Subject: [NEXTEL-1] Cingular takeover could be bad news for Redmond jobs

From: Marcelrf <[email-masked]>
Date: Sun, 22 Feb 2004 23:19:51 -0500

Cingular takeover could be bad news for Redmond jobs

2004-02-18
by Clayton Park
Journal Business Editor

REDMOND -- Mayor Rosemarie Ives went to bed Monday night thinking one of
her
city's biggest employers would be acquired by Britain's Vodafone, the
company most
likely to keep AT&T Wireless' Redmond headquarters and 2,200 local jobs
intact.

She awoke to learn that AT&T Wireless Services Inc. had agreed overnight
to be sold
to Cingular Wireless, following the Atlanta-based company's last-minute
decision to
raise its all-cash bid to a whopping $41 billion.

A sale to Cingular is more likely to result in large-scale layoffs at
AT&T Wireless and
could mean the elimination of the Redmond headquarters, since both are
U.S.
companies.

``It's not been a great week for Redmond,'' said Ives, who added, ``We
will certainly
extend a red carpet to Cingular.''

Ives said she was informed by an AT&T Wireless official Tuesday morning
that it has
yet to be determined what the company's sale to Cingular would mean for
Redmond.

Cingular's acquisition of AT&T Wireless would be the largest all-cash
transaction in U.S.
history. It would also be the most ever paid for a Washington state
company, eclipsing
the $35 billion that Germany's Deutsche Telekom paid in 2001 to acquire
Bellevue-based VoiceStream Wireless (now known as T-Mobile USA).

The combination of Cingular, the nation's second-largest cell phone
carrier with 24
million subscribers, and AT&T Wireless, the No. 3 carrier with 22
million subscribers,
would create a new industry leader.

The merged company, to be known as Cingular Wireless, would take over
the top spot
now held by Verizon Wireless and its 37.5 million subscribers.

The sale, which has received the thumbs up by the boards of both
companies, still
requires approval from AT&T Wireless shareholders and U.S. regulators
and isn't
expected to be completed until the end of the year.

The merger will assuredly result in layoffs at the combined company;
Cingular said
Tuesday that it expects to achieve more than $1 billion in operating
expense and
capital expenditure savings in 2006 and more than $2 billion in annual
savings in 2007.

Cingular's chief operating officer, Ralph de la Vega, told analysts and
reporters in a
conference call Tuesday that billing and other operational functions
will be merged, the
Associated Press reported. De la Vega said there could be job cuts and
management
changes, but would not elaborate.

AT&T Wireless Chairman and CEO John Zeglis said during the conference
call that he
will not remain with the combined company.

AT&T Wireless was already in the process of trimming its 30,000-employee
work force,
having announced plans in November to cut 1,900 jobs by the end of 2004.

On Tuesday, the Seattle Times reported that AT&T Wireless issued pink
slips to 220
information technology workers, including 150 in Bothell, where the
company had
2,564 workers as of last summer, according to its most recent business
license
renewals. The company has approximately 5,000 workers in Washington
state.

Bill Garing, chairman of the Redmond Chamber of Commerce, said his group
is taking
a wait-and-see approach to the news of Cingular's plans to acquire AT&T
Wireless.

``The chamber's primary interest would be retaining jobs locally and
keeping a local
presence,'' Garing said.

Kelley Gast, a spokeswoman for the Macerich Co. -- owner of Redmond Town
Center,
where AT&T Wireless's headquarters are located -- said the cell phone
carrier has a
long-term lease on nearly 600,000 square feet of space in six office
buildings the
company occupies. She declined to say exactly how much time remains on
the lease,
but said that it is more than five years.

``We would expect AT&T Wireless and their successors to uphold the terms
of the
lease,'' Gast said.

Ives expressed hope that Cingular will maintain a presence in Redmond
and that
layoffs here would be kept to a minimum.

``The (AT&T Wireless) people working in Redmond are all highly
skilled,'' Ives said.
``We're always concerned when people lose jobs, especially when the
economy is still
tenuous.''

The Redmond mayor praised AT&T Wireless for being a ``good neighbor''
that ``got
very involved in supporting community events'' after moving its
headquarters to
Redmond from Kirkland in 1997.

``Ten years ago, I never would have thought that AT&T Wireless would
have its world
headquarters in downtown Redmond,'' Ives said. ``Who knows what's around
the
corner?''

Clayton Park can be reached at [email-masked] or at
425-453-4224.

AT&T WIRELESS TIMELINE

ã 1981 —Craig McCaw founds McCaw Cellular Communications Inc., a
Kirkland startup
company that would grow to become the first nationwide mobile phone
network. ã
1994 — Sold to New York-based AT&T Corp. for $11.5 billion — the most
ever paid for
a Washington state company. McCaw Cellular becomes the wireless division
of AT&T
and is renamed AT&T Wireless Services. ã 1997 — Moves its headquarters
from
Kirkland’s Carillon Point to Redmond Town Center. ã 2000 — AT&T Corp.
holds initial
public offering of 360 million AT&T Wireless “tracking shares” raising
$10.6 billion. ã
2001 — Spun off from AT&T Corp. to become an independent company.
Tracking
shares converted to common stock. ã August 2003 — Reports plans to cut
1,500 jobs
by end of 2004 — later increased to 1,900. ã December 2003 —
Acknowledges
industry-worst “portability error rate” of more than 60 percent after
new federal rules
allow cell phone users to keep phone numbers when switching local
carriers. ã January
2004 — Announces that company is for sale after reporting disappointing
fourth quarter
earnings, in part due to its portability problems. ã Feb. 17 — Board
accepts $41 billion
takeover bid from Atlanta-based rival Cingular Wireless. Deal — the
biggest all-cash
transaction in U.S. history — includes assumption of $6 billion in debts
from AT&T
Wireless.

The U.S. cell phone market at a glance

Associated Press A ranking of U.S. cellular companies based on
subscriber numbers
and market shares at the end of 2003. 1. Verizon Wireless: 37.5 million,
24.3 percent
2. Cingular Wireless: 24.0 million, 15.6 percent 3. AT&T Wireless: 22.0
million, 14.2
percent 4. Sprint: 20.4 million, 13.2 percent 5. T-Mobile: 13.1 million,
8.5 percent 6.
Nextel: 12.3 million, 8.0 percent 7. Alltel: 7.9 million, 5.1 percent 8.
U.S. Cellular: 4.4
million, 2.9 percent Sources: Company reports, Yankee Group.

McCaw Cellular to AT&T Wireless; Sale marks the end for company that
started in
Kirkland

By Clayton Park

Journal Business Editor

KIRKLAND -- The sale of AT&T Wireless Services Inc. to Atlanta-based
rival Cingular
Wireless will mark the end of the line for the company founded in 1981
by cell phone
pioneer Craig McCaw.

Kirkland-based McCaw Cellular Communications Inc., as the company was
originally
known, grew in the 1980s from a regional carrier to become the first
nationwide cell
phone network.

Its sale in 1994 to AT&T Corp. for $11.5 billion was, at the time, the
most ever paid for
a Washington state company, and turned its founder -- who now lives in
the tony
Eastside waterfront community of Hunts Point -- into a billionaire.

John Chapple, CEO of Kirkland-based Nextel Partners Inc., a cell phone
company that
McCaw founded in 1998, witnessed the sale of McCaw Cellular up close as
the
company's executive vice president of operations(corrected)

Chapple said he never would have imagined in 1994 that he would be
around to see
the sale of AT&T Wireless. In recent months, however, as rumors swirled
that the
company might be on the block, Chapple wasn't surprised that Cingular
would
eventually outbid British telecommunications giant Vodafone for AT&T
Wireless.

``This was very important to Cingular,'' Chapple said. ``Their
traditional landline
telephone business is slowing down. It was important for growth purposes
to acquire a
wireless carrier. From my perspective, they could ill afford to lose
this auction.''

Chapple, who was personally recruited by McCaw to join McCaw Cellular in
1988,
recalls the company's ``pioneering spirit'' as a ``vibrant startup''
with only a few
hundred employees when he came on board.

``I saw it grow to a company with several thousand workers,'' said
Chapple, who
continued his role as vice president at AT&T Wireless until he decided
to leave to
pursue other interests in early 1995.

Chapple said McCaw's decision to sell the company to AT&T made sense at
the time
because it would be aligning with what was then the biggest name in
telecommunications.

``I don't think any of us truly envisioned in 1994 that 10 years later
the AT&T Wireless
brand name would be gone and that virtually everyone I worked with (at
McCaw
Cellular) would be gone as well,'' Chapple said Tuesday when asked for
his reaction to
the news of AT&T Wireless's pending sale.

Over the years, there has been a steady stream of departures from AT&T
Wireless of
the holdover executives from McCaw Cellular, Chapple said.

Many former McCaw execs now work either with Chapple at Nextel Partners,
the
nation's 10th largest wireless carrier, or at Western Wireless and
T-Mobile USA, two
Bellevue-based mobile phone companies started by another former McCaw
executive,
John Stanton.

``In that sense,'' Chapple said, ``the McCaw spirit is still alive.''

UNEMPLOYMENT ECONOMIC CONDITIONS BUSINESS ACQUISITIONS CELLULAR
http://www.kingcountyjournal.com/sited/story/html/156466

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