Datrontech issues profit warning as share prices fall
Distributor Datrontech has issued its second profits warning in 15 months, blaming a sluggish performance from the PC assembler market in the UK. Now the group financial director Gerry Connolly is leaving Datrontech with a £115,000 pay-off following the profits warning. Datrontech now expects pre-tax profits of £2.6 million for the six months to 30 June, down from £3.2 million, and profits for 1998 as a whole to be down from £6 million to £5.2 million. The profits warning - which follows similar warnings from other rival distributors including Ilion - drove Datrontech shares down 23p to 60p on the UK stock market yesterday. Chief executive Mark Mulford said that the profits warning came after component sales this summer to UK assemblers were slower than expected. He said that the reason for the slow-down was unclear, but followed overstocking in the channel in Q2. The slow-down meant that the component distributor had to decide whether to try and keep margins up, or to lower prices to try and kick-start the market. Mulford said that Datrontech was trying to maintain margin on components. Ideal Hardware shares also fell 25p to 247.5p.
Siemens steps up attempt to sell fab
With the clock ticking down to its closure, Siemens has launched a global marketing campaign to try and convince one of its semi-conductor rivals to take over its loss-making Tyneside plant. The £1.2 billion plant is due to start winding down next month and will close on 31 January. If a buyer is not found, 1,200 jobs will go as well. Siemens has targeted rivals Motorola, Fujitsu and Samsung with glossy marketing brochures and a video claiming "the future's on the market" - but has yet to find a buyer for the plant, which received £44 million in aid from the UK government to set up. Siemens claims that the involvement of the UK government in trying to keep the plant open, makes it more likely that a buyer will step forward. Ross Forbes, Siemens communications manager, said that it had government support for plans to sell the plant as a going-concern. Trade secretary Peter Mandelson has set up a task-force with the company and local agencies to try and save the plant and jobs, but has also blamed Korean DRAM manufacturers for dumping memory. Two weeks ago, government minister Mandelson and Fatchett were delivering different messages about the closure.
Fujitsu to produce 16ns, 100MHz SDRAM
Fujitsu said that it is ready to start volume production of what it claims is the world's smallest 64Mbit synchronous DRAM conforming to Intel's PC 100 memory standard. The SDRAM chips, which use a .22 micron fabrication process, will begin shipping to its OEM customers in September, Fujitsu said. The devices have an area of 51.34mm, a clock speed of 100MHz and an access speed of 16 nanoseconds or less, the company said. Prices for the chips are set to be around $12 when bought in volume. http://www.fujitsu.co.jp/index-e.html
RIMMs start to ship in volume
South Korean conglomerate Samsung has started shipments of its 64Mbit modules based on Rambus technology. According to reports, volume production of the RIMMs (Rambus in line memory modules) has already started with production of 100,000 units a month. It is supplying the modules to Dell, Intel and also Compaq, the reports said. The Rambus technology will become the dominant memory architecture in years to come. Intel has said that machines using the fast 1GHz memory will start to be produced in volume at some stage in 1999. Samsung is expected to ramp up production of the RIMMs to one million units a month by this time next year. The Korea Herald reported that the US commerce department has delayed its decision on whether Hyundai was guilty of dumping DRAM in its territory by a month. US memory manufacturer Micron had alleged that Hyundai was selling memory at below the cost of production.
US dealer further in Microsoft soup
Microsoft has filed further charges against a US dealer who, it alleges, was abusing its Easy Fulfillment Program. The software vendor has filed a further contempt charge against Shawn LePorte, to add to the charges of conspiracy, fraud, theft unfair competition and trademark infringements which it has already filed against the dealer. Microsoft alleges in the suit that LePorte created several fictitious dealerships - including Premier Computers and CSL Computers - as a vehicle to sell Microsoft Open Licence Program licenses to other fictitious end-users that seemed to meet the MOLP criterion. Microsoft alleges that the scam worked by them reselling the licenses to end-users that would not qualify for the MOLP scheme. The latest motion against LePorte, asking for him to be found in contempt of court, relates to a court order stating that he must turn over rare coins that Microsoft claims were purchased with proceeds from the scam. The software that Microsoft claim LePorte was reselling includes Microsoft Office 97, Office 97 Professional Edition, Office 97 and Windows 95. The tightening of the LePorte case comes just days after Microsoft investigators in Europe seized an estimated $60 million of pirated OEM software in what it claimed was the largest anti-piracy operation it had mounted outside of the US. Microsoft's PR company in the UK could not be contacted for comment as they were "off site" for several days.
Geocities cuts FTC deal on privacy violation claim
Community-based Web operation Geocities has reached a settlement with the Federal Trade Commission (FTC), which had been investigating the operation over alleged privacy violations. Under the settlement Geocities seems to have agreed to stop telling its subscribers that it won't disclose personal information about them, while at the same time the company is continuing to deny it did anything wrong. The FTC had claimed that Geocities had been telling lies when it said it didn't disclose personal information. Geocities has meanwhile published a new personal privacy programme which doesn't include any such guarantees, but prohibits "inappropriate third-party collection and use of personal information." According to the FTC the company had engaged in "deceptive practices" by gathering data on games played on its site by children, then passing this over to third parties. Geocities, which went public a few days ago, uses a community-based model for its site and is highly popular with children.
LCD monitor market showing price erosion
The desktop LCD monitor market has taken a hit in value due to rapidly eroding prices, according to research from US-based Stanford Resources. Stanford blames the lingering Asian economy crisis, slow growth in the notebook market and continued low volume demand for desktop LCDs on the low market value. Samsung monitor product marketing manager Aaron Fright confirmed that market value is at a low at the moment but denied that flat screen makers are taking financial hits as a result. "There is massive price erosion," said Fright, "and there is definitely more competition. A 14-inch desktop TFT two years ago would have cost £2,000. Now it costs £800." Fright added that the market value would increase next year as more users start to demand higher spec products such as 17 and 18-inch panels. "The desktop flat screen is no loss leader," said Fright. "It has become a high revenue generator. For example we have just signed a deal to supply Reuters with potentially 20,000 units a year." The Stanford report, Flat information Displays, suggests that the FPD market will total 2.2 billion units in 1998 for a total value of $13.8 billion, rising to 2.7 billion units and $25.9 billion in 2004.
Virgin Net dumps Excite in favour of Lycos
UK ISP Virgin Net has dumped Excite UK in favour of Lycos UK, because the latter has a better search engine than the former, the company has claimed. The Richard Branson outfit said that it had taken several months to choose a new navigation centre. David Clarke, CEO of Virgin Net, said: "We took this search very seriously. We put together a formal tender for the full range of navigation services we required for our advertisers and services. Lycos came out top." He said that as a result of the new deal, he expected Virgin Net to increase its page impressions by a figure of 1.8 million a month. A representative for Virgin Net said: "We dumped Excite because they couldn't offer us what we needed for advertising and other purposes." Evan Rudowski, director of European operations at Excite, said: "We've parted on amicable terms. We made a proposal to the amd we weren't willing to do the substantial work for them with the minimal amount of money." He said that moves like this were frequent. "We replaced Lycos in Germany recently. There's a limited number of partnerships like this worth pursuing."
European Commission investigates call charges
The European Commission is to mount an investigation of international phone charges levied by PTTs in seven countries. The Commission says that the investigation is the result of a survey of the entire EU, which began almost a year ago. The countries to be covered are Austria, Finland, Greece, Ireland, Italy, Luxembourg and Portugal, and the Commission is focussing on transfer charges made to forward international calls. The reduction of these would bring the targeted countries more into line with the rest of the EU, and with global plans for telecoms deregulation. Overcharging for international services has historically been an easy source of revenue for PTTs. The Commission has invited the national authorities to investigate possible over-charging, and provided they do so, will then be willing to wait six months before considering further action.
Judge considers two week delay for Microsoft case
Microsoft and the US Department of Justice (DoJ) are reportedly in agreement that the case against Bill Gates' company should be delayed for two weeks. Trial judge Thomas Penfield Jackson is currently considering their request. The DoJ's antitrust action against Microsoft is currently scheduled to start on 8 September, but Judge Jackson himself has expressed doubts that this can now be achieved, because of the struggle over whether or not depositions should be taken in public. Various news organisations have successfully demanded to be able to report the depositions of Bill Gates and other Microsoft executives, but Microsoft has appealed against this ruling. The appeal itself is likely to delay the trial, while the complexities associated with making arrangements for news coverage have already delayed the start of deposition-taking.
Three Korean memory manufacturers show mixed results
The beleaguered South Korean economy, combined with a worldwide slump in memory prices, have had an impact on the results of Hyundai, Samsung and LG. The world's largest memory manufacturer, Samsung, performed best, with an increase in profit up to $113 million for the first six months of 1998, from $92 million in the same period last year. Sales for the half year also rose by 18 per cent to $7.9 billion. Samsung was boosted by strong sales of telecoms equipment, said analysts, but semiconductor and consumer electronics sales remained weak. Samsung also benefited from the weakness of the South Korean won against the dollar, and meant it boosted its earnings from exports. But the other South Korean giants which make memory fared less well. Hyundai posted a $250 million loss for the period, compared with a $113 million profit last year. The loss came on sales up 63 per cent to $1.75 billion. Also making a six-month loss was LG Semicon which lost $188 million, against a $12 million profit last year. Again sales were up, this time by 42 per cent to $912 million. A Coopers & Lybrand financial audit of South Korean company debt - at the end of 1997 - showed that many of the chaebols owed banks large amounts of money. Samsung had $5 billion in long-term loans and $1 billion in short-term, LG had $2.9 billion in long-term debt and $276 million in short term and Hyundai's long-term debt was $3.27 million with its short-term debt standing at $1.47 billion. The government of South Korea is still pushing these three companies to consolidate their business activities but so far they have resisted attempts to do so.
Lotus scrambles to repair security loophole
Lotus is to rush out a security patch for Notes 4.6 client "within a month" after a leading independent lab published details of a security loophole in the software on the internet. Lotus officials played down the likelihood of the flaw being exploited, but said that it would be addressed in the Notes Release 5 upgrade, and in an interim patch. The patch, Notes 4.6 2A, will be available on the Lotus Web site. According to L0pht Heavy Industries, the Notes 4.6 client loophole is caused by a feature in the software that allows developers to preview Domino-based applications. In tests, L0pht claimed that hackers could misuse the preview feature to get unauthorised access to data. L0pht said that the loophole particularly affected sites that were using Notes as a development platform or as an intranet. Affected users, according to L0pht, are advised to manually edit the access control lists, and to set up routing filters to prevent access to the HTTP port of Notes client-only machines. L0pht, which comes out of a US hacking group, has previously listed a number of other security flaws in Lotus Notes, including the ability of Web users to write to remote server drives and change server configuration files.
Ideal claims ‘no decline’ in trading
Ideal Hardware has rejected suggestions that UK PC distributors are all affected by a sales malaise. Yesterday, competitor Datrontech, issued a profits warning which caused its shares to slide on the UK stock markets. Other IT companies, including Ideal, also showed drops in their share price. But Ideal Hardware, in a statement from its board of directors, said that Datrontech's observations that it, as well as a number of other PC distributors had experienced a sharp decline in business compared to the first four months of 1998, did not apply to it. "In line with its trading update on 11 June 1998, Ideal has continued to trade strongly throughout the final quarter at margins within the company's target band," the statement said.
Canion loose on GK deck
Compaq co-founder Rod Canion and a cabal of former Compaq executives have resigned en masse from struggling software developer GK Intelligent Systems. The resignations of six senior staff GK Intelligent Systems sent the share price into a tail-spin and the shares lost 57 per cent of their value before trading was suspended yesterday. GK Intelligent Systems develops multimedia-based training softwar but has yet to ship any product. Resigning with Canion, who had been at the company just five months, were chief financial officer Tim Harris, chief information officer Doyle Baker, corporate counsel David Cabello, head of communications John Sweney and board member John Gribi. All are former Compaq executives who had worked with Canion before he was ousted as the head of Compaq. Canion cited "basic philosophical differences" as his reason for leaving GK Intelligent Systems, which has never posted a profit and has yet to file its 1997 accounts. Canion remains the third-largest shareholder with around 15 per cent of its stock.