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@Home embraces AT&T
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January 6, 1999: 12:28 p.m. ET
@Home awards Internet contract to AT&T; tracking stock may loom
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NEW YORK (CNNfn) - Shares of high-speed Internet service provider @Home Corp. shot up more than 7 percent Wednesday after the company announced it had awarded AT&T Corp. a long-term contract to create a nationwide Internet Protocol network, which would allow for simultaneous voice, data and video transmissions on AT&T's so-called backbone infrastructure.
Redwood City, Calif.-based @Home's shares hit a 52-week high of 86-1/4 on heavy trading volume of more than 1.6 million shares on the Nasdaq. By around 11 a.m., @Home (ATHM) stock had settled back slightly but was still up 5-5/8, or 7.01 percent, at 85-7/8.
The contract announcement coincided with growing speculation that AT&T (T) is mulling a plan to go public with 10 percent of a new tracking stock that would allow investors to individually follow the performance of a new cable and wireless unit related to AT&T's proposed $48 billion of Tele-Communications Inc. (TCI)
AT&T is expected to offer details of that acquisition in a proxy the telecom behemoth is expected to file with the Securities and Exchange Commission Wednesday, according to published reports and Wall Street analysts. In an article Wednesday, The Wall Street Journal said AT&T will likely reveal plans to create a separate tracking stock tied directly to TCI's cable operations and AT&T's wireless-telephone units, the company's high-growth businesses.
The newspaper, citing analysts, said the tracking stock, excluding debt, would be valued at $29 billion.
AT&T spokesperson Jeff Roberts refused to confirm or deny the Journal story Wednesday, citing company policy not to comment on media speculation.
In the run-up to the latest conjectures, several Wall Street analysts raised their ratings and target price on AT&T's stock this week, which has surged to new highs after months of relatively lackluster performance.
On Wednesday, shares of NYSE-listed AT&T were up 2-1/16 at 81-9/16, or 2.59 percent, within grazing range of the stock's 52-week peak of 82-7/16. Volume totaled more than 4.4 million shares.
On Tuesday, Merrill Lynch analyst Dan Reingold helped trigger a rally in AT&T stock after he revised his near-term rating on the company's shares to "accumulate" from "neutral," and his long-term rating to "buy" from "accumulate."
Reingold also notched up his target price on the stock to $94 a share over the next 12 to 18 months.
AT&T Corp. booted the possibility of a public stock offering when it agreed to purchase TCI last year. But the company has declined to comment or elaborate on its plans since then.
Initially, AT&T said it intended to group its consumer operations into a new unit called AT&T Consumer Services, which would have traded under the company's main ticker symbol. Under the expected plan, the relatively riskier cable and wireless businesses would trade separately as a tracking stock, while the consumer and long-distance businesses would remain together as a single unit.
According to published reports, the tracking stock will begin trading in late Spring. AT&T would retain as much as an 80 percent stake in the tracking stock, and could parcel out up to 20 percent to existing shareholders in an exchange offer, the Journal said.
The TCI acquisition has a final hurdle to surmount before it can be considered a done deal: regulatory approval by the federal Communications Commission.
In the @Home deal, the use of AT&T's backbone facility will increase @Home's capacity 100 times and allow the company to take on millions of broadband users.
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AT&T
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