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Merger rumors fuel BBN stock

Internet provider BBN sees its stock jump on continued speculation that it may be bought by AT&T.

Internet provider BBN (BBN) saw its stock jump nearly 9 percent today to 21-7/8 on continued speculation that it may be bought by AT&T (T).

Today marked the third straight day that the company's stock has risen on buyout rumors. The stock was trading at about 16 on Thursday.

Company representatives declined comment. "We would never comment on takeover rumors," Tom Evslin, vice president of AT&T WorldNet, told CNET NEWS.COM.

The latest rumor circulating was that AT&T was making a bid at $26 per share, one trader told Reuters. On Friday, the company delayed the release of its third-quarter results until May 6 without stating a reason. That heightened the buyout speculation.

Rumors of a buyout of BBN by AT&T have surfaced before, and the companies already have close business ties. Analysts say AT&T would like to expand in the Internet business. Despite AT&T's ranking as the world's largest telecommunications company, its WorldNet service has not ignited as many of them had expected.

In June 1995, AT&T and BBN announced a deal to provide to provide business with a range of services for Net access. The pact was expected to generate more than $120 million for BBN over a three-year period. Evslin said the deal still was effective but would not say whether the financial target was being met.

In July 1995, AT&T Ventures bought an $8 million equity stake in BBN. A BBN spokesman said the amount was less than a five percent stake. AT&T Ventures, a venture capital arm, operates independently of AT&T's corporate operations.

The rumors come on the heels of merger talks between American Online and CompuServe. Some analysts speculate those talks have cooled, however.

The industry is undergoing rapid consolidation. Many analysts think the winners will be those with the largest networks, which can benefit from economies of scale.