Seeing the new future

If big deals are like bad luck, and always come in threes, Chicago need to brace itself for something stupendous.

On a single weekend, the local phone company and a local baseball team pulled off deals that, while not unanticipated, represent a significant shift away from the past. In fact, addressing the SBC-AT&T merger on the same weekend that the Chicago Cubs dealt Sammy Sosa has my head spinning.

The two deals have more in common than proximity of time.

Sosa, like AT&T, is past his prime, has shrunken physically and could be headed straight downhill. So it's something of a relief to us Cub fans that the team was able to trade him, even if it had to throw $12 million into the pot and only get a utility fielder and two minor prospects in return.

It's just hard to believe that only a year or two ago, Sosa would have commanded millions in return, if not someone of superstar status. And there's just this nagging feeling that, if Sosa is able to get a fresh start in Baltimore and turn things around, we're all going to look back at this weekend as a turning point.

AT&T investors may feel similar relief, having seen the once-proud telecom giant face massive cutbacks, dwindling market share and shrinking margins. Just as baseball analysts were saying Sammy couldn't come home again after behaving badly, telecom analysts were predicting a takeover of AT&T by someone, most likely a Bell company.

But they also must look back with some regret to even recent years, when a rumored BellSouth bid for AT&T reportedly hit the $20 billion mark, 25% above the $16 billion that the SBC deal represents for investors. And it's hard to believe the once-mighty AT&T will soon be reduced to a product line within SBC, if that much.

SBC Chairman and CEO Edward Whitacre insists the AT&T brand isn't going away but declined to say how it would be used. His previously anointed successor, Randall Stephenson, had great praise as well for AT&T Labs, calling it "the crown jewel of this industry" but didn't preclude renaming it SBC Labs.

And that's natural because for SBC, as for the Cubs, it's all about the future. In their phone call with analysts today, SBC and AT&T execs agreed that the latter's revenues will continue to shrink and that, if the merger is completed as expected by mid-2006, the firm will see revenue growth by 2008.

In Cub talk, that's "Wait til the year after the year after next year."

Email me at cwilson3@primediabusiness.com.