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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
December 7, 1998
(Date of earliest event reported)
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
New York 1-2360 13-0871985
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation)
New Orchard Road, Armonk, New York 10504
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(914) 499-1900
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ITEM 5. OTHER EVENTS
The text of Exhibit 99(a), a press release, dated
December 8, 1998, announcing the execution of definitive
agreements between International Business Machines
Corporation ("IBM") and AT&T Corp. ("AT&T"), pursuant to
which, among other things, AT&T will acquire the assets
of the IBM Global Network from IBM, is hereby
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibits.
99(a) Press Release, dated December 8, 1998,
announcing the execution of definitive
agreements between IBM and AT&T
pursuant to which, among other things,
AT&T will acquire the assets of the IBM
Global Network from IBM.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
INTERNATIONAL BUSINESS
MACHINES CORPORATION
Date: December 16, 1998 By: /s/ Andrew Bonzani
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Name: Andrew Bonzani
Title: Assistant Secretary and
Senior Counsel
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EXHIBIT INDEX
Exhibit No. Description of Exhibit Page No.
99(a) Press Release, dated December 8, 4
1998, announcing the execution of
definitive agreements between
International Business Machines
Corporation ("IBM") and AT&T Corp.
("AT&T"), pursuant to which, among
other things, AT&T will acquire the
assets of the IBM Global Network
from IBM.
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Exhibit 99(a)
AT&T to Acquire IBM's Global Network Business for $5 Billion -- Companies
Also Sign Series of Outsourcing Contracts
NEW YORK
Dec. 8, 1998 -- AT&T and IBM today announced a series of
strategic agreements under which AT&T will acquire IBM's Global Network
business for $5 billion in cash, and the two companies will enter into
outsourcing contracts with each other. IBM will outsource a significant
portion of its global networking needs to AT&T. AT&T will outsource certain
applications processing and data center management operations to IBM.
The transactions could represent $2.5 billion in additional
revenue to AT&T in the first full year of operation.
The IBM Global Network business AT&T will acquire serves the
networking needs of several hundred large global companies, tens of
thousands of mid-sized businesses and more than 1 million individual
Internet users in 59 countries.
The acquisition boosts AT&T's strategy to rapidly increase the
company's revenue, especially at its fast-growing networking services unit,
AT&T Solutions. About 5,000 IBM employees will join AT&T as part of the
acquisition.
"These strategic agreements are all about growth," said AT&T
Chairman and CEO C. Michael Armstrong. "Growth in revenue, growth in
technology, and -- most important -- growth in what AT&T can do for
customers.
"For AT&T, today's announcement supports four areas we've
targeted for growth: global services, data networking, Internet Protocol
technology and network outsourcing through our AT&T Solutions business,"
said Armstrong. "The acquisition of IBM's global data network will
accelerate our ability to deliver IP-based services to global customers. It
will give us a sophisticated new platform for revenue growth."
By providing customers with more attractive global services,
Armstrong said the acquisition will enable AT&T to compete more effectively
with strong rivals for the provisioning of global managed data network
services, including IP.
"We are delighted that AT&T will be the new home for our Global
Network operation," said IBM Chairman and CEO Louis V. Gerstner, Jr. "With
this agreement, the network will receive the management focus and resources
necessary to maintain its standing as a world-class provider of
connectivity to IBM and millions of customers.
"AT&T will use its expertise to enhance and expand the Global
Network to the benefit of its customers, including IBM," he said. "We can
now focus fully on helping our customers take advantage of the emerging
networked world through e-business applications and solutions."
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IBM's Global Network has more than 1,300 dial-up points of
presence and dedicated access from more that 850 cities in 59 countries.
The Global Network offers business customers innovative services and
worldwide operations and support, including in-country, native-language
support personnel.
AT&T said its acquisition of IBM's high capacity global network
would be supportive of the 100-city, IP-based network that would be created
as part of the global joint venture announced by AT&T and BT in July.
IBM said that this transaction, in its entirety, is not expected
to have a significant impact on the company's 1999 operational results.
AT&T said earnings dilution from the transaction is expected to be
insignificant in the first full year of operation and accretive thereafter.
AT&T and IBM said they expect the acquisition to conclude by
mid-1999, following clearance by U.S. regulators and certain regulatory
authorities outside the U.S.
Armstrong said today's announcement is about more than acquiring
IBM's global network. "We have also reached several significant outsourcing
agreements that match each company's strengths with the other company's
business needs," he said.
IBM has awarded AT&T Solutions an outsourcing contract valued at
$5 billion over five years for a significant portion of IBM's own global
networking needs, making it the single largest networking outsourcing
contract ever awarded. The contract is expected to double the network
outsourcing revenue of AT&T Solutions and will enable it to grow more
rapidly by serving a wider set of customer needs with a broadened scope of
services.
In addition, AT&T and IBM's Global Services unit have reached
agreement for outsourcing services valued at about $4 billion over the next
10 years. As part of the agreement, IBM will manage AT&T's legacy
applications processing, including billing, service-order-processing,
installation and maintenance, for customers of AT&T business long-distance
services. In addition, IBM will assume management of AT&T's data processing
centers, which operate corporate information systems such as accounts
payable and receivable and employee payroll and benefits. Under the
agreement, more than 2,000 AT&T management employees will be offered
positions with IBM. Editor's Note: NEW YORK NEWS CONFERENCE -- AT&T and IBM
will discuss these announcements in a news conference at 11 a.m. (USEST)
today at AT&T's world headquarters at 32 Avenue of the Americas in New York
City. AT&T Chairman and CEO C. Michael Armstrong and IBM Chairman and CEO
Louis V. Gerstner, Jr. will make remarks and take questions. Reporters who
cannot attend can participate by calling in prior to 11 a.m. at
1-800-700-8174 in the United States or 612-332-0430 elsewhere. No access
code is required. Trouble number: 1-800-932-1100 for U.S.; 612-334-6983 for
elsewhere. A replay of the news conference will be available beginning at 3
p.m. EDT today at 1-800-248-7600 in the U.S. and 1-402-493-8905 elsewhere.
The replay will be available until 3 p.m. Friday, Dec. 11.
SATELLITE COORDINATES -- A satellite feed of the 11 a.m. EDT news
conference in New York is available at the following coordinates: Ku band
satellite, Telstar 5, transponder 13. Downlink polarity, vertical; downlink
frequency, 11958, MHz, 97 degrees west.
(Note: The foregoing are "forward-looking statements" which are
based on management's beliefs as well as on a number of assumptions
concerning future events
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made by and information currently available to management. Readers are
cautioned not to put undue reliance on such forward-looking statements,
which are not a guarantee of performance and are subject to a number of
uncertainties and other factors, many of which are outside AT&T's control,
that could cause actual results to differ materially from such statements.
For a more detailed description of the factors that could cause such a
difference, please see AT&T's filings with the Securities and Exchange
Commission. AT&T disclaims any intention or obligation to update or revise
forward- looking statements, whether as a result of new information, future
events or otherwise.)
Adele Ambrose Rob Wilson
AT&T IBM
908-221-6900 914-499-6565
[email protected] [email protected]
888-602-5420/pager
- or-
Eileen M. Connolly
AT&T
908-221-6731
[email protected]
888-602-5417/pager
