Healthcare privacy rules take effect

Department of Health and Human Services Secretary Tommy Thompson last week decided to let the much-debated Health Insurance Portability and Accountability Act healthcare privacy rules formally take effect. The move came despite voluminous criticism he heard about the rules, which were issued by the Clinton administration, from hospitals, insurance companies and other parties during last month's round of written comments. Although he praised the HIPAA rules as beneficial to the privacy of patient data, Thompson also emphasized that HHS intends to alter the regulations and will issue "guidelines" on how the Bush Administration expects them to be implemented by the healthcare industry and its business partners.

Smell technology whiffs failure

Feel free to supply your own smart-alecky remark about this business failure: DigiScents, a developer of technology that is supposed to give computers the ability to create odors on demand, has apparently flunked the smell test in its attempts to find new investors. The Oakland, Calif., company, which garnered more attention than a skunk at a garden party when it launched two years ago, closed its doors last week after failing to replenish a $20 million capital stake. "We're basically trying to position ourselves for a relaunch," said a DigiScents executive. Expect to see potential investors positioning themselves upwind.

Say so long to 'Clippy'

Anyone who has long been bugged by that paper-clip helper in Microsoft Office - in other words, almost everyone - can now vote on the icon's fate on a Microsoft Web site. Of course, none of the options involve melting the annoying Clippy down to a useless drop of tin. Microsoft is eliminating Clippy from Office XP, the forthcoming upgrade to the application suite. A special Web site devoted to Clippy's exit can be found at www.officeclippy.com. Clippy's response: "At least I'm not a sock puppet."

Pink slips fly at Critical Path

E-mail outsourcer Critical Path last week announced the layoff of 450 employees, including seven from upper management. Among the latter were company President Diana Whitehead, who held the job for only two months, and vice president of business development Mari Tangredi. "The last weeks have been difficult for Critical Path," said David Hayden, company founder and executive chairman, in a statement. "Now we have turned the corner with the implementation of a reorganization designed to reduce costs and focus the company on its core products." In February, Critical Path had to restate earnings after discovering problems with previously reported revenue.

Network cancels NBC Internet

NBC last week decided to shut down the NBC Internet portal in which it was a minority shareholder. In order to shut down Internet NBC and lay off many of its 300 workers, NBC will have to buy the portal for $85 million in cash. NBC Internet suffered a net loss of $245 million in the last quarter of 2000. Shares of NBC Internet, which stood at close to $100 in January 2000, closed at $2.14 last week. NBC owns other Web sites, including NBC.com and AccessHollywood.com, and assets of the NBC Internet portal may be combined with them.

Kana, Broadbase circle wagons

Two struggling start-ups in the customer relationship management arena, Kana Communications and Broadbase Software, last week agreed to merge in a stock-swap deal valued at $40 million. The combined firm will be called Kana Software. Kana recently said it would lay off 20% of its workforce.

Verizon split proposed in Virginia

A group of competitive service providers, headed by AT&T, last week filed a petition with the Virginia State Corporation Commission asking it to order the state's incumbent carrier, Verizon, to separate its wholesale and retail units.

The group says splitting Verizon is the only way to ensure competitive providers get fair treatment from the company. Competitive carriers must work with Verizon, which owns the last-mile local loops, to offer telecom services to users. Similar attempts to split Verizon have been made in other states, including Pennsylvania and Maryland. Pennsylvania and Maryland declined to enforce the structural split of Verizon's wholesale and retail arms, although Pennsylvania said there should be a functional split.

Verizon has responded to the petition by stating that a structural split would result in higher phone costs, longer deployment rollouts for new technologies and customer confusion.