Business Briefs

Reported by Star-Bulletin staff & wire

Monday, December 6, 1999

IBM to build bigger supercomputer

ARMONK, N.Y. -- International Business Machines Corp., the world's largest computer maker, said today it will spend $100 million to develop a supercomputer that is 500 times faster than current models.

The "Blue Gene" computer will be able to process more than 1,000 trillion calculations per second, or 2 million times faster than a personal computer. That's 1,000 times more powerful than "Deep Blue," which beat chess champion Garry Kasparov in 1997. IBM plans to use the computer to delve into the mysteries of the human body by solving the mystery of the formation of proteins, the workhorse molecules and building blocks of the body. IBM hopes the research will lead to use of the computer for other commercial purposes, Bloomberg News reported.

Japan's recovery shows weakness

TOKYO -- Japan's economy put the brakes on growth in the July-September period after showing surprising strength over the first half of the year, data showed today, but economists say the road to economic recovery remained intact.

The government said gross domestic product -- the broadest measure of activity in the world's second-largest economy -- fell an inflation-adjusted 1.0 percent in July-September from the previous quarter after rising over the first six months of 1999.

The 1 percent decline was worse than economists had predicted, landing outside their forecasts of 0.6 percent growth to a 0.9 percent fall, but many said Japan was not in danger of slipping back into recession.

"There's no change in our view that the economy is recovering," said Mamoru Yamazaki, senior economist at Paribas Capital Markets.

In other news . . .

CAMP HILL, Pa. -- Rite Aid Corp., the worst-performing company in the Standard & Poor's 500 index this year, named Kroger Co. executive Robert Miller as chairman and CEO. Miller, 55, was Kroger's vice chairman and chief operating officer and had been CEO of the Fred Meyer Inc. grocery and department stores. He succeeds Martin Grass, who quit in October.

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Of Mutual Concern

News for mutual fund investors

Janus tops Vanguard as leading seller

NEW YORK -- Janus Capital Corp.'s surging sales have ended Vanguard Group's three-year run at the top of the charts.

Janus, the sixth-biggest mutual fund company and a unit of Kansas City Southern Industries Inc., attracted $2.9 billion in October, topping the $2.6 billion by No. 2 Vanguard, according to Boston-based Financial Research Corp. It was the first month since October 1996 that Vanguard wasn't the biggest seller.

Janus accounted for four and Vanguard had three of the 10 best-selling funds in the month. The biggest seller was the Vanguard 500 Index Fund, which tracks the Standard & Poor's 500 index, attracting $648 million in net sales, FRC said.

The average 71 percent return for the past 12 months of Janus' 22 growth-oriented stock funds is luring investors. The Denver-based company, which manages about $210 billion, has seen assets almost double this year from $110 billion, faster growth than any of the other top 10 fund companies, FRC said.

Vanguard set to reopen Health Care Portfolio

VALLEY FORGE, Penn. -- Vanguard Group's $11 billion Specialized Health Care Portfolio will accept new customers again Dec. 20, 10 months after the second-biggest U.S. mutual fund manager closed it. The fund, Vanguard's biggest specialized portfolio and one of its 10 biggest funds overall, was closed to new investors Feb. 25 after assets more than doubled to about $10 billion in the previous 12 months.

New customers, however, will have to invest more to sign up for the fund, as Vanguard raised the initial investment minimum to $10,000 from $3,000. The Valley Forge, Penn.-based company also started charging a 1 percent redemption fee in April to discourage short-term trading in the fund.

"Considering several new policies that we now have in place, we are confident that the level of future inflows will be more modest and will be made primarily by investors interested in making a long-term commitment to the funds," said Vanguard Chairman John Brennan in a statement.

The Specialized Health Care Portfolio had $809 million in net new money this year through October, after attracting $2.6 billion last year, according to Financial Research Corp., a Boston-based industry research firm.

Japan surpasses Italy as No. 3 fund market

TOKYO -- Japan, paced by a surging stock market and a strong currency, has vaulted past Italy to capture the No. 3 spot among the world's biggest mutual fund markets.

Japan's mutual fund assets exceeded $508 billion at the end of October, ahead of Italy, with almost $475 billion. In June, Italy had $466 billion in fund assets, while Japan, the world's second-largest economy, was fourth with $415 billion, according to Cerulli Associates Inc., a Boston-based industry research firm. The United States, with $6.1 trillion at the end of June, and France, with $622 billion, occupy the top two spots.

"The surging yen and flaccid euro" helped Japan surpass Italy in dollar terms in October, said Ben Phillips, a Cerulli consultant who tracks the global money management industry.

Japanese investors are also pouring money into equity funds, spurred by gains in the country's stock market, Phillips said. Japan's stock market performance is among the world's best this year while Italy's is the worst among the major industrial countries.

Ex-Internet Fund whiz opening new investment

NEW YORK -- Ryan Jacob, whose management of the Internet Fund turned him into a mutual fund celebrity before his 30th birthday, is aiming to build an investment boutique to tap burgeoning interest in the Internet.

Jacob Asset Management LLC is introducing a new no-load Internet mutual fund next Monday and plans to roll out additional mutual funds, a hedge fund and private client business, betting the boom in Internet investing is more than a fad. "We want to become the premier investment advisory firm focused on the Internet," said the 30-year-old money manager.

Assets in U.S. Internet-only stock mutual funds have risen to more than $4.3 billion at the end of September from $2.8 million at the end of 1996, according to according to CDA/Wiesenberger, a research firm. This year's 1,252 percent asset growth followed last year's 4,500 percent pace.