Goodbye, Free E-Mail

July 6, 2001

USA.net officials plan to begin charging for e-mail service because advertising revenue isn't covering operational costs, a spokeswoman says.

By the end of July, USA.net's 4 million-plus e-mail users must decide whether to discontinue service or begin paying $29.99 a month for an upgraded account. New subscribers will pay $49.99 per month.

USA.net began its free e-mail service five years ago. Officials believed they would be able to offset the cost by charging for ad space on the site.

"The most successful free e-mail services are those attached to something else that has some value," said Mark Levitt, a research director at IDC in Massachusetts.

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AMD not exactly in the chips: Despite record sales of its computer processors, Advanced Micro Devices warned that second-quarter earnings will fall far short of expectations.

The news sent shares down 16 percent in after-hours trading Thursday. Sales of Athlon and Duron PC processors could not overcome the continuing slump in demand for flash memory chips used in digital cameras, cell phones and other electronic devices, the company said.

Overall, AMD's second-quarter sales declined 17 percent, compared to the first quarter. The company projected that second-quarter sales could decline as much as 10 percent when it posted first-quarter results in April.

AMD (AMD), which will release its second-quarter results on July 12, also said net earnings will range from 3 cents to 5 cents per diluted share. Analysts were expecting 27 cents per share, according to Thomson Financial/First Call. A year ago, AMD earned 61 cents per share.

AMD said sales for the second quarter were $985 million, down significantly from the first quarter sales of $1.19 billion. The results are also a 11 percent decrease from the second quarter of 2000.

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Nothing is free: Amazon.com (AMZN) stopped free shipping for multiple orders of books, compact disks, videos and digital video disks after a two-week promotion that a company spokesman said was a test run.

The action was taken shortly after barnesandnoble.com (BNBN) began offering a similar discount and after some customers said Amazon raised some prices by factoring the cost of shipping into its listings.

Amazon spokesman Bill Curry said that most prices were unchanged, adding that the promotion was a test to determine whether customers could calculate their bills easier without a shipping charge. A recent Jupiter Media Metrix study indicates 63 percent of shoppers stop short of completing their purchases after shipping charges are computed at the last step.

With the end of the free-shipping promotion, Amazon lowered prices that had been raised. Customer criticism had nothing to do with the moves, Curry said. "That's why you do a test is to get a reaction and to see how people actually behave," he said. "We completed two weeks of it and feel we've got enough data that we can make sense of it."

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Houston hub: Houston is one of three cities chosen by Royal Dutch/Shell Group as a megacenter computer hub, the Houston Chronicle reported.

The oil company is expected to announce Friday that it will consolidate its computer operations in Houston, Kuala Lumpur and The Hague over the next 18 months. Under the agreement, IBM will supply all the major computer and storage systems for the centers.

Shell and IBM spent a year working out the agreement, valued at more than $100 million over the five-year life of the deal, the companies said.

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Sole owner: RadioShack (RSH) said it has agreed to buy Microsoft's 25 percent stake in the consumer-electronics chain's Internet venture, RadioShack.com, for $88 million in cash.

Separately, RadioShack said that sales from its retail division increased 8 percent to $356.6 million in June from a year earlier. Sales at company-owned outlets open at least a year rose 4 percent.

Much of the increase was driven by sales of wireless phones, the company said.

The companies did not give a reason for Microsoft's (MSFT) sale of its stake, but both vowed to keep working together on other ventures.

RadioShack also said it has settled a payment dispute with CompUSA by accepting $123.6 million plus interest for a $136 million CompUSA note.

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Less-than-total recall: Sony (SNE) said the cost of three cell-phone recalls in Japan over the past three months would total an estimated 12 billion yen ($95.5 million.)

The figure was well below the estimates of 20 billion yen or more forecast by several analysts and Japanese media over the past week. Those had assumed a full replacement of handsets still held in inventory by NTT DoCoMo (NTT).

The recalls involved one model sold by DoCoMo and two models sold by KDDI.

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Too much stock: Motorola (MOT) has already sold "some" of the stock it received from Spain's Telefonica last month, a source familiar with the transaction said.

Telefonica on June 19 paid Motorola 122.56 million new shares -- or 2.7 percent of its capital -- in exchange for an acquisition valued at $1.8 billion of Mexican mobile phone companies from the U.S. firm, creating a massive stock overhang and alarming investors who feared Motorola would dump the stock.

"They've sold some shares, but there is still a sizable chunk left," the source said, adding that Motorola may make an announcement about the share sale when it reports quarterly results next week.

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More reductions: WebMethods (WEBM) said its fiscal first-quarter loss will be higher than Wall Street expected because of the economic downturn, adding that it will reduce its work force by about 15 percent as a result.

The company also said it expects to take a one-time restructuring charge in the second quarter of fiscal 2002.

WebMethods said it now expects to post a loss of 9 cents to 10 cents a share -- excluding the amortization of deferred stock compensation, goodwill and other non-cash charges -- for the three months ended June 30.

Reuters and AP contributed to this report.