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Technology Stocks : America On-Line (AOL)
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To: Tunica Albuginea who wrote (14841)5/5/1999 11:15:00 AM
From: Joe S Pack  Read Replies (2) of 41369
 
TA,
You make a good point. T is making the argument that it will
save billions of dollars in local access fees to RBOCS. But of course
they will get cable revenue etc.
But here are the few points to ponder:
1) T needs to spend billions of dollars in hardware to upgrade
cable nets to make truely two-way internet access.
2) With 100 billion dollar dilution on shares for the two recent
buys and already sold $10B worth of bonds, how will it affect share
performance in a short while? In the long run if they can execute
well and the merger succeeds it will be a good investment.
3) Still there will be regulatory hurdles along the way.
4) These mergers may tarnise ATT's image as a reliable phone company. Cable companies don't have that kind of image with customers.
5) RBOCs will accelerate their DSL deployment at a faster rate
than they would have planned or would like to do.
6) ATT does n't have a good record on buy and merge front.
Remeber BOb Allan destroyed NCR and lost a few billion dollars.
May be Amstrong is a different guy but
any merger of these magnitude will take lot more time to
be smooth and efficient than people would like to have.
Now it is not two but is three.

Points 5 and 6 are good for AOL.

-Nat
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