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The week in review: Stock swoons and gadget dreams

The high-tech world rings in the new year with an interest rate cut, some Apple Computer discounts and promises of gadgets ahead.

The high-tech world rang in the new year with an interest rate cut, some Apple Computer discounts and promises of gadgets ahead.

The Federal Reserve this week cut the federal funds rate by a half-point to 6 percent and the discount rate by a quarter-point to 5.75 percent. The surprise rate cut boosted the Nasdaq 14 percent; the previous best one-day gain was a 10.5 percent spurt last December.

Harvest time
Apple Computer announced massive price cuts across its entire line of business systems--Power Mac G4 and Power Cube G4 desktop systems, Power Mac G4 server, and PowerBook G3 notebooks. Apple's price cuts come as the company has failed to clear a backlog of inventory from dealers' shelves.

The PC maker may have more tricks up its sleeve, however. At next week's Macworld Expo in San Francisco, Apple is expected to unveil new Power Mac desktops with faster chips and restyled PowerBook laptops.

The company also is expected to introduce four new Power Mac models, including a new top-of-the-line computer with a 733-MHz G4 processor, the fastest Macintosh computer to date. The new computers are expected to help the company close the speed gap with PC competitors such as Compaq Computer and Dell Computer, which are already offering computers with Intel's Pentium 4 chips running at 1.5 GHz.

CES front and center
Next week's consumer electronics conference promises to bring much in the way of gadgets and goodies from start-ups and PC giants alike.

Surprisingly, names such as Microsoft and Intel will be taking center stage at the conference. Intel plans to unveil an MP3 player, while Microsoft is expected to give new information about its long anticipated Xbox video game player.

New products in home networking will aim to charge the nascent industry for connecting PCs, printers and other electronic gadgets at home.

Taking sides
Advanced Micro Devices may be making plans to take on Intel in the server market and will enlist one of its own competitors to help out.

Under a complex deal, CNET has learned that AMD is sending to software developers computers that run on competitor Transmeta's Crusoe processor and contain a special version of Transmeta's "code-morphing" software. The computers are designed to run a program that simulates AMD's upcoming server chip, called Sledgehammer, sources said.

Separately, Transmeta has obtained a license that will allow it to make chips that rely in part on the Sledgehammer design.

The Sledgehammer simulator is crucial to AMD's plans to break into the lucrative server market. With a software simulation of the chip, developers can tweak their programs so they can release products when Sledgehammer emerges commercially in the first half of 2002.

Auction action
Yahoo shook up the auction world when it announced that it will begin charging listing fees for its Internet auctions and that it will ban the sale of Nazi militaria and Ku Klux Klan memorabilia. The new fees come during a sharp industry economic downturn, brought on by a slowdown in online advertising.

The new policy on hate-related material comes as Yahoo has been criticized--by a French court of law, as well as by consumer watchdog groups--for the sale of Nazi paraphernalia. Preventing such Nazi- and KKK-related material from appearing on its site could prove difficult, however. To enforce the ban, Yahoo said it will use software to comb for objectionable material and employ a team of workers to review listings.

In Washington
Several members of the tech industry are cheering President-elect Bush's pick for attorney general, saying Republican John Ashcroft's hands-off approach to commerce could be a boon for business. However, some are less certain about Ashcroft's stance on Internet filtering and online pornography--two issues sure to come before the next attorney general, as challenges to laws regulating Internet content make their way through the courts.

This week saw the swearing in of a new Congress that has vowed to make Internet privacy one of its top issues. Polls show that a large majority of consumers--and thus voters--are concerned about protecting their privacy online, and a Federal Trade Commission study last year found that voluntary action by the online industry didn't keep numerous sites from failing to meet even the most basic privacy standards. As a result, a bipartisan group of senators and congressmen have vowed to introduce and pass Internet privacy legislation this year.

Also of note
Sales of PCs through stores, catalogs and online retailers fell in 2000 for the first time, down nearly 1 percent compared with,, and took top seating as holiday traffic gainers in the 2000 season, but online-only and remained No. 1 and No. 2 for the second straight year...Lawyers for seven former and current Microsoft employees amended a $5 billion discrimination lawsuit filed against the company...A Motorola spinoff unveiled an MP3 player and a new MP3 format that is designed to display lyrics and other graphics while songs play.