Does anyone know the exact detail on the Lucent/Philips joint venture? Philips and Lucent have announced that this joint venture is coming to an end. I think that I read somewhere that Lucent has taken a one time charge on this. Does this mean that Lucent is taking back its portion of the telephone business or it is writing off its 40% stake in the joint venture completely?
Someone else will have to answer your questions. I don't follow the shark as much as the pilot fish.
But since I'm posting this note, I may as well add the IBD article whose last sentence caught my eye:
>>>
investors.com
Will A Revamped AT&T Hit Sales-Growth Target?
Date: 10/26/98
Author: Reinhardt Krause
Amid a big shake-up engineered by Chairman C. Michael Armstrong, AT&T Corp. is striving to reach sales-growth goals this year and next.
The nation's largest phone company is expected to show progress when reporting third- quarter earnings Monday. And it had better. AT&T has said it wants '98 sales to rise 2% to 4% over '97 - about double last year's anemic 1.6%. It had '97 sales of $51.3 billion.
Its rivals, including the regional Bells, are boosting sales much faster, with growth rates usually in the double digits. In the first half of '98, AT&T's sales rose less than 1% vs. the year-ago period.
AT&T is expected to report Monday that sales of data services to businesses are rising. Analysts also will be watching two other key areas: its struggling consumer long-distance business and wireless sales.
''We're still skeptical about what to expect from AT&T in terms of growth,'' said Ophelia Barsketis, portfolio manager at Stein Roe & Farnham in Chicago. Stein Roe once was a big AT&T stockholder, but isn't now.
''Some of what Mr. Armstrong is doing is huge risk/reward situations,'' Barsketis said. ''He's done a lot of long-term strategic planning, but the base needs to produce some decent sustainable growth, and we're not seeing that yet.''
Indeed, after a spate of cost cuts and deals this year, AT&T is a work in progress. Armstrong left Hughes Electronics Corp. to join AT&T as chairman and chief executive in November '97. Among Armstrong's many moves: He's buying cable leader Tele-Communications Inc.
''We see them (AT&T) on track,'' said Peter Kennedy, an analyst at Morgan Stanley Dean Witter Inc. ''There should be stabilization in consumer long-distance, a pickup in ales to) business, and wireless should stay strong.''
Cost-cutting that includes 18,000 layoffs is boosting earnings. Excluding one-time charges, second-quarter profit rose 60% vs. the year-ago quarter, to 91 cents a share.
AT&T is expected to earn 96 cents a share for the third quarter. That's the consensus of 26 analysts polled by Zacks Investment Research Inc. That would be 39% more than the 69 cents it reported in the year-ago quarter.
But Armstrong still must revive AT&T's core businesses, or his honeymoon may not last. The company is aiming for 4% to 8% revenue growth in '99, analysts say.
''AT&T's biggest hurdle is that it's so big,'' said Jeffrey Kagan, president of Kagan Telecom Associates Inc. in Atlanta. ''Armstrong is doing what they hired him for - shaking things up. But the results have yet to be seen.''
At least one analyst, however, does see results.
''Sales growth for the year should be 3% to 4%,'' said Eric Strumingher, analyst at Paine Webber Inc. ''The real pickup is in business ales).''
Teleport Communications Group Inc. will help boost AT&T's business sales, say analysts. AT&T says it will take a third-quarter charge of $217 million, or $137 million after taxes, for its $11 billion acquisition of Teleport in July.
The $48 billion TCI purchase is still in progress.
AT&T shares fell about 14% after it revealed the TCI deal, but they've since regained two-thirds of that loss.
Buying TCI could open the door for AT&T in local phone markets, making it easier to compete with the Bells.
TCI and its affiliates reach about 33 million homes and have about 11 million customers. But upgrading TCI's cable wiring to offer phone service is a long-term project, AT&T concedes. The tab could be more than $5 billion.
But with TCI, AT&T could offer a package of long-distance, cable TV, Internet access and other types of services to keep high-spending consumers.
Those packages could become vital when AT&T battles the Bells in the long-distance phone market, analysts say. The Bells plan to enter long- distance, but regulators won't grant approval until there's more local phone competition. Some Bells are expected to start offering long-distance service next year.
That's a challenge for AT&T. About 45% of its sales come from long-distance service to homes. It's still No.1, but AT&T has steadily lost share in that market since its '84 breakup.
Among consumers, its market share has fallen to 62.2% from 67.5% a year ago, says market researcher Yankee Group in Boston.
But analysts say some of the lost business won't hurt. About 15% of AT&T's 80 million home customers spend little on long-distance calls, analysts say.
''In the ideal, the (consumer) market share they lose is going to be the bad (low-usage) share,'' said Boyd Peterson, a Yankee Group analyst.
Peterson also points out that AT&T's real growth will come from the newer, more dynamic markets of wireless and data services.
AT&T has high hopes for its wireless unit, a bright spot in the first half of the year. The unit has added about 520,000 cell-phone subscribers in the first half and now has about 8.75 million.
''We're expecting AT&T to beat our estimate for 300,000 new subscribers in the third quarter,'' said Kennedy at Morgan Stanley.
One of AT&T's weapons has been a new flat-rate national pricing strategy. It rolled out the aggressive ''Digital One'' rate plan in May.
And there's much more on AT&T's plate. In October, AT&T said it will buy Vanguard Cellular Systems Inc. for $1.5 billion, including debt. The deal would give AT&T about 625,00 East Coast customers.
In July, it announced a merging of global operations with British Telecommunications PLC. On Friday, AT&T said it will realign some of its cell- phone properties with BellSouth Corp.
And it may buy other firms. Possible targets include McLeodUSA Inc. and WinStar Communications Inc., analysts say.
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