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U S West, Intel team up in networking deal

U S West shares moved up 3 1/2 to 76 1/8 Wednesday after announcing that it and Intel have inked a deal to jointly offer high-speed home networking services.

US West (NYSE: USW), which is set to merge with Qwest Communications (NYSE: Q) in a $40 billion deal later this summer, said the companies will provide services allowing two or more home computer users to share a single high-speed digital subscriber line Internet connection as well as share computer files and network printers.

Company officials cited market studies that show the number of homes with multiple computers is expected to reach 26 million in the next four years and demand for ways to connect these computers is also expected to grow.

The joint service uses Intel's AnyPoint Home Network, which connects home PCs through existing phone lines. Digital subscriber line service takes advantage of unused capacity on phone lines, allowing a user to surf the Internet at high speeds while talking on the phone or sending a fax.

Intel Corp. (Nasdaq: INTC) shares were up 2 9/16 to 115 9/16.

On Tuesday, U S West CEO and chairman Sol Trujillo announced that he would step down once the Qwest merger is complete.

In a letter to employees, Trujillo indicated that the recent rounds of merger talks between the two companies had revealed rifts in their ideas about leadership appointments and corporate structure.

"For this merger to work for customers and shareholders alike, it is essential for the leadership to be in full alignment on all these key issues," said Trujillo in the letter. "I have decided to accommodate the views of my counterpart so that he can shape the people selection, organization and governance of the new Qwest by his values and priorities."

The deal still needs the approval of the Federal Communications Commission and a number of states. Qwest is the fourth-largest U.S. long-distance company, providing high-speed data services, primarily to business customers.

U S West officials said that Trujillo's decision was based on disagreements about some of the role's in the new company, such as the Office of the Chair which Trujillo would have occupied with Nacchio and Philip F. Anschutz, a non-executive chairman of Qwest.

In its latest quarter, U S West topped analysts' estimates, earning $425 million, or 83 cents a share.

First Call consensus expects it to earn 81 cents a share in its first quarter and $3.41 a share in the fiscal year.

Its shares surged to a 52-week high of 80 in February after falling to a low of 51 1/2 in May.

Eleven of the 21 analysts tracking the stock maintain either a "buy" or "strong buy" recommendation while the remaining 10 analysts call it a "hold."