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Shareholders Approve Merger of Comcast, AT&T Broadband
Shareholders also approved a 1-for-5 reverse stock split
Jul 11, 2002 (The Record - Knight Ridder/Tribune Business News via COMTEX) -- Comcast Corp. and AT&T Corp. shareholders Wednesday approved the $55 billion spinoff of AT&T's cable television unit to Comcast, a move that will make the new company, AT&T Comcast, the largest cable provider in the nation. The deal still needs approval from federal regulators, but is expected to be completed by the end of this year. The spinoff of the unit known as AT&T Broadband would mark the end of CEO Michael Armstrong's $100 billion strategy, implemented during the late 1990s boom, to unite several telecommunication services in one company. The strategy collapsed in 2000 after consumers switched from long-distance to wireless and e-mail, demand for broadband Internet use didn't materialize, and stock prices melted. AT&T's stock has fallen by almost 50 percent over the past year to around $10, the lowest level in a decade. It closed Wednesday at $9.78, down 23 cents. Armstrong, who said he'll leave the company after the spinoff is complete, said Wednesday at the company's shareholder meeting that he may scrap a plan to issue tracking shares for AT&T's consumer long-distance telephone unit. The plan was approved by shareholders Wednesday. Tracking shares are issued by a parent company to monitor the performance or earnings potential of a subsidiary; they don't represent ownership in the business. Companies such as WorldCom have said they're dropping these types of securities to reduce investor confusion. WorldCom plans to eliminate the stock that follows its MCI consumer-phone business, while Sprint Corp. CEO William Esrey said in May that his company might eliminate the shares for its PCS wireless unit. Armstrong also announced at the meeting, held in Charleston, S.C., that his most likely replacement is 48-year-old company President David Dorman, an announcement that surprised few. Shareholders also approved a 1-for-5 reverse stock split, a cosmetic move that increases AT&T's stock price without increasing the company's total value.
This article contains material from Bloomberg. By Brendan January