Investors could hear AT&T Corp.’s stock whistling like a bomb as it fell to a low not seen in more than 10 years after the company released two loads of bad news last week-another fourth-quarter revenue warning and an 83-percent cut in its quarterly dividend, the first cut in the company’s history. AT&T’s stock was trading at $17.81 per share Friday, down from a 52-week high of $61.
Wednesday, amid reports of a slowing economy and lowered earnings expectations along Wall Street, AT&T said its fourth-quarter dividend would be 3.75 cents per share, down from 22 cents in the previous quarter.
“While we did not make this decision lightly, we believe it is necessary and in the best long-term interests of our shareowners to adopt a dividend policy comparable to the policies of our competitors,” said Michael Armstrong, the company’s chairman.
AT&T said the move will help its split into four different companies, which was announced in October. According to Wednesday’s release, AT&T Wireless and AT&T Broadband likely will not pay any dividend when they are separated.
The company’s revenue warning stated its overall growth in the fourth quarter will be 2.5 to 3 percent instead of the previously expected 4 to 5 percent. The reason, the company said, is anticipated contract signings and industrywide pricing pressures in its Business Services and Consumer Services sectors.
However, AT&T said its Internet, data, broadband and wireless sectors would meet or exceed expectations. The company said the growth in data and Internet revenue would stay at more than 20 percent; its broadband unit would likely improve over its third quarter rate of 10.8 percent; and its wireless business would reach the high end of its 30 to 35 percent target growth rate.
In a separate blow to the company, law firm Lovell & Stewart L.L.P. announced it filed a class-action lawsuit against AT&T, alleging it didn’t tell investors about adverse developments in its core business and made false statements regarding the IPO of its AT&T Wireless stock.
