Strategic Window: News Briefs

SBC Communications Inc. reported a $5 billion profit in the first quarter and posted record growth in DSL and long-distance subscribers. The huge profit compares to a $193 million loss the previous year. The company still faces tough pressure from rivals in its local phone consumer business: SBC lost 770,000 retail access lines in the first quarter to companies that resell local phone service through UNE-P. Seventy percent of those lines go to consumers. In the previous quarter, SBC lost 810,000 retail access lines due to UNE-P competition. This year, SBC cut its capital expenditures in half to $897 million from the period a year ago.

State of the CLEC

In its Annual Report on the State of Local Competition, the Association for Local Telecommunications Services reports that despite ongoing challenges, CLECs continue to grow and are making progress toward profitability. CLECs made great strides in the last year toward reducing their debt burdens and streamlining their operations. For the first time in their history, the publicly-traded CLECs generated positive EBITDA in 2002, a remarkable turnaround from their $2 billion EBITDA loss in 2000, says ALTS.

CIENA to Acquire WaveSmith

CIENA Corp., which sells optical networking gear to AT&T Corp., Verizon Communications Inc. and other large telephone carriers, plans to acquire WaveSmith Networks Inc. Under the agreement terms, CIENA will issue approximately $158 million in shares to WaveSmith stockholders and investors. CIENA expects the merger to close in its fiscal third quarter. WaveSmith, a privately held company based in Acton, Mass., owns a multiservice switching platform that collects voice and data traffic at the edge of a carrier's network and connects it to the core network.

AT&T Streamlines Organization

AT&T is streamlining its organizational structure in move it says will better serve customers and speed decision-making. As part of the realignment, Chris Rooney was tapped to lead the sales organization. Rooney, who was president of AT&T Government Solutions, succeeds Ken Sichau, who is retiring after 17 years with the company. Reed Harrison will lead Network Engineering and Operations. Harrison previously led network engineering, maintenance and field operations for AT&T's local, long distance and global networks and products. He succeeds Frank Ianna, who also announced retirement plans. According to AT&T, CEO Dave Dorman and AT&T President Betsy Bernard asked Ianna to delay his departure to assist in the transition and manage critical network and security issues, working closely with Harrison.

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