Investors acted more on faith than on a strong grasp of the details as they pushed AT&T; Corp.'s shares up $6.125, to $63.75, after the world's biggest telecommunications company announced its second breakup in 11 years.
There are dozens of unanswered questions about the future of the three companies AT&T; expects to create by the beginning of 1997, from how AT&T; will fix its poorly regarded computer company to how much of its relatively light debt load will be assigned to each of the new companies.
Yet the bottom line was this, repeated over and over by brokers and analysts who freely admitted they hadn't yet figured out the small stuff: The last time AT&T; broke up, spinning off the seven regional Bell operating companies in 1984, everyone made out like bandits. The rest can wait.
"The parts are worthmore than the whole," said Andrew M. Brooks, director of equity trading at T. Rowe Price Associates Inc., the Baltimore-based mutual fund house. "People can sell a story and that creates enthusiasm. Now Wall Street will take it apart and tell you what it's worth, and that's going to take time."
When that time comes, lots of people will want to know the answer. AT&T; is the nation's most broadly held stock, with an estimated 2.2 million holders of its 1.6 billion shares. And those shares have not performed well recently.
Until yesterday, the shares were up only about 5 percent over the past year, well below the rise of technology stocks and the overall market. And the so-called "Baby Bells" have outstripped AT&T;'s performance since the court-ordered deal that, by closing time yesterday, had become known as "Divestiture I."
Similarly, AT&T;'s common stock dividend has been increased just once since the 1984 breakup. In 1990, the annual payout was boosted from $1.20 to $1.32.
"We weren't feeling real good about it until today," said Eric Leo, chief investment officer for Legg Mason Capital Management, a division of Baltimore-based Legg Mason Inc. that holds about 35,000 AT&T; shares. "The market is going to be from Missouri [the Show-Me state] on this one."
Mr. Leo said, however, that the stock market losers in the deal could be the owners of competing companies that will find it tougher to deal with the leaner AT&T; units that will be freed from the shackles of interdivisional politics.
One company will continue AT&T;'s long-distance telephone business, one will sell telecommunications equipment from the $29 phone for the home to the most sophisticated networks, and the third company will continue a restructured form of AT&T;'s computer business.
Robert Gensler, T. Rowe's telecommunications analyst, said Wall Street's best back-of-the-envelope guesses put AT&T;'s breakup value at $67 to $70 a share. But much of the reasoning is based on analogies to other companies that may not be precise, he said.
The assumed value of the telephone equipment company is based on the value of Northern Telecom Ltd. and the value of the surviving telecommunications company on such competitors as MCI Communications Corp. The value of the unprofitable computer unit -- which dates to AT&T;'s disastrous $7.5 billion, 1991 takeover of NCR Corp. -- is assumed to be only a few dollars a share, Mr. Gensler said.
Legg Mason analyst Michael Balhoff said the surviving long-distance company is worth about $55 a share, the equipment business about $11 a share and the computer unit about $1 to $2 a share.
"The best thing to do, for most people, is to sit back and see how it settles out," said Ira Gansler, a broker at Ferris Baker Watts Inc. in Baltimore.
Sitting back and waiting paid off in Divestiture I, as stock brokers pointed out fondly yesterday. When the old AT&T; broke up, shareholders got one share of every regional Bell telephone company for every 10 shares of AT&T; they owned, as well as 10 shares of the new AT&T.;
In the years since, Bell Atlantic Corp. has gone from about $17 a share to $61.375 yesterday, Bell South jumped to yesterday's $72.875 from $18.50 and Nynex Corp. is at $48.625, compared with $15 in 1984.
AT&T; itself has risen from about $16.