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AT&T Wireless connects
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April 27, 2000: 6:14 p.m. ET
Eagerly awaited IPO defies pressure on the Dow, trades up on first day
By Staff Writer Tom Johnson
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NEW YORK (CNNfn) - A resilient AT&T Wireless stock pushed upward after making it's long-awaited market debut Thursday, withstanding the day-long downward pressure on the Dow as investors looked to grab a share of the largest IPO in U.S. history.
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CNN's David Haffenrefer reports on the wireless industry.
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The wireless subsidiary of telecom titan AT&T Corp. closed up 2-3/8, or 7.8 percent, at 31-7/8 Thursday. More than 137 million AT&T Wireless shares traded hands, making the company the most actively traded issue on the New York Stock Exchange.
AT&T Wireless (AWE: Research, Estimates), the nation's No. 2 wireless concern, raised a record $10.6 billion late Wednesday when it priced 360 million shares at $29.50 each, slightly above the midway point in its expected pricing range of $26 to $32 per share. The offering dwarfed the previous largest U.S. offering, United Parcel Services (UPS: Research, Estimates), which raised $5.52 billion.
 Initial trading in the stock was hampered by the overall market's early swoon, related to new signs of inflation creeping into the U.S. economy. But the stock never dropped below its pricing level and managed enough momentum by mid-afternoon to post a nearly 10 percent gain, in line with most analysts' expectations.
"It's living up to the script," said John Fitzgibbon Jr., an IPO analyst with Redherring.com. "In light of a down market, an IPO market in ashes, a $10 billion deal, [the fact] that the stock is able to sell at a premium bodes well for major corporations."
Still, the massive size of AT&T Wireless' offering, issued as a tracking stock by AT&T, ultimately drew less interest than normal from institutional investors, some of whom believed the abundance of shares muted any potential for extraordinary gains.
An investment banking source told CNNfn.com that institutional investors ultimately purchased about 65 percent of AT&T Wireless' available shares, below the 80 percent level that is typical with new issues.
That left 35 percent of the 360 million shares available to individual investors and company employees, who eagerly snapped up shares even though the IPO market has been stuck in a rut for the last month.
"Personally, I would have liked to have seen it priced at the lower end of the range as an olive branch to the individual investors," said David Menlow, president of IPOFinancial.com. "But I think they did a superb job pricing it, particularly given the pressures they were under with an offering of this size."
AT&T mulling later distribution options
The public offering represents roughly a 16 percent stake in the company, with AT&T Corp. (T: Research, Estimates) retaining the remaining 2.31 billion shares. AT&T Wireless began trading Thursday with a market capitalization of more than $68.1 billion.
AT&T Chairman and CEO Michael Armstrong told CNNfn's In The Money that the company currently is mulling various methods to distribute the remaining AT&T Wireless shares, but said it would honor its commitment to current AT&T shareholders to provide at least a portion of those shares via a stock dividend. (310K WAV) (310K AIF).
 Company spokeswoman Eileen Connolly said AT&T will distribute the remaining shares beginning later this year, either through some sort of stock exchange, a secondary offering or a stock dividend, or some combination of the three.
Connolly also said AT&T employees snapped up all of the 36 million shares made available to them at the initial public offering price. She said roughly 60,000 employees participated in the offering, purchasing an average of 629 shares each.
Still, even as AT&T Wireless' stock powered forward, AT&T (T: Research, Estimates) shares slipped 3 to 48 and now are roughly 24 percent off their 52-week high of 63.
Some analysts have blamed the decline on investor disappointment that AT&T has relinquished some control over its fastest-growing unit, even though as a tracking stock AT&T Wireless' results will continue to appear on AT&T's balance sheet.
However, Armstrong said the market's overall doldrums, and not potential financial issues, were responsible for the decline.
"It's pretty tough for a company of our size to trade different than the trends of the market," he said. "So I expect the way AT&T is trading today is pretty much on the merits of the market."
New hope for IPOs?
AT&T Wireless' offering breaks a nearly week-long drought in the IPO market that saw scores of companies either postpone their initial floats or call them off all together as the markets' seemingly tireless momentum came grinding to a halt.
 Two other companies made their market debuts Thursday. One, Praecis Pharmaceuticals (PRCS: Research, Estimates), jumped 18 percent to 11-3/4 by late afternoon Thursday, after pricing its shares at $10 per share -- the lower end of its expected range -- late Wednesday.
Wireless network products manufacturer Metawave Communications Corp. (MTWV: Research, Estimates) saw even better gains, jumping 5, or nearly 56 percent, to 14 by late afternoon.
Analysts initially expected a 30 percent to 40 percent first-day gain for Metawave, but were dismayed when the company priced at $9 late Wednesday, below it's expected pricing range of $11 to $13 per share. 
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AT&T Corp.
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