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

To: bill c. who wrote (8423)	12/18/1997 10:31:00 AM
From: Chemsync	Read Replies (1) \| Respond to of 21342

[4.5 billion Internet Access Deal] Bill, I'm sure you've noted the cables have been rumbling alot lately. Got the feeling the Telcos are preparing to counter volley? NextLevel, TCI in Internet access deal By Margaret Coker, CBS MarketWatch Wed Dec 17 18:32:46 1997 ÿ CHICAGO (CBS.MW) -- Shares of NextLevel Systems Inc. jumped 18 percent Wednesday after the company announced a multibillion deal that aims at bringing high-speed Internet access to homes across America. NextLevel said it has entered into long-term understandings worth as much as $4.5 billion over the next three to five years to supply at least 15 million advanced digital set-top devices to nine leading cable system operators. Tele-Communications Inc. said it and its affiliates would buy 6.5 million to 11.9 million of the set-top devices. This would give NextLevel about a 30 percent share of the residential Internet market over the time period, said Walter Dymek, a senior manager at the Eastern Management Group. This is "an aggressive estimate" in a sector that is still in its infancy, he added. ÿ Projected sales "are a very aggressive estimate that is going to be mitagated by the price points of these things." Walter Dymek, Eastern Management Group "1998 will be a very aggressive year to determine high speed Internet access through both cable and telephone access. Hard decisions are going to be made about technology that brings high-speed Internet access" to residential consumers, Dymek said. 'Very aggressive estimate' The NextLevel projected sales "are a very aggressive estimate that is going to be mitagated by the price points of these things (set-top boxes)," he said. NextLevel also announced it was changing its name back to General Instruments, and appointed Edward Breen as its chief executive. He had served as acting CEO since October. Under a restructuring plan completed in July, General Instrument Corp. reorganized into three firms: NextLevel, CommScope Inc. and General Semiconductor Inc. As part of the set-top deal, cable operators will receive warrants to purchase about 16 percent of General Instrument's equity at a price of about $15.00 per share. TCI will gain a 10 percent equity stake in General Instrument in exchange for its digital transport and authorization functions, General Instrument officials said. Analysts said then that NextLevel had the greatest and fastest growth potential because it supplies set-top boxes, cable modems and other components for voice, data and video networks, including the Internet. Its biggest business is supplying equipment used by cable operators to deliver programming. Dick Badler, a spokesman for the company, said the digital end was "rapidly becoming" its primary product. Digital TV TCI officials said the deal would bolster digital TV as the up-and-coming television service for customers. The technology would provide high-speed Internet access, advanced digital entertainment features .a nd a broad range of new services including network games, impulse transaction capabilities, data and e-mail and the future promise of Internet voice and video applications, TCI Chairman John Malone said in a statement. Badler said the deal "opens up all kind of horizons for cable operators and their customers." Customers would, on average, pay $300 for the boxes, he said. This price point could be undercut, Dymek said, as soon as regional telephone companies like Bell Atlantic and Bell South finish testing their high-speed Internet access wires. This Internet access option could be ready to go to market as soon as the first quarter of 1998, he said. "I'm not so sure who (cable operators or telephone companies) is going to succeed in the (residential) marketplace. The cable operators are a bit more aggressive in bringing solutions to market than the telephone companies . but there are a couple of negatives of the cable business," Dymek said. "One of these is the reliabilty issue. People don't like the reliability of cable companies. They do in fact like the reliability of the phone companies." The Nextlevel deal places the company in a great position ahead of what promises to be "a difficult year for competitors to establish market superiority," Dymek said. "They have credible product." Margaret Coker is an online reporter for CBS Marketwatch. ÿ