Prices are falling all over --''''>
U.S. Wholesale Prices Show Surprising Jump
Thursday February 18 9:15 AM ET
By Caren Bohan
WASHINGTON (Reuters) - Soaring food and energy prices pushed up
U.S. wholesale prices at their fastest rate in more than two
years, the government said Thursday, but inflation in other major
sectors remained mild.
The Producer Price Index jumped 0.5 percent in January after a
0.4 percent increase in December, the Labor Department said.
January's was the biggest one-month gain since a matching
increase in October 1996.
It also was well above the 0.1 percent rise forecast by U.S.
economists in a Reuters survey. There was very little reaction in
financial markets, as traders saw the gain in producer prices
outweighed by a fall in the core rate.
The core PPI, which strips out volatile food and energy costs,
eased by 0.1 percent in January after a 1 percent rise in
December. Economists had expected the core index to increase by
0.1 percent.
''I tend to focus on the core measure,'' Dan Seto, economist with
Nikko Securities, told Reuters Television. ''What we are
concerned about at this stage in the economy is demand-driven
inflation and we see no signs of that in the producer price
report.''
Food and energy prices have been extremely soft over the past
year because economic problems in Asia, Russia and Latin America
have depressed global demand for farm products, oil and an array
of other commodities.
Prices of food products, which make up nearly one-fourth of the
PPI, surged 1.6 percent in January, their biggest gain since a
matching rise in April 1993. Prices of energy goods rebounded
from two straight months of steep declines, climbing 1.8 percent
last month.
Soaring gasoline and heating oil costs helped drive the gain, but
costs for residential electric power and natural gas also grew.
Helping to offset those strong price gains was a 1.2 percent drop
in the cost of passenger cars.
While stressing that the latest PPI data did not set off any
inflation alarm bells, some economists said it may be an
indication the best news on prices is in the past.
''I think it demonstrates just how important energy has been in
the past two years in holding down U.S. inflation,'' said Paul
Kasriel, an economist with Northern Trust Corp. (Nasdaq:NTRS -
news) ''Although there's still no sign of any meaningful
sustained increase in energy prices, all it would take is ...
stability in energy prices to ramp up inflation.''
In a separate report Thursday, the Labor Department said the
number of Americans filing first-time claims for unemployment
benefits rose slightly last week, but remained at levels
suggesting a strong labor market.
Initial jobless claims rose by 4,000 to 288,000 in the week ended
Feb. 13 from 284,000 in the prior week.
The four-week average of initial claims, viewed as a more
accurate barometer of the job market, fell to 292,000, the lowest
since 1989.
------------------------------------
Key Index Sinks To 23-1/2 Year Low
By Doris Frankel
Thursday February 18 1:04 AM ET
CHICAGO (Reuters) - Commodity prices tumbled to the lowest level
in two decades Wednesday, weighed down by burdensome supplies and
an outlook for continuing weakness in industrial demand in the
struggling economies of Asia, Latin America and Russia.
Despite a bounce in some markets like oil, cotton and wheat,
commodities in general absorbed selling by speculators for a
second day as little appeared on the horizon to spark any worries
about supply shortages in 1999.
Wednesday, the Bridge/Commodity Research Bureau Index of 17
commodity futures ended at 184.17, down 0.16 point, after dipping
to a new 23-1/2-year low for a second straight day.
The index has sunk about 5 percent so far this year and 20
percent in the last 12 months, and compares to a record low of
95.20 set in August 1968. The record high was 337.60 in November
1980.
''The outlook for commodity prices remains poor until the
economic situation in Asia and Latin America improves,'' said
Robert Hafer, managing director for the Bridge/CRB index. ''I
would say any call for a turnaround is certainly premature.''
The CRB index has been in a downward trend since mid-1996.
''We accelerated to the downside beginning in 1997, with the
advent of the currency crisis in the Pacific Rim countries. That
is really what turned the trend,'' Hafer said.
Soybeans and sugar, two of the top commodities exported by
Brazil, continued to set the tone Wednesday. Soybeans hit new
12-year lows and sugar new 11-year lows amid general concern that
Brazil, which was forced to devalue its currency, the real, last
month, will flood markets with cheap exports.
At the Chicago Board of Trade, soybeans for delivery in March
ended 1-1/2 cents lower at $4.86-1/4 a bushel, with corn down 1/2
cent at $2.13-1/2. May world sugar at the New York Board of Trade
closed 0.01 cent a pound lower at 6.47 cents.
March wheat in Chicago set a new life-of-contract low at $2.47 a
bushel early after news that Pakistan, a top U.S. customer,
bought 100,000 metric tons of European wheat at prices well below
those of the United States. That compared to the 21-year low of
$2.34 set in September.
March wheat ended 2-1/2 cents a bushel higher at $2.54-3/4 on
late buying from commercial grain firms. But analysts, eyeing
excellent weather for the U.S. and Argentine wheat crops, said
more price weakness can be expected.
''Basically, we'll have to drive wheat down to where the Chinese
are interested,'' said Sid Love, a grain analyst in Overland
Park, Kansas. ''China is the only one that could buy enough to
make a difference.''
China's wheat crop is estimated at 110 million metric tons this
year, down from 123 million in 1998.
Gold and silver led precious metals slightly lower in New York,
while March copper posted a slight gain of 0.20 cent a pound to
62.75 cents. But copper, a key industrial metal, is still
hovering around its lowest levels since mid-1987.
At the New York Mercantile Exchange, March crude oil closed 16
cents higher at $11.53 a barrel, hovering $1 above 12-year lows.
March heating oil ended 0.32 cent a gallon higher after setting a
record low of 29.52 cents Tuesday. March gasoline ended 0.15 cent
a gallon higher at 33.07 cents.
As for signs of recovery in commodity prices, analysts said much
depended on economic and industrial recovery overseas.
''We need to see strength in those global economies that are
struggling, namely Japan, China, Russia,'' Hafer said. ''We need
to see strength out of the Latin American economies that are
struggling. Until we see that strength, imports of commodities
are going to remain weak. That is what caused the problem,
especially China and the Pacific Rim counties.''
------------------------------------------------------
PC Maker EMachines Has High Ambitions
By Dick Satran
Thursday February 18 1:03 AM ET
SAN FRANCISCO (Reuters) - Price-busting personal computer maker
EMachines Inc. expects to go public this year or early next and
will become what it claims will be the ''fastest-ever (start-up)
company to crack $1 billion in sales.''
EMachines burst onto the scene at the end of last year with a
fully-equipped personal computer for $399, at a time when even
the most cut-rate competitors were doing it for $599.
The South Korean-built machines are so cheap, many analysts doubt
EMachines will ever be profitable.
''We're almost profitable right now and will be by the end of the
quarter, and we'll be showing good profit by the end of the
year,'' Chief Executive Stephen Dukker said in an interview.
Helping to propel its earnings, it hopes, will be the roll-out of
a higher priced $800 machine called the eStation that will have
some of the colorful design features of Apple's iMac computers,
though it will have Windows operating system.
If they make their goal it will confirm the wisdom of Dukker's
strategy to create a ''virtual company,'' so lean and focused it
has only 20 employees, mostly housed in an office complex in
unfashionable Fremont, Calif., across the bay from Silicon
Valley.
The tiny staff markets the EMachines made by TrGem Computer Inc.
and Korea Data Systems. Customer service is out-sourced to a
third party, and the company sells through a limited number of
large retailers, keeping marketing and distribution costs low.
There is no made-to-order Web site, or national advertising. The
name brand is being built through word of mouth, and retailers'
inserts in Sunday newspapers.
Dukker says in addition to the low-cost structure, it makes
revenue from the Internet, through its partner Netcom. As a
result, it can make money on a gross profit margin that is half
of the industry standard, Dukker said, and it will be able to
show a picture of a very profitable company by year's end.
''Our intent is to go public in the fourth quarter of this year,
or early in the first quarter next year.
''We believe we have the opportunity to set the record as the
fastest-ever company to crack $1 billion in American history, in
our first 12 months,'' Dukker said.
Microsoft, by comparison, took 15 years, and the Internet era
hot-growth companies, Amazon.com Inc. and Netscape Communications
Corp. (Nasdaq:NSCP - news), will do it in just over three years.
''We're on track to sell 1.7 (million) to two million PCs in the
year,'' after selling 180,000 in the last six weeks of 1998 and
pre-selling into retail channels another 700,000 for the first
half of this year, Dukker said.
But rather than focusing on sales alone, Dukker, a former
retailer who worked at CompUSA and Computer City likes to focus
on the way EMachines ''changed the industry by reinventing what
the low-end PC is.''
While PC components have been falling steadily in price, the
computer makers have been continually upgrading their products,
keeping them in the $1,000-plus range and equipping them with
more firepower and frequent new model cycles.
Dukker contends that this has left many potential buyers out of
the market, and the entry of EMachines means that penetration of
PCs is being stretched for the first time in more than three
years.
''We've tapped into an unserved market,'' Dukker said. ''We've
reignited the first-time buyers.''
Dukkers says EMachines' buyers have mostly come from, and will
continue to be found, in roughly 20 million potential first
buyers for low-priced machines. Also in the mix will be families
wanting a second computer and those with college bound students.
The market share is not being taken from existing PC makers,
though Packard Bell, its most direct low-end competitor ''appears
to be sinking fast,'' he said.
Dukker said the PCs it sells are ''not leftovers'' but are
''sixth-generation, Pentium II-level'' PCs. Computer magazine
critics say that the computers will look dated soon because they
are not cutting edge, and they also fault the company's policy of
charging for service calls 15 days after the initial call. But
Dukker responds that his partners, TriGem and Korean Data, have a
long history of making PCs without quality problems and returns
have been lower than the industry average, another factor
boosting profit margins.
''The demand in price point is so strong and model has been so
successful for our retail partners, as well as ourselves, the
level of commitment is just building like topsy,'' he said.
------------------------------------------------------
ISP offers free PCs to subscribers
By Margaret Kane, ZDNet
Wednesday February 17 11:57 PM ET
Think $29.95 a month is a bit steep for Internet service? What
about if it includes a free PC?
That's the deal a New Hampshire ISP is offering. The company,
Empire.Net, is giving subscribers a 300MHz white-box Intel system
with 32MB of RAM, 2.1GB hard drive, 24x CD-ROM, 56K v.90 modem,
and a 14-inch monitor. The catch? They commit to using Empire.Net
for three years.
Mike Salvanelli, sales manager at Connect Plus, Empire.Net's
parent company, said the company has been using a similar model
for cellular phone service for about four years.
"With prices plummeting on hardware, we were able to do it," he
said.
The company began advertising the deal in last Sunday's Boston
Globe. Response has been "outstanding," Salvanelli said.
Of course, that success rate is relative. The service is being
sold through three Boston-area computer resellers, some of which
have signed up as many as 14 new customers in a day. The offer is
only available in New Hampshire and eastern Massachusetts,
although the company plans to expand to western Massachusetts and
Rhode Island.
It had to happen
PC prices have dropped precipitously in the past year or so, with
some name-brand PCs now priced below $600. Several PC makers have
signed deals with ISPs to give consumers rebates of up to $100
when they subscribe to a service.
Industry watchers have said it was only a matter of time until
ISPs were giving away PCs.
While Empire.net appears to be the first ISP to give away PCs to
subscribers, other ISPs have offered free services to
subscribers, though that has seemed more popular in Britain than
in the US. Free-PC.com, an idealab! startup, recently caused a
frenzy when it announced that it would give away systems to
10,000 people who were willing to watch constant on-screen
advertisements.
The gimme may a good way for ISPs to lure customers in, but since
margins on Internet service are so small, it won't be an easy way
to make money, said Scott Miller, an analyst at Dataquest.
"The trick with the cell phone model is that there's enough
margin in the service that you can do that. The issue with PCs is
you've already got relatively high penetration and you're not
making a lot of money on the service," he said.
Stops churn
But it could help prevent "churn," where customers switch
frequently between service providers.
"We tend not to try to bundle extras," said Ed Hansen, a
spokesman at MindSpring Enterprises Inc. (Nasdaq:MSPG), a large
ISP in Atlanta. Mindspring charges a start-up fee as well as a
monthly charge, although it sometimes waives the start-up fee.
"You'll always see bundling happening, but it's unusual to see
something so high-priced rolled into something that's a fairly
low subscription price, Hansen said. "The question is, during
these three years are they losing money on these customers?"
Dataquest's Miller said the bigger worry could be for PC makers,
who may be seeing their product become just a toaster.
"The thing that should concern the PC makers is that in this
case, consumers are not focused on the value of the hardware,
they're focused on the value of the service," he said. "The brand
equity begins to shift to the service provider. The hardware is
increasingly a commodity, where consumers say 'I don't care what
kind it is, I just want the service.' "
----------------------------------------------------
Access Power Announces Unlimited Free Telephone Calling Between
Service Areas
Thursday February 18, 8:58 am
New Offer From Access Power Advanced Communications(TM) Allows
Residential And Business Customers The Opportunity To Call For
Free, Anytime Day Or Night Until June 1, 1999
PONTE VEDRA BEACH, Fla., Feb. 18 /PRNewswire/ -- Access Power,
Inc. (OTC Bulletin Board: ACCR - news) a pioneer service provider
of Internet Telephony announced free unlimited, anytime calling
between its service areas until June 1, 1999. The company uses
advanced communications equipment to process calls using Internet
Protocol. Access Power is offering this service to everyone
making calls between these cities:
Miami, FL; Jacksonville, FL; Orlando, FL; Tampa, FL; St.
Petersburg, FL;
Clearwater, FL; Dallas, TX; Ft. Worth, TX; Houston, TX;
Tucson, AZ;
Salt Lake City, UT
Customers are not required to have special equipment or Internet
access. The only charge is a one time $20 service activation that
allows customers to continue using the service even after this
program.
''We want to introduce as many people as possible to the quality
and savings of our Internet-based communications network. This is
the future of communications and we believe that people who take
advantage of this offer will become long-term customers of our
basic service as well as our advanced communication services,''
said company president and CEO Glenn Smith.
The Company also sells PC software that allows free PC to PC
calling and low rate PC to phone calling from anywhere in the
world over the Internet to anywhere in the US or Canada. To sign
up for this offer, visit the company's web site at
www.accesspower.com or call 1-800-388-2980.
Contact:
Access Power, Inc.
Brandie Hall brandie@accesspower.com
904.273.2980 V, 904.273.6930 F
accesspower.com
Certain statements contained in this release may contain
forward-looking information with respect to plans, projections or
future performance of this company, the occurrence of which
involved certain risks and uncertainties, including, but not
limited to, product and market acceptance risks, the impact of
competitive pricing, competitive products, product development,
commercialization and technological difficulties and other risks
detailed in reports filed from time to time with Securities and
Exchange Commission.
SOURCE: Access Power, Inc.
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