Group Calls Smut Filters Faulty

Teligent Offerings Raise Eyebrows


Teligent photo

Alex Mandl,
Teligent CEO

Teligent Inc., the Vienna, Va.-based telecommunications start-up headed by former AT&T president Alex Mandl, made a graceful debut on the public markets Nov. 21. The stock closed on Nov. 28 at $25.63, giving the company a market capitalization of $1.3 billion.

The company, which is in the process of building a telephone and Internet service that runs on antennae rather than fiber, sold 5.5 million shares of common stock on the Nasdaq National Market for $21.50 a share - its original target price was between $18 and $20.

Concurrently, Teligent collected $300 million through a high-yield debt offering. The company originally was to collect $400 million. But poor debt market conditions forced the company to scale the offering back. The 10-year bonds were priced with a yield of 11.5 percent.

Mandl, who left the second spot at AT&T last year for Teligent, was perhaps the biggest winner with the initial public offering. His stake in the company is now valued at $25 million, and he has options to buy almost 5 million more shares over the next five years for $5.77 a share. At current market prices, those options are worth another $100 million.

IRIDIUM OPENS RESTON OFFICE

Iridium LLC, Washington, D.C., announced plans this week to open a new complex in Reston, Va. It will serve as the central processing point for the multibillion-dollar Iridium global communications network.

Iridium plans to spend $8 million over the next year on the center, including hiring 250 employees. Founded by Motorola Inc. in 1991, Iridium is developing a global wireless communications network of 66 low earth orbit satellites and land based systems. Service is expected to be available in 1998 via wireless telephones and pagers.

Virginia Gov. George Allen hailed the selection of Reston over competing sites in Maryland and Washington D.C.

"Iridium's fantastic investment further enhances Virginia's reputation as the technology capital of the East Coast and contributes mightily to our Silicon Dominion," Allen said.

AXENT TO BUY RAPTOR

Network security software company Axent Technologies Inc. in Rockville, Md., has agreed to buy Raptor Systems Inc., Waltham, Mass., a firewall vendor, for stock worth $250 million.

The new company will keep the Axent name. The deal terms call for Axent to trade four-fifths of a share for each outstanding Raptor share, issuing 12.8 million total shares.

DIGITAL'S GIVE-AWAY?

Digital Equipment Corp.'s network product business unit has been sold for $430 million to Cabletron Systems Inc., Rochester, N.H., in what one analyst called a near give-away.

Under the deal, Maynard, Mass.-based Digital and Cabletron will establish a partnership that includes a reseller and services contract and a product licensing agreement.

The sale fits with Digital's strategy of getting out of non-core businesses, said William Becklean, an analyst with Hancock Institutional Equity Services, Boston. "Digital practically gave [the unit] away," Becklean said.

For Cabletron, the price was right, and the company gets added scale, distribution channels and some new products, he said. The purchase is expected to boost Cabletron's revenues to $2 billion.

The new unit will be called Digital Network Products Group: A Cabletron Systems Company. Digital and Cabletron will work together to develop and market new products. Cabletron will make and sell some products under the Digital brand name.

EDS BAILS OUTO UNEMPLOYED WORKERS, BEEFS UP JAPANESE STRATEGY

Electronic Data Systems Corp., Plano, Texas, is in negotiations to hire 600 people from the computer services division of Yamaichi Securities Co., a Tokyo brokerage firm that was shut down on Nov. 24 following a drastic Tokyo stock market fall and suggestions of illegal trading.

The workers - who range from engineers to salespeople - would be placed at a Japanese subsidiary of EDS, called EDS Japan, founded in 1986 that currently has 400 employees.

SANTA CRUZ FIRM DUMPS MICROSOFT

Following a European Commission decision Monday, the Santa Cruz Operation, Santa Cruz, Calif., has announced it will create a new version of Unix without using Microsoft technology.

The EU released SCO from a contract with Redmond, Wash.-based Microsoft Corp. that required SCO to include Microsoft code in versions of its Unix operating system and pay royalties to Microsoft for using that code. SCO filed the complaint with the EU in January 1997.

LOCKHEED MARTIN WINS RECORD FAA SUPPORT CONTRACT

Lockheed Martin Corp., Bethesda, Md., will begin work this spring on a $1 billion contract to provide technical and professional services for the Federal Aviation Administration.

The 10-year National Airspace System Implementation Support Contract is the agency's largest support award yet, FAA officials said. Lockheed Martin beat out tiny Washington Consulting Group, a $50 million a year integration firm in Bethesda, Md.

The Lockheed Martin team will provide about 1,000 workers to FAA headquarters, regional centers and field offices.

Team members include TRW Inc., Cleveland; Science Applications International Corp., San Diego; Arthur D. Little Inc., Cambridge, Mass.; Information Spectrum Inc., Cherry Hill, N.J.; LB&M Associates Inc., Lawton, Okla.; and Automated Information Management Inc., Lanham, Md.

V-CHIPS IN PERSONAL COMPUTERS

Industry and free-speech groups such as the American Civil Liberties Union are lobbying against a draft regulation that would require computer makers to install so-called V-chips in their products.

The draft regulation, prepared by the Federal Communications Commission, would require that PC makers install the V-chip technology - being developed by TV manufacturers under direction from Congress - into computers capable of viewing TV programs. The V-chip is intended to detect a special code attached to each TV program's broadcast signal showing whether it contains nudity, violence or foul language. Users could then program the V-chip to block the display of some or all of the TV programs.

In response, the Washington-based Information Technology Industry Council says the FCC's draft rule should only apply to computers that come with built-in TV receivers. This would allow the computer to screen broadcast TV signals, without also having to screen images and other content drawn from the Internet.

COPYRIGHT THEFT

President Bill Clinton should veto the "No Electronic Theft Act" because it threatens the free flow of information and the long-standing legal doctrine of "Fair Use," according to several high-tech groups.

In a Nov. 25 letter to Clinton, the New York-based Association for Computing said the bill - which outlaws the not-for profit distribution of digital property such as software - will have a "negative impact on the rich scientific communications that have developed on the Internet in many fields, including computer science."

Other groups that oppose the measure include the Institute of Electrical and Electronics Engineers-USA and the American Library Association, based in Chicago. The legal "Fair Use" doctrine allows limited use of another's intellectual property, such as a paragraph from a book or a snippet from a video.

However, the bill is strongly supported by a bevy of industry groups, who fear that pirated software, data and other intellectual property would be widely disseminated, so cutting their sales.

Group Calls Smut Filters Faulty


File photo

Christine Varney,
partner, Hogan & Hartson

In their search for online porn, automated smut-filters block up to 99 percent of useful online content, according to a new study by the Washington-based Electronic Privacy Information Center.

The center announced the results of its survey as industry and government officials held a summit to tout measures - including smut-filters - that families can use to fend off online porn.

The conference, titled "Internet/Online Summit; Focus on Children," was chaired by Christine Varney, a former commissioner at the Federal Trade Commission and now a partner at the law firm of Hogan & Hartson, based in Washington. Varney's clients include Netscape Communications Corp., Mountain View, Calif.

The use of software smut filters is being pushed by industry, partly to persuade Congress not to impose further legal curbs on the dissemination of Internet smut.

In response, EPIC released its study, titled "Faulty Filters," which said that use of one filter blocked 99 percent of Web sites containing references to "Thomas Edison" or "American Red Cross." The study can be found at http://www2.epic.org/reports/ filter_report.html.


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