BREAKFAST WITH THE FOOL
Tuesday, December 28, 1999
"Industry is Fortune's right hand, and frugality her left."
Bell Sails Over AT&T Hurdle
Richard McCaffery (TMF Gibson)
Local telephone company Bell Atlantic (NYSE: BEL) avoided a pitfall in its drive to offer long distance services in New York last night when the Federal Communications Commission denied rival carrier AT&T's (NYSE: T) motion to prevent the company from quickly rolling out services.
AT&T filed its motion last week, shortly after the FCC gave Bell the OK to offer long distance services in New York. Bell Atlantic became the first baby bell granted approval to offer long distance services in a local coverage area since the Telecommunications Act of 1996 first cleared the way for local companies to do so.
In its petition, AT&T claimed Bell Atlantic hasn't fully opened its lines to competitors that want to offer local services. The FCC responded that AT&T didn't raise any issues the commission hadn't already considered.
When AT&T filed the petition December 23, it also announced plans to ask the U.S. Court of Appeals for a stay. Although the court could conceivably grant AT&T's request, thus delaying the New York rollout, Bell Atlantic's move into the long distance market is viewed by industry experts as inevitable.
Since litigation is expensive, many would like to see AT&T find a better way to spend its money than a legal battle going nowhere. Keep in mind, however, that Bell Atlantic has been every bit the 800-pound gorilla in the Northeast, and competition in local markets won't flourish unless Bell is kept on its toes.
Bell Atlantic plans to offer its New York customers "surprise-free" long distance services January 5. The company, the second-largest local telecom company in the U.S., has 8 million customers from Buffalo to Manhattan. For telecom carriers, New York is a critical market because of its size and the number of calls started and completed in the Big Apple.
News to Go
Burger King Corp., owned by London-based conglomerate Diageo Plc (NYSE: DEO), told parents to return promotional Pokemon balls that could harm infants. The "PokeBalls" are less than three inches wide and led to the choking death of a 13-month-old girl.
Two subsidiaries of Charter Communications (Nasdaq: CHTR) plan to offer $900 million in notes to repurchase existing debt and to raise working capital. Charter, headed by Microsoft cofounder Paul Allen, is the fourth-largest cable operator in the U.S. Its plan is to offer high-speed Internet connections via cable wire to customers throughout the country.
Global investment group Investcorp is buying school products and customized jewelry manufacturer Jostens (NYSE: JOS) for about $950 million. The deal includes about $100 million in debt. Jostens shareholders will receive $25.25 in cash for about 98% of the company, which represents a 38% premium over last night's closing price. The deal should be completed in about 90 days.
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