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Business Briefs

Reported by Star-Bulletin staff & wire

Tuesday, January 9, 2001

Davis vows to fix Calif. power crunch

SACRAMENTO, Calif. -- Calling California's two-year experiment in electricity deregulation a "colossal and dangerous failure," Gov. Gray Davis has proposed several major steps to reassert the state's control over its power market, including the creation of a new state energy authority that could buy generating plants from private utilities and build new plants.

In his annual address to the California legislature yesterday, Davis, a Democrat, also promised that he would not allow California's two largest private utilities to continue their recent slide toward bankruptcy, saying that he would use all the state's powers, including taking control of power plants and transmission systems if necessary, to keep the system working.

Davis' proposals will now be debated by a Legislature that has already been considering even stronger measures to tame soaring wholesale electricity prices and power shortages in many parts of the state.

AT&T gets boost from raised rating

NEW YORK -- AT&T Corp. shares, which fell by two-thirds last year, may double in the next 12 months, said Morgan Stanley Dean Witter & Co. analyst Simon Flannery. He raised his rating to "strong buy" from "neutral."

The pending breakup of the largest U.S. long-distance telephone and cable-television provider into three separate companies with a tracking stock for the consumer long-distance business "should unlock substantial value for shareholders," Flannery wrote in a note to clients.

Flannery, citing strength in AT&T's cable and wireless- communications businesses, set a 12-month price target of $35 on the shares and said they may be worth as much as $40, Bloomberg News reported. New York-based AT&T closed up $2.44 today at $22.50 in New York Stock Exchange trading. The stock is off 53.4 percent from a year ago. Flannery has rated AT&T "neutral" for several years, he said.