From The Industry Standard Top News

THE INDUSTRY STANDARD MAGAZINE
News Briefs
By Industry Standard Staff
Issue Date: May 14 2001

MARKET MOVES

SNAP BACK: Some optimism returned to Wall Street as both the Dow and the Nasdaq started the week strong. Still, hopes that a recession wouldn't happen took a blow Friday when the Labor Department reported that unemployment ticked up to a 30-month high of 4.5 percent. That prompted speculation that the Federal Reserve could trim interest rates for the fifth time this year at its next meeting, May 15. The Dow ended the week at 10951, and the Nasdaq closed Friday at 2192.

OTHER NEWS

STAR WARS SEQUEL: In a speech at the National Defense University, President Bush said he planned to greatly expand the missile-defense strategy of his predecessor. It was welcome news for beleaguered defense and technology companies. Boeing, Lockheed Martin and TRW will likely be the biggest beneficiaries of the revived Star Wars plan.

GM RENEWS HUGHES TALKS: General Motors announced last week it will renew negotiations with News Corp. to sell Hughes Electronics. The proposed plans are part of a yearlong restructuring of Hughes - which owns satellite company Panamsat, as well as satellite-TV service DirecTV. If successful, the deal will mark News Corp. owner Rupert Murdoch's most ambitious attempt yet to enter the North American satellite TV market.

DEBT REDUCTION: Vodafone, the world's largest wireless operator, raised $5 billion in London through the sale of new shares to help fund its $6.9 billion acquisition of British Telecom's wireless operations in Spain and Japan. Coupled with plans to sell its London headquarters, the deal should help BT meet its target of reducing its $43.1 billion debt burden by a third this year.

FUND FLOPS: Merrill Lynch is closing its Internet Strategies fund barely a year after it opened with $1 billion. The fund, which has lost 58 percent of its value, will be absorbed by the Global Technology fund, which has lost 51 percent of its value in the past year. It is but the latest Internet fund to shutter in recent weeks.

H'WOOD SHUFFLE: Hollywood writers spent the week negotiating with producers as the possibility of a strike loomed over the movie and television industry. A Writer's Guild deal could serve as a model for actors, who will open negotiations with the studios in two weeks.

REDMOND LEARNS TO SHARE: Microsoft intends to expand existing programs for sharing its source code, but it won't go completely to open-source. In a speech at New York University, Craig Mundie, an adviser to Bill Gates, championed the continued commercialization of software as the only viable business model for the new economy and emphatically rejected the open-source model in favor of a "shared-source philosophy" that protects intellectual property.

STRANDED AT THE DRIVE-IN: Bertelsmann's BMG unit and EMI abandoned merger talks amid concerns that regulatory hurdles in Washington and Brussels would be too high. The dissolved deal means that Bertelsmann's music strategy remains incomplete. It's the second time in less than a year that EMI has been left at the altar. In October, EMI and AOL Time Warner abandoned their $17.3 billion merger for similar reasons.

AUCTION INDICTMENT: The former chairmen of Christie's and Sotheby's, Sir Anthony Tennant and Alfred Taubman, were indicted last week on anti-trust charges resulting from an investigation by the U.S. Department of Justice. In a case that has rocked the auction world, the two are accused of conspiring to fix commission fees charged to buyers and sellers.

BAD NEWS AT CREDIT SUISSE: Credit Suisse First Boston is expected to slash up to 200 jobs, possibly as early as this week. The news of cutbacks follows word of a probe by the Securities and Exchange Commission and the U.S. Attorney's office into how the bank allocated shares of tech IPOs. Also last week, the regulatory body of the National Association of Securities Dealers said it plans to recommend charging the firm for violating certain NASD rules.

NOTED: Priceline.com posted a loss of 3 cents per share, better than the 5 cents-per-share loss analysts expected. The company warned it is not out of "turnaround mode." ... Internet consulting firm Razorfish bid farewell to founders Jeffrey Dachis and Craig Kanarick. ... EarthLink co-founder Reed Slatkin is accused of bilking investors out of more than $35 million in a daytrading scheme that promised annual returns of up to 60 percent. ... EBay announced it will ban the sale of artifacts from Nazi Germany, the Ku Klux Klan and notorious criminals.

Edited by Maria De La O

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