Web Design Directory

  w   w   w   .   d   e   s   i   g   n   d   i   r   .   n   e   t
An industry leading web design, hosting and development directory. We bring together the best web designers and their customers. Find the lates website business news and updates.
Search DesingnDIR
Advertising | Submit Site »
   » Home Page / Industry News  
  Find Services Provider       Technology Stories        WebSite Services   
AT&T agrees to buy BellSouth for $67 billion

2006-03-06 13:58:00

AT&T Inc. said on Sunday it would buy BellSouth Corp. for $67 billion to acquire the rest of Cingular Wireless it does not already own, and expand into the southeastern United States to gain heft to battle growing competition from cable television and Internet companies.

Together, AT&T and BellSouth would have a coast-to-coast long-distance telephone and data network, residential customers in 22 states and business customers comprising more than half of the Fortune 1000, analysts said.

BellSouth shareholders will receive 1.325 shares of AT&T common stock for each common share of BellSouth. Based on AT&T's closing stock price on March 3, that equals $37.09 per BellSouth common share, a 17.9-percent premium.

The new AT&T, which was formed in November when SBC Communications Inc. completed its acquisition of AT&T Corp., also said it would repurchase at least $10 billion of its common shares over the next 22 months.

The deal's price tag, which values BellSouth at about 6.9-times Wall Street's 2006 cash-flow forecasts, will likely weigh on AT&T's stock price, said Stifel Nicolaus analyst Chris King.

"We believe this premium valuation ... is difficult to justify," King said. AT&T trades at about 6.0-times cash flow, while Verizon trades at about 5.1-times cash flow.

The companies have a combined market capitalization of $165 billion, based on Friday's closing stock prices.

The next largest telephone company, Verizon Communications which bought MCI Inc. last year, has a market capitalization of $99 billion.

The deal would bring ownership of Cingular Wireless, the No. 1 U.S. wireless telephone company, under one roof, which Wall Street analysts have said would streamline management and allow one parent company to enjoy all of the financial benefits.

AT&T currently owns 60 percent of Cingular, while BellSouth owns the remaining 40 percent. Despite its heft, Cingular has been losing market share of the most lucrative, customers to its main rival, Verizon Wireless.

At the completion of the deal, which is expected to close within a year, all the landline and wireless businesses will exist under the sole brand name of AT&T, the companies said.

A purchase of BellSouth would recombine the former "Ma Bell" with four of the seven original Baby Bells regional telephone companies.

Two top consumer groups asked the government to block the deal, saying it could lead to higher prices. AT&T said the deal would result in a "very competitive company," especially in wireless and video services.

AT&T, whose history dates back more than 125 years to the invention of the telephone, was broken up in 1984, with the parent controlling the long-distance assets and its seven offspring controlling regional local telephone services.

"This is essentially re-creating the old AT&T. But in this environment, the industry has been so weakened, with so many competing technologies, it's a very, very different world now," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

"It will strengthen two companies that aren't particularly strong. The industry needs that consolidation to make them stronger against competing technologies," Ghriskey said.

As traditional landline phone businesses have been hurt by a shift to e-mail and wireless phones, telephone carriers have shifted their focus to faster growing businesses such as wireless and data services.

AT&T and other major telephone companies also have been upgrading their networks to offer subscription-television services to thwart competition from cable TV operators, which are offering phone services. AT&T in January began offering video in Texas and plans to expand service to 21 cities in its home territory this year.

A merged AT&T-BellSouth would be trailed by Verizon Communications, which last year bought MCI Inc. Qwest Communications International Inc., the final remaining Baby Bell, covers Minnesota to Washington state.

Any deal would require approval from antitrust authorities as well as the Federal Communications Commission, but analysts said they doubted there would be significant opposition.

"The deal is likely to be approved," said Blair Levin, an analyst at Stifel Nicolaus and a former Federal Communications Commission chief of staff. "The government has already given us a road map and it had very few speed bumps and much less brick walls for this kind of transaction."

He said the government would likely seek similar conditions on this transaction that were placed on the AT&T-SBC deal, which included some price controls, as well as providing competitors access to some buildings and ensuring customers have unfettered access to the Internet.

AT&T expects the deal to be neutral to earnings per share in 2007, and boost earnings per share, excluding merger costs and other items, thereafter.

Cost-savings are expected to top $2 billion in the second year after closing the deal, and total nearly $18 billion, AT&T said. The savings will come from an undisclosed amount of work force cuts, lower advertising expenses and cheaper operating costs as the companies merge operations to one network.

For Edward Whitacre, chairman and chief executive of the new AT&T, a deal would be the latest of a long line of bold acquisitions. A purchase of BellSouth by the new AT&T had been long-expected by Wall Street, but the announcement came sooner than some analysts predicted -- just three months after SBC completed the purchase of AT&T.

Whitacre, who was expected to retire around the end of this year, was asked to stay until March 2008, AT&T said. He will serve as chairman of the combined companies, while BellSouth Chairman Duane Ackerman will head BellSouth operations for a transition period following the merger, the companies said.

Microsoft ALM server online next week
Saint Patrick's Day is the lucky day for developers awaiting Microsoft's ALM server.
Vodafone CEO eyes fixed-line services: report
Britain's Vodafone Group Plc plans to offer fixed-line telecoms services alongside its traditional mobile phone business, Vodafone Chief Executive Arun Sarin told a UK newspaper.
Red Hat aims to simplify CPU virtualization
Red Hat formally announced at a press event in San Francisco last week its Integrated Virtualization strategy, aimed at simplifying CPU virtualization deployment for RHEL (Red Hat Enterprise Linux) customers. The initiative includes integration of virtualization software, known as a “hypervisor,” into Red Hat’s Linux kernel, as well as the formation of a Virtualization Resource Center to support customer efforts.
Social Networking Won't Lift Netscape from Web Limbo
Talk in the industry that Time Warner will try to revive its Netscape division by turning it into a social networking hub sounds like another forlorn hope.
Hackers Get Windows XP on Apple Computers
As expected, hackers have found a way to run Microsoft Corp.'s Windows XP operating system on new Macintosh computers, winning an ad hoc contest and a $13,854 cash prize to boot.
McAfee vows to help after faulty software release
Executives at McAfee are promising to help enterprise customers manage the difficulties that arose March 10 after faulty software prompted users to delete Microsoft Excel files, among others. The defective software is no longer posted, so users can now safely download the latest anti-virus definitions for McAfee’s VirusScan product, officials said.
Amazon.com Modifies 'Abortion' Queries
Amazon.com Inc. said Monday it had modified the way its search engine handles queries for the term "abortion" after receiving an e-mail complaint that the results appeared biased.
Analysts: Ruling Could Hurt Amazon.com
When a New Jersey judge ruled that Amazon.com Inc. breached a groundbreaking contract with Toys R Us Inc., she delivered with the legal blow a public scolding, calling company executives obstinate, arrogant and even childish.
MySpace, Verizon Music-Video Promotional Event Draws 4,300 Bands
More than 4,300 bands have been competing to release singles through Verizon Wireless' VCAST mobile phone service and MySpace.com – before signing with a record company.
VeriSign Buys m-Qube for $250 Million
VeriSign has purchased mobile-applications provider m-Qube in a bid to expand the company's push into the wireless space and establish stronger ties with mobile carriers.


   
» Web Hosting Interviews
Web Hosting interviews, news and reviews. Compare the Best web hosting providers.
» Daw - Web Hosting Blog
Views and Comments about Hosting Industry. News, Trends, Products and Sevices.
» Your WebSite Here
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371


» Submit your site to Web Design Directory

About Us | Advertising | Privacy | Terms Of Use | Contact Us

© DesignDIR.net 2003 - 2017, part of of Business Address Network. All Rights Reserved!