Computer Industry California

It was George Harrison--the quiet, but not-oblivious-to-trademark-law Beatle--who in 1980 first noticed the potential for conflict. Leafing through a British magazine, Harrison saw an ad for an Apple Computer Inc. retailer. So the composer of the "Sue Me, Sue You, Blues" quickly rang up the trademark agents at the Beatles' company, Apple Corps Ltd., and asked them to investigate. The two firms have been at odds over the name they share almost since--most recently in a London courtroom.

The limousines were as backed up as ever South of Market last weekend. Festive techies spilled from the nightclubs, apple martinis clutched in their fingertips. If you weren't here last year at this time, the locals kept saying, you might never guess that this is a city in the throes of a tanking Nasdaq, a city where creditors are running from start-up to start-up, repossessing foosball machines and office cubicles. But appearances can be deceiving.

The next time you walk into a 7-Eleven to buy cigarettes or beer and you look underage, a clerk will probably ask to scan your driver's license. A small electronic device will allow clerks to quickly determine whether you're old enough to make the purchase. The scanner reads information coded onto a magnetic strip on the back of a driver's license or state-issued ID, which includes a person's name, birth date, address, height and weight. The device, developed by VeriFone Inc.

Granting Silicon Valley one of its most sought-after breaks this year, Gov. Gray Davis signed legislation Wednesday that will exempt certain computer industry workers from the state's mandatory overtime law. Under California law, most workers are entitled to time-and-a-half pay if they put in more than 40 hours a week, and double pay if they work more than 12 hours a day.

In a move that foreshadows the emergence of a new breed of high-performance personal computers, Compaq Computer will pay $135 million for a 13% stake in computer workstation vendor Silicon Graphics as part of a broad technology-sharing agreement between the two.

They are fast-growing. They're often technology-driven. They hire smart people and they've got an eye on the global picture. And, often, they appear as if out of nowhere. They are "gazelles," a favored term for any start-up company that becomes a multimillion-dollar business in a short time. "These are the innovators. They see the future accurately, and they act on it now," said economist David Birch, who is generally credited with coining the term.

Three years after finding itself on the brink of bankruptcy, Merisel may finally be on the road to sustained profitability. The El Segundo company is one of the country's largest distributors of computer hardware and software, with 25,000 products in its portfolio. It ranks 343rd on the Fortune 500 list with $4.6 billion in sales last year, although profit remains small.

Editor's note: This is the first in an occasional series of articles examining the origins of the California dream and its contemporary possibilities. * California was born here on a morning in winter in the cold, fast water of the American River's South Fork. Nativity occurred, quick as a glimpse, at a bend in the river between Dutch and Indian creeks, below the scrub pines of Murphy Mountain.

Hewlett-Packard Co. named Robin Abrams president and chief executive of VeriFone, the HP subsidiary that makes point-of-sale computers for validating credit- and debit-card purchases. Abrams, formerly head of Apple Computer's Americas division, replaces Hatim Tyabji, who has been chairman, president and CEO of VeriFone for 12 years. Abrams joined VeriFone in March 1997, a few weeks before HP agreed to acquire the company for $1.29 billion.

After less than four months as a visible presence on the Southern California computer scene, Detroit-based Inca Computer Co. has pulled the plug on its Southland operation, putting more than 120 people out of work. The shuttered stores--in Burbank, Northridge, Santa Clarita, Montclair and Costa Mesa--were closed Oct. 12 after the chain ran into major funding problems, company executives said.

Concerned about California's future labor force attending schools that are badly overcrowded or in bleak disrepair, high-tech executives have quietly poured millions of dollars into a campaign for a November ballot initiative that would make it easier for communities to build new schools and upgrade facilities. Backers of Proposition 39, which would lower the vote threshold needed to pass local school bonds from a two-thirds majority to 55%, say they have raised more than $13 million.

Three leading computer manufacturers and nine of their suppliers, including troubled Irvine disk drive maker Western Digital Corp., will invest $100 million to form an independent Internet marketplace for silicon chips, monitors and other PC parts. Hewlett-Packard Co., Compaq and Gateway spearheaded the formation of the new San Francisco-area Internet marketplace.

Three of the biggest personal computer makers, Hewlett-Packard Co., Compaq Computer Corp. and Gateway Inc., and nine of their suppliers will invest $100 million to form an independent Internet marketplace for silicon chips, monitors and other PC parts. Other members of the new San Francisco-area Internet marketplace include chip maker Advanced Micro Devices Inc., contract manufacturers Solectron Corp. and SCI Systems Inc., disk drive maker Western Digital Corp., Hitachi Ltd., Samsung, NEC Corp.

Cisco Systems Inc., the world's largest maker of Internet equipment, agreed to lease 10 buildings in an Irvine Co. development in Milpitas, about two miles northeast of Cisco's main campus in San Jose. Starting this summer, Cisco will begin to occupy 572,000 of the 1 million square feet of space in the development, McCarthy Center. Financial terms weren't disclosed. Cisco is hiring aggressively to maintain revenue growth, adding more than 2,500 employees a quarter, some through acquisitions.

Many local technology companies that sprang up from decades of Cold War spending are booming now, a decade after the military slowdown, this time as makers of chips, lasers and other components that are powering the information revolution. The region's technology companies, once driven by the military's needs for exotic equipment, find themselves creating the next generation Internet--a high-speed, high-reliability thoroughfare filled with video and sound.

Check the employee rolls of Silicon Valley companies and you will find countless graduates of Tsinghua University, a sort of Cal Tech-Harvard equivalent. They are among the best and brightest of China who have streamed to the U.S. by the thousands in search of the engineering breakthrough, the Internet play or the technology start-up that translates into millionaire in any language.

Cadence Design Systems Inc. said a federal judge ordered Avant Corp. to stop selling and using its ArcCell software, an expected move in Cadence's copyright infringement suit against Avant. The order from U.S. District Judge Ronald Whyte in San Jose clarifies and reinforces his preliminary injunction of Dec. 19.

Intel Corp. may have to pay almost $1.4 billion to investors who own securities known as put warrants, now that its common stock has dipped below $70 a share. The Santa Clara-based chip manufacturer last year sold 46 million of these warrants, which let investors sell or "put" stock back to Intel at a set price. Intel received $288 million in premiums by selling the warrants, and investors were able to insure their holdings against falling share prices.

The hot-selling Palm hand-held computer may be about to get its hand slapped. A secretive Mountain View, Calif., start-up called Handspring Inc.--begun in November by renegade PalmPilot developers Donna Dubinsky and Jeff Hawkins--is expected to unveil an electronic organizer that is cheaper and better than the lower-end Palm III model. Handspring, backed by blue-chip venture capital firm Kleiner Perkins Caufield & Byers, declined to comment.

In a major victory for California's high-technology companies, an influential federal appeals court made it tougher Friday for shareholders to win securities fraud lawsuits against corporations. Shareholders must now show that a company intended to commit fraud--not merely engaged in reckless conduct, according to a divided U.S. 9th Circuit Court of Appeals.