Friday, December 19, 1997
The Daily Dow
by Robert Sheard
LEXINGTON, KY. (Dec. 19, 1997) -- Despite the market's plunge and partial recovery (which some talking heads still won't admit is related to options expiration), it was a newsworthy day for Dow components.
AT&T (NYSE: T) chairman Michael Armstrong reinforced the idea that he's out to slash costs. In addition to the announced sale of AT&T's Universal Card to Citicorp (NYSE: CCI), Armstrong put a freeze on all hiring, an expected prelude to a new round of job cuts. Two years ago, AT&T slashed 17,000 positions and the buzz surrounding the company suggests that the number may be even larger this time.
Armstrong is also looking for ways to cut costs on local traffic by going around local phone companies if possible. And in perhaps the most important move for shareholders, Armstrong is tying managers' compensation to the financial success of the company, a situation that has not been the case in the past. The news was greeted so positively that AT&T shares closed higher by more than $2. The rise was great enough, in fact, that AT&T fell out of the top ten yielders -- an amazing achievement considering how AT&T looked some six months ago.
AT&T wasn't alone today in the news. General Electric (NYSE: GE) authorized an additional $4 billion buy-back of its own stock, hiked its quarterly dividend 15%, and announced a new direct-purchase stock plan for shareholders. Since GE's current share buy-back plan commenced in December 1994, the company has already bought some 243 million shares, worth approximately $9.8 billion.
Late in the day, Chevron (NYSE: CHV) also announced a share buy-back, totaling $2 billion. In addition, the company sees 1997 earnings setting yet another new record.
And finally, if you own General Motors (NYSE: GM) and haven't seen the news flashes, you're probably wondering what's up with the stock price. Although the stock technically opened higher this morning (at $60 5/16), that's $3.25 a share lower than Thursday's closing price in New York ($63 9/16). The reason for the discrepancy is a distribution of Raytheon's (NYSE: RTN) Class A shares.
The distribution comes about as part of the spin-off of Hughes Electronics (NYSE: GMH) and the sale of Hughes's defense business to Raytheon. Included in the $9.5 billion deal is a payment in Raytheon Class A shares to GM shareholders. According to Dow Jones News Center, GM shareholders will get $3.59 a share in today's distribution.
Stock Change Last -------------------- T +2 1/8 61.31 GM -4 15/16 58.63 CHV + 1/8 74.19 MMM -2 5/16 83.63
Day Month Year FOOL-4 +0.83% 0.41% 26.60% DJIA -1.15% -0.85% 20.28% S&P 500 -0.89% -0.90% 27.82% NASDAQ +0.09% -4.74% 18.09% Rec'd # Security In At Now Change 1/2/97 479 AT&T 41.75 61.31 46.86% 1/2/97 153 Chevron 65.00 74.19 14.13% 1/2/97 179 Gen. Motor 55.75 58.63 5.16% 1/2/97 120 3M 83.00 83.63 0.75% Rec'd # Security In At Value Change 1/2/97 479 AT&T 19998.25 29368.69 $9370.44 1/2/97 153 Chevron 9945.00 11350.69 $1405.69 1/2/97 179 Gen. Motor 9979.25 10493.88 $514.63 1/2/97 120 3M 9960.00 10035.00 $75.00 CASH $2051.96 TOTAL $63300.21