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Airline Prenuptials, Cisco Skids
February 7, 2008
NEWS AT A GLANCE
Airline merger talks heat up
Merger talks between Delta Air Lines and Northwest Airlines could result in a deal as soon as next week, according to newspaper reports, and that could spur a merger between United Airlines and Continental. (The New York Times, free registration) Northwest has a “golden share” in Continental that gives it veto power over any merger, but it would sell back that stake if it combines with Delta, leaving Continental free to seek its own deal. Rising fuel prices, a slowing economy, and the greater chance of regulatory approval in the Bush administration are all cited as factors pushing the mergers. (The Wall Street Journal)
Cisco meets targets, lowers outlook
Tech bellwether Cisco Systems, the top maker of computer networking equipment, forecast a lower-than-expected 10 percent rise in revenue for the current quarter, sending its shares down more than 8 percent in extended trading. Wall Street was expecting a 15 percent rise. (Reuters) CEO John Chambers said a slowdown in U.S. business spending is spreading to Europe. “The weakness they see likely has to catch up with everybody” in the tech sector, said John Krause at Thrivent Financial for Lutherans. (Bloomberg) Cisco also reported that profits for the previous quarter rose 7.2 percent, to $2.1 billion, in line with expectations. (USA Today)
AOL to be split in two
Time Warner said it is splitting AOL into two businesses, separating the sickly dial-up Internet access and the healthier ad-supported Internet portal. The plan, announced by new CEO Jeffrey Bewkes, could open the way to selling off one or both units. (MarketWatch) Google is a potential bidder for the portal business, analysts say, to better compete against a Yahoo!-Microsoft behemoth. “Google is very much a techie site, and AOL has more consumer-friendly editorial,” said Shahid Khan at IBB Consulting. (BusinessWeek.com) Bewkes also said Time Warner might sell off its cable business and fold New Line Cinema into the larger Warner Brothers movie studio. (Reuters)
Seeking a line on searching laptops
An increase in the search of laptops and other electronic devices at U.S. customs checkpoints has prompted businesses to revisit their travel policies, with some even requiring employees to erase company hard drives before flying abroad. It has also spawned lawsuits seeking clarity on how much privacy travelers have over their electronic property. The government argues that customs agents can search your hard drive with the same freedom they search your suitcase. Some legal experts disagree. “What a laptop records is as personal as a diary but much more extensive,” says Georgetown law professor David Cole. (The Washington Post, free registration)
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