In Business This Week: Headliner
Bernard Ebbers: Born to Shop
You can't keep an acquiring man down. Less than three months after attorneys from the Justice Dept.'s Antitrust Div. nixed his $120 billion deal to buy Sprint, WorldCom Chief Executive Bernard Ebbers is at it again. On Sept. 5, he announced that his company would buy Tampa-based Intermedia Communications for $6 billion in stock and debt.
While peanuts compared with the failed Sprint deal, the purchase of the Web site manager is an important move for Ebbers, who wants to remake his Clinton (Miss.) long-distance phone company into the premier provider of Internet services to businesses. Ebbers likes Intermedia's 55% stake in Digex, a leader in Web hosting.
Ebbers says that WorldCom will now cut to 12 months from 18 months the time it will take to ramp up as a major Web hoster. Although Wall Street applauded the move for Intermedia--whose shares jumped 9%, to 31--the deal didn't win converts for WorldCom. Its stock fell 9%, to $33.75, on fears that earnings would be diluted.By Charles Haddad in Atlanta; Edited by Eric SchineReturn to top
The Day the Free Music Died
The noose is tightening around MP3.com. On Sept. 6, a federal judge ruled the Internet music site had willfully infringed on the copyrights of record companies and awarded Seagram's Universal Music Group $25,000 per CD copied. The damages could reach as much as $250 million, a sum the San Diego-based upstart termed a "death sentence." Analysts expect the companies to settle before November, when the judge will determine the number of CDs involved and final damages. Universal is likely to receive far more than the four other major record companies, which have already settled for an estimated $20 million each. And that's not the end of MP3.com's problems: Even if the company can scrape up the settlement money, the ruling will spur independent labels to file their own suits.Edited by Eric SchineReturn to top
A Difference of Opinion on the PC
What's up with PCs? Equity analyst Ashok Kumar of U.S. Bancorp Piper Jaffray is betting on a slowing in PC demand. That prompted him to downgrade chipmaker Intel Corp. on Sept. 5, sending it and the rest of the Nasdaq into a two-day tailspin. Intel shares lost 11% by the end of Sept. 6, closing at 66. But Kumar's is a lonely voice. Market researchers Data-quest and International Data Corp. think PC unit demand will rise 15% to 20% in the second half, vs. the same period in 1999. And Morgan Stanley Dean Witter analyst Mark Edelstone is still bullish on Intel, forecasting earnings above Wall Street estimates. That's based partly on higher gross margins from plant efficiencies and sizzling demand for pricey server chips.Edited by Eric SchineReturn to top
Is Bristol-Myers Checkmated?
Bristol-Myers Squibb Co. may be losing its grip on the $1.5 billion cancer drug Taxol.
On Sept. 6, a U.S. district court judge said a patent that might block generic drugmaker Ivax from making a cheaper version of Taxol did not have to be considered when the Food & Drug Administration decides whether to approve the generic version. Even worse for Bristol, the Federal Trade Commission has disclosed it was investigating whether a pact Bristol struck with a third party over that patent is an anticompetitive maneuver to keep Ivax away from Taxol.Edited by Eric SchineReturn to top