FROM THE EDITOR'S DESK

Old Dogs, New Tricks<@VM>Techtoon

Trish Williams

All eyes are now on Arthur Johnson and Lockheed Martin Corp., as the $26 billion systems integrator tries to split off its state and local IT services and commercial businesses into a separate organization and "unlock" their value.

As Washington Technology Staff Writer Nick Wakeman notes in a front-page story on the integrator's Sept. 27 restructuring, Johnson's marching orders are to find the joint ventures, strategic partnerships or spinoff opportunities that can unlock the value in these fast-growing markets.

Both the company's state and local and commercial businesses have been growing at better than 20 percent a year for Lockheed Martin.

Most investors apparently are taking a wait-and-see approach. But the company's stock price, which has been buffeted by problems in its aerospace business, moved little with the news of the restructuring. One leading analyst tells Wakeman that is likely to continue until "people see some real results."

Another front-page story in this issue shows just how controversial Internet tax policy can be, even among members of the same party. Utah Gov. Mike Leavitt (R) told Washington Technology Staff Writer Steve LeSueur that he opposes legislation introduced last month by Republican presidential hopeful Sen. John McCain to permanently ban new Internet sales taxes.

Leavitt called McCain's bill a "radical departure" from American tradition that allows state and local governments to set their own tax policies. Leavitt chairs the influential National Governors' Association, which has established a task force that is trying to come up with a simplified scheme for taxing Internet transactions that does not put a burden on the businesses collecting those taxes.

At the same time, Virginia Gov. James Gilmore (R), who chairs a federal commission wrestling with Internet tax policy, sees no fundamental problems with the McCain plan.

Gilmore said McCain's legislation, like proposals on all sides of the issue, should be seriously considered by the Advisory Commission on Electronic Commerce, which is slated to deliver its report to Congress in April 2000.

Interestingly, both Gilmore and Leavitt are optimistic that a reasonable approach can be found.

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