23rd > September > 1999 Archive

The Register breaking news

Compaq pulls plugs on IA-64 Tru64, aims Alpha at high end

Compaq last night confirmed that Tru64 for IA-64 was no more -- or, in the words of Unix division general manager Tim Yeaton, that it would no longer be "productised". The move, which has been anticipated for some days now, tidies up the company's OS strategy some more, and clearly positions the Alpha version of Tru64 at the high end, with IA-64 at the low to mid range. Compaq, having abandoned NT for Alpha earlier this year, is now pursuing a radically different strategy from the old twin track NT-Unix, Alpha-Intel one. With that one abandoned and the cost of NT development now firmly dumped in Microsoft's lap, Yeaton's hands are free to push Alpha Tru64's "business critical server capabilities" up beyond the Wintel space. Commented Terry Shannon, of Shannon Knows Compaq: "Actually, this is not a bad decision. Tru64 Unix V5 (and TruCluster V5) deliver some very attractive capabilities... on Alpha. And only on Alpha. IA-64 systems won't ship for another year. Given Compaq's decision to focus IA-64 at the low end and the midrange of the server marketplace, Yeaton has done The Right Thing." Compaq now has a pretty standard Wintel PC manufacturing business with a SCO relationship and support for IA-64 Monterey providing the Unix capability, and a clearly defined Alpha business with substantially decreased potential for overlap. (Remember, if you can remember that far back, that Alpha was originally intended as one of the 'blow Intel away' chips, so really Compaq has only just got to knocking that one on the head, officially.) In addition, Compaq has Linux support to throw into the pot, but Yeaton sees this as an advantage, rather than fuzzing of the OS strategy that might lead to another cancellation. "We see Linux as very complementary to Tru64," he told The Register. He envisages customers deploying Alpha Linux workstations running in conjunction with Alpha "computation engines." At the same time, Compaq is working on Linux-Tru64 application compatibility, and expects to achieve this within the next 12 months. This will itself provide a boost for Alpha Tru64. ®
John Lettice, 23 Sep 1999
The Register breaking news

eMachines' iMac-alike to be made less like iMac

Japanese PC vendor Sotec said yesterday that it will continue to offer eMachines' eOne consumer-oriented computer -- but from next month the machine it offers will be a remodelled version that looks rather less like Apple's iMac than the current one does. The company's announcement, made by director of planning Masayasu Ozeki, is a tacit admission of the validity of Apple's claim that the eOne's designers ripped off the look and feel of the iMac -- a claim that's the subject of a writ against Sotec. Indeed, the move came a day after the Tokyo District Court imposed a preliminary ban on sales of the eOne in Japan while it considers the merits of Apple's case. The eOne was released on Japan last July at a price point around 80 per cent of the iMac's. That same month, Apple lawyers fired of lawsuits against eMachines and its backers, Korean Data Systems and Trigem with the intention of first blocking the eOne's sale and distribution in the US, and then with wresting actual and punitive damages from the three companies. Soon after, in August, Apple issued a similar suit against Sotec in Japan. The Mac maker has also issued a writ against Daewoo and FuturePower over their own iMac-alike, the ePower. ®
Tony Smith, 23 Sep 1999
The Register breaking news

The channel – it's all breasts, gay men and dodgy ads

Reseller Ciscom managed to daub itself all over a woman's breasts without the Advertising Standards Authority (ASA) batting an eyelid this month. The ASA had received objections over the Middlesex reseller's advert which asked: "Need Support?", and showed a woman wearing only a bra top bearing the words "CIS" and "COM" on each breast. The ASA deigned the ad inoffensive, despite a complaint that it was sexist, and let the matter pass. It had a similar reaction to a Procase advert, which was said to have showed two overtly camp cartoon characters stating "Vote Gay". One was annoying a policeman and the other attracting attention from children in a school-yard. Procase stated: "Our friends in the labour 'camp' have a disconcerting habit of always trying to bring things down. "Like standards of living, quality of life and now the age of consent. Frankly, if we ran a business like this, we'd find ourselves in queer street." We found out this afternoon that Procase has in fact ceased trading, but surely business must have been booming at Procase if it could afford to upset that section of IT-buying public that didn't see eye-to-eye with its outlook on life. But then again, perhaps not. The ASA decided not to uphold the compliant that the advert was homophobic. However, it did deem it likely to discredit the Labour party. But Lady Luck was not smiling so charitably on Type Technologies. The London company was late delivering its computer products after promising same-day London despatch. It pleaded that it had run out of stock before the order that sparked the complaint. But it was upheld by the ASA. Obviously, it should have painted the claim over a pert chest to avoid the ASA's wrist-slapping. Computer Warehouse was also in trouble after an advert specifically stated: "New 400MHz Powerbook... IN STOCK NOW". When the complainant tried to order the product, they were told it was not available. The ASA warned Computer Warehouse to avoid using claims such as "in stock now" in future, unless they already had stocks of the advertised kit. Personal Computer Science was told off for an advert offering a free printer and scanner with one of its PCs. The complainant was told the product was not available and was offered a more expensive alternative. The complaint was upheld. Telecomms companies also came in for a roasting. Vodafone was told to remove its claim of "no contract" on its Pay as you Talk mobile phone package advert. The ASA said the service rules qualified as a contract. And the prize for this month's most disobedient company must go to the Docklands Telecom Centre. It advertised a mobile phone offer in the national press, claiming: "Everything free with Orange", with the "All Free" label slapped across the handset. Yet the complainant was charged £19.99 for the phone on his first bill. And a promised £50 accessory voucher later turned out to be conditional on the user first spending £100. The ASA said the company had failed to respond to its enquiries and said it was concerned by its lack of co-operation and apparent disregard for the codes of practice. ®
Linda Harrison, 23 Sep 1999
The Register breaking news

Christmas online shopping bonanza predicted

Europe is set to cash in on an online spending spree this Christmas with e-shoppers set to shell out almost $2 billion to acquire a little bit of festive spirit. But this figure is dwarfed by the US, which is expected to spend more than $8.5 billion in the run-up to the holiday season. Include the Far East in the equation and e-commerce is set to generate a Christmas cracking $12.2 billion -- up from $4.5 billion last year. Blaine Mathieu of research firm Dataquest said: "While 1998 was the year that online shopping first rose to prominence in the US, the 1999 holiday season is shaping up to be the launching point for an explosion of global consumer e-commerce." What's more Dataquest believes many of the supply chain and distribution problems which took some of the sparkle out of last year's performance have now been sorted out. E-tailers have learned from their mistakes and are better prepared to handle the flood of orders that are anticipated this year, said Mathieu. ®
Tim Richardson, 23 Sep 1999
The Register breaking news

Y2k fix email contains its own bug

Email users are being warned to watch out for a sneaky virus that masquerades as a Y2k fix from the mighty Microsoft. Hackers have latched onto people's fears about the millennium bug, and created a selection of email messages that promise a free Y2k fix. But on opening, the email's attachment -- which claims to come from support@microsoft.com -- the user activates the virus, called Y2KCount. The next time they log on, the virus scans for their user name and password, and sends it back to the creators of the virus. Or at least that's the theory. These fraudsters can supposedly use the ISP account without the user's knowledge for free -- and send emails as if they were that person, according to Paul Brettal, product consultant at Data Fellows. "It is a clever virus because the anyone would be able to send emails and look like they work at that company. They would also get free access to the ISP account -- more of an issue in the US than the UK, where more ISPs make monthly charges." Brettal said the virus was under control, and had not yet surfaced in the UK. What's more, Jason Holloway, Data Fellows country manager, said the virus itself seemed to have a fault that would prevent it from wreaking havoc. "The Y2KCount virus seems to have a fault in the coding -- a problem in the activation routing. As far as we are aware, this means it has been unsuccessful in sending any user names and passwords back the creators of the virus. "This is similar to around 75 per cent of the viruses we see because they are largely made be amateurs." However, Holloway warned that the Y2KCount did show the dire possibilities of such a virus. Similarly, Microsoft is not taking any chances. Earlier this week, Don Jones, Microsoft's director of Year 2000 readiness, issued a warning: "The Y2k-related email message that claims to come from Microsoft is a hoax. Consumers should not open the attachment but rather delete it immediately." ®
Linda Harrison, 23 Sep 1999
The Register breaking news

Sony to unveil digital music Walkman today

Sony is set to launch its entry into the digital music player market today, the twentieth birthday of the Walkman portable stereo. Sony's move follows MP3 player pioneer Diamond Multimedia announcement yesterday of its lastest Rio. As previously discussed by Sony president Nobuyuki Idei, the new machine, to be put out under the Walkman brand, will store music files on Sony's Memory Stick technology. Sony sees Memory Stick as an alternative to transferring data by cable -- users will just copy data from their PC to a Memory Stick (itself the size and shape of a chewing gum stick) which then plugs into the digital Walkman. Sony is certain to equip its own computers and digital consumer electronics kit with Memory Stick slots, but it will still have some way to go to persuade other vendors to support the format instead or alongside the more commonplace Compact Flash format. Given the popularity of the Walkman brand, Sony's new player could well give Memory Stick the user base the company needs to attract third-party support. The digital Walkman is due to be released in the US in time for Christmas. Meanwhile, Diamond Multimedia yesterday shipped the second generation of its Rio MP3 player, the Rio 500. The new version ups the built-in memory to 64MB, enough for around two hours of songs, and features a USB port to make connection to a PC easier. Diamond's definition of a PC now includes the Mac -- the device will ship with third-party Mac music management and downloading software. The Rio 500 will retail for around $269 in the US, and comes in three colour schemes: silver, translucent blue and translucent turquoise. ® Related Stories IO Data Device preps $180 digital music player Tosh readies MP3 music player Audiohighway struggles to push music player patent
Tony Smith, 23 Sep 1999
The Register breaking news

MS Win2k training switch telegraphs early death for NT

Windows 2000 may have been a long time coming, but Microsoft intends to push it hard when it does arrive, and just to make sure, is 'disappearing' Microsoft-certified support for NT 4.0 by the end of next year. Current and would-be Microsoft Certified Professionals (MCPs) have been stunned by an announcement here that the company intends to "retire" NT 4.0 examinations on 31 December 2000, and that these are to be replaced by Windows 2000 equivalents. These exams are necessary for the achievement and retention of MCP and MCSE (Microsoft Certified Systems Engineer) status. Obviously, if it's to keep support qualifications current, Microsoft has to move the exams along regularly, but it's more usual for the company to keep exams for the previous generation of software current for two years or more. NT 3.51 exams, for example, won't be retired until June of next year, while MCPs depending on Windows 3.1 for their qualifications didn't get the plugs pulled on them until 1 September 1998. As far as NT 4.0 is concerned, the exams themselves will be retired at the end of next year, with candidates having until the end of 2001 to switch to an equivalent Windows 2000 version. That means NT 4.0 expertise will still be around for a while, but that Microsoft will stop adding to it in fairly short order. This could turn out to be an issue for companies intent on obeying the analysts who've been warning customers off migrating early to Windows 2000. And we can't help a wry smile at the two items currently at the bottom of Microsoft's retirement list. Microsoft Windows Architecture parts one and two get theirs next Thursday. Instead of these, candidates are "required to satisfy the core requirements of the revised MCSD track by October 1, 2000." As far as we can see, there's no obvious equivalent of a course in the Microsoft Windows Architecture in the new track. Does this mean they're still working on it, or they gave up? ®
John Lettice, 23 Sep 1999
The Register breaking news

Red Hat Q2 revenue up 95 per cent

Red Hat, the Linux distributor -- and now, we're told, service provider, to stress the company's got its eye on where the money is in the open source OS market -- yesterday reported that its second quarter as a publicly-traded company saw a 95 per cent increase in revenue over the same period last year. It's just a shame that the same can't be said for Red Hat's profitability: it lost $3.1 million, up from the $2.1 million it lost last quarter. This time last year, for Red Hat's second quarter of fiscal 1999, the company says it had an income of $100,000. Still, you have to spend money to build a business, and that's clearly what Red Hat is now doing. The money is coming in from its Linux distribution as before, but it's also beginning to reap the rewards from selling tech support and other services -- the only snag is that right now, it's costing more to build that services arm than the operation is generating. At the same time, Red Hat has been expanding its geographical reach with the founding of Japanese and European subsidiaries, and that's obviously going to lead to ongoing costs in Q3 as the company fills out each office with sales and support staff. That said, Red Hat needs to work harder at promoting its service offerings. The company admitted that 74 per cent of its Q2 revenue came from product sales. Now, that's great if all you want to do is sell copies of Linux, but it's not the basis for a long-term money-making operation, and Red Hat really needs to work hard at swinging the product:services revenue ratio round the other way. Deals with the big names like IBM, Compaq and... er... Siemens will help here, but primarily financially -- they do little to show there's to Red Hat than a two-CD Linux distribution. ® Related Stories Red Hat CEO lambasts 'feudal' software industry TMing Linux -- Red Hat CEO attacks 'cheap knock-offs' Fear and loathing as TM card played for Red Hat Linux
Tony Smith, 23 Sep 1999
The Register breaking news

IT sector puts pressure on Taiwan gov to get power supplies back

The Taiwanese authorities have come under pressure from the island's IT community to rethink its priorities when reconnecting power supplies. Initially, the government said that public authorities, government offices and domestic households would be the first to be reconnected, with the island's businesses facing a wait of "several weeks", according to Taiwan-based EuroTrade. Such was the uproar created by this announcement, that the government has U-turned on its earlier decision. TSMC, the island's largest silicon foundry, has now begun its clean-up operation, with around ten per cent of its power supplies back on. But it will be weeks before anything approaching normal production is restored. According to EuroTrade, TSMC has said it will be at least one week after power supplies return to normal before it can resume full production. In the meantime, it -- and others in the same position -- is working on testing and re-calibrating its machinery. Since the earthquake struck, TSMC has raised around $8.25 million for disaster relief funds, with employees of the company contributing 20 per cent of their September salaries. One of Taiwan's major motherboard makers, Abit, has said it anticipates being back in full production within one week and that it suffered only minor damage in the quake. UK-based 3D and multimedia reseller 3DSL, has compiled a list of major equipment producers effected by the earthquake. To view the 3DSL article and the list, click here. ®
Sean Fleming, 23 Sep 1999
The Register breaking news

Amazon to sell digital music

This week's Basil Fawlty "stating the bleedin' obvious" award goes to the Reuters reporter who asked Amazon.com's general manager for music sales, Jennifer Cast, if the company will be selling digital music at any time in the future. Cast's response: "Obviously." Not only are music downloads a clear extension of what Amazon is already doing with CDs and tapes, but all of its e-retail competitors talking about the digital music market with drooling relish, Amazon would be just plain daft not to. In any case, since Amazon is already dipping its toe in the download pool -- as The Register reported back in June, when the online retailer began offering sample tracks in Liquid Audio format to tease album buyers. Amazon has clearly found the water warm and comfortable, to the extent that, according to Cast, the company will begin to sell downloads "between now and the end of December... [or] more likely we'll do something in 2000". The retailers timeframe is clearly dependent on sufficient numbers of people buying digital music players, and while various manufacturers are looking to get kit out in time for Christmas (most notably Sony and Diamond Multimedia), others, like Matsushita, Phillips and Toshiba, are waiting until mid-2000 before entering the market. ®
Tony Smith, 23 Sep 1999
The Register breaking news

Health sector ISP attacked by hospital staff

A subscription-free ISP offering to plough its profits back into the cash-strapped National Health Service (NHS) has come under fire from the very people it claims it will help. NHSpeople.net is aimed at people who work in the health service but is facing allegations that it is in competition with the NHS' own secure internal network, NHSnet. NHSnet -- which is owned and run by BT and Cable & Wireless -- is not without its knockers though. A recent report by the BBC's Newsnight claimed many clinicians and health trusts had lost confidence in the service saying it was neither secure nor reliable. Barry James, a director of NHSpeople.net, said: "There are thousands of doctors, clinicians and NHS managers who are frustrated at the limitations of the current Internet provision within the NHS, who are crying out for reliable, secure electronic communications." This particular storm in a bedpan has also dumped itself on the doorstep of the government. "There's a fair bit of fretting and fuming going on at the Department of Health (DoH)," said James. "They see this [NHSpeople.net] as potentially stepping on their toes," he said. He may be right. The Register has learned that some of the staff working on the NHSnet project have expressed their concerns about the new service. And while the official line from the DoH is that it views NHSpeople.net as any other commercial provider, a spokesman made it clear that the service was not endorsed by the NHS. It's also investigating whether NHSpeople.net is in breach of any trading laws since it is using the name and logo of the NHS. "It looks like it is accredited by the NHS but it is not," said a spokesman at the DoH, worried that it might mislead some people. NHSnet is part of a seven-year £1 billion project to modernise the NHS by using wired services to speed up referrals, obtain patient information and allow hospitals to communicate with one another more quickly. ®
Tim Richardson, 23 Sep 1999
The Register breaking news

Profit falls at Northamber, but at least it made one

Northamber saw pre-tax profit drop 28 per cent for the year ended 30 June, but said it was doing better than most rivals. Profit before tax was £6.32 million for the distributor, against £8.81 million the previous year. Sales were down 5.4 per cent to £277.73 million. Pre-tax margin fell from 3 per cent to 2.17 per cent, with earnings per share down 31.8 per cent to 11.8 pence. Net asset value per share rose by 8 per cent to 91.8 pence, and net cash was up at £3.9 million, from £1.7 million last year, with zero net borrowings. David Phillips, Northamber chairman said: "These results simply reflect the effects of the over supplied and competitive trading conditions during the second quarter of 1999 and also the absence of the anticipated pre-millennium upturn." But he pointed out that the distributor was doing better than many of its rivals. "Our results are below those reported last year and our own earlier expectations, but compare favourably with the performance of others in our immediate sector," he stated. Phillips said there had been a "strong UK market place imbalance between forecast and actual demand", with the consequent price erosion and fall in annual sales distorting comparisons of any meaningful annual growth. The company announced Tony Caplin, non-executive director, would be made non-executive deputy chairman at the next AGM. Staff increased from 366 to 416 over the year. Regarding the future, the dire trading conditions of the second quarter now seemed to have stabilised, said Phillips. "The new trading period has started in line with our own expectations. Return on capital and margin retention will continue to remain our primary focus, with margin retention likely to be the main source of profit growth until market conditions improve further." He added that the board was confident that the company would continue to be profitable in the year ahead. Rival Datrontech posted disappointing results earlier this week, saying it would make further cut backs after losses of £700,000 for the six months ended 5 July 1999. ®
Linda Harrison, 23 Sep 1999
The Register breaking news

Lysander goes skinny dipping

Thin-client vendor NCD has awarded Lysander Systems its Premier Diamond Partner accreditation status. The reseller will now get access to a series of NCD beta products as well as marketing help and technical support over the Web. Lysander had already run a series of thin-client computing seminars, capitalising on a resurgence in interest in the model. David Perry, regional director of NCD UK, said: "The thin-client market is expanding so rapidly at the moment that we want our accreditation programme to stay at the forefront of the industry alongside our products." The company added three new tiers to its channel accreditation scheme in June. Andrew Watts marketing manager at Lysander, added: "Our partnership with NCD has played a significant part in our success and has provided us with the support needed to make a significant impact in the thin client environment." ®
Sean Fleming, 23 Sep 1999
The Register breaking news

Via poised to ship 500MHz+ Socket 370 Cyrix chip

Via is putting the Cyrix roadmap back on track with the launch of a 500MHz-plus Socket 370-compliant chip, codenamed Joshua, this year. Cyrix had this and other chips on the stocks, but had to all intents and purposes suspended operations pending its acquisition by Via. Joshua is based on the Cayenne core, and is a modification of Cyrix's MII with 3Dnow! instructions added. It has 64k of primary cache and 256k secondary cache. Via has been running a roadshow demonstrating a Joshua implementation running at 350MHz, but says that production silicon will operate at speeds in excess of 500MHz. Even so, the company will probably have to work hard to carve a slice of the low cost market for itself - the very fact that NatSemi sold Cyrix to Via indicates that this is a trickier patch than Cyrix, Centaur and Rise anticipated. And Via also has a few other items from the Cyrix roadmap in the locker. Earlier this year it was aiming to ship Mojave, with the Jalapeno core, at 600MHz plus in summer of next year - this obviously now seems some revision. ®
John Lettice, 23 Sep 1999
The Register breaking news

Torvalds says Transmeta to announce at Comdex – maybe

Transmeta's secret will finally be revealed at Comdex in November. Or not - according to Linus Torvalds. Intercepted by reporters earlier today in Helsinki, Torvalds displayed recursive enigmaticism by telling them he thought he might now be able to tell them when he'd be able to tell them. But what he then told them was that Transmeta was thinking about saying something at Comdex, or alternatively saying when it would be able to say something then. If that didn't give you a nasty doze of the bends, you'll have grasped that he's saying when he might say when he might say something. But Linus is a suss guy who must grasp that Transmeta's cunning ploy of not saying anything at all and thus garnering huge quantities of free publicity has to run out of shelf life sooner or later. Plus, there have been a couple of straws in the wind. The patent application (See story) gives an idea of the territory it's headed for, and there have been rumours, some of which might even turn out to be true... ®
John Lettice, 23 Sep 1999
The Register breaking news

Apple deflates stock price

Analysis Apple's Q4 profit warning, issued on Monday, has nothing to do with meeting the demands of customers but everything to do with controlling the expectations of Wall Street. It's not at all about Motorola's ability (or otherwise) to keep Apple's factories stocked with PowerPC 7400 (aka G4) CPUs. Instead, it's all about reining in a runaway stock price before what's expected of the company outstrips what it can deliver. So what does Apple's statement actually say? Well, not very much, actually. Essentially, when the company announces its results for the current and fourth fiscal quarter, which is about to end, it reckons earnings will be between $75 million and $85 million. It also says that's lower than last quarter's revenue, which you may recall came to $114 million (before being bumped up by the sale of $89 million worth of ARM shares). And the reason? Motorola didn't ship Apple enough G4 processors. Sounds simple, but such is the fall in earnings that it warrants a closer look -- having your profit fall by up to 41 per cent year on year (Q4 1998 saw earnings of $106 million) seems rather more serious than a limited supply of processors. So what about the flow of G4s into Apple? There has been talk of trouble at Motorola with the G4 ever since last June when rumours surfaced that the chip was way off schedule. Subsequent events have shown that that wasn't the case after all, but that doesn't mean everything at Motorola has been running smoothly either. New CPUs -- and the G4 is significantly different from the G3 -- take time to design, time to debug and time to produce. If the company is to be believed, Motorola has been ramping up production of G4s for the last couple of months. That doesn't mean its been punching out any more chips, rather that the number of defective parts which have to be dumped have been falling as bugs in the production process have been dealt with. These days chips are produced for a range of clock speeds, if they fail to run at, say, 500MHz, they're tested at 450MHz and, if necessary, are sent down the line until they're certified to run at a clock speed within the range, don't work at all or do work, but a slower speed than the vendor can get away with. In the early days of a CPU's life, that process tends to favour lower clock speed chips. There's nothing surprising there -- that's how all processors start out. The point is, Motorola knows that, Apple knows that and Apple should arguably have tailored its own shipment plans accordingly. In fact it has, which is why the 450MHz machine wasn't set to appear until the end of the month, and the 500MHz G4 sometime in October. When your release schedule is so spaced out, a few weeks here or there shouldn't make much difference, and indeed they arguably haven't. The fact is, even with a good supply of CPUs, computer companies can't always get machines out on time. The blue'n'white G3 may have shipped on time, for example, but a heck of a lot of people had to wait some time for their machines as the initial batch of orders were fulfilled. It's no different this time, and the proof is that for all the complaints against Motorola, Apple hasn't rejigged any of its 450MHz and 500MHz release dates. So what's really going on here. First, the profit fall. Revenues and earnings traditionally tail off in the summer months, which is why CFO Fred Anderson has always stressed the very positive expectations the company has for the December quarter (Q1 2000) and downplayed Q4. And he did so not only in Monday's profit warning but months ago when Q2's numbers were published. A fall of 41 per cent year on year sounds a great deal, but Apple did exceptionally well last year because it launched the iMac. iMac sales are continuing reasonably well, but the trend is downward, largely because the novelty has begun to wear off but also because there has been no recent kick to the line to give sales some extra momentum, much as the release of the multi-coloured casings did back in January and February, and the 333MHz speed hike did a few months later. Now, hopefully, the combination of the iBook, a revitalised iMac and ramped-up Power Mac G4 will indeed allow Anderson's predictions for the fourth quarter. But that's why he made them, and why the profit warning was, to a degree anticipated much earlier and dutifully sidelined in favour of better results in the next quarter. Any gaps in the processor supply line will have made matters worse, but they won't have changed the broad financial outlook for the quarter. So why make the warning? Well, the blame lies not with Motorola but with Apple itself, though to be fair, most other computer companies would have done the same. The announcement of the iBook, followed closely by the launch of the G4 and all the rumours of the upcoming iMac 2 have driven Apple's share price way up. At the beginning of the year Apple stock sold for around $35, this month it peaked at over $80 -- that's the highest price Apple stock has ever achieved. Now that's great if you're an Apple investor, but not too hot if your Apple itself. Even in its heyday, when it was solid, successful and its future wasn't in question, Apple was trading at the $40 mark. It would have been hard to sustain the expectations inherent in a share price double that one even then, but now when Apple can still feel the heat from the massive losses it recorded while under Gil Amelio? No, Apple really doesn't need that kind of pressure. Hence the 'deflationary' tactic of driving down the share price by issuing a profit warning. Apple's statement has so far knocked around $11 off the share price, getting it down towards the $60 mark, which is probably a reasonable indication of what the company is really worth. Company executives are legally bound to maximise the value of their shareholders' investments, and if that means limiting it in the short term to prevent much, much worse figures in the medium to long term, so be it. What 'much, much worse figures'? The ones that will come if the Street loses confidence in a high, overvalued stock. If Apple runs into real trouble -- and a slower-than-expected supply of brand new processors isn't real trouble -- it could well lose the backing of Wall Street. Apple -- and AAPL owners -- had enough of that in 1997. ®
Tony Smith, 23 Sep 1999
The Register breaking news

Is Taiwan weak link in global chip chain?

In the aftermath of the earthquake, attention is being focused on Taiwan's chip and component makers as the weakest link in the global electronics supply chain. Most makers of finished products said they were ready to restart production. However, at 20 or more fabs(fabrication facilities) belonging to chip makers in Hsinchu, power was only gradually being restored. Industry watchers drew attention to potential safety concerns at the high-tech facilities. "It may be that they can't go into the fabs, because it could be like the surface of Venus in there with the chemicals and gasses that are used, "speculated one analyst, "If you've got one or two pipes loose, you could fry yourself walking in there. We really don't know what's going on in a lot of the fabs right now." "I haven't heard dire stories yet," commented Dan Heyler of Merrill Lynch in Taipei, "but fabs typically are full of gasses, and they're very toxic and also corrosive." Each day of lost production costs Hsinchu's semiconductor manufacturers US$20 million, Heyler said. Assuming power is restored over the weekend as predicted, he continued, It's very likely that most companies would return to normal production, though not necessarily at full capacity, by the end of next week. "It's very good that they have partial power, they can begin inspections, and get the chemicals cleaned up and recalibrate equipment, which takes 24 hours or so." Sources at Winbond Electronics said last night the company had 80 per cent power at one facility in Hsinchu. Assistant vice-president denied rumours that toxic chemicals had been released inside the clean room. The quartz glass lining of at least one furnace was broken, he said, but could be replaced relatively easily. Taiwan Semiconductor Manufacturing Co (TSMC) representatives said they had partial power. Staff at both companies said they expected full power to be restored over the weekend. Makers of simpler components such as capacitors, resistors, power sub-assemblies, and printed circuit boards were less seriously affected by the quake, according to Paul Meyer, an analyst at Credit Lyonnais Securities Asia. "Structural damage has been limited, and there are fewer critical processes," Meyer said, "So if you do have the electricity suddenly cut off… as soon as it comes on again, you can restart production - you can pretty much take up where you left off." "We don't really see normal operations for these guys until early next week. When power comes up, they recalibrate their SMT (Surface Mount Technology) lines, they recalibrate their equipment. That's a pretty quick process for the midstream and downstream companies." With the Xmas high season approaching, short supply of chips and other components was the biggest worry for the computer industry, said Daniel Lee spokesman for Behavior Tech Corporation, which makes CD-ROM drives at a factory in the Chung Li Industrial Park, north of Hsinchu. "Regarding our factory and equipment, nothing was damaged during the earthquake. Problems with the electricity supply may delay some of our production lines for CD-ROM drives, but we think that may not be so serious. The output of our Taiwan factory is less than 20 per cent of our total global sales. Our factory in mainland China occupies more than 70 or 80 percent of our sales." "We buy the CD-ROM decoder chip from local suppliers - maybe production will be delayed," Lee said. The company's chips are made by a subsidiary of Hsinchu-based United Microelectronics Corp. The Chung Li factory would be ready to resume operation on Friday, Lee said, but because of an upcoming public holiday the restart would be delayed until Monday. The upcoming mid-autumn holiday could give some companies a breathing space in which to assess and repair damage. Notebook maker Quanta computer is one of many that have asked employees to work over the weekend to make up lost production. ®
Simon Burns, 23 Sep 1999