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  • kubus_gt kubus_gt Sep 12, 2000 10:41 AM Flag

    COVAD SBC deal

    SBC, Covad strike $600 million DSL alliance

    By Corey Grice
    Staff Writer, CNET
    News.com
    September 11, 2000, 5:15 p.m. PT
    today agreed to invest
    in Covad Communications and signed a six-year, $600
    million agreement with the company to jointly deliver
    high-speed Internet connections.

    SBC will invest
    $150 million in Covad, which represents about a 6
    percent minority stake, and settled several legal
    disputes as part of the plan.

    Beginning Oct. 1,
    SBC, which has a broad plan to offer digital
    subscriber line (DSL) connections to consumers and
    businesses called "Project Pronto," will resell Covad DSL
    connections both in and out of the Baby Bell's 13-state
    region. Covad will receive a guaranteed $600 million in
    revenue over six years.

    The deal marks the latest
    major alliance in the DSL sector and raises questions
    about whether Rhythms NetConnections, a comparable
    competitor, will seek a similar partnership.

    Last
    month, local phone company Verizon Communications agreed
    to merge its DSL assets with those of NorthPoint
    Communications, a DSL wholesaler and Covad competitor. The deal
    leaves Rhythms as the last of the triumvirate of
    national DSL competitors without a significant Baby Bell
    partnership.

    The deals are intended to provide Verizon
    and SBC with an avenue for providing high-speed Net
    access beyond their geographic regions. NorthPoint and
    Covad have spent the past two years building DSL
    networks in some of the nation's largest cities, giving
    the Baby Bells a broader reach.

    For the DSL
    upstarts, the Baby Bell alliances provide them with a major
    resale partner with a large base of potential customers
    and deep financial backing.

    "It's a help to
    both of our business models," said Terry Moya,
    executive vice president of external affairs for Covad
    Communications. "We're building a relationship between the two
    companies so we can do some joint planning."

    As
    part of the Covad-SBC deal, the two companies settled
    several legal issues, including an antitrust lawsuit by
    Covad against Pacific Bell and parent company SBC. The
    companies also settled their differences over line
    sharing--the process of delivering high-speed Internet access
    over the same phone line customers use for voice
    service--and agreed upon pricing for line sharing.

    SBC
    had 435,000 DSL customers as of mid-August and
    expects to reach 1 million by the end of the year. Covad
    today raised its DSL installation estimates to 200,000
    by the end of the quarter.

    Now we know that
    VZ will not be looking into DSLN since they got a
    deal with NorthPoint Communications, a competitor to
    Covad which is what DLSN is reselling. RTHM is trading
    around 9.5 today way under it's $50 high.

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    • Wakeup McFly!!!

      The Bells are looking to
      make money in DSL, 'cause margins in voice are getting
      worse and worse. They will steal business from all
      resellers and use infrastructure big-guys to help them do
      it.

      No-name DSL resellers with few customers are dead meat.
      DSL.net is frozen out. A reseller with bleeding red ink
      and a biz model in trouble.

      That's why it
      tanked 11% today on this news. THIS IS NOT GOOD NEWS FOR
      DSL.NET!!!

      Abandon hope!!!

    • Yep,. this is a very bad news for DSLN longs.
      The reason for that is that COVD is infrastructure company and it was still valued too low.

      • 1 Reply to thexrum
      • not exactly thxrum a bad news. If both SBC and
        Covad raised their estimates for number of customers by
        the end of the year, then it means that DSLN will
        also have a broader base of customers by then. Why?
        Cause it resells what COVAD makes. Same exact thing
        that SBC will be doing. Covad will take care of
        technical stuff and maintanance and SBC & DSLN will take
        care of marketing it and selling to customers. Now
        here is the fun part. SBC - will market it to the
        residential customers, DSLN - Businesses only!
        Ever heard
        of BBOX? They are added value reseller and they are
        good at it, DSLN is getting there.

    • Bid now at 5. :-)

    • As you'd say "You are a major Dumbshit....Do you
      not look at the volume at at all.
      "


      >>The only short positions that occurred was from 8 1/8
      to 7. <<
      Sorry but 9 to 5 is a lot better
      than 8 to 7.

      >>Most shorters that are
      smart lefted during that time. <<
      If you could
      speak English someone might believe you had a
      clue.

      >>The price is reflective from the panic sellers you
      and the other shorters influenced. <<
      Such
      as the insiders who filled to sell over 2M shares
      since the pump, right?

      >>To all longs, do
      not let this retards influence you.
      <<
      Again, if you could speak English someone might believe
      you had a clue.

      >>This company is still
      growing and DSL services are not going away.
      <<
      Yep, its losses are still growing. There are over 50
      DSL providers and DSL.net ranks nearly daed last in
      service and is dead last in price. Everyone knows the
      weak die even in strong markets (which DSL is
      not).

      >>Worse case they would be bought out or merged.
      <<
      Nope, there will be no buyut. No one wants 3rd teir
      resellers.

    • You are a major Dumbshit....Do you not look at
      the volume at at all. The only short positions that
      occurred was from 8 1/8 to 7. Most shorters that are smart
      lefted during that time. The price is reflective from
      the panic sellers you and the other shorters
      influenced. Also, maker condition are the other factor. To
      all longs, do not let this retards influence you.
      This company is still growing and DSL services are not
      going away. Worse case they would be bought out or
      merged.

    • Hye wallstrett when we DO break 5 will you kindly shut the hell up?

    • Can you believe it GTB38 actually believes his bullshit and thinks we'll break 5.00...LMAO,ROTFLMAO!!

    • Is there any reason why DSLN is down when NAS is up?