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After record IPO, AT&T Wireless shares climb slightly

Shares of AT&T Wireless get a lukewarm welcome on their first day of trading on the public market, rising about 7 percent from their offering price.

Shares of AT&T Wireless got a lukewarm welcome on their first day of trading on the public market today, rising about 7 percent from their offering price.

AT&T Wireless shares were at $31.56, a $2.06 gain, at the 1 p.m. PT close of regular trading. The IPO priced at $29.50. Nearly 57 million shares traded hands less than one hour after the company hit the market today. Last year, many Internet and wireless IPOs blasted higher by at least doubling and tripling on their opening day.

The company went public on a less-than-perfect day for an IPO, with the markets jittery because of economic data released today that indicated that inflation may be on the rise. The Labor Department reported that labor costs rose, while the Commerce Department noted that economic growth continues unabated. Both the Dow Jones Industrial Average and the Nasdaq Composite Index were in the red this morning.

AT&T Wireless raised a whopping $10.62 billion in its initial public offering yesterday, setting a record for capital raised by a U.S. company in a domestic offering.

AT&T Wireless, which began trading today under the ticker "AWE," priced its IPO at $29.50 a share--slightly above the middle of its $26 to $32 range.

A couple of months ago, such a price would have been considered fair to poor. But given the markets' downturn and the huge number of shares to be offered, the underwriters fared well, analysts said. Goldman Sachs, Merrill Lynch and Salomon Smith Barney are the lead underwriters.

"In this environment, it would be arrogant to price at the top of the range," said Randall Roth, an analyst with the IPO Plus Aftermarket Fund. "The bankers wanted to leave some upside for investors rather than have this thing flop on its first day."

He estimates the offering may rise as much as 15 percent to 25 percent on its first day. Although it is unlikely to have the triple-digit pop that technology investors became accustomed to in better times, a double-digit gain is more than respectable, Roth said.

The company, which is a tracking stock for telecom giant AT&T, will have 2.31 billion shares outstanding after the IPO. That gives the company an initial market cap of $68.1 billion--roughly 42 percent of the size of AT&T.

Wall Street is expected to closely watch the long-awaited offering, waiting to see whether it will jump-start the sluggish IPO

Tom Davey, IPO critic for Red Herring, on investment in the wireless sector.
market. Several offerings have been delayed or postponed in the past month, as the markets have fallen sharply from their record highs of mid-March.

"In this case, I don't know if it will reignite things, but it will bring the focus back to IPOs," Roth said.

Meanwhile, the AT&T Wireless pricing has easily surpassed the previous top U.S. offering--that of United Parcel Service, which raised $5.5 billion last year.

AT&T Wireless generated $7.6 billion in revenues last year, up 41 percent from the previous year. It posted a $405 million loss for the year, compared with a gain of $164 million a year earlier.