Advertisement - Click to support our sponsors.

Business Briefs

Reported by Star-Bulletin staff & wire

Monday, August 28, 2000

Big travel company to cut 1,200 jobs

FORT WORTH, Texas -- Sabre Holdings Corp., the world's largest travel-reservation company, said today that it will cut 1,200 jobs to save money even as it agrees to pay $757 million to buy an Internet travel business. Sabre, which owns 62 percent of the Travelocity. com Web site, will cut more than 11 percent of its work force through a combination of layoffs and attrition over the next several months, officials said. At the same time, Sabre said it has agreed to pay $17.75 a share for GetThere Inc., which operates an Internet marketplace, GetThere.com, focused on business-to-business travel services. The price is a premium of 46 percent over GetThere's closing price Friday of $12.12.

Applied Micro buying MMC for $4.4 billion

SAN DIEGO -- Applied Micro Circuits Corp., whose chips speed data traffic on fiber-optic networks, agreed to buy MMC Networks Inc. for about $4.36 billion in stock to add computer-network microprocessors to its product line. Applied Micro will issue 0.619 share of its stock for each MMC share. That values MMC at $113.78 a share, a 45 percent premium to its closing price of $78.25 on Friday. Shares of Sunnyvale, Calif.-based MMC closed up $31.75, or 41 percent, to $110 today.

VoiceStream to buy cell-phone company

WEST POINT, Ga. -- VoiceStream Wireless Corp., the nation's eighth-largest mobile telephone carrier, has agreed to buy cell-phone company Powertel Inc. for $7.2 billion in stock and assumed debt to fill gaps in its U.S. network. The deal is subject to the completion of the previously announced $46 billion merger between VoiceStream and Germany's Deutsche Telekom AG, the largest telecommunication company in Europe.

In other news . . .

SAN FRANCISCO -- Del Monte Foods Co., the largest U.S. producer of canned fruits and vegetables, agreed to buy the rights to UniMark Group Inc.'s Sunfresh fruit brand and a distribution center in Texas for about $14.5 million.

---

Of Mutual Concern

News for mutual fund investors

Large funds reduce Microsoft holdings

BOSTON -- Many of the biggest mutual fund families, including Fidelity Investments, Janus Capital and Putnam Investments, cut their holdings in Microsoft Corp. sharply in the second quarter, according to recent regulatory filings.

Fidelity cut its holdings by 36 percent -- to 119 million shares from 185 million -- as the software maker was hit with a federal court decision that the company had abused its monopoly power in the software market and should be broken up.

"It's got to be a reflection of concern from their protracted litigation, that there was no settlement or relief," said fund industry consultant Geoff Bobroff.

Janus chopped its holdings by 47 percent -- to 18.1 million shares from 38.7 million shares -- and Putnam lowered its holdings by 14 percent -- to 48.4 million from 56.5 million.

Other big sellers included American Century, T. Rowe Price, Oppenheimer Funds and AIM Management Group, all top-20 fund complexes, ranked by assets according to fund data firm Financial Research Corp in Boston. Bankers Trust, American Express Financial Advisors and Goldman Sachs also sold shares.

Strong to leave helm of Discovery fund

MILWAUKEE -- Richard Strong will quit on Aug. 31 as manager of Strong Capital Management Inc.'s Strong Discovery Fund, passing control to co-manager Charles Paquelet to focus on running the $45 billion money management company.

"It's a huge firm, and there are a lot of demands on his time," said Stephanie Truog, a spokeswoman for the 1,200-employee privately held company.

Strong, 58, had planned to pass on the reigns of the fund when he hired Paquelet in 1996, she added.

The $183 million Discovery Fund has lagged its peers recently. The fund averaged an 8.3 percent return the past five years, ranking it above just 7 percent of other funds that focus on mid-sized growth companies, according to Bloomberg data.

It has increased 13 percent this year.

British money manager changes tune on 'Net

LONDON -- Schroders Plc, Britain's biggest pension manager that last year shunned Internet stocks as over-priced, says it now can not buy enough of them.

The London-based money manager, which runs more than $211 billion in assets, said it is investing as much as 32 percent of its U.K. funds in technology, media and telecommunications stocks. That's 4 percent higher than their weighting in the FTSE All-Share index. And Schroders is still buying, said fund manager Bill Baker. In place of all-weather food and energy companies, Schroders is notching up stakes in Cable & Wireless Plc, the phone and Internet services provider, and news and information companies like Reuters Group Plc, Pearson Plc and EMAP Plc.

Market-neutral funds losing battle for profits

NEW YORK -- It has been the worst year for U.S. stocks since 1994, and investors may be tempted to look for conservative funds designed to make money whether stocks rise or fall. Don't bother.

These so-called market neutral funds have not, for the most part, done what they are supposed to -- average returns of 6 percent to 10 percent a year no matter the market environment. Instead, "they've generally lost money in up, down and sideways markets," said Russel Kinnel, director of fund analysis at Morningstar Inc., a mutual fund research firm in Chicago.

Legg Mason Inc. plans to close its Market Neutral Primary Fund later this year because of poor performance and lack of interest from investors.

The most popular way to run a market neutral fund is to try to make money wagering on shares the managers expect to rise and stocks they bet will tumble. The value of the stocks they are long is equal to the value of those they are short. The biggest problem is that managers have twice the opportunity to mess up, and few managers are trained in intentionally picking losers. The funds also tend to have high fees because of trading costs associated with keeping the value of the longs and shorts equal in the portfolio.