Things will get worse before they improve in cyberspace.

That is the conclusion of a study conducted by Pegasus Research International.

The firm estimates that more than one third of publicly traded Internet firms will probably run out of cash by the end of 2001.

In addition, 335 publicly traded Internet companies used up about $2 billion in cash in the third quarter of 2000. That is about the same amount used up in the second quarter.

The study was published in Saturday’s edition of Barron’s.

“We’re seeing the financial pressure intensify as never before,” Pegasus President Greg Kyle was quoted in the newspaper.

Barron’s said the top 15 companies on its list actually were due to run out of cash in the fourth quarter of 2000. However, many were able to take “evasive action,” such as raising money through a debt offering or through a cash infusion.

Barron’s said seven companies should be watched because they will soon experience either good or bad news.

The companies include Fashionmall.com Inc., Choice One Communications Inc., Bluefly Inc., audiohighway.com, TriZetto Group Inc., Internet Commerce & Communications Inc., and Stamps.com Inc.

Corning Bucks the Trend

Corning Inc. said 2000 revenues topped $7 billion and earnings rose 70 percent, according to The New York Times.

Telecommunications-related products, including optical fiber, make up 75 percent of revenues. Corning is the world’s biggest maker of fiber cable, the so-called backbone of the Internet.

Sales of photonics equipment, which shoot signals down fiber-optic pipelines, accounted for more than $1 billion in revenues, more than double the 1999 level, according to the company.

Up, Up and Away

So, you think the price of air travel has gotten out of control? You’re right.

The costs for business travel are at a historic high.

Yet, it seems like it’s going to get a lot worse. Why?

Because the already heavily consolidated airline industry is about to become much more concentrated.

United Airlines’ parent UAL Corp. is trying to figure out how to convince the Justice Department that it should buy US Airways Group.

Then, on Monday the Wall Street Journal reported that AMR Corp., the parent of American Airlines Inc., is negotiating to buy the assets of Trans World Airlines Inc. as well as some assets resulting from the proposed merger of UAL and US Airways.

The TWA deal is a bit tricky. It would first require the troubled airline to file for Chapter 11 bankruptcy. AMR would provide the financing to TWA and then take it through the bankruptcy process, according to the paper, quoting a source.

In addition, AMR would acquire some assets belonging to UAL’s United Airlines and US Airways. For example, AMR would buy half of US Airways’ very profitable northeast shuttle as well as 49 percent of the proposed DC Air carrier that is to be created from the UAL-US Airways merger.

Once these deals are completed, United will wind up with 26 percent of U.S. traffic while American will have 25 percent. Delta would be a distant third.

Boeing’s Bonus

Boeing recently delivered its 491st commercial jetliner since Jan.1, 2000.

Big deal? Certainly for the rank and file of the company.

This is because more than 19,000 engineers and technical workers will receive a $1,000 bonus as part of an incentive in a contract settling the union’s 40-day strike last spring.

At the time, Boeing wanted to make up for production lost during the strike, and workers were looking to recoup lost wages.

Union workers received a $500 bonus when the company delivered its 225th commercial aircraft June 19. The extra $1,000 bonus is for the delivery of 491 planes by Feb. 28.

The bonus checks will be delivered five to eight days after the plane is delivered.

Today’s Layoff Announcements

• AmeriTrade Holding Corp. said it will lay off 230 employees, or about 9 percent of its workforce, due to declining market volume. The cuts will come from offices in Forth Worth, Tex., and Omaha, Neb.

• The New York Times Co. said it would cut 69 jobs, or 17 percent of the work force, at its money-losing Internet unit due to soft advertising sales.

• Lernout & Hauspie Speech Products NV will can 800 employees this week in the first phase of an overall 20 percent staff cut, according to Reuters. The company, which is being investigated by the SEC and foreign securities commissions, hopes to save about $21.9 million in payroll and related expenses when it terminates 1,200 employees worldwide this quarter, according to public documents.

• Auto parts maker Delphi Automotive Systems said it closed its Packard Electric Division’s plant in Brazil, and about 450 workers will lose their jobs.

Outsourcing on the Rise

The worldwide finance and accounting outsourcing market is projected to grow from $12 billion in 1999 to $37.7 billion by 2004, according to Dataquest Inc., a unit of Gartner Group Inc.

However, at the moment many companies are still slow to move to outsourcing.

According to the study, opportunity in finance and accounting outsourcing will be strongest in industries characterized by larger company sizes, intense competition, low levels of regulation, rapid growth, widespread restructuring and merger and acquisition activity, extensive ERP adoption and prior outsourcing experience.

New technologies and Web delivery of financial applications have accelerated the adoption of outsourcing as a way to increase operational efficiency, gain competitive advantage and create shareholder value, according to the study.

Gartner Dataquest defines finance and accounting outsourcing as the ongoing engineering, operation, administration and management of selected finance and accounting “backoffice” processes by an external party. Finance and accounting outsourcing vendors assume responsibility and liability for the continuous performance of outsourced processes. See Dataquest press release.

From the CFO.com “Brief” Case

• Southern California Edison, the No. 2 California utility, is “probably” closer to a bankruptcy filing than its larger rival, Pacific Gas and Electric Co., Standard & Poor’s said on Friday.

• Drugstore.com Inc. said fourth-quarter sales would surpass consensus estimates. The online pharmacy said that fourth-quarter net sales would come in at least $35 million. Analysts had expected revenues of $29.33 million, according to First Call/Thomson Financial. The company said in a statement that net sales for the quarter topped all sales for fiscal 1999. Drugstore.com also said its unaudited gross margin was more than 13 percent in the fourth quarter, compared with a negative 16.3 percent for the same period in 1999.

• Unregulated power producer Calpine Corp. said Friday that it increased its earnings per share estimates for the fourth quarter of 2000 and all of 2001.

• Dell Computer chief executive Michael Dell exercised options on 11.96 million common shares earlier this month and then sold them the same day.

• Two officials of the Clinton administration are moving to PricewaterhouseCoopers. Annette Smith, who served as Deputy to the Tax Legislative Counsel in the Treasury Department, has joined PwC as a Partner in the firm’s Washington National Tax Services practice. W. Val Oveson, the first National TaxpayerAdvocate appointed by the Treasury Secretary under the IRS Restructuring and Reform Act of 1998, has joined PwC as a Managing Director in the firm’s State Tax Consulting Practice.