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Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: SteveG who wrote (3308)	1/8/1998 4:38:00 PM
From: SteveG	Read Replies (3) \| Respond to of 12468

<A> An AT&T/Teleport Deal Seen Adding To Earnings By 3rd Year By Shawn Young NEW YORK (Dow Jones)--If AT&T Corp. (T) buys Teleport Communications Group Inc. (TCGI) for $10 billion to $11 billion, the purchase is likely to hurt AT&T's earnings in the first two years, but add to them by the third year, said Sanford C. Bernstein & Co. analyst Tod Jacobs in a research note. The Wall Street Journal said Thursday that a long-discussed deal between the nation's largest long-distance company and the largest local phone company that isn't a Baby Bell appears imminent. The purchase, though costly, would constitute a grand entrance into the local market by AT&T. It would also be the biggest initiative yet by the company's new chairman and chief executive, C. Michael Armstrong, who took the reins in November. The purchase could dilute AT&T's earnings by 10% to 12% in the first full year, which would probably be 1999, Jacobs said. That figure does not take into account savings from the merger, which could cut the dilution in half, Jacobs said. The deal would very likely add to earnings by the third year, he said. "We would expect that AT&T Chairman Armstrong, who told us that deals must make financial sense as well as strategic sense, would assert that dilution would be minimal in year two, and that the deal would be accretive by year three," Jacobs wrote. Extrapolating from savings on combined local and long-distance service announced by MCI Communications Corp. (MCIC) and WorldCom Inc. (WCOM) when they agreed to merge, Jacobs said savings from an AT&T merger with Teleport could come to roughly $700 million in the first year and more after that. Since Tele-Communications Inc. (TCOMA), Comcast Corp. (CMCSA) and Cox Communications Inc. (COX) own about 65% of Teleport, the deal also could pave the way for AT&T to work with cable companies to offer local phone service and perhaps data services over cable wires, Jacobs said. A deal with Teleport would not put AT&T into the consumer side of the local market, but a broader alliance with cable companies could, analysts said. ======= Also, valuation considerations: Message 3122958 Although I thought the analyst was talking about what AT&T payed for Teleport, and that it was 6x (vs. 6.5x.) Anyone with clarification/thoughts?