Article 43
Sunday, January 30, 2005
SBC buys AT&T
The boards of SBC Communications Inc. and AT&T Corp. met this afternoon to vote on a deal under which SBC would acquire AT&T for roughly $16 billion, mainly in stock, people close to both companies say.
Executives of both companies, who have been negotiating for days, have come to a proposed agreement for the deal, which would create the largest telecom carrier in the U.S. The agreement isn’t final until the boards approve it, but momentum for a tie-up built quickly after years of sporadic talks, including some as recently as late November.
People familiar with the matter said the proposed deal calls for AT&T shareholders to receive SBC shares valued at about $15 billion, as well as another $1 billion in the form of a special dividend. SBC Chairman and Chief Executive Edward Whitacre Jr. would remain in his current positions, while AT&T Chief Executive David Dorman would become president, these people said. AT&T would get three seats on the new company’s board, including one for Mr. Dorman.
It was unclear what would happen to AT&T’s brand name after an acquisition, but the new company may end up with the 130-year-old brand.
The deal signals the ambition of SBC, based in San Antonio, to dominate the one section of the U.S. phone industry where it ranks as a fledgling—the challenging business of providing phone and data services to large businesses.
For AT&T, any board-approved deal would end a 130-year history that began with the invention of the telephone. The company, based in Bedminster, N.J., has been shrinking steadily since the government broke up its monopoly in 1984, splitting it into seven local Bells and a vast long-distance operation.
In recent years, AT&T has been struggling with sharp declines in revenue—it predicts a drop of about 16% this year—as price wars and increasing competition have sapped its strength. The company has been seeking to sell itself for several years and came close to a deal with BellSouth Corp. in 2003.
SBC, meanwhile, has been looking for ways to make inroads with large businesses, and any deal with AT&T would create a shortcut straight to the top of that market segment. An acquisition of AT&T by SBC would likely spark a flurry of deal-making in which AT&T’s largest rival, MCI Inc., could become a prize for another of the giant Bell companies looking at the corporate-services market.
Now whittled down to fewer than 47,000 employees and eagerly shrinking its declining business down to just providing phone and data service to corporations, today’s AT&T is a fragment of the company that in the 1980s employed more than a million people and was one of the most powerful companies on earth.
“It was iconic,” says Robert Atkinson, a former U.S. Federal Communications Commission official who now heads the Institute for Tele-Information at Columbia University in New York.
AT&T withstood antitrust suits in 1913 and 1949 and an investigation by the Federal Communications Commission in the 1930s. But in 1974, the government filed the antitrust suit that a decade later resulted in the breakup of the monopoly.
Many former executives and other experts say the late Charles Brown, the chairman and chief executive who presided over the 1984 breakup, made the seminal error that helped set the stage for AT&T’s demise when he chose to split off AT&T’s local and wireless operations.
The government had proposed that the company keep its local and long-distance operations together and split off its Western Electric equipment-making division, now Lucent Technologies Inc. Instead, Mr. Brown jettisoned the sleepy local-phone operations and AT&T’s seemingly impractical wireless-communications licenses. AT&T kept the glamorous long-distance business, where prices were high, and the equipment-making arm that could have become a way for AT&T to take part in the explosion in computer technology.
“That was mistake No. 1,” said Mr. Atkinson. AT&T has been shrinking ever since and has fitfully acquired and spun off a number of businesses, including wireless, cable and computers. Most recently, it has narrowed its focus to serving corporate customers.
“The era of the huge company trying to be all things to all people all the time is over,” said Mr. Atkinson. The Bells, which continue to add assets and services, now face this challenge as they confront new competitors, including cable companies and Internet-based phone companies.
“If they’re not adept at adapting, they will follow the same path as AT&T,” said Mr. Atkinson.
Writeto Almar Latour at and Shawn Young at
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See what this may mean about Pensions HERE
Credit: pension_watchdog
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Wednesday, January 26, 2005
Multiple layoff notices start 2005
My friends at AT&T report managers got layoff notice 1/18 - union folks 1/25, and the CNRPs will be getting notice 1/28.
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Tuesday, January 04, 2005
The cost of COBRA
The Consolidated Omnibus Budget Reconciliation Act - COBRA - gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
For us layed off AT&T workers, the 2005 cost to continue our benefits under COBRA is about $450 single coverage, $1150 family coverage - monthly.
Click HERE for the COBRA Insurance website.
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