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

To: porcupine --''''> who wrote (1625)	5/6/1999 8:01:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Microsoft takes AT&T stake, to ally on services NEW YORK, May 6 (Reuters) - Software giant Microsoft Corp. said on Thursday it would take a $5 billion stake in AT&T Corp. , the No. 1 U.S. long-distance company, forging an alliance to speed the delivery of voice, video and Internet services into millions of American homes. Under the non-exclusive agreement, which confirmed widespread expectations, AT&T will increase its use of Microsoft's Windows CE-based operating system software in its digital set-top boxes, through which AT&T expects to manage its high-capacity cable links to customers. AT&T had previously committed to use a Windows CE-based system in 5 million television set-top boxes, which will be raised 50 to 100 percent under Thursday's announcement. AT&T will also license software Microsoft is developing to deliver e-mail and interactive services over cable television. After completing its proposed acquisition of cable company MediaOne Group Inc. , systems owned and operated by AT&T will have a potential audience of 25 million homes. Microsoft has agreed to pay $5 billion for newly issued AT&T convertible trust preferred securities and warrants. The preferred securities will have a face value of $5 billion and be priced at $50 each, with a quarterly payment of 62.5 cents per security. The 30-year maturity securities will be convertible into 66.7 million AT&T shares at $75 a share. The warrants will be exercisable in three years to buy 40 million AT&T common shares for $75 each. Microsoft will also buy MediaOne's 29.9 percent interest in Telewest Communications Plc , Britain's second biggest cable company, through a tax-free exchange of Microsoft shares. ((New York Newsdesk 212-859-1700))