"The man who is too old to learn was probably always too old to learn." -- Henry Hasskins

Comcast Targets AT&T Broadband

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By Dave Marino-Nachison (TMF Braden)
July 9, 2001

Cable operator and telecommunications firm Comcast (Nasdaq: CMCSA) yesterday confirmed that it has offered to buy AT&T's (NYSE: T) broadband business in a deal for which it would issue 1.05 billion shares of stock -- valued at $44.5 billion based on Friday's closing prices -- and assume $13.5 billion in debt. The acquisition would make Comcast the world's largest broadband communications provider.

In its public statement, Comcast said it is also willing to acquire AT&T's interests in entertainment, television production, and cable television consortium Time Warner Entertainment, Cablevision (NYSE: CVC), and Rainbow Media (NYSE: RMG) through further debt assumption and equity issuance.

According to Comcast Chairman Ralph Roberts, the companies had discussed such a deal for months but couldn't come to an agreement. Now, with AT&T closer to sending its breakup plan -- which would include the spinoff of AT&T Broadband and the sale of the aforementioned media assets -- to stockholders for approval, Roberts hopes he can sway AT&T investors through this unsolicited deal.

"Your shareholders would receive significantly more value through a combination with Comcast than through your planned restructuring," Roberts said in a letter to AT&T Chairman Michael Armstrong. And AT&T stockholders would own a majority of the combined company. Comcast hopes both arguments will induce AT&T investors to pressure the company to agree to the deal.

No official press release had been issued by AT&T as of press time, but company spokeswoman Eileen Connolly told Bloomberg that "AT&T has no current plans to sell its broadband business, including this transaction by Comcast. We will analyze the proposal and respond in due course." AT&T executives have said in the past that the unit is not for sale.

News to Go

Telecommunications equipment company Marconi (Nasdaq: MONI) said Deputy CEO John Mayo resigned Friday, effective immediately. George Simpson will remain CEO, while Roger Hurn will stay on as chairman. "The entire workforce faces immediate short-term challenges," said Mayo in a statement, "and it is inevitable that sacrifices will have to be made for Marconi to enjoy the prosperity and growth available in the medium and long term."

AOL Time Warner (NYSE: AOL) top brass named Walter Isaacson, editorial director of Time Inc., the new CEO of CNN News Group.

Telecommunications equipment company Lucent (NYSE: LU) said it won a one-year, $90 million deal to supply TyCom (NYSE: TCM) with optical networking systems and services. The deal leaves room for another $50 million in upgrades.

Online travel services company Travelocity.com (Nasdaq: TVLY) said it acquired WhereTo.com, an Australian company valued for its net fare booking technology. "Net," or consolidation, fares are fares offered by an airline to a travel agent at one price with the agent then marketing them at a higher one.

Video game software developer Acclaim (Nasdaq: AKLM) named TheStreet.com software development executive David Sturman its chief technology officer.

Children's apparel retailer Children's Place (Nasdaq: PLCE) said it expects a fiscal second-quarter loss of $0.13 to $0.17 per share -- Wall Street was looking for a loss of $0.06 -- as same-store sales for the five weeks ended July 8 fell 16% year-over-year.

Dave Marino-Nachison congratulates Ryan and Suzanne on their nuptials. Dave's stock holdings can be viewed online, as can The Motley Fool's disclosure policy.

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