1.I am bullish on AT&T and IMHO, AT&T will devastate this company called WorldCom. No contest. Major consultants are telling their clients to switch to AT&T.
2. Those who try to draw parallels between IBM's turnaround and AT&T are hopefully wrong. Why? IBM slashed the dividend from $5.00 to $1.00. AT&T has kept the dividend the same. I don't want to even think what will happen should AT&T decide to cut the dividend. IBM is repurchasing shares with the resulting savings which in a way inflate the earnings.
3. IBM's share price appreciation occurred in an up market. Frankly, I am not completely sure that one can rely on an up market for the next two to three years. AT&T share price during the coming years, in part, will depend on what the market does. The brokers use the terminology of "market performer".
4. The company says cost reduction of $2.6 billion for 1998 is on schedule. To achieve these cost reductions, obviously AT&T will incur costs and for that reason I am unable to do the microanalysis. However, major brokerage houses expect AT&T to earn $3.60 for 1998 as opposed to earlier forecasts of $2.96.
5. IMHO, AT&T's share price currently reflects the most optimistic scenerios, but again, keep in, the market direction is a major determining factor too.