By MICHAEL BRUNTON, BRUCE CRUMLEY, NINA PLANCK AND PEGGY SALZ-TRAUTMAN

EUROPE: ANOTHER TECHNOLOGY FLOP

Germany's electronics giant Siemens will sell its personal computer manufacturing subsidiary, Siemens Nixdorf Informationssysteme (SNI), to Taiwan's Acer, one of the largest PC makers. SNI, once rated Europe's number one computer manufacturer, was regarded as the Continent's last serious challenge to U.S. and Asian dominance of the information technology industry. It will now join the long list of Europe's technology flops. European companies such as the U.K.'s ICL, Groupe Bull in France and Italy's Olivetti all sold or scaled back their PC businesses in the early 1990s when low margins and aggressive U.S. rivals squeezed them out of home markets. While SNI will still design and sell machines, its exit leaves the world's PC manufacturing business to players in the U.S. and Far East. Spurred by changes in global markets and the convergence of computing and telecom technologies, Siemens is regrouping. The company claims it is now the best positioned to offer the new integrated services which will account for about 40% of Siemens' sales of nearly $28 billion this year.

CZECH FUNDS MAY LOSE THEIR CLOUT

After the Velvet Revolution, the Czech economy was the darling of the many Western economists who urged liberalization on any former communist who would listen. Sell state industries! Deregulate! Czechs took on the program like good pupils. Some 2,000 state-owned companies went on sale in the early '90s in a broadly-based voucher scheme. Hundreds of investment funds burgeoned. In 1996, GDP grew 3.9%. But last year's growth was a torpid 1% and investment funds are a mess. On average, they trade at 70% of the net asset value of the shares they hold. Badly managed or corrupt, many need shaking up. A new law passed by Parliament might do just that. By 2003, all closed-end funds will be opened. That means managers will be required to repurchase investors' shares--a boon to holders who want to realize gains. In closed-end funds, "investors can't get to their assets if the fund doesn't perform," says Tomas Jezek, former chairman of the Prague Stock Exchange and now on the governing board of the Securities Commission. "Managers will have to pay more attention to their portfolios." The upper limit on holdings of one company will fall to 11% from 20%--forcing sell-offs in controlling stakes in firms, allowing much delayed restructuring by new owners. The mere expectation of the law's passage has already set fund managers in motion, with major sell-offs in utilities and power companies. "Managers are complaining," says Radek Vavra, chairman of Citicorp Investment Company. "But what they are really saying is, 'Our funds will fall apart because we are bad managers.'"

FRENCH PIQUE CLOUDS EURO'S LAUNCH

Fears of a showdown between France and Germany over key aspects of European Economic and Monetary Union escalated just days before the May 1-2 summit which will determine what countries will participate in the euro's launch. The battle over who will be the first head of the new European Central Bank intensified as French Prime Minister Lionel Jospin threatened to veto the Dutch candidate, Wim Duisenberg, who is backed by all other E.U. members, but most importantly by Germany. Dutch Prime Minister Wim Kok, who faces national elections on May 6, responded by promising to do the same to the French nominee, Jean-Claude Trichet. They also angrily rejected the potential power-sharing compromises that had been viewed as a possible way out of the impasse. French officials, meanwhile, rejected proposals put forward by German Finance Minister Theo Waigel for tougher post-euro budgetary constraints to reduce debt levels. His French counterpart, Dominique Strauss-Kahn, waved off urgings by Waigel that member governments operate under stricter collective budgetary restraints once the euro is in circulation. While he agreed the goal of debt reduction was laudable, Strauss-Kahn said individual states must maintain policy and budgetary flexibility. Continuing discord over essential policy issues between the two prime movers behind monetary union does not bode well for this week's summit in Brussels--or for the near-term stability of the new currency.