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Motorola gets AT&T pact
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August 15, 2000: 10:26 a.m. ET
Motorola named primary broadband technology supplier to AT&T
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NEW YORK (CNNfn) - Motorola, the No.2 wireless provider, won a contract naming it AT&T's primary supplier of broadband technology.
In early morning trading Tuesday, shares of Motorola (MOT: Research, Estimates) slipped 3/16 to 35-9/16 after trading higher in pre-market activity.
Specific financial terms of the agreement were not disclosed.
 The alliance, announced after Monday's market close, taps Motorola as the provider of video, voice and data supply to AT&T's broadband unit in major markets.
The deal also calls for AT&T to buy 700,000 Motorola cable set-top boxes through 2003. The terminals will provide broadband access, enabling users to watch video, connect to the Internet and make phone calls simultaneously. AT&T and Motorola also plan to co-market and distribute set-top terminals and cable modems.
AT&T (T: Research, Estimates) also announced earlier Monday that it will purchase one million set-top cable boxes from Philips Electronics (PHG: Research, Estimates).
Credit Suisse First Boston analyst Marc Cabi repeated his "buy" recommendation for Motorola after the announcement and set a price target of $125 a share.
"We believe the announcement shows further evidence that Motorola's General Instrument acquisition is paying dividends," Cabi said in a research note. "We have confidence that the company can deliver 20 percent growth in the segment through 2001."
DB Alex Brown analyst Brian Modoff also applauded the alliance, and reiterated his "strong buy" rating for Motorola stock.
"We note that this announcement underlines the strength of the broadband business, which continues to flourish with a forecast which exceeds $3 billion for 2000, while operating margins continue to be north of 15 percent," said Modoff in a research note.
"We would also like to emphasize that Motorola is building several strong businesses independent of its handset business, including network infrastructure, semis, and broadband, all of which have both healthy revenue and high margins," Modoff said. 
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