Stock of the Day
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SBC Communications (SBC)
SBC Communications in Talks to Buy AT&T
SBC Communications is in serious talks to acquire AT&T – its former parent - for more than $15 billion. SBC, the nation's No.2 telecommunications company, is interested in AT&T's telecommunication services to large corporations and its international network since the company would have to spend billions to get what AT&T has built over a long period of time. If SBC acquires AT&T, it would create the nation's biggest telephone company.
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| Stock Analysis |
AT&T shares jumped more than 6% on Thursday morning after the takeover rumors while SBC shares sank. Verizon and Sprint, SBC's biggest competitors, fell too. MCI was up over 3% as Wall Street predicts that if SBC buys AT&T, a takeover of MCI would happen next.
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Investors should consider the fact that the acquisition may never happen. BellSouth's plans to acquire AT&T in 2003 collapsed. SBC' shareholders are concerned because the $15 billion price rumored does not include the $6 billon net debt AT&T has and SBC would have to deal with it after the deal happens. Also, AT&T's revenues are expected to fall another 15% in 2005.
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SBC is currently dealing with Cingular's acquisition of AT&T Wireless (Cingular is co-owned by SBC and BellSouth). And some analysts consider buying BellSouth's 40% stake in Cingular instead of buying AT&T makes more sense. Other analysts think that buying MCI would be a smarter move. MCI has a market value of $6.2 billion and almost no net debt after its surfacing from bankruptcy.
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Profile |
SBC Communications Inc. is in the communications industry. Through its subsidiaries' trusted brands and world-class network, SBC and its affiliated companies provide voice, data, networking and e-business services, including local and long-distance voice, high-speed Internet access and data transport, voice and data network integration, software and process integration, Web site and application hosting, e-marketplace development, paging and messaging, as well as cable and satellite TV, and directory advertising and publishing.
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