The week in review: Making plans for profits

Some of the tech world's heavyweights give clues on how they plan to stay afloat in a slowing economy.

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
Some of the tech world's heavyweights gave clues this week on how they plan to stay afloat in today's slowing economy.

Intel has completed the design of its "McKinley" processor for servers--a manufacturing milestone that will likely be one of the highlights of the Intel Developer Forum next week. Although the high-end 64-bit processor won't appear in servers until 2002, the news that the design is finished will likely be one of the focal points of the three-day conference starting Tuesday in San Jose, Calif.

The chipmaker also will up the stakes in the power-saving mobile processor game next week with a faster mobile Pentium III aimed at smaller notebook PCs, an evolving class of systems referred to as "thin-and-lights." With the chip, Intel is attempting to offer buyers an acceptable amount of performance without decreasing the all-important battery life of laptops.

Apple Computer seemed to be going back to the 1960s as CEO Steve Jobs unveiled new iMac models--complete with CD-RW drives--in two new psychedelic colors during his keynote address at Macworld Tokyo. Taking the stage in a suit and tie--a departure from his signature black turtleneck and jeans--Jobs also cut the price of the entry-level Power Mac G4 Cube and introduced a new Cube with 128MB of memory and a CD-rewritable drive.

But analysts said they are worried that Apple's decision to bank on iMac patterns such as "flower power," a psychedelic flower pattern, and blue dalmatian, a blue-and-white polka-dot pattern, could limit the appeal of Apple's best-selling machine.

Napster played its own game of survival this week. The popular music-swapping service tried to prevent a possible court-ordered shutdown as executives offered record companies $1 billion over five years for the right to allow copyrighted music to be traded on its network. Record labels quickly scoffed at the offer, calling it a publicity stunt. A hearing on the copyright case is set for March 2.

Cash flow problems
Despite these strategies, some companies are still facing rough going.

Shares of Sun Microsystems slid after the company said it could miss consensus estimates by more than 50 percent in the third quarter. Executives for the maker of servers and network software said they expect the company to report third-quarter earnings of 7 to 9 cents per share, far less than earlier analyst estimates of 15 cents per share.

Intel announced it will delay employee raises, curb hiring, and cut back on expenses in an effort to weather the downturn in the U.S. economy. Employees learned in a memo that the company has imposed a wide variety of cost-control measures designed to reduce operating expenses by hundreds of millions of dollars. The company is not reducing capital spending or its research and development budget, but it is cutting costs nearly everywhere else.

Webvan ceased service in Dallas and laid off its entire staff there to conserve operating capital and focus on the profitability of its nine other markets. Webvan's Dallas operations employed approximately 220 workers, who will receive 60 days severance. The cash-strapped dot-com entered the Dallas market through its acquisition last year of HomeGrocer.com, another online grocery service.

Online convenience store Kozmo announced that it would lay off workers as part of a sweeping plan to build a brick-and-mortar presence. Under the new plan, the New York-based company is expanding its business-to-business operations--including leasing out its warehouse space and fulfillment operations--and dropping the .com from its name. Kozmo will also unveil a print catalog April 1.

On the frontier
Although the technology is invisible, laser-based communications networks are coming closer to becoming a concrete presence in the networking world. Until recently, the technology has been relegated to white-board theories, research-and-development labs and trial projects. Two start-ups plan to announce for the first time the commercial availability of their products and services within the next week.

The technology aims to make the connection between expansive national networks and smaller, less-developed metropolitan networks that are already being taxed under strong demand from businesses. Lasers aren't a surefire hit, however, as other competing technologies such as fixed wireless and direct fiber-optic connections are just around the retail corner.

The Web's biggest domain name registrar will offer a new service that can turn telephone numbers into Web addresses, hoping to ease the pain of having to type letters while Net surfing on a wireless phone. VeriSign's domain name registrar division unveiled a beta version of its WebNum service, hoping to capture a new slice of the domain name market focused specifically on wireless Web surfing. In the process, it stands a chance of regaining a small portion of the monopoly it once had on worldwide domain name registration.

IBM signed a deal with software and map maker Webraska, adding the final pieces of content needed to start its onslaught into the wireless Location Based Services (LBS) market, a $20 billion industry. LBS technology begins with a basic idea that with an embedded chip, anything or anyone can be located anytime. Companies are already using it, for example, to locate an automobile that needs service.

On the Hill
When it comes to Internet bills in Congress this year, you could say it's deja vu all over again. In a recent flurry of activity, members of the House and Senate have introduced bills targeting Internet taxation, online gambling, spam and Internet privacy. The catch is that they are for the most part virtually identical to bills that fell short of passage last year.

The Supreme Court upheld rules limiting a company to 30 percent ownership of the cable TV market, affirming the requirement that AT&T shed millions of subscribers. Getting under the cap is an issue AT&T has been struggling with ever since it acquired cable company MediaOne, a deal completed last June. As a condition of approval of that acquisition, the Federal Communications Commission insisted that AT&T either let go of about 10 million subscribers, spin off Liberty Media or sell its 25.5 percent stake in Time Warner Entertainment.

Attention all of you laid-off dot-com engineers: The Federal Communications Commission is hiring. It just hopes you don't mind a starting salary of $27,778. The newly appointed chairman has made it his mission to convert the FCC into a technology-savvy agency. But the agency's bureau chiefs unanimously agreed they wouldn't win recruits based on salary alone.

Also of note
As Microsoft charges ahead toward delivering Office XP by midyear, it is falling a bit behind on meeting its Windows XP targets, according to testers...BlueLight.com unveiled changes to its Internet access service, which include limiting customers' free Web access time and charging a fee for additional usage...Walt Disney offered new details of plans to shut down its Go.com Web portal, notifying members of changes that will affect some affiliated Web services offered in exchange for personal data such as home telephone numbers...Hewlett-Packard has created a new division for its handheld computers and other mobile gadgets, merging several groups and luring Motorola's top U.S. cell phone executive to lead the effort...Siemens agreed to buy U.S.-based Efficient Networks in a deal valued at $1.5 billion.