Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10 5/3/83; site umcp-cs.UUCP
Path: utzoo!linus!philabs!seismo!rlgvax!cvl!umcp-cs!arnold
From: arnold@umcp-cs.UUCP
Newsgroups: net.invest
Subject: re: Stock Rip off?
Message-ID: <4870@umcp-cs.UUCP>
Date: Tue, 24-Jan-84 12:46:14 EST
Article-I.D.: umcp-cs.4870
Posted: Tue Jan 24 12:46:14 1984
Date-Received: Fri, 27-Jan-84 08:13:13 EST
Organization: Univ. of Maryland, Computer Science Dept.
Lines: 37



	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.


-- 
- - -- --- -- --- --- -- --- -- -- -- --- --- -
Arnold Miller, U of Maryland, College Park Md.
UUCP:	{seismo,allegra,brl-bmd}!umcp-cs!arnold
CSNet:	arnold@umcp-cs 	ARPA:	arnold@maryland