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

To: bill c. who wrote (10100)	4/6/1998 10:25:00 AM
From: Chemsync	Read Replies (2) \| Respond to of 21342

GTE Raising Cash for Internet Acquisitions <<"You have to make sure you have the right assets to go to battle," >> GTE Attacks Costs with Local Business Sell-Off over $2 Billion By Andrew Brooks at Bloomberg News 03-APR-98 GTE Corp. said it will sell local phone businesses for about $2 billion to $3 billion to cut costs and free up cash for expansion into Internet services and other areas with greater sales growth. ÿÿÿÿÿÿ The moves are expected to reduce annual costs by more than $500 million in the next two years, including savings from 1,500 job cuts. The company expects to take a first-quarter charge of $802 million that will reduce 1998 earnings by 83 cents a share. ÿÿÿÿÿÿ GTE is aiming to concentrate on its data services and other high-growth areas. The company, which offers a range of phone services including local, long distance and wireless, also wants expand its national presence before Baby Bell rivals catch up. ÿÿÿÿÿÿ "GTE's gotten serious about transforming from a traditional plain old phone company," said Scott Wright, an analyst at Fahnestock & Co., who has a "buy" rating on GTE shares. ÿÿÿÿÿÿ The businesses for sale include 5 to 8% of its local phone operations, Airfone, which provides phone service on airplanes, and others that chief financial officer Michael Kelly declined to disclose. ÿÿÿÿÿÿ "You have to make sure you have the right assets to go to battle," Kelly said. ÿÿÿÿÿÿ Kelly said he expects the company to make several small acquisitions to enhance its services rather than make one big purchase. He declined to disclose potential acquisition targets. ÿÿÿÿÿÿ "We're looking at a number of smaller acquisitions that would help to augment our capabilities," he said. ÿÿÿÿÿÿ Last fall, GTE was outbid by WorldCom Inc. for MCI Communications Corp., the No. 2 US long-distance company. GTE bid $33.5 billion, while WorldCom sweetened its offer to $41.8 billion. ÿÿÿÿÿÿ Last year, GTE beefed up its data services by paying $616 million for Internet service provider BBN Corp., an Internet pioneer that connects companies to the global computer network. At the same time, GTE bought part of Qwest Communications International Inc.'s 16,285-mile nationwide network, which is expected to be completed next year. ÿÿÿÿÿÿ Apart from acquisitions, GTE also wants to cut costs. ÿÿÿÿÿÿ Kelly said the company plans to fire more than 1,500 workers, some of whom were notified today. While most of the cuts are expected in GTE's wireless unit, they also include some international positions and some jobs that will be eliminated when the company moves its headquarters to Irving, Texas. ÿÿÿÿÿÿ GTE has been hiring workers in some divisions, and Kelly said he doesn't expect the cuts to significantly change the size of the overall workforce of 114,000 employees. "We do envision additional staff reductions over time," he said. ÿÿÿÿÿÿ The cost-cutting measure will result in after-tax charges of $482 million, including a writedown of the company's combined fiber-optic and coaxial cable video networks. GTE will also take a $320 million charge for an accounting change for its Canadian operations and for retiring about $800 million in high-interest debt. ÿÿÿÿÿÿ Earnings before the charge are expected to be "in line" with estimates, the company said. ÿÿÿÿÿÿ