KeepShorting,, I'm on your side, the pension liability is a factor, however, it's only a factor if all of the employees take a lump sum pension. But that will never happen because the pension laws do not allow it. I retired recently from T, and one of my reasons was to protect my pension. I wanted my pension in 1 lump sum so my future wasn't in the hands of AT&T. I gave the money to a money manager. It's a risk either way, but I know any retirees who left there pensions with T and they collect a monthly annuity. Once that decision was made they can never change the way they get their pension. And when that retiree die and his spouse dies, all of that pension that is left (which is basically all of the money, because T was only paying the equivalent of the interest it was earning) goes back into the pension fund. Now I'm going to pick a simple number of a pension value for example,, but lets say that every retiree had a pension worth $500,000 and 1% of the 300,000 retirees die this year (all of these are feasible numbers), then $1.5 billion automatically goes back into the retirement fund. Now I know this is a simple look at it and there are more factors, but there are just as many factors that could make this number I made up a low guess as there are that it's a high guess. My point is if all of the mutual funds aren't concerned with it, then maybe you and I need not focus too hard on it. In my case, I took the lump sum to hedge, my 401k that I left 100% invested in T stock (against my money managers advice),, but he's aware of it and has adjusted my portfolio on his part for my stupidity.
if it was that simple they would have taken care of it buy now. they don't have the money and the market doesn't care. the pension liabilities are greatly underestimated and this stock will ultimately get adjusted for it.
Like many of us less risky returns for T's pension assets are almost non existent in this economy and the recovery is sick in spite of what others around here suggest ad nauseum.
From T's recent SEC filing: "...due to the continued uncertainty in the securities markets and U.S. economy in 2013, we have lowered our expected long-term rate of return on asset assumption to 7.75%."
If you want to see pension messes, check out the number and size of public sector pensions and related under funded obligations. Take Sockton, California for example, a city of only 300K. In it's bankruptcy proceeding, the biggest part of Stockton’s debt is the $900 million it owes to the California Public Employees Retirement System. Wonder who will end up paying for that mess? Right now it looks like the bond holders, but local taxpayers should be on full alert.