AT&T slash shareholder payout

AT&T has announced it is to reduce its dividend by around 83 per cent, warning investors that profit and sales figures will not meet expectations.

The telephone operator will reduce its dividend from 22 cents to 3.75 cents a share per quarter, beginning in 2001. The move is part of an ongoing company reorganisation to reduce $62bn of debt and split the firm into four companies. AT&T made the announcement at its monthly board meeting yesterday. AT&T said sales growth would slow to the lowest level in nearly two years, mainly through the erosion of interest in its long-distance phone business. C Michael Armstrong, chairman of AT&T, said in a press release: "While we did not make this decision lightly, we believe it is necessary and in the best long-term interests of our shareowners to adopt a dividend policy comparable to the policies of our competitors." AT&T's battered stock price was hammered still further after the announcements, sliding as low as $17 per share on the New York Stock Exchange. The company's shares have lost about 70 per cent of their value, after hitting a 52-week high of $61 in April.