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  1. Technology
November 21, 1995


By CBR Staff Writer

The winner in the titanic tussle at Cable & Wireless Plc between chairman Lord Young and chief executive James Ross is no doubt known to all by now, but it was always likely that we would have to put Computergram to bed before the white smoke from the meeting of non-executive directors went up: it became clear over the weekend that the reason pinning down exactly what has been the strategy at Cable & Wireless is because the answer you got depended on which camp the interviewee was in; James Ross is keen to concentrate on the Far East, Europe with Vebacom AG, and the US, where a deal with Nynex Corp is said to be cooking, where Lord Young has been buying things such as the 10% stake in Bezeq Israel Telecom Ltd that took his fancy – adventuring in St Petersburg and Latvia is seen askance by the Ross camp, and even Australia may be regarded as outside the core; a majority of the executive directors are said to be in the Ross camp, and Lord Young is said to be aghast at the public row – in which case, being the soothing politician he was, he will no doubt think it his duty to resign… Not?

Cable & Wireless Plc was hoping to make any announcement in an orderly fashion just before the Stock Exchange opened this morning, but you know how people like to feed these matters to the Financial Times.

With US West Inc nominally a partner of Time Warner Inc, we were a bit surprised that the lure of the bright lights was so strong that according to the Wall Street Journal, AT&T Corp was apparently ready to risk investing in the company’s cable television unit, but Reuter quotes friends of AT&T saying the company is a long way from deciding to invest substantial sums of money in the cable unit; the Journal said AT&T was talking with Time-Warner about a multi-billion dollar investment, in order to provide local telephone service to millions of subscribers, but the source said AT&T is concerned by Time Warner’s current management instability and by uncertainties caused by US West’s litigation; meantime US West plans a legal challenge Time Warner’s combining of Warner Bros and Warner Music, a source close to the situation told Reuter on Friday; it is already trying to get Time Warner’s pact to acquire Turner Broadcasting System Inc unscrambled.

Hard to see what it has to do with the European Commission but it cleared Seagate Technology Inc’s deal to buy Conner Peripherals Inc.

Microsoft Corp is so thrilled with the way the Microsoft Network has been going that it has allowed its subscription base to exceed the 500,000 it had planned, and it says it now has more than 525,000 subscribers enrolled, making it one of the largest Internet service providers: it will also extend its charter membership annual rate of $40 for US subscribers to March 31.

Deutsche Bahn has put a 49.9% stake in its DBKom Gesellschaft fr Telekommunikation mbH, the railway operator’s telecommunications network, up for sale, and RWE AG, Viag AG, Veba AG and Thyssen Handelsunion AG – with BellSouth Corp – will all be entering bids in the action.

Performance Systems International Inc – it calls itself PSINet – has signed a non-binding letter of intent with Clear Communications Ltd, Wellington for a joint venture to offer Internet access in New Zealand: PSINet will get 45% of what is tentatively named Clear PSINet Ltd.

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Australia will introduce full and open competition to telecommunications from July 1 1997, Prime Minister Paul Keating said at the Osaka summit meeting of the Asia-Pacific Economic Co-operation body.

Redwood Shores, California-based Oracle Corp has won an order from the DreamWorks SKG high-tech movie studio with database tools and client-server applications: DreamWorks will use Oracle7 and its integrated set of Oracle applications modules.

UK medical, product monitoring and environmental group Graseby Plc, Cambridge, warns that product monitoring and environmental activities will see pre-tax profits and earnings per share materially below last year’s ú10.1m and 11.4 pence figures: it said reduction in metal detector sales in North America and production problems with its D40 checkweigher caused lower profit margins in product monitoring, and expected profit down 30% to ú3.3m; in its environmental division sales were 20% down and profits were also hit by sales to utilities which, in some cases, required extra costs to install equipment; in view of poor performance over the past 12 months, Graseby said it had replaced most environmental division senior management and will take a ú2.0m charge in 1995 to cover redundancy costs; cash expenditure related to this charge is not expected to exceed ú500,000, it said.

Give a company a silly name and hang it: on Friday it was announced that Kaleida Labs Inc was disappearing into Apple Computer Inc, and now PC Week hears that Taligent Inc may be closed down next month.

Well come on, Hewlett-Packard Co may be growing many times as fast, but it is only half the size (and the payout is only 20 cents a quarter against 25 cents): Louis Gerstner is clearly doing a fantastic job at IBM Corp, because the market is currently valuing IBM at some 10% more than the Palo Altoer, and the market always gets it right…

Mannesmann AG said group earnings in the first nine months of 1995 rose on strong engineering profits and a sharp rise in telecommunications earnings with sales up 11% to $14,964m from the year before, and orders up 13% to $19,795m: group investment rose 2% to $1,063m; the company said telecommunications was again the main profit-driver, posting vigorous earnings growth from increased profits in the D2 cellular phone network, despite start-up costs for its other activities.

Thyssen Telecom AG, the telecommunications subsidiary of Thyssen Handelsunion AG, said its current value is around $2,482m after $709m was paid for Thyssen Telecom shares in a fund-raising announced yesterday; the shares represented 27.3% of the company’s value and raised Thyssen Telecom’s share capital to $57m from $46m last December, when the company was formed; the capital increase brought in several new shareholders – Commerzbank AG, Westdeutsche Landesbank Girozentrale AG, WGZ Bank, Part’Com, a subsidiary of the French public bank Caisse Francaise, and the Dutch ING Group all took up shares in the offering; the company said it plans to float on the Frankfurt exchange by 1999 at the latest.

Hewlett-Packard Co plans to spend another $1,000m buying in its own shares, of which it currently has 510m out, trading at around $90; it still has about $300m left of its previous buyback authorisation.

One of those bubbling under bits of gossip that won’t lie down and decently die is that IBM Corp is putting together a bid for Storage Technology Corp – and with the state that IBM’s storage lines are in, a case can be made for it: IBM knows it will now never beat the Louisville, Colorado company in the tape library business, and if IBM’s heavily delayed Magstar tape drive can’t be used in a StorageTek library, it will have even less potential; Iceberg is not seen as that much more brilliant a product than IBM’s Ramac, but at least IBM would get the satisfaction of easing Hewlett-Packard Co drives out of the thing in favour of its own (and despite their raw performance, all too few other manufacturers seem to want to use the OEM versions); the company should not cost too much either because IBM would likely be the only buyer in the market… all of which brings us to the price – the company is currently valued at only $1,450m, but also has quite a lot of other paper out, so it might cost $2,000m all told at the current valuation, and $2,800m to $3,000m – small change for IBM – should be enough to get a recommendation for the bid from Ryal Poppa; the bid suggestion first surfaced way back in January (CI No 2,582).

The European Commission said on Friday that it would take a favourable view on the creation of ICO Global Communications Ltd, the company set up to develop the Inmarsat-P satellite cellular system.

Visa USA said it expects a detente soon in the ongoing battle with Mastercard International Inc and its partners over standards for software to conduct secure transactions on the Internet: Visa, which announced an alliance with Sony Corp for a secure entertainment and transaction environment, said it expects the sparring partners to come together on a converged standard, possibly by the first quarter of next year; Visa and Mastercard, which had been working together on one standard for Internet transactions, recently split views (CI No 2,761); Visa said it hopes to converge the standards soon, and analysts say a split would slow down electronic commerce; MasterCard, which in October was joined by IBM Corp, Netscape Communications Corp, GTE Corp and CyberCash, said it was still talking to Visa, which in late September unveiled its own specifications – Secure Transaction Technology, with Microsoft Corp.

Mountain View, California-based Netscape Communications Corp has completed its acquisition of Collabra Software Inc in which it purchased 100% of the company for 1.85m shares of Netscape stock: the acquisition is intended to qualify as a tax-free reorganisation and a pooling of interest for accounting and financial purposes, it said.

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