21/12/984

Millennium bomb could cause big problems for companies

By RICHARD WATERS

The Financial Times

NEW YORK - The Year 2000 computer problem could cause far-reaching problems for U.S. companies, from shutting down oil wells to forcing microprocessor plants to close, according to disclosures made in recent days.

The warnings, contained in reports filed with the Securities and Exchange Commission, amount to the most detailed picture yet of the possible extent of the Y2K problem, or "millennium bomb," whereby computers risk failing at the end of next year.

Concerned that companies weren't telling their shareholders enough about the risks and what they were doing to put things right, the SEC recently leaned on companies to disclose far more in their regular quarterly filings.

Chevron, the oil company, said that any problems it faced "will most likely be localized." However, it added that it could not tell whether it would suffer "significant business interruptions," including the shutdown of all its oil and gas production.

Intel, the chip maker, said it could not "identify or avoid all the possible scenarios" of things going wrong. It added that the failure of an electricity grid could force its plants to close or shut down airports and other transport facilities it relied on.

Most companies said they expected to fix their own computer systems before the end of next year. Many added, though, that they couldn't tell whether their most important suppliers would be ready, and some expressed worries about utilities and other providers of essential infrastructure.

Motorola, which makes mobile telephones and computer chips, said it was "particularly concerned about energy and transportation suppliers. Many of those suppliers are unwilling to provide assurances that they will be Year 2000-ready."

General Motors added that it would face "significant impediments" if electric and water utilities, government agencies, financial institutions and other "providers of general infrastructure" were not ready in time.

Efforts to assess whether suppliers and utilities will be ready have had only patchy success, some companies report.

DuPont, for instance, said that only 30 percent of its key suppliers responded to a survey it sent out. Of these, two out of five had "a high risk" of not meeting the deadline.

Ed Yardeni, of Deutsche Bank Securities in New York, said most companies had spent less than half what they expected to spend to put their houses in order, a sign that many were falling behind.

Many have increased their estimates of the cost of fixing the problems. GM, for instance, put its total cost at $560 million, higher than the $360 million-$500 million range it predicated earlier this year.