APRIL 30, 1999
Texas Regulators Grant Conditional Approval of SBC's Long-Distance Service Application
Yesterday, Texas regulators granted conditional approval of SBC Communications applications to offer long-distance services in the state. However, SBC still must file documents with the Public Utility Commission of Texas, detailing the terms under which it will work with rival local-telephone companies. The baby bell must complete tests showing that competitors would have equal access to services and other elements that SBC uses. Also, the company has to get approval from the Federal Communications Commission, which has to date not yet granted permission to any of the RBOCs to enter the long distance market. Previously, Texas regulators rejected SBC's applications to offer long-distance services in the state, arguing that the baby bell failed to comply with market opening conditions.
MCI WorldCom's First Quarter Profit Rose Above Expectations, But Stocks Fall on Possible Acquisition of Nextel Communications
MCI WorldCom reported that their first quarter profit was beat expectations, with a threefold increase in first quarter profits, but its stock fell on concerns about its possible acquisition of Nextel Communications. The company reported that first quarter net income increased $709 million, or 37 cents a share, compared with pro forma net income of $191 million, or 10 cents a share. The surge in profit reflected last year's acquisition of the MCI Communications Corporation and strong growth in data and Internet services. Although company revenues beat expectations, their shares fell $3.8125, to $83.875 on NASDAQ, after chief executive Ebbers declined to comment on speculations that MCI WorldCom would acquire Nextel Communications.
Sprint Increases Offer for People's Choice TV to $10 a Share
Sprint yesterday announced that it had raised its offer for People's Choice TV Corp. to $10 a share from $8 in response to investors who controlled a large amount of stock in People's choice. The group went to Sprint after People's Choice announced on April 12 that it had agreed to be acquired by Sprint for $8 a share. By agreeing to terms with that group, Sprint insured that it would get enough of the stock so that they feel the deal is a certainty. The value of Sprint's offer now stands at about $150 million, or about $25 million more than the original offer.
ADSL
FCC Chairman William Kennard Visits Rhythms NetConnections, Inc.
Yesterday Rhythms NetConnections hosted Federal Communications Commission Chairman William Kennard for an on-site tour of the company's headquarters and network operations center and meetings with employees. Chairman Kennard was briefed on the technology that powers Rhythms' networks and the services Rhythms offers to its customers, and explored with employees the competitive and regulatory issues facing the industry. "Rhythms is proof-positive that the Telecommunications Act is spurring competition and delivering new services to consumers," said Chairman Kennard. "New, innovative companies, like Rhythms, are building the infrastructure for the new economy, giving consumers more choices and flexibility and creating high-paying jobs."
ASIA PACIFIC
Logica Wins 17 Million Stg in Contracts in Japan Mobile Phone Market
Logica has won 17 million stg in contracts to upgrade Japan's mobile telecommunications market. The new contracts in Japan reflect the growing demand for Logica's Telepath solution in the Japanese mobile phone market. DPG, DTQ and TuKa, each digital operators in Japan, have all either upgraded their existing short message centers or are installing new systems.
BRAZIL
Motorola and Nokia Wins $353 Million in Mobile Phone Deals from Brazil's Telefonica
Telefonica SA's Telefonica Celular unit has signed a 188 million deal with Motorola Inc. and a $165 million deal with Nokia Corp. to purchase CDMA digital cellular telephone manufactured in Brazil. Under the terms of the agreement, Telefonica Celular will purchase Startac 7760 and Multitac 3160 models from Motorola and 5180 and 6180 models from Nokia. The Motorola StarTac 7760 has a market price of 1,800 reals but Telefonica Celular will initially sell it for 899 reals, with a discount of 149 reals for customers changing from the analog system. The Nokia 2180 will be sold for 275 reals as a promotion for Mother's Day on May 9.
EUROPE
Alcatel and BellSouth Sign Worldwide Supplier Agreement
BellSouth Corp. and Alcatel have signed a worldwide supplier agreement with Alcatel, allowing Alcatel to sell Internet hardware to all BellSouth affiliates without negotiating contracts. BellSouth said the agreement, which extends to 2003, will generate volume-based savings and reduce its local number of vendors.
British Telecommunications Consortium to Invest $500 Million in Hungary's Mobile Phone Network
The British Telecommunications PLC and Telesystem International Wireless Inc. consortium bidding for Hungary's mobile phone network, would invest $500 million over the next three years to operate the Hungarian network. A senior TIW official said that the new company, DunaTelecom, expects an increase of 40 percent in mobile phone users in Hungary over the next few years.
Mobilcom, Germany to Invest $270 Million on Fiber Network for its Internet Service
Mobilcom of Schleswig Germany plans to purchase an optical fiber network to support its new Internet business. This is believed to have achieved a market share of around 4% after only 4 months. Mr Schmid is said to be prepared to pay up to $270 million for the right network having already been piped at the post by Mannesmann, which bought the o.tel.o network Schmid was after.
European Commission Ends Investigation of Sonera, Austria Telekom and Portugal Telecom's International Rates
The European Commission has closed its investigation into the international connection rates charged by the Finnish, Austrian and Portuguese dominant telephone operators. EU's investigation was part of seven probes launched into dominant operators in August 1998. The commission concluded that since the start of their investigation, Sonera has reduced rates by an average of 28 percent, Austria Telecom 26 percent and Portugal Telecom by 28 percent. The rates, used between telecommunications companies carrying an international call from origin to destination, are an important influence of prices end-users pay for calls. Of the other four cases launched last August, the commission said it has received no reply to its request for data from the Italian and Greek regulators, and is therefore pursuing its probes into Telecom Italia and OTE.
FIBER OPTICS
Pacific Gateway CEO Justifies Sale of TAT14 Capacity and Purchase of 12 US City Links
Pacific Gateway announced that it will sell network capacity on its Trans-Atlantic city centre network connecting New York with London. Separately, the company would purchase high speed, broadband capacity on US routes connecting twelve of the major metropolitan cities in the US, creating an US network to be in service over the next several months. This would enable it to enter the US-centric Internet market and provide it with significant savings over its existing US long haul network. The company's president and CEO Howard Neckowitz said the sale of the TAT14 capacity was in line with the company's strategy of selling bandwidth on a global basis, whilst rights to the US network connecting twelve US cities provided a critical link in the company's strategy to expand beyond its switched operations into the high bandwidth Internet market.
PSINet Lights OC-48 Northeast MFN Dark Fiber Links and IXC Acquire US Backbone
PSINet Inc has activated of portions of PSINet's dark fiber capacity, which was previously acquired from Metromedia Fiber Network. This route covers the New York City metropolitan area, the route between New York and Washington, as well as the Washington, DC metropolitan area. Specific portions lit are the primary OC-48 fiber strands linking to Washington DC, Baltimore, Wilmington, Philadelphia, Newark and New York City. Harold Wills, president and COO of PSINet, said the corridor between New York City and Washington, DC carried most of the Internet traffic that moved throughout the US and onto the UK and Europe, and the new capacity would serve as a critical high speed on-and-off-ramp for PSINet's customers. In addition, it was executing a second stage in the deployment in OC-12 stages of the transcontinental North American OC-48 fibre backbone acquired from IXC Communications in 1998, and which, together with the north-east corridor capacity, were connected to PSINet's OC-3
transatlantic submarine cable systems. These were acquired from Global Crossing, also in 1998.
Qwest to Supply Advanced TelCom Group With $63 Million of Wholesale Services over 7 Years
Qwest Communications International has been awarded a seven-year, $63 million, wholesale contract to provide a suite of high-speed broadband and data services, including dedicated Internet access, frame relay, private line, dark fibre and long distance, to Advanced TelCom Group. ATG is a facilities-based CLEC headquartered in Santa Rosa California, that focuses on the under-served markets in medium-sized cities and plans to expand to over 50 cities across the US in the next five years. ATG will use the services as a basis for value-added sales to its own customers.
Qwest Wins $18 Million, Five Year Contract to Provide High Speed Backbone for California's Education 4CNet
Qwest Communications International has been awarded an $18 million, five year contract to provide the high-speed backbone for the 4CNet educational data network developed by the California State University and California Community Colleges systems. This network includes co-location within seven facilities and high-speed backbone capacity to over 150 locations throughout the 4CNet system, including connectivity to the Coalition for Education Network Initiatives in California's (CENIC), CalREN-2 network and the Abilene Internet2 nation-wide network.
Publisher/Editor: Dr. Paul Polishuk
Editor: Sean Buckley
APRIL 29, 1999
AT&T to Record $30 Billion Loan Pact with 18 Lenders
AT&T has arranged a record $30 billion loan agreement with 18 lenders to two days ahead of schedule. Under the terms of the one-year agreement, the company will finance the $20 billion in cash that is part of its proposed $65 billion acquisition of MediaOne Group. Also, it will use the accord to support its borrowing in the commercial paper market. Chase Manhattan Corp. and Goldman, Sachs & Company will provide $5 billion, with the remaining $20 billion to be split amount 16 other banks. The loan pact follows AT&T's unsolicited bid for Mediaone Cable last Thursday, and asked Chase and Goldman to arrange the loan by Friday.
Hughes Electronics Completes $1.36 Billion Acquisition of Primestar Inc.
Hughes Electronics Corp. has completed its $1.36 billion acquisition of Primestar Inc. Primestar agreed to raise its payout to creditors to about 97.5 cents on the dollar, from 67 cents. The payment consists of 85 cents in cash plus stock appreciation rights in Hughes shares for holders of $475 million of Primestar bonds and institutions that made a $350 million bridge loan to the company.
ADSL
Intermedia Communications Partners with Rhythms NetConnections and Northpoint Communications to Expand its DSL Service
Intermedia Communications has entered into strategic alliances with Rhytms NetConnections and Northpoint Communications , in an effort to expand the scope of its DSL service base. Currently, Intermedia is deploying ADSL service in 16 markets in the East and the South. The alliances with Northpoint and Rhythms will expand Intermedia's coverage to 17 more cities, including San Francisco and Chicago, in about 90 days.
ASIA/PACIFIC
Sony's Fiscal 1998 Operating Profit Falls 34.9 Percent
Sony Corp announced that its consolidated operating profit for fiscal 1998 fell 34.9 percent from the year before to 338.65 billion yen. Affecting the Sony group's performance were rapid changes in the business environment, such as the yen's gains against the U.S. dollar and the economic slump in emerging market economies of Asia, Eastern Europe and Latin America as well as in Russia. Consolidated pretax profit for the year, which ended March 31, came to 368.13 billion yen, down 18.9%, on sales of 6,7494.62 billion yen, up 0.6% from the previous year. Net profit fell 19.4% from the year before to 179.00 billion yen. Fueled by the popularity of its PlayStation video game console in the U.S. and Europe, Sony's game division became their top profit earner, generating 136.50 billion yen of the company's operating profit, up 16.7% from the previous year.
NTT DoCoMo to Offer 5-for-1 Stock Split
NTT Mobile Communications Network Inc. has decided to offer a five-for-one stock split to its shareholders to make the stock more readily available to investors. It will be offered to shareholders whose names are on the company's stock registry as of June 30 this year, subject to authorization by shareholders at an assembly just before that date. Stocks will be split September 13, in a move that will raise the number of the company's outstanding shares fivefold to 9,576,00. NTT DoCoMo has been enjoying brisk earnings on the back of a rapidly expanding cellular phone market and in the process has drawn keen investor interest.
Korea Telecom Will Invest US$297 to Increase Internet Service Speed
Korea Telecom Company announced that it will invest 350 won ($297 million) to increase the speed of its Internet service, Kornet. The company will spend 70 billion won to speed its backbone network to 1 Gpbs. Giga switches, or central operators, will be installed in 35 cities across the nation to increase the speed of intercity Internet service. Presently, Kornet has about 488,000 personal and corporate subscribers.
EUROPE
KPN to Reduce Various International Call Rates By May 15
KPN announced plans to reduce its call rates to a number of destinations in Europe, the U.S. and Canada from May 15. It plans to introduce "city rates" to major European financial centers such as Frankfurt, Brussels, London and Paris. KPN said that there will be one single low rate for 12 countries, with the city rates set even lower. The price cuts were made possible by KPN's international joint venture KPNQwest,
BskyB's CEO Mark Booth Resigns to Head New Startup ePartners
Mark Booth, CEO of BskyB since November 1997, announced his resignation to head a new start-up company called epartners, which will invest in new media opportunities including the Internet, interactive television and wireless communication. The new venture is funded by a $300 million equity capital base that will be provided by News Corporation. Rupert Murdoch had made the offer to support and invest in the new venture after Booth had been approached by an Internet company.
UMC and Microcell Launch GSM Roaming Agreement Between the Ukraine and Canada
UMC, the Ukraine's largest mobile phone operator, launched a GSM roaming agreement with its Canadian partner Microcell between the Ukraine and Canada, which is the home of 1 million ethnic Ukrainian's. UMC says it already has roaming agreements with about 80 operators in 44 countries. Previously, UMC launched the Ukraine's first GSM 900 service in 1998. Urktelecom, the Ukraine's incumbent fixed-line monopoly, owns 51% stake in the company, with the remaining 49% split between Deutsche Telekom, Tele Danmark and KPN of the Netherlands.
UK Retailer Kingfisher and France's Arnault Launch Free Pan-Europe Internet Access Service
UK retailer Kingfisher and France's Groupe Arnault have launched a new free Internet access service called Libertysurf. The new venture is 40% owned by each of the two companies, and 20% by associated service providers and management, which the company said would be the first "really free" such French service. Other companies such as Iliade, Lokace and World online France have offered limited time or limited user number free service and it is intended should be the first such free pan-European service. Libertysurf will initially be available through Kingfisher's 167 Darty electrical stores in France, with plans to expand the service to other Kingfisher outlets in France, which include Castorama and BUT and eventually to Belgium, the Netherlands and Germany, where the group also has shops. Bernard Arnault said it was a realistic target for LibertySurf to overtake France Telecom's Wanadoo service in the very undeveloped 4% penetrated French Internet access provision market, with!
in three
to five years.
MERGERS/ACQUISITIONS
Cisco to Acquire Amteva Technologies for $170 Million
Cisco Systems announced that it will acquire Amteva Technologies for about $170 million. Based in Glen Allen, CA, Amteva is a manufacturer of "middleware," which sits between a company's data base systems and its Web site, allowing different applications and computers to communicate and work together.
RCN Acquires a 48 Percent Stake in Juniornet for $47 Million
RCN has acquired a 47.5 percent stake in Juniornet Corp., a commercial-free online learning service for children introduced last month, for $47 million in cash. Also, Juniornet acquire RCN's Lancit Media Entertainment subsidiary, which creates children's television programming for about $25 million in cash.
Warp 10 Technologies Acquires Portfolios Online
Warp 10 Technologies, a Toronto-based company that runs Adsgallery.com, will acquire Portfolios One, also based in Toronto and operates Portfolios.com, for an undisclosed amount. Under the terms of the agreement, Adsgallery.com will house the content of both web sites. Michael Neray, currently CEO of Portfolios Online, will become Warp 10's marketing director. Marvin Igelman will remain president and chief executive at Warp 10.
Publisher/Editor: Dr. Paul Polishuk
Editor: Sean Buckley
APRIL 28, 1999
AT&T Enters Into Joint Venture with NTT Corp. to Collaborate on Global Network Solutions for Multinational Corporations; AT&T's Stock Rises 42 Percent
AT&T and Nippon Telephone Corporation, the world's two largest telecommunications companies, will collaborate in the global market for corporate network solutions. Under the terms of a Memorandum of Understanding, NTT and AT&T will begin working together to develop definitive agreements and business ventures that provide value-added networking solutions for large and mid-sized multinational businesses and industries. AT&T Solutions, as the managed professional services unit of AT&T, will represent AT&T in working with NTT. The alliance's first priority will be to collaborate on the operation and development of the IBM Global Network in Japan which AT&T is in the process of acquiring. Second, the companies have agreed to explore other potential collaborations with similar operational devices, transport, service deployment and distribution arrangements in other Asia Pacific countries where the IGN currently operates. Finally, the companies will enhance the existing IGN service
offerings, develop new services beyond the current scope of IGN and form sales alliances to provide global networking solutions. In related news, AT&T's first quarter profit rose 42 percent, beating analysts' expectations. This surge in profit was a result of the chairman C. Michael Armstrong's cost-cutting campaign, and a 6 percent increase in company sales.
IBM Increases Dividend by Nine Percent and Authorizes $3.5 Billion Stock Buyback
IBM yesterday raised its dividend 9 percent and authorized a $3.5 billion stock buyback. The company raised its dividend to 24 cents a share from 22 cents, the first increase in a year and the fourth in four years. This dividend, which will be paid to shareholders of record as of May 10, along with the company's ninth buyback since 1995 are efforts by chairman, Louis V. Gerstner Jr., to reward investors who have stayed loyal to IBM.
House of Representative Approves New Legislation for Satellite TV Service According to a report in the Wall Street Journal, The House of Representatives have approved broad legislation today that rewrites the rules for the satellite television industry, permitting companies to broadcast local television programs and long-distance signals that have up until now been either restricted or been very expensive. The new law, which was passed 422 to 1, with the lone opposing vote of Representative Robert Brady, Democrat of Pennsylvania. Mr. Brady argued that the new legislation imposes a new must carry requirement supported by cable companies that requires satellite companies that decide to offer any local signals must also offer all local programming those markets by 2002. However, those who voted for the bill argued that it will resolve the long-running disputes between the satellite and broadcasting industries, and will enable satellite companies to effectively compete with cable television, which many analysts feel holds a monopoly in many markets.
ADSL
Bell Atlantic Brings its Infospeed DSL Service to the Boston Market
Bell Atlantic has launched its Infospeed DSL service into the Boston market, which is now available in Cambridge and will be introduced in other parts of the Boston metropolitan area. The entry-level package with unlimited use will be $49.95. Since it was introduced last fall, Bell Atlantic's Infospeed DSL service is available in parts of the Philadelphia, Pittsburgh and Washington, D.C. metropolitan areas and in communities on New Jersey's Hudson River waterfront. The company plans to expand availability in additional communities in these markets in the coming weeks and months. Additionally, Bell Atlantic will introduce the service in the New York area this spring.
Concentric Network Announces Payable Date for Stock Split
Concentric Network Corporation announced that shares resulting from the company's previously announced 2-for-1 stock split payable to holders of record on Friday, April 30, 1999, are expected to be payable after market close on Friday, May 21, 1999. As such it would be expected that the trading market price of Concentric's common stock on the Nasdaq National Market would reflect the split shares and the as-adjusted on Monday, 24, 1999.
BRAZIL
Brazil's Telemig, Tele Norte Celular AGMs Approve 1998 Dividends
Tele Norte Celular Participacoes AS and Telemig Celular Participacoes SA's shareholder meeting approved 1998 dividends, the companies said. Tele Norte Celular shareholders approved dividends of 0.005 reals for preferred and common shares to be paid on May 28. Telemig Celular shareholders approved dividends of 0.0017 reals for common shares and 0.0279 reals preferred shares, also to be paid on May 28. Telbras preferred and common share receipts RCTB 31 and RCTB 41 went ex-dividend on news of the dividend approvals. Telecomunicacoes Brasileiras SA was spun off into 12 separate holding companies in June of last year in preparation for privatization in July and the preferred and common receipts are an amalgam of the companies that emerged from the privatization process.
EUROPE
Telecom Italia Rejects Olivetti's $65 Billion Bid; Plans to Move Ahead With Deutsche Telekom Merger
Telecom Italia took new measures to fend off Olivetti SpA's $65 million hostile bid for the company, and will move ahead with merger plans with Deutsche Telekom. Olivetti's bid had been rejected in a 50-page document that would be released to the public later this week. In addition, Telecom Italia announced plans to sell 65 percent of its pay-per-view television operation Stream to a number of companies including Rupert Murdoch's News Corp. Olivetti argued that Telecom Italia's rejection is an interruption to its planned bid which begins on Friday and runs for 21 days.
MERGERS/ACQUISITIONS
Amazon.Com Acquires Three E-Commerce Companies for $645 Million
As it continues to expand its presence in the on line marketplace, Amazon.com has separately acquired three privately held e-commerce firms for $645 million. The company announced that it will purchase Exchange.com, an online marketplace for rare, antiquarian and used books and music; Accept.com, an e-commerce company in Redwood City, CA; and Alexa Internet, another e-commerce company based in San Francisco. The company said the Exchange.com will greatly increase its core book and music offerings and create auction and retail space for Exchange.com's independent dealers. All three acquisitions are expected to close by June 30. Separately, the company plans to enter the greeting card business to further expand the options available from its site. Through their greeting card business, the company plans to offer more than 800 cards in 45 categories, all without charge or registration.
MCI WorldCom Raises Stake for CAI Wireless From $24 to $28 a Share
MCI WorldCom has raised their stake from $24 to $28 a share to acquire CAI Wireless Systems Inc. Based on CAI's 17 million shares outstanding, the deal is valued at $476 million, compared with the original $408 million. The wireless licenses controlled by CAI, which is based in Albany, will allow MCI WorldCom to reach customers' homes or businesses without going through the Baby Bell's local phone networks.
Sprint to Acquire American Telecasting Inc. for $168 Million
To provide an estimated 10 million households with access to the Sprint Integrated On-Demand Network, the company offered yesterday to acquire American Telecasting for $6.50 a share, $168 million. As part of the deal, Sprint would also assume about $281 million in debt. The licenses can be used for high-speed Internet and data services in several major United States markets.
Intervoice to Acquire Brite Voice for $164.4 Million
Intervoice has agreed to acquire Brite Voice Systems for $164.4 million in cash and stock, a deal that could bring together two providers of call automation and interactive voice response systems. Intervoice will pay $13.40 each for some 9.2 million Brite Voice shares and exchange stock for the remaining 3.1 million shares outstanding. Of the total, $122.7 million will be in cash and $41.7 million will be in Intervoice stock.
SOUTH AMERICAN TELECOM
Telefonica SA's del Peru Posts a 66 Percent Loss in First Quarter Net Sales
Telefonica SA's Telefonica del Peru unit had posted first quarter net profit of 102 million soles (US$30.5 million), down 66 percent from 1998. The downturn was due to the effects of the Brazilian crisis and the depreciation of the sol, the unit said. Telefonica del Peru plans investments of $1.19 billion in the 1999-2001 in a program to improving services.
Publisher/Editor: Dr. Paul Polishuk
Editor: Sean Buckley
APRIL 27, 1999
Comcast Considers Entering into Joint Venture with Microsoft or AOL
To counterattack AT&T's $54 billion hostile takeover bid for MediaOne Cable, Comcast Corp. is considering a joint partnership with Microsoft Corp. or America Online Inc. to develop digital television and high-speed Internet access. At this time, the discussions are very preliminary and are among a number of possibilities being considered by Comcast, who previously offered to acquire MediaOne for $48 billion in stock. This type of deal could create several possibilities for both AOL and Microsoft. For AOL, it would provide the company with the ability to offer broadband or high-speed services to its own Internet empire. Microsoft sees this proposed alliance as a means to supply software systems for both digital television and high-speed Internet access. Also, the company desires to deny AOL an exclusive right to deliver Internet services to the cable companies' customers. Overall, the goal of both companies is to prevent AT&T from gaining further hold over the nation's cable networks.
Supreme Court Denies to Review BellSouth and US West's Complaint to Enter Electronic Publishing Business
Yesterday, the Supreme Court refused to review the complaint filed by Baby Bell companies US West and BellSouth, that a 1996 law prohibits them from entering the electronic-publishing business. The two companies argued that a section of the 1996 Telecommunications Act denies the First Amendment rights of the Baby Bell companies and violates the constitutional prohibition against bills of attainder, or legislation that finds someone guilty of a crime and passes sentence without a trial. Under the 1996 law, the Bell companies who want to offer electronic commerce services, must do it through separate subsidiaries. However, according to representatives at BellSouth, this provision expires in February 2000.
ATM
Convergent Networks Launches its Service Enabling Architecture for Carrier Delivery of New Voice and Integrated Services; Unveils First Products
Convergent Networks, Inc., a startup based in Westford, MA, yesterday launched its Service enabling architecture, a new network architecture that enables next-generation and incumbent carriers address current voice service delivery challenges and accelerate the introduction of high-margin integrated services to their customers. The company's product, the Integrated Convergence Switch is a second-generation, convergence switch that exploits the cost advantages of ATM to switch multi-service traffic. In addition, Convergent's Service Management Gateway platform, provides scalable call management, supporting multi-protocol signaling, such as Signaling System 7 (SS7). Pricing for the Integrated Convergence Switch starts at just under $100,000. Additional DS-0 increments are prices at an average of $25 per port. Products will enter beta testing in the second quarter 1999, with general availability in the fourth quarter of 1999.
E-COMMERCE
EBay to Acquire Butterfield & Butterfield for $260 Million in Stock
To expand their presence as an on-line auction service, Ebay has agreed to acquire auctioneer Butterfield & Butterfield for $260 million in stock. Since it was founded four years ago, Ebay has gained 3.8 million registered members who use the Internet for online purchases of goods and services. Yesterday the company reported better-than-expected first-quarter earnings of $5.9 million, or five cents a diluted share, up from net income of $148,000 in 1998. In contrast to Ebay, Butterfield, which was founded in 1865, has much slower company growth. Ebay sees the acquisition of Butterfield, who employs fifty experts that guide traditional auctions, as a means to authenticate and appraise sophisticated items being offered for sale online.
Citigroup Unit Launches E-Commerce Service in Asia Pacific
Citibank introduced an electronic-commerce service that allowing companies to place orders, monitor invoices and arrange payments online. The company's services should allow companies to reduce the costs of handling invoices by as much as half and will lead to more efficient processing of orders. The new service, called Citibank Commerce (www.citicommerce.com) was introduced in the Asian-Pacific regions, where centers such as Singapore and Hong Kong have been promoting technology services. Additionally, the company plans to expand the service into Europe, the U.S. and Latin America.
EUROPE
Deutsche Telekom Offers to Acquire One2One for 33 Billion DM
Deutsche Telekom has reportedly made an offer to acquire UK mobile phone operator One2One for 33 billion dm. The joint owners of One2One, Media One Group, Inc. and Cable & Wireless PLC previously announced they were exploring strategic alternatives regarding their ownership of One2One. In addition, Deutsche Telekom has made a bid of 31 dm for the company.
MERGERS/ACQUISTIONS
AT&T Broadband and Internet Services to Acquire Cable Co-op's Cable System
AT&T Broadband & Internet Services has signed a letter of intent to acquire Cable Communications Cooperative of Palo Alto, Inc., which serves 28,000 customers in Palo Alto, East Palo Alto, Menlo Park, Aterhton and select portions of Santa Clara and San Mateo counties. AT&T Broadband & Internet Services has agreed to a cash purchase of the system, which operates under one franchise agreement that represents all of the communities. Terms of the agreement were not disclosed, and a definitive agreement supporting the purchase is expected within the next few weeks.
General Electric Company to Acquire FORE Systems for $4 Billion at $35 a Share
General Electric Company PLC has agreed to acquire FORE Systems Inc. for $4 billion at $35 a share. The price represents a premium of 43 percent to the company's closing share price on Friday. FORE Systems reported sales of $632 million for the year to March 31, 1999, up 35 percent from 1998, while operating income before interest, taxes and non-recurring items was $55.4 million, up 48 percent from 1998. Tom Gill, currently president and CEO of FORE, will continue in these roles and report to GEC chief executive George Simpson. FORE Systems will operate as a wholly-owned subsidiary of GEC while continuing to use the name of FORE Systems.
Microsoft to Acquire Jump Networks for an Undisclosed Amount
Microsoft will acquire Jump Networks, which provides calendar ad address book services through its Internet site. Terms of the agreement were not disclosed. Microsoft plans to integrate Jump's offerings into its free MSN electronic-mail service, called Hot-mail, and move its employees in Mountain View, CA, to Hotmail offices in San Jose, CA. This follows America Online's previous $150 million purchase of When Inc. Both companies said the deal would enable MSN to provide their customers with combined e-mail, calendar and address functions, keeping consumers abreast of events and allow them to purchase goods and services more easily.
SOUTH AMERICA TELECOM
Argentina to Invest $200 Million to Capture 30 Percent of Telefonica's Market
Telecom Argentina-Stet France will invest $200 million in a bid to capture more than 30 percent of the local market currently held by Telefonica de Argentina SA, once full telecommunications sector deregulation begins next year. Juan Carlos Majoan, Telecom Argentina's chairman, said that the company's intention is "to capture more than 30 percent of that part of the market where today we have nothing, and we expect to lose less than that figure" in Telecom Argentina's existing concession area. Telecom Argentina plans to invest $200 million to confront the challenges of deregulation, including $60 million in the western province of Mendoza, which is part of Telefonica de Argentina's concession area. Additionally, the company expects the arrival of other international players in the local, long-distance and international call market to unleash a "tariff war" in Argentina, where phone charges are among the highest in the world.
Publisher/Editor: Dr. Paul Polishuk
Editor: Sean P. Buckley
APRIL 26, 1999
AT&T's Bid for MediaOne Cable Boosts Time Warner's Shares
When AT&T announced on Friday their $54 billion counter offer for MediaOne Cable, the shares of Time Warner cable rose $1.25 to $73 in a down market in the New York Stock Exchange composite trading. As a result of AT&T's bid for MediaOne, Time Warner's 12.9 million cable subscribers are valued now at $60 billion. Time Warner is keeping a close eye on the proposed deals, since the outcome determines which company, AT&T or Comcast, will own a stake in some of Time Warner's most profitable entertainment assets. Currently, MediaOne owns about 25% of Time Warner Entertainment, which includes Warner Brothers movie and television production studio, the Home Box Office network and most of Time Warner's cable systems. Time Warner is taking a neutral stance in the battle for MediaOne. The company argues that they do not want to jeopardize the relationship that they have with both companies. However, many close to the situation, including Alan Gerry, a major Time Warner shareholder believe that Time Warner will greatly benefit if AT&T is successful in acquiring MediaOne. More importantly, if the deal goes through then Time Warner and AT&T would be able to finalize their agreement allowing AT&T to use Time Warner's cable television lines to offer local phone service.
Global Crossing Plans to Acquire Cable & Wireless's Undersea Fiber Optic Cable Operations for $725 Million
Global Crossing announced plans to acquire Cable and Wireless's undersea fiber optic cable operations for $725 million. With this acquisition, Global Crossing will be able to lay and maintain its own fiber cables. Right now the company has contracted outsiders to construct and maintain its networks. The company currently has one operational cable linking the U.S., the United Kingdom, the Netherlands, and Germany. Through the acquisition of Cable & Wireless's cable, the company could save as much as $100 million annually in construction and maintenance expenditures. Further, the acquisition will give Global Crossing a means to take advantage of the explosion in undersea-cable projects. In addition to this acquisition, the company will name William B. Carter Jr. to head the global marine unit. Previously, Carter served as the president and chief executive of AT&T's submarine systems before being acquired by Tyco.
BRAZIL
Telefonica Approves 109.8 Million Real Capital Increase for Telesp
Brazil's Telefonica has approved a 109.8 million real capital increase of its Sao Paulo fixed-line telecom operation, traded as Telesp. The company is issuing a further 586,456 Telesp preferred shares at price of 218.13 reals per share. Existing Telesp shareholder will have pre-emptive rights on the issue from now until May 25. The shares will qualify for 1999 dividends.
EARNINGS/STOCKS
GTE's First Quarter Network Services Unit Revenues Increase 2 Percent
GTE Corp. announced that first-quarter revenues from network services were $3.7 billion, up 2 percent from 1998, driven by a 9 percent year-over-year increase in its minutes of use, and 10 percent growth of access lines in use. The wireless products services unit's first-quarter revenues rose to $816 million from $742 million a year earlier, due to an 8 percent year-over-year increase of its wireless subscribers to 347,000. The data products and services first-quarter revenues were $223 million, up 81 percent from 1998 levels, due to a rapid growth of Internet use, and a variety of online and security services for business customers. The company's international operations had first-quarter revenues of $133 million, up 56 percent from the same quarter of 1998, partly reflecting new operational efficiencies.
Nokia Corp. Mobile Phone Unit Beats First Quarter Expectations
Nokia Corp's first quarter results have exceeded expectations for sales growth and profitability at Nokia Mobile Phones. In addition to the company's 92 percent rise in the division 's sales was the exceptional profit margin of 23.9 percent. Nokia Mobile Phone President Matt Alahuhta's predicted that the total number of mobile phones in use will break the 1 billion mark in 2003, compared with 2005 in an earlier forecast. Alahuhta said that the company's official target of 25-35 percent year-on-year sales growth could be exceeded and that 10-15 percent of all handsets that will be sold next year will have Internet connectivity.
E-COMMERCE
ETrade Announces 2-for-1 Stock Split
ETrade Group Inc. announced on Friday that it will split its stock 2 for 1, the second split of the year for the online brokerage firm. Previously, the company split its stock on January 29th. The split will double the number of shares outstanding to 230 million but halves their value. The new shares will be issued May 21 to stock of record may 7.
EUROPE
Sprint Corp. and Partners Increase Their Equity by $700 Million in Global One Venture
Sprint Corp., Deutsche Telekom AG and France Telecom SA have increased the equity of their Global One partnership by $700 million. Although the alliance has been clouded by Deutsche Telekom's $82 million agreement with Telecom Italia SpA, which has drawn opposition from France Telecom. However, in a recent news release, Global One reiterated its dedication to its "course and mission."
IBM and Siemens' Infineon to Invest 3 Billion ffr in Corbeil-Essonne Plant
International Business Machines Corp. announced that it will join forces with Siemens AG unit Infineon Technologies to realign IBM's Corbeil-Essonne plant in France, investing 3 billion ffr and cutting 1.150 jobs. IBM has presented to managers and unions at the plant an industrial plan aimed at "ensuring the continuation of the site and its future development." The plan foresees the creation of a joint venture with Infineon and the reduction of 1,150 of 2,730 jobs in the production of integrated circuits at the factory.
France Telecom Argues Deutsche Telekom is in Clear Violation of Accords
France Telecom said that Deutsche Telekom AG's plan to acquire Telecom Italia SpA is in "clear violation" of accords between France Telecom and Deutsche Telekom. France Telecom plans to take the necessary steps to defend its rights and interests, as well as those of shareholders. The company's international position will not be significantly affected by the acquisition. It noted that it has pursued a strategy of rapid international growth in recent years, multiplying sales outside France by five within just three years. France Telecom and Deutsche Telekom's primary joint subsidiary is Global One, which they own together with Sprint Corp.
FIBER OPTICS
Level 3 Communications to Construct Trans-Atlantic Undersea Cable System
Level 3 Communications announced that it would install a Trans-Atlantic high-speed, large capacity Internet cable system for about $600 million to $800 million. Tyco Submarine Systems, Ltd. will design and develop the high-capacity undersea cable system, which will have the capacity to transmit 1.28 terabits per second. The system, which is expected to be in service by September 2000, will link Level 3's high-speed and capacity networks for Internet transmissions in the United States with its European network. The cable would run from Long Island to North Cornwall, England.
MERGERS/ACQUISITIONS
Broadcom Corp. to Acquire Epigram Inc. for $316 Million in Stock
To expand the presence in the emerging home network market, Broadcom Corp. will acquire Epigram Inc. for about $361 million in stock. Under the terms of the agreement, Broadcom will issue 4.6 million shares of Class B common stock in exchange for all of Epigram's preferred and common shares. Broadcom's class A stock, which the company used in deriving the $316 million deal value, closed Friday at $68.75m down $1.875, in NASDAQ stock market trading.
SOUTH AMERICAN TELECOM
Argentina's Telecom and Telefonica Argentina-Stet France to Terminate Telintar Long-Distance Partnership
Telefonica de Argentina SA and Telecom Argentina-Stet France will terminate their shared long-distance service provider, Telintar SA, on May 1 as part of the country's telecommunications deregulation process. Telecom director of investor relations Pedro Insussarry said: "Telintar will be dissolved, with half of the equity going to Telecom and the other half to Telefonica." Starting May 1, the companies' long-distance service will be provided separately by their Telecom International SA and Telefonica Larga Distancia de Argentina SA units. |
