NEW YORK (CNN/Money) -
A one-for-five reverse stock split propelled shares of AT&T to $25 Tuesday as the company returned to its long-distance phone service roots a day after officially shedding its cable assets.
CNN/Money erroneously reported Monday that AT&T shares would trade in the $69-range. That report did not subtract the roughly $8 per share value of AT&T Broadband, which became part of Comcast Corp. after the close of trading Monday.
AT&T (T: Research, Estimates), the first Dow company to boost its share price by cutting the number of shares outstanding, closed at a non-split adjusted $13.51. It opened Tuesday at $25.41 after subtracting the value of its cable assets.
Shareholders of AT&T common stock will receive one share of AT&T stock for every five shares they hold. AT&T anticipates it will have approximately 770 million shares outstanding.
Under the terms of the deal, a shareholder with 100 shares of AT&T on Monday will have about 32 Comcast shares Tuesday and 20 AT&T shares due to the reverse split.
The reverse split comes after the company shed its cable and wireless operations. AT&T's sale of its cable assets to Comcast (CMCSA: Research, Estimates) for $29.2 billion closed Monday. It spun off AT&T Wireless (AWE: Research, Estimates) in an IPO in 2001.
Dow components Johnson & Johnson (JNJ: Research, Estimates) and Exxon Mobil (XOM: Research, Estimates) have split their stocks in recent months. But the reverse split puts AT&T in the company of Palm and Ericsson, former penny stocks which cut their shares outstanding to raise their stocks' price.
After shedding its cable assets, AT&T is now closer to the pure phone company which it was in 1984 before regulators split up the then-monopoly.