The week in review: Melissa virus spreads

A self-replicating virus that exploits email software to send a list of porn sites rapidly spread across the Internet, forcing some companies to shut down their email servers while spawning a host of copycats.

The virus, W97M_Melissa, uses a combination of Microsoft Word macros and Microsoft Outlook to send a list of 80 pornographic Web sites to users listed in a victim's address book. Though Symantec, Network Associates, and TrendMicro posted fixes within a few hours, it wasn't enough to prevent speedy proliferation of the virus, which quickly arrived at Microsoft, Intel, and other major sites.

Caught
First identified last Friday, Melissa spread in "Internet time," catching antivirus companies flat-footed. By week's end, however, the focus had shifted from treatment and inoculation to finding the perpetrator.

By Tuesday authorities had identified the point of introduction; but the owner of an America Online account that was apparently used to inject the Melissa virus into the wild says he had nothing to do with it, and that he is planning to close his account because of the online giant's "lack of security."

On Thursday night a New Jersey man was arrested by federal and state officials and charged with creating and disseminating the virus. It was not clear if other suspects remain.

Teamwork
America Online and Sun Microsystems outlined a joint effort to market business software, opting to keep selling overlapping products from both Sun and Netscape Communications, which AOL bought this month. The venture includes 1,000 former Netscape workers and a like number from Sun, and calls for Sun to pay AOL nearly $1.3 billion during three years--a significant bet to help reshape the company, bolster profits, and better compete with IBM, Compaq, and Hewlett-Packard.

In a move related to the purchase, AOL laid off some 850 employees, about half from each side.

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A day later, longtime Netscape client engineer and Mozilla.org pioneer and evangelist Jamie Zawinski handed in his resignation and took to the Web to criticize AOL and Netscape as well as himself.

Also as a result of the $10.2 billion deal, AOL is in negotiations with Excite to either salvage or possibly cancel the content-sharing agreements between the search directory and Netscape.

Meanwhile, Sun's side deal with giant AOL has helped fuel a three-fold jump in Sun's stock price--pushing it to historic highs. The Palo Alto, California company has slowly climbed from the mid-20s in early 1996 to the low 40s last fall, and roared ahead in the last six months.

Buyout
In a widely reported move, Yahoo agreed to acquire Broadcast.com in a stock swap worth about $5.7 billion to bring video and audio content to the portal. Yahoo will offer $130 for each Broadcast.com share, representing about a 10 percent premium. Yahoo executives said to expect more acquisitions during the year.

Push media pioneer PointCast let go close to a third of its workforce after buyout talks with a consortium of telephone companies fell through. The news revealed that Microsoft had been interested in trying to create a flashy new high-speed Internet service for consumers. Until very recently, it appeared that Microsoft had yet to put together a coherent broadband strategy.

AT&T's TCI cable unit says it cannot keep up with the demand for the @Home Network, forcing prospective customers in the San Francisco Bay Area to wait even after being told the service was coming soon.

Telecommunications companies including Bell Atlantic and SBC Communications are cutting prices on digital subscriber line technology, but many potential customers still can't subscribe to the high-speed service.

Warning
Silicon Graphics warned Wall Street that its third-quarter net loss will be 20 to 25 cents bigger than analysts' consensus estimates. The surprise cast a shadow on SGI's earlier plans to have a net profit for the first six months of 1999. PeopleSoft too said it would miss expectations.

Though Baan denies it, analysts say the company is quietly trying to sell off The Coda Group, a financial applications company the Dutch firm bought last year. Coda has turned into more headache than help.

Two more top executives resigned at Electronic Data Systems as an expected shuffle of high-level management at the IT services giant gathers momentum under new CEO Dick Brown.

High-flying IT services firm Sapient beefed up its Web-based offerings, scooping up San Francisco-based consulting firm Adjacency in a deal worth roughly $50 million.

Microsoft attorneys and antitrust prosecutors, so far unable to reach a settlement, signaled that they will continue to talk during a recess in the landmark antitrust trial that will last until at least through May 10. In a separate antitrust trial brought by Caldera, newly public evidence showed Bill Gates expressing concern in a 1989 email that competition was undermining the software giant's ability to set prices for its DOS operating system.

Falling costs
The cost of a basic PC built around Intel components could drop about $100 later this month, after the company rolls out its long-awaited "Whitney" chipset. At the same time, performance in the low end of the market should improve with the release of another Celeron processor.

Emachines has shot from virtually nowhere to become the fourth-largest PC supplier in the U.S. retail market, passing such established players as Packard Bell NEC and coming within one percentage point of IBM. The meteoric rise indicates it has struck a chord with PC buyers, though doubts persist about the company's ability to be profitable.

Qualcomm is working on a new semiconductor that would allow cellular phones and handheld computers to be controlled by a single microprocessor, enabling the company to offer dual-use devices at a potentially lower price than rival products.

Sony has tapped the Linux operating system for use in a simulation that will help developers come up with games for its next-generation PlayStation more quickly.

Toshiba will slash production of industry-standard 64-megabit DRAM chips by about 90 percent by the end of the year, and shift to more advanced 128-megabit chips.

Launch
Amazon.com launched online auctions, a move that could drastically alter the competitive landscape in one of the fastest-growing areas of e-commerce. But shoppers looking for one-of-a-kind items are more likely to find retail goods available elsewhere, in contrast to the free-wheeling flea market atmosphere of competing sites like eBay and AuctionUniverse.

In a letter sent to online advertising customers, IBM said it would pull its advertising from sites in the United States or Canada that do not post clear privacy policies. Federal Trade Commission Chairman Robert Pitofsky said he hopes others will mimic the Web's second-largest advertiser.

Senate Commerce Committee chairman John McCain will introduce a bill to allow companies to ship strong encryption products overseas to non-hostile nations. The Arizona Republican and presidential hopeful once backed domestic controls on encryption but now aims to liberalize the export of the data-scrambling technology.

An adult Web site called Blue Door is locked in a trademark dispute with Intel over the chip giant's advertising campaign for the Pentium III processor, which features a blue door.

Also of note
The final beta version of Windows 2000 is expected during the third week of April ... Microsoft confirmed two potential vulnerabilities in its Internet Explorer 5.0 browser that let Web operators swipe visitors' private information ... The applications outsourcing market should kick into gear this year, laying the ground for a future growth spurt ? Advanced Micro Devices took the lead in notebook speed over Intel with new chips that run as fast as 380 MHz and have won the company a place in Compaq's business line ... DirectWeb said it will give away PCs with its Internet service ? Gobi followed suit ? An upstart auction site said it too will give away up to 12,000 PCs at random to customers who sign up for its service ? AT&T and British Telecommunications won European Union approval for a planned joint venture after AT&T agreed to loosen its ties with Telewest Communications and sell a British long distance unit ? The Dow finally closed above the 10,000 mark, crowning in its record-setting run.