Armstrong Addresses the Troops

Last Thursday, AT&T Corp. chairman C. Michael Armstrong distributed the following memo to AT&T Broadband employees about Comcast Corp.'s offer to buy the cable operation.

I'm sure you've all been reading about Comcast's offer to buy AT&T Broadband and I suspect that many of you are asking yourselves, "What's next?"

First, it's important to define what's happened here. Comcast's offer is called a "subsidiary bear hug." Usually, that happens when a company thinks that they found an undervalued asset that's part of a larger enterprise. And they would like to put a number at the Board of Directors' table and the shareholders' table that says, "I think that's worth a lot of money." If somebody puts $58 billion dollars at your doorstep, will you look at it? Sure.

So what's the process to analyze it? We'll take that two-page letter and we'll analyze what the real values are that they're trying to express, in terms of the $58 billion they're offering. It's not immediately obvious, because you've got to consider the debt, the assets and things they may or may not have included in their letter. So we'll net it out, and then we'll compare their offer to alternatives such as the business plan that we have, and the value that we expect to deliver. The board will then make a judgment and we'll respond to Comcast. That will probably happen over the coming weeks, not quarters.

As I told the Boston Chamber of Commerce yesterday, Comcast's offer recognizes at least some of the value that we've created in AT&T Broadband. The question is whether it recognizes the right value. Only our Board of Directors can make that call and they will do what is in our shareowners' best long-term interest.

Meanwhile, I hope you have also noticed that one of the by-products of all this new attention has been a developing appreciation for the value we have created in the rest of our company as well — AT&T Business and AT&T Consumer. If we can deliver on our potential, there's no limit to the value we can create.

That's why we all need to stay focused on our day-jobs — serving customers better than anyone else, and better each time than the time before. We can't afford to get distracted or worry about things that are going on around us that we can't do anything about anyway.