On the Net

HOUSE OK'S NEW INTERNET CHILD-PORN BAN

The House of Representatives on Tuesday overwhelmingly passed another attempt to update Internet child-porn laws. By a vote of 413-8, the House passed a bill that would outlaw pornographic digital images of children unless they were proven to be computer-generated simulations that did not portray actual underage sex. "Children are the most vulnerable among us," said bill sponsor Lamar Smith, R-Texas, "and their vulnerability increases when child pornographers are free to ply their trade." The U.S. Supreme Court struck down a similar law on free-speech grounds in April, saying it was too broadly written and could outlaw mainstream films like "Traffic" and "Romeo and Juliet" that use adult actors to portray teenage sex. "This legislation closes the door left open by the Supreme Court's ruling," Smith said. "Child pornography on the Web is a tool for pedophiles. Take away the tool and you take away their ability to victimize children." Rep. Mark Foley, R-Fla., a bill co-sponsor, said it was time to unshackle prosecutors so they could protect "our children." But Rep. Bobby Scott, D-Va., predicted the new bill would not survive a courtroom challenge.

PALM REPORTS 4TH QTR LOSS

Palm Inc., the No. 1 maker of handheld computers, said it reported a fiscal fourth quarter loss as consumer demand for pocket-sized digital organizers continued to decline. The Santa Clara, Calif., company said its net loss, as measured by Generally Accepted Accounting Principals, was $27 million, or 5 cents per share, compared to a net loss of $392 million, or 69 cents per share, for the same period a year ago. Before costs related to inventory, restructuring and other items, Palm's net loss was $18 million, or 3 cents a share. After the company warned last month of weaker-than-expected sales, analysts dropped their expectations to $230.8 million in revenue and a loss of 3 cents per shares, according to a survey by Thomson Financial/First Call. The company said revenues for the quarter totaled $233 million, up 41 percent from the $165 million for the comparable period last year. "Palm executed quite well in a down market," said Eric Benhamou, Palm chairman and chief executive officer. "Over the quarter, our pro forma gross margins grew to nearly 35 percent, we generated positive cash flow from operations, and channel inventory remained within our desired range."

GE TO SELL B2B UNIT

General Electric Co. is selling Global Exchange Services, its business-to-business e-commerce unit, for about $800 million to Francisco Partners, according to a joint statement. The unit helps businesses complete paperwork through the Internet. "It's a good business, but it's not really central to our core strategy," David Frail, a GE spokesman, told The Washington Post. The firm, with about 1,700 employees, will continue to be based in Gaithersburg, Md., and will be run by its current management team. Francisco Partners, of Menlo Park, Cali., a firm with $2.5 billion in committed capital, is focused on late-stage investments that allow high-technology units of larger corporations to be spun off. Last year, GXS posted an operating profit of $167 million, according to GE's 2001 financial report. GXS will be known as Global Exchange Services, Inc., when the acquisition is complete.

HOTELS.COM TO REVIEW USA BID

Hotels.com has formed a committee to review a bid by majority owner USA Interactive buy 100 percent of the company's shares. USA Interactive, which owns about 65 percent of Hotels.com, on June 3 announced a combined $4.5 billion for the minority shares of Expedia, Hotels.com and Ticketmaster. The committee hired Lazard as its investment banker, and will consult with law firms Akin, Gump, Strauss, Hauer & Feld and Potter Anderson & Corroon. The company provides hotel-room discounts online. Separately, Hotels.com announced a long-term partnership with Continental Airlines. When Continental confirms reservations, the airline will refer customers to Hotels.com on an automated basis. Terms of the deal were not disclosed.

LOUDEYE TO CUT JOBS, CFO

Loudeye Corp., maker of software to broadcast audio and video over the Internet, will cut about 37 percent of its work force, including its chief financial officer, and is reducing its executive pay to reduce expenses by more than $10.2 million annually. The reductions will cost about $1.7 million in the second quarter, the company said. Loudeye will be left with about 130 employees in its Seattle headquarters, New York and Los Angeles. Loudeye executives agreed to a 10 percent pay cut. Controller Jerry Goade will be interim CFO, replacing Brad Berg, the company said. Berg joined Loudeye in October 2000.

MSNBC.COM NAMES INTERIM EDITOR

MSNBC.com has named Michael Silberman acting editor in chief of the news site, succeeding Merrill Brown, who earlier this month announced plans to step down. Brown helped launch the popular Web site in 1996. Silberman will be editor in chief until a permanent replacement is found. Previously, he was the site's managing editor. In a statement, Neil Shapiro said, "NBC and Microsoft are actively searching for the next editor in chief, looking at both internal and external candidates."

CNP ACQUIRES "LA.COM"

The California Newspapers Partnership, which includes Media News Group, Gannett Co. and Stephens Media Group, has acquired the Internet domain name "la.com." The terms of the deal were not released. The partnership operates 21 daily newspapers in California with a combined circulation in excess of 600,000. In a brief statement, Gerry Grilly, president of CNP, said the domain name was acquired from David Ezra and Marty Mizrahi of Las Vegas. "We expect to launch an exciting new site encompassing the partnership's newspapers and a variety of strategic community and travel partners later this year," said Grilly. Until the new site is launched, the site will feature content from the partnership's daily papers in Southern California.

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