The week's news: Bugs, bears, and lawyers

But for the stock market's precipitous fall off, software bugs might have stolen the week's headlines. Then again, what's a news week without "Wintel?"

Bugged out
Software giant Microsoft suffered on several fronts. First of all, its free email service Hotmail scrambled to fix a security hole that lets malicious JavaScript programmers swipe passwords. Subsequently, rivals such as Yahoo, Lycos, Eudora, and Excite had to follow suit in plugging newly recognized holes.

Microsoft was also forced to admit that an Access bug which can cause information to be saved to the wrong record exists in several versions of its database program. Then it had to say that the same bug affects a widely used database engine known as Jet, dramatically expanding the potential scope of the problem.

Meanwhile, an old feature of the Windows operating system which enables networked PCs to access shared files may expose Windows 98 to hackers, although there is disagreement as to how likely the scenario is.

Is this the right time?
Thursday the Dow Jones Industrial Average plummeted 357.36 points, marking the third-biggest point loss in the history of the index. The drop, a long-expected correction in the markets, was blamed on the economic crises looming over Russia and Asia. The technology and Net sectors were hard hit, while online brokerages saw some of their heaviest traffic days yet.

Publishing software maker Quark disclosed that last week it had proposed to purchase larger rival Adobe Systems. Adobe dismissed the offer, which Quark described as a premium-priced cash bid but Adobe called vague.

Oracle will soon debut an outsourcing service for small and medium-sized businesses, providing a smaller firms with a secure Web site address from which they can use various Oracle database and business applications.

Taking a bigger step, Fore Systems paid $250 million for startup Berkeley Systems in order to gain a share of the multibillion gigabit-speed Ethernet pie. The company's primary focus has been providing high-speed asynchronous transfer mode (ATM) networks for corporate campuses and service provider networks, but Fore hopes to tie its gear to the dominant means for connecting PCs to server computers and a network.

Cabletron will go the opposite route, using the fruits of its recent acquisition binge to get back into its core strength: corporate networks. Two new hardware devices are expected after Labor Day, potentially sparking a price war.

Telecommunications equipment makers Ciena and Tellabs renegotiated terms of their merger, lowering the price by more than a third to $4.7 billion after Ciena warned that its third-quarter results would fall short of expectations and that its hopes for a huge contract from AT&T had been dashed.

The law gets its due
Patents for Internet businesses and techologies continued to flow forth, pleasing some but opening the way for a surge in lawsuits. Will legal protection for budding business practices help or hinder the new economy?

The Justice Department deposed Bill Gates, topping headlines regarding Microsoft's alleged strongarm tactics with co-hegemon Intel and claims by Caldera executives that Microsoft failed to hand over all of the source code required by the judge presiding over an unrelated suit.

California maintained its claim to legislative leadership of the Net, as Gov. Pete Wilson signed the California Internet Tax Freedom Act, which bars local governments from levying new or discriminatory taxes on Internet companies and transactions for three years.

Also of note
Intel released its 450-MHz Pentium II processor, and all the major PC makers immediately introduced systems with the company's top-speed chip. The same day, the leading chipmaker unveiled an improved version of its Celeron processor, which is designed for the low-cost market...IBM made a renewed play for the high end of the consumer PC market...Online giant AOL said it passed 13 million subscribers worldwide.