SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: December 8, 1998
AT&T CORP.
A New York Commission File I.R.S. Employer
Corporation No. 1-1105 No. 13-4924710
32 Avenue of the Americas, New York, New York 10013-2412
Telephone Number (212) 387-5400
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Form 8-K
AT&T Corp.
December 8, 1998
Item 5. Other Events.
See Exhibit 99 to this Form 8-K.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 99 AT&T Corp. Press Release issued December 8, 1998.
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Form 8-K
AT&T Corp.
December 8, 1998
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 thereunto duly authorized.
AT&T CORP.
/s/ Marilyn J. Wasser
-----------------------------------
By: Marilyn J. Wasser
Vice President and Secretary
December 14, 1998
AT&T To Acquire IBM's Global Network Business For $5 Billion
Companies Also Sign Series Of Outsourcing Contracts
FOR RELEASE TUESDAY, DECEMBER 8, 1998
NEW YORK - 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."
IBM's Global Network has more than 1,300 dial-up points of presence and
dedicated access from more than 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.
# # #
(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 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 any forward-looking statements,
whether as a result of new information, future events or otherwise.)