Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Sully- who wrote (44919)	12/10/2001 1:29:20 PM
From: stockman_scott	Respond to of 65232

The head of AT&T seems to be watching out for his own interests... Package Deal: Armstrong Comes With AT&T Broadband Monday December 10, 10:50 am Eastern Time Forbes.com By Penelope Patsuris <<Is AT&T chief C. Michael Armstrong really in a position to be so picky? Apparently he and his board of directors think so, having sent all three of AT&T Broadband's suitors packing after proposals to buy AT&T's cable unit were presented on Saturday. And it's not just price that prospective buyers Cox Cable , Comcast and AOL Time Warner can't agree on. Also at issue is whether the AT&T Broadband's buyer will agree to use AT&T's cable telephony services. Since cable telephony sends regular telephone calls over cable wires at far less expense than calls made via traditional telecoms like Verizon , it's expected to overtake traditional telephone technology in the not too distant future. This is expected to become a critical source of revenue for AT&T in the coming years. "'Armstrong sold this deal to Wall Street on the expanded revenues for cable telephony," says Rick Doherty, director of research with the Seaford, N.Y., Envisioneering Group. With hundreds of thousands of subscribers, AT&T is one of cable telephony's biggest suppliers, but Cox, for instance, already has a much larger cable telephony business in place and uses Sprint as its supplier. "It's a paramount concern for the AT&T board that when any cable telephony customer picks up the phone it's AT&T's network that's getting used," says Doherty. What's most surprising to find on the bargaining table is the role of Michael Armstrong himself, both during the transition and within the new organization. "If Armstrong were running any other company, he'd be long gone," says Carmel Group analyst Sean Badding. "I think he's got to have some real ties into the board, considering that shareholders have been demanding his head for some time. Everything he's done has been the opposite of what he was supposed to do." Two years ago Armstrong paid a premium for cable operator TCI in the largest deal in telecom history. Since then, his vision of bundling telephony, broadband cable and wireless services to lock in consumers has failed, and he's been reduced to selling off the farm piece by piece for a total loss of around $10 billion. This is hardly a strong bargaining position. What's worse, the necessary TCI plant upgrades that Armstrong promised Wall Street would cost $10 billion-$20 billion have run up into the hundreds of billions, and it's not even finished yet. "A third of AT&T customers don't even have access to broadband, while most of Cox, Comcast and AOL Time Warner's customers do," says Doherty. "AT&T's plant is still a fixer-upper. Whoever buys it will have to put a lot of money into it. " It's not exactly a track record that makes Armstrong a must-have member of the new entity's team, but for whatever reason the AT&T board seems to want to secure a spot for him, despite his past missteps. "And of course, Armstrong wants as strong a parachute as possible for himself," adds Doherty.>>