Once NN's name becomes more readily associated with AT&T and BT --- and, Godspeed the day, with a major RBOC --- it should ride the tides with those you mention.
From the EETimes, a follow-up on the effects of recent merger announcements:
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Posted: 9:00 p.m., EDT, 7/29/98
Puzzlement greets carrier merger mania
By Loring Wirbel
NEW YORK - The summer of mergers and alliances among large carriers has so blurred the line among long-distance interexchange carriers, ILECs, CLECs and cable TV operators that it has become difficult to typecast the players, though doing so will be necessary to determine if the mergers comply with the spirit of the 1996 Telecommunications Reform Act. It's also tough to tell if residential and business customers will experience more or less competition on a practical basis.
The spate of alliances between dissimilar carriers begun by AT&T Co.'s marriage to Tele-Communications Inc. reached a new high in terms of size this week. Incumbent local exchange carrier Bell Atlantic, still absorbing its acquisition of Nynex, announced it was merging with GTE Corp., a longtime competitive local exchange carrier that moved into long-distance and wireless services in the mid-1990s.
The announcement came just two days after the weekend revelation that AT&T will take the place of WorldCom/MCI in a partnership with British Telecom plc. The BT/MCI joint venture, Concert, will be dissolved, and AT&T and BT will take a 50/50 ownership in a new joint venture for international broadband and voiceband telecommunication business. The two companies will make a joint investment of $1 billion for "emerging technologies" in communications, including new Internet Protocol and asynchronous transfer mode services.
Retiring Bell Atlantic chairman Ray Smith claimed that the pooling of interests, valued at $67.46 billion, did not represent an acquisition, but was "a merger among equals in every way." The merged company will not retain either name, but will be renamed as a new entity spanning local access to international long-distance.
Investors reacted much as they did when AT&T and TCI merged in June, sending GTE shares down four points at midday Tuesday and Bell Atlantic shares down 1 1/8.
Ivan Seidenberg, chief executive officer of Bell Atlantic who becomes co-chief executive officer of the new company, faced some tough questions at last week's news conference. He insisted the AT&T/BT announcement did not accelerate completion of his company's deal with GTE, which had been under discussions for several months. Seidenberg made a clear distinction between Bell Atlantic's move and the efforts by SBC Communications Inc. to acquire both Pacific Telesis and Ameritech Corp.
"Size, while it's important, isn't the only thing, or always the most important thing," Seidenberg said. More important is developing a base of customers to amortize costs for moving broadband services to residences and small offices. In this regard, he said, Bell Atlantic was not moving too quickly in merging with GTE, but was being driven by customers demanding megabit access now.
"The customers think we all ought to be moving a lot faster than we're moving," Seidenberg said.
GTE, a longstanding alternative local carrier, grew a cellular business on the West Coast and within its local customer base during the 1980s, and upgraded the network to CDMA-based PCS in the 1990s. The company serves suburban markets in a Midwest swath from Michigan to Texas.
GTE expanded into long-distance services in 1996. It has been an early pioneer in ATM switching, and has offered digital video services in markets such as Tampa, Fla., and Ventura County, Calif.
GTE chief executive Charles Lee, who is to become co-chief executive with Seidenberg after the merger, said that the overlap between the two companies' service areas was minimal. He said less than 1 percent of GTE's current long-distance customers were in Bell Atlantic/Nynex territory, and that in wireless services, "our hard overlaps amount to less than a million POPs [points of presence]." Consequently, the two companies are predicting almost no layoffs among the combined base of 250,000 employees.
Seidenberg and Lee emphasized that one of the key areas where the merger would accelerate technology would be in the rollout of asymmetric digital subscriber line services. Both companies are strong proponents of ADSL, and can amortize equipment costs over a larger customer base now. [NN's announced ADSL source, Efficient Networks, has close ties to BA through DSC. Whether this will help NN, I don't know.]
GTE and Bell Atlantic combined have 63 million access lines in 38 U.S. states. Internationally, they supply 30 nations with voice and data services. The combined revenue base of the merged company is $53 billion, and its combined market capitalization is $125 billion.
"We believe that this action is totally consistent with the Telecom Act of 1996," Lee said. He also predicted further surprises among large carriers, saying "the consolidation in our industry has been going on for a number of years, and it's not over yet."
That continued consolidation was exemplified by the AT&T deal with British Telecom, in which the two companies will collaborate on projects ranging from local access to undersea fiber-cable development. BT had attempted the same infrastructure with MCI under the Concert joint venture, and would have extended that effort to include the acquisition of MCI, but WorldCom came in with a larger offer that scotched the deal. Since that time, analysts had anticipated that the combined WorldCom/ MCI would be uninterested in continuing the Concert alliance - even if the European Union had allowed it to continue.
EU officials still may put regulatory hurdles in the way, but the new AT&T/BT alliance may face less scrutiny than the original Concert. BT chairman Sir Iain Vallance has been named the chairman of the new joint venture, which does not yet have a name. BT, however, will acquire the name of Concert, and AT&T plans to offer international services in the United States under the name AT&T Concert.
AT&T president John Zeglis said that a global Internet service will be one of the primary goals of the new joint venture, which the two companies predicted will have an annual growth rate of 15 percent. Three divisions - voice and data, sales and service, and carrier services - will be created, though only the latter one will deal with small businesses and residential access. The bulk of the joint venture is aimed at large corporate accounts.
AT&T is withdrawing from two European alliances, Unisource and WorldPartners, as a consequence of signing the deal with BT. The joint venture will have 5,000 employees, and is expected to have initial annual revenue of about $10 billion, with operating profits of $1 billion.
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Another article by Loren Wirbel (my favorite DSL writer), this time specifically on NN:
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Posted: 3:45 p.m., EDT, 7/29/98
Newbridge reorganizes to hold slide
By Loring Wirbel
KANATA, Ontario - Newbridge Networks Corp., acting to halt a perception among analysts that it is losing corporate and product identity in its alliances with Siemens AG and 3Com Corp., has begun to reorganize into three product-related groups. Newbridge will also establish a revamped corporate marketing headquarters at its U.S. offices in Herndon, Va., after two years in which many key Herndon executives left the company.
Analysts expressed universal optimism at the changes initiated by chief executive Alan Lutz, though some warned that the company has significant ground to regain since the days in the mid-1990s when its MainStreet and Vivid ATM switch architectures were winning acclaim for WANs and LANs, respectively.
"No one is really dissatisfied with [chairman Terry] Matthews' overall leadership at Newbridge," said one Toronto analyst who asked not to be named. "But there's been a great deal of concern about mid-level management's ability to execute in recent years. Between the time of the Ungermann-Bass acquisition at the end of 1996 and the discontinuation of the U-B product line earlier this year, good people were leaving Herndon and Santa Clara in droves."
For example, the executives responsible for determining Newbridge's enterprise LAN marketing strategy, Rick Tinsley and Eric Andrews, left Newbridge a year ago to form Turnstone Systems Inc. with Whitetree founder Kingston Duffie. Since then, Newbridge's LAN message has not been presented concisely to outsiders.
In a conference call with analysts July 28, Lutz said Newbridge's three divisions will cover switching, access and Internet Protocol/internetworking products. Scott Marshall, formerly Newbridge's executive vice president of R&D, leads the switching-products group. Conrad Lewis, formerly the executive vice president of marketing and product management, heads the access-products group. Jim Arsenault, formerly the vice president of solutions marketing, directs the IP and internetworking-products group .
Lutz said he will centralize global marketing in Virginia under an outsider as executive vice president for marketing.
Lewis, who also serves as chief technology officer, will have general oversight of all affiliate companies, a longstanding strategy at Newbridge, which makes minority investments in companies and they remain independent. The affiliates include high-profile OEMs such as Advanced Computer Communications Corp. and Cambrian Systems Inc., as well as component-level companies such as Tundra Semiconductor Inc. Some affiliates will liaison directly with appropriate product groups, in addition to the oversight Lewis will provide.
Marshall will oversee all broadband switches sold to carriers, including the MainStreet 3600 series of TDM switches, as well as the MainStreetXpress series of broadband frame and ATM switches, some of which were co-designed with Siemens. Affiliates CrossKeys Corp., Seabridge, Castleton Network Systems, Starvision Systems and Telexis Corp. will be tied to the switching group.
Lewis' group will cover a range of last-mile access technologies, from xDSL and cable-modem subscriber modem technologies, to wave-division multiplexing metropolitan broadband systems. Affiliate companies working with the access group include Cambrian, West End Systems and Spacebridge Networks Corp.
Finally, Arsenault's group, focused largely on enterprise products, will cover all aspects of Internet Protocol systems, including voice over IP. The Vivid switched-routing product line will be marketed by Arsenault's group, and Lutz made clear that Vivid ATM switches were not phased out when U-B products were discontinued, they were simply retargeted for IP-based traffic. Products stemming from the effort with 3Com and Siemens for "carrier-based internetworking" also will be sold through Arsenault's group. Affiliates tied to this group include ACC, Vienna Systems, TimeStep Corp., Bridgewater Systems Corp., FastLane Technologies Inc. and ImagicTV Inc.
Lutz said that Newbridge will aim for a mix of customers that included 50 percent incumbent carriers, 30 percent alternative carriers and 20 percent corporate enterprise customers. He added that Newbridge will concentrate in particular on the U.S. market, hoping to realize more than 35 percent of total revenues from the United States within three years. In that time , Newbridge targets total revenue figures of $5 billion, with $1 billion coming from access products.>>> |
