Opening Bell

The new phone stocks debut

Many of the brokers and specialists who work the floor of the New York Stock Exchange arrived on the job an hour and a half early last Monday. They were preparing for an avalanche: the start of trading in 1.6 billion shares in eight new companies to be created Jan. 1 by the breakup of American Telephone & Telegraph. At precisely 10 a.m., the opening bell sounded with six swift clangs, and the rush was on. By 10:14, all eight of the new issues had opened, and 1.9 million telephone shares had changed hands.

Interest in the new stocks remained strong throughout the week. In all, 42.9 million telephone shares were traded, accounting for 11 % of the volume on the Big Board. Stocks in five of the seven regional companies carved out of A T & T gained in price during the week. So did the new, streamlined AT&T, which includes longdistance service, Western Electric and Bell Laboratories. Its stock opened at 19 and rose to 20 7/8. The old A T & T, which will continue to be traded until Feb. 15, remained attractive. Its price jumped from 62 3/4 to 66 1/8 on a volume of 12.5 million.

Shares were traded on a when-issued basis; deals were concluded, but the actual stock delivery will take place early next year. Sometime around mid-February, holders of old A T & T stock will be given an equal number of shares in the new AT&T plus one share in each of the seven regional companies for every ten of the old AT&T shares that they own.

The complex divestiture and the myriad investment choices it creates have bewildered most people, despite the best educational efforts of brokerage houses and AT&T. At first, professional traders dominated last week's action, while amateur investors stayed on the sidelines. Said Stan Chernau, a Nashville attorney and an AT&T shareholder: "When it takes seminars to explain what is happening, nobody makes money but the pros and the brokers. I'm going to let the dust settle." After a day or two, however, more and more small-time investors began to place their bets.

Shares in the new AT&T were the fastest-moving stock. Now that divestiture has freed the company to compete head-on with ITT, IBM and other giants in the telecommunications and computer businesses, AT&T has suddenly become a tempting growth stock, with the potential for rapid rises (but also for precipitous drops). By week's end, 23.4 million shares in the new AT&T had been traded.

Many investors wanting more security and income chose the regional companies, which offer safe, annual dividend yields in the 8% to 10% range. One of the favorites was Bell Atlantic. It covers the territory from New Jersey to Washington, and has perhaps the most cost-efficient operation of all the new companies. Bell Atlantic shares opened at 65 3/4 and rose to 68 7/8. Just two lost ground: Southwestern Bell, which started the week at 62 but finished at 61, and BellSouth, which dipped from 89 to 86 7/8.

The only thing that was certain about last week's trading was that brokers were making a bundle. Discounters like Charles Schwab earn about $77 trading 100 shares of Bell Atlantic, for example, while Merrill Lynch and other old-line companies make approximately $87. John Bain of Lehman Bros. Kuhn Loeb organized a contest among the happy pros to see who could come closest to guessing the opening prices for the eight new stocks. He is still examining more than 100 entries and plans to announce the winner this week. The prize: a glass decanter in the shape of a telephone. This file is automatically generated by a robot program, so viewer discretion is required.