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The week in review: Hacking Microsoft

Calling it an act of "industrial espionage," Microsoft says its internal networks were accessed by hackers.

Calling it an act of "industrial espionage," Microsoft said malicious hackers gained access to its internal networks, where they were able to see some of the company's upcoming software code.

The software giant enlisted the help of the FBI on Friday to investigate the attack after a hacker or group of hackers broke into the company's network. According to sources, the hackers had access to networks for weeks, giving them time to explore Microsoft's internal computers.

Security experts said the break-in heralded a new phase of industrial attack, as the hackers created an intelligent software agent called a worm to rummage independently through networks for valuable information.

Microsoft may be one of the biggest names thus far to have its corporate networks hacked, but it's far from alone in having suffered such attacks.

Whole new game
More than 500 people faced strong winds and endured heavy rain for hours outside the Metreon, Sony's downtown-San Francisco shopping center, in hopes of purchasing the long-anticipated PlayStation 2 the day of its release.

Concerns over the availability of the game console have been mounting following Sony's announcement that it would limit consoles made because of component shortage concerns. Yet if PS2 is sold out at your local retailer, you may be able to find it online--for a price. Auctions at Amazon.com, eBay, Yahoo and Excite@Home have fans bidding more than $1,000 for the recently released game machine.

The shortage is expected to hit hardest the smaller retailers and online stores that had hoped to offer the game consoles this holiday season. Even a week before anyone had the hardware required to play them, PS2 titles were among the top-selling U.S. video games.

Breaking up
AT&T chief executive C. Michael Armstrong this week announced that he would blow up the empire he has spent the past three years constructing. Company executives outlined a four-way split of Ma Bell, with broadband and business units becoming separate companies and consumer services being listed under a tracking stock with its own CEO.

The move comes as AT&T attempts to reverse a stock slide that has brought it to consistently lower 52-week lows, with investors concerned about double-digit revenue declines in the consumer long-distance business and slower-than-expected growth in business services.

The breakup plan is a black eye that could be slow to heal. AT&T has served as a standard-bearer of a unique and ambitious acquisition strategy that now may serve as a worldwide warning that bigger is not necessarily better.

Scrutiny over the split is most likely to come from the Federal Communications Commission, although telecommunications attorneys said the FCC probably won't block restructuring.

Jumping on the breakup bandwagon is telecommunications giant and AT&T rival WorldCom, which plans to separate its declining long-distance business from its other fast-growing operations.

Laptops and desktops
The first laptops using the much-hyped Transmeta chips have landed in the United States, and more are likely headed this way. Sony is shipping its Vaio C1 PictureBook--a 1-inch-thick, 2.2-pound machine based on the 600-MHz Transmeta TM5600 Crusoe chip--to the States. Until now, notebooks containing Transmeta's chips have been released only in Japan, and in limited numbers.

Dell Computer's latest high-end laptop sports both DVD and rewritable CD-ROM drives. The Inspiron 8000 is Dell's first consumer notebook offering DVD and CD-RW drives installed at the same time.

Famously loyal Amiga fans will be able to purchase in coming months a new AmigaOne computer based on a Motorola PowerPC processor. Amiga itself, which develops only its namesake software, will rely on partners to sell the computers, the first in six years from the company.

The Pentium 4 will debut at a fairly low price next month. The 1.5-GHz Pentium 4 will come out at $795, according to various sources, while a 1.4-GHz version of the chip will be priced at $625. Though the exact price could change, sources have said the final prices are lower than Intel's usual introductory price for new processors.

Dot-com trouble
Stamps.com will lay off 240 full-time, part-time and contract employees across all locations in a move to streamline operations. The layoffs follow closely on the heels of the departure of the company's chief executive, which itself followed, by three days, the resignations of Stamps.com's president, chief financial officer and comptroller.

Mylackey.com, which provided consumers with a range of personal services from walking their dogs to detailing their cars, posted a farewell note on its Web site with a "thank you" and "goodbye" to its customers and vendor partners. Mylackey said it is ceasing operations in all markets, citing its inability to raise the necessary capital to fund market and service expansion.

Dot-com job cuts are coming at a record pace, and the increase is likely to continue in the coming months. Job cuts for the period from Sept. 25 through Oct. 20 rose to 5,677, a record for a single month and the fifth consecutive month of increases. The October figure marks an increase of 18 percent from the preceding month, when struggling dot-coms accounted for 4,805 layoffs. Since December 1999, the total number of job cuts has reached 22,267.

The Securities and Exchange Commission has launched an informal inquiry into Amazon's accounting practices related to the e-tailer's commerce network, the company said in its earnings report.

Amazon's commerce network is a series of promotional partnerships with other online and offline retailers. Over the past year, Amazon has signed a flurry of deals with companies such as Toys "R" Us, Drugstore.com and Living.com, which closed and filed for bankruptcy protection earlier this year.

Also of note
Some Goliaths in the aviation industry, including British Airways, United Airlines and Honeywell International, said they will combine their online trading exchanges to form a single venture designed to cut purchasing costs for participating buyers and sellers...America Online's newly released AOL 6.0 does note allow subscribers to set their own default home pages when connecting to the Internet through the online service...Napster released a Macintosh version of its wildly popular file-swapping software, officially welcoming Apple computer users to the free-music revolution...eBay apologized to customers for a system upgrade that has led to intermittent outages and frustrating service problems during the past two weeks.