To all:
AT&T down to $16.50 ???
Sound unbelievable? Consider the following scenario. As you read this, keep in mind that a few years ago AT&T had a monoply on the long distance market. Today, they're struggling to hold on to 50% of the LD market.
The following is an extrapolation of a future stock price based on AT&T's past market position and current price to earnings (p/e) ratio.
These are the current p/e's for the following companies on 5/8/97:
AT&T.....9.3 (p/e). MCI ....21.8 (p/e). Sprint .....17.2 (p/e).
If a p/e ratio is a reflection of the markets belief in a company's future prospects and position, then based on the above p/e's of AT&T, MCI and Sprint, the future market share of the long distance market would look like this:
AT&T... 19.25%. MCI ....45.13%. Sprint .....35.61%.
If an equal value were given to the market position of these three companies based on the above assumption, this is how the future stock price would look:
AT&T......$16.50. MCI ....$38.75. Sprint ......$30.63.
Hard to believe? I find it harder to believe that the current lack of leadership is still entrenched at AT&T when it had a monoply of the long distance market and let it slip to 50%. Could that market share continue to slip to 19.25%? That's what the current depressed p/e ratio is saying loud and clear.
Will AT&T's dividend buoy the stock price? Possibly, if it's not cut.
Is AT&T a great short? Well, AT&T's stock price is down nearly 26% since Jan. 1. It's direction is unmistakable.
If you're a shareowner and concerned about what's happening, here is AT&T's Investor Relations website:
att.com
You can email them a message at this website. It won't do any good, but it'll give you a chance to blow off some steam. |
