• USA Today, Wednesday, March 8, 2006 11:15 AM

USA Today technology columnist Kevin Maney argues that the AT&T-BellSouth merger arises out of the weaknesses of both companies, not their strengths. Three years ago, BellSouth's president confided to Maney that business was horrible, with customer losses hitting anywhere between 30 and 50 percent. In today's column, Maney says "if anything, BellSouth's future looks worse now than it did then," and later, he notes several analysts who agree AT&T is "a leaky boat" that is "about to pay $67 billion for another hole." One analyst says AT&T has poor "capital velocity"--meaning the company has such a mountain of debt and overhead that it can't use the little it makes on top of that to stay ahead of competition. "All AT&T does with this deal is slow down its own decline," the analyst adds. Weighed down by all the "legacy junk," as Maney calls it--not to mention the billions it’s going to cost to build up the company’s Internet protocol networks--leaves AT&T in a poor position to compete with lithe Internet newcomers like Vonage and Skype.  

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