dailynews.yahoo.com
AT&T Under Pressure to Deliver at Meeting
By Jessica Hall
NEW YORK (Reuters) - At a crucial meeting with analysts on Monday, telephone and cable television giant AT&T Corp.
faces pressure not only to unveil a highly anticipated wireless tracking stock, but also to reassure investors that its
strongest growth is not in its past, analysts said.
Since much of the content of AT&T's (NYSE:T - news) meeting has circulated throughout the industry and Wall Street
over the past three weeks, Chairman C. Michael Armstrong must deliver a few surprises on new growth initiatives to
maintain shareholder enthusiasm, analysts said.
AT&T's stock, one of the weakest performing Blue Chips this year, has jumped 21 percent in anticipation of an
announcement that it will launch a wireless tracking stock. It is expected to sell a 10 percent to 15 percent portion of the
unit in an initial public offering, industry sources said.
Shares of AT&T, the No. 1 U.S. long-distance telephone company, gained 1-11/16 to 57-1/8 on the New York Stock
Exchange on Friday.
It would be a big disappointment if the tracking stock failed to materialize, analysts said. AT&T declined to comment on
the meeting's content.
``It would be a huge surprise is they didn't make any wireless stock announcement. But people also want some visibility
on cable, what the next steps are and where the new growth potential is,' said one industry analyst who declined to
identified by name.
``They have so much going on right now that people want to be reassured that they (AT&T) are on track,' the analyst
said.
AT&T has run into uncertainty in the past few months. Its cable leader Leo Hindery left the company, its telephone pacts
with cable companies remain elusive and its planned MediaOne Group Inc. (NYSE:UMG - news) acquisition may face a
longer-than-expected review.
AT&T also faces other major challenges -- the pending entry of Baby Bell companies into its core long distance market,
the planned $115 billion merger of its chief rivals MCI WorldCom Inc. (NasdaqNM:WCOM - news) and Sprint Corp.
(NYSE:FON - news), and the need to tackle new growth businesses to offset the stagnant long-distance voice market.
At the meeting, AT&T must quell concerns and reassure investors that its efforts to roll-out phone service over cable
television wires remain on target and on budget, analysts said.
Chief Financial Officer Dan Somers will be named as the permanent head of its cable operations, industry sources said.
AT&T also has been mulling having President John Zeglis oversee the new wireless tracking stock, sources said. It was
not clear if that decision had been made, but such a move would be risky since it could alienate the current head of
wireless, Dan Hesse, analysts said.
``Hesse has single-handedly reinvented the wireless industry. He developed the new billing model and changed people's
view of wireless. Even by considering a move that would lose Hesse is beyond my comprehension,' said independent
industry analyst Jeffrey Kagan.
AT&T also is expected to discuss the expansion of its fixed wireless service, code-named Project Angel, industry
sources said. The fixed wireless service is currently being tested in Dallas and the company plans to use the technology
to provide phone and data services to homes it cannot reach through cable television wires.
``Everyone expects it (fixed wireless) to be the next big home run. But prime time, full use of it is still about a year away,'
said Frank Dzubeck, president of Communications Network Architects.
AT&T also may announce plans for new fiber-optic network upgrades and expansion in high-density markets and a
more aggressive push into the local telephone market, analysts said.
Armstrong has shored up many of AT&T's weak areas since he joined the company two years ago. Its Internet
business, however, remains lackluster and needs attention, analysts said.
AT&T's WorldNet business remains a minor player with only 1.5 million residential customers, far behind leader America
Online, which has about 21 million subscribers. |
