Interview: Standard & Poor's---Rosenbluth, Todd---Analyst
>> we have one more note on allan dodds frank’s interview with kenneth langone. we contacted eliot spitzer and his office had no response to the comments from mr. langone. alltel plans to spin off its wireline unit and merge it in a $9.1 billion transaction to allow it to focus on its cellular phone business. joining us with more details on the deal is todd rosenbluth, equity analyst with standard & poor’s, joining us from new york. is this deal, for all shareholders involved, a positive or negative?
>> we only cover alltel, we don’t cover valor at standard & poor’s equity research. from the alltel perspective, we think this is a positive deal. we think they’ve found additional shareholder value from the wireline properties that we think will propel the stock going forward and we have a hold recommendation now.
>> why did alltel want to get rid of the wireless business in the first place?
>> the telecommunications industry has been changing shape and alltel has decided their path is to grow using wireless assets. they’ve made acquisitions, throughout 2005 that included western wireless, properties from cingular wireless over the year, as well, and this is a step in that direction to spin out the wire-line properties and focus on the growthier side of the business.
>> is alltel perhaps positioning itself to be acquired?
>> we’re looking at the company from a stand-alone basis from a wireline standpoint and from alltel, the wireless side and we think this is positive for both segments. we think the wireless side allows them to make more capital investments to compete with the verizon wireless and cingulars of the world and from the wireline perspective, we think it will have stable cash flows to support its strong dividend. >> i know you’re just covering alltel here, can you enlighten us strategically and financially what the deal means for valor?
>> valor is a smaller company than alltel. alltel has about three million local phone lines and valor is closer to 300 to 400,000 access lines so the size differential is enormous so it’s more that alltel is getting together with valor but alltel will have the majority stake in it. u.a.l. stell shareholders will have the majority ownership as well as directors will primarily be coming from alltel.
>> $9.1 billion transaction. is alltel getting the right price for the wireline business?
>> we think so. we’ve raised our target price at standard & poor’s equity research on alltel today because of the higher multiple for the wireline properties than what we were expecting. we think it’s appropriate based on what will happen with valor going forward but we think it’s a little bit better than we anticipated.
>> what is that price?
>> we have a $59 target price over the next 12 months on alltel shares and recommend investors hold it.
>> as far as the telecom industry, why are some of the smaller telecoms like alltel and sprint not as successful in maintaining both the wireless and wireline businesses as, say, verizon or at&t?
>> from alltel’s perspective, they had been a smaller regional player compared to where verizon wireless or what at&t, which has bought s.b.c. and has the cingular wireless relationship, there’s more integration going on and overlap in the properties and they have a national presence. alltel is building up its presence but is still relatively small compared to the customer accounts that cingular or verizon wireless has so switching directions will be a positive.
>> considering the expansion, cable, broadband, wireless, wireline, how do you see the structure of telecom companies evolving in the next five years? >> we think we’ll see a lot of competition, from the cable side of the business as well as wireless and traditional telecom companies all going after the same customers and customers are trying to spend as little as possible but get as many services as they possibly can and these three entities are trying to vie for that position. we think alltel will compete better based on what’s going forward.
>> todd rosenbluth, thank you very much for your time.
>> our pleasure.
>> this is todd rosenbluth, equity analyst with standard & poor’s. much more ahead when “after the bell””after the bell” returns. detroit fans losing faith, soccer teams losing revenue. details there. and nba games might be losing something that most game watchers consider part of the territory.
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Listen Interview: INVEMED ASSOCIATES INC--langone, kenneth---Chairperson of the Board
the man he’s suing over former nyse chief dick grasso’s pay package, billionaire kenneth langone, may help raise funds for a challenge to spitzer.
>> what is it about eliot spitzer that bugs you the most?
>> i hope people don’t think i was attacking eliot spitzer. i was simply pointing out the case against me and fact that i think he’s not the person who should be the governor of this state with its challenges, job creation, the economy and all the other challenges. i think in america we’re ready for people that can manage as well as be elected and i don’t think he can manage.
>> you made the point this isn’t personal.
>> absolutely not, allan.
>> but you said you feel he’s a vigilante prosecutor.
>> what i said is, his behavior, whether with me or anyone else, is inconsistent with what justice is supposed to be all about. when you have that kind of disconnect, how can you have the public trust.
>> you absolutely don’t want him to be governor.
>> i don’t think he’s qualified to be governor.
>> what are you going to do to keep him from becoming governor?
>> i’m going to wait to see who surfaces to run against him. this young man in nassau county, i’m very impressed.
>> in other campaigns you’ve raised millions of dollars.
>> i’ve raised lots of money. i’ve raised lots and lots of money for people whom i respect who want to go into political office and for what it’s worth, i don’t want anything back from them, nothing, just do a good job.
>> let me ask you the obvious question, why not run against eliot spitzer yourself?
>> i’d be the worst guy in the world in politics. worst. why? because i think a lot of what i believe in would be very popular. i think my taxes should be increased. i don’t think i should get social security. can you imagine the firestorm i’d create with those two points. but that’s what i believe.
>> let’s talk about your case in eliot spitzer. inside, you challenged eliot spitzer to do something with regard to your case, tell me about it.
>> very simple, he, with great fanfare announced this case against me and grasso but i’m talking about my gas. my case. i think m owes it to the effort he put into this case anded time he spent, let’s go to court before you leave office and you, mr. attorney general, you try that case and he knows as well as i know this case is bankrupt at this point, bankrupt.
>> why do you say that?
>> because there isn’t―in 31 depositions so far, there hasn’t been one single person utter one word that they were misled. that’s a tremendous statistic.
>> misled about how much mr. grasso was paid.
>> how he was paid, the components of his pay, the process by which we determined he was going to be paid. the whole thing. i’m very proud of the work we did. people might not agree with what i think grasso is worth but i got to tell you, the process was as good as i’ve seen anywhere.
>> do you think the attorney general is intimidating businessmen?
>> absolutely, that’s his modis oprendi. that’s what bothers me. we’re suppose to live in a democracy where people aren’t afraid of elected officials but people are frightened of him.
>> have you talked to dick grasso or hank greenberg about getting involved in the campaign against spitzer?
>> no, this is me, based on what i’ve seen, firsthand, on my experience that, eliot spitzer is not qualified to be governor of new york state. i think the citizens will rue the price paid if he becomes governor.
>> any other cases he’s been making have merit in your opinion?
>> sure, i’m not suggesting for a minute that some of the cases he brought don’t have merit but on the other hand, you don’t create laws expose facto. i never heard the word market timing forces. there are cases where it’s not against the rules or against the law, i don’t know. but prominent lawyers have said to me, this guy’s just out to create―and by the way, he shows up with the media. you have said you have not been questioned by the attorney general.
>> i was interviewed with the s.e.c. in connection with this case. the attorney general had a representative in that room. to this day, nobody, not the attorney general or anyone in his office has asked me one question about this case. think of that, they bring a case against me but don’t even hear what i think. that’s about as unfair as it gets.
>> you say that some people have been deposed are telling you that they’re not represented accurately.
>> a significant number of people have contested the web report, they have said that in the web report, what comments are attributed to them, they’re saying, i didn’t say that. we’ve asked the web people, give us the notes. the notes are what the report was derived from. the notes have been destroyed. think of that. tell me how it would look cosmically if we were on the other side, if it was me who had the notes and i wrote a report and i said, well, i got rid of the notes.
>> let me close with a question about the press. you talked a lot about the press in this speech.
>> i think the attorney general has a very unholy alliance with the press. i think the attorney general could not do what he’s doing if he didn’t have the level cooperation of the media.
>> do you think we’ve been soft on him?
>> i think you’ve been biased, very biased. he’s your hero. eliot spitzer, to me, is a creation of the media, that’s fine. look, we lived through this before, we’ll live through this. but i’m sitting here at 70 years old and saying to myself, i know better and i have no ax to grind. the one thing i know for certain, this case for me, i’ll say it, is bankrupt. it’s gone. he knows it. let’s go to court. but i’ll challenge him, i will bet my last dollar he’ll do everything he can to leave town before this case gets to court.
>> we’ll be right back.
