AT&T, IBM in $5B Telecom, Networking Contract

AT&T said it will provide global telecommunications and networking outsourcing services to IBM worth approximately $1 billion annually over a period of five years. The deal represents new revenues, but will not have a material impact on AT&T's financial results. AT&T had revenues of $85.5B in 2006 and analysts expect $121B in 2007 and $127B in 2008 (the large jump is due to the BellSouth merger, completed in late 2006). AT&T said it will take around $80M in charges over the next year related to the deal with IBM. Shares of AT&T gained 0.4% to $42.41 on Tuesday, while IBM lost 0.6% to $118.36.

Sources: Associated Press, Reuters
Commentary: A Look At Tech Stocks By Relative P/E and PEG ・Is Anyone Immune to the Ripple Effect of the Unfolding Financial Crisis? ・Safety in Tech? You Betcha -- Barron's
Stocks/ETFs to watch: IBM, T
Earnings call transcript: International Business Machines Q2 2007, AT&T Q2 2007

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Comments

[Carpe Max:]

NewsVisual did some great research on this deal. They found that strong ties exist between the two companies through UPS and the Council on Foreign Relations www.newsvisual.com/new... . Directors from both AT&T and IBM are or have been Chairman/CEO at UPS. Two Directors at IBM are also currently Directors at CFR. It seems these ties probably played a key role in this deal.

2007 Oct 03 02:46 PM