Judy Estrin, a veteran of Silicon Valley, plans to relinquish her duties as Cisco's chief technology officer at the end of this month to form a new firm to be launched in May. Mike Volpi, Cisco's current executive vice president of business development, has been promoted to chief strategy officer and will assume many of Estrin's responsibilities.
"My history prior to Cisco was building things," Estrin said in an interview. "Some habits are hard to break."
Estrin's departure highlights what could be an emerging issue for high-flying Cisco as it continues to grow: How does the company hold on to key personnel amid a boom in venture capital funding of start-up networking companies? Even Cisco's turbo-charged stock may not be enough for some executives who want to work for a smaller outfit where they can have more control.
Cisco may also face the same problems as Microsoft--retaining executives who reap such stock windfalls that they no longer need to work. That does not appear to be Estrin's motivation, given her previous successes in the industry and entrepreneurial background.
Mario Mazzola, who headed Cisco's business unit for big businesses, recently announced plans to retire in June.
Estrin, 45, and husband Bill Carrico have a long history in Silicon Valley. Estrin and Carrico joined Cisco two years ago when Cisco acquired Precept Software. Cisco's chief executive, John Chambers, has often joked in public appearances that he thought so much of Estrin that Cisco bought Precept.
Estrin's Silicon Valley history dates back to 1981, when she co-founded networking company Bridge Communications with her husband. That venture went public in 1985, then was acquired by 3Com. Estrin in 1988 co-founded "thin client" device maker Network Computing Devices with her husband, before leaving in 1994.
The duo started Precept in 1995.
Estrin said her latest venture would "not be competitive to Cisco," but would focus on how to "scale the Internet." Estrin will serve as chief executive of the as the as yet unnamed firm and Carrico, who left Cisco last year, will be chairman.
"I don't think it made sense within the confines of Cisco," Estrin said of her new venture.
Buzzsaw.com will announce Monday that it has raised $75 million in venture capital to fuel its precipitous growth in business e-commerce.
The San Francisco-based start-up, an online marketplace for the construction industry, raised funds from Bank of America, Impact Ventures, Morgan Stanley Dean Witter's Private Equity and Real Estate Private Equity Groups. The company said it plans to use the funding for marketing, sales and engineering interests, as well as acquisitions and global expansion.
Buzzsaw.com, which launched in November, faces stiff competition in online services for the construction business, estimated by trade groups as a $650 billion market in the United States last year. Buzzsaw.com and rivals BuildNet, and Oracle-backed Bidcom are creating software or building marketplaces to connect architects, engineers, builders and material suppliers.
The investment follows an acquisition by the company last week. Buzzsaw.com said it would buy printing software company PageMasters to add to its services for building and design professionals.
Chief executive Carl Bass said Buzzsaw.com hopes to offer the industry "online services and e-commerce tools that are easy to use, require no special software or set-up consulting, and help industry professionals work more efficiently."
"This funding will support our continued growth as we add the resources needed to fully realize our market potential," Bass said.
Buzzsaw.com said the site has added an average of 300 building and design projects per week, adding to about 5,500 active projects.
Buzzsaw.com is also backed by Autodesk and Crosspoint Venture Partners, which both participated in this investment, bringing the total capital Buzzsaw.com has raised to $90 million. An ongoing FBI case has revealed a computer virus that can erase hard drives and dial 911 emergency systems, according to a warning posted on the Web this weekend.
So far, reports of the virus are limited to the Houston, Texas, area and involve four Internet service providers--America Online, MCI Worldcom, AT&T and NetZero--according to the posting by the National Infrastructure Protection Center.
The virus causes "victim systems to dial 911, possibly causing emergency authorities to check out substantial numbers of 'false positive' calls," according to yesterday’s posting.
The so-called self-propagating script also can "overwrite victim hard drives," according to the NIPC.
The FBI and NIPC are continuing to investigate the virus. The NIPC brings together representatives from the FBI, other government agencies and the private sector to protect the nation's computer networks.
FBI and NIPC representatives could not be reached for comment.
The judge mediating settlement talks between Microsoft and the Justice Department declared today that the negotiations are at an impasse and he has ended his role in the landmark antitrust case.
"I regret to announce the end of my efforts to mediate the Microsoft antitrust case," Richard Posner said in a statement.
Posner, who heads the U.S. Court of Appeals for the Seventh Circuit in Chicago, had given the talks until Wednesday but called it quits early. Today's setback opens to the door for a final ruling on the case at any time from U.S. District Judge Thomas Penfield Jackson.
In addition, Microsoft's shares could be under pressure Monday. In recent days, the shares have climbed when a settlement appeared possible and dipped when the talks seemed to stall.
"Unfortunately, the quest has proved fruitless," Posner wrote in the statement. "After more than four months, it is apparent that the disagreements among the parties concerning the likely course, outcome and consequences of continued litigation, as well as the implications and ramifications of alternative terms of settlement, are too deep-seated to be bridged."
Assistant attorney general Joel Klein said in a prepared statement the DOJ
"would have preferred an effective settlement to continued litigation." But
"settlement for settlement's sake would be pointless," he added.
Gates said problems occurred because the DOJ and states were not working
together. "There were divisions and extreme views on the other side that
brought us to the point where mediation wasn't going to be successful," he
said.
Iowa attorney general Tom Miller issued a statement of behalf of the states, stating: "The states, together with the Department of Justice, exerted their best efforts to make this process succeed during the four months in which we
participated in this mediation."
Miller said the states were "committed to our objectives and look forward to achieving them in the continuation of the litigation," but that they would "remain open to any meaningful dialogue with Microsoft."
William Neukom, Microsoft's executive vice president and general counsel,
referred to a sentence in Posner's statement that he said indicated why
the talks collapsed.
In his written statement, Posner praised the efforts of the DOJ and Microsoft, but made no mention of the states.
"I think Judge Posner's statement speaks for itself," Neukom said. "It was,
of course, a process involving more than those two parties."
Dissension among the states and the DOJ has plagued the negotiations, so much so that Posner had tried streamlining the process, said sources close to the discussions.
The action was designed to get a basic settlement agreement in place, which the
states would then have two days to approve.
George Washington University Law School professor Bill Kovacic said Posner
's action likely irked some of the states. "Clearly, you
have a situation where the kids wanted to sit at the table with the adults,"
he said.
"But these are no ordinary kids. They have nuclear bombs, and that makes
them very dangerous," said Kovacic, referring to the states' ability to
reject any settlement proposal.
The states yesterday responded with new demands, directly leading to the
talks' collapse, said several sources close to the negotiations.
One demand renewed an earlier request that Microsoft be compelled to develop a version of Microsoft Office for the Linux operating system, said a source familiar with the discussions.
Another would give each of the 19 states the power to independently enforce
any consent decree coming out of the negotiations.
"There are situations where any party can enforce an injunction, but it can
be a logistical nightmare," said University of Baltimore School of Law
professor Bob Lande. "As a practical matter, there's no way Microsoft wants
19 people breathing down their throats. But I can understand from the states' point of view why overseeing the consent decree would be such a nightmare
(that) they all wanted to do it."
Microsoft, already at odds with the states over other settlement proposals,
would not accept the demand for enforcement by 19 separate entities as
well as the DOJ, said sources familiar with the talks.
Microsoft invested more than 3,000 hours trying to settle suit, with good reason, say legal experts. Jackson's ruling, if it goes against Microsoft, could be used as ammunition in the more than 115 class-action suits pending against Microsoft.
"Microsoft is sailing into dangerous, uncharted waters with respect to these
pending civil lawsuits," explained Rich Gray, an intellectual property
attorney with Outside General Counsel Silicon Valley of Menlo Park, Calif.
"Once Jackson decides on a remedy and issues his final judgment, that
judgment can be used to great advantage in these civil lawsuits even while
Microsoft appeals the ruling."
Neukom made it clear Microsoft would be ready to appeal the case, which
could end up at the Supreme Court in as little as 24 months. But first
Jackson must rule and then set hearings for remedies--or what to do about
Microsoft's alleged misbehavior.
"I would expect we'll get a decision from Jackson next Friday, and I expect
it will be ugly for Microsoft," Gray said.
Never mind the volatility, several publicly traded dot-coms showed immediate signs of failing.
Once-heralded start-ups Peapod, Drkoop.com and CDNow each acknowledged they are running short of cash. Meanwhile, this week's IPO landed Artistdirect in hot water with federal regulators and perhaps shareholders, and Silicon Valley icon Seagate bucked the trend to go public by agreeing to be acquired in a $20 billion deal that will again make the company private.
Running low
Health site Drkoop, named after the former surgeon general, and retailer CDNow also acknowledged being low on funds in regulatory filings. All three companies have seen their stock shares plummet.
Artistdirect too faces a cash-flow problem: Because it issued too many options to buy shares in the company, it will have to offer a "recission" and could be forced to repay certain investors up to $27 million. The company gained $60 million from this week's public offering.
Meanwhile, Seagate's decision to return to private ownership reflects the hard drive industry's continued woes. Leading companies have routinely reported quarterly losses for the past several years.
New outlook
Separately, IBM and Qwest Communications formed a multiyear, $5 billion agreement to provide businesses with Web hosting services from 28 new data centers.
Major online advertising networks are lowering their sights to include small-circulation email newsletters. Several have recently created products and services that allow these ultra-niche publications to sell advertising space for the first time.
Children's Web sites could dodge the strict new standards of the Children's Online Privacy Protection Act, set to kick in next month, by not asking children under 13 for their name, address or other identifiable information. But despite high costs and other rigors of gaining parental consent, many dot-coms will comply so they can continue collecting valuable consumer information.
Milestones
Handspring said it will begin selling its handheld computers in retail stores, a confident move on the part of a company that struggled to meet online demand after debuting in October. The company also filed to go public.
Motorola and Nokia are working together to standardize a new wireless technology capable of handling voice and high-speed Internet access, opposing a rival technology from Qualcomm. Further division in the already fractured wireless networking market may foster higher consumer prices.
Change of direction
Sun Microsystems' willingness to be more flexible in licensing Java software for servers is paying dividends. The company has recently signed five new partners, bringing its total to 12. Sun, which invented Java, designed to shield programmers from the underlying differences among computer hardware and operating systems, has often struggled to balance its control over the software with the desire to spread it as widely as possible.
Sony announced a corporate restructuring and new deals to bring more online services to consumers as part of an ongoing attempt to reinvent itself as an Internet company. The change includes grouping three of the Japanese concern's U.S. media units under a new company called Sony Broadband Entertainment, to be formed in July. Sony aims to pipe digital content into customer's homes through high-speed Internet connections to Sony hardware.
OpenTV agreed to buy Internet pioneer Spyglass in a $2.5 billion deal to help the company expand into the burgeoning wireless communications market, and Liberate Technologies said it would acquire closely held MoreCom, a provider of software for interactive video services, for $561 million. OpenTV, Liberate and Microsoft are competing for early position in the market to develop software that allows consumers to purchase goods and services via interactive TV.
Worrying
eBay closed some member accounts and called in federal officials after receiving more than 150 complaints about fraudulent auctions, acting on customer complaints. The leading online auctioneer contacted the U.S. Postal Service, which investigates mail fraud, and the Los Angeles Police Department in Van Nuys, Calif., where the alleged perpetrators are believed to have based their operations.
Also of note
Just as the college basketball season is ending, LevelEdge.com has launched an online
database intended to connect high school and junior college prospects with
four-year institutions.
America's highly developed sports market has long been efficient in identifying blue chippers, but the new service hopes to appeal to lower-profile, "second-tier" students and schools.
It's a novel approach to a crowded field. Summer camps and scouting combines, Amateur Athletic Union (AAU)-style junior programs, and broadly subscribed newsletters already surround the sometimes sordid recruiting process. Meanwhile, Web sites like Rivals.net have unearthed services like CoachT, devoted to high school hoops in Tennessee.
"The type of athlete that a leading Division I school gets, national-caliber type of athletes, probably wouldn't avail themselves to this type of service," said Tim Tessalone, sports information director at the University of Southern California. "These have been most helpful to athletes who aren't quite at that level and have trouble attracting attention."
It's no secret that college sports are big business. Rights to broadcast the NCAA Division I men's basketball championship, which enters its final stages this weekend, were recently awarded to the CBS network in an 11-year agreement worth some $6 billion, according to reports.
Each year university sports programs spend about $2 billion recruiting America's 10 million high school and junior college athletes, LevelEdge calculates. In 1997-98, Division I colleges awarded an average $2.2 million in full and partial scholarships to some 240 men and women athletes. Division II schools devoted an average of $615,000 to 150 students.
Most of the attention goes to the top prospects, everyone agrees.
Initially focusing on basketball, LevelEdge plans to add football, soccer and track by the end of the year and eventually cover 20 of the 56 men's and women's scholarship sports. Its core database product will profile athletes' performance history (career statistics, honors and so on) and academic qualifications.
Also offering resources for parents, coaches and recruiters, the company intends to profit from premium information services, advertising and sponsorships, and sales of related sporting goods, nutrition products and instructional videos. The company hopes to partner with sports camps and various high school and junior college governing bodies to boost the credibility of its statistical data as well as increase the size of its database.
To stay on the good side of the NCAA, which struggles to police big-time athletics according to a largely outdated amateur code, the company vows not to sell ads on its profile pages.
"There will be no Carpoint on our site, and we will not be doing anything with Autobytel," notes chief executive Lisa Henderson, once a marketing executive with software maker Autodesk.
LevelEdge also has taken pains to structure its profiles so that athletes without regular access to the same computer can make updates from any wired system. Lower-income students typically access the Internet from as many as five different machines, the company says.
The move underlines LevelEdge's more inclusive approach. Where basketball's Prepstars covers "several hundred" elite basketball players, according to publisher Dennis Wuycik, LevelEdge launched with more than 3,000 profiles.
By June, well-heeled LevelEdge will have received some $19 million in
funding. Tennis star Billie Jean King serves as chair of the company, which
has 30 employees and expects to soon open a Chapel Hill, N.C., office.
An ambitious experiment in giving away free high-speed Internet connections will kick off officially tomorrow.
As earlier reported, the Broadband Digital Group will launch its FreeDSL.com service on April Fools' Day, with the official announcement slated for Monday.
The free service will be presented to the public as the cheapest in a new series of bargain-basement deals being launched by high-speed Net companies desperate to attract subscribers to their technology.
Separately, SBC Communications and Excite@Home are each offering temporary sign-up bargains that bring broadband services closer to the price of ordinary dial-up Net access.
FreeDSL has struck deals with a list of major local telephone companies and local alternative providers in an attempt to reach most of the major metropolitan areas by the end of this year, a goal that would make it one of the most wide-ranging high-speed Net providers in the country. Its service uses digital subscriber line (DSL) technology, which allows ordinary telephone lines to handle regular phone calls and high-speed data at the same time.
Its entry-level service will be supported by advertising. A basic connection, which will provide downloads about three times faster than the fastest dial-up modems, will be free as long as subscribers agree to keep a standard Web advertising banner on their screens at all times and allow their movements online to be tracked by a targeted advertising service.
The company is betting it can persuade its subscribers to pay for faster service and no ads, however. Consumers can pay about $10 a month to have the ads turned off completely or about $20 a month to upgrade to a connection more than seven times as fast as dial-up modems.
Paying $35 a month--close to the same price as the average entry-level DSL connection or a basic cable-modem connection--will give FreeDSL subscribers a connection of 1.5 megabits per second, or more than 27 times as fast as dial-up modems.
That's an ambitious set of services for a company that already has about 740,000 potential subscribers signed up. Analysts say it will be difficult to make back the cost of equipment and service. Even free dial-up ISPs, such as NetZero, which has attracted several million subscribers, have yet to reach anywhere near the realm of profitability, they note.
"I'm a little skeptical right now," said Brent Bracelin, a communications analyst with Pacific Crest, a technology-focused investment bank. "The reason why free dial-up economics work is because it's a mature technology. But with DSL, you're talking about very expensive equipment costs."
The company is also looking at more innovative ways to eke dollars out of advertisers, however. Company founder Ryan Steelberg said he is testing a way to control subscribers' connections so that individual Web sites would download considerably faster. Thus, if Yahoo paid for advertising, anyone going to a Yahoo site would see pages load much quicker than nonpaying competition.
The service will initially be available in Atlanta, Dallas, Chicago and Los Angeles, the company says. By early May, it should hit San Francisco and Seattle, then slowly spread out to 40 urban areas by the end of the year, Steelberg said.
The backload of customers waiting for DSL service in many of these markets could cause a wait of several weeks or more for the FreeDSL service, Steelberg said. In order to keep potential customers happy, the company will provide these subscribers with free dial-up service in the interim, he said.
CNet News.com's Corey Grice contributed to this report.
In the aftermath of losing its chief executive and a planned $120 million investment, online grocer Peapod was soliciting takeover offers from several candidates, including rivals. The troubled company is said to be nearly broke.
Benefiting from major Net companies' demand for improved Web site performance, Akamai Technologies said it has already doubled its customer base, to more than 400, since the beginning of this year. Some of the leading Web hosting companies, many of which actually house parts of Akamai's network, are beginning to see the upstart as a threat to their own business.
Hewlett-Packard topped Compaq Computer in retail PC sales last month, and industry analysts said the longtime leader may never regain its former status. Compaq's consumer PC division had been a bright spot compared with its money-losing commercial desktop operation. Last year, Compaq ceded the top spot in overall U.S. PC sales to Dell.
AT&T will assume majority control of Excite@Home's board of directors, consolidate the company's financial results with its own, and has offered to buy the stakes of co-partners Comcast and Cox Communications should those cable operators want to back away. Reversing plans for a tracking stock announced in November, the moves are intended both to shore up a wayward Internet strategy and tackle the threat of a proposed merger between America Online and Time Warner.
Microsoft made concessions in its ongoing antitrust settlement talks, but fear of the unknown was keeping the sides apart. The software giant tentatively agreed to refrain from charging PC makers higher prices for operating system software if these companies also sell products that compete with other Microsoft applications, and to separate its Web browser from its operating systems. But federal and state negotiators worry that the concessions may seem significant yet prove irrelevant due to the fast-changing nature of the industry as well as Microsoft's contentious history.
IBM said it shipped its 10 millionth ThinkPad notebook … Lernaut & Hauspie agreed to acquire Dragon Systems for about $593 million, combining the two leaders in voice recognition software … Intel invested in two Linux companies, which likely will expand the operating system's inclusion on Intel computers … AT&T's sale of stock to track performance of its wireless telephone business could raise as much as $11.5 billion, making it the biggest initial public offering in U.S. history … Cisco Systems surpassed Microsoft as the most valuable company in the world.
A San Francisco dot-com is looking to redefine the meaning of networking for student athletes seeking university scholarships.
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