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Business Briefs

Reported by Star-Bulletin staff & wire

Monday, February 14, 2000

Pilot shortage curbs Lanai flights

LANAI CITY -- A shortage of pilots has led Island Air to suspend its two daily flights between Lanai and Maui, effective March 2. Island Air spokeswoman Julie King said the airline is seeking more pilots nationwide, but they are in short supply. Although the suspension of service is called temporary, King said Island Air doesn't know when it will be able to resume the flights. Meanwhile, Pacific Wings announced it is starting twice-daily service between Kahului and Lanai City on March 1. But its planes don't carry as many passengers as Island Air's. Pacific Wings cofounder Myron Caplan said his airline has already begun flying charters between Maui to Lanai.

CMGI continues expansion with deal

ANDOVER, Mass. -- Moving to bolster the services it provides to companies doing business online, Internet investment company CMGI Inc. said today it has agreed to acquire Tallan Inc., a closely held electronic-commerce services provider, for about $920 million in cash and stock.

Last month, Tallan, which is based in Glastonbury, Conn., said it planned to go public with an initial public offering of stock valued at up to $74.75 million.

CMGI, based in Andover, Md., operates a network of more than 60 Internet companies that include Engage Technologies and AltaVista, It also has a venture capital affiliate called MGI At Ventures. Last week, CMGI said it agreed to acquire online auctioneer uBid.com in a $407 million deal. CMGI said it plans to integrate Tallan with CMGI Solutions.

Computer Associates to buy software firm

ISLANDIA, N.Y. -- Computer Associates International Inc. said today it agreed to acquire Sterling Software Inc. in a $4 billion stock swap. The deal will give Computer Associates, based in Islandia, N.Y., a wide range of software products. Computer Associates will exchange 0.5634 of its shares for each of Dallas-based Sterling's 84 million shares. That values Sterling's shares at $39.30, a 14 percent premium over Friday's close price of $34.44.

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Of Mutual Concern

News for mutual fund investors

Scudder Kemper cuts funds, overhauls lineup

BOSTON -- Scudder Kemper Investments Inc. said it's merging 23 mutual funds and shutting six, as the money management arm of Zurich Financial Services Group seeks to reverse withdrawals of about $6 billion last year.

The reduction in the number of funds to 43 follows Scudder's hiring last month of Farhan Sharaff from Citigroup Inc. to take over as global investment chief from Cornelia Small.

The Scudder, Kemper and AARP mutual funds -- the latter sold to members of the American Association of Retired Persons -- ranked 19th among the 20 biggest fund groups, returning 13.4 percent on an asset-weighted basis because of their focus on value investing, according to William Dougherty, president of Kanon Bloch Carre, a Boston-based research firm.

Scudder also will open its entire lineup of funds to the AARP program, expanding from the 16 funds currently available through its venture with the association.

Scudder, Kemper and AARP, which manage about $78 billion in U.S. and international stock and bond funds, lost more than $5.8 billion through the first 11 months, according to Boston-based Financial Research Corp.

Among the changes, the $6.4 billion Scudder Growth & Income Fund will take over the $5.9 billion AARP Growth & Income Fund, the biggest funds for those two units. Scudder changed managers on those funds in October, picking Kathleen Millard to replace Rob Hoffman, who left the firm. The six funds Scudder plans to shut, citing the lack of demand, are the Scudder Real Estate Investment Fund, Scudder Financial Services Fund, Scudder California Tax Free Money Fund, Scudder New York Tax Free Money Fund, Scudder International Value Fund and Scudder International Growth Fund.

Franklin Mutual buying department store stocks

WASHINGTON -- The Franklin Mutual group of money managers is buying department store stocks such as Saks Inc. and J.C. Penney Co., arguing that investors have beaten shares of these companies down to bargain levels.

Many department store stocks fell last year and continue to trade near their 52-week lows. Such declines have attracted Franklin Mutual, a Short Hills, N.J., investment adviser that seeks out-of-favor stocks it judges to have been driven too low. The mutual fund group bought 7 million shares in Saks and 3.5 million shares in J.C. Penney last year, according to documents filed with the Securities and Exchange Commission. Franklin Mutual also bought 2.4 million shares of Sears, Roebuck & Co. and 1.4 million shares of May Department Stores Co. in 1999, and raised its stake in Federated Department Stores Inc. to 2.9 million shares from 2.2 million.

Janus Capital to sell mutual funds in Japan

TOKYO -- Janus Capital Corp., the best-selling U.S. mutual fund group, is taking its show to the world's No. 2 economy. The Denver-based unit of Kansas City Southern Industries Inc., which manages about $270 billion, took its first step into Asia, setting up a marketing alliance with Nomura Securities Co., Japan's largest brokerage. Janus is betting Japan's traditionally risk-averse investors are ready for funds emphasizing fast-growing companies.