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Staff
Wednesday June 26, 2002

Jury awards research hospital 

 

$200 million in punitive damages 

LOS ANGELES — Genentech Inc. said it will appeal a jury verdict ordering it to pay more than $500 million to City of Hope National Medical Center if it can’t persuade a Superior Court judge to order a new trial in the intellectual property rights dispute. 

The biotech giant was ordered Monday to pay City of Hope $200 million in punitive damages. Earlier this month the same jury ordered Genentech to pay the research hospital $300.1 million in compensatory damages. 

Jurors found that Genentech failed to pay royalties on some drugs manufactured at City of Hope under the terms of a 1976 agreement. 

Sean Johnston, Genentech’s vice president of intellectual property, did not say what the basis for a new trial or an appeal would be. But he said the agreement with City of Hope stood for 20 years without dispute. 

“We continue to be very disappointed in the outcome of this trial,” he said. 

 

Napster wins approval of  

$5 million debtor-in-possession loan  

 

WILMINGTON, Del.— Napster Inc., which filed for Chapter 11 bankruptcy protection early this month, won final approval Tuesday of a $5.13 million debtor-in-possession agreement with Bertelsmann AG, its prospective purchaser. 

Napster, which stirred controversy as the provider of a free Internet music service, will use $4 million of the loan to fund business operations. The remaining $1.13 million will fund a key employee retention plan, the terms of which also were approved Tuesday. 

The loan includes an 8 percent interest rate and expires the earliest of Aug. 30, the completion of the sale, or the termination of the sale agreement. The loan also includes $250,000 to cover administrative expenses incurred during the Chapter 11 case. 

Napster was unable to win approval of bid procedures in connection with the proposed sale of substantially all its assets to Bertelsmann in a deal valued at $92 million. As a result, attorneys for Bertelsmann said they may not be able to go through with the sale. 

Chief Judge Peter J. Walsh of the U.S. Bankruptcy Court in Wilmington said he was “not prepared” to approve the bid procedures because the proposed sale process was too short. 

Bertelsmann has agreed to acquire Napster’s assets for $8 million in cash plus the elimination of its alleged $83 million secured claim. 

 

Palm’s fourth-quarter loss  

matches Wall Street expectations  

 

SAN JOSE – Handheld computer maker Palm Inc. on Tuesday reported a fourth-quarter loss in line with reduced Wall Street expectations and said it doesn’t expect to break even until the quarter ending in November. 

For the three months ended May 31, Palm said it lost $27.5 million, or 5 cents a share. In the year-ago period, the Santa Clara-based company lost $392.1 million, or 69 cents a share. 

Excluding one-time events, the company reported a loss of $18 million, or 3 cents a share — compared to a loss of $89.2 million, or 16 cents per share, in the year-ago period. 

The company said revenues for the quarter totaled $233 million, up 41 percent from the $165 million for the comparable period last year. 

 

Providian completes sales of  

1.3 million high-risk accounts  

 

SAN FRANCISCO — Credit card issuer Providian Financial Corp. said Tuesday it completed the sale of 1.3 million high-risk customer accounts for $1.2 billion, completing a series of moves designed to shore up finances after suffering major loan losses last year. 

San Francisco-based Providian sold the high-risk accounts to two limited liability companies formed by Goldman Sachs & Co., Salomon Barney, Cardworks Inc. and CompuCredit Corp. as part of an agreement announced in April. The portfolio held $2.4 billion in loans, down from $2.6 billion as of March 31. 

Although the sale raised more cash for Providian, the company will lose money on the deal. Providian recognized a $240 million loss on the transaction in the first quarter and expects to record an additional $6 million loss in the second quarter.