Microsoft and AT&T announce $5 billion cable deal

Microsoft Corporation has signed a massive $5 billion agreement with AT&T sothat the two companies will work together to deploy digital cable access tothe Internet to millions of homes in America. Under terms of the agreement,Microsoft will purchase $5 billion of AT&T securities and AT&T will increaseits use of Microsoft Windows CE-based WebTV technology.

"Our agreement today represents an important step in Microsoft's vision ofmaking the Web lifestyle a reality," said Microsoft chairman and CEO BillGates. "Working with AT&T, a leader in the delivery of cable and telephonytechnologies, we will expand access to an even richer Internet andtelevision experience for millions of people."

Before the agreement, AT&T had previously planned to use Windows CE/WebTV in5 million set-top devices. Now, the company will expand its Windows CElicense to an additional 2.5 to 5 million devices. Additionally, AT&T willlicense Windows NT/2000-based software for email and interactive TV use.

"We're gratified that Microsoft shares our strategy of using broadband cableto bring a new generation of digital communications, information andentertainment services to millions of American families," said AT&T Chairmanand CEO C. Michael Armstrong. "We look forward to expanding our relationshipwith Microsoft and adding its creativity and technical know-how to our own.This will accelerate the work we're already doing with many other softwareand hardware companies.