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The week in review: Making a media behemoth

The Federal Trade Commission unanimously approves the $109 billion merger of America Online and Time Warner, paving the way for final government approval of one of the largest deals in corporate history.

The Federal Trade Commission unanimously approved the $109 billion merger of America Online and Time Warner, paving the way for final government approval of one of the largest deals in corporate history.

The FTC's approval has been Creating a media titan widely viewed as the most difficult regulatory obstacle before the proposed multibillion-dollar combination. Government regulators had been lobbied heavily by rivals such as Walt Disney, which contended that the merger would create an unfair media monopoly. The deal still faces review by the Federal Communications Commission.

The approval of the proposed merger offers the first significant rules in the United States for regulating competition in the emerging area of high-speed Internet access. The consent decree applies only to the AOL-Time Warner deal; other cable owners are not bound by it. But the compromises hammered out in the final agreement could set a framework for how Internet broadband carriers will be forced to deal with rival services, legal experts say.

PC sales slow
Software giant Microsoft joined the growing list of tech companies issuing profit warnings, announcing that its 2001 fiscal second quarter will be 5 percent to 6 percent lower than expected--in the $6.4 billion to $6.5 billion range. Shares fell after the news.

Separately, Advanced Micro Devices warned that fourth-quarter revenue and profit will be lower than expected. The warning follows similar concerns by rival chipmaker Intel, which cautioned Wall Street of lower revenue expectations on Dec. 7.

Intel this week postponed opening a fabrication facility for making PC processors for a year, citing current market conditions.

Compaq Computer lowered fourth-quarter revenue expectations by as much as 10 percent. The PC maker now expects revenue to be between $11.2 billion and $11.4 billion, 8 percent to 10 percent below expectations.

Palm's new skin
Palm released a beta version of its newest operating system--software it hopes will help take Palm devices from electronic organizers to powerful vehicles for wireless voice and data communication. The new version 4.0 of the Palm OS supports 16-bit color, Bluetooth wireless connectivity, universal serial bus (USB) connections for easier PC synchronization, and support for wireless telephony.

A Palm executive demonstrated a Palm handheld computer dialing a cell phone using Bluetooth this week at the PalmSource developers conference in San Jose, Calif.

Much of the focus at this week's conference was on expanding Palm's influence in the corporate marketplace. According to Palm's chief operating officer, already 40 percent of Palm devices are paid for or reimbursed by businesses, and 80 percent of Palm devices are already synchronized at work. And of the Fortune 500 businesses, more than 120 have already chosen Palm as their standard.

Also at the conference, a host of new features for the Palm, including MP3 playback capabilities and enhanced multimedia services, were highlighted. Most additions are expected in 2001.

Supermodel Claudia Schiffer used the conference to announce that her Palm Vx Claudia Schiffer Edition is now available on her Web site. In an interview with CNET News.com, she said she was "totally hooked" on the handheld device.

Full stream ahead
Technology companies positioning themselves for a better foothold in the faltering Internet audio and video market unveiled a slew of new--and, they say, improved--products. The jerky presentation of many events streamed through the Internet is a turnoff for many consumers. But companies that showcased new products at the Streaming Media West 2000 conference hope to move the industry a step closer to TV-quality viewing on the Web.

Streaming media use spiked this year, with a 65 percent increase in home PC users viewing audio and video delivered over the Web. The study found that at home, 35 million Web surfers used streamed content in November 2000, a 65 percent gain from the 21 million during the same month last year.

Microsoft chief executive Steve Ballmer acknowledged serious shortcomings in current audio and video streaming technology but promised better things to come. In an hour-long keynote, Ballmer showed off newly released Microsoft technology--including a demonstration of the company's upcoming Whistler operating system--and discussed some projects due next year.

Also of note
The more than 55,000 credit card numbers exposed on the Web for more than a day have been removed by FBI agents, and the security hole that allowed a hacker to steal the information from Creditcards.com has been fixed...While commercials during Super Bowl XXXV next month will star Budweiser, beer munchies and a host of other household names, dot-com companies will be playing only second string in television's most watched sporting event...CenterSpan Communications bought the rights to defunct Scour's file-swapping technology in a bankruptcy auction, planting the seeds of a potential competitor to Napster's new music service...Google's new toolbar extension may give Web surfers the feeling they're being watched, as one version keeps track of every site a person visits to analyze search and surfing patterns.