Good points. AT&T could easily move to other technologies if they need to..However I think investing in T itself is the safest and more flexible bet right now. Here is the rational
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But for all of the various concerns, perhaps the most subtle is uncertainty over how AT&T intends to distribute its remaining stake in the wireless unit.
Even if the offering's underwriters exercised their over-allotment options, which would allow them to sell an additional 54 million shares, AT&T would still retain 82.5 percent of the wireless shares.
In the six weeks or so immediately after AT&T's announcement of the offering, many on Wall Street were privately led to believe that AT&T intended to distribute its entire remaining wireless stake to existing holders of AT&T's common shares, analysts, investors and people close
to the offering said this week.
But in recent months, AT&T's top management has all but decided not to fully distribute the remaining shares, the people said. Instead, AT&T will probably first give holders of its common stock the option to exchange
those shares for wireless shares outright.
Such an exchange offer would obviously allow investors to decide which shares to own, but could also have a significant positive effect on AT&T's cash flow and per-share earnings. Because AT&T's common shares earn a dividend while the wireless shares do not, each share that is exchanged would allow AT&T to reduce its overall dividend payments, which totaled $2.7 billion last year.
In addition, as the common shares that are exchanged are subsequently retired, the company's per-share earnings would increase (though analysts would be sure to discount the value of at least some of that rise).
At least two people close to the offering pointed out that John C. Malone, who sits on AT&T's board, has had considerable success with such exchange offers at Liberty Media, his television programming operation.
According to people close to the offering, the current thinking in AT&T's executive suite is to conduct an exchange offer first, perhaps within six months, and then distribute the remaining unclaimed wireless shares.
AT&T has said it will consider selling additional wireless shares to the public, but that appears highly unlikely, at least this year.
nytimes.com |
