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

To: Sully- who wrote (44962)	12/10/2001 2:26:31 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

40 Different Types of Market Bears... markpoyser.com

To: Sully- who wrote (44962)	12/10/2001 5:28:04 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

AT&T Down on Broadband Unit Questions Monday December 10, 4:13 pm Eastern Time By Jessica Hall PHILADELPHIA (Reuters) - Shares of AT&T Corp. (NYSE:T - news) shed over 4 percent on Monday as questions lingered about the sale of all or part of the company's cable television unit and about the unit's cash-flow targets, analysts said. AT&T's stock, the No. 1 U.S. long-distance telephone and cable-television company, fell 78 cents to close at $16.90 on the New York Stock Exchange. The stock has fallen about 2 percent this year. The company's board met on Saturday to consider three bids to acquire AT&T Broadband and two proposals that would give the company a sizable cash cushion, sources close to the situation said. AT&T said on Sunday it would continue discussions with all suitors, but ``cautioned that there could be no guarantee that it would enter into a transaction.'' The ongoing talks are the latest chapter following five months of uncertainty over the fate of AT&T Broadband. Some investors viewed that statement as a signal that AT&T may reject all offers and proceed with its original plan to spin off the unit as an independent company, analysts said. ``I think the fact that AT&T emphasized the fact that one potential outcome is AT&T Broadband not being sold may be concerning investors. The only reason stock price has been up this year is because people were hoping that AT&T would sell off AT&T Broadband,'' said Drake Johnstone, an analyst with Davenport & Co. ``I would doubt that investors would be patient enough to hang on to AT&T if there wasn't some near-term resolution with AT&T Broadband,'' Johnstone said. ``The rest of AT&T's businesses are doing poorly -- consumer revenues are down, business revenues are down. I don't think people want to own AT&T for the rest of those businesses.'' CASH-FLOW JITTERS Other analysts suggested that AT&T's stock sold off in reaction to a story in The Wall Street Journal, which said AT&T internally reduced the cable unit's 2002 cash-flow forecasts to $2.85 billion, from $3.3 billion. The newspaper cited unnamed ''people familiar with the situation.'' AT&T did not immediately return calls seeking comment. Patrick Comack, an analyst with Guzman & Co., said he spoke with AT&T executives, who denied that internal forecasts for the cable unit were cut. ``If it were to be true, it would make the cable unit less valuable ... (a forecast of) $2.85 billion basically indicates that margins stay flat,'' said Comack, who expects the broadband unit's cash-flow to be $3.4 billion in 2002. ``Someone got that number from somewhere. I think that's shaking up the market ... (but) the bottom line is that AT&T denies this,'' Comack said. Some analysts suggested that the cash-flow forecasts may have been floated by an AT&T rival, or a suitor who wants to keep a lid on bids for AT&T Broadband. AT&T has not disclosed the broadband unit's cash-flow target for 2002, but it previously said it would boost profit margins to industry-standard levels within three years. In October, the company said AT&T Broadband's revenues will grow at a low- to mid-teens rate in 2001, and will show similar or slightly better growth in 2002. TAKE THE MONEY, OR RUN THE UNIT? AT&T Broadband, which has about 14 million subscribers, received takeover offers from smaller rivals Comcast Corp. (NasdaqNM:CMCSK - news) and Cox Communications Inc. (NYSE:COX - news). Media and Internet group AOL Time Warner Inc. (NYSE:AOL - news) and software titan Microsoft Corp. (NasdaqNM:MSFT - news) submitted a variety of investment bids, sources familiar with the situation said. AT&T asked the suitors to supply more information about their bids and will hold talks this week with each party to discuss the offers in detail, sources said. New York-based AT&T postponed plans to carve out AT&T Broadband as an independent company in July, when Comcast offered to purchase the unit in a deal originally valued at $44.5 billion. AT&T rejected Comcast's bid as inadequate, and then fielded proposals from other interested suitors. Barring a very lucrative takeover offer, several AT&T executives and directors favor keeping the cable television unit independent, sources said. The company recently hired new AT&T Broadband executives, who have ties to AT&T board member Amos Hostetter, a proponent of keeping the business independent. ``Clearly, with the management team they've put together at AT&T Broadband, the intent wasn't to attract these people who have long standing in the industry and then sell off the business,'' said Susan Kalla, an analyst with Friedman, Billings, Ramsey & Co. ``It's pretty clear that they want to try and maintain at least some of the broadband business themselves. That might have been a disappointment to investors who were hoping to take the money and run,'' Kalla said.