Cost of fixing millennium bug will be gigantic

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08/19/98 10:48:36 AM

By Cynthia Mitchell

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ATLANTA -- Metro Atlanta's largest companies are starting to firm up the price tag for fixing the millennium computer bug -- and, more importantly, they're letting shareholders in on it.

And the price tag will be enormous. With just a relative handful of Atlanta companies reporting so far, the total cost for fixing the bug in this area is impossible to estimate. But, the highest estimates from just those companies reporting is already more than $700 million.

In the seven business days after the Securities and Exchange Commission issued new guidelines on what companies should disclose about their Year 2000 problems, 10 of the 11 large metro Atlanta companies reporting quarterly earnings revealed either how much they expect to spend, how much they've already spent, or both. (Coca-Cola Enterprises, the only one that didn't include dollar figures, said it's fixing the problem through an ongoing systems update and doesn't expect the incremental costs to be ``significant.'')

When told of the response from the Atlanta companies, SEC spokesman Duncan King said:

``Wow. It's amazing they've been that responsive. We didn't think we were going to see things really improve until mid-September, because companies have 45 days to put together their 10-Q reports after the close of their business quarter.''

The problem itself is extremely complex. Companies have to figure out how many of their computer systems will become confused by dates beginning in the Year 2000 -- a situation that could wreck havoc on everything from traffic lights to hotel reservation systems. Besides worrying about their own systems, they have to reassure themselves that every outside system they deal with won't mess things up. And then, in what's viewed as the most critical and expensive part, they have to test and retest to make sure things will run smoothly when the clock hits midnight on Dec. 31, 1999.

So assigning a cost to the problem has been akin to nailing down Jell-O. The most common U.S. total cost estimate has a wide swing -- from $300 billion to $600 billion to fix both corporate and government systems.

It's not much different locally.

Take BellSouth Corp. The telecommunications giant has an estimated Y2K cost with a high range that is double its lowest -- $100 million to $200 million.

Most of that swing, which the company started reporting in the first quarter, is pure safety margin, says spokesman Clay Owen. The company has 30,000 desktop personal computers, 3,000 mainframe and midrange computers and 2,500 voice switches instrumental in carrying phone calls from place to place.

``You can be on schedule and on budget throughout the entire life and then when you get to your critical testing, you've got to intensify your efforts to make sure everything goes right,'' he said.

Because the new SEC guidelines officially apply to earnings reports filed after Aug. 5, the picture should only get clearer. Moreover, as the weeks go by, companies simply are getting a clearer fix on where they stand.

That's the case at Delta Air Lines. It disclosed in May it expects to spend $110 million to $125 million to fix its internal information technology systems, but said it was still assessing its operating systems.

``With the way our Year 2000 program is going, we should have a much better handle on a lot of those details the SEC is looking for within the time frame they've specified,'' said spokesman Kip Smith. ``We're aiming to have all of our critical systems completely analyzed and remediated by the end of this year and completely tested by the middle of next year. So as we go through the remediation process, we will know more'' about exact costs.

Story Filed By Cox Newspapers