Business Briefs

SAN MATEO (05/20/2000) - A $3 billion disk drive agreement between EMC Corp. and IBM Corp. fell victim last week to a settlement between the two companies in a patent infringement case. In March 1999, EMC agreed to purchase $3 billion worth of IBM disk drives for use in EMC Symmetrix products over a five-year period. But the deal dissolved as both EMC and IBM, in a joint statement last week, dismissed all claims and counterclaims relating to an unrelated patent infringement case. In the legal fallout, the original disk drive agreement was replaced with a standard contract bearing no monetary value, the companies said. Both companies agreed to a five-year moratorium on patent infringement lawsuits against one another.

Aiming to create an Internet company with a global reach, Madrid-based Internet service provider Terra Networks SA and Web portal provider Lycos Inc. last week agreed to merge in a stock-swap deal valued at $12.5 billion.

Under the terms of the agreement, which has been approved by the boards of directors of the two companies, the shareholders of Lycos will be offered $97.55 worth of Terra common stock in exchange for each Lycos share, Terra and Lycos officials said.

The executive committee of the board of Spanish telecommunications operator Telefnica, which owns about 67 percent of Terra, also has unanimously approved the agreement, the statement said.

Terra shareholders, including Telefnica, will own between 54 percent and 63 percent of the combined company, which will be called Terra Lycos, with Lycos shareholders owning the remaining 37 percent to 46 percent.

Terra and Lycos together currently have some 50 million unique Internet users and operations in 37 countries throughout North America, Latin America, Asia, and Europe, representatives of the companies said.

As part of the agreement, Terra Lycos has entered into a broad strategic relationship with German media company Bertelsmann. Building on an existing Lycos-Bertelsmann joint venture in Europe, Bertelsmann has agreed to a five-year advertising, placement, and integration services deal with Terra Lycos valued at $1 billion. Bertelsmann will remain a "significant" shareholder in Lycos Europe, officials said.

U.S. Senator Rick Santorum, a Republican from Pennsylvania, recently detailed his plans to introduce legislation that would give telecommuters a $500 tax credit for working at home.

Santorum said he will introduce the legislation to spur companies to let more employees work from home. The $500 credit could be used to cover expenses, including technology equipment necessary to furnish a home office, he said.

Santorum penned the National Telecommuting and Air Quality Act, which put in place a program to study the benefits of allowing employees to work from home.

Several companies have signaled support for Santorum's new Telework Tax Incentive Act, which provides for the $500 credit.

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