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In Business This Week: HEADLINER: GEORGE CONRADES

INTERNET COUP

Before George Conrades took over as CEO and president of BBN, he rose to a top spot at IBM on the strength of his sales skills. That salesmanship has paid off: On May 6, Conrades inked a deal to sell the Internet pioneer to GTE, which is pushing into new telecom markets. The price: $616 million.

Since joining BBN in 1994, Conrades has turned the company into an Internet star--selling noncore businesses and providing reliable, high-speed Internet "backbones" to big companies. But heavy investments in the BBN network have kept the company from turning a profit, though. "Conrades has moved the ball, but he hasn't scored a touchdown," says David Goodtree, of Forrester Research.

The deal with GTE could pose problems with AT&T, a major BBN customer. Once the deal with the AT&T rival is complete, that business could go away. But Conrades will come out on top: He holds stock and options amounting to 2.6% of BBN. They're worth around $16 million at the proposed acquisition price of $29 a share. Not bad for three years' work.EDITED BY KELLEY HOLLAND By Paul JudgeReturn to top

RECORD COMPANIES IN CAHOOTS?

WHAT KEEPS THE PRICE OF music disks so high? The Federal Trade Commission has launched a preliminary antitrust investigation of six large recording companies, including Thorn EMI, Time Warner, Sony, Polygram, Bertelsmann, and MCA, say sources close to the inquiry. An attorney for EMI confirmed that the company received a letter from the FTC asking it to retain information pertinent to an FTC inquiry. At issue: whether the companies are withholding large blocks of advertising funds from retailers that price compact disks below suggested prices. Under the law, manufacturers can require retailers to advertise minimum prices for products in return for "co-op" advertising dollars, but they're not allowed to interfere with advertising that the manufacturers don't fund.EDITED BY KELLEY HOLLANDReturn to top

PHONE SUBSIDIES GET AN OVERHAUL

A CHANGING UNIVERSE: ON May 7, the Federal Communications Commission finally issued long-awaited rules on universal service, the system of subsidies that keeps local phone rates low in rural markets. The new system provides an additional $2.25 billion annually to finance inexpensive Internet access for schools and libraries and provide $400 million for discounts for rural health-care providers. As part of the overhaul, the FCC plans to cut the access fees long-distance providers pay to local phone companies for use of the local network by $1.7 billion. Look for local phone companies to go to court and try to block that cut. EDITED BY KELLEY HOLLANDReturn to top

U.S. SHOE PINCHES NINE WEST

NINE WEST GROUP IS HAVING to do some fancy footwork to shore up the confidence of its investors. On May 6, the shoe company disclosed that the Securities & Exchange Commission is investigating how it books revenues. That sent Nine West's shares plummeting 18%, to 32 1/2, before trading was halted. Robert Galvin, Nine West's chief financial officer, says that most of the investigation relates to accounting policies at U.S. Shoe, a rival Nine West acquired for $600 million in May, 1995, and he doesn't expect it to affect earnings. That cheered investors some. The stock recovered, to 34 1/8, on May 7. EDITED BY KELLEY HOLLANDReturn to top


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