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Yesterday the Chicago Tribune, in another article in its continuing coverage of the SBC-Ameritech merger, digressed to mention SBC's relationship with Amdocs. I'll synopsize the details that a DOX shareholder might find interesting. SBC helped found DOX sometime in the '80's with the goal that it be able to provide SBC with technologically advanced software that it couldn't itself develop in- house. (This, no doubt, refers to the client-server UNIX based system that resulted.) SBC provided $50 mil. for a 50% stake, which is now worth over $1 billion. As, I think, Ken G reminded us, SBC currently has ownership in DOX of about 20%, which I presume means that it used the IPO, in part, to liquidate some of its initial position, while still retaining a significant stake. The article says that half the compensation of SBC's five top executives last year was in the form of DOX shares SBC had owned--in the case of CEO Whitacre, $12.6 mil. of his $23 mil. in total pay--as a reward in recognition of their decision to take a chance in creating DOX so long ago, a decision which has been so fruitful for the company. SBC says that the creativity this form of compensation represents is both virtuous and necessary for them to be competitive in retaining great executive talent. The article further implies a growing expectation that once SBC and Ameritech merge (which seems a fait accompli; the FCC has given its blessing, as have the vast majority of unions, which the article quotes an SBC spokesperson as saying), which is to say that once DOX's largest customer doubles in size, SBC will provide DOX with more business. This is a simple, rational calculus. As far as I'm aware Ameritech still retains its wireless operations, unlike, say, the former PacTel, which spun its off a while back. I don't know the extent to which Ameritech currently does business with DOX, if any. Given DOX's claim that half of all phone calls made in the U.S. involve their software at some point, I find a rational basis in guessing, without knowing more, that the odds of Ameritech currently being a DOX customer at 50%. If DOX now has no relationship with Ameritech, I think it reasonable to presume that eventually all of Ameritech's billing and customer care systems will be DOX supplied, as a result of the necessity in harmonizing operations in the eventually integrated company. On the other hand, if Ameritech is currently a lesser customer of DOX's then the merger would necessarily strengthen their relationship. Either way, the SBC-Ameritech merger stands to benifit DOX greatly, and DOX shareholder's should be very excited about this prospect. And we should be further enthused about being in solidarity with Mssrs. Whitacre and others who are in such powerful positions within the industry and can benefit themselves (and us) by continuing to support DOX in the future. |
