In Business This Week
AOL GOES AWOL
MAYBE THEY SHOULD CALL IT America Offline. On Aug. 7, America Online suffered a massive, nationwide outage of its system after installation of some new software hit a snag. Beginning around 4 a.m., AOL's 6 million customers were unable to sign on to the service. The company said only that the system failure came during some regularly scheduled software maintenance. AOL had a similar problem in February, 1994. While an AOL spokesperson said the company was hoping to have service restored by the end of the day, as of 6:30 p.m. the system was still down.EDITED BY KELLEY HOLLANDReturn to top
FAIR TRADE FOR A COMMODITIES POST?
THREE IS THE MAGIC NUMBER. Early in President Clinton's term, attorney Brooksley Born, 55, was a leading candidate for two key government posts. She didn't get them--but on Aug. 2, the Senate approved her to lead the Commodity Futures Trading Commission. It makes sense: Born has specialized in commodities law at Washington's Arnold & Porter. But her approval did not come without hardball politics. To get full Senate support, Born had to agree to recuse herself from any probe of trading by Hillary Rodham Clinton, a longtime pal.EDITED BY KELLEY HOLLANDReturn to top
GE CAPITAL'S BIG SPENDER
Gary Wendt isn't the type to take no for an answer. Since 1994, when he was rebuffed by Kemper, the chief executive of GE Capital Services has been buying up insurers at home and abroad.
His latest grab: On Aug. 5, Wendt agreed to pay roughly $1.8 billion to acquire First Colony, a Lynchburg (Va.)-based life insurer with assets of $11 billion. That means GE Capital has spent over $5 billion in the past three years on U.S. life insurers and reinsurers. Included in the shopping spree: Life Insurance Co. of Virginia, American Express' life insurance company, and Great Northern Annuity, formerly a part of Weyerhaeuser. Wendt has also spent $1 billion on two German reinsurers.
Wendt has his wallet out because he wants to bring GE's fabled operating efficiencies to bear on these companies. He believes retirement assets will be good business as baby boomers age.
Is Wendt still on the prowl? He said in July that GE Capital's insurance businesses "had not yet reached critical mass." Stay tuned for his next deal.EDITED BY KELLEY HOLLAND By Tim SmartReturn to top
WHY PFIZER MAY BE IN A BAD MOOD
THE FOOD & DRUG ADMINIStration has ordered Pfizer to rein in claims for Zoloft, its $1 billion rival to Prozac. Contrary to what Pfizer has suggested, the drug is approved only to combat major depression, not anxiety, postpartum depression, obsessive-compulsive disorder, or "mood disorders" such as PMS-related depression. The drugmaker must now run corrective advertising and write to health-care professionals correcting its statements, and the FDA may demand further remedies. Pfizer wouldn't comment.EDITED BY KELLEY HOLLANDReturn to top
NETSCAPE GETS TOUGH
THE BATTLE OF THE INTERNET titans just exploded into a legal dispute. In an Aug. 6 letter to Microsoft and the Justice Dept., Netscape Communications' outside lawyer, Gary Reback, accused the software giant of violating antitrust laws. His charge: Newly announced licensing restrictions on Microsoft's Windows NT Workstation software unfairly limit use of Netscape's Web-site software. But that's not all. Reback, whose earlier efforts to curb Microsoft led to a Justice Dept. probe, says he soon may raise objections to Microsoft's deals with AOL and AT&T. Microsoft promised them prominent positions on its Internet connection site if they recommend that customers use Microsoft's Web browser. Justice wouldn't comment. Microsoft called Netscape's move a public-relations ploy.EDITED BY KELLEY HOLLANDReturn to top