Spam war too big for Microsoft to fight alone

One of the most profitable Internet business models is a direct marketing tactic expected to cost U.S. companies billions this year. The worldwide problem is so expensive that even cash-rich Microsoft Corp. has thrown down the gauntlet by coordinating with law enforcement agencies and organizing a détente with competitors to fight the intrusive culprit — e-mail spam.

Microsoft says it needs outside help to prevent unwanted e-mail from driving

BY DAVID SPEAKMAN

One of the most profitable Internet business models is a direct marketing tactic expected to cost U.S. companies billions this year. The worldwide problem is so expensive that even cash-rich Microsoft Corp. has thrown down the gauntlet by coordinating with law enforcement agencies and organizing a détente with competitors to fight the intrusive culprit — e-mail spam.

Microsoft says it needs outside help to prevent unwanted e-mail from driving away its e-mail customers. A key ally is San Francisco software company Brightmail Inc., which recently inked a deal with Redmond, Wash.-based company to filter spam from Microsoft’s MSN Hotmail service.

Thirty percent of incoming e-mail to Internet service providers (ISP) is spam, and between 15 and 20 percent of corporate e-mail is spam, according to Ferris Research of San Francisco. Spam will cost U.S. companies $10 billion this year, says Ferris. That’s 20 times the price to rebuild the World Trade Center.

“Spam consumes computing resources, e-mail administrator and helpdesk personnel time and reduces workers’ productivity,” states a recent Ferris research report. “Despite the increasing deployment of antispam services and technology, the number of spam messages, and their size, is continuing to grow.”

Spam messages aren’t limited to text and links to Web pages. These days many spammers include graphic attachments and interactive audio and video presentations in their unsolicited e-mails. Those big attachments choke Internet bandwidth. Brightmail estimates spam accounts for about 41 percent of all global Internet traffic, making it by far Web’s the largest single use.

“Historically, Microsoft has redirected spam to a junk-mail folder in a user’s Hotmail account,” says Brightmail spokesman François Lavaste.

The problem has become so enormous that Microsoft stopped being passive and turned to Brightmail for help stopping spam from polluting its MSN service, he says. Hotmail also caps the number of “blocked” spam e-mail addresses at 250 — meaning users can block the first 250 and after that they’re out of luck.

“Microsoft is working on many fronts to help address the growing problem of spam for consumers,” the company declared in a written statement to Biz Ink. “This includes ongoing technological innovations, intensifying our efforts to cooperate with other ISPs in fighting spam, and working with [the] government to enforce current anti-spam laws.”

MSN’s arch rival, America Online ISP, relies on in-house software to block about 780 million spam messages a day — more than half the daily 1.46 billion incoming e-mails AOL processes.

“I get spam too, and I’m as fed up with it as all of our members are,” says Jonathan Miller, CEO of the America Online ISP, in a press statement addressing AOL’s antispam effort. “I, too, have become outraged by the tide of spam that’s drowning the legitimate e-mail I want to get.”

As much as 15 percent of each America Online monthly subscribers’ bill are costs associated with spam, according to past reports by AOL, which is owned by AOL Time Warner Inc. of New York.

Yahoo Inc. of Sunnyvale is also going it alone against spammers with its SpamGuard filtering software, launched in 1999.

“Yahoo continues to make headway in our fight against spammers who are infiltrating in-boxes with intrusive spam e-mail,” says spokeswoman Mary Osako.

By going it alone, AOL and Yahoo are in the minority. Brightmail claims six of the 10 largest Internet companies as clients.

“ISPs turn to Brightmail to keep up on the arms race with spammers,” Brightmail’s Lavaste says. “Our software has to adjust itself dynamically every 10 minutes because spammers constantly adapt to get through filters.”

Spammers are extremely persistent because they receive an attractive return on investment. On average, only one out of 100,000 people who receive a spam e-mail must respond for the marketing tactic to make money, Microsoft says.

While spammers are fattening their bank accounts, spam’s cost to society is so high that even the traditional junk mail and telemarketing industries are lobbying the U.S. Congress to act against unsolicted e-mail.

The Direct Marketing Association (DMA) is urging federal lawmakers to re-introduce the Anti-Spamming Act to create uniform, federal laws restricting e-mail spam. The bill (HR1017) failed to pass last year. If approved, it would replace a crazy quilt of state laws regulating e-mail spam.

California state Sen. Debra Bowen, D-Marina Del Rey, seeks support for legislation to strengthen the state’s anti-spam laws by allowing consumers to sue spammers $500 for each unwanted e-mail received.

Part of DMA’s motivation for a uniform, federal law levying heavy fines — as much as $11,000 for each unsolicited spam e-mail message sent — is to keep spammers from giving legitimate, direct marketing a reputation worse than it already has for filling mail boxes with junk mail offers and catalogs.

In the war against e-mail spam, U.S. Rep. Zoe Lofgren, D-San Jose, says she plans to introduce antispam legislation later this year.

Menlo Park RBC presence to grow

RBC Capital Markets says it is pulling the plug on some of its investment banking operations in Minneapolis and plans to move staff closer to the action in New York and Menlo Park. RBC, which is owned by Toronto-based Royal Bank of Canada, says it wants to position itself as a bigger player on the coasts.

Although the company is keeping mum on the specifics, RBC recently told employees the move

RBC Capital Markets says it is pulling the plug on some of its investment banking operations in Minneapolis and plans to move staff closer to the action in New York and Menlo Park. RBC, which is owned by Toronto-based Royal Bank of Canada, says it wants to position itself as a bigger player on the coasts.

Although the company is keeping mum on the specifics, RBC recently told employees the move is not about job cuts, but about moving professionals out of the Midwest toward the East and West Coasts. Its San Jose office will remain open.

RBC vows to keep a sizable Minnesota presence; current Twin Cities facilities were acquired when the company bought Dain Rauscher Inc. in 2001. RBC has been beefing up its California operations for years, including buying San Francisco-based Sutro & Co. last year.

Wells Fargo’s mortgage unit shrugs off state threat

A two-year battle has California regulators trying to hobble the nation’s largest mortgage lender by revoking its residential-lending license.

In a legal tiff, labeled by Wall Street analysts and Wells Fargo & Co. of San Francisco as a bunch of hot air out of Sacramento, California’s Department of Corporations charges the bank’s home mortgage unit illegally stiffed its customers with unnecessary charges.

“Department of Corporations examiners discovered that Wells Fargo

BY DAVID SPEAKMAN

A two-year battle has California regulators trying to hobble the nation’s largest mortgage lender by revoking its residential-lending license.

In a legal tiff, labeled by Wall Street analysts and Wells Fargo & Co. of San Francisco as a bunch of hot air out of Sacramento, California’s Department of Corporations charges the bank’s home mortgage unit illegally stiffed its customers with unnecessary charges.

“Department of Corporations examiners discovered that Wells Fargo Home Mortgage was making charges not allowed in California” under the state’s Truth in Lending Act, COD commissioner Demetrios Boutris said in a written statement.

As a national lender, Wells Fargo says it is regulated by the federal government, not California, and has filed a lawsuit in federal court seeking to strike down the state’s law. It will be heard March 10.

At issue is California’s mortgage lending law, which differs from federal regulations and laws in the 49 other states on exactly when a lender can start charging interest.

“California law prohibits the charging of interest more than a day before the mortgage is recorded,” says Wells Fargo Home Mortgage CEO Pete Wissinger.

Wall Street analysts believe California’s law is headed for the legal dustbin.

“The most likely outcome would be for the federal court to rule that federal regulations pre-empt state regulations, especially since it has done so in the past,” says Lehman Brothers analyst Jason Goldberg.

In a December 2002 federal court ruling, Wells Fargo successfully fought to have California’s automatic teller machine (ATM) surcharge laws struck down.

“As we all know, banks still charge ATM fees,” Goldberg says.

Bear Stearns analyst David Hilder says Wells Fargo knows what it is doing.

“We continue to view Wells Fargo as one of the best-managed banks,” he says, noting Des Moines, Iowa-based Wells Fargo Home Mortgage is nationally chartered, not California state-chartered.

Its national charter, Wells Fargo’s Wissinger says, is proof the California license threat holds no legal ground.

Expanding bank steers clear of Silicon Valley

Humboldt Bancorp is aiming to become a major player in community banking in Northern California beyond its Eureka roots, but don’t expect a face-off with Silicon Valley’s monster banks.

To pay for expansion, the company plans to sell lucrative, non-core businesses. Humboldt says it may be able to grow by opening branches or acquiring other banks.

Humbolt’s strategy is to let the big banks fight over the Bay Area while

BY DAVID SPEAKMAN

Humboldt Bancorp is aiming to become a major player in community banking in Northern California beyond its Eureka roots, but don’t expect a face-off with Silicon Valley’s monster banks.

To pay for expansion, the company plans to sell lucrative, non-core businesses. Humboldt says it may be able to grow by opening branches or acquiring other banks.

Humbolt’s strategy is to let the big banks fight over the Bay Area while it focuses on rural areas and second-tier cities. With nearly $1 billion in assets, the company is dwarfed by behemoths such as Bank of America, Wells Fargo and Citibank. It even runs a distant second to larger community banks such as Greater Bay Bancorp of Palo Alto, which boasts assets of nearly $8 billion.

Humboldt CFO Pat Rusnak says Humbolt plans to become a major force in community banking with a footprint that stretches from the Oregon border to Fresno.

“But we have [left] the East Bay and South Bay out of that vision,” he says.

Humboldt, which also operates banks under the names Capitol Valley Bank and Tehama Bank, has a minor Bay Area presence with one Capitol Valley branch in Napa.

Rusnak said Napa is as far south as his bank plans to operate along the Interstate 101 corridor, saying more lucrative territory lies in Central Valley cities such as Stockton, Modesto and Merced.

“We have plenty of opportunity to grow our franchise along Interstate 5 between Sacramento and Fresno,” he says.

Tim Rogers, chief economist with Briefing.com in Chicago, says Humboldt is smart to focus on geographic areas the big banks may view as an afterthought.

“With the banking consolidation, smaller banks can’t compete in the same market with big banks, which dominate with the convenience of location for consumers,” he says.

According to banking industry mergers and acquisitions tracker, Charlottesville, Va.-based SNL Financial, there were 213 banking mergers in 2002 compared with 261 in 2001. The biggest deal was last November’s $5.8 billion merger of Citigroup and Golden State in California.

But Humboldt doesn’t have that amount of cash and may not be able to grow organically in the Bay Area.

“I don’t think they can finance themselves as cheaply as the monster banks,” says Briefing.com’s Rogers.

Humbolt may succeed by looking for openings in all the right places.

Venture capital fund raising at seven-year low

Although Silicon Valley still grabs the lion’s share of startup money, a new study shows venture capital investment nationwide continues to lose steam.

San Francisco-based private equity watcher VentureOne says third-quarter venture investment fund-raising of $1.2 billion was at its lowest level since the second quarter of 1995 when only $520 million was raised.

VentureOne says less money was raised because funds are investing less in startups.

“That fund-raising drop is

BY DAVID SPEAKMAN

Although Silicon Valley still grabs the lion’s share of startup money, a new study shows venture capital investment nationwide continues to lose steam.

San Francisco-based private equity watcher VentureOne says third-quarter venture investment fund-raising of $1.2 billion was at its lowest level since the second quarter of 1995 when only $520 million was raised.

VentureOne says less money was raised because funds are investing less in startups.

“That fund-raising drop is not due to a lack of capital,” says John Gabbert, VentureOne’s vice president of worldwide research. “There is still a tremendous amount of money available.”

He says there are many healthy VC funds sitting on billions of dollars and that will affect Silicon Valley.

As in the past, “a good portion of the funding — about 51 percent — goes to Silicon Valley and California,” Gabbert says. But those investment dollars are shrinking.

On thing possibly spooking new investment is that valuations of existing venture-backed companies seeking additional funding continued to fall in the third quarter.

VentureOne says the median pre-money valuation of such firms was about $10 million — a drop of $1 million in three months. Those are levels not seen since 1996.

With these figures, it’s not hard to understand why funds would rather keep their equity in money markets than investing in businesses where on average first and second round investments are losing value.

“It’s a terrible climate,” says Tim Williams, CEO of Somerset, N.J.-based storage technology maker Tacit Networks, which plans to market its products to Santa Clara’s Hitachi Data Systems and Palo Alto-based Hewlett-Packard Co.

“It was hard to find investors,” Williams said after Tacit closed a $7.3 million first round of funding Dec. 9, “but those [VC firms] that did invest made their decisions fast.”

“I think it’s fair to say the long-term impact hasn’t been realized yet,” Gabbert says.

“As the decline of funding sets in and fewer startups receive financing,” he says, “it will have a ripple effect on the region — especially for an economy that relies heavily upon business and innovations from early stage and new tech companies.”

Gabbert says the current drop in median first and secondary rounds of financing is hitting most companies — even successful companies with solid business models.

That, he says, could mean fewer Bay Area jobs as companies with good, vigorous ideas are being stunted like bonsai trees.

Perot snares 4,600 local signatures

Local Ross Perot supporters collected thousands of signatures in a grass roots effort to put the independent candidate on Indiana’s fall election ballot.

“We collected over 1,500 signatures in the first day,” said Carolyn Wenz, Perot’s Delaware County Coordinator. “During the two weeks we were out, we collected 4,600

(Ball State Daily News – Page 2 – May 14, 1992)

Texas billionaire expected to be on Hoosier fall ballot

By DAVID SPEAKMAN
Staff Writer

Local Ross Perot supporters collected thousands of signatures in a grass roots effort to put the independent candidate on Indiana’s fall election ballot.

“We collected over 1,500 signatures in the first day,” said Carolyn Wenz, Perot’s Delaware County Coordinator. “During the two weeks we were out, we collected 4,600 signatures total.”

To qualify for the Indiana ballot, candidates must collect 29,919 signatures. “Now I believe we are over (the required number of signatures),” Wenz said.

Wenz, a one-time presidential campaign coordinator for Robert Kennedy in 1968, said the country is at a crucial moment. “We are at a crossroads – a make-or-break moment. If this man gets in the White House, we will change the course of history.”

Wenz is not alone in her assessment of the political scene. “The Republicans and the Democrats don’t know how to run the country. It wouldn’t hurt to give Perot a chance,” said Jean Thurman, office manager at WBST radio.

Thurman explained why she signed Perot’s petition. “I didn’t like any of the other candidates. But I did like how Ross Perot came from a poor background and established his business,” she said.

“The choice we have between Bush and Clinton is pathetic,” said Wenz.

“George Bush has forgotten middle America.” Wenz pointed to Bush’s cut of the luxury tax on yachts. “That tax cut really helped me out.”

“Bill Clinton lost his credibility when he said he smoked marijuana and then claimed he never inhaled,” she said. “Yeah, right.”

While many political pundits are writing Perot off as a protest candidate, his supporters say otherwise. “He has a definite chance to win, and I’m not saying that just because I’m working for him,” said Wenz.

“As the summer goes on, Bush will continue to sink in popularity and Clinton will fade away,” Wenz said. “Ross Perot is popular right now and a lot of people don’t even know who he is.”

“Look at the polls,” she said. “He hasn’t officially announced his candidacy and he is winning in Texas and California.

Coming to America

Every year hundreds of thousands of undocumented immigrants make the perilous trek across the U.S.-Mexican border, risking arrest, detention and the threat of abuse as they seek refuge and a new life in the north.

According to David Davis of Ball State University’s minority development, the immigration will have a radical impact on the structure of American society. He said that by the turn

By DAVID SPEAKMAN
For The Muncie Star, page T-15

Every year hundreds of thousands of undocumented immigrants make the perilous trek across the U.S.-Mexican border, risking arrest, detention and the threat of abuse as they seek refuge and a new life in the north.

According to David Davis of Ball State University’s minority development, the immigration will have a radical impact on the structure of American society. He said that by the turn of the century English will be the second language of the majority of Californians. Added to that are projections that within the next century white Americans will become the new minority.

This week, WBST will devote a series of special reports to chronicling the flow of those immigrants into the United States, focusing on the effects of the 1986 Immigration Act, which was designed to solve the immigration debate once and for all.

The stories – which coincide with the fourth anniversary of IRCA becoming law – started Saturday and will continue Monday through next Saturday on Morning Edition and Weekend Edition.

At 8 p.,. Saturday, Weekend Edition host Scott Simon takes listeners to the San Diego-Tijuana border, where the largest number of undocumented immigrants cross into North America from Mexico and Central America each day.

“We have wanted to do stories on the border for some time because who can cross and who cannot tells a great deal about how we define America,” Simon said. “By reporting it from the perspective of people who break a fence, dodge trucks, swim through raw sewage and risk assault and robbery from thugs to get here, we saw the relationship between the immigrants and the INS from a different vantage entirely.”

“We witnessed the tensions firsthand, and found there are no easy solutions to the border issue.” said Mandalit del Barco, who produced the Weekend Edition reports. “We kept hearing about how ironic it is that while the walls come tumbling down all over Europe, they’re being built up more and more between the U.S. and Mexico.

At 6 a.m. Monday, Morning Edition host Bob Edwards will begin to examine the ramifications of the passage of IRCA.

  • MONDAY – When IRCA was enacted 4 years ago, 3 million immigrants became eligible for amnesty. In this first Morning Edition piece, NPR reporter Celeste Wesson reports on where those people are today and what their new found legal status has meant to them.
  • TUESDAY – NPR’s Katie Davis reports from Mexico on “The push factor,” the economic conditions in Mexico that force many Central and South Americans across the border in search of better wages and living conditions in the north.
  • WEDNESDAY – NPR’s Isabel Alegria reports from San Francisco on whether or not IRCA has created a deep underclass of those still-undocumented immigrants who have fallen through America’s safety net.
  • THURSDAY – Celeste Wesson reports on how U.S. businesses have been effected by IRCA, which for the first time made it illegal for employers to knowingly hire undocumented workers.
  • Friday – NPR’s Paz Chohen interviews lawmakers, proponents and opponents of expanded immigration, in a report from the nation’s capital on the failure direction of U.S. immigration policy.

“Some have benefited from legalization,” said Wesson of IRCA ramifications, “but, for example, among farm workers legalization hasn’t translated into better working conditions and higher wages.” Wesson visits a north San Diego camp where farm workers – many of whom are documented – live in the woods, in shacks made of plastic scraps.

Wesson says that when the law was passed, employers geared up to face sudden employee shortages and the need to pay a lot more for workers.

Celebrating Copland

Wednesday is Aaron Copland Day at WBST. In honor of his 90th birthday, a special tribute is being paid to one of America’s most beloved composers.

Starting at 1 p.m. on A Copland Celebration: A Keyboard Tribute, pianist Claudia Stevens of the College of William and Mary in Virginia performs a program of piano works by and in tribute to Copland.

The concert also features the works of Virgil Thompson, Leonard Bernstein, David Diamond, Richard Bales, Sheila Silver and Claudia Stevens.

A Copland Celebration: A Concert Band Tribute continues the Copland extravaganza with the united States Coast Guard Band, which will perform original Copland works and transcriptions for band.

Scheduled highlights include a performance of A Lincoln Portrait narrated by Walter Cronkite and Emblems, Copland’s only pure band work.

Adventures in Good Music with Karl Haas adds to the tribute at 7 p.m. A Tribute to Aaron Copland underlines why the composer is considered the dean of American Music.

The birthday bash reaches its climax at 8 p.m. with A Concert in Celebration of Aaron Copland’s 90th Birthday. This is a live broadcast of Minnesota’s Saint Paul Chamber Orchestra.

The Orchestra, under the direction of Peter Bay, will perform Copland’s Music for the Theatre, Quiet Cry, Three Latin American Sketches and Appalachian Spring.

David Speakman is a communications intern for WBST.