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Technology Stocks : WCOM -- Ignore unavailable to you. Want to Upgrade?

To: Anthony Wong who wrote (5137)	10/4/1999 2:40:00 PM
From: SteveG	Read Replies (3) \| Respond to of 11568

From Sanford Bernstein's Tod Jacobs: Highlights 1. WCOM seen as best strategic fit with Sprint; potential deal discussed in articles this morning similar in structure and scope to potential structure outlined in our call last week; updating the numbers for Friday's closing price yields about 11% dilution in year one and 6-7% dilution in year three (break-even by year-3 would require 8% incremental revenue synergies) 2. Assuming that WCOM upped its offer to meet BellSouth's terms with a stock for stock offer (not necessarily required, in our opinion, for WCOM to win the deal, given what we think is Chmn. Esrey's preference from WCOM), dilution in year one would be about 16% and dilution in year three would be 10-11% (break even with 13-15% incremental revenue synergies) 3. DT also said to be weighing its options; however, we believe bottom line is that company's standstill agreement with Sprint precludes any unsolicited offers Investment Conclusion: WCOM and FON are rated outperform. PCS is rated marketperform. Details Articles out this morning suggest a potential bidding war between WCOM and BLS for Sprint, with BellSouth offering a higher price as well as a collar to protect Sprint's downside. While we've always believed that BLS formed one of the logical three bidders for FON's assets (along with WCOM and DT), the bottom line is that we believe that Sprint is far more keen to merge with WorldCom than with BellSouth for numerous reasons, including the more natural synergies, better international solution, more complete nationwide competitive local infrastructure (with a business/data focus) and - believe it or not - fewer regulatory issues currently. As such, we expect that Sprint will favor a WorldCom bid, even at a lower price (though, as they say, every man has his price…). The terms for a WorldCom-Sprint deal outlined in the paper this morning are similar in structure and scope to the deal we outlined in our call last week (stock for stock purchase transaction; premium for both sides; PCS spun out as a tracker; and about $2b in synergies by year three). Updating the numbers for Friday's closing price yields 11% dilution in year one and 6-7% dilution in year three (see Exhibit 1). We believe that the combined wireline company could break even in year three with 8% incremental revenue synergies, somewhat more than we forecast last week, but still achievable. If WorldCom were to up its offer to meet BellSouth's terms with a stock for stock offer (not necessarily required, in our opinion, for WCOM to win the deal, given the superior strategic fit discussed above), dilution in year one would be about 16% and dilution in year three would be 10-11% (see Exhibit 2). The company could break even in year three with 13-15% incremental revenue synergies

To: Anthony Wong who wrote (5137)	10/4/1999 3:18:00 PM
From: Eric L	Read Replies (1) \| Respond to of 11568

Anthony, << Sprint Asks BellSouth for Sweetened Bid >> This gets fun. I still say MCI top dog here but ... If BellSouth (and if they get the wireless side) we have technology alphabet soup because we have Sprint PCS totally CDMA. BellSouth is GSM in their 1900 MHz spectrum and TDMA/AMPS in 1800 MHz. BellSouth also has GSM interests overseas and TDMA in Latin America. Now the CDMA zealots would say, hey, just do a CDMA overlay. Thats a possibility. Another would be that this could help drive a CDMA/TDMA/GSM/ multi-band phone. SIM inside to authenticate to a GSM network. - Eric -