GartnerGroup: Y2K Problems Will Be Minor
STAMFORD, Conn. - GartnerGroup said it expects some year-2000 glitches in banking and other industries, but nothing catastrophic.The research company said that most problems will not arrive in the first weeks of the year, and that they will be easy to correct as they surface. Lou Marcoccio, research director, said Tuesday that the banking, transportation, and utilities industries have made "tremendous" progress.
"We believe banking is in exceptionally good shape and has been leading the pack all along in terms of compliance," he said. If problems do occur, Mr. Marcoccio said, they will be administrative or transactional issues that will occur after Jan. 3 or 4. "They will be isolated and of relatively low frequency."
In a Dec. 15 survey for Gartner of 1,500 people in the United States, 60% said they will withdraw extra money from banks before Dec. 31. About 70% said they planned to buy emergency items or food and 50% said they would buy gasoline.
Mr. Marcoccio said such countries as Russia, India, Pakistan, and Western Africa are behind the United States, United Kingdom, Australia, Canada, the Netherlands, Sweden, and Chile in fixing their software. The banking, airline, financial services, and pharmaceuticals industries are better prepared than worldwide government services, local town governments, and small companies in lagging countries, he said.
Software fixes have cost $300 billion to $600 billion worldwide and an estimated $150 billion to $225 billion in the United States, said Matthew Hotle, vice president of GartnerGroup's year-2000 research. Most companies have decided not to turn off their data centers this weekend "because the actual impact of changing the way they do business - by turning the 'off' switch - would be more harmful than maintaining the way they do business," Mr. Hotle said. However, he added that some companies are trying to prevent viruses by turning off Internet access. To date, Mr. Marcoccio said, about 30,000 virus threats have been made worldwide. "We don't know how many of these will be actual," he said.
- Carol Power
State St. to Take $57M Hit in Securities Sale
BOSTON - State Street Corp. said late Tuesday that it expects to record a pretax charge of $57 million, or 21 cents a share, in the fourth quarter as a result of a repositioning of its investment portfolio assets.In a press release Tuesday, State Street said it sold $5.2 billion of securities in the repositioning. A First Call survey of 12 analysts produced a mean earnings estimate of 73 cents a share for State Street's fourth quarter. A year earlier State Street earned $110.7 million, or 68 cents a diluted share.
- Dow Jones
Chase, Deutsche Picked for Junk Bond Sale
NEW YORK - Jostens Inc., a maker of school yearbooks and class rings, selected Chase Manhattan Corp. and Deutsche Bank AG to raise $895 million from bank loans and a junk bond sale.Proceeds will be used by Investcorp, a buyout firm based in Bahrain, in the Persian Gulf. Investcorp's offer of $950 million in cash and assumed debt was accepted by Minneapolis-based Jostens Tuesday.
Jostens plans to raise $635 million in long-term senior secured loans and $260 million in a short-term bridge loan to be repaid with proceeds of a junk bond sale next year, said bankers familiar with the company. Deutsche Bank AG has promised to provide the bridge loan and will manage the bond sale. Goldman, Sachs & Co. and Warburg Dillon Read are helping to arrange the senior secured loan.
The senior secured loans are divided into a $150 million six-year revolving credit, a $150 million six-year term loan, and a $335 million eight-year term loan. The bankers said the six-year loans will be sold to banks and the eight-year loan to nonbank investors such as insurance companies and pension funds.
Pricing on the six-year loan will begin at 300 basis points over the London interbank offered rate. A 350-basis-point spread over Libor is expected for the eight-year loan.
- Bloomberg News