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Wednesday, April 7, 1999
"I'm living so far beyond my income that we may almost be said to be living apart." -- e.e. cummings
Universal, BMG Go Online
Two of the world's largest record companies, Seagram's (NYSE: VO) Universal Music Group and German media giant Bertelsmann's BMG, reportedly will announce today a joint venture to promote and sell music over the Internet. Their efforts will include a new online music store called getmusic.com, selling music by Universal and BMG artists, as well as those from rival and independent music labels, and competing directly with the likes of Amazon.com (Nasdaq: AMZN) and CDnow (Nasdaq: CDNW).
In addition, Universal and BMG will build off several existing BMG websites, including Peeps.com, a R&B (rhythm and blues) site; Bugjuice.com, which focuses on alternative music; and TwangThis.com, for country music. These sites will promote the companies' own artists, featuring interviews, chat rooms, and live music broadcasts. And, of course, the sites will also feature prominent links to the online music store, getmusic.com.
Together, Universal and BMG control 44% of the U.S. music market. Seagram's purchase of PolyGram last year made Universal the world's largest music company, with labels such as MCA, Geffen, Def Jam, Mercury, and Motown and artists such as Elton John, Herbie Hancock, and U2. BMG owns more than 200 record labels in 53 countries, including Arista, RCA and BMG Classical, and boasts artists such as Whitney Houston, Puff Daddy, and Sarah McLachlan. BMG also owns the world's largest music club, which sells CDs and tapes online at www.bmgmusicservice.com.
Time Warner's (NYSE: TWX) Warner Music and Sony's (NYSE: SNE) Sony Music already have jointly opened an online music and video store, called Total E, run through the Columbia House music club and featuring $0.99 shipping and handling. Total E and getmusic.com set the stage for the record companies to release music online, allowing music buyers to digitally download music directly to their computers.
News to Go
A state court judge in San Francisco cut in half a jury's $50 million award in punitive damages against cigarette maker Philip Morris (NYSE: MO) in a case involving a former smoker with inoperable cancer. The judge upheld the jury verdict issued in February, but called the jury's decision on punitive damages "excessive." The company was ordered to pay $26.5 million, which includes $1.5 million in compensatory damages for medical expenses.
Security software maker Network Associates (Nasdaq: NETA) warned that it expects first-quarter earnings to fall short of expectations due to slowing demand as companies focus on solving the Year 2000 problem. The company anticipates earnings of $0.30 to $0.32 a share, compared with analysts' mean projection of $0.48.
Internet software developer Spyglass (Nasdaq: SPYG): announced it has won a three-year $20 million contract from Microsoft (Nasdaq: MSFT) to license technology and provide services for Windows CE-based products.
3D graphics accelerator technology company 3Dfx Interactive (Nasdaq: TDFX) announced that its new Voodoo3 2000 and 3000 boards will be available this month in 9,000 stores worldwide, with up to 15,000 stores expected to carry 3Dfx brand products later this year. Participating retailers include Best Buy, CompUSA, Babbage's, Software Etc., and Electronics Boutique.
Regional phone company Bell Atlantic (NYSE: BEL) is expected to file a long-awaited application with New York regulators within a week saying it has met conditions to enter the state's long-distance market, The Wall Street Journal reported. This would mean that the company has met federally mandated standards requiring that its network be open to competitors, and would prompt state regulators to begin formally evaluating whether Bell Atlantic should be allowed to sell long-distance services in New York.
Truck-leasing company Ryder System (NYSE: R) warned of lower-than-expected first-quarter earnings -- about $0.30 to $0.35 a share -- because of high costs in its shipment-management business and reduced demand in Brazil. Analysts had been forecasting EPS of $0.42.
Generic drug maker Watson Pharmaceuticals (NYSE: WPI) will be added to the Standard & Poor's 500 Index after the close of trading Friday, replacing Aeroquick-Vickers (NYSE: AVN), which is being acquired by Eaton Corp. (NYSE: ETN). Univision Communications (NYSE: UVN) will take Watson's place in the S&P MidCap 400 Index.
Internet content syndicator InfoSpace.com (Nasdaq: INSP) announced a 2-for-1 stock split, effective on or around May 4.
March Retail Same-Store Sales:
Costco (Nasdaq: COST) -- up 8%
Dollar Tree Stores (Nasdaq: DLTR) -- up 5.4% (quarter ended March 31)
Friedman's (Nasdaq: FRDM) -- up 16.4% (quarter ended March 31)
Intimate Brands (NYSE: IBI) -- up 21%
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