U.S. Firms Prepare For The Worst Of Y2K

[John Walker <jwalker@networx.on.ca>]

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U.S. Firms Prepare For The Worst Of Y2K

By Andrew Hay

http://dailynews.yahoo.com/headlines/tc/story.html?s=v/nm/19990104/tc/
corporate_2.html

NEW YORK (Reuters) - The new millennium and its much-anticipated
computer bug is still a year away but many U.S. companies are
already throwing in the towel.

They admit they won't be ready.

Companies are beginning to make such frank statements on Y2K risks
to cover themselves against possible securities litigation, analysts
said. The statements also provide ammunition for their own suits.

Companies such as Chevron Corp. (NYSE:CHV - news) and AT&T Corp.
(NYSE:T - news) say their systems may be vulnerable to significant
failures as they grapple with the Year 2000 date change. McDonald's
Corp. (NYSE:MCD - news) and DuPont Co. are more confident their
machines can handle the date change. They are less sure about those
of suppliers and local governments.

The Year 2000 problem arises in computers systems that record only
the last two digits of a year, raising the possibility they could
mistake the year 2000 for 1900, for example. The glitch could confuse
computers and microchips embedded in machines, causing them to spit
out bad data or not work at all.

With Year 2000 errors putting profits at risk, industry consultants
report companies doubling or tripling spending to ensure key systems
are Y2K compliant and insulated from outside failures.

``The fundamental cost of Y2K is the risk of business
interruption,'' said Jeff Ray, a vice president at Compuware Corp.
(Nasdaq:CPWR - news), a leading software testing company.

Companies have still not done most of the tedious and costly work to
fix Year 2000 computer bugs.

``It appears that over half the work will be crammed into 1999,''
said Steven Hock, chief executive of research company Triaxsys
Research LLC.

Of the 500 largest U.S. companies, 70 percent have been reporting in
Securities and Exchange Commission filings on their progress with
the Y2K bug. As of the end of September, those companies had spent 42
percent of their year 2000 budgets, according to a report by
Triaxsys.

At that rate, the Missoula, Mont. company estimates many companies
will fall short of fixing all their computers and machines by the
Year 2000.

As companies realize they and their partners may not achieve full
compliance, they are planning back-up systems and looking for
alternate vendors.

Coca-Cola Co. has contingency plans for the failure of power, water
and phone systems. They include stockpiling raw and packaged
materials, increasing inventory levels and securing alternate supply
sources.

McDonald's and DuPont are developing plans to handle problems that
may arise if a number of vendors do not fix their computer bugs.

While some companies devise contingency plans, others are still
wrestling with modifications to their own systems. The
technologically complex telecommunications sector ranks dead last
among all other industries in progress toward completion of Y2K
projects, according to Triaxsys. Also behind are the utilities
industry and the energy sector.

Industries leading the race are banking, securities and insurance,
all of which began looking at Y2K up to 10 years ago largely because
of regulatory requirements. Most telecom companies only began looking
at the issue two to three years ago.

Chevron has said it will not fix all its systems by Dec. 31, 1999,
and Year 2000 business interruptions could prevent it from making and
delivering refined products and producing oil and gas.

AT&T has acknowledged the potential for failure across its systems
and has cranked up Year 2000 spending by more than 50 percent.

While disclosing such problems in SEC filings may protect them from
lawsuits, it won't keep the business running if the computers
operated by the companies and their vendors don't work.

``You can't announce to your shareholders that you went out of
business because of a vendor...but you're going to sue,'' Ray said. 

------------

Also in this issue:

- Euro Complicates Business For U.S. Firms 
    The introduction of the euro makes life easier for U.S. companies
    with no partners or suppliers in Europe, but others with
    transatlantic relationships may find it more complicated, analysts
    said Monday. 
- Service On The Net 
    The Internet is all about e-commerce, right? Wrong. The real power
    of the Web lies not in the direct selling of products, but in the
    creation of tighter relationships with customers and delivery of a
    higher level of service and support -- which, in turn, improves your
    own bottom line. 
- Library Net access under renewed attack 
    update Library filtering foes once again will face off in court
    later this month, in a case that has become the symbolic flip side of
    the bellwether Loudoun County Library case. 
- Wisconsin Lawmakers Poised To Act On Y2K Bills -- Paper
    CHICAGO (Reuters) - Wisconsin lawmakers will take up as many as 10
    bills starting this week dealing with year 2000 computer problems,
    the Milwaukee Journal Sentinel reported Monday.
- Pre-Y2K jitters largely unfounded
    NEW YORK -- Worries that the first few days of the new year would
    bring computer problems similar to those expected when the dreaded
    Y2K bug hits appear to be mostly unfounded. 
- Some 400,000 Taiwanese Companies Not Ready For Y2K
    TAIPEI (Reuters) - Some 400,000 small and medium sized companies in
    Taiwan are not yet prepared for the impact of the millennium bug,
    the economics ministry said Sunday.
- U.S. Firms Prepare For The Worst Of Y2K
    NEW YORK (Reuters) - The new millennium and its much-anticipated
    computer bug is still a year away but many U.S. companies are
    already throwing in the towel.
- New Lists and Journals
    * NEW: FROGNAPPERS - Worldwide Practical Joke Network
    * NEW:ONELISTADDICTSPG-General Audience Newsletter Featuring New
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    * RE-NEW: EPG Episode Guide Announcement List



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