I don't think that AT&T will rebound in IBM-like fashion any time soon. I can understand not wanting to miss the "next IBM", I missed that one too (darn it!). But consider the numbers: IBM peaked in 1987 at over $170/share, then dropped to the low $40's in 1993 - and finally rebounded nicely after some serious corporate changes. AT&T peaked at the beginning of 1996 in the low $50's (adjusting for the Lucent/NCR spinoffs). So for T to follow the IBM pattern exactly, it would hit a low of maybe $12-14/share in late 2001/early 2002.
Actually, I wonder if old "T" will ever rebound. I just don't think that management is willing to make the necessary sacrifices to get the company back on track. Although AT&T shareholders have been suffering, it's managers are doing quite well financially. It really isn't in their interest to reduce their own numbers and cut their own pay and perks. They have no real reason to change, and they are effectively in control, not the shareholders. Although the company has performed some interesting accounting tricks under the guise of "restructuring", there really hasn't been any serious change in the corporate hierarchy, which is what restructuring is supposed to mean. If John Walter can actually act toward meaningful restructuring the way he has talked about it, T might actually be worth buying. But talk is cheap (to use a phrase not coined by AT&T).
The short term worry now is this accounting gimmickry. Multiple "one-time charges" in recent years, then this year's ploy of breaking out "core earnings" from "growth initiatives" with regard to projected earnings. Anyone notice that the first quarter earnings release date was bumped back from April 17 to April 21? Did the numbers look so bad that management decided to make a few "adjustments" so as to yield better results? This "next IBM" may have to wait a while longer. In the meantime, the real IBM is probably a better buy. |
