The week in review: Dot-coms duck and cover

Dot-coms had a rough week, as a number of e-commerce sites shut down, cut staff or shuffled their executive deck.

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
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Dot-coms had a rough week, as a number of e-commerce sites shut down, cut staff or shuffled their executive deck.

Teen site Kibu.com, backed by prominent Silicon Valley businessmen including Jim Clark, planned to close. The company laid off most of its 65-person staff. Kibu said that it was going to return its remaining capital to investors and had created a Web site for employees to present themselves to the job market.

Productopia.com, which provides product information and buying advice, confirmed rumors that it would shut down. Separately, WebHouse Club, an affiliate of Priceline.com that offers a name-your-price gasoline and grocery service, said it is folding, citing the company's inability to raise capital. The news sent shares of Priceline tumbling toward new lows.

Online drugstore More.com laid off about a third of its staff to "shorten the path to profitability," which the company expects to meet sometime in 2001. Online marketplace eSprocket, which hosts buyers and sellers of used equipment from businesses, cut its staff by 50 percent. eSprocket's CEO said the layoffs were made to reduce the company's cash burn rate while the company is "gaining traction" in the industry.

Nimish Mehta resigned as CEO of online printing company Impresse, which also laid off an unknown number of employees. Sources said Mehta left the company last week for personal reasons and to spend more time with his family. The company laid off workers in sales and marketing departments.

GreatEntertaining.com, which gives party-planning tips and sells related items, shed two-thirds of its staff, including chief executive and co-founder Tanya Roberts. Less than two years old, the company will revamp its business strategy to focus less on consumer sales and more on corporate and trade customers, such as florists and professional party planners.

Internet consulting start-up Gen3 Partners, led by the former head of Cambridge Technology Partners, laid off approximately 30 employees from a staff of about 130.

Echoing the current conditions, a group of top stock analysts warned investors not to hold their breath for most Internet stocks to rebound. Last year was "the anomaly--a year where things got incredibly euphoric and companies went public at earlier stages than ever before," said Henry Blodget, a member of the panel and a well-known financial analyst at Merrill Lynch.

The panel Webcast was jointly hosted by CNET News.com and the University of Pennsylvania's Knowledge@Wharton.

Courting favor
The government tore into Microsoft's proposed schedule for hearing its antitrust appeal this week. The government called Microsoft's proposal "excessive" and said it would "delay resolution" of the appeal. The software giant had filed a legal response that accused the government of trying to "short-circuit the appellate process."

In other legal news, a panel of three appellate judges harshly grilled lawyers for both Napster and the recording industry before adjourning without a decision this week in the latest round of a closely watched legal clash that pits the Internet against copyright laws. Napster's legal team faced tough questioning from the judges on whether its technology deserves the same protection the Supreme Court granted VCRs in a case involving Sony and the motion picture industry in the 1980s. Lawyers for the Recording Industry Association of America (RIAA) came under fire for the industry's contention that Napster controls the material traded over its system.

The FBI released documents about its controversial Carnivore technology, but critics blasted the lack of information and said they still could not determine whether the email-tapping program would be an invasion of privacy. The FBI also withheld the source code to the Carnivore system--one of the most coveted pieces of information for privacy advocates.

Chips are down
Dell Computer said revenues will be lower than expected for its third fiscal quarter, joining a cascade of companies in recent weeks admitting that business is not growing like they thought it would. The company said that revenue will grow only 7 percent over revenues of $7.67 billion in its second fiscal quarter. The revised figure means that revenue for its third quarter will come to approximately $8.2 billion.

However, the PC maker escaped without a brutal sell-off like Apple Computer suffered. Last week, Apple plunged nearly 52 percent after issuing a more severe profit warning.

Ironically, a new report said semiconductor sales grew 53 percent and hit an industry high for the month of August. The boom was credited to strong worldwide demand for Internet and wireless equipment. Chip sales during August reached $18.2 billion, a jump from $11.9 billion in the same period a year ago.

Despite the bad news in the industry, Transmeta, which makes chips for notebooks and portable Net appliances, plans to raise $143.6 million in an initial public offering later this month. So far, companies that plan to incorporate the company's Crusoe chip include IBM, Sony, NEC, Fujitsu, Gateway and Hitachi. Sony, Gateway, America Online, Compaq Computer and several other manufacturers are also investors in Transmeta.

Cash and confidence
Oracle CEO Larry Ellison guaranteed the company's database and e-commerce software will run Web sites three times faster than rival offerings from IBM and Microsoft--or he'll give customers $1 million. Critics dismissed the bet as a public relations stunt.

Shares of Corel jumped 83 percent after rival Microsoft invested $135 million in the struggling software maker. The software giant invested in its rival in the software application market under a new strategic relationship centered on Microsoft's so-called .Net initiative. Corel has been in dire financial straits since the collapse of a proposed merger with Inprise.

After Microsoft's investment, Corel elevated Derek Burney to president and CEO of the company on a permanent basis. Burney had been serving as interim president and CEO since August, when founder Michael Cowpland abruptly resigned as CEO.

Also of note
Handspring began selling its Visor personal digital assistant in Asia, marking the latest move to expand its distribution channels...Time Warner's decision to scrap its planned acquisition of record label EMI Group will likely hasten European approval of the media giant's merger with AOL, although the companies still face additional hurdles in the United States...Small phone and Internet service providers are struggling as they try to launch new services, upgrade their networks and generally compete with the giants of the communications world...The technology industry breathed a sigh of relief after the Senate voted to increase the number of high-tech workers permitted to enter the United States under special visas.