Sunday, March 5, 2006

And the Best Actor Award Goes

It's pretty hard to compete with the Academy Awards tonight, and maybe that explains the timing of today's news about AT&T acquiring BellSouth. The analyst concall is at 10am Monday, but with the news out today, it will be interesting to watch how these stocks perform Monday.

OK, so like, who issues press releases of such magnitude on a Sunday? And on Oscar Sunday? Either there's an even bigger story coming on Monday (my guess is not), or they want to slip this in while nobody's paying attention, and America wakes up with a love-in Oscar hangover Monday and just goes "whatever", what's good for corporate America is good for me (probably not, but I really wonder sometimes).

As a rule of thumb, I hardly ever post on weekends, as I'm usually preoccupied with other things. I did see this story earlier in the day, though, and figured just wait til Monday to see if I had an angle worth posting about.

Well I'm posting now because CBS Radio in New York interviewed me about an hour ago about the story. So, if you happen to be bored with the Oscars, and happen to be a nighthawk reading this post, and happen to listen to your local CBS Radio affiliate tonight or on Monday, there's a good chance you'll hear me on the radio.

Hey, if you do, please let me know - I'd love some validation on this!

I'm not going to say much here about the news, and there's certainly no scoop. Russell Shaw has a very good posting from earlier today that should answer many questions, and many other insightful posts are sure to follow Monday morning. Hat tip to Andy Abramson on Russell's post, as he cited it on his blog - and I'm sure Andy will have his own cogent take on the news soon. Om Malik's post today is also a good read, as is Mark Evans's post from first thing this morning. When do you ever sleep Mark?

For my two cents, I'd just like to add a few quick thoughts, most of which is what I shared with CBS Radio tonight....

- In a bizarre way, at&t does deserve the Best Actor award. They go from what looked like terminal decline and being acquired by SBC for "only" $16 billion - half of what the Sprint/NexTel deal went for. How can this be? Was AT&T really so badly managed? Then their new corporate logo was recently unveiled - same logo, but the name has gone from AT&T to at&t. So, is this the meek, happy-to-be-still-alive, smaller and friendlier AT&T? Or is it a wolf in a sheep's clothing that really hasn't - and by nature cannot - change its stripes - and is simply waiting for the right situation to reassert itself? I dunno. Looks like the latter to me with today's news. I have always felt that AT&T is one of the most valuable brands ever created, and it seemed ridiculous for it to be worth the $16 billion SBC bought it for. Well, here they come, reversing the acquisition at over 4 times the price to take out BellSouth.

- As with so many other carrier deals happening these days, it's all about wireless. With 100% of Cingular, this really creates a telecom megabrand. They've got the huge subscriber base, the brand and the network - all primed for the inevitable onslaught of cool wireless apps that we've been waiting for. The rich will certainly get richer. We all know they've got a strong franchise in the enterprise market, and now, CallVantage finally has an addressable market with BellSouth's footprint. I think they'll now get to become the VoIP provider everyone thought they'd be in 2004, when CallVantage was launched with great fanfare at Spring VON. Has there ever been a marketing campaign with greater irony? Dubbed "The Year of the Giant", their launch was anything but. I remember - I've got the t-shirt and the photo with Kareem Abdul Jabbar to prove it! With massive global advertising during the 2004 Olympics, they sure looked to be world beaters. However, Vonage totally spooked them, and baited them into a price war and killed any chance of making money with VoIP. With barely 70,000 subscribers to show for all this, "the giant" was acquired for a song (I think)within a year's time. Wow.

- Of course, this news will have a domino effect of questions and winners/losers analysis that impact the whole communications sector. First and foremost, how will Washington and consumer groups react to what sure looks like a devolution back to 1984 when the AT&T monopoly was broken up? In broad strokes, this merger would basically reduce the US to a two horse market - AT&T and Verizon, and that raises all kinds of questions about consolidation and competition - for everybody. The other RBOCs -well, Qwest, really. The independent carriers. The wireless operators. The cable guys. The broadband operators. Consumers. Startups. Vendors. Etc. This merger is probably bad news for Packet 8, as their deal with BellSouth will look tenuous now. It's bad news for Vonage as well, especially if they can really get CallVantage on track. And that does not bode well for Vonage's IPO aspirations - which in turn, hurts the overall IP sector in terms of its attractiveness to the VCs and bankers. All of which is good news for at&t, and if so, I suspect it may only be a matter of time until they become AT&T again. Now that would be Oscar-worthy!

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