Word: armstrong
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Dates: during 1990-1999
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...called the last mile. But that monopoly was broken up by regulators in 1984, forcing the company to divest the Baby Bells--and pay them access fees to use their lines. "If you have to go through your competitors, then how can you be effective in satisfying your customers?" Armstrong asks, explaining his decision to begin purchasing cable companies. "I asked, What was it going to take to become the greatest communications company in the world...
...word: him. Since arriving at AT&T 18 months ago, after stints at IBM and Hughes Electronics, Armstrong has unleashed a wave of high-profile, big-bucks purchases that has sent both his and the company's stock soaring. It was the perfect meeting of a CEO with an unlimited imagination and a corporation with an unlimited checkbook. In January 1998, just two months after Armstrong took the helm, the company paid $11 billion for Teleport, a company that operates fiber-optic networks in New York and other cities. Six months later, AT&T purchased Tele-Communications Inc., then...
...Armstrong's bold stroke posed such a change in the competitive landscape that various players along the communications-company continuum spent a few desperate days last week searching for ways to keep MediaOne out of AT&T's hands. Internet power America Online, software supremo Microsoft, telecom giant MCI Worldcom and cable's Comcast (which made the initial $48 billion bid for MediaOne that AT&T overwhelmed) all huddled at various times because each had something to lose. AOL, for instance, could find its access to cable-modem customers blocked and its booming online-content business threatened...
Overlooked in all the hype about a bidding war was the fact that the economics of the deal could work only for AT&T, because of the synergies Armstrong's strategy made possible. No other company was in a position to provide each of MediaOne's subscribers with as wide an array of services and soak up all those revenue streams. (Think about it: Would you rather buy phone service from your local cable company or AT&T?) No other company, in other words, could justify the $4,700 per subscriber that AT&T was willing to pay. "Bottom line...
Nevertheless, Armstrong handed out some consolation prizes to keep his rivals from hatching new plots. AT&T made Comcast happy by selling the company 2 million cable subscribers at the relatively low cost of about $4,550 per subscriber. That was in addition to the $1.5 billion breakup fee Comcast collected to walk away from the deal. (Comcast's strengthened position may come in handy later as Exhibit A when AT&T has to prove to regulators that it has not rebuilt the old Ma Bell monopoly.) AT&T sold to Microsoft--a company whose Internet strategy is looking increasingly...