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

To: Mazman who wrote (3591)	12/16/1998 9:13:00 AM
From: Mazman	Read Replies (2) \| Respond to of 11568

More on Worldcom's Possible Deals from today's WSJ MCI Talks With Several Firms On a Deal to Manage Networks By REBECCA BLUMENSTEIN and GARY MCWILLIAMS Staff Reporters of THE WALL STREET JOURNAL, December 16, 1998 MCI WorldCom Inc. is in talks with several companies about an arrangement that would significantly broaden its ability to manage businesses' giant voice and data networks, according to people familiar with the situation. A deal, say the people, will likely involve the sale of MCI WorldCom's Systemhouse unit, which puts together computer systems for clients. While the unit, which MCI purchased for $1 billion in 1995 and now employs 9,000, is highly regarded, people close to the situation say it may be too small to win the large-scale contracts that MCI WorldCom wants. But an agreement, the people say, would involve much more than just Systemhouse and could even end up with MCI WorldCom purchasing a major player in the market and wrapping the unit into it. "There is no chance that we are just going to sell the asset," said one person close to the talks, referring to MCI's desire for any deal to be part of a broader relationship. "A lot of customers want us to do the integration for them. We think it's important to have the networking and systems capability to do that." Any agreement would likely include a broad set of relationships. Among these: the formation of a joint venture that could provide customers with one-stop shopping for voice and data networking, and computer-outsourcing services. At this point, MCI WorldCom hasn't selected a partner, though people close to the situation say that Electronic Data Systems Corp. is one of the companies in discussions. The talks between MCI and EDS were reported Tuesday in the Washington Post. The review of MCI WorldCom's network-management capabilities, which may go on for another month, is a major priority for top management as MCI and WorldCom continue to combine their assets. Broadly, such an agreement would mirror a similar pact struck by AT&T Corp. and International Business Machines Corp. last week. As part of AT&T's pact to purchase IBM's global network for $5 billion, AT&T agreed to take over network-communication services for IBM and IBM agreed to assume computer operations for AT&T. MCI WorldCom Chairman Bernard J. Ebbers has said since buying MCI that he wants to be a major player in the data-networking business, an emerging sector that enables companies to build and design the information services they need. It is also considered a strategy to increase voice and data traffic on MCI WorldCom's own network. Analysts say an agreement between MCI and EDS, for example, would address weaknesses at both companies. MCI WorldCom's Systemhouse, which lacks a large global presence, is expected to bring in $1.7 billion in annual revenue, which pales in scope to EDS, which boasts annual revenue of about $15 billion. EDS also operates its own telecommunications network that could be more profitably run by MCI WorldCom, analysts say. And EDS last week named a top telecommunications executive, former Cable & Wireless PLC Chief Executive Richard H. Brown, as its chairman and chief executive. "To the extent a deal materializes, we could see a more efficient use of assets and better margins," says Raimundo C. Archibold, information services analyst at J.P. Morgan Securities.