AT&T to buy IBM Global Network for $5 billion.

I Find Karma (
Tue, 8 Dec 1998 10:30:19 -0800 (PST)

FINALLY, we may have a reasonable competitor to MCI/Worldcom.
It's about time.

By the way, to those of you who sent me personal email about my post
yesterday, thanks. And to those of you who sent FoRK email about my
post yesterday, shame on you. Don't make me get out the muzzles,
because I'm not afraid to use them.

Today's damned San Francisco power outage prevented me from using the
American Express Platinum concierge service during my first attempt.
Trying to get a parking space at the Getty. We'll see how good these
guys really are.

> Tuesday December 8, 12:17 pm Eastern Time
> AT&T to buy IBM Global Network for $5 billion
> (adds details, stock prices, analysts comments, byline)
> By Jessica Hall
> NEW YORK, Dec 8 (Reuters) - AT&T Corp. (NYSE:T - news) on Tuesday said
> it would acquire International Business Machines Corp.'s (NYSE:IBM -
> news) global corporate networking business for $5 billion, in AT&T's
> most-aggressive move yet to bolster its small but fast-growing data
> business.
> IBM's Global Network provides a variety of data networking services for
> clients, including setting up and managing their internal networks and
> providing external Internet connections.
> The business serves roughly 35,000 corporate customers in 900 cities in
> more than 100 countries around the globe, and provides Internet access
> to more than one million individual users in 59 countries.
> ``This helps to strengthen AT&T's weak link. AT&T has really been behind
> companies like MCI WorldCom and Equant in having global data networks,''
> said industry analyst Jeffrey Kagan.
> The acquisition of the IBM unit, as well as AT&T's planned international
> alliance with British Telecommunications Plc (quote from Yahoo! UK &
> Ireland: BT.L) , helps AT&T leap-frog into a leading position in
> providing global networking services to multinational corporations,
> analysts said.
> The sale to AT&T was widely expected after the long distance telephone
> giant acknowledged in September it was interested in buying the unit.
> AT&T edged out other bidders such as Qwest Communications International
> Inc. (Nasdaq:QWST - news), the No. 4 U.S. long distance company,
> industry analysts said.
> The purchase price topped the $3 billion to $4 billion IBM had
> originally expected to fetch, analysts said.
> Shares of AT&T, the second most active issue on the New York Stock
> Exchange, gained $3.25 to $68. Shares of IBM added $2.44 to $169.625,
> also on the NYSE.
> The deal allows IBM to exit the data networking business and focus on
> its mainstay software, services and hardware businesses, analysts said.
> ``It brings both companies back to their basic skills. Both will be able
> to run harder and faster and avoid any missteps in areas where they
> might not excel,'' said Kenneth McGee, a telecommunications analyst for
> Gartner Group, a market research firm.
> As part of the deal, IBM granted AT&T a five-year, $5 billion contract
> to handle a large portion of IBM's networking needs, while AT&T has
> outsourced some of its applications processing and data management work
> to IBM.
> IBM, the world's largest computer maker, will handle jobs such as
> billing and installation for AT&T's business long-distance customers
> under an outsourcing contract valued at $4 billion over 10 years. IBM
> will also assume management of AT&T's data processing centers, which
> operate corporate information systems such as employee payroll and
> benefits.
> Under the agreements, more than 2,000 AT&T management employees will be
> offered positions with IBM. About 5,000 IBM employees will join AT&T as
> part of the Global Network sale, which the companies expect to complete
> by mid-1999 following approval by U.S. and foreign regulators.
> IBM first entered the global networking business in 1981 to provide
> multinational companies with global data links at a time when most phone
> companies stopped service at national borders. In recent years, many
> telecommunications firms, including AT&T, have moved into global
> networking.
> IBM said that the deal will not have a significant impact on its 1999
> operational results. AT&T said any earnings dilution from the deal is
> expected to be insignificant in the first full year of operation and add
> to earnings thereafter.
> AT&T Chairman and Chief Executive C. Michael Armstrong, a former 30-year
> veteran with IBM, joined AT&T about 13 months ago.
> Since Armstrong's arrival, AT&T has been on an acquisition rampage,
> agreeing to acquire local phone company Teleport Communications Group
> Inc. for about $11 billion and cable television giant
> Tele-Communications Group Inc. for $48 billion. AT&T also announced a
> $10 billion alliance with British Telecommunications Plc.
> ``This kind of activity would have overwhelmed the old AT&T but it's why
> they brought in Armstrong. AT&T needed a thorough housecleaning and
> Armstrong has good momentum in getting that done,'' Kagan said.


Well, I guess it ain't easy doing nothing at all.
-- the Offspring, "Why Don't You Get a Job?"