AT&T Message Board - Msg: 955181

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Technology Stocks : AT&T

T 27.13

-0.7%

Feb 6 9:30 AM EST

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To: Bob Smith who wrote (219)	3/9/1997 12:52:00 PM
From: Seeker2007	of 4298

Bob, Perhaps it may trade higher than that based on a cash flow basis. I do not have the figures in front of me - but if earnings are down due to heavy capital spending then the charge to earnings would be a non-cash charge (i.e. depreciation). Plus if Telephone were to get some ROI on that non-cash charge then that would be a boost to future earnings and cash flow. Since the market is a discounting mechanism that would say that T should trade in its current trading range. However, there is a risk - viz. wholesale and rapid collapse of the long distance business from the politically well connected bells. I am intrigued by the new "wireless" box. There was a post some time ago claiming a $300/ yr capitalized charge for the box - (based on an assumption of 10% interest - AT&T long bonds trade at 8%) so perhaps the cost is ~270. I think that this would be a big hit because the household would have to pay for only one line - These days a bell line easily costs $25/month. Throw in another $25 for a cell phone line - makes it $50. AT&T could offer $40 and throw in all the services like call waiting etc which really are big profit centers for the bells and cost very little to provide. Then lose the access charge - 3c/min, target initial penetration for high volume users (those who actually spend a few dollars on long distance rather complain about the high per minute cost of the $5/month long distance bill) - Each end of the acces charge is 30% of the LD dollar. For a customer spending $50/mon that is $15 which AT&T could pass on to the customer. Sounds like a very competitive scenario to me. Concerns - Execution and the Bells political muscle. AS

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