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

To: TraderEd who wrote (2635)	6/17/1998 12:42:00 PM
From: SDR-SI	Read Replies (1) \| Respond to of 11568

TE: The other minor negative in the giving up of most or all of the MCI Internet business is that it has been mentioned that one of the "plusses" of WCOM's acquiring of MCI was its gaining of the MCI Internet sales organization, which is much larger than WCOM's Internet sales organization and which is more directed toward wholesale and large-user-retail sales. If the entire MCI Internet operation is divested as a block, then this benefit of the original acquisition concept will not accrue to WCOM. It is, however, the easiest part of the deal to replace and/or replicate and/or compete with. Although it would have been nice to get a sales staff that is already up and running, in my opinion not getting it is nowhere near the negative that having to give up UUNET would be. It appears that it is the price that must be paid for regulator approval. Steve

To: TraderEd who wrote (2635)	6/17/1998 12:52:00 PM
From: dougjn	Respond to of 11568

Three things. First, the divestiture of MCI's internet backbone and customers is clearly a distress sale. MCI isn't doing it because it wants to. It has to. And in short order. Further it cannot sell to the highest bidder. E.g. neither Sprint nor GTE would likely be acceptable to the DoJ or the ECC. Therefore, MCI is unlike to get as much as it could under more favorable circumstances. (Why do you suppose Cable and Wireless was so desperate to hold onto its sweetheart (wholesale assets only) deal that it sought to enjoin MCI from backing out of it, and paying them $25 million for their trouble?) Second, the full MCI internet business unit will be much more valuable that the somewhat convoluted backbone and wholesale only deal. It is a going concern. Third -- there are nonetheless some advantages to Wcom/Mcic that offset some of these disadvantages. From what I understood, MCI internet and UUnet had faced some serious technical integration issues. Those are now made much easier. Technology does march along at a furious pace, and Wcom/Mcic can indeed use the proceeds to buy the latest and greatest from Ascend, Cisco, Ciena, et.al. And with Uunet, the combined entity already has way more than critical internet mass. (Which is a lot of what the buyer of the full MCIC internet unit will be purchasing.) So MCI-Worldcom can continue to add customers and business while adding whizz bang capacity. However, the internet business is growing so fast that even with these considerations, no doubt Wcom/Mcic would have preferred to sell as little of its existing customer base as possible. Nonetheless, at the end of the day, the clear leader in large scale Net operations will remain Mci-Worldcom. So if you were managing Wide Area Networking for Exxon, who would you call first??? Doug