|
AT&T shareholders speak
|
 |
September 25, 2000: 12:22 p.m. ET
New York pension fund managers question possible long-distance spinoff
By Staff Writer John Chartier
|
NEW YORK (CNNfn) - Some large shareholders of AT&T Corp. are questioning the strategic alternatives the telecommunications firm reportedly is considering as a means to boost its flagging stock.
New York State Comptroller Carl McCall, manager of the state's $120 billion retirement fund, and New York City Comptroller Alan Hevesi, who manages the city's $100 billion retirement fund, would like to meet with AT&T officials to discuss possible strategies.
 Combined, the state and city pension funds hold more than 24 million AT&T shares.
Shareholders are concerned that a spinoff of the company's consumer business, one of the alternatives reportedly being considered, might do more harm than good.
"We are troubled by the continuing decrease of the value of our investments in the company and are pleased that management and the board of directors are considering steps to stem the loss of shareholder value," McCall and Hevesi said in a letter to AT&T Chairman C. Michael Armstrong Friday. "However, as long-term investors, we want to be assured that the options are being considered to promote growth and stability in the long-term, and not simply to produce a short-term boost in the stock price."
An AT&T spokesman declined comment on the letter or any of the company's possible strategies. AT&T shares, which just last March were trading at $60, now are hovering around $30.
Board members of Basking Ridge, N.J.-based AT&T (T: Research, Estimates) wrapped up a four-day strategy session over the weekend at which they mulled options for reinvigorating the stock.
The company reportedly is considering the sale of its long-distance calling business, where revenue has been declining, so it can focus on developing the broadband delivery of Internet, phone and video services over the cable TV systems it has purchased for more than $100 billion.
It also reportedly is considering a full or partial merger with British Telecommunications PLC (BTY: Research, Estimates), or the issuance of a cable tracking stock .
Shareholders are worried that selling the long-distance business which, despite decreases, still is the largest revenue generator for the company, would hurt its ability to pay for upgrading cable service. They also worry that losing the large long-distance customer base could jeopardize AT&T's ability to bundle local, long-distance and wireless voice and data services.
"...We are aware that some investors are concerned that the option to spin off the consumer business could be detrimental to the interest of long-term investors," the letter said. "They believe that AT&T would lose the cash flow of the consumer business, which could be used to reduce mounting debt, and the established consumer base, which could facilitate the company's growth strategy of providing bundled services through multiple channels."
McCall and Hevesi also expressed concern over the possible issuance of a tracking stock, saying it might have a short-term impact but would not, in the long term, unleash shareholder value. They said a tracking stock also could create conflicting priorities among board members.
Both McCall and Hevesi have requested a meeting with Armstrong before any decisions are made, the letter said.
Shares of AT&T were down 56 cents to $29.19 in midday trading Monday. 
|
|
|
|
|
|
AT&T
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
