adm@cbneb.UUCP (01/29/85)
AT&T announced 4th-quarter and year-end results yesterday. Earnings for the last quarter were $0.34 per share, up from $0.28 recorded during the 3rd- quarter. For the entire year, ATT earned $1.25 per share. Comparing AT&T's stock price to IBM's and GE's we find that AT&T is selling at 17 times earnings, while IBM and GE sell for 12.4 and 12.7 times earnings, respectively. Also, let us note that the yield on AT&T common is now 5.6%, compared to IBM's yield of 3.3% and GE's yield of 3.5%. I cannot see any reason why AT&T should warrant a higher multiple than either GE or IBM. Therefore, that implies AT&T should be selling at or near 15 1/2. If AT&T were to drop to that level, then that would have the stock yielding a "utility like" 7.7%. My point: $1.20 dividend on the common is NOT appropriate when the Company is making just 4% more than that. If AT&T wants to be like IBM or GE, then according to my numbers, the Company should cut its dividend from $1.20 per share, or $0.30 quarterly, to $0.54 per share, or $0.135 quarterly. With divestiture, the Company has paid the price, its employees are being asked to tighten their belts, and the consumers have gotten ripped off. But the shareholders have done nicely$ On Friday, the new T made a new all-time high price of 22 1/8. Its the shareholders Company and I feel it is now their turn to "feel the pain." Cutting the dividend would probably cause some short term discomfort, but the additional monies that would be retained by AT&T could result in great long term rewards. Thurman (AT&T BTL-Columbus)