The Daily Dow
Tuesday, May 27, 1997
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (May 27, 1997) -- The shaggiest of all the Dow Dogs made its way into the groomer's office today. Since April 24, AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> has recovered by more than 20%, still in the hole for the year, but a solid month nevertheless.

Today, in what could be the merger story of the year (decade?), the Wall Street Journal reported that AT&T is in negotiations with former Ma Bell component SBC COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SBC)") else Response.Write("(NYSE: SBC)") end if %> to join forces in what would be a deal in the $50 billion range, the largest merger ever. When AT&T experienced its legendary break up in 1984, who would have imagined that two of those spinoffs (SBC Communications and Pacific Telesis) would join forces and then contemplate merging back with the parent company, all in less than 15 years?

The potential deal comes about, of course, as the telecommunications industry is supposedly being opened up for more competition, with long-distance companies joining the local telephone game, and vice versa. For that reason alone, any such merger faces huge regulatory scrutiny before it could be improved.

The interesting speculation now, assuming the deal actually gets off the ground, is about who would manage the combined company. AT&T Chairman Robert Allen is about to retire, and his supposed heir, John Walter, has only been with the company for about seven months. Does that mean the SBC Communications brain trust move in to the top slots in a combined company?

There are thousands of questions to be answered as the story unfolds, of course, but for those Foolish Four investors with a stake (perhaps even a double stake) in AT&T, today's gain of more than 3% is a welcome advance in the move the stock started in late April.

(c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. ________________________________

Stock  Change   Last
--------------------
T    +1  1/2   37.50
GM   +   1/2   58.00
CHV  -   1/2   70.25
MMM  -1  1/8   91.00

               Day   Month    Year
        FOOL-4   +1.19%   6.00%   1.24%
        DJIA     +0.51%   5.34%  14.50%
        S&P 500  +0.32%   6.04%  14.71%
        NASDAQ   +1.40%  11.77%   9.15%

    Rec'd   #  Security     In At       Now    Change
   1/2/97  120 3M            83.00     91.00     9.64%
   1/2/97  153 Chevron       65.00     70.25     8.08%
   1/2/97  179 Gen. Motor    55.75     58.00     4.04%
   1/2/97  479 AT&T          41.75     37.50   -10.18%


    Rec'd   #  Security     In At     Value    Change
   1/2/97  120 3M          9960.00  10920.00   $960.00
   1/2/97  153 Chevron     9945.00  10748.25   $803.25
   1/2/97  179 Gen. Motor  9979.25  10382.00   $402.75
   1/2/97  479 AT&T       19998.25  17962.50 -$2035.75


                             CASH    $609.53
                            TOTAL  $50622.28