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Today's report from Web Editor
Susan Rush
• AT&T: Split Personalities; Earnings Drop Off
• Nortel Takes A Hit On Wall Street
• DSL Pushes Forward Despite Tech Glitches
• Is A Chip Slowdown Coming?
• Broadband Briefs
AT&T: Split Personalities; Earnings
Drop Off
Well, it's official, AT&T
will split into four separate companies, but it looks like Wall Street is
still frowning on Ma Bell. Following the spin-off announcement, a lackluster
earnings report for the fiscal third quarter and forecasts of further
sluggishness in the coming year, AT&T shares continued to drop this
morning, down more than 9 percent to $24.44 during early trading. And in
what has become typical treatment by Wall Street, Merrill
Lynch analyst Adam Quinton downgraded AT&T's intermediate-term stock
rating to an "accumulate" from a "buy."
AT&T reports third quarter earnings 35 cents a share,
compared to 50 cents a share during the same period a year ago. Pro forma
revenue during the quarter increased 3.7 percent to $16.97 billion, up from
$16.33 billion for Q3 1999. The bump in revenue was sparked by the
performances of the broadband, wireless and business services units. These
units are performing -- AT&T Broadband for example, saw a 10.8 percent
increase in revenue -- so it's not surprising that when the decision was
made to split up the company, these units were tagged to lead the
independent charge.
The four new companies, which will still operate under the
AT&T brand, are: AT&T Broadband, AT&T Wireless, AT&T
Business and AT&T Consumer. Each spin-off will become a publicly held
company, trading as a common stock or a trading stock. The units will
continue to bundle each other's services through inter-company agreements,
according to an AT&T statement. The restructuring is expected to be
complete in 2002.
Related Stories:
It's OK
To Spin Off, BroadbandWeek Direct, 10/24/00
AT&T:
And Four Stand Alone, BroadbandWeek Direct, 10/23/00
Nortel Takes A Hit On Wall Street
Nortel Networks'
shares took a tumble today, down $17.00 to $46.31, after third quarter sales
fell short of some analysts' expectations. Revenue for the quarter totaled
$7.31 billion, up from $5.15 billion a year earlier, but analysts were
anticipating sales of more than $7.50 billion.
Nortel president and chief executive John Roth says that the
company makes "no apologies" for a 42 percent increase in sales
and that despite people's wishes, he doubts that the company can maintain
150 percent growth rates forever. Nortel's optical equipment system sales
jumped 90 percent during the quarter, but analysts expected sales to at
least double. The company expects revenue and earnings per share from
operations to grow between 30 and 35 percent in 2001.
Stock market investors seem to be a little jittering these
days, and as a leader in optical networking gear Nortel's disappointment
caused a trickle effect in the fiber-optic industry, with many companies in
both the fiber optic and networking business suffering a stock backlash
today. JDS Uniphase fell
$16.88 to $78.19; SDL, a JDS recent
acquisition, plunged $54.84 to $261.14; Ciena
dropped $20.88 to $114.50; and even Cisco Systems took a slight hit, falling
$1.94 to $52.94.
Related Story:
Nortel,
Lucent Push Broadband Content Move, Multichannel News, 4/10/00
DSL Pushes Forward Despite Tech Glitches
DSL subscribers will surpass 23 million worldwide by 2004,
despite technical deficiencies, according to a new report from Cahners
In-Stat, a sister company to Broadband Week. Players in the DSL
arena are working hard to overcome DSL's shortcomings, including reach,
spectral compatibility and availability, and this hard work will most likely
pay off for CLECs and ILECs.
The "DSL
Market Analysis" report findings include Asymmetrical DSL remaining
the "flavor" of choice in more than 70 markets through 2004. The
United States will continue its DSL dominance, but regions like Asia/Pacific
will continue to grow. The report also examines DSL market drivers and
competitors.
Despite the positive growth expected for the DSL market,
competition is fierce in the broadband sector and DSL providers must stay on
top of their game. "It's critical that DSL service providers and
equipment manufacturers continue to work in the best interests of the
industry in terms of making DSL readily available to everyone,"
explains Mike Lowe, senior analyst for In-Stat's Advanced Carriers Service.
"In the face of competition, end users won't wait for DSL to get its
act together."
Related Stories:
Report:
Baby Bells In DSL Driver's Seat, BroadbandWeek Direct, 8/8/00
DSL Is On The Rise, BroadbandWeek Direct, 7/25/00
Is A Chip Slowdown Coming?
Growth is continuing in the semiconductor industry, but the
trade group Semiconductor
Equipment and Materials International warns that a chip slowdown may be
on its way.
The group reports semiconductor equipment makers posted a 16
percent increase, a book-to-bill ratio of 1.16, in orders during the month
of September, but that number is down from the previous month's book-to-bill
ratio of 1.23. In a statement, SEMI said the decrease may just be "a
seasonal slowing in new orders," but some analysts feel otherwise. One
analyst from Chase H&Q advised a "wait-and-see" strategy for
the industry. If the downturn continues, the chip makers may need to
react, but for now, manufacturers will "wait-and-see."
Broadband Briefs:
- Excite@Home Corp.
reports a third quarter net loss of $668.7 million, or $1.67 a share, compared
with a loss of $498.6 million, or $1.37 a share during the same period a year
ago. The company added 510,000 new subscribers to its high-speed Internet
access over cable lines service during the quarter, bringing its total
subscriber base to 2.3 million. Excite has goal of reaching 3 million
subscribers by year's end.
- Nokia lands a
contract to supply equipment for a high-speed Internet access service in
China. Terms of the deal were not disclosed.
- Cisco Systems
wins approval from the San Jose city council to build a $1.3 billion corporate
campus in Coyote Valley.
- Telewest
Communications tabs Motorola Broadband
and Marconi to provide a trial
end-to-end Voice over Internet Protocol to be used over Telewest's broadband
cable network.
- Qwest Communications
expands its broadband access service to businesses in four Texas markets:
Austin, Dallas/Fort Worth, Houston and San Antonio.
- Fixed broadband wireless Internet access system
provider Hybrid Networks reports net sales
for the third quarter of $5.5 million, up from $3.3 million for Q3 1999. The
company shipped $12.3 million worth of systems and related services, compared
to $4.9 million during the same period a year ago.
- New Edge
Networks is now offering DSL service to businesses and residential
customers in Kansas. The service is launching first in Wichita, and will
expanded to reach El Dorado, Hutchinson, Lawrence, Manhattan, Salina and
Topeka.
- America Online and Time
Warner have reportedly spent $3.8 million lobbying Congress and the
executive branch in an effort to win approval for their $135 billion merger,
according to circulating news reports.
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