Dear El: Well, CNBC is blaming the following FUNDAMENTAL cause for the price decline. Personally I am confused over this comment of "price compression" I thought there was a shortage of band width. JDN
MCI WorldCom Announces Renewal of America Online Pact
Dulles, Virginia, April 6 (Bloomberg) -- MCI WorldCom Inc., the second-largest U.S. long-distance telephone company, renewed its agreement to carry the traffic of America Online Inc., the world's largest Internet service.
The companies didn't outline terms of the agreement, though MCI WorldCom Chief Financial Officer Scott Sullivan said last month there is ``price compression in this marketplace.'
Some analysts had been concerned that America Online's planned purchase of Time Warner Inc. would lead customers to access the Web through cable-television lines instead of through MCI WorldCom's UUNet Technologies Inc. unit, which provides data transmission services to Internet companies. Time Warner's cable systems serve about 20 percent of the U.S.
America Online ``is a significant customer of WorldCom,' said Vik Grover, an analyst at Kaufman Brothers with a 'buy' rating on MCI WorldCom. ``I think AOL will drive increased usage of the Internet, which will benefit UUNet.'
Grover said the renewal didn't come as a surprise and that UUNet competitors such as Level 3 Communications Inc. don't have enough transmission capability to effectively compete with MCI WorldCom on a contract of this size.
Shares of MCI WorldCom, based in Clinton, Mississippi, fell 1 3/8 to 42 7/16 in late-morning trading on volume of 30.3 million, making it the most active U.S. stock. The shares have fallen about 29 percent in the past year.
America Online, which provides Internet service to more than 22 million subscribers, rose 2 1/4 to 65 1/4. The Dulles, Virginia- based company plans to buy Time Warner for about $166 billion. Broomfield, Colorado-based Level 3 fell 6 1/2 |
