tfilm@ihuxn.UUCP (01/23/84)
One can estimate the values of AT&T stock before divestiture and mixed AT&T/TELCO stock after divestiture. Before the fact, if one held 100 shares of AT&T at a nominal value of $60 per share, he would have 100 X $60 = $6000. After the split, the share holder has 100 AT&T and 70 TELCO shares, all slightly different in face value. If all 170 shares were normalized to $6000/170 = $35.29, the shareholder would break even, however I don't see any of the 8 companies' shares near this value. This appears to be a whopping loss for all the AT&T common stock holders. I hope that I am wrong, perhaps someone can clarify this.
jug@whuxle.UUCP (01/24/84)
You have discovered the problem of the average of a bunch of numbers to draw conclusions about their distribution. The computation you should make goes more along the following lines: Let's use the composite closing prices of Friday, January 20, 1984. Name Close No. of Shares Value ---------------------------------------------------- "Old" AT&T $ 65.625 100 $ 6,562.50 =================================================== "New" AT&T $ 17.75 100 $ 1,750.00 Ameritech 68.125 10 681.25 Bell Atlantic 73.5 10 735.00 Bell South 93.5 10 935.00 Nynex 63.875 10 638.75 Pacific Telesis 61.75 10 617.50 Southwestern Bell 65.125 10 651.25 US West 63.5 10 635.00 ---------------------------------------------------- Total post-divested shares 170 $ 6,643.75 **************************************************** As you see, this is not a "rip-off" if you do the calculations properly. J. U. Grauman whuxg!jug
arnold@umcp-cs.UUCP (01/24/84)
One can estimate the values of
AT&T stock before divestiture and
mixed AT&T/TELCO stock after divestiture.
Before the fact, if one held 100 shares of AT&T
at a nominal value of $60 per share,
he would have 100 X $60 = $6000.
After the split, the share holder has 100 AT&T and 70 TELCO
shares, all slightly different in face value.
If all 170 shares were normalized to $6000/170 = $35.29,
the shareholder would break even, however
I don't see any of the 8 companies' shares near this value.
This appears to be a whopping loss for all the
AT&T common stock holders.
I hope that I am wrong, perhaps someone can clarify this.
You are wrong! ( and can not do mathematics)
We have 100 shares at $60 each before break up yielding
$6000 in total value. After Break up we have 100 share of AT&T at
$20 each and 70 Telco shares averaging $60 each.
Giving us a grant total of 100 x $20 + 70 x $60 = $2000 + $4200 = $6200
We have just earned $200 by letting AT&T Break Up into AT&T/TELCO
Not only that but the combined dividends of the new ATT and TELCO
is 6 cents more a share per year then the dividends of the old ATT
Therefore ATT stock holders make out better after divestiture
then before divestiture.
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Arnold Miller, U of Maryland, College Park Md.
UUCP: {seismo,allegra,brl-bmd}!umcp-cs!arnold
CSNet: arnold@umcp-cs ARPA: arnold@marylandjohnl@haddock.UUCP (01/28/84)
#R:ihuxn:-51900:haddock:11900001:000:636 haddock!johnl Jan 27 12:56:00 1984 Telephone stockholders taking a loss? You must read different stock tables than I do. As of Wednesday: 10 shares of old AT&T: 65 3/4 * 10 = 657.00 10 shares of new AT&T: 18 * 10 = 180.00 1 share each of: Ameritech: 66 5/8 Bell Atlantic: 73 1/8 Bell South: 93 3/8 Nynex: 63 7/8 Pac Telesis: 62 Southwest Bell: 63 3/4 U S West: 61 1/2 Total BOC: 484.25 484.25 Total: 664.25 So at this point the divested "package" is worth 1.1% more than the old AT&T shares, which makes sense since with divested shares you get to pick what you want. John Levine, ima!johnl