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Wednesday, October 9, 2002 |
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• AT&T Broadband outlines 1,700 cuts • Listen.com cuts distribution deal • Akamai, AOL expand partnership • More Wi-Fi certification to get underway • Corning, SBC warn profit will be at low-end of forecasts • Air2Lan, Boingo Wireless team for service
AT&T Broadband outlines 1,700 cuts With its pending merger with Comcast Corp. inching closer to approval, AT&T Broadband has revealed plans to cut 1,700 positions. Once the merger is approved, 675 positions will be eliminated, with the remaining 1,025 jobs to be cut during a post-merger transition period of 6 to 9 months. The majority of the affected employees currently hold executive and management positions. Employees that receive their walking papers will receive generous severance packages -- from four months to a year -- and extended paid healthcare coverage of up to 18 months, according to a source familiar to the matter. AT&T Broadband points out that 70 percent of
its 4,000 Denver-based employees will stay on after the merger.
Of the 4,000 employees, 2,000 serve the local operations in Denver. After the merger closes, Comcast's mountain division will be located in Denver. Brad Dusto will head the division. The job cuts should come as no surprise; it has been no secret that the merged company's headquarters would be in Philadelphia. The merger is expected to close in the fourth quarter. Related stories:
Listen.com cuts distribution deal Verizon Online DSL subscribers can stream the latest tunes to their desktop thanks to a newly signed distribution agreement between Verizon and Listen.com. The Rhapsody subscription service is one of the more compelling music subscription services available over the Internet today, as it is the only service to provide consumers legal access to music from all five major record labels -- BMG, EMI Recorded Music, Sony Music Entertainment, Universal Music Group and Warner Music Group. Rhapsody enables users to stream songs from a library of more than 240,000 tracks. The service will run Verizon's DSL subscribers an additional $9.95 a month. To entice customers to sign up for the Rhapsody subscription service, Verizon is offering a free month of Rhapsody to those who sign up by Oct. 31. The service will be offered to Verizon's 1.5 million DSL subscribers. Listen.com has inked deals for the Rhapsody service with BroadJump, NetGear, DirecTV and Road Runner. According to a U.S. Commerce Dept. report on broadband
demand issued last month, "the factor most likely to accelerate
broadband demand is the creation and deployment of easily understood,
value-adding business and consumer applications." Related stories:
Akamai, AOL expand partnership America Online has plans to extend its infrastructure and is expanding a deal with Akamai Technologies Inc. to make it happen. Financial terms were not disclosed. As part of the expanded deal, AOL will use Akamai's EdgeSuite service to enhance the performance and reliability of its content. Akamai will deploy its edge servers in AOL's backbone network worldwide. The servers will act as a private content delivery network for AOL members. Separately, Cable & Wireless moved to prevent Akamai from selling its EdgeSuite products and services. C&W asked a US District Court to stop Akamai from selling the products, claiming that Akamai's products infringe on a C&W patent. The preliminary injunction request is part of a C&W lawsuit filed in August that charged Akamai and its affiliate Sockeye Networks Inc. with infringing on C&W's Internet optimal-routing patent. Akamai denies its product line infringes on C&W's patents and says the suit is without merit.
More Wi-Fi certification to get underway The Wi-Fi Alliance is ready to kick off another round of Wi-Fi certification testing. On Nov. 29, the organization will begin interoperability testing 5 GHz IEEE 802.11a-based products. The availability of multiple products based on the 802.11a chipset has sparked this round of testing, which will be conducted at the organization's interoperability testing laboratory in San Jose, Calif. The laboratory will begin accepting products for the next round of testing Oct. 18. The Wi-Fi Alliance was formed in 1999 to certify interoperability of IEEE 802.11 products. "This is an important step in the development of a broad range of future products, and provides the foundation for the dual band (IEEE 802.11a and 802.11b) product interoperability testing," said Sarosh Vesuna, Wi-Fi Alliance technical committee chairman. Interoperability testing for 802.11b-based products began in March 2000. There are currently more than 450 Wi-Fi certified products on the market today, according to the Wi-Fi Alliance. Related stories:
Corning, SBC warn profit will
be Demand in the telecom sector remains weak, and Corning Inc. and SBC Communications Inc. say they are feeling the pinch. Both companies have issued warnings that their financials will be at the low-end of their earlier forecasts. Corning expects to post third-quarter revenue in the range of $830 million to $840 million and a net loss of between 7 cents and 8 cents a share. In July the company forecast a loss of seven cents to 10 cents a share on revenue of between $825 million and $875 million. Although Corning is glad that it was able to meet its earlier quarterly guidance, it says the outlook for the telecom sector remains difficult. The murky outlook will force Corning to further restructure its operations in the fourth quarter, although it did not outline specifics. Previously, the company said that further restructuring moves could encompass more staff cuts, the potential sale of or discontinuation of some non-core assets, plant closures and consolidation of manufacturing capacity in the telecom sector. In April, Corning said it would cut 4,400 jobs this year. The company eliminated 10,000 last year. At the end of the quarter, which ended Sept. 30, Corning had cash and short-term investments of more than $1.5 billion. The company still expects to return to profitability next year. Corning will report its full Q3 results on Oct. 30. Separately, SBC said it expects record full-year profit of roughly $2.26 per share. This falls at the low end of an earlier forecast calling for per share profit to range between $2.26 and $2.35. Last month, SBC announced plans to cut another 11,000 jobs by early 2003, 9,000 of which will be eliminated in the fourth quarter. The company blames regulators for its financial woes, saying wholesale prices set by regulators are below cost. SBC has been fighting against this and other regulations imposed on telecoms, but are not imposed on the cable operators. SBC has reaffirmed plans to reduce its capital expenditures to be in the range of $5 billion and $6 billion in 2003. SBC has a 2002 capital expenditure budget of just under $8 billion. SBC will report its third-quarter results on Oct. 24. Related stories:
SONICblue Inc. has made its interim CEO permanent and Gemstar-TV Guide International Inc. has replaced its chief executive. L. Gregory Ballard has been named CEO of SONICblue Inc. Ballard has been serving as interim CEO since Aug. 8 when the company fired Ken Potashner. It is believed that Potashner was forced out after publicly lobbing allegations of below-board loans made to company executives in conjunction with SONICblue's RioPort spinoff. SONICblue, however, has said that the timing of Potashner's dismissal was coincidental. Ballard also has been appointed to the company's board of directors. SONICblue's interim chief financial officer Marcus Smith also has changed his status to permanent. Gemstar's CEO Henry Yuen will be replaced by Jeff Shell. Yuen has resigned his post, but has agreed to stay on at the company as a nonexecutive chairman. The company's board of directors had been trying to push Yuen out of his CEO role since August. "Gemstar is a company of enormous potential," said News Corp. Chairman and CEO Rupert Murdoch in a prepared statement. "Our challenge now is to convert that potential into reality and an important step in that direction is the appointment of Jeff Shell as CEO." News Corp. owns a 42 percent stake in Gemstar. Shell is a former News Corp. executive and has been co-chief operating officer of Gemstar since April. Another News Corp. executive Paul Haggerty was named acting chief financial officer. CFO Elsie Leung has resigned her post. News of the appointments sent Gemstar's stock soaring. Shares were up nearly 19 percent to $3.08 as of 10:50 a.m. EDT. Related story:
Air2Lan, Boingo team for service With the help of Boingo Wireless, Air2Lan has launched its Air2Lan Wi-Fi service. The service, powered by Boingo Wireless, is being offered to Air2Lan's current corporate clients and will be marketed to corporate and recreational users nationwide. Air2Lan Wi-Fi is a co-branded version of Boingo's wireless Internet service and includes a built-in VPN, and software that provides signal settings where users can store network profiles to ease moving between Wi-Fi locations. The partnership with Boingo enables Air2Lan to expand beyond its local clientele by making use of Boingo's network of Wi-Fi hot spots in hotels, airports, cafes and other public locations in the United States. Users have three pricing plans from which to chose. For $7.95, users receive unlimited sessions and traffic at a hot spot location for 24 hours. Each 24-hour period is dubbed a "connect day." For $24.95 users receive 10 connect days per month. Unlimited access costs $74.95 per month. "Being able to take broadband connectivity on the road is tremendously appealing to people who are wirelessly enabled at home or at the office," said Dave Hagan, Boingo Wireless president. Related stories:
• BitBand raises funds BitBand Inc. has secured $5.25 million in second round funding. Investors include Fantine Group, the Challenge Fund, the Kardan Group and Sequoia Seed Capital. BitBand develops video- and audio-on-demand solutions for broadband IP networks. The company will use the funds to extend its marketing and sales efforts. • Inktomi to reduce its staff To better align operating expenses with revenue, Inktomi Corp. plans to shed 20 percent of its work force. The 85 cuts will bring Inktomi's headcount down to roughly 300 employees. For the quarter ended Sept. 30, the company expects to post a net loss of between 5 cents and 7 cents a share. Revenue is expected to fall in line with analysts' estimates at $20 million. • Artera launches virtual broadband service Artera Group Inc. has rolled out a virtual broadband service, dubbed Artera Turbo Release 2, via a dial-up connection. The service, which costs $9.95 a month, is built on a series of patent pending optimization technologies, according to Artera. The current version of the service does not support America Online, but the company says an upgrade will be available later this month.
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