Speculation is running high about what moves AT&T Corp. will make to bolster its tumbling stock price.
The company’s stock has lost nearly 39 percent of its value this year since hitting a 52-week low of $29.63 in recent weeks. The sell-off has come as the company’s primary consumer long-distance business is reporting revenues less than expected.
Reports indicate AT&T may consider tracking stocks for its long-distance and cable businesses or an outright sale of some businesses. The Wall Street Journal on Friday indicated AT&T is in preliminary merger talks with British Telecommunications plc. The two companies already have partnerships in the Internet, landline and wireless international markets.
One area of AT&T’s businesses analysts are critical of is AT&T Wireless Group, which continues to trade below its April initial public offering price of $29.50 per share. At RCR press time, AT&T Wireless was trading at $25, down 2.44 percent.
AT&T offered just 15.6 percent of the wireless business to the public, and investors are unsure of when AT&T will distribute more shares. Analysts argue AT&T Wireless, which records the largest average revenue per user in the industry, could be worth billions more if the company spun off the business entirely.
AT&T Wireless’ IPO raked in $10.6 billion, and analysts were critical of it from the beginning. Its magnitude and structure caused concern. Many tracking stocks have underperformed, and Liberty Media Group and Sprint PCS are just a few tracking stocks that have outperformed their parent companies.
Investors may also be concerned that AT&T Wireless may become too large a bidder in upcoming spectrum auctions despite CEO John Zeglis’ assurances that the company is not in a desperate need of spectrum and will bid responsibly.
