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April 12, 1988


By CBR Staff Writer

After what were described in Rome as significant basic differences between the two companies, Ing C Olivetti SpA said that it would not now permit AT&T to exercise its option to raise its stake in Olivetti SpA to 40% from the present 22%. Under the 1983 agreement, AT&T had an option to take its stake to 40% this year, but the deal was renegotiated in 1986 to put the option date back to 1990. Reports are confused, but it appears that AT&T had wanted a bigger management role in the Italian company, and there were talks about AT&T increasing its stake sooner than 1990. But reports differ on whether AT&T or Olivetti initiated the talks. One version has AT&T pressing Olivetti, saying it was prepared to pay a handsome premium to the market price, another has it that Olivetti wanted AT&T’s money. But Carlo de Benedetti, whose Cie Industriali Riunite has control of the board of Olivetti with just 13% of the shares, was unwilling to cede the greater management role – or effective control – for the US phone giant. At the operational level, Olivetti is unhappy that AT&T has not sold more personal computers in the US, while AT&T is not pleased at Olivetti introducing its Edge Computer-based LSX3000 machines instead of pushing the 3Bs harder, and complains that Olivetti is not responsive enough in shipping personal computers when it needs them. AT&T says it does intend to retain its present 22%, but the disagreements cast doubt on the long term future of the ties between the two – at present Olivetti manufactures all AT&T’s personal computers, and in return markets AT&T’s 3B computers and Dimension PABXs in Europe. James Olson, chairman and chief executive of AT&T was operated on for cancer of the colon March 25 and is recuperating. President Robert Allen is minding the shop.

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