AT&T sees higher earnings, plans stock split
The telecom giant says it expects earnings from 1999 operations to be higher than expected, and announces a stock split and a move to repurchase company shares.
The company said it anticipates earnings from continuing operations to be between $4.20 to $4.30 per share, excluding the impact of its planned merger with Tele-Communications Incorporated.
A consensus of analysts polled by First Call expects AT&T to earn $4.09 per share.
The company said that as a result of the TCI merger, AT&T expects EPS dilution to be approximately $1 per share on a pro forma basis, assuming the merger closes at the end of the first quarter.
Shares of AT&T edged higher in morning trading, climbing 1.52 percent or 1.25 points, to 83.5. The stock has traded as high as 83.63 and low as 48.38 during the past 52 weeks.
The company expects 5 to 7 percent revenue growth for 1999 on a pro forma basis, including the effect of its planned mergers with TCI and Vanguard Cellular Systems, as well as the previously announced acquisition of the IBM global network business.
The telco hopes these acquisitions and investments will expand its revenue source from a heavy dependence on a single product line--long distance voice--to a more diversified portfolio of high-growth communications, information, and video services.
"As we begin the New Year, AT&T and TCI are right on track with our ambitious timetable for the pending merger," said AT&T chairman Michael Armstrong. "We expect to complete the merger in the first quarter of 1999, presuming shareholder, and regulatory approvals."
Armstrong also said AT&T's board of directors has authorized the repurchase of up to $4 billion of AT&T common stock. The company said it intends to repurchase shares from time to time prior to the closing of the TCI merger through an open market share repurchase program.
AT&T said it will reissue the repurchased shares as part of the shares to be issued for TCI.
The company also announced a three-for-two split in which AT&T's shareowners would receive an additional share of stock for every two shares they own on the record date of the split.
AT&T stock is the most widely held issue in the United States.
"This split further demonstrates our confidence in AT&T's continued growth," Armstrong said.