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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: RocketMan who wrote (6090)	3/3/1999 7:45:00 PM
From: puborectalis	Respond to of 41369

Wednesday March 3, 5:45 pm Eastern Time AT&T, AOL marketing deal makes sense - analysts NEW YORK, March 3 (Reuters) - A potential pact in which AT&T Corp. (NYSE:T - news) would pay to market its telephone services to subscribers of America Online Inc. (NYSE:AOL - news) makes sense for both companies, analysts said Wednesday. An alliance of AT&T and AOL has been long rumored, and on Wednesday the USA Today newspaper said the companies were in talks on an arrangement under which AT&T would pay to market its services on AOL. Officials at AT&T and AOL declined to comment on any possible talks or the newspaper report. Citing sources close to the situation, the newspaper said AOL is looking for an upfront payment of about $500 million. ''AOL has half the (U.S. Internet) consumer market. AT&T wants nothing other than to be No. 1,'' said David Goodtree of Forrester Research. ''Both have something the other one wants.'' AOL is ''a killer marketing machine'' that would give AT&T access to its current 15 million subscribers and to future subscribers, he said. AT&T already has deals with almost every major Web gateway firm. According to Gary Arlen of Arlen Communications, ''it makes sense for AOL to associate with the first-rate players.'' Analysts said the deal makes more sense than the recently revived rumors of an outright merger of the two companies. AT&T is ''stitching together a nation of cable modems,'' Forrester's Goodtree noted, through its $48 billion purchase of Tele-Communications Inc. (Nasdaq:TCOMA - news) as well as through deals with other cable companies. The promise of high-speed voice and data service could be popular with AOL's audience. The possibility of a deal raised questions about other business arrangements between the companies. AOL had asked the federal government to force AT&T to open up TCI's cable network. In a speech Wednesday, AT&T chief financial officer Dan Somers said, ''We're happy for them (AOL) to jump on our network, but it has to be a commercial arrangement,'' rather than an obligatory one. The current marketing alliance would be worthwhile without involving the cable network issue, William Blair analyst Abhishek Gami said. ''They can easily do a one-off deal even if it doesn't have anything to with the cable network,'' he said.