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Today's report from Web Editor
Susan Rush
• Comcast Ousts Competition, Wins AT&T Broadband
• IDT Snags Winstar Assets
• Juniper Trims Q4 Sales Forecast
• Cox To Automate Customer Service
• Broadband Briefs
Comcast Ousts Competition,
Wins AT&T Broadband
After a five-month bidding extravaganza, AT&T
Corp. has awarded Comcast Corp. the
grand prize -- AT&T Broadband.
Comcast's bid valued at $72 billion won out over competing bids from two
other media giants, AOL Time Warner Inc. and Cox Communications Inc.
AT&T will spin off its broadband unit and merge it with Comcast to form
the largest MSO in the country. The new company, dubbed AT&T Comcast
Corp., will serve more than 22 million subscribers. The No. 2 cable guy, AOL
Time Warner, has 12 million subscribers. Ma Bell's board of directors
announced the deal late Wednesday night.
"AT&T Comcast will create value for its shareholders and employees
by bringing more services to more people more quickly," says C. Michael
Armstrong, chairman and CEO of AT&T. "Our shareholders and our
employees will both benefit from the industry-leading growth we will
achieve."
AT&T shareholders will receive roughly .34 shares of AT&T Comcast
for each share of AT&T they own. Comcast shareholders will receive one
share of AT&T Comcast for each Comcast share they own. AT&T
shareholders will own a 56 percent economic stake and a 66 percent voting
interest in the new company.
"Good for AT&T," says Mike Paxton, senior analyst at Cahners
In-Stat Group. From Paxton's point of view, the company was able to make a
deal and still maintain some control. There is likely to be some
head-butting between the Armstrong and Comcast camps. "Comcast is
rolling the dice a bit, but 9the move) does prove it wants to be a bigger
player in the cable industry."
The fate of AT&T Broadband's 40,000 workers and Comcast's 35,000
employees remains unclear. Some industry analysts are predicting that
Comcast will trim some of AT&T Broadband's work force to reduce debt.
During a conference call this morning, however, company officials said it is
premature to discuss the fate of employees.
Armstrong will make out in the deal as well. Instead of retiring in 2003 as
previously announced, he will take over the helm at the new company as
chairman. Comcast president Brian Roberts will serve as the new entity's
CEO.
The deal, which also encompasses AT&T's 25 percent stake in Time Warner
Entertainment, includes the assumption of $20 billion in AT&T debt.
Microsoft Corp., which as hell-bent on keeping rival AOL Time Warner from
acquiring AT&T Broadband, will convert its $5 billion stake in AT&T
Broadband into shares of the new company.
AT&T had originally planned to spin off its broadband unit as an
independent company, until it received an unsolicited bid from Comcast for
roughly $41 million in July. Although the bid was rejected by AT&T as
being too low, it put the unit on the table. Later that month, it was
reported that AOL Time Warner was talking with AT&T about a potential
bid of its own. In September, Cox entered the fray. In a statement, Cox said
it was disappointed with the outcome, but remains confident it will be a
"premier provider of voice, video and data services in our
communities." A spokeswoman for the cabler declined to comment on the
specifics of its bid. AOL Time Warner could not be reached for comment
before deadline.
The deal, which is expected to close at the end of 2002, is subject to
regulatory approval. "I don't think this deal will face too much
opposition, at least not enough to restructure it significantly," says
Paxton. Unlike when AOL and Time Warner Inc. were planning to merge, the FCC
is now taking a more hands-off approach under the leadership of Michael
Powell. "We will have to wait and see what shakes out on Capitol Hill,
but I believe we will see at least one more (consolidation) deal in the next
12 months," says Paxton.
The creation of AT&T Comcast puts the pressure on AOL Time Warner to
react. "What will AOL Time Warner's next move be? Maybe the company
will make a move to acquire another cable company, such as Adelphia,"
speculates Paxton.
Related Story:
Report:
AT&T Broadband Bids Revised, 12/17/01
The
Fate Of AT&T Broadband Lingers, 12/10/01
Comcast
Bids For AT&T Broadband, 7/9/01
IDT Snags Winstar Assets
Well, it's official -- late last night, IDT
Corp. won approval from a U.S. Bankruptcy Court to acquire substantially all
of Winstar Communications Inc.'s
assets.
"This is an unbelievable deal for us," IDT Chairman Howard Jonas
said during a conference call this morning. We are the eighth-largest phone
company in the country, and the only thing we didn't have was the last mile.
Now we have the last mile," he said. "It is our intent to become
the greatest telecom company in the country."
IDT snatched up the assets in a $42.5 million deal -- $30 million in cash
and $12.5 million in IDT Class B common stock. "The assets are worth $5
billion," said Jonas. "We believe we will collect more in accounts
receivable than the total amount we paid for the assets," he said.
Winstar will operate under IDT's communications division and will be run by
interim CEO Charles Garner, IDT Venture's CEO. "Winstar represents much
more than the acquisition of $5 billion in assets. Our goal is to service
the existing customers and to grow our business and work force over
time," Garner said.
"By joining forces with IDT, Winstar has solidified its financial
position so that we may continue to stay focused on serving our customers as
an even stronger Winstar," Winstar said in a message to customers
posted on its Web site. The deal with IDT saved Winstar from having to
liquidate. The telecom company provides service to several government
agencies, including the Department of Justice, the Bureau of Alcohol,
Tobacco and Firearms and the Securities and Exchange Commission.
Related Stories:
Report:
Winstar To Sell Assets To IDT, 12/19/01
Liquidation
Could Be In Winstar's Future, 12/11/01
Winstar
Asset Auction Set For December, 11/21/01
Juniper Trims Q4 Sales
Forecast
Shares of networking company Juniper
Networks Inc. tumbled nearly 15 percent in early trading following news
that the company is lowering its fourth-quarter revenue forecast by as much
as $50 million.
Citing current market conditions and cautious spending by its customers,
Juniper expects to post revenue between $150 million to $155 million.
Previously, the company was calling for revenue of $200 million. Pro forma
earnings for the quarter will be roughly 5 cents a share. Juniper's revised
forecast will fall short of analysts' consensus estimates by 5 cents,
according to Thomson Financial/First Call.
"We will continue to focus on our financial metrics and our ongoing
profitability, despite the challenging environment," Juniper Chairman
and CEO Scott Kriens says. "And we will remain committed to our service
provider customers, who in turn remain committed to Juniper Networks and the
New Public we are building together."
Juniper's news dragged down the stock price of many other company's in the
same business sector. At one point in early trading shares of the following
companies dipped: Ciena Corp. fell 27 cents, Cisco Systems dipped 85 cents,
Corning Inc. slipped 11 cents, Sycamore Networks Inc. fell 9 cents and JDS
Uniphase dipped 7 cents. As of 11:24 a.m., Juniper shares were off $3.22 to
$19.71, well off their 52-week high of $145.
Related Stories:
MSN,
Yahoo Ink Licensing Deals, 12/18/01
pressplay
Adds CD Burning To Services List, 12/11/01
Cox To Automate Customer
Service
As Cox Communications Inc.
continues its march to migrate its broadband customers to its own high-speed
network, the cabler has enlisted Support.com
and BroadJump Inc. to deliver
customer care on-demand to subscribers.
The Broadband Resolution Suite, jointly developed by Support.com and
BroadJump, will enable Cox to offer point-and-click self-service
capabilities through assisted service to its 780,000 cable modem
subscribers. The system addresses Cox's need to provide automated customer
service, whether the customer's need is at the time of installation or any
other time, says Kimberly Edmunds, Cox's vice president of customer service.
"The solution has the ability to proactively push updates and deliver
assisted services when needed," says Gary Zilk, Support.com's senior
product manager for the Broadband Resolution Suite. "It eliminates the
need for some calls to tech support." Through an application on his
desktop, a subscriber can get answers to questions, run a diagnostic on
their own, but also have the option to be connected with a live person via
the Internet if the problem can not be solved. "Ultimately the
subscriber can grant access to a tech person to his machine via remote
control," Zilk says.
The four-year old Support.com started with the idea of solving the question,
"If computers are so smart, why can't they fix themselves," says
Zilk.
Earlier this month, Cox said its network is 75 percent complete. The company
plans to begin transitioning customers this month, with the migration of all
customers completed by March 2002.
According to Zilk, service providers must provide service profitably, and
eliminating some service calls will not only save time, but money.
Related Stories:
Verizon
To Offer Do-It-Yourself Tech Support, 12/18/01
Cablers
Ink Deals With Excite, AT&T Withdraws Bid, 12/4/01
Broadband Briefs:
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Covad
Communications emerges from bankruptcy today and closes its $150
million in funding from SBC Communications
Inc. To get the skinny on Covad's rise from bankruptcy, click
here.
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Broadband networks provider Velocita
Corp. lights up second route of its 20,000-mile network in the Midwest.
The 530-mile section provides service via POP in Tulsa, Kansas City and
St. Louis. To date, roughly 1,700 miles of the network have been turned
on.
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Nortel Networks and Vodafone
in Spain complete live international roaming calls using the UMTS Third
Generation Partnership Project (3GPP) wireless standard. The voice calls
were completed between Madrid and Tokyo.
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CommWorks posted $64.1 million in
revenue during the fiscal second quarter, an 8 percent increase over
numbers posted in the previous quarter.
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