Price, Corporate Governance and Insider information

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

More evidence of price not determined by the point supply and demand
crosses.

Henry C.K. Liu


NY pension funds question AT&T on restructuring

    NEW YORK, Sept 25 (Reuters) - New York city and state
pension funds holding stakes valued at $725 million in AT&T
Corp. have sent the telephone company a letter seeking
assurance that any restructuring done to boost the short-term
stock price will not hurt long-term shareholder value.
    "We are troubled by the continuing decrease of value of our
investments in the company and are pleased that management and
the board of directors are considering steps to stem the loss
of shareholder value," the funds said in a letter sent to AT&T
Chairman C. Michael Armstrong on Friday.
    "However, as long-term investors, we want to be assured
that the options are being considered to promote growth and
stability in the long-term, and not simply to produce a
short-term boost in the stock price," the funds said in the
letter, a copy of which was obtained by Reuters.
    The funds requested a meeting with Armstrong, a list of the
options under consideration by the company, and the costs and
benefits of the potential changes to the company and its
shareholders.
    New York-based AT&T's stock lost 3/4 to close at $28-13/16
on Monday on the New York Stock Exchange. The stock has fallen
more than 43 percent so far this year.
    At an annual retreat last week, AT&T's board weighed
various restructuring options -- including jettisoning its
shrinking consumer telephone business, creating more tracking
stocks, deepening its ties with British Telecommunications Plc
 or buying national wireless company Nextel
Communications Inc.  No decision has been announced.
    AT&T, the largest U.S. long-distance telephone company
and cable television operator, declined to comment on its
rumored restructuring options.
    "We understand their (the funds') concerns about AT&T's
stock price. Our shareowners are not happy about the stock
price and neither are we. We remain committed and focused to
deliver shareowner value for the long term," said AT&T
spokesman David Caouette.
    The $120 billion New York State Common Retirement Fund
holds 11.8 million shares of AT&T common stock, while the $100
billion New York City Pension Funds and Systems holds 13.3
million shares.
    The funds requested a meeting with Armstrong, a list of the
options under consideration by the company, and the costs and
benefits of the potential changes to the company and its
shareholders.
    The funds said they were aware some investors feared the
creation of a tracking stock would "result in conflicting
priorities for members of the board and undermine fundamental
principles of good corporate governance."
    The funds also cited investor concerns that a spin-off of
the consumer business could harm long-term investors and rob
the company of cash flow and an established customer base.
 (( -- Jessica Hall, New York newsroom 212-859-1729))