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The week in review: Building a behemoth

Creating a cable behemoth sometimes takes time, persistence and a little more cash, as Comcast learned this week.

Comcast learned this week that creating a cable empire takes time, persistence and a whole lot of cash.

After months of corporate tire-kicking, AT&T Broadband, the biggest cable company in the United States, decided to merge with original suitor Comcast. The $72 billion deal would create a cable powerhouse, with more than 21 million subscribers and access to about 38 million households. That reach would help the new company take on the local telephone companies in offering both telephone and high-speed Internet services over cable wires.

But it may also further confuse the fragmented cable broadband Internet business, in which millions of Excite@Home subscribers are being shunted separately to AT&T Broadband and Comcast. The two companies had separately been building networks to replace Excite@Home's systems.

AT&T CEO C. Michael Armstrong sees the broadband unit and Comcast accomplishing more together than they could alone. Yet as AT&T and Comcast were explaining what the proposed merger would do, other companies were busy assuring employees what won't happen if merger plans fall apart.

Employees developing Hewlett-Packard and Compaq's post-merger plans will not lose their jobs if the multibillion-dollar deal collapses, according to documents the companies filed with federal regulators. There has been widespread speculation that members of the integration team would have to be let go if the deal failed, because they would hold insider information about the other company.

"If for any reason the merger does not gain regulatory or shareholder approval, each of our (integration) employees will go through a similar process which we use when we hire a new employee from a competitor," states Compaq's filing with the Security and Exchange Commission. That interview process would determine what type of confidential information the employee has acquired and whether there would be a conflict of interest if they return to their prior position.

Security alert
Microsoft has touted Windows XP as its most secure operating system, but the company this week released a bug fix for a security hole that could leave some people's systems open to malicious attack. Microsoft is recommending that every Windows XP customer--and some using other Windows operating systems--apply the patch immediately.

The informal community of Internet software pirates has been ripped apart by the recent international law-enforcement raids on many of its elite crackers, members of the shadowy scene say.

"This is a bad hit for warez," one self-described 18-year-old programmer, who has been a member of the community for four years, wrote in an online chat with CNET News.com. "Right now, every scene is at a standstill. Every one of them."

Warez is the generic online name for digital content such as games, movies or software whose copy protection has been defeated by skilled programmers. The chaos is the result of what has been billed as the largest action against online software pirates to date.

Separately, the Dutch department of Justice raided the University of Twente as part of a software piracy investigation and part of the international sting on warez trading. Several students were apprehended and are suspected of trading in illegal software, misuse of computer facilities at the university, and being members of a criminal organization.

Online shelves clearing fast
Many Harry Potter toys are doing a disappearing act--along with other popular toys--at several major online retailers, forcing customers to look to online auctions to find the toys in time for Christmas. Amazon.com, Walmart.com and KBToys.com said they have sold out of some of the season's most popular gifts, from Potter toys to Pixter electronic drawing devices, as well as some Lego and K'Nex building sets.

As in past years, shoppers turned away from online stores are clicking their way onto eBay and other online auctions. Not only are the toys available there, but research also shows customers aren't necessarily having to pay a premium.

Despite the rocky holiday seasons of past for online retailers--sluggish and crashing Web sites, inventory problems, delivery mishaps, and complaints about everything from privacy to return policies--this season has, so far, been relatively problem-free.

The reason is mostly because the companies that are still alive have learned from past mistakes and have put resources into the back-end technology and operation systems. And with sites running more smoothly, merchants can focus on what's really important: selling goods.

Also of note
Microsoft asked a court to stop a Linux start-up from using a name the software giant contends infringes on the Windows trademark...Windows XP, Microsoft's biggest operating system launch ever, has failed to generate enough retail sales to push past its predecessor. Which may help explain why less than two months after Window XP's launch, Microsoft has reshuffled a few high-ranking executives in its flagship Windows unit...Mac users discovered a new default home page powered by AOL Time Warner's Netscape Communications subsidiary--a seemingly minor switch that nevertheless highlights some of the most fractious alliances in the technology industry...Pressplay, which will charge people a monthly subscription fee to download and stream digital music, launched through its Web distribution partnerships with Yahoo, Microsoft's MSN Music and Roxio...As Republicans and Democrats debate sweeping changes to federal tax laws, analysts and company executives agree anxious taxpayers will be more prone this year to use software and online tax-preparation services offered by Intuit and H&R Block.

Want more? Check out all this week's News.com headlines.