Business Briefs

Reported by Star-Bulletin staff & wire

Monday, December 13, 1999

United Air in pact with Galileo site

ROSEMONT, Ill. -- Galileo International Inc. said UAL Corp.'s United Airlines will commit $5 million to promoting Galileo's new Web site, expanding the travel-reservation company's role in providing ticket sales for United on the Internet. The five-year agreement that starts Jan. 1 calls for the world's largest airline to offer some products and services on Galileo's Web site that aren't on independent travel sites, Galileo said. United and Galileo sales teams also will cooperate in developing business with travel agencies and corporations, Bloomberg News reported.

Airlines are trying to expand business as they add capacity. Rosemont-based Galileo provides computer services to travel agencies in 40,000 locations, giving them access to flight schedules and fares, and letting them book reservations and issue tickets for 500 airlines. Its new Web site isn't yet available.

DHL buys back stake from Japan Airlines

BRUSSELS, Belgium -- DHL International Ltd. bought back a 20 percent stake from Japan Airlines Co., and said it's considering an initial public offering, which analysts estimate could value the company at as much as $4 billion.

The closely held overnight delivery service company today completed the purchase from JAL, which is seeking ways to slash trillions of yen in debt and reverse losses in five of the last six years. DHL's aiming for the sale of 23 percent of the company as early as 2001. DHL is seeking funds to accelerate an expansion in Europe where it's benefiting from a boom in demand for inventory management and for parcel delivery from technology companies. The company's bulking up by boosting its fleet and adding two more hubs as U.S. rivals such as FDX Corp.'s Federal Express increasingly challenge the Brussels-based company at home.

In other news . . .

TOKYO -- In a positive sign for Japan's economy, the central bank said today that business confidence at major manufacturing companies improved for the fourth consecutive quarter.

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Of Mutual Concern

News for mutual fund investors

Fidelity's Magellan puts more cash in stocks

BOSTON -- Fidelity Investments' flagship Magellan Fund, the biggest mutual fund in the world, took more than $700 million of its cash and put it to work in U.S. stocks in October, according to a report by the company.

Fidelity Magellan, managed by Robert Stansky, had 92.9 percent of its assets in U.S. stocks in October, up from 92.2 percent in September. The fund's cash position was cut to 7 percent from 7.8 percent at the end of September, the Fidelity report said. The fund left its stake in foreign stocks unchanged at 4.2 percent.

Technology is still the fund's favorite group of stocks, accounting for 21.6 percent of the $97.5 billion in assets in October, Bloomberg News reported. Magellan gained 15.7 percent this year through November, ahead of the S&P 500's 14.3 percent in the same time. Magellan, which had $99.2 billion in assets at the end of November, lags the Lipper growth fund average of 17.5 percent through 11 months this year, according to the Fidelity report.

Lipper: Extended hours to raise risks of funds

NEW YORK -- Mutual fund investing may be becoming riskier with the increase in after-hours stock trading on volatile alternative electronic networks, according to the founder of mutual fund analyst Lipper Inc.

It's still uncertain how the technology revolution sweeping Wall Street will affect mutual fund investors over the long-term, says Michael Lipper.

As more and more trading activity takes place on electronic communications networks, known as ECNs, outside the traditional hours of 9:30 a.m. to 4 p.m. EST, stock prices will grow increasingly volatile, Lipper predicts. That in turn will cause an increase in the volatility of mutual fund prices, he says. Stock prices fluctuate more in the after-hours markets because there are fewer buyers and sellers to generate fluid markets.

Lipper says he was uncertain whether extended trading sessions would ultimately hurt or benefit mutual fund investors.

Firsthand Funds adding 2 percent redemption

NEW YORK -- Firsthand Funds, a red-hot mutual-fund firm that specializes in technology investing, plans to add fees to its funds to ward off speculative investors.

Firsthand -- which is targeting the first half of 2000 for the new charges -- will add a 2 percent "redemption" fee to all of its funds, which will charge investors that pull money out less than 180 days after purchase. The San Jose, Calif.-based mutual fund firm said it's adding the fees to discourage short-term investors from jumping in and out of the funds -- which can create costs for the fund and disrupt its portfolio-management strategy. Firsthand built the redemption fees into its newest funds, the two-month-old Firsthand Communications Fund and the Firsthand E-Commerce Fund, but will add them to its three older, better known funds: Firsthand Technology Value, Firsthand Technology Leaders and Firsthand Technology Innovators.

University to train mutual fund managers

BOSTON -- Boston University's School of Management is launching a graduate business program to train future investment and mutual fund managers.

The program leading to a Master of Science in Investment Management is believed to be the first of its kind. Jeffrey Heisler, a finance professor who is faculty director of the program, said industry changes such as increased market volatility and a shift toward self-directed retirement accounts have led to the need for more-sophisticated investment strategies and structured products. Julie Allen, the program's assistant director, said the majority of the 30 to 35 students entering the inaugural class starting Jan. 11 have several years of work experience in the field. Classes meet on nights and weekends, so students can work full-time. Tuition for the 17-month program is $35,000.

Neuberger launches growth-stock offering

NEW YORK -- Neuberger Berman Management Inc., a New York investment company, has launched its third growth-oriented stock fund. The new Neuberger Berman Century Fund looks for blue chip stocks that haven't reached their full growth potential. Targeted are large companies with median market capitalizations of $10 billion and those with consistent earnings growth in rapidly expanding industries.

Neuberger Berman Management, which has about $55 billion in assets under management, is a unit of the money-management company Neuberger Berman Inc.