agreement, DTI will receive telecommunications facilities in a route form Atlanta, GA. To Louisville, KY, plus a cash tune-up payment. The other party will receive telecommunications facilities in DTI's route from Tulsa, OK. to Nashville, TN. In addition, DTI has granted the other party an option to purchase additional telecommunications facilities on certain routes. The total transaction will result in an approximately $8 million to $10 million cash payment to DTI.
MFS Network Technologies Signs Agreement with Norlight Telecommunications to Expand Fiber Optic Network to Over 550 Miles
MFS Network Technologies has signed an agreement with Norlight Telecommunications to expand their fiber optic network from the original 130 miles announced in October to over 550 route miles. The new contract is valued at over $17 million. Upon completion of the network, Norlight Telecommunications will be able to deliver high-speed digital voice, data and video communications, and will provide service to central and southern Michigan cities. MFSNT has completed design and engineering work on the network and will begin construction immediately. Second and third tier cities will soon be connected with Detroit and have access to protected traffic distribution. Completion of the network is scheduled for the third quarter of 1999.
GTS Expands to 12,000 Kilometers Pan-European Network with the Addition of Madrid and Hamburg
Global TeleSystems Group will add an additional 2,500 additional kilometers to the company's network with the addition of Madrid and Hamburg, expanding their Pan-European fiber optic network to 12,000 kilometers. Madrid and Hamburg are the 18th and 19th cities added to the network as primary customer access nodes, with the network ready to serve customers on short notice in four additional European cities. Spain is the 10th country and Hamburg is the sixth German city added to the network. GTS Carrier Services also offers Internet service providers connectivity to Vienna, Prague, Bratislava and New York. In total, GTS Carrier Services currently reaches 26 of the 44 European cities to which it is scheduled to provide service by year-end 1999.
Microsoft Corp. and Dialogic to Jointly Develop Computer Telephony Software
Microsoft Corp. plans to jointly develop computer telephony hardware and software with Dialogic Corp. to integrate Dialogic's CT Media server software into the Windows operating system. Under the terms of the agreement, Microsoft will license the company's server software, and Dialogic will provide development services to Microsoft in exchange for $20 million in payments over the next five years. Microsoft has also taken a $24.2 million equity investment, or 5 percent stake, in Dialogic. The companies see the agreement as a way to accelerate the use of open platform and standards in computer telephony.
Telefonica to Divide up the Assets of Riograndense de Telecommunicacoes
Telefonica SA and its partners in the Brazilian telecom operator Companhia Riograndense de Telecommunicacoes have divided up the company's assets, with Telefonica retaining control of CRT's mobile unit. The decision was taken to avoid Telefonica having to give up its controlling stake in CRT, an obligation imposed by the Brazilian authorities last year when the Spanish group acquired various telecom operators in the Sao Paulo region. Brazilian legislation prohibits any one group from controlling two fixed line telephone operators, and Telefonica would have had to hand over control of CRT or reduce its stake to under 20 percent by January 2000. Having now taken over CRT's mobile operations, Telefonica, which is now operating in various markets with a total of over 74 million inhabitants, will have a key strategic position in the Brazilian mobile phone market.
Rockwell Unit to Acquire Dynapro's HMI Software and Hardware Business
Rockwell International Corp. unit Rockwell Automation has signed an agreement to acquire Dynapro's human-machine interface software and hardware capabilities for an undisclosed sum. Under the terms of the agreement, Rockwell will purchase intellectual property and assets of Dynapro's software business, which Rockwell Automation currently sold under the Rockwell Software brand.
March 3, 1999
Hewlett Packard Reportedly to Split Into Two or More Traded Entities
Hewlett Packard Corp. is expected to announce a major corporate restructuring that could break up the company into at least two separate publicly traded entities, according to a report in the Wall Street Journal. A transaction, if completed, could rank as one of the biggest split-ups in corporate history, the report stated. Although HP would not comment, people familiar with the matter said the company is planning a major announcement after the stock market closed yesterday. During its latest quarter, company sales of Unix servers fell, while total sales went up only 1% to $11.94 billion. Revenue from test and measurement equipment dropped 14%, compared with a year earlier. The report noted that HP has underperformed the overall stock market significantly. One possibility calls for the company to spin off their test and measurement business, which has different growth dynamics from the computer business. Another person close to the company said that HP is likely to try to stress faster-growing markets, including internet-related hardware, that could command a premium on Wall Street.
Intuit to Acquire Computing Resources for $200 Million
Intuit Inc. announced that it would acquire closely held Computing Resources Inc. for $200 million in cash and stock, to expand its product offerings for small businesses. Intuit has been using Computer Resources to support the payroll function of its Quick Books accounting software since October, and the acquisition advances its goal of being an essential for small businesses.
Lucent Unit to Acquire Enable Semiconductor's Ethernet Unit for $50 Million
Lucent Technologies Inc.'s unit Lucent Microelectronics group announced that it has reached an agreement to acquire Enable Semiconductor's Ethernet local area network for approximately $50 million in cash. Under the terms of the agreement, Lucent will acquire Enable's portfolio of Ethernet integrated circuits and technology as well as a team of 40 IC developers. The deal will provide Lucent with expertise in Ethernet's technology for these networks.
MCI WorldCom to Spend $6.5 Billion for Global Expansion; will have Emphasis on Asian Markets
MCI WorldCom expects to spend $6.5 billion in 1999 on global expansion and will shift the emphasis on its new markets initiative to Asia from Europe. This year's $6.5 billion US$ budget for global expansion represents a dramatic increase in spending in this area. Over the last three to four years, the company and its predecessors MCI Communications Inc. and WorldCom Inc. spent a total of about $12 billion on international expansion. Initially, the company's Asian growth initiative will focus on Hong Kong and Japan, with plans to build out even further, although no specific countries have been planned. In related news, the company launched its Internet services for businesses in the Asia-Pacific region. The Internet division will provide services to businesses of all sizes, but expects that the majority will be multinationals needing to conduct Internet communications with the U.S. Once MCI WorldCom's Asia-Pacific Internet business services are fully developed, the division will begin
marketing consumer Internet services in the region.
Xylan's Shares Rise 33% Following Alcatel's Acquisition
Investors yesterday reacted favorably to Alcatel's acquisition of Xylan Corp. as company shares rose $8.8125, or 33 percent, to $35.75. Alcatel, which already owns 6 percent of Xylan, will pay $37 for each remaining share, a 37 percent premium over Xylan's closing price on Monday. Boards of both companies have approved the offer.
Corning to Acquire BICC's Telecommunications Business and 50 Percent Equity Interest of Optical Waveguides Australia for $133 Million
Corning Inc. will acquire BICC's telecommunications businesses and the 50 percent equity interest in Optical Waveguides Australia, Pty Ltd., it does not already own for approximately $133 million The telecommunications cable businesses produce optical and metallic telecommunications cable and provide network installation services. Upon completion of the deal, BICC's telecommunications businesses in Australia, Germany, Spain and the United Kingdom will become wholly owned by Corning Incorporated. Corning sees the acquisition as a means to expand their international platform from which it can capitalize on new product and business opportunities in the European telecommunications market.
AT&T Redirects Emphasis to Internet Based Products
AT&T announced that it will stop purchasing traditional long-distance switches from Lucent Technologies and redirect its annual capital spending of about $6 billion toward products based on Internet technology. The company also announced yesterday that it would participate in a group formed by Lucent, Motorola and other companies to promote new uses for the Internet, such as services that read e-mail over the phone.
Cisco Expands Presence with Acquisition of 400 Acres for New Facility
Cisco Systems has agreed to acquire more than 400 acres in the North Coyote Valley in San Jose, CA for a new site that will house up to 20,000 employees. The new location will nearly double Cisco's landholding in Silicon Valley. Based in San Jose, Cisco currently employs more than 10,000 people in Silicon Valley and more than 17,000 others at sites around the world. The new location will be the companies biggest business site, with about seven million square feet of office space.
Microsoft Purchases 5 Percent Stake in Dialogic for $24.2 Million
The Microsoft Corp. announced that it would purchase a 5 percent stake in the Dialogic Corp. for $24.2 million and enter a $20 million licensing and service pact with Dialogic to expand in telecommunications. Dialogic, which electronically links telephones and computers, will receive the $20 million over four years for product development, support and licensing of its products. The agreements expand the companies' previous joint development of standards for Internet voice transmission and could make it easier for software developers to write programs for voice transmissions over the Internet , voice recognition and call centers.
Nortel Networks Signs Product Agreement with MCI WorldCom
Nortel Networks has signed an agreement with MCI WorldCom that will span the next 20 months. The agreement lays the foundation for purchases covering a wide range of products and solutions, including Nortel Networks' switches, optical networking equipment, network management tools, and access platforms.
Deutsche Bank Seeks EU Support in Deutsche Telekom Cable Operations Bid
Deutsche Bank AG is hoping for the support of the European Commission in its attempt to acquire the cable television operations of Deutsche Telekom AG. Deutsche Bank chairman Rolf Breuer broached the subject with EU competition commissioner Karel Van Miert last month and made it clear he is hoping for the backing of the commission, according to an article in the Sueddeutsche Zeitung. The EU Commission has pressed Deutsche Telekom to shed its cable TV operation to allow the network to be used for Internet connections as well as radio and TV broadcasting.
Sony Invests $250 Million in its New Playstation II Game Console
The Sony Corporation has unveiled the second generation version of its new Playstation video-game console. To promote the new playstation game center, the company has invested more than $250 million, and is confident that it will be a success. Playstation II is far more powerful than the current model with a 128-bit microprocessor compared with the current generation of 64-bit machines. It can produce three-dimensional characters, connect users to the Internet and a personal computer, and play music and movies using CD-ROM's and the more cutting edge DVD's. Along with these features, the 3,000 software titles made for the original Playstation can be used on the new version. This makes Playstation II the first video-game player that allows users to play games designed for its predecessor. The new version will become available initially in Japan by next winter and in the United States by the year 2000.
March 2, 1999
Alcatel Agrees to Acquire Xylan Corp. for $1.7 Billion
To enhance its presence in the computer networking market, Alcatel has agreed to acquire Xylan Corp. for more than $1.7 billion in cash. Both companies will officially announce the deal today. This acquisition enables Alcatel, a supplier of traditional and wireless telephone systems, to augment its presence in the emerging data communications market. The deal comes at a time when other large traditional telephone equipment makers are making efforts to keep abreast of the convergence of telephone and data technologies. In January, Lucent Technologies agreed to acquire data network player Ascend Communications for $20 billion and Northern Telecom purchased Bay Networks for $9.1 billion last year.
Adelphia to Acquire FrontierVision for $1 Billion
Consolidation of ownership in the cable-television industry continues as Adelphia Communications Corp. will acquire FrontierVision for $1 billion in cash and stock. Cable companies have continually sought out partners in recent years as the opportunity to deliver new services such as local phone service and Internet access over cable has significantly grown in the past few years. As a result of the acquisition, Adelphia would see its subscriber base rise up 30%. It will add 702,000 basic cable subscribers to Adelphia's existing base of 2.4 million subscribers, which are scattered throughout New England and Virginia. Under the terms of the agreement, Adelphia will purchase FrontierVision in exchange for $550 million in cash and seven million shares of Adelphia Class A common stock, valued at $421.8 million based on last Tuesday's closing price. In addition, the company will assume $1.11 billion in debt through the deal, which is expected to close later this year.
Iridium Falls 1st Quarter Revenue and Subscriber Base Falls Below Expectations
Iridium expects to miss its first quarter targets for subscribers and revenue, putting it in default of agreements with lenders that helped finance its $5 billion telephone-satellite system. The company has an agreement with its bankers to meet a target of 52,000 subscribers , including 27,000 users for the satellite-communications portion of its network by the end of March. The company has targeted its revenue at $ million in cash and $30 million in accrued revenue. To finance its system, Iridium has about $800 million in secured loans from a number of banks. To help finance Iridium's effort Motorola Inc., which built a network of 66 low earth satellites, has also put up $750 million to finance the project. In addition, Motorola has provided Iridium with about $400 million in vendor financing and owns $157 million of Iridium's high-yield debt. Currently, Iridium has fewer than 20,000 subscribers , and its officials told analysts that is unlikely to see a rapid enough increase to
meet the targets agreed upon with its lenders.
US West to Utilize TV for Phone and Internet Services
US West Inc. has proposed a plan to extend its telephone and Internet services to customers' television sets using software from Network Computer Inc. Through this new service, US West will be able to view electronic mail and Caller ID information through their television screens, in addition to surfing the web and watching television at the same time. The company plans to begin a trial run of the service in both Phoenix, Denver or Minneapolis in the following several months, with broader deployment by the end of the year. To access this service, customers need a television set-top box linked to US West's Internet service either through a standard telephone dial-up connection or through a high-speed DSL line.
Echostar Offers to Acquire PrimeStar's Direct Broadcast Satellite Assets for $600 Million
EchoStar Communications Corp. has made an offer to acquire PrimeStar Inc.'s high-powered direct broadcast satellite assets for $600 million. These assets consist of two high-powered DBS satellites, Tempo I and Tempo II, and 11 of the 32 full-CONUS DBS frequencies located at the 119-degree West Longitude orbital position. Subject to regulatory approvals, EchoStar said it would use these assets to provide local programming, high definition television and data services to additional U.S. markets.
MCI WorldCom Introduces Asia-Pacific Internet Business Services
MCI WorldCom has launched a comprehensive Internet service for businesses in the Asia-Pacific region, under an initiative to develop the region into a major Internet hub. The company said the services will be offered through its UUNET Internet network and that it will establish a new regional headquarters for the division in Hong Kong. The division currently has functioning Asia-Pacific operations in Hong Kong, Japan and Australia, where it recently acquired OzEmail.
AT&T Approaches Australia's AAPT with Merger Proposal
AT&T has approached Australia's AAPT Ltd. with a proposal for a merger, according to a recent report in The Australian. However, no further details of the deal were available and AAPT officials declined to comment on the speculation. In addition, sources close to the AAPT board said no merger or takeover bid were presented to the board which met last Thursday.
Ericsson, Philips, Motorola, IBM Lucent and Others Join Forces to Develop Standard for Internet Based Services
LM Ericsson Telefon AB has joined forces with 12 firms, including Royal Philips Electronics NV, Lucent Technologies, Motorola Inc., IBM and Sun Microsystems to develop a standard for Internet-based services. The standard, called Open Service Gateway, allows various types of electronic equipment in the home to be controlled via the Internet. At this year's CeBit fair in March, Ericsson will present an application largely built upon the new standard.
Conexant to Develop Multiple-Function Cable-Modem Chip
Conexant has announced plans to release a cable modem chip that will bring a direct challenge for Broadcom Corp.'s hold on the cable modem market. The new CN9414 InfoSurge product handles communications functions that typically require multiple chips. In addition to hardware savings, Conexant said the chip can be upgraded with new software to adapt to changes in communications standards. According to Dwight Decker, Conexant's chief executive officer, this new chip could reduce the price of a modem by about 25%. Conexant hopes that the new chip will eclipse Broadcom's 80% stake of the cable modem chip market. This position has helped Broadcom's stock to quintuple since it went public last year. Whereas Conexant relies on software to adapt to changing standards, Broadcom believes that they will retain a big chunk of the market. Consequently, it can build features into circuitry to produce less-expensive chips. Conexant will not begin production on its new chip until the third quarter,
giving Broadcom time to produce other items for cable modems.
China to Reduce Internet Fees by 50 Percent and Lower International Telephone Charges
The Chinese government will reduce charges for using the Internet by about 50 percent and lower international telephone fees from March 1. China's information industry ministry said the cuts, the first since December 1996, will also mean lower charges on fixed telephone installation and on setting up mobile telephone services. In addition, it will stop levying administrative fees on local call networks and cut administrative fees on long-distance calls. The ministry said call charges on international calls to the U.S. will be cut to 15 yuan, 18 percent less than the current tarriff of 18.4 yuan. Fees on international telephone calls to Asian countries will be cut to 12 yuan a minute. People using the Internet will pay four yuan per hour for the first 60 hours in a month and eight yuan for every additional hour in the same month.
Dell Computer Continues Aggressive Price Strategy with Introduction of Intel Enhanced Workstation
To step up its aggressive pricing strategy Dell Computer has launched a new workstation program using two of Intel Corp.'s latest microprocessors for nearly the same price that competitors are charging for single-microprocessor workstations. The move is bound to spark new questions about Dell's relationship with Intel. Competitors have claimed that Dell's ability to sell Intel's latest and most-profitable microprocessors wins its favorable pricing. The chip maker's Pentium II line was announced last week and sells for about $450 apiece. Its precision workstation with two Intel 450-megahertz Pentium II chips will cost $2,372. In contrast, Hewlett Packard and Compaq Computer each previously announced a similar machine run by just one Intel microchip and priced within 5% of Dell's machine.
March 1, 1999
FCC Rules Internet Connections as Long-Distance Calls
The FCC ruled on Friday that connecting to the Internet constitutes a long-distance call, not a local one. Although the ruling will not increase the cost of logging on to the Internet, it is a benefit for the Baby Bells and could provide a strong source of income for some small, independent phone companies. One continual issue is the $600 million in fees received by independent phone companies from the Baby Bells in what is known as "reciprocal compensation." Several Internet service providers use independent telephone companies as their carriers for incoming calls, and as a result the Bell companies must pay the independent carriers for routing calls onto the Internet. The ruling however is not a total victory for the Bells, since they must honor existing agreement or defer to state regulators. In addition, the FCC proposed that the independent carriers work out future payment rates with the Bells, with oversight by state regulators.
Internet 2 Consortium Introduces the 10,000 Mile Abilene Network; Will Enable 37 Universities to Transmit Data at 2.4 Gbps
To garner the construction of an improved Internet, three dozen American universities last Wednesday were linked to a new national research network pipeline that moves data 1,600 times faster than the T-1 lines that universities currently use. Known as the Abilene Network, it will span more than 10,000 miles, linking 37 universities at 2.4 billion bits, or gigabits per second. The Abilene Network is one of a half-dozen next-generation Internet networks developed by the privately financed Internet 2 consortium and the Federal Government in recent years. At the launch party last Wednesday, there was a demonstration of remote surgery in which doctors collaborated over the network while hundreds of miles apart. Other applications will include interactive distance learning, digital libraries, and multimedia entertainment. The network is expected to link more than 60 research institutions across the United States. Initially, access to the Abilene network is limited to academics and other
professionals, but it will enable consumers to rent and view movies on line.
Mindspring Enterprises Inc. to Report Losses Into 2000 Due to Internet Acquisitions
Mindspring Enterprises Inc. expects to report losses into the year 2000 as a result of expenses related to its acquisition of two Internet service providers. The Atlanta-based company made the forecast with the Securities and Exchange Commission. In NASDAQ Stock Market trading, Mindspring fell $3.8125 to $85.4375. Previously, Mindspring acquired SpryNet, an Internet service provider owned by America Online Inc. for about $35 million, and in January the company purchased $245 million for part of Netcom from ICG Communications, Inc.
Novell Inc.'s Fourth Quarter Profit Doubles as it Exploits Delay from Microsoft
Novell Inc. announced that its fiscal first-quarter earnings more than doubled as it exploits rival Microsoft Corp.'s late delivery of a product. Company net income for the period ended January 31 was $28.9 million, or eight cents a diluted share, compared with $14.1 million, or four cents a share, in the year earlier period. Revenue increased 13% to $285.8 million. To challenge its rival Microsoft, the company is stressing a directory technology in its NetWare network operating system that helps manage huge numbers of PC users across the Internet. Similarly, Microsoft's Windows 2000 software is expected to have comparable technology, but has been delayed until late this year.
Philips Submits Bid to Acquire VLSI Technology for $17 a Share
Royal Philips Electronics NV has submitted a proposal to the board of directors of VLSI Technology Inc. with the objective of negotiating an agreement to acquire all shares of VLSI at a price of $17 usd per share in cash. Philips president and chief executive officer Cor Boonstra said the offer represents a premium of around 60 percent to the closing VLSI market price last Thursday. Philips plans to combine its Philips Semiconductors unit with VLSI, and Boonstra noted that VLSI will be a platform for Philips Semiconductors' further expansion in the US.
Deutsche Telekom to Introduce New Tariffs for Public Phones Today
Deutsche Telekom AG will introduce new tariffs for its public payphones and cardphones beginning today. Fees for national call will be reduced to 40 pfennings from 1 dm between 2:00 AM and 9:00 PM, while fees for calls between 9:00 PM and 2:00 AM will rise to 40 pfennings from 20. Fees for local calls will remain unchanged at 20 pfennings per minute.
Lycos Reports $9.3 Million Loss in Fourth Quarter Earnings
Lycos Inc. reported a $9.3 million second-quarter loss which is close in line with analysts' forecasts, despite hopes that something would boost company shares. Revenue for the fourth quarter was a bit higher than the $29 million analysts had anticipated, aided by stronger than expected advertising revenue of $20.9 million. The company's $9.3 million loss was larger than analysts' $8.2 million forecast. This report comes amidst Lycos' attempts to garner support of its merger with USA Networks Inc. Since the merger was announced on February 9, company shares have fallen about 30%.
Motorola Plans to Spin Off Analog, Logic Chip Division
Motorola Inc. is considering spinning off its analog and logic semiconductor division, with an intention to eventually sell the division, according to a recent report of Electronic Buyers' News. The company is looking to spin off its semiconductor components group from the rest of its chip operations to become a separate and distinct business. It said Motorola will give the division a new name, and possibly find a buyer. The spin-off is part of Motorola's strategy to focus on its higher-margin semiconductor lines, such as microprocessors, microcontrollers and digital-signal processors.
IBM to Provide Support for Cisco Product Line
International Business Machines Corp. and Cisco Systems Inc. announced that IBM's Global Services division will provide product support and services for Cisco's networking systems. IBM said Global Services support for Cisco products is available already for companies in the US, adding it plans to announce additional Cisco support services over the coming months. IBM will provide services such as help desk and technical support, same-day and next-day maintenance and access to on-site IBM service specialists for customers using Cisco's intranet and extranet services.
Five US Telephone Companies' Phone Service to Cuba on Thursday Over Unpaid Fees
The government announced that telephone services offered by five U.S. companies will be cut off by this Thursday at midnight unless the companies pay their debts to the Cuban government . The foreign ministry said that Sprint Corp. and Puerto-Rico-based TLDI would be excluded from the measure because they have continued to meet their obligations. Cuba has allowed eight U.S. companies, including AT&T Corp. and MCI-WorldCom Inc., to establish long-distance service between to the U.S. for a fee since 1992, but the agreement has recently become entangled in a political and legal dispute involving the families of four Cuban dissidents killed in 1996.
Telefonica Group's Net Profit Rose 14.5 Percent in 1998, Driven by Strong Growth in Mobile Phones
The Telefonica Group's net profit rose 14.5% during 1998 to 217.584 billion pesetas. This growth was driven fundamentally by Telefonica Moviles, which accounted for 37% of the Group's consolidated profit, up from 15% in 1997. Operating revenues at the Telefonica Group increased 5.7% in 1998 to 2.906 trillion pesetas, maintaining the decelerating trend which began at the start of the year and continued throughout the following quarters. Revenue growth at Telefonica de Espana slowed due to the liberalization of fixed telephony in Spain without prior approval of a complete restructuring of tariffs. Mobile telephony had made a significant stride. Telefonica Moviles accounted for 13.8% of consolidated revenues (up form 11.8% in 1997) and posted a net profit of 80.345 billion pesetas, almost triple the amount of a year ago. |
