BREAKFAST WITH THE FOOL
Friday, November 26, 1999
"The difference between a rut and a grave is the depth."
-- Gerald Burrill, Episcopal Bishop of Chicago
AT&T May Spin Off Wireless Division Through IPO
Richard McCaffery (TMF Gibson)
Long distance telecommunications, cable, and Internet giant AT&T (NYSE: T), which is expected to issue a tracking stock to unlock the value of its wireless business, may issue the shares through an initial public offering that could be one of the largest in U.S. history, The Wall Street Journal reported.
Under the plan, AT&T would sell up to 15% of the wireless division's outstanding shares to the public, raising as much as $10 billion to build out its national wireless network. The rest of the shares would be distributed to existing shareholders, The Journal said.
An IPO would allow AT&T to capitalize on investors' hunger for wireless stocks, which are among the hottest companies being traded today. TeleCorp. PCS (Nasdaq: TLCP), the largest AT&T wireless affiliate in the United States, went public November 22 at $20 and closed the same day at $33.
AT&T's wireless division is one of its four primary lines of business. The others are business services, consumer services, and broadband and Internet services. In terms of revenue, the division is the largest wireless services provider in the United States with more than 10 million subscribers spanning more than 130 markets.
At the end of last year, AT&T's wireless network reached 55% of the U.S. population, stretching to 96% with roaming agreements. The company plans to continue expanding its wireless footprint through acquisitions and network buildout to better compete with the other national wireless phone providers.
One likely advantage for shareholders in a wireless IPO would be that investors would receive voting rights. Shareholders in tracking stocks, on the other hand, don't receive voting rights since the parent company retains actual ownership of all the tracking stock's assets. (Click here for more information on tracking stocks.)
News to Go
Soft drink maker Coca-Cola (NYSE: KO) no longer plans to advertise with the World Wrestling Federation (Nasdaq: WWFE) after the company received complaints from the Parents Television Council regarding WWF content. The WWF body-slammed the Parents Television Council in a press release after the markets closed Wednesday.
Tire and rubber developer, manufacturer, and distributor Goodyear (NYSE: GT) is cutting about 1,400 jobs and shutting down plants in Italy and Argentina as part of a streamlining effort related to its purchase of eight factories from Japan's Sumitomo Rubber Industries, The Wall Street Journal reported.
Automated equity trading service Investment Technology Group (NYSE: ITG) is buying back another 2 million shares of common stock to boost shareholder value. Under the plan, the repurchased shares will be canceled but available for issuance in the future. The company has nearly completed its earlier repurchase of 2.8 million shares. The 4.8 million shares represent about 15% of the outstanding stock.
Rebar steel manufacturer Birmingham Steel (NYSE: BIR) is looking into the sale of the company with the help of its financial advisor Credit Suisse First Boston. It also sent a letter to the United Group, a shareholder with an 8% stake in the company that's waging a proxy contest, expressing its willingness to resolve differences through a meeting. The United Group is also interested in a meeting.
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