DFIN.COM Financial Archives With A Digital Bias
(Synopses of News that Impacts Finance in a Digital World)

The Digital Financier Update (DFIN.COM Update) provides a weekly commentary on important stories with significant financial, and or Internet implications. The purpose is to provide finance professionals and there staff with a timely brief synopses of recent and historic news events that best illustrates the changing digital economy.  The stories will eventually impact all of us.  Many of our stories may have received very little popular press coverage.  The weekly summary is e-mailed at no cost to participating subscribers for distribution to staff and co-workers.

This publication is designed to be a quick read and the archive is a good resource for financial history.

The most common sources for the DFIN.COM Update include UP, AP,  Fast Company, Business Week,The Economist, Forbes, Wired, Federal Reserve Bank Publications. The Wall Street Journal Interactive, MSNBC, L.A. Times, San Jose Mercury News. 

Savings as a percentage of disposable income, reaches and all time low and dipped to a negative number of minus 0.5 percent in the first quarter.  Internet commerce continues to explode and E-Trade just added its 1,000,000 account.

Amazon.com launched a free electronic greeting-card service.  Why? - Because they have great URL recognition.  We may become inundated with free cards and other digital clutter.  But this will build additional traffic for Amazon.

It is reported that by the age of 12, most children are able to log on to the Internet with little or no parental supervision.  To these children the Internet appears to be as natural as TV.  At 12 they are entering the consumption years of life. We consider this to be a very positive finding.

All of the "FREE" on the Internet is supported by advertising.  "The average advertising rate charged by a sampling of Web sites
fell 1.4 percent in the first quarter. Palo Alto, Calif.-based
AdKnowledge said its survey of 1,800 Web sites found the average
cost per thousand rate fell to $29.09. The decline was 0.5
percent, while average cost per thousand impressions (or CPM) fell
3 percent in the fourth quarter of last year. The Online
Advertising Report also found Netscape's Navigator claims about 39
percent of Web browser use, down from 58 percent a year ago."

Economy grows at strong 4.5 percent, By Kathleen Hays , CNBC, April 30 - Consumer spending at fastest pace in a decade, Consumers are so confident that they are dipping heavily into savings to finance their buying binge.

"The remarkable U.S. economy grew at a strong 4.5 percent annual rate in the first three months of this year, far above expectations, as consumers spent at the fastest pace in more than a decade. The Commerce Department reported Friday that the solid growth in the gross domestic product, the total output of goods and services, came despite the fact that the nation’s trade deficit, battered by overseas economic turmoil, soared to a record level from January through March, subtracting 2.4 percentage points from overall growth."

"AND IF IT had not been for trade, which amounted to a loss of $55.6 billion in output, the GDP would grown at an even more remarkable 6.9 percent in the first quarter."

"What it all means is that the U.S. economy is still roaring along with little or no sign of a slowdown."

"The 4.5 percent growth rate for the first quarter, more than a percentage point higher than many economists had been expecting, was faster than the 3.9 percent growth turned in for all of 1998."

"The new GDP figure underscored that the U.S. economy has managed to prosper despite nearly two years of global currency turmoil that has pushed one-third of the world economy into recession."
       
"The loss of overseas markets has been offset by American consumers, who increased spending at a 6.7 percent rate in the first three months of the year, the largest advance since a 7.2 percent rise in 1988. The gain followed a strong 5 percent growth in consumer spending in the fourth quarter of 1998 and can be attributed to a combination of record levels of tax refunds along with good income growth and a surging stock market.   Consumer spending accounts for two-thirds of total economic activity."

"Consumers are so confident that they are dipping heavily into savings to finance their buying binge. The GDP report showed that the personal savings rate, savings as a percentage of disposable income, dropped to a negative number of minus 0.5 percent in the first quarter, an all-time low."

"In addition, business investment continues to advance, rising by 10 percent with heavy investment in computers continuing, a gain in that category of 10.5 percent. That advance follows an 18 percent gain in the fourth quarter."

INFLATION UP BUT SUBDUED
"Even with the strong consumer demand and tight labor markets, inflation remained a no-show in the first three months of the year."

"A price measure tied to the GDP rose at an annual rate of just 1 percent, little changed from a 0.9 percent increase in the fourth quarter."

"Falling import prices, including big drops last year in petroleum prices because of slumping global demand, have played a major role in keeping U.S. inflation under control."

"Because of the low inflation, the Federal Reserve has been able to permit faster economic growth than it would normally sanction with the unemployment rate at a 29-year low of 4.2 percent. Normally by this time, the central bank would have started to raise interest rates to slow economic growth and keep tight job markets from pushing inflation higher."

"But a report Thursday showed that employers’ cost for wages and benefits increased by the smallest amount on record, reinforcing the belief of many economists that the Fed will leave interest rates alone, possibly for the rest of this year, hoping that growth will slow on its own."

"The 4.5 percent total GDP increase in the first quarter was down from a 6 percent surge in the final three months of last year, the biggest quarterly advance in nearly 15 years, a growth spike that was aided by a temporary narrowing in the trade deficit."

"Housing construction, which has been propelled by low mortgage rates and low unemployment, jumped 15.6 percent, the fastest advance in a year." The Associated Press contributed to this report.

Bar Says E-Mail OK for Transmissions , CalLaw.com, By Brenda Sandburg : "The American Bar Association has given its seal of approval to the use of e-mail to transmit client documents."

"Under most circumstances, a lawyer does not violate a client's confidentiality by transmitting documents via unencrypted electronic mail, the ABA Standing Committee on Ethics and Professional Responsibility concluded in an ethics opinion announced last week."

"A lawyer's obligation to protect confidential client information from unauthorized use or disclosure "does not require an absolute expectation of privacy in a communication medium," the ABA said in a statement. "It requires only a reasonable expectation of privacy." "

"The committee compared e-mail transmission to the use of land-line telephone service, cellular and cordless phone service, fax machines, and regular mail. "

"While mail can be lost or stolen and telephone conversations may be overheard by wiretap or eavesdropping, both provide reasonable expectations of privacy, the committee said. Similarly, the committee said e-mail transmissions offer a reasonable expectation of privacy even though they may be susceptible to interception."

"The committee said it was not addressing use of cellular or cordless phones. In addition, it said there is no legal authority stating that use of facsimile transmission meets the duties of confidentiality."

Service Disrupted to Online Bankers Service Disrupted to Online Bankers By DAN SEWELL. AP Business Writer, ATLANTA (AP) -  One of the first significant disruptions to online banking occurred with very little reaction. Even the stock price held steady.

"As many as 500,000 people who bank online could have run into service disruptions because of a glitch with a CheckFree system, the e-commerce company said Thursday. At a time when end-of-the-month payments are coming due, customers of 21 of the banks that use CheckFree for electronic banking services have had ``intermittent'' problems since early Monday, the company said. Some consumers who use Quicken or Microsoft's Money financial software have reported problems either logging on or in getting ``kicked out'' before they are finished with their transactions, said Terrie O'Hanlon, a CheckFree spokeswoman. ``Customer by customer, the experience is different,'' she said. The banks affected are ones in which a new transaction processing system called Genesis is being used. She said CheckFree began switching banks to the new system six months ago. CheckFree technical staffers have been working around the clock, she said. In a statement, Pete Sinisgalli, chief operating officer, said workers had trouble diagnosing the ``root cause'' of the problem, but on Thursday believed they had identified it and ``have developed what we believe will be the solution.'' He said CheckFree was trying ``to resolve this issue as quickly as possible to restore uninterrupted service for consumers.'' First Union Corp., the nation's sixth-largest banking business, was putting together special instructions and information for customers on its Web page. The Charlotte, N.C.-based First Union has some 16 million customers in the eastern United States. ``Some of our customers are affected. We don't know how many at this point,'' said spokeswoman Danielle Deabler. She estimated the total number of customers who bank online as in the ``hundreds of thousands.'' She said First Union would work with CheckFree to make sure customers weren't charged late fees caused by the problem. Based in the Atlanta suburb of Norcross, CheckFree Holdings Co. has some 2.8 million customers and helps provide electronic payment services at 350 institutions. Founded in 1981, the company has 1,800 employees. Only a small percentage of Americans use such services, largely because of unfamiliarity or concerns about reliability and security. ``On behalf of everyone at CheckFree, I want to apologize for the inconveniences consumers have experienced because of this issue, and assure them that we are committed to continually improving the quality and reliability of our services to ensure their confidence,'' Sinisgalli said. Earlier this week, MSNBC reported that Yahoo Inc. had indicated interest in obtaining CheckFree Holdings. That report helped push shares of CheckFree as high as $52 on Tuesday. The stock has since lost ground but was up more than 4 percent, or by $1.87 at $46.75 a share Thursday on the Nasdaq Stock Market."

‘Handicapped access’ hits the Web,Next month, Feds will unveil Net authoring standards that enforce accessibility requirements, By Maria Seminerio , MSNBC, April 26 -  Next month the government will extend the ADA to the Internet.

"He spends a lot of time chatting with friends, even at work, but Bill Stilwater wouldn’t call the connections he makes on the Internet any sort of a luxury. In fact, for him, the Net is an absolute necessity, even when it comes to idle talk among friends."

"IT JUST SO HAPPENS that Stilwater is a quadriplegic. “The only time I get out is to go to the doctor,” he says. The Web has brought a sense of “normalcy” to his life."

"Stilwater, who in 1988 founded the Computers for Handicapped Independence Program, says Internet access “makes a difference between living and just existing” for many handicapped people."

"Yet, as Stilwater notes, the vast majority of Web sites keep users with visual, hearing or other impairments from accessing some of their content."

"But that is about to change. The federal government, in an effort similar to that undertaken to open up access to public buildings and public transport systems through the Americans with Disabilities Act (ADA), is now focusing on the Internet."
       
"WIDESPREAD EFFECTS
Next month, it will unveil standards aimed at ensuring that Web sites operated by firms doing business with government agencies are fully accessible to the disabled."

"Once these standards are implemented later this year, observers say, the same sweeping changes in store for the public sector are likely to hit commercial Web site operators, too."

"The potential? Sites that use dizzying graphics will have to consider their impact on users with visual impairments. Those that include audio will have to make sure they provide the text to go with it, so deaf users have full access."

"Even the makers of public Internet kiosks will have to overhaul their designs, taking into account the necessary height requirements for users confined to wheelchairs, experts predict."

"The standards are being developed by a little-known government agency called the U.S. Access Board, which was responsible for setting the ADA guidelines after it was signed into law in 1990, said Jenifer Simpson, manager of technology initiatives at the President’s Committee on Employment of People With Disabilities. "

"The Access Board, with the help of a committee made up of technologists and industry leaders, will release the standards for public comment by the end of next month. The Department of Justice has been ordered by Attorney General Janet Reno to oversee a yearly survey of sites’ compliance with the standards."

"Sites buying from or selling to government agencies will most likely have to comply with the standards within a few months, Simpson and other experts said."
       
"IT’S A BASIC RIGHT
Advocates for the disabled believe opening up access to the Internet to the estimated 54 million handicapped people now living in the U.S. is crucial."

“This is really a civil rights issue,” Simpson said, noting that while many high-tech executives fret about excessive government regulation of the Net, it would never have existed without government intervention."

“The Internet is subject to market forces, but it didn’t start through market forces, it was started by the federal government,” she said. “The government has a real interest in seeing that the disabled are not discriminated against.”

"Judy Brewer, the director of the World Wide Web Consortium’s Web Access Initiative and a member of the Access Board, said she believes the new standards will be a catalyst for commercial sites to improve access for the disabled."

“I’m certainly hoping that they increase awareness about the issue,” Brewer said.

"Brewer, Simpson and other experts predicted that as with the issue of consumer data privacy, Congress may step in if the industry does not regulate itself on disability access."
       
"‘MAJOR PROBLEM’
“The number of sites that are accessible to the disabled is a very small minority right now,” Brewer said. “We have a major problem, and the trend is toward making sites even more complex, which decreases accessibility even further.”"

"With the Internet being such a critical tool in education, employment, and civic life, “the impact of inaccessibility is becoming more significant,” Brewer said."

"Advocates for the disabled are quick to point out that the changes needed to allow full access aren’t costly. Nor would they prohibit graphics."

"“You can have full access and still have all the elements you want to have on your site,” said Michael Cooper, a technologist at the Center for Applied Special Technology, a non-profit that advocates the use of computer technology by the disabled."

"E+Trade said in a statement that Lisa Dossey, a software publishing consultant from Roswell, Ga., had opened the one millionth account."

"E+Trade said it added 233,000 new active accounts in its second quarter ended March 31, representing more new accounts than it had added in all of 1998, excluding acquisitions. The number was also more than the total of new accounts added from 1992, when E+Trade Securities Inc. was founded, through the end of fiscal 1997, it said."

"E+Trade President and Chief Operating Office Judy Balint told Reuters in a recent interview that the broker planned to expand into Europe's major markets in the next two years, including Germany, Italy and Spain, as well as into such Asian markets as Hong Kong, Japan, and Singapore. "

"E+Trade's stock ended at $104.06 on Friday after announcing its second stock split this year. Investor infatuation with Internet companies has led to soaring share prices for most online brokers. It also last week reported a smaller second-quarter operating loss than the market had been expecting."

Who is Buying on the Web Today? Written by Harry Henry, Senior VP and General Manager of Infobeads , April 28, 1999 - Aside from sky-rocketing IPO stock prices, the next hotbed of activity on the Web is the introduction of e-commerce sites. Everyone has one or wants one. From start-ups to long established manufacturers and retailers who are re-configuring their internal operating structure to capture the Internet buyer.

And, the product sets are endless. What started out as a world for "tech-ie's", buying hardware and software on the Web (a natural first step) has now spread to the well-documented success stories of those selling books and CD's to travel-related services (witness priceline.com) to all sorts of financial transactions (none hotter than online trading these days) to automobiles to fill in the blanks. It is all happening. In every industry.

But, who is buying? Who are these sellers chasing?

While the potential is endless, and it looks like the next gold rush or land grab, let's take a closer look at what is happening today.

Turn the clock back to a few short months ago (eons ago in Internet time), and look at the holiday season. The data below shows who bought.

"The bottom line is that we see enormous potential. We have an audience with experience buying. That audience has to be developed to make them repeat buyers across a number of buying opportunities/events (read holidays). The industry has to create new Web buyers --- market to them, cross marketing, easier to use, etc."

"Any wonder why an Amazon and others want to jump into a mall approach and try to cross sell? They have a chance to sell more to their market. A market they have cultivated and developed and one that no one else has!"

For the first time, Yahoo lost its #1 ranking as most visited web site honors to Lycos. Lycos reached 51.8% of the web surfers.  Yahoo continued to hold onto the most trafficked web site with the greatest number of page views.  

America Online Inc. , AT&T and France Telecom were among organizations identified to join Internic in registering Internet addresses starting April 26. Amazon.com, continues to morph itself by adding to its growing list of consumers goods offered to its large and growing customer base. Amazon has made a large minority investment in HomeGrocer.com Inc.  Amazon is one of the first Internet companies to expand its line of business successfully.

FTC to launch e-commerce division, Watchdog agency seeks to fight online fraud, regulate on-line shopping and advertising, By Elliot Zaret, MSNBC, April 21, 1999 -  "As e-commerce has exploded into a multi-billion dollar industry, fraud on the Internet has also grown at breathtaking rates. That's why the Federal Trade Commission plans to keep a closer eye on the burgeoning industry by launching an e-commerce division in the next few weeks that will regulate on-line shopping and advertising."

"It's a focus of all our resources concerning the Internet," said FTC spokesperson Victoria Sreitfeld.

"Streitfeld said the watchdog agency has been actively monitoring e-commerce issues for some time and has investigated about 60 Internet fraud cases. The new unit will consolidate existing efforts throughout the agency, and monitor fraud, deceptive advertising and privacy on the Internet. "Part of the effort will be to monitor kids sites," Streitfeld added."

"We are also paying close attention to the development of electronic commerce," FTC Commissioner Sheila Anthony said in a speech to the American Advertising Federation last month. "We want to be sure that we understand this new medium. We also want to be sure that its development reflects basic consumer protection principles that apply in all other media, but in a way that recognizes the dynamic, interactive nature of the Internet."

"Anthony promised that the FTC would take "law enforcement actions to stop the Internet from turning into the 'wild west' of advertising and marketing."

The FTC's Bureau of Consumer Protection has also put an "E-Commerce and Internet" site online (www.ftc.gov/bcp/menu-internet.htm) to help educate consumers and businesses about online fraud and privacy.

Lycos beats Yahoo in number of users over month, By Andrea Orr
PALO ALTO, Calif., April 21 (Reuters) - "More than half of all Internet users visited a Lycos Inc. property last month, helping the online service surpass Yahoo! Inc.'s long-standing lead, according to a survey being released on Wednesday."

"The new Media Metrix survey, which is closely watched by Internet advertisers and investors, shows that Lycos attracted 31.9 million users in March, compared with Yahoo's 31.3 million."

"It was the first time Lycos' reach has surpassed that of Yahoo, which has typically ranked first among the Internet portals -- the online hubs that offer everything from news and stock quotes to shopping links, sports scores and chat rooms."  The latest data also mark the first time that Internet underdog Lycos, based in Waltham, Massachusetts, has attained an audience reach of over 50 percent. The survey shows 51.8 percent of Internet users visited a Lycos property at least once during March, vs. 50.8 percent for Yahoo and 30.6 percent
for Excite Inc. "

"By other gauges, Yahoo arguably remains the leader. In its latest quarter, Yahoo averaged 235 million page views a day, or more than four times Lycos' average. Page views are the number of individual pages all Internet users combined call up in a given day."

"In addition, while Yahoo is a profitable business, Lycos is still losing money. And though name recognition is harder to quantify, Yahoo appears to be a better-known brand than Lycos."

"One reason Lycos may still not be as much of a household name as Yahoo is that its strategy involves compiling multiple businesses. Unlike Yahoo, which has focused on developing a single strong brand, Lycos is a network of different services, including the Tripod and Angelfire online communities, the HotBot search engine, the Wired technology news service, and the Suck.com collection of commentary on media and culture."

"This strategy, it argues, has helped it grow rapidly by reaching multiple demographics."

"In recent months, Lycos has moved aggressively to offer some of the hottest new features available online, including a search service for online music recorded in the
Internet-friendly MP3 format."

"Lycos said it became interested in the format when it discovered that "MP3" was second most commonly searched word on the Internet, after "sex."

Women, minorities making more use of the Internet, April 21, 1999, Scripps-McClatchy Western Service, Mercury News SACRAMENTO, Calif. - "About 23 percent of African Americans, 36 percent of Latinos and 64 percent of Asians are online. Propelled chiefly by falling computer prices, those numbers are expected to reach 40 percent, 43 percent and 69 percent, respectively, next year, said analysts at Forrester Research of Cambridge, Mass., regarded as one of the nation's leading online market research companies."

"And women now make up half of the population surfing the Web, according to Media Metrix, which tracks online usage."

"The traditional picture of Internet users as white males is no longer accurate,'' said officials with the U.S. Internet Council, a high-tech trade association in Washington, D.C. ``With each passing month, the population of the Internet more closely resembles the demographics of the American people as a whole.''

"Operators of Web sites catering to women and ethnic groups say this trend is significant because the Internet is becoming an important place to find employment, educational opportunities and to conduct business."

"They said it also helps smash stereotypes that minority groups are not exploring the Net or taking advantage of its resources."

"For a long time, we've been saying there are a lot of middle-class Hispanics with interest in the Internet and an interest in technology,'' said Lavonne Luquis, president and co-founder of LatinoLink, a Web site that carries general interest news and interactive content aimed at Latinos."

"Luquis said she helped start the site four years ago because she found a scarcity of Latino-centric sites on the Web. LatinoLink now attracts increasing numbers of new visitors -- Luquis said traffic in March increased 40 percent over February -- and a steady number of large advertisers, including Wells Fargo, Compaq Computer and Charles Schwab."

"the federal government has launched efforts like the Education Rate Fund. Dubbed e-rate, the $2 billion program is funded by telecommunications companies to give public and private schools and libraries Net access."

"I realize that government officials have a natural inclination to do something,'' said Mark Rhoads, legislative director of the U.S. Internet Council, which includes heavyweights such as Microsoft, Sun Microsystems, Oracle and Cisco Systems. Government looks ``with suspicion on industry groups like ours that say, `Don't do anything' or `Go slowly."

"Basically, we think that right now the marketplace is allowing for a lot of rapid innovation'' that could be derailed under tax burdens or regulations, Rhoads said."

"Operators of minority Web sites say that most poor people will be left behind as the Internet helps reshape American culture and finance unless there are programs designed to help them. "

"Still, minority Web site operators celebrate the developments of the past few years. As the Internet began changing from a techie-network into a vast interactive medium, some observers feared a ``digital divide'' would develop in which whites dominated the Web while minorities lagged behind."

"A 1997 poll by Lou Harris & Associates seemed to support that such a stratification was in place. That study estimated the percentage of online users that were African American or Latino was only 6 percent for each group. Women, according to Media Metrix, were less than 20 percent of Web surfers three years ago."

"But thanks to dramatic drops in PC prices, more and more families are buying one and searching cyberspace." "And the Web has become more appealing to ethnic groups as it features more sites that cater to specific groups."

President Clinton became the first President to be found in contempt of court by a judge in Arkansas and oil prices continue to lead commodity prices upward.  China is entering the computer chip market aggressively while price pressures in the PC market help bring more households into the computer age while forcing  the resignation of Compaq Computer Corp.  chief executive, Eckhard Pfeiffer, and its chief financial officer resigned in the wake of recent
earnings disappointments.

America's trade deficit soared to a record $19.4 billion in
February as the global financial crisis depressed U.S. exports for
a fourth straight month.

Cheap PCs lead to breakthrough: Computers now in 50% of homes, BY DEBORAH CLAYMON, Mercury News Staff Writer, April 11, 1999 - 

"A personal computer was once the most complex and expensive appliance you could buy for your home. Suddenly that plastic box of electronic circuitry is as simple to run as your dishwasher, half the price of a good refrigerator and nearly as common as the answering machine."

"Almost two decades after the first balky models hit the market, the PC has finally crossed into half of all U.S. homes, at least three market research firms now estimate. That's a little-noticed breakthrough with enormous implications: The PC explosion is equalizing access to technology, fueling the Internet economy and radically remodeling the computer industry itself."

"In early 1997, only 25 percent of all PCs sold at retail cost $1,000 or less. Today that figure is 61 percent. It is relatively easy to find a computer with monitor for less than $600."

"Millions who've never owned a computer before are flocking to buy them. The majority have a simple set of goals: to communicate with family and friends, gather information from health news to stock quotes and shop until they drop on the Internet. While only 14 percent of home computers were linked to the Net in January 1996, two-thirds of American homes with computers are now connected."

"That's what Lance Andrew decided when he bought a bargain-basement Emachine. Emachines Inc., an Irvine-based joint venture of Korean manufacturers Trigem Computer and Korea Data Systems, started selling PCs for as little as $399 (without a monitor) in December. Enough people agreed with Andrew to give Emachines fourth place in U.S. retail PC sales in February, just its third month."

"Half the buyers of cheap PCs have never owned a computer before. Households with $35,000 or less annual income purchase 56 percent of all sub-$1,000 PCs, according to a 1998 survey by International Data Corp"

"``The problem was pure and simple affordability,'' said Stephen Dukker, chief executive of Emachines. Dukker is a new breed of computer executive: No engineer, he left a job as senior vice president of merchandising for the Computer City retail chain to pursue a magic price point -- a sub-$500 computer."

"Magic the low prices seem to have been. The percentage of Americans owning a PC surged 5 percent between July 1998 and January 1999 to pass the 50 percent threshold -- after not having increased more than 3 percent in any six-month period since 1994."

"Some believe multiple computer households will soon be the norm. Forget 50 percent PC penetration, said Rick Latman, chief executive of Seattle-based Microworkz Computer Corp, which says it will introduce a $299 PC later this month. ``I think we are going to 140 percent. Everything you do and everything you live by will be connected to the box.''"

"That emerging mass market, more akin to the audience for consumer electronics than computers, is critical to making the heavily hyped Internet economy a success."

"But it is not just a numbers game. As cheap PCs help bring a more diverse audience online, they provide an impetus for Internet merchants to widen the array of products and services offered."

"``Each time the price point on PCs comes down, it enables another wave of consumers to come online,'' said Kate Delhagen, director of the online retail strategies group for Forrester Research in Cambridge, Mass."

"``It previously made little sense for Kmart or Walmart to sell products online,'' said Delhagen. ``But the changing customer base is starting to make it more logical for them and every other merchant.'' "

"Putting even more price pressure on computer makers, consumers are more and more willing to forgo the best components. Intel recently introduced a Pentium III microprocessor running at 500 MHz; IBM and other manufacturers make 25 gigabyte hard disks. But Emachines is selling plenty of computers with a 300 MHz microprocessor and a 2.1 gigabyte hard disk."

"In 1998, PC shipments leapt an impressive 14 percent, but overall revenues for computers rose just 1 percent, because the average price of PCs dropped so far. Forrester Research projects a repeat performance in 1999: Shipments will jump 14 percent, but revenues will creep forward only 3 percent."

"The economic effects ripple outward from there. With PCs less profitable, some Internet service providers are teaming up with low cost manufacturers to offer PCs to consumers who sign up for Net access as a package deal."

"Cheap PCs also transform the landscape for the highly-anticipated ``Internet appliances,'' non-PC devices used to communicate on and access the Net. Already they've all but killed the network computer, a once-touted desktop computer that would draw data and processing power mainly from a network. Now they're posing challenges to devices like Microsoft's WebTV, a low-cost PC alternative which enables Web surfing and e-mail via TV."

"IDC predicts that 36 percent of all those who access the Internet in 2002 will use a device other than a PC. The comparable figure today is 6 percent."

"It is spending nearly a billion dollars on a key project in Shanghai to gain what it sees as a strategic edge in microchip design and production."

"China has some semiconductor production but Hua Hong is its boldest move to date and it is designed to put the nation into the industry big leagues eventually."

"Hua Hong is in charge of what has been dubbed the 909 project which includes production of 64-megabit DRAM or dynamic random-access memory chips."

"It has formed a joint venture with Japan's NEC Corp to invest a combined $1.2 billion."

"In February, the venture began operations at its Shanghai plant which is supposed to produce 5,000 eight-inch wafers a month this year and eventually reach 20,000 a month."

"Its production comes on stream after a prolonged slump in DRAM prices and after some big producers -- such as Matsushita, Nippon Steel Semiconductor and Oki Electric of Japan -- have pulled out of this fiercely competitive field."

"U.S. limits on technology transfers to China may hamper efforts to produce chips with greater memory but Xia is not worried just yet. ``There is room for mid and lower level technology products in this market,'' he said."

"Analysts say a key question is whether Hua Hong will conduct independent research and development like Japanese and South Korean firms or use the Taiwan method -- highly efficient production that relies on outside design companies in California's Silicon Valley."

Domain Name List Is Dwindling, by Declan McCullagh, Wired News, April 14, 1999 - "Wouldn't it be great to own a domain name that's also a popular word? Your site could be an instant classic like amazon.com or broadcast.com. Or sex.com or news.com."

"Well, forget it. You don't stand a chance. Start-ups, squatters, and speculators already have bought up all the Internet's prime real estate."

"A Wired News investigation found that the .com versions of nearly all popular words have been taken. Of 25,500 standard dictionary words we checked, only 1,760 were free."

"The result: The once-fierce pace of domain name registration is slowing. In the last month, only about 100 new dictionary-word .com domains have been snatched up."

"The domains added to InterNIC's database since 20 March include agitate.com, horrify.com, measle.com, soggy.com, shorten.com, cravat.com, impudent.com, and satiric.com."

"Last month ICANN finalized the structure of its "Domain Name Supporting Organization." Some participants believe that decisions on how many new top-level domains there will be and which ones to add will be made by the end of the summer."

The Domain name, WallStreet.COM is for sale with a minimum bid of $300,000, (current bid = $250,000), Vice President Gore is breaking the law by soliciting personal information from children on his presidential web site, and Russia is flexing its muscle in the Kosova War.

 

The Russian economic instability is a real concern in this environment. The Balkans, Middle East and Northern Ireland have fought for hundreds of years and peace will not brake out anytime soon - if ever. Religion, a poor economy and nationalism are the seeds of war. Kosovo brings in all of these ingredients. When people take up a nationalistic pride there is no telling what can happen next.

U.S. to Pay S&L $909 Million in Contract Breach, April 10, 1999, By ROBERT A. ROSENBLATT, Times Staff Writer WASHINGTON – "A federal judge on Friday ordered the government to pay a hefty $909 million in damages to Glendale Federal Bank, the first of what is expected to be a series of awards stemming from the S&L crisis that could cost taxpayers as much as $50 billion."

"The ruling is the first damage award among more than 120 cases filed by savings and loan associations that allege they were financially harmed when the government changed accounting rules and other regulations during the crisis in the 1980s."

"Glendale Federal and other thrifts were given favorable accounting rulings in return for acquiring ailing thrifts."

"The decision could potentially set a precedent for massive payouts by the government, writing a final chapter in the saga of S&L failures that have already cost taxpayers an estimated $250 billion.
If the courts approve the damage claims of other S&Ls with the same financial approach used in the Glendale Federal case, the government might have to pay as much as $50 billion, according to some lawyers involved in the issue. "

"And the decision could encourage companies in other industries to take legal action too, claiming that changes in other government regulations crippled their search for business profits."

Online aliases no shield from law, BY DEBORAH CLAYMON Mercury News Staff Writer, April 5, 1999 - "Grumbling about an employer has become one of the most popular amusements on the Internet. In chat rooms, on Web sites and on electronic message boards, workers bellyache about the boss, while feeling safely tucked away behind an online alias or screen name."

"But it turns out that this anonymity dissolves quickly when a judge believes that what is being said could be illegal or a violation of a contract. "

"Just ask the 21 employees of Raytheon Co. who are now defendants in a lawsuit demanding $25,000 in damages for disclosing ``certain Raytheon proprietary and confidential information on the Internet'' via anonymous postings on a Yahoo Inc. electronic message board. "

"Under court order, Yahoo had to provide the Lexington, Mass., defense contractor with all the personal identification information it had on the defendants, said Diane Hunt, a Yahoo spokeswoman."

"The court order sets no new legal precedent, experts say. There are already numerous incidents of online services surrendering otherwise proprietary information about users who have been accused of a crime. America Online did just that last week when it gave law enforcement officials evidence to track suspected "Melissa" virus author David L. Smith.

But the Raytheon case highlights the way the Internet has blurred the line between public and private conversation, and raises questions about the common assumption that people can easily protect their identities online. "

"Whether the case has broader implications is less clear. Margaret Jane Radin, co-director of the program on Law, Science and Technology at Stanford University, said she does not believe free-speech issues are involved -- primarily because Raytheon filed its case as a breach of contract, rather than as a libel or slander suit. ``Controlling your own employees under employment contract is a very different thing from controlling the free marketplace of ideas,'' she said.

As the Internet audience grows, corporate policing of online communications is certain to increase. "

Three Big Owners Get Top Roles In Integrion Consortium By Chris Costanzo, April 6, 1999, American Banker - "Ending months of speculation about a restructuring, the Integrion home banking consortium is paring down to three primary owners from the current 15 financial institutions."

"Prodigy said it has also teamed up with Recompute, a national computer seller, to provide discounted computers that come already loaded with the bilingual Prodigy Internet."

Merger Deals Climbed in 1Q -- Further Rise Is Expected, By Tania Padgett, April 7,1999, American Banker - "Bank mergers gathered some steam in the first quarter, and the pace is expected to pick up further in the months ahead.

The value of announced bank deals in the United States climbed to $20 billion for the period, from $12.6 billion in the fourth quarter of last year, according to data from Sheshunoff Information Services and American Banker."

"Investment bankers and others say dealmaking should accelerate further as banks get ready for a possible accounting change and wrap up work on year-2000 computer preparations. Rising stock prices also could lend a hand.

"We expect an improvement in valuations, and banks should have double-digit earnings growth," said James McDermott, chairman of Keefe, Bruyette & Woods Inc. "Once the market absorbs that information, that will be the catalyst for more activity."

"Many observers had expected a big decline in mergers in the first quarter. And in fact, the dollar volume would have been off sharply had Fleet Financial Group not announced its $16.8 billion deal for BankBoston Corp."

"The activity was still a long way off from the record levels of early 1998. In the first quarter of 1998 there were 131 announced bank deals, worth $27.2 billion. And the second quarter had a whopping 149 deals, worth $213.1 billion."

"Still, most experts see increased deal activity during the rest of the year. For starters, many bankers may try to move before a possible accounting change that would bar pooling of interests -- an approach used in many mergers. The end of the pooling would usher in purchase accounting, which leaves goodwill on the balance sheet."

Clueless Al, Vice president doesn't know open source from open house, BY DAN GILLMOR, Mercury News Technology Columnist, April 7, 1999 - "AL, Al, Al . . . You've been one of the more clued-in politicians when it comes to technology, even if you didn't invent the Internet. You might even make a decent president someday."

"But if you and your campaign team don't stop acting so clueless on the topic, people in the technology community are going to start laughing out loud when the name ``Al Gore'' comes up in a conversation. "

"You may be unfamiliar with your latest techno-gaffe, which comes courtesy of your presidential campaign Web site (www.algore2000.com). On a page asking Netizens for their campaign assistance, you proclaim: ``This is your web site -- IT'S OPEN SOURCE -- and I want you to help us build it.''

Hello? Open source? Is this a joke? "

"This is one of several occasions in the past few weeks that you've done something like this. You did more damage when you claimed credit for creating the Internet. Given your generally solid understanding of technology, that was beyond foolish. At least you backed off quickly from that gaffe, using some self-deprecatory humor in the process."

"And Tuesday, just before launching a ``Just For Kids'' feature on the Web site, someone pointed out that it was asking for all kinds of personal information. Someone on your staff must have forgotten the legislation your boss signed to protect kids from this sort of thing. "

"But if you want to win the votes of the lower-level people who actually create the technology, a sizable contingent around here, you might consider a strategy other than filching buzzwords. "

"You might, say, pledge to end Bill Clinton's anti-privacy policy on encryption, the scrambling of data to keep it from prying eyes. That would take political courage, not low-rent larceny.

Or, even better, take open-source software seriously enough to find out what it's all about. And then pledge that a Gore administration would do everything in its power to make open source software the standard for government computer systems. "

Hot www.wallstreet.com Web Address Up For Sale, April 7, 1999, NEW YORK (Reuters) – "The owner of a hot Internet address, www.wallstreet.com, Wednesday said he would auction off the domain name after he said he received a $250,000 offer from a pornography Web site operator."

"Ehud Gavron, a principal of ACES Research, the small Tucson, Ariz., Internet provider that owns the address, said he would prefer to sell it to a financial services firm when he puts it on the block April 20. "

"Up until now, we really haven't done anything with it, haven't tried to sell it, but we got this quarter-of-a-million dollar offer from a porn site,'' Gavron said. ``That's what gave us the idea. We said: 'Hey if out of the blue somebody wants us to give $250,000, maybe there's somebody out there who can get a better benefit out of it."

"The reason pornography sites are keen on the address is because so many people type in ``www.wallstreet.com'' when looking for financial information, Gavron said, claiming the inactive address gets 4,000 to 17,000 hits per day. The firm, however, has not collected any comprehensive data on the average number of users or their profiles, he said. "

"Visitors to the site currently are diverted to a stock quote page created by the Arizona Daily Star newspaper.

Although Gavron said he prefers to sell the address to a financial institution, there may be few takers on Wall Street.

"Most of the firms already have domain names with their own corporate identity, which is better than a generic name like 'wallstreet' or 'hotstocks,''' said Bill Ahearn, the chief spokesman for investment bank Lehman Bros. Holdings Inc."

Gavron, however, will push ahead with an online auction, hosted by the New Commerce Communications Web site at http://www.com-broker.com on April 20. "

"The owner reserves the right the right to reject a final bid of less than $300,000, a notice posted on the site optimistically said. "

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