AT&T Corp. is looking to immediately raise the value of its shares, with a one-for-five reverse stock split.
Ma Bell proposed the reverse stock split in a proxy statement filed with the Securities and Exchange Commission yesterday. In the filing, the company said the reverse split would "adjust the trading prices of AT&T common stock following the various transactions to effect AT&T's restructuring plan, including the AT&T Comcast transaction."
Without actually increasing the value of anyone's holdings, the reverse stock split is designed to raise the price of AT&T shares fivefold. Analysts are predicting that AT&T's stock price will fall to between $8 and $10 a share. In 1999, AT&T shares traded around $60 — if the stock split is approved, AT&T shares would be boosted once again to between $40 and $50. Investors raised their eyebrows at AT&T proposal — reverse stock splits are normally used by smaller companies to boost their stock price. At one point in early trading today, the company's shares lost 6 percent of their value, trading at $13.51.
The reverse split also would reduce the number of outstanding shares. The company has 3.5 billion outstanding shares, and the split would reduce that number to roughly 700 million.
AT&T also is seeking shareholder approval of a plan to issue a new class of tracking stock for its consumers-services unit.