The week in review: Bright tech earnings expected

Yahoo kicks off the quarterly earnings season with a moderately strong showing, and leading hardware makers are expected to follow suit.

5 min read
Punctuating a shortened post-holiday week, Yahoo kicked off the quarterly earnings season with a moderately strong showing, and leading hardware makers are expected to follow suit.

Server manufacturers should top expectations for the second quarter, analysts say, thanks in part to growing Internet infrastructure sales. Other corporate computing firms too are benefiting from increasing investments as businesses continue transferring operations online, an effort partly fueled by publicized failures at major Web sites.

The Web bellwether reported net income of $28.3 million for the second quarter, or 11 cents per share, topping estimates by 3 cents per share. Including charges for mergers and acquisitions, Yahoo reported a net loss of $15 million, or 7 cents per share.

IBM, Sun, SGI, services giant Unisys, and storage specialist EMC are among the market leaders most likely to exceed consensus estimates for the second quarter, according to one leading analyst, Steve Milunovich of Merrill Lynch. Chipmakers AMD and Intel report next week, but the former has already issued a warning.

Graphics chip leader ATI Technologies reported sales of $302 million for the third quarter, up 65 percent from a year ago. Earnings of $35.9 million, or 17 cents a share, rose from $26.5 million, or 12 cents a share. Nearly all of ATI's revenue comes from graphics products, but the company is preparing to expand into the market for low-cost Net devices and TV set-top boxes with "system-on-a-chip" products.

Apple shares hit a six-year high as excitement builds for Macworld, an expected consumer notebook, and next week's earnings report.

Change of plans
There are signs that Intel's next-generation processor, a 64-bit chip code-named Merced, may slip back to the third or fourth quarter of next year. Prototypes of a chip originally due at the end of 1999 and then set for mid-2000 still aren't available.

National Semiconductor agreed to manufacture chipsets designed by Via Technologies, including controversial products that will support faster 133-MHz memory and contain a 133-MHz system bus. The chipsets will contain the logo of both companies, which could defang an Intel lawsuit that threatened to block Via's chipsets from coming to market. National has an extensive cross-licensing agreement with Intel that could be seen as authorizing National chipsets.

Microsoft and its antivirus allies are bracing themselves for an expected release of a new "Trojan horse" program that could let hackers seize control of computer networks running Windows NT.

Software companies are proposing alternative operating systems that shuns Windows while appealing to manufacturers and users looking for programs that run well on PCs costing less than $200, as well as older PCs not capable of running Windows efficiently.

The inside track
US West will offer a high-speed DSL connection whose relatively cheap cost will be offset by some of the same busy-signal dangers as a dial-up service. At $19.95 per month, or $37.90 per month when combined with Internet service, it will be the cheapest DSL package on the market. But analysts say service, rather than cost, is key for the emerging market.

Chipmaker Broadcom's recent Epigram takeover may have given the company a leg up on a home networking technology that would allow PCs, handheld computers, and other devices to "speak" to each other over regular phone lines. The Home PhoneLine Networking Association (HomePNA) will soon announce a new high-speed standard, and seems to be leaving toward Epigram's entrant. Broadcom plans to build chipsets that combine its cable and DSL technology with Epigram's technology to create an all-in-one product.

Intel made another move into networking, purchasing Softcom Microsystems, a start-up that makes processors for switches, routing devices, and other network hardware. The acquisition could help Intel dive into a market segment now dominated by in-house development. Terms of the cash purchase were not disclosed.

IBM is selling its half of a joint memory manufacturing business to partner Toshiba. The Japanese company will take over Dominion Semiconductor in Manassas, Virginia, by December 2000.

Higher stakes
Thousands of Californians were introduced to the political debate over the access rights of third-party Internet service providers to cable television networks. Newspaper and television ads funded by Excite@Home and an anti-regulation coalition called Hands Off the Internet (backed in part by AT&T) underscore the importance being placed on the issue by Ma Bell, the AT&T-controlled cable-modem service Excite@Home, and their competitors. Separately, the influential Rep. Ed Markey (D-Massachusetts) said he will introduce a measure aimed at prying open cable TV companies' networks, breaking new ground in the so-called open access fight.

More Americans are getting online, but race and class sharply segregate those who have access, according to a report issued by the Commerce Department. The agency's third annual look at the so-called digital divide between technology "haves" and "have-nots" shows those living in rural areas and those at the lowest income levels have much less access to computers and Net connections in comparison to upper-income households in urban areas.

After just seven months in existence, the Internet Corporation for Assigned Names and Numbers (ICANN) is running out of cash and bills are going unpaid. Predominant domain registrar Network Solutions has refused to sign a contract that would help fund the beseiged non-profit, established by the U.S. Commerce Department.

Moving ahead
PeopleSoft is reworking its PeopleSoft Business Network portal plan, announced with great fanfare last fall as the cornerstone of its long-awaited Internet strategy. The site was to offer outsourced commercial applications for internal use and for business-to-business transactions, but the PSBN moniker has been dropped from company literature and a key developer has left the company.

Privately held online grocery merchant Webvan placed an order worth more than $1 billion with engineering firm Bechtel to build automated distribution and delivery warehouses around the country. The spending plan is deemed one of the most ambitious yet conceived by an Internet company.

Bricks-and-mortar laggards selling office supplies, computers, and sporting goods are getting a lift into cyberspace from an unlikely source--their wholesale distributors. The latter are hoping for new services revenue, greater loyalty from their dealers, and a chance to sell more and different kinds of products.

Barnesandnoble.com opened an online music store, putting pressure on market leader Amazon.com and possibly paving the way for a price war.

Designed chief executive Bob Moog is leaving Toysrus.com, possibly jeopardizing the company's Christmas sales. Toys 'R Us has been slow to embrace e-commerce.

Also of note
Toshiba passed Compaq to regain the notebook market's top spot by releasing lower-priced systems based on processors from Advanced Micro Devices ? Prodigy is promoting a $199, Linux-based PC ? Micron is charging $1,087 for a "free PC" that comes with three years of Internet service from Earthlink ? Microsoft will provide customized content from its MSN MoneyCentral site for American Express, Bank of America, Charles Schwab, and Citigroup ? Troubled Hotmail announced a redesign ? Spending on outsourcing grew to nearly $100 billion in 1998 and is projected to reach over $151 billion by 2003.