The Boston Globe from Boston, Massachusetts • 61

ONLINE TODAY boston.combusiness Tv" Ticker Local news updates I Filter Strategy and ideas UVJ Portfolio tracking E-mail: Stock alerts, company news LAJ DOW JONES NASDAQ 11,94770 2,346.18 FULL MARKET COVERAGE, E4 Boston Globe Friday, October 13,2006 1 i uLuutu. tit iiiimilnnmiHrrni uiini "iiBlIIIfliau 4 TTTMTimtrrrmri. i 1 jf if- (A 'fWw Wachovia, Mellon may pursue MFS Analyst says banks could fear being left behind as fund industry consolidates By Ross Kerber GLOBE STAFF Suitors for MFS Investment Management include the banking giants Wachovia Corp. and Mellon Financial news services re-ported, showing the potential appeal of the Boston mutual-fund company. Spokesmen for the banks declined to comment on the reports, made since Wednesday by CNBC and Bloomberg News, which both cited unidentified sources.

A spokeswoman for Morgan Stanley, the investment banking company reportedly hired to help sell MFS, also declined to comment. MFS, which employs about 2,400 people, including 2,100 in Massachusetts, has officially been on the block since Sept. 18, when its Canadian parent, Sun Life Financial of Toronto, said it had hired investment bankers "to advise on strategic alternatives" for the unit. Yesterday, a Sun Life spokesman would only note that other buyers for MFS about which there had been speculation have not appeared. The interest of Pittsburgh-based Mellon and Wachovia, of Charlotte, N.C., "will complete the alphabet soup of candidates" said the spokesman, Michel Leduc.

In a recent interview, MFS chairman Rob- ert Pozen sounded bullish about the potential value of the Boston firm, which is on the block at the same time as Putnam Investments, another major Boston fund company. Both have seen outflows from their mutual funds in the wake of market-timing scandals and stiffening competition. But Pozen argued MFS has offset those outflows with growling business from institutions, bringing total assets under management to about $170 (5 LI 'ill i tot" 1 J. jiMiMlwBiWf4 PHOTOS BY JOHN TLUMACKIGLOBE STAFF Kyle Wiggins from Dallas browses the inventory at Tower Records in Harvard Square, which is holding a going-out-of-business sale. Music megastores besieged Digital vs.

physical Albums sold, first six months of 2006 Digital albums Tower, Virgin losing business to the Wal-Marts, Best Buys, and the multiplying iTunes By Chris Reidy GLOBE STAFF 14.7m 5 Bedford firm IcMefequitin 1 Physical albums 255.9m 95 arvard University student and iPod owner Kyle Wiggins is one reason Tower Records in Cambridge and Burlington and Virgin Megastore in Boston are holding going-out-of-business sales. options probe "The last time I bought a CD? It's been a while," 2 By Ross Kerber GLOBE STAFF iUfiti 5 it 1 SOURCE: Nielsen SoundScan Leading retailers Ranked by units sold, second quarter of 2006 1. Wal-Mart 2. Best Buy 3. Target 4.

Amazon.com 5. iTunes Music Store 6. FYE 7. Circuit City 8. Tower Records 9.

Borders 10. Sam Goody SOURCE: NPO Group GLOBE STAFF Wiggins said while looking for bargains at Tower in Harvard Square. Tower's and Virgin's troubles demonstrate that large stores that specialize in music are in danger of becoming an oddity locally. "The ability to download music has eaten into this business," said Jim Schaye, chief executive of Hudson Capital Partners of Newton, which, with the Great American Group, is managing the liquidation of 89 Tower stores nationwide. "The viability of this kind of retailer is becoming extremely difficult." Downloaded music isn't the only threat to giant music stores.

Other kinds of retailers have successfully poached on their turf. According to the NPD Group, a market research firm, top-selling music retailers during the second quarter included Wal-Mart, Best Buy, and Target; during that period, NPD estimated that 7 percent RECORDS, Page E3 WHERE DO YOU SHOP? uJj Share your music purchasing habits at boston.combusiness. 1,1 1 i Hurt by competition from the Web, stores like Virgin on Newbury Street are closing. Boston Communications Group Inc. yester-f day replaced two top executives, said it would restate past financial filings, and took other steps after finding flawed accounting on stock options, the latest fallout from continuing probes into how technology companies have paid insiders.

Chief executive E.Y. Snowden will leave his post to become non-executive chairman of its board of directors, and Karen Walker resigned as chief financial officer, effective immediately, the Bedford maker of billing software said. General counsel Alan Bouffard also "has decided to accelerate his retirement," the company said. As non-executive chairman, Snowden will continue working with Boston Communications Group on strategy. Boston Communications' moves follow similar steps at other companies recently.

On Wednesday the chief executives of online publisher CNet Networks Inc. and security-software maker McAfee Inc. stepped down after their employers found evidence of options abuses. Top officers or directors of Apple Com-STOCK OPTIONS, Page E3 Hard to figure 1 Under the new Medicare drug benefit, consumers pay varying portions of drug costs based on annual spending. The $2,250 to $5,100 range, in which consumers pay 100 percent of the cost, is referred to as the "doughnut hole." Net phone equipment maker lifts IPO price Is Medicare coverage gap a big issue? Democrats hoping angst over drug plan trips GOP candidates 95 -r- 5 SPENDING FORMULA Consumer expenditure DOUGHNUT HOLE 100 OTHERS UNDER REVIEW To see a list of the companies caught up Medicare reimbursement in the stock options scandal, visit boston.combusiness.

A 25- 75 100 ii-' 0 1 $250 to $2,250 Consumer pays part $2,250 tO $5,100 Consumer pays all Over $5,100 Government pays almost all GLOBE STAFF oto $250 Consumer pays all SOURCE: Medicare WENDY MAtUAGLOBt STAFF By Hiawatha Bray GLOBE STAFF When telecommunications hardware company Acme Packet of Burlington goes public today, the company expects to raise more money than it originally bargained for up to $17 million Acme Packet yesterday boosted the' price of its initial public offering, from $6.50 to $7.50 a share to $8 to $9 a share. The repricing could let Acme Packet raise a maximum of nearly $103 million from today's offering. Not many technology offerings have been increasing their prices of late; indeed, there haven't been many at all. According to Thomson Financial and the National Venture Capital Association, the third quarter of 2006 was the weakest in three years for high-tech stock offerings. There were only eight, with a total value of $934 million.

Acme Packet's strong prospects are mainly because it caters to one of the tech industry's hottest segments next-generation phone systems based on Internet technologies. Acme Packet's venture investors, including Menlo Ventures, Advanced ACME PACKET, Page E2 By Diedtra Henderson GLOBE STAFF WASHINGTON Democratic congressional challenger Ron Klein recently stopped by a Florida doughnut shop to tell seniors that Medicare's prescription drug benefit guarantees larger profits for pharmaceutical companies, but makes subscribers pay thousands of dollars in out-of-pocket expenses. Klein was referring to the "doughnut hole," a gap in the Medicare plan's coverage that will affect millions of beneficiaries. In a year in which Democrats could regain the majority in the US House of Representatives, the state senator's race against veteran Congressman E. Clay Shaw Jr.

in Florida's 22d Congressional District has been closely watched. It's attracting an added layer of attention by focusing on the Medicare coverage gap. One quarter of the district's voters are senior citizens. rrm plan explained LtaJ Learn more about Medicare Plan at boston.combusiness. NURSES ON THE LINE A crowd of nurses picketed outside Brigham and Women's Hospital in Boston yesterday.

The nurses union is dissatisfied with a 1.5 percent pay raise proposed by the hospital. The hospital says the union wants a 16 percent one-year pay raise. manager, said the doughnut hole ranks among the top three issues for Klein in the sprint to next month's midterm elections. Part D's problems can be fixed to benefit seniors, according to Klein. For instance, he favors allowing the government to negotiate with drug companies to lower prices.

Shaw counters that most seniors signed up won't spend enough on medicines to enter the coverage gap. Some polls, like one released this week by AARP, suggest such healthcare matters as insurance coverage and rising drug prices are pressing issues MEDICARE, Page E3 The Medicare drug plan, called Part took effect in January. It provides drug coverage for more than 38 million seniors and people with disabilities, according to the government. Depending on the source, 3 million to 7 million of them will topple into the doughnut hole by the end of the year. Beneficiaries initially pay low premiums and pominal out-of-pocket expenses.

But after they use $2,250 of their drug benefit, they pay the full cost of any drugs until spending reaches $5,100, and they qualify for catastrophic coverage. Brian Smoot, Klein's campaign Columnist Steve Bailey is not uniting today..