AT&T Takes Over IBM's Global Data Network in $5 Billion Deal

AT&T Corp.'s $5 billion acquisition of IBM's global data network marks a significant step in the company's bid to strengthen its global presence. The deal, which also includes a $4 billion outsourcing contract over 10 years, brings IBM employees into AT&T's fold, with 5,000 joining the company and 2,000 AT&T staff being offered jobs with IBM. The partnership cements AT&T's position in a market where it previously had a deficit, with AT&T CEO C. Michael Armstrong expressing admiration for IBM CEO Lou Gerstner and the company he leads.

Key Takeaways:

• The deal includes a $5 billion cash payment and a $4 billion outsourcing contract over 10 years.
• 5,000 IBM employees will join AT&T, while 2,000 AT&T staff will be offered jobs with IBM.
• The acquisition aims to solidify AT&T's global presence, with a focus on data networks.
• Armstrong has been making deals to strengthen AT&T's position in the telecommunications market, including the purchase of Teleport Communications Group and the acquisition of Tele-Communications, Inc.
• The deal is seen as necessary for AT&T's revitalization, allowing the company to remain a player in the global data network market.

Statistics:

• $5 billion: The cash payment made by AT&T as part of the deal.
• 10 years: The duration of the $4 billion outsourcing contract between AT&T and IBM.
• 5,000: The number of IBM employees joining AT&T as part of the deal.
• 2,000: The number of AT&T staff being offered jobs with IBM.
• 35,000: The number of corporate customers served by IBM's data network.
• 900: The number of cities in over 100 countries where IBM's data network covers.
• 1 million: The number of individuals in 59 countries with Internet access through IBM's data network.

Sources:

• C. Michael Armstrong, CEO, AT&T Corp.
• Lou Gerstner, CEO, IBM
• Chicago Tribune (September 1998)
• Jeffrey Kagan, Telecommunications consultant
• Knight Ridder/Tribune Information Services