TOP STORIES -- May 25-30
Microsoft and AOL
Settle Netscape Lawsuit
Microsoft Corp. will pay AOL Time Warner Inc. $750 million to settle an antitrust lawsuit alleging that the software giant unfairly crushed AOL’s Netscape Web browser. In the settlement deal, the rivals also agreed to collaborate on digital media initiatives to thwart piracy.
Seen as a victory for both companies, the agreement resolves the biggest corporate fight over the demise of Netscape, one of the main issues of the federal antitrust suit Microsoft settled last year.
Under the agreement, Microsoft will extend AOL’s right to use Explorer in its Web service for seven more years, free of royalties. And AOL will be able to use Microsoft’s Media Player 9, which gives greater control than earlier versions of the video and music player over how content can be displayed and stored.
Executives at the companies said they hoped the collaboration on digital-rights mechanisms would speed content delivery and cut the use of peer- to-peer networks that let users swap pirated content for free.
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Banks Win High Court
Decision on ATM Fees
The U.S. Supreme Court handed the banking industry a final victory in its 3 1/2-year battle with the cities of Santa Monica and San Francisco over automated teller machine fees.
The court refused to hear an appeal of lower court rulings that overturned laws the two cities passed in 1999 to bar banks from charging for use of their ATMs by customers of other institutions.
Bank of America Corp., Wells Fargo & Co. and the California Bankers Assn. had sued to challenge the laws, which the lower courts threw out on grounds they conflicted with federal banking rules.
BofA and San Francisco-based Wells Fargo have national banking charters issued by the U.S. Office of the Comptroller of the Currency, whose regulations permit banks to charge ATM fees to non-customers.
Backers of the laws and consumer groups expressed disappointment at the outcome of the case.
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Markets’ Spring Rally
Picks Up Pace Again
After a brief pause, Wall Street’s spring rally resumed last week as investors began piling into stocks rather than risk being left behind.
The Standard & Poor’s 500 index jumped 3.3% for the week while the Nasdaq composite index bounced 5.7%. The gains came on the heels of a down week that had snapped a five-week winning streak for both indexes. The Dow Jones industrial average, meanwhile, added 2.9% last week.
All three gauges also posted gains for May, their third straight winning month. That hasn’t happened since late 2001.
The rally came despite several tepid economic reports. Analysts said investors were buoyed by the recent federal tax cut, which reduces taxes on both dividends and capital gains.
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Insurer Sues to Block
Potential State Takeover
Infighting over the fast-deteriorating workers’ compensation system in California took a new turn when officials of the workers’ comp insurer of last resort announced they have sued the state Insurance Department to thwart a potential takeover.
The lawsuit, filed by the State Compensation Insurance Fund, is the latest salvo in an intensifying battle between Insurance Commissioner John Garamendi and operators of the public, nonprofit fund that controls more than half of the California workers’ comp insurance market.
The lawsuit was filed late Tuesday in San Francisco County Superior Court.
Garamendi has been highly critical of State Fund management in recent months, warning repeatedly of a looming financial meltdown at the insurer. State Fund officials insist their institution is fundamentally sound and that meddling by the Insurance Department would only add to the turmoil roiling the California workers’ comp market.
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Tenet Healthcare’s
CEO Steps Down
Jeffrey C. Barbakow, Tenet Healthcare Corp.’s chief executive for the last decade, resigned from the Santa Barbara-based company, which has been hard hit by government investigations of its hospitals.
Trevor Fetter, Tenet’s 43-year-old president, assumed Barbakow’s duties. Tenet said it was looking for a permanent replacement, and Fetter is regarded as a strong candidate.
Tenet has been on a downward spiral since last fall, when a federal investigation was launched into its practice of boosting profit with special payments that Medicare makes for the sickest patients.
In a message to employees, Barbakow, 59, said, “I know that the new management will do what is necessary to restore Tenet to its rightful position of leadership in the health-care industry.”
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BofA and Wells Fargo
Challenge ‘Opt In’ Laws
In a preemptive strike against proposed financial-privacy laws, lawyers for Bank of America Corp. and Wells Fargo & Co. asked a federal judge to block cities and counties from limiting how banks can share customers’ information with telemarketers.
The banks and supporters of the local laws in Northern California made their arguments before U.S. District Judge Claudia Wilken in Oakland, who didn’t issue an immediate ruling.
The immediate challenge is to laws passed by Daly City, San Mateo County and Contra Costa County, which are to take effect Sept. 1. Unlike the federal Graham Leach Bliley Act, which allows customers to opt out of having banks share financial information with third parties, the local laws require customers to “opt in.”
The banks’ lawsuit is part of a broader challenge to the authority of anyone other than federal legislators and regulators to exercise control over the practices of nationally chartered banks.
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Jury Awards Inventor
in Suit Against EBay
A federal jury in Virginia found that EBay Inc. infringed an inventor’s patents and ordered the online auction giant to pay him $35 million.
Although the award is small compared with the nearly $250-million profit EBay racked up last year, the jury’s finding is a substantial setback for the San Jose company, which had never lost a trial or settled a lawsuit.
EBay plans to ask U.S. District Judge Jerome Friedman in Norfolk, Va., to set aside the verdict. “We believe the weight of the evidence
The victor in the case is Thomas Woolston, a 39-year-old electrical engineer in Great Falls, Va. Among Woolston’s patents are one for a system for selling items at a fixed price and for a technology that allows buyers to compare prices from multiple online sellers.
The jury found that EBay’s “Buy It Now” option violates one patent and that EBay unit Half.com infringes another patent, said Woolston’s lawyer, Scott L. Robertson.
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Wet Seal Taps Former
Disney Executive as CEO
Clothing retailer Wet Seal Inc. named former Walt Disney Co. executive Peter Whitford as its new chief executive, four months after dumping longtime leader Kathy Bronstein.
Chairman Irving Teitelbaum said the company, after hitting “a major bump in the road” last year, was “ushering in a new era” with Whitford’s appointment.
Whitford, 48, last month quit as global president of Disney’s retail chain as the entertainment giant announced it would close or sell its stores. “I did not want to be part of the sale or downsizing of the Disney Stores worldwide,” Whitford said. “And I wanted to return to the apparel industry.”
Whitford said his first priority would be to focus on the flagship Wet Seal division, which has been having trouble connecting with its young, trend-conscious customers. The company operates 622 Wet Seal, Arden B and Zutopia stores.
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Sony Unveils All-in-One
PSX Game Console
Sony Corp. unveiled an all-in-one audio and video device in its effort to shape the future of home entertainment, and pull out of a slump, by taking advantage of its immensely popular PlayStation 2 video game console.
Called PSX, the box will combine the functions of a PS2, a DVD player and recorder, a digital music player, a television tuner and a personal video recorder that can store 60 hours of TV programming.
Sony competitors such as Microsoft Corp. are pursuing a similar strategy. Microsoft is adding several new functions to its Xbox game console.
Sony declined to give a retail price for PSX, which will debut in Japan this year and in the U.S. in 2004. The PSX announcement follows a surprisingly weak earnings report for last fiscal year.
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Anheuser-Busch Expects
Sales Boost in New Brew
Anheuser-Busch Cos. is rolling out a new upscale beer to compete against imported brews, whose sales are barreling along in an otherwise stagnant beer market.
The world’s largest brewer hopes the beer, called Anheuser World Select, will tap into the thirst for foreign-tasting suds while holding appeal as a fresher beer made stateside.
The beer will be sold in only 10 selected markets, including the Los Angeles area and Las Vegas. World Select also will be priced in line with the imports.
Anheuser-Busch, based in St. Louis, accounts for about half of all U.S. beer consumption. It sells such mainstream brands as Budweiser, Bud Light and Michelob. Its 12 domestic breweries include one in Van Nuys. World Select will be bottled in Baldwinsville, N.Y.
