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AT&T Kathleen Early

AT&T Kathleen Early. 15.398 Class Two Howard Anderson. “…It was…. “ the best of times, it was the worst of times, It was the age of wisdom, it was the age of foolishness, It was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness,

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AT&T Kathleen Early

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  1. AT&TKathleen Early 15.398 Class Two Howard Anderson

  2. “…It was… • “ the best of times, it was the worst of times, • It was the age of wisdom, it was the age of foolishness, • It was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, • It was the Spring of Hope, it was the Winter of Despair

  3. “We had everything before us, • “we had nothing before us….” • AT&T Problem: Long Distance, very quickly, goes from a cash cow/profitable to …. Barely profitable. • … and they are not alone.

  4. A T & T • Sales $67 • Business: 50% • Business Growth: - 11% ($34 B) • 2001: expected: - 17% ($28.2 B) • Debt: $62 B ( MediaOne, TCI) • Wireless: $10.4 B, up 35% • Broadband: UP 10.4% • Cost of new local subscriber: $600

  5. ATT • Long Distance: will shrink: $6 B ($29B)

  6. Example: Worldcom • Revenue by segment 2000 1999 • Voice 1.71 1.84 -7.1% • Data 1.93 1.57 22.9% • International 1.54 1.19 29.4% • Internet Related Serv .69 .49 40.8% • Wholesale & Consumer 2.62 2.97 -11.8 • Other 1.14 1.26 -9.5% • Total 9.93 9.32 3.3%

  7. What do we learn? • 1. Long Distance is a pure commodity • (Ellen Hancock: $.05/mile OC48 - $.01) • 2. AT&T’s issues are the same as Worldcom, Sprint, etc. • 3. 1998: Fortune Favors the Bold… A. Buy new competitors: McCaw, Teleport. B. Buy cable properties: TCI, MediaOne C. Build Internet Businesses D. Assume slower deterioration of LD; get control of end user.

  8. The Market Will Be Heard • Stock Mar 99Feb01 $60 $21 Market Cap $240 B $81 B Lost: $160 Bill + $100 Bill ( debt) - =trouble.

  9. The “Hail Mary” Pass • ATT: 4 companies • Wireless: $9.6 Bill – 18.6% Margin “A” • Broadband: $9.3 B – 24.3% Margin “A-” • Consumer $19.B 41% Margin “C” • Business $28.4B 36% Margin “B- • Tot: $66 B

  10. Restructure: • Wireless: $9.6 3X $27b • Broadband 9.3 2.5 23b • Consumer $19 1.25 23b • Business 28.4 2X 56 • Total Breakup Value: $129 B or 50% premium

  11. Wireless Industry • Subscribers 1987 1990 1995 1999 2000 • U.S. 1.23 5.28 33 86 100 • Source: Yankee Group

  12. Global Wireless Forecast(Billions of Subscribers) • 00 01 02 03 04 05 06 • .59 .73 .86 .98 1.1 1.2 1.3 • Source: Yankee Group

  13. Internet Influence • 2000 • Wireless Internet users: 660 M • 1 billion web pages • 75 million host computers

  14. Questions: • 1. What is AT&T’s Internet Strategy? • 2. How has it changed? • 3. What will be different with 4 companies? • 4. With companies like PSI in the tank, what part of the market looks attractive? • 5. At some point, will you not be competing with your former sister divisions?

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