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To: Jenna who wrote (115920)	11/2/2000 4:22:52 AM
From: ColtonGang	Read Replies (1) \| Respond to of 120523

Market Place: Happy Days After the AOL-Time Warner Merger By ALEX BERENSON ACK in January, in the good old days when Internet stocks were hot, America Online agreed to buy Time Warner with AOL stock. The deal, if approved by regulators, would leave AOL shareholders with 55 percent of the merged company, even though Time Warner's revenue and cash flow are far greater. AOL stock has since fallen almost a third, destroying most of the premium the company had offered for control of Time Warner. So a Time Warner shareholder might conclude that America Online's chairman, Stephen M. Case, had bamboozled his Time Warner counterpart, Gerald R. Levin, into taking AOL shares at the worst possible time. "Short term, anyone objective would say probably Steve got the better part of the deal," said Larry Haverty, a senior vice president at State Street Research in Boston and a longtime media investor. But Mr. Haverty, like many other Time Warner holders and industry analysts, hardly cares. With the deal likely to be completed this month, he predicts that the merged company will grow quickly by combining AOL's marketing skills and captive base of online users with Time Warner's huge library of films, magazines and the like and its relationships with major advertisers. "The deal strategically and financially makes all the sense in the world," Mr. Haverty said. "Five years out, if you're a shareholder in this company, you're going to be a happy camper." That view is widely shared. "Strategically, it makes a lot of sense," said Tom Wolzien of Sanford C. Bernstein. "These companies fill the holes of the other one. They're subscription-advertising combo models. The reality is the pieces are very compatible." To be sure, the recent history of big media mergers is hardly comforting for shareholders in either AOL or Time Warner. Disney stumbled badly after it bought Capital Cities/ABC in 1996, and Time Warner stagnated for five years after it was created in 1990 by the merger of Time and Warner. "Huge deals are really hard to do and create a lot of uncertainty," said Roger McNamee of Integral Capital, which sold its 404,000 AOL shares the day the merger was announced. But if the merged company can overcome that hurdle, it will have big advantages over Disney and other traditional media companies, which are still struggling to figure out how they can profit from the Internet, said Jessica Reif of Merrill Lynch. "Given the multiple distribution platforms that they have, it's obviously a very powerful consumer engine," she said. "There's a reason that you see Disney and to a lesser extent NBC screaming in Washington" that they are at a disadvantage in reaching AOL subscribers. John Schreiber, an assistant portfolio manager at Janus Capital, the mutual fund company that is Time Warner's largest shareholder, with more than 120 million shares, said the companies had already begun to demonstrate how they would work together. For example, AOL has pitched Time Warner's magazines to its users, resulting in hundreds of thousands of new subscriptions. And the companies are trying to sell big advertisers on deals that will reach both America Online users and the people who watch Time Warner cable channels and read its magazines, Mr. Schreiber said. "Once the merger closes, I think you'll see some very powerful cross- promotional deals across all of Time Warner's advertisers," he said. Mr. Schreiber also says the risk of cultural clashes between the companies is limited, because the merger partners disclosed publicly where top executives would stand in the combined company only a few weeks after the deal was announced. So people who feel their responsibilities have been diminished have had months to look for new jobs, and some have already left, he said. Given the strength he sees in the combined company, Mr. Schreiber said the question of whether Mr. Levin could have negotiated a better deal with America Online is moot. Shares in cable companies like Comcast have fallen 15 percent or more this year, while big media companies have been flat or up slightly. So "it's not as if Time Warner shareholders have lost out on a great deal of upside," Mr. Schreiber said.

To: Jenna who wrote (115920)	11/2/2000 8:43:37 AM
From: vagabond	Respond to of 120523

A bad omen for TMTA (Transmeta) IPO, set for next week... ==================== Thursday November 2 6:55 AM ET IBM Scraps Transmeta Chip Plan By MAY WONG, AP Technology Writer SAN JOSE, Calif. (AP) - IBM Corp. has canceled plans to use an energy-saving chip manufactured by Transmeta Corp (news - web sites). in its upcoming laptop computers, deflating the upstart's balloon one week before it goes public. IBM instead will continue using Intel chips - the Pentium III and Celeron - in its ultralight ThinkPads due to roll out in the fourth quarter, company spokesman Tim Blair said Wednesday. IBM said in June it would use Transmeta's low-powered Crusoe semiconductor. ``We'll continue to look at Transmeta for future products in the ThinkPad line, but at this point, for this product, we're not going to market with it right now,'' he said. Blair would not say whether the decision was related to product performance, engineering problems or marketing issues, exacerbating the skepticism surrounding Transmeta's outlook before its scheduled Nov. 6 initial public offering. ``It certainly will put a cloud on Transmeta's plans,'' said Steve Kleynhans, an analyst with the Meta Group who follows the chip industry. ``People will wonder: 'What did IBM discover as they moved forward in developing a machine with this product?' It may have nothing to do with performance, but people will say, IBM is a smart company ... and people will infer that there's something negative about (Transmeta's) product.'' Transmeta downplayed the fallout of IBM's decision and said it remains confident in its growing list of customers. Santa Clara, Calif.-based Transmeta unveiled its Crusoe chip in January after five years of highly secretive development. The chip's ``code-morphing'' technology is supposed to consume less power and give off less heat and thus extend the battery life for laptop computers. Transmeta has been positioning itself to cut into the market share of Intel Corp. IBM was among several laptop manufacturers at the PC Expo in June to show off a prototype using the Crusoe chip. Sony Corp., Fujitsu Ltd., and NEC Corp have each begun using Crusoe chips in the latest models of their ultralight laptops. ``IBM was the biggest feather in Transmeta's cap,'' Kleynhans said. ``To make up the volume it would have had with IBM, it would need two or three other computer makers, and they still wouldn't have the prestige of IBM.'' Of all the notebook makers that are taking a chance with the Crusoe chip, IBM would have had the biggest and farthest reach with mainstream consumers, said Linley Gwennap, principal industry analyst of the Linley Group. ``But the big issue is if this starts a trend, if other companies start backing out of their commitments with Transmeta, then there's a problem.'' Transmeta said it still has a good relationship with IBM, whose semiconductor division manufactures the Crusoe chip for Transmeta. ``We have seen that the companies providing the most innovation with Crusoe are focusing on the need for significantly extended battery life,'' said Transmeta spokesman Philip Bergman. ``Companies that are not extending battery life as a focus may look to other options. It's up to the needs of a particular customer.'' Bergman said he could not comment about the financial impact of IBM's decision because the company is in its pre-IPO quiet period. The proposed offer price of Transmeta shares is between $11 and $13.