Telecommunications and Automotive Industry Updates: Metrocall Buys AT&T's Paging Business, Compaq to Close Over 6 Plants and Ford Reprimanded for Withholding Information

Strategic Insights -

Metrocall Inc. has agreed to buy AT&T's electronic paging business for $205 million in stock and cash, marking AT&T's exit from the paging business. The sale will allow AT&T to focus on other areas, including its acquisition of cable giant Tele-Communications Inc. in a multibillion-dollar deal. Metrocall, the nation's second-largest paging company, will acquire 1.2 million subscribers and an exclusive five-year agreement with AT&T Wireless Services retail stores to sell Metrocall paging products.

Meanwhile, Compaq Computer Corp. is closing six overseas plants and eliminating 17,000 jobs as part of a cost-cutting drive following its acquisitions of Digital Equipment Corp. and Tandem Computers. The cuts will total 17,000 jobs of the companies' 85,500 total payroll, with most coming at Digital. Compaq is also closing operations in Australia, Brazil, and Japan that handle final assembly of computers for shipment to customers.

In a separate development, federal safety officials have rebuked Ford Motor Co. for withholding information from federal investigators about vehicles prone to stalling. The National Highway Traffic Safety Administration officials said Ford should have sent the agency six documents in answering federal requests in auto safety investigations closed more than a decade ago.

Key Takeaways:

  • Metrocall will acquire 1.2 million subscribers and an exclusive five-year agreement with AT&T Wireless Services retail stores to sell Metrocall paging products.
  • Compaq is closing six overseas plants and eliminating 17,000 jobs as part of a cost-cutting drive following its acquisitions of Digital Equipment Corp. and Tandem Computers.
  • The cuts will total 17,000 jobs of the companies' 85,500 total payroll, with most coming at Digital.
  • Ford Motor Co. has been rebuked by federal safety officials for withholding information from federal investigators about vehicles prone to stalling.
  • The National Highway Traffic Safety Administration officials said Ford should have sent the agency six documents in answering federal requests in auto safety investigations closed more than a decade ago.

Statistics:

  • Metrocall will pay AT&T $110 million in cash and $95 million in preferred stock.
  • Compaq is cutting 17,000 jobs, with 10,000 coming from Digital Equipment Corp. after its acquisition by Compaq.
  • Ford Motor Co. was accused of withholding 17 documents related to auto safety investigations.
  • The National Highway Traffic Safety Administration has maximum fine limit of $7,000 for withholding information.
  • Compaq's total payroll is 85,500, with 54,000 employees at Digital Equipment Corp.

Sources:

  • "Metrocall to buy AT&T's paging business for $205 million," USA Today, August 3, 1997.
  • "Compaq to close 6 overseas plants, trim 5,000 jobs," Houston Chronicle, August 4, 1997.
  • "Safety officials rebuke Ford for withholding information," Washington Post, August 5, 1997.