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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Mao II who wrote (1037)	12/8/1998 8:29:00 PM
From: porcupine --''''>	Read Replies (3) \| Respond to of 1722

AT&T says IBM deal will help plans for BT venture NEW YORK, Dec 8 (Reuters) - AT&T Corp. said Tuesday its plan to buy IBM Corp.'s global corporate networking business will help accelerate the telephone giant's plans for its proposed international alliance with British Telecommunications Plc . AT&T earlier said it planned to buy IBM's Global Network business for $5 billion in cash. The two companies also agreed to various outsourcing deals under which AT&T will handle IBM's data networking needs, while IBM will handle some of AT&T's applications processing and data management work. The Global Network business provides a variety of data networking services for clients, including setting up and managing their internal networks and providing external Internet connections. The business serves roughly 35,000 corporate customers in 900 cities in more than 100 countries around the globe, and provides Internet access to more than 1 million individual users in 59 countries. The acquisition gives AT&T a massive jump-start on its proposed international joint venture with BT. Global Network has a presence in 93 cities out of 100 cities where AT&T and BT had planned to build new networks, AT&T said. AT&T said the AT&T-BT venture had planned to spend $5 billion to enter those 100 cities. Now, the venture will be able to delay some of that planned spending or spend money in different ways. "We're not going to have to do as many things as we had thought we'd have to do initially...it may delay some capital spending, it may eliminate some. It will help us save some money but I'm not ready to say how much," AT&T Chief Financial Officer Dan Somers told reporters following the AT&T-IBM press conference. AT&T said it does not expect its Global Network acquisition to complicate the regulatory review of its planned venture with BT. European antitrust regulators last week expanded their probe into the proposed joint venture, citing concerns the two companies would have too much control in the market for corporate global telecommunications services and international carrier services. The European Union also said it was concerned the companies would create or strengthen a dominant position in Britain. But AT&T said it does not expect the deal to affect the expanded probe. "The amount of this network that would affect the joint venture...I do not consider to be material and I think the regulators, when they look at it, will agree with me," AT&T Chairman C. Michael Armstrong said during the press conference. Shares of AT&T, the second-most active issue on the New York Stock Exchange, gained $3 to $67.75. IBM added $2.06 to $169.25, also on the NYSE, bucking weakness throughout the broader market. (( Jessica Hall, New York newsroom 212-859-1729))

To: Mao II who wrote (1037)	12/19/1998 9:40:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Welcome, Mao II -- that's quite a moniker for a capitalist --!!!!:> As you know, IBM and AT&T are two of the components of GADR's Model Dow Value Portfolio (the other two being Boeing and GM). In the past, IBM has tried to become a long distance phone company (via SBS Skyline), and AT&T once tried to become a computer company, via NCR. IBM's effort didn't fit into its long term goals, and AT&T's diworsification into computers was a multi-billion dollar fiasco. Now, with both companies under different management, IBM is selling its global phone network to AT&T, and AT&T is having much of its computer system run by IBM. It's amazing what a new management can do, once it exercises some common sense. (Boeing, are you listening?) Interestingly, IBM gets paid both ways. However, as a customer itself of the network it is selling to AT&T, IBM will be paying some of it back to AT&T, over time. One estimate from the Street is that $9 billion will be passing back and forth between the two companies. And, several thousand employees of the one will now become employees of the other, and vice versa. One analyst has even declared it a "partnership". Of course, the most awesome merger in the world would be Big Blue combining with Ma Bell. But, perhaps formal merger is unnecessary, in light of this informal partnering. My case for both of these companies is a macro one. There are a billion adults out there who have never made a phone call or owned their own PC. Most of them would like to. Over the next generation, globalization of free markets will make it possible for a great many of them to do so. The computer industry and the telco industries are both expected to grow at double digit annual rates for at least another generation to come. And, don't forget that famous equation: Telephones + Computers = The Internet. Why pay astronomical multiples for untested new ventures in order to invest in the growth of e-commerce, when you can do so by buying shares of these rock solid blue chips at reasonable multiples of sales and earning?