THE STANDARD'S

                         M E D I A  G R O K

           A Commentary on What the Press Is Reporting and Why


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Friday, April 20, 2001


* Dell: We Are the Champions, Aren't We? 

* Bottoms Up for Microsoft and Sun?  

* Smile, Dial and Pay More 



* Palm Losing Grip on Market Share

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Dell: We Are the Champions, Aren't We? 

Poor Dell. It gets named No. 1 PC maker in the entire known universe,

and all anyone can talk about is how lousy its competition is. Of

course, that kind of reaction is pretty much inevitable when news of

anyone pushing past Compaq for the first time in seven years is

released in the same report that says the U.S. PC market shrank for

the first time.

The media clung closely to the report's conclusions, though several

reporters pulled out some cliches to embellish them. Dell is growing

"with a vengeance," wrote News.com's Michael Kanellos, who paraphrased

an analyst as predicting, "The gap between Dell and the Dell-nots will

also increase." Dell's hometown Austin American-Statesman boasted that

the company "has been pouring kerosene on the flames of a computer

price war it started." But reporter John Pletz also added an

interesting caveat that Media Grok didn't find elsewhere: Being the

big cheese doesn't mean so much if you're making a profit of 3 percent

or less, which the American-Statesman says is what many analysts think

is going on at Dell.

That's not likely to cheer up the folks over at Gateway, who were

saddled with the grim task of reporting earnings far worse than

analysts had expected, due to the company's frantic efforts to cut

costs. The logic should be clear to us all by now: Cutting costs down

the road means spending some serious cash now, especially if, as the

Wall Street Journal put it, you are "unwinding sales relationships"

with retailers and getting out of the "high-risk consumer loan

market." (Insert your own slowing-economy comment here.)

Still, CEO Ted Waitt managed to be chipper about Gateway's future, no

matter what goes on outside the company's walls. As the New York Times

reported it, Waitt said, "We are in control of our own destiny. We

feel we can get back into a high-earnings-growth model regardless of

what the market does." - Michaela Cavallaro

Dell Takes Top Spot in PC Sales (AP) 


(Registration required) 

PC Market in U.S. Contracts by 3.5%, Shrinking for First Time in Seven



(Paid subscription required.)

Gateway Reports Net Loss on Restructuring Charges 


(Paid subscription required.)

Dell Beats Compaq for No. 1 Ranking 


Gateway Posts Loss on Special Charges 


(Registration required.) 


Bottoms Up for Microsoft and Sun? 

We know it's hard to believe, but it's true: This morning, there is

yet more earnings news to read. But today it wasn't just any earnings,

it was Microsoft's. And "the Redmond, Wash. colossus," as the

Washington Post's surprisingly cheeky report put it, beat analysts'

expectations - which had already been lowered - by 2 cents a share.

Please, try to restrain your cheering.

As you might expect when hordes of journos are working with the exact

same material, reports were quite similar; only the analysts' names

were different. The consensus is that Gates & Co. did well because of

what more than one outlet called the "surprising" strength of the

Microsoft Office suite, which is due to be replaced by Office XP this

year, combined with growth in the company's .Net servers and the

Windows 2000 operating system. The company's success was so surprising

that a Goldman Sachs analyst interviewed by the Wall Street Journal

made the unusual admission that he was "a little embarrassed" that he

cut his Microsoft estimates three times in March.

Still, as many reporters were more than happy to point out, what's

good for Microsoft isn't necessarily good for the rest of the

industry. The usual puns - the Journal went with "not so sunny" - were

dragged out in honor of Sun Microsystems' earnings report, in which

the company announced it met Wall Street's lowered expectations.

That's where the good news ended, though; as the San Jose Mercury News

put it, Sun "saw its previously rapid growth rate come to a screeching

halt in its fiscal third quarter as corporations cut way back on

technology purchases." But at least one analyst saw something positive

here, telling the New York Times, "They're sort of at peace with

themselves, which is more than I would have said last quarter."

But inner peace and the (at least momentarily) rebounding stock market

don't necessarily make for a sanguine CEO. In a post-conference call

interview with the Merc, Scott McNealy had this to say, in response to

what seems to have been a question about when the economy's slowdown

will end:  "I see a bottom every time I change my 1-year-old's diaper.

That's the only sure bottom I know." - Michaela Cavallaro

Good Times in Redmond 


Sun Comes In a Cent Over Estimate 


Microsoft Navigates Bleak Seas 


Microsoft Easily Tops Reduced Forecasts On Strong Demand for Corporate



(Paid subscription required.) 

Microsoft Weathers High-Tech Storm 


Microsoft Bucking the Trend: Revenues Up 14 Percent as Diversification

Pays Off


Sun Micro's Profit Dropped Sharply in Quarter Amid Slow Sales Growth


(Paid subscription required.) 

Sun Meets Lowered Estimates for Its 3rd-Quarter Earnings 


(Registration required.)

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Smile, Dial and Pay More 

Let's face it, anything relating to the rules under which telecom

companies pay each other for services is bound to be complex. But the

job of the press is to make the complex comprehensible. After reading

all of today's stories about a recent FCC ruling, you may be left

scratching your head about the details - but the outlets agree the

result may be higher ISP prices.

The beef before the FCC was whether the Baby Bells will have to keep

paying billions of dollars a year to their competitors for phone calls

that the Bells' customers make to ISPs. These payments were set in

place by the 1996 Telecommunications Act. On Thursday the FCC voted to

phase out such payments over a period of years - some outlets said two

years, others said three.

ZDNet's Interactive Week provided good detail on the tangled history

of this dispute. It seems the FCC had issued a similar ruling in 1999,

but a federal court overturned parts of it.

InternetNews reported that yesterday's FCC vote to side with the Bells

and eliminate the "reciprocal compensation" payments was unanimous.

But ZDNet's Interactive Week said the vote was 3-to-1. Both outlets

quoted Harold Furchtgott-Roth, the FCC commissioner whom Interactive

Week fingered as casting a dissenting vote.

Most reports suggested that the end result could be higher prices down

the road. ZDNet and the San Jose Mercury News quoted spokespeople from

small phone companies saying that they had anticipated the FCC ruling

- which means that they may be raising the prices they charge their

ISP customers. SFGate reported that an earlier survey of California

ISPs found that 80 percent of them would pass along any such rate

increases to their customers. Dialup access will cost you about $4 a

month more, SFGate figured. Add in CNET's story on the likelihood of

rising prices for cable Internet access, and resign yourself to paying

more for your Net fix. - Keith Dawson

FCC Phases Out Controversial Telecom Fees 


FCC to Revise Reciprocal Compensation Rules 


FCC Cuts Fees Paid for Internet Phone Traffic 


FCC Reduces Company Payments for Internet Phone Traffic (AP) 


FCC Caps Rates for Local Carriers 


Could Net Cable Rates Be Headed Higher? 


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Palm Losing Grip on Market Share


Good Times in Redmond


Ericsson to Cut 12,000 Jobs


Market Realities Hit Security Nonprofit 


Motorola Linked with Mitsubishi Tie-up





Pay Us for a Heads-Up on Security Threats 


Web Firms Fined for Collecting Data on Children 


Internet-News Site Launches 'Charity-Style' Plea for Cash 


(Paid subscription required.) 

BlueLight Nixes Accidental MP3 Discount 


Troubled Mainspring Sees 'Victory' in $80M IBM Deal 


Vice President Cheney: No Net Taxes 


Venture Capital: 'Gray Hair' Trend Gains Popularity in Business 


Deconstructing Privacy Notices 


Database Companies Desperately Want to Keep Information Public


South Korea Links to Future Right Now 


AI Is Alive on the Internet 


The Man Who Saved 'Blogging'? 




Written by Deborah Asbrand (dasbrand@world.std.com), Michaela

Cavallaro (mcavalla@maine.rr.com),Keith Dawson (dawson@world.std.com),

Jen Muehlbauer (jen@englishmajor.com) and David Sims


Edited by Jimmy Guterman (guterman@vineyard.com).

Copyedited by Jim Duffy (jduffy@thestandard.com).



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