AT&T CORP
8-K, 1998-12-14
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                       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

<PAGE>

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.

<PAGE>

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.)



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