What Would Happen to 100 Shares of AT&T After Its Breakup?
T

    

    For many years, the American Telephone & Telegraph Company
    was the most widely-held stock in the United States.  Not only was
    it a regulated utility, with guaranteed rates of return on
    capital, making it the archetypal “widows and orphans”
    stock, but it was also one of the country's largest private
    employers, and encouraged its employees to invest their savings in
    company shares.  Known among Wall Street brokers and traders
    simply as “Telephone”—what other phone company
    was there?—it was one of only twenty-six companies granted a
    single-letter ticker symbol: “T”.  But after the 1984
    breakup of AT&T into separate regulated local telephone
    companies, and an unregulated national long-distance company which
    kept the AT&T name, the luster began to come off.  Certainly
    it didn't help that the local phone companies, known as
    “Regional Bell Operating Companies”, were ultimately
    allowed to compete aggressively with AT&T on its own turf,
    long distance, but the problems began well before that.  Any
    monopoly, of course, can only lose market share once its market is
    opened up to competition.  But AT&T management compounded that
    loss by entering into a series of ill-fated business combinations.
    The company eventually fell victim to the ultimate indignity,
    being swallowed up by one of its children, SBC Corp., in late
    2005.

    Let us consider what would have happened to a hypothetical 100
    AT&T shares purchased on January 2, 1970 (just one day into
    the Unix epoch).  Those shares would have cost about $4,950
    (depending on the time of day the trade was executed), or about
    $30,000 in 2014 dollars.  On December 30, 1983 (the day before the
    divestiture), those 100 shares were worth $6,150; the next
    business day, they were worth only $1,800, but the investor also
    received ten shares each of the seven Regional Bell Operating
    Companies: Pacific Telesis, U S West, Ameritech,
    Southwestern Bell, BellSouth, Bell Atlantic, and NYNEX.  In the
    divestiture, 28.5% of the value of the old “Ma Bell”
    was assigned to the new AT&T, with the rest being divided
    among the “Baby Bells”.

    Let's follow each of the successor companies individually.
    We'll start with NYNEX, the smallest in territory of the RBOCs but
    important to Wall Street as it was the local phone company for
    most of New York State including Manhattan.  NYNEX had two 2-for-1
    stock splits during its period of existence, so on August 14,
    1997, the hypothetical shareholder would have held 40 shares of
    NYNEX.  On that day, NYNEX merged with Bell Atlantic.

    So next we consider Bell Atlantic (ticker “BEL”).
    Prior to the merger with NYNEX, Bell Atlantic also had two 2-for-1
    stock splits, giving our investor 40 shares of BA on August 14,
    1997.  On that day, she would have received 30 new shares of BA in
    exchange for her 40 shares of NYNEX, plus $53.44 in cash to settle
    the fractional shares resulting from the merger.  In 1998, Bell
    Atlantic had another 2-for-1 stock split, leaving our investor
    with 140 shares of Bell Atlantic, now Verizon Communications
    (“VZ”), which today is worth $33.81 per share or
    $4,733 in total.

    U S West was the second-smallest of the Regional Bell
    Companies after divestiture, and was allocated 8.94% of the cost
    basis of old AT&T.  As with all the other RBOCs, AT&T
    shareholders received ten shares of U S West (the odd
    typography is the company's, not mine), under the ticker symbol
    “USW”.  Like the other companies we have considered so
    far, U S West had two 2-for-1 stock splits before its
    finances began to get really complicated.  On November 1, 1995,
    the company created a tracking stock for its “new
    media” assets, mostly cable television systems it had
    purchased over the years.  All shareholders of U S West
    received a share of the tracking stock (ticker “UMG”)
    for each share of USW, so at this point our investor has 40 shares
    of USW and an equal number of UMG.  In June, 1998,
    U S West Media Group merged with Amos Hostetter's
    Continental Cablevision to form MediaOne Group.  As a result of an
    asset reclassification prior to the merger, UMG shareholders
    received additional USW stock; our investor would have received
    $4.67 in cash and one additional share of USW.  We'll pick up the
    MediaOne story later.  Two years later, the end came for
    U S West as it merged into Qwest; for her shares, our
    hypothetical shareholder received 70 Qwest shares and $49.94 cash
    in lieu of fractional shares.  She ends this part of the story on
    July 1, 2000, with 70 shares of “Q” and 40 shares of
    “UMG”.

    Now things start to get really complicated, as we draw together
    the threads that make up today's AT&T Inc.  First up is
    Ameritech Corporation (“AIT”), which merged with SBC
    on October 8, 1999.  By the time of the merger, stock splits would
    have multiplied our investor's holdings to 120 shares.  These
    shares were converted into 157 shares of SBC plus cash in lieu of
    0.92 share.

    Pacific Telesis Group (ticker “PAC”) was the
    smallest of the “Baby Bells”, serving parts of
    California and Nevada, but with large “Independent”
    presences in both states resulting in a smaller customer base than
    one might otherwise have expected.  Pac*Tel, as it was universally
    known, had two 2-for-1 stock splits in the 1980s giving our
    investor 40 shares.  Pac*Tel's AirTouch wireless unit was spun off
    on April 1, 1994 at a 1-for-1 ratio.  When AirTouch merged with
    Vodafone Plc on June 30, 1999, our investor would have received
    $360 in cash consideration, plus 20 Vodafone Airtouch ADSes (which
    split 5-for-1 a few months later).  Pac*Tel merged into SBC on
    April 1, 1997, and our shareholder's 40 PAC shares would have
    become 29 shares of SBC plus cash in lieu of 0.258 share.

    BellSouth is the only one of the original seven RBOCs not to
    have engaged in financial fun and games during the 1990s; until
    2006 it had remained essentially the same company as it was upon
    Divestiture in 1984.  Its stock was been one of the better
    performers of the group, with four stock splits giving our
    hypothetical investor 180 shares.

    Southwestern Bell is the last of the “Baby Bells”
    we must consider.  Trading under ticker symbol “SBC”,
    Southwestern Bell spent the first decade of its life in a mode not
    dissimilar to its six sisters, with two stock splits giving our
    hypothetical investor 60 shares by 1994.  The company changed its
    name to “SBC Communications” before going on a buying
    binge, swallowing up three of its sister companies, as noted above,
    and eventually taking over Mother herself.  Taking into account
    the Pacific Telesis acquisition, a 1998 stock split would have
    left our investor with 178 shares.  Add to that 157 shares
    converted from Ameritech and as of 2005, our shareholder would
    have had 335 shares of SBC.

    Before we pick up the thread of AT&T Corp. again, we have to
    consider the fate of U S West Media Group, which became
    MediaOne Group after merging with Continental Cablevision.  Our
    investor received 40 shares of “UMG” as a result of
    the spin-off from U S West.  On June 15, 2000, MediaOne
    Group became part of AT&T, with MediaOne shareholders having a
    rather confusing selection of mostly-cash, half-cash-half-stock,
    or mostly-stock.  To avoid as much of the confusion as possible,
    we'll just assume that our hypothetical shareholder took the
    mostly-stock option, which gave her $340 in cash, plus 59 shares
    of AT&T common stock, plus another $21.75 in cash in lieu of
    fractional shares.

    As part consolation for the breakup, AT&T was allowed to
    keep its equipment-manufacturing arm, Western Electric, and its
    hugely important research arm, Bell Laboratories.  But on
    September 17, 1996, these businesses (with the exception of a few
    parts of the Labs) were spun off as Lucent Technologies (ticker
    “LU”).  AT&T did not have any stock splits between
    1984 and 1996, so our investor still had her 100 original
    “T” shares.  She would have received 32 shares of
    Lucent plus cash in lieu of 0.4084 share.

    In the early '90s, AT&T decided to bulk up its flagging
    minicomputer business by acquiring National Cash Register (known
    far and wide as “NCR”).  It didn't work, and on
    December 31, 1996, NCR was spun back off again.  Our hypothetical
    AT&T shareholder received 6 shares of NCR plus cash in lieu of
    0.25 share.  In April of 1999, AT&T had a 3-for-2 stock split,
    giving our investor 150 shares.  NCR split 2-for-1 on December 31,
    2004.

    On September 30, 2000, Lucent spun off a random selection of
    businesses as Avaya (ticker “AV”), at a 1-for-12
    ratio.  Lucent had two 2-for-1 stock splits prior to this, so our
    investor's 128 shares of Lucent would have given her 10 shares of
    Avaya.  Lucent's microelectronics business was spun off as Agere
    Systems on June 1, 2002, with a rather complex allocation
    involving two different classes of Agere stock.  Our investor
    would have received 1 share of Agere class A stock, plus cash in
    lieu of 0.379771392 share, and 33 shares of Agere class B stock,
    plus cash in lieu of 0.86406528 share.  (This bizarre structure
    was designed to make the spin-off tax-free to Lucent
    shareholders.)

    On Novembr 11, 2006, Lucent was purchased by French competitor
    Alcatel, in an all-stock deal at a ratio of 1 Lucent share to
    0.1952 Alcatel-Lucent ADS.  Our investor would have received 24
    shares of Alcatel-Lucent and cash in lieu of 0.9856 share.

    In July, 2001, AT&T exited the cellular telephone business,
    spinning it off as AT&T Wireless (“AWE”), which
    had existed for a few years previously as a tracking stock.  By
    this time, our investor had 209 shares of AT&T common stock
    (after taking account of the MediaOne merger), so she would have
    received 67 shares of AT&T Wireless, plus cash in lieu of
    0.2562 share.  AT&T Wireless was purchased by Cingular, a
    partnership of SBC and BellSouth, in 2004 for $15 cash per share,
    closing out this position at $1,005 even.

    On November 18, 2002, AT&T investors finally got rid of
    Mike Armstrong, sending him and his huge cable TV investment to
    Comcast.  This transaction was immediately followed by a 1-for-5
    reverse stock split, so our shareholder's 209 shares of AT&T
    stock would have turned into 67 shares of Comcast class A common
    (“CMCSA”) plus $16.04 cash in lieu of a fractional
    Comcast share, and 41 shares of new AT&T common stock plus
    $10.81 cash in lieu of a fractional AT&T share.

    On May 27, 2005, Agere Systems untangled its complex share
    class structure, replacing the two original classes of stock with
    a single class, and at the same time taking a 1-for-10 reverse
    split.  As a result, our investor would have received 3 shares of
    new Agere stock (still under the ticker “AGR”) and
    $4.92 cash in lieu of a fractional share.  In December, 2006,
    Agere agreed to be purchased by LSI Logic Corporation in an
    all-stock deal, giving Agere shareholders 2.16 shares of LSI for
    each AGR share they hold.  The deal closed in April, 2007, at
    which point our investor would have received six shares of LSI
    plus cash in lieu of 0.48 share.  After the merger was completed,
    LSI Logic changed its name to LSI Corporation.

    On November 18, 2005, AT&T was purchased by SBC.  After the
    purchase closed, SBC renamed itself “AT&T Inc.”
    and after a wait of a few weeks received AT&T's old ticker
    symbol, “T”.  Our hypothetical shareholder's 41 shares
    of AT&T would have been converted into 31 shares of SBC stock,
    plus cash in lieu of 0.95622 share.

    In early 2006, BellSouth agreed to be purchased by “new
    AT&T” in an all-stock deal giving BLS shareholders 1.325
    shares of AT&T stock.  After waiting most of the year for FCC
    approval, this transaction finally closed on December 29, 2006,
    and our investor would have received 238 T shares for her 180
    shares of BellSouth, plus cash in lieu of half a share.

    On November 20, 2006, Verizon spun off its directory publishing
    business, forming Idearc, Inc., with Verizon shareholders
    receiving one share of IAR for every twenty VZ shares they owned.
    Our investor would have received 7 shares of Idearc.  On March 31,
    2009, Idearc filed for Chapter 11 bankruptcy protection, rendering
    those shares worthless.

    On January 8, 2007, NCR announced plans to spin off its
    database division, Teradata, as a separate company.  NCR
    shareholders received one share of Teradata for each share of NCR
    they owned on September 14, 2007.

    In February, 2007, Comcast announced a 3-for-2 stock split.
    Our hypothetical investor would have received an additional 33
    shares, plus cash in lieu of half a share.

    On June 4, 2007, Avaya announced that it would be taken private
    by an investor group led by Silver Lake and TPG Capital.  When the
    deal closed on October 26, 2007, our shareholder would have
    received $17.50 in cash per share, for a total of $175.

    On March 31, 2008, Verizon spun off its wireline operations in
      Maine, New Hampshire, and Vermont, with the resulting company
      then merging with FairPoint Communications at a ratio of one
      FairPoint share per 53.0245 Verizon shares, giving our investor
      two FairPoint shares and $4.59 cash in lieu of a fractional
      share.  FairPoint filed for Chapter 11 bankruptcy protection on
      October 26, 2009.

    On April 21, 2010, Qwest Communications agreed to be acquired
      by CenturyLink in an all-stock transaction, with Qwest
      shareholders receiving 0.1664 share of CenturyLink for every
      share of Qwest they owned.  Our investor would have received 11
      shares of CenturyLink plus cash in lieu if 0.648 share when the
      merger was consummated on April 1, 2011.

    On July 1, 2010, Verizon spun off additional wireline
    operations in fourteen states (including the entire state of West
    Virginia) to Frontier Communications; VZ shareholders received
    Frontier stock at a rate of 4.165977 to 1, so our shareholder
    would have received 33 shares of Frontier plus $4.35 cash in lieu
    of a fractional share.

    On September 2, 2013, Verizon agreed to buy Vodafone's 45%
    interest in Verizon Wireless for $130 billion in cash, stock, and
    other consideration.  On the completion of the transaction, all of
    the Verizon shares and some of the cash would be distributed to
    Vodafone shareholders; as a part of the deal, Vodafone would also
    buy out Verizon's interest in Vodafone Italy.  Vodafone UK
    shareholders received 0.0263001 VZ shares for every Vodafone
    share, and Vodafone subsequently implemented a 6-for-11 reverse
    split, but the Vodafone ADSes represent 10 Vodafone UK
    (“ordinary”) shares.  To keep the ADS-to-ordinary
    share ratio the same, the ADSes performed the same reverse split
    as the ordinary shares.  Thus, our investor received 26 VZ shares,
    plus a cash dividend, cash in lieu of 0.3001 fractional Verizon
    share, 54 new ADSes, and cash in lieu of 0.545 new ADSes.
    (Whew!)

    On May 6, 2014, the Singapore firm Avago Technologies completed
      its acquisition of LSI Corp. for $11.15 per share, with our
      hypothetical investor receiving $66.84 for her 6 LSI shares.

    So to sum up, someone who purchased 100 shares of AT&T
      common stock on January 2, 1970, would now own the
      following:

    
      
	
	  Quantity
	  Ticker
	  Name of company
	  Value
	
      
      
	
	  604
	  T
	  AT&T Inc.
	  $21,599.04
	
	
	  166
	  VZ
	  Verizon Communications
	  $7,984.60
	
	
	  54
	  VOD
	  Vodafone Group plc ADS
	  $2,060.10
	
	
	  —
	  —
	  Cash (excluding cash in lieu of fractional shares)
	  $1,946.84
	
	
	  100
	  CMCSA
	  Comcast Corp. class “A”
	  $5,174.00
	
	
	  11
	  CTL
	  CenturyLink
	  $381.15
	
	
	  12
	  TDC
	  Teradata
	  $527.64
	
	
	  33
	  FTR
	  Frontier Communications Corp.
	  $193.38
	
	
	  12
	  NCR
	  NCR Corp.
	  $360.84
	
	
	  24
	  ALU
	  Alcatel-Lucent
	  $94.08
	
      
      
	
	  Total
	  $40,321.67
	
      
    

    Analysis by Garrett A. Wollman, based on public information
    from the Securities and Exchange Commission's EDGAR database and
    the investor relations departments of Alcatel-Lucent, Avaya
    Communications, AT&T Inc., Comcast Corp., FairPoint
    Communications, LSI Corp., NCR Corp., Qwest Communications,
    Verizon Communications, and Vodafone Group plc.  Values based
    on NYSE and NASDAQ closing prices as of May 7, 2014.  See any
    errors?  Send mail to wollman@bimajority.org.

    Revision history: Updated 2006-03-14 to correct Lucent,
    Avaya, and Vodafone totals; thanks to Sam Webb.  Also added
    information about the T/BLS merger announced shortly after the
    original release of this article.  Updated 2007-01-28 to reflect
    the Lucent-Alcatel merger, the final details of the BellSouth-AT&T
    merger, and NCR's proposed spinoff of Teradata.  Updated
    2007-06-05 with more details on the Teradata spin-off and the sale
    of Avaya.  Updated 2007-12-22 with the final details for the sale
    of Agere Systems, the sale of Avaya, the Comcast 3-for-2 stock
    split, the NCR-Teradata spin-off, and the Verizon-Idearc spin-off,
    and initial information about the proposed Verizon-FairPoint
    transaction in Northern New England; thanks to "Claudia".  Updated
    2009-10-18 to reflect the Idearc bankruptcy and Verizon-FairPoint
    transaction.  Updated 2010-11-15 to reflect the spinoff of some
    Verizon operations to Frontier.  Updated 2014-05-07 to reflect the
    merger of Qwest with CenturyLink, the sale of LSI Corp. to
    Avago, and the Verizon-Vodafone share distribution and reverse
      split.
  

