To: Kimberly Lee who wrote (13978 ) 8/17/1999 3:33:00 PM From: 2MAR$ Read Replies (1) | Respond to of 108040
To: 2MAR$ (353 ) From: Auric Goldfinger Tuesday, Aug 17 1999 3:08PM ET Reply # of 355 Have some cheese: "The Microsoft-Globo alliance is sure to have an impact on such other Latin American Internet players as Starmedia Network Inc (STRM), America Online Inc. (AOL) and Yahoo! Inc. (YHOO). "The news can't be too good for people like America Online,"said one industry executive, speaking on condition of anonymity. "Microsoft-Globopar Pact May Help Brazil Internet Growth 8/17/99 13:49 By Margarita Palatnik SAO PAULO (Dow Jones)--Microsoft Corp.'s (MSFT) planned $126 million investment in Globo Cabo SA (GLCBY) is seen doing more than improving the Brazilian cable company's balance sheet and its parent's pedigree. The investment represents a welcome cash injection for the debt-ridden unit of media giant Globo Comunicacoes e Participacoes SA (E.GLP), but it also includes a partnership to offer cable-modem access to the Internet, explore delivery of WebTV and unify Globopar and Microsoft portals in Brazil. Industry executives predicted the venture between South America's dominant media group and Microsoft will speed up the rate at which Brazilians turn to cyber channels and likely set off a consolidation in the country's nascent Internet business. Globopar and Microsoft said late Monday that the U.S. software giant would pay $126 million for an 11.5% stake in Globo Cabo and form a series of joint ventures. "The main aim for us is to be a catalyst for Internet adoption," Renato Cotrim, Microsoft Informatica Ltda.'s business manager in charge of TV platforms, said Tuesday. Using cutting-edge technology, Brazilian consumers would be able to hook up their computers to the Internet through cable television lines instead of the more traditional telephone lines. "For sure they are going to accelerate the penetration of Internet in the country," said Paulo Humberg, director of Freelance SA, an online auction company. "The good thing is that it will grow the industry as a whole." The deal even got a quick welcome from some competitors. "Things haven't played themselves out yet, but everything that boosts the Internet is positive," said Caio Tulio Costa, general director of Universo Online, Brazil's most popular Internet servcice provider and portal known as UOL. "Microsoft is very determined to invest in this market." Using TV Cable Lines Instead Of Telephone Lines Although some industry insiders point to a lukewarm reaction to cable-modem technology from U.S. users, Brazilian demographics and infrastructure may produce a different outcome. Globo Cabo has almost a million cable subscribers among the most affluent Brazilians, reaching many prime candidates for Internet subscription. This comes at a time when Brazil is still developing its telephone infrastructure. Although phone penetration is growing at a staggering pace - lines have jumped to 24 million from 13 million in the past year - there still aren't many homes with extra phone lines dedicated to a fax or a computer. In addition, still-poor line quality makes data transfer over the phones unreliable. As a result, many Brazilians might first experience Internet navigation at speeds of 256,000 bauds per second instead of the 2,400 bps that were industry standard only a few years ago - and about 10 times faster than the average 28,800 bps currently available at homes in the U.S. This technological leapfrogging - also being offered by recently-launched Ajato, a cable-modem provider of much-smaller rival group Abril SA - could also accelerate Internet adoption, according to observers. Despite a late entry for both Globo and Microsoft into the Internet arena in Brazil, both companies are seen as potentially all-mighty. "Together they are amazingly powerful," said Freelance's Humbert. "They have the best content in Brazil, with the best available technology." Seen Affecting AOL, Yahoo! And Others The partnership is also seen prompting consolidation in the sector. Monday, before both companies had officially announced their partnership, rumors heated up about the sale of UOL - speculation quickly struck down by company officials. "UOL is not for sale, and it never was," said UOL's Costa. Costa added the company was embarking on "a 10% private placement," but he declined to offer further details. The Microsoft-Globo alliance is sure to have an impact on such other Latin American Internet players as America Online Inc. (AOL), Yahoo! Inc. (YHOO) and Starmedia Network Inc (STRM). "The news can't be too good for people like America Online," said one industry executive, speaking on condition of anonymity. "And if you see the fight that Microsoft and AOL are having in the U.S. (for Internet users), they could transfer that fight other places and we would have serious consolidation." WebTV, another venture in which Microsoft has invested heavily in the U.S., also offers other obvious synergies for the two new partners. Developed by Microsoft, WebTV allows customers to navigate the World Wide Web through a television-based platform. "They are targetting 10% of TV users," said another industry executive on condition of anonymity, noting that Brazil has some 40 million homes with televisions, almost twice the number of homes with phone lines. Globo and Microsoft were scheduled to give a press conference in Sao Paulo later Tuesday.