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HOLLYWOOD CONTRACTS INTEGRATORS

Who says systems integration doesn't have entertainment value? Stars in the big-budget movie hit "Contact" actually utter the term systems integrator at least twice. They're referring to the government-hired builders of a complex machine that is meant to transport an earthling to another world. What a contract! The film features Jodie Foster with Matthew McConaughey as her love interest and Tom Skerritt as the head of the National Science Foundation.

INDUSTRY LAUDS NEW TAX PACKAGE

The infotech industry gained several billion-dollar tax breaks from the five-year budget deal signed Aug. 5 by President Bill Clinton.

Among the goodies were a rollback of capital gains taxes, which will boost top executives' earnings and perhaps spur more investment in high-tech start-ups. The industry also gained a permanent extension of the on-again, off-again research and development tax break that allows a company to deduct annual increases in research and development spending from its taxable revenue, and a tax break that reduces the tax burden on earnings from the overseas sales of software. This export measure could be worth more than $1.5 billion over the next five years.

YEAR 2000 CIVIL WAR?

The Arlington, Va.-based Information Technology Association of America reports that things are heating up between a prominent state government IT executive and federal agency officials overseeing year 2000 corrections.

"Will the digital drawbridges be raised in Pennsylvania?'' blares a headline in the ITAA's Year 2000 Outlook e-mail publication.

"That's one of the options under consideration should other government agencies not become Y2K compliant.''

Pennsylvania Chief Information Officer Larry Olson expressed concerns about federal agencies not being compliant, as well as the prospect of solutions not being compatible with his state.

He's written to state and federal officials, testified before Congress and, on July 28, spoke about the potential dangers before the National Governors Association Committee on Economic Development and Commerce. Now, Olson wants to hold a state and federal CIO summit on the subject in October.

Olson told the ITAA that "digital firewalls'' would be a last-ditch effort to consider in blocking the introduction of noncompliant date data between federal and state agencies.

Also on the year 2000 front: Input, the Vienna, Va.-based market research firm, just posted a detailed report, "The Problem of the Century,'' on its World Wide Web site (www.input.com). It offers advice on sorting through year 2000 service vendors.

ACQUISITIONS IN THE AIR

Chantilly, Va.-based Comstor Corp. has signed an agreement to purchase selected assets of Boulder, Colo.-based Data Storage Marketing Inc., a distributor of PCs, storage and connectivity products.

Data Storage Marketing, one of 11 U.S. distribution partners of Redmond, Wash.-based Microsoft Corp., posted annual revenues of $150 million.

The combined revenues of the companies will be $400 million.

Comstor is a subsidiary of Stamford, Conn.-based GE Capital Services, a $6 billion provider of global IT solutions and products.

Also, Vienna, Va.-based Space Applications Corp. recently announced its purchase of the majority of assets of Landover, Md.-based Applied Research of Maryland Inc., a subsidiary of Applied Research Corp.

Applied Research of Maryland provides software and scientific support to NASA through prime contracts and subcontracts. The acquisition brings nearly 100 scientists and engineers to SAC's staff.

AS DIGEX TURNS

Doug Humphrey, founder of pioneer Internet access provider Digex Inc. in Beltsville, Md., has resigned from the company.

Digex has gone through several incarnations since Humphrey and Michael Doughney started the business in 1990. Humphrey stepped aside as CEO in early 1996 when Digex hired American Mobile Satellite Corp. executive Chris McCleary to run the company. McCleary and his team successfully took Digex public last October.

Intermedia Communications Inc., Tampa, Fla., bought Digex in July for $150 million. Humphrey was chief technology officer until quitting and a director until the Intermedia buyout.

Officially, Digex said Humphrey resigned to "pursue other interests." Industry sources said Humphrey is planning to launch a new Internet company in Maryland.

THEY LIKE FEDERAL TELECOMMUNICATIONS

At least that's the sentiment after the U.S. General Services Administration's Federal Telecommunications Service held a nationwide "customer focus week'' from July 30 to Aug. 6.

Of particular interest was a survey from McLean, Va.-based Booz-Allen & Hamilton Inc. of more than 2,000 FTS customers of local and long distance network services. The results were approval rates even higher than President Clinton's. It showed overall satisfaction rates of about 85 percent for products and services, and a tad higher for FTS representatives.

BANKING ON A YEAR 2000 FIX

Although smaller banks and U.S.-based offices of foreign banks seem to be behind the curve, most U.S. banks, savings & loans and securities companies are taking steps to fix their own year 2000 problem, the nation's top banking regulators told Senate lawmakers during a hearing on the year 2000 readiness of the nation's banking industry.

A fix is vital for the tightly integrated and information-dependent industry, said the regulators, including Securities and Exchange Commission Chairman Arthur Levitt, Federal Deposit Insurance Corp. Acting Chairman Andrew Hove and Eugene A. Ludwig, comptroller of the currency.

"If a securities firm is not ready for the year 2000, it will have implicitly made a decision not to be in business," Levitt told the hearing, chaired by Sen. Bob Bennett, R-Utah.

Bennett also released a trial balloon, suggesting that Congress should consider a law to provide some level of legal immunity to financial services companies that fix their own system, but are hurt by other companies'
failures.

It is only a draft, but "it will be welcomed by industry and opposed by lawyers," predicted Bob Cohen, vice president of communications at the Arlington, Va.-based Information Technology Association of America.

GNAT BITES MICROSOFT

Top Internet service providers are working hand-in-glove with Microsoft Corp. to steer consumers away from using browsers developed by Microsoft's archrival, Netscape Communications Corp., according to a survey by NetAction, a group based in San Francisco.

"Our survey found that only two of the 12 largest ISPs serving the consumer market give customers a choice of browsers with their start-up software," said NetAction's director, Audrie Krause. "This benefits Microsoft's bottom line, but it doesn't benefit consumers."

NetAction's survey can be found at http://www.netaction.org/msoft/

browsers.html. To counteract Microsoft's predatory policies, NetAction urged consumers to join a Sept. 15 lobbying effort in Congress.

INFOTECH HELPS DRIVE ECONOMIC BOOM

Information technology is the third most significant factor that business leaders attribute to current economic growth, according to a survey by the Technometrica Institute of Policy and Politics, based in Los Angeles.

The institute conducted the poll for Investor's Business Daily. The current period of economic expansion is the third longest since World War II.

Business leaders surveyed picked productivity as the most significant factor for the growth, followed by Federal Reserve policies. Further, a whopping 93 percent of the executives see the economy growing through 1998.


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