AT&T to buy Panasonic phone business by Oscar Newman
NEW YORK (AP) - Following shortly after AT&T's announced purchase of BellSouth Corp. for $67 billion, AT&T has reached an agreement with Matsushita Electric Industrial Co. Ltd. of Japan for the purchase of Kyushu Matsushita Electric Co. and Panasonic Communications Co., Ltd. These Matsushita divisions will give AT&T access to a wide range of communications products, including business telephone systems, consumer corded and cordless telephones, cellphones, wireless networking, powerline networking, fax machines, VoIP phones, and network cameras. In a press conference at the Hotel Americana in New York City, Edward Whitacre, chairman and chief executive officer of AT&T, Inc. (formerly SBC Communications, Inc.), told reporters and Wall Street analysts that "with this new acquisition, AT&T will recreate much of the vertical integration we had prior to the Bell System divestiture in 1984. We will be well equipped to serve our millions of customers, and to compete with cable and satellite companies and other new entrants in the telecommunications arena." "Furthermore," he continued, "this move represents a reunion for Panasonic and AT&T. At one time, Panasonic was a major supplier of AT&T-branded consumer phones; and for several years, AT&T provided service on Panasonic business phone systems." The combined cash and stock deal is valued at approximately $32 billion, and is expected to close during the fourth quarter of 2006, pending approval of regulatory agencies in the US and Japan. Cingular Wireless stores are going to be re-labeled AT&T (including stores that were changed from AT&T to Cingular last year), and will sell AT&T-branded cellphones, business systems, consumer phones, and other products made in the former Panasonic factories. Whiteacre told reporters that "it has always bothered me to spend countless millions promoting the AT&T name to bring people into our stores, where they see the same products they can buy at other stores. Furthermore, even inexpensive consumer communications products are becoming very complex, and deserve to be sold in a specialized environment, by properly trained sales counselors." "According to a recent university study," Whiteacre continued, "half of all malfunctioning products that are returned to stores by consumers work perfectly, but consumers just don't understand how to use them. By having highly qualified people in each AT&T store, both at the time of sale and time of return, we will increase the number of retained products and satisfied customers." There will be a gradual transition to AT&T-branded products in the stores, replacing other brands such as Motorola and Ericsson. In the 1980s, at the beginning of the cellular industry, AT&T sold phones with their own name on them (made by AT&T subsidiary Western Electric, and by NEC in Japan). In that same era, AT&T Phone Center Stores sold AT&T-branded consumer phones manufactured by Panasonic. Panasonic will not be allowed to make or sell competing products for 10 years, under the purchase agreement. Toy and phone marketer VTech Electronics North America, has been selling AT&T-branded consumer phones under license from AT&T spin-off Lucent Technologies. Under the current contract, VTech will lose the right to use the AT&T name after December 31, 2006, but has negotiated the right to use both the Lucent and Avaya brands on consumer phones starting in 2007. Avaya, Inc. is a spin-off of Lucent Technologies, and makes and markets business telephone systems. Lucent concentrates on switching and networking equipment for local telephone companies and long distance carriers, and is currently in merger talks with French telecom giant Alcatel. In major metropolitan areas, AT&T will contract with Avaya, based in Basking Ridge NJ, to install and service business and residential phone systems. In markets where Avaya is not able to provide service, AT&T stores will provide customers with a list of approved installers, who had been certified Panasonic dealers. It is expected that some Panasonic dealer employees will be hired to sell in the AT&T stores, and to provide local technical support. Some current Panasonic dealers in areas not served by AT&T stores will have the option of becoming franchised AT&T dealers. Panasonic's KX-TA824 and KX-TAW848 analog phone systems will be phased out by the end of the year. KX-TDA digital IP systems will continue, and new KX-TDA500, 1000 and 5000 models will be introduced within the next two years. AT&T expects to see major growth in the large system "enterprise" market, and will be able to handle national contracts, which was not possible with the current Panasonic distribution through independent local dealers. Former Panasonic execs William Kopp and Salvatore Abrivo will head the new AT&T subsidiary, to be called AT&T Kono Corporation, in honor of Matsushita founder Konosuke Matsushita. Kopp, who will oversee product development and integration with AT&T, will get a seat on the AT&T board of directors. Panasonic staff members who do not transfer to AT&T will be offered outplacement counseling and up to one year salary and medical insurance, depending on length of employment. In a surprise appearance at the AT&T-hosted press conference, Whiteacre introduced incoming Panasonic President Fumio Ohtsubo. Ohtsubo took out a miniature bonsai tree that had been behind the podium in the hotel's grand ballroom and snipped off several small branches. He explained that the health and longevity of the tree depends on continual pruning of less important peripheral branches, to concentrate resources on the vital roots, trunk and major branches. "The same principals that enhance the growth of a tree," Ohtsubo explained, "apply to a business. We have sold our remaining stake in Universal Studios to Vivendi; and now I am pleased to announce that we are selling other divisions to AT&T so we can concentrate on digital video - the future of Panasonic." _________________________________________________________________ KX-T Mailing list --- http://kxthelp.com/ Subscription changes: http://kxthelp.com/mailman/listinfo/kxt
