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The week in review: Cutting back--everywhere

The trend toward cutting back hits a wide spectrum--from people to prices to power.

Steven Musil Night Editor / News
Steven Musil is the night news editor at CNET News. He's been hooked on tech since learning BASIC in the late '70s. When not cleaning up after his daughter and son, Steven can be found pedaling around the San Francisco Bay Area. Before joining CNET in 2000, Steven spent 10 years at various Bay Area newspapers.
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Steven Musil
5 min read
The trend toward cutting back hit a wide spectrum this week--from people to prices to power.

Several online companies continued the rampant practice of cutting staff to cut costs and reach profitability. Troubled Web portal AltaVista laid off 200 employees, or about 25 percent of its staff, while NBC Internet said it is cutting about 150 positions in a move to reduce costs amid an increasingly soft online-advertising market.

AOL Time Warner is planning to close down its Web entertainment hub Entertaindom on Feb. 1, making it the latest in a long line of failed Time Warner online ventures. Separately, Drkoop.com said it will close its Austin, Texas, headquarters and lay off 45 employees.

Hundreds of thousands of businesses and residential homes went dark as surging power demand snuffed out lights throughout Northern California and Silicon Valley. The blackouts struck with little or no warning to customers.

The electricity crunch has created a mini-boom for retailers selling one niche tech product: the power supply that doesn't go out. The units, which range in cost from less than $100 to tens of thousands of dollars, keep computers and other tech gear running even when electricity is cut.

In other cutting news, Apple Computer launched a $200 instant rebate for two iMac models, cutting $200 off the 450MHz iMac DV+ models as well as the top-of-the-line iMac Special Edition. The rebate brings the prices down to $1,099 and $1,299, respectively.

Fighting a bug
As cold and flu season gets into full swing, a new variant of the Melissa virus is spreading, this time in the guise of a Macintosh-formatted Microsoft Office document. Like other Melissa variants, the bug's main impact is that it tries to replicate itself. Future Microsoft Word documents created by infected systems can carry the virus and, when the virus is a Windows-based PC running Microsoft Outlook, it will mail 50 copies of itself using the program's address book.

A real-life virus may be infecting relations between companies that fight computer bugs. Last week, Spanish antivirus company Panda Software announced that a new virus had attacked five of its customers. The revelation surprised and angered other virus researchers, as Panda didn't share samples of the virus with them. The reason: The Panda member responsible for informing them had a virus--a real-life one--and was out sick.

An Internet worm cobbled together from generally available hacking tools could swamp infected portions of the Net with its high-bandwidth searches for vulnerable servers. Known as the Ramen worm, the self-spreading program appears to have been created by common Internet vandals--called script kiddies--and limits itself to infecting Red Hat servers that haven't been secured properly.

A tough call
Consumers have a message for companies trying to figure out why the wireless Web market has failed to take off in this country: It's the screen, stupid. Only a year ago, companies were promising to liberate the power of the Internet from the confines of the desktop computer, bringing it to the nearest pocket-sized cell phone. The gap between hype and reality is hardly new to the high-tech world, but why is the U.S. market so tough when other countries are flocking to the new technology in large numbers?

A pair of software development companies thinks the wireless Web needs to be more graphic. Graphics engine Simplylook and wireless provider Gravitate want to see pictures, graphs, pie charts--anything that isn't text--added to wireless Web pages. The duo next month will launch a way to provide wireless Web pages with interactive imagery, such as offering maps with directions highlighted on them, or being able to zoom in or out of an image.

The cost of using a cell phone continued its downward spiral in 2000, dropping another 7 percent on average across the United States. The biggest decreases were for people who used mobile phones the most. Costs of a 10-hours-per-month plan dropped an average of 10.1 percent, from $66.64 to $59.91.

The earnings season
Some of the biggest companies in the high-tech arena reported earnings this week--some good, some bad.

Apple announced a hefty $247 million fiscal first-quarter loss, excluding investment gains. The deficit was wider than analyst estimates but in the range of what the company had warned Wall Street to expect. The loss amounts to 73 cents per share on total revenue of $1 billion, a 57 percent drop compared with revenue in the same quarter a year ago.

Intel squeaked past lowered fourth-quarter earnings expectations, posting net income of $2.6 billion, or 38 cents a share. Analysts expected the company to earn 37 cents a share. Earnings were up 4 percent from the same period a year ago but down 13 percent from the previous quarter.

Microsoft met lowered expectations for its fiscal second quarter. The software maker posted earnings of $2.62 billion, or 47 cents a share. A year earlier, Microsoft's net income topped $2.44 billion, or 44 cents a share.

IBM slipped past analysts' expectations for fourth-quarter earnings by 2 cents a share. Big Blue earned $2.7 billion, or $1.48 a share. Analysts polled by First Call expected earnings per share of $1.46. In a conference call with financial analysts, IBM Chief Financial Officer John Joyce dismissed concerns about slowing PC sales and technology spending in the United States.

Advanced Micro Devices missed analyst estimates for fourth-quarter earnings, but company executives said the general health of the PC market isn't as bad as rival Intel described. Analyst estimates were cut last month after the company warned it would not meet its original fourth-quarter targets because of the widely reported slowdown in PC sales growth.

Also of note
In an apparently overzealous attempt to prevent spam, Microsoft's Hotmail has been discarding e-mail sent to and from sites hosted by controversial Internet service providers--even if the sites themselves are not controversial...Undeterred by industry uncertainty, a national group of TV stations is starting to test services designed to beam high-speed data such as software programs, music or video directly into homes using TV signals...eBay listing fees will increase between 5 cents and $1.30 on most items beginning Jan. 31...Hobbit fans hurried to New Line Cinema's spruced-up "The Lord of the Rings" Web site, featuring behind-the-scene snippets of the trilogy due to hit theaters by year-end.