Q06: How to enter SBC acquiring AT&T?

Quicken is enabled for online access, but I'm not sure that SBC drip have online access, I'll have to look into that. Thanks for pointing that out.

Payne.

I think this situation is similar to that for telephone numbers. You don't want to reuse them again for a different customer because of the inevitable confusion and inconvenience that may result. But reuse is necessary because the supply of pristine TNs is limited.

There are about 10 million different combinations of 5 letters or less available for use as ticker symbols. This should be enough to avoid the problems of reuse in all but unusual circumstances.

This is a very unusual circumstance in that the single-letter ticker symbol "T" is prime real estate in the ticker symbol world. SBC, having acquired it, rightfully wants to keep it despite the problems and confusion this reuse will cause us all.

I think you can still perform this experiment by deleting your current price history and then using "Get Historical Prices" which should go far back in history for both the SBC and T symbols. Just be sure you make a backup before you start messing around.

But I fear that different quote servers may do things differently and that the same server may in the future change what it does today.

The same situation exists with changing the SBC ticker symbol to T for those who also own old AT&T. Different Quicken versions may behave differently, the same Quicken version may act differently depending on whether or not it finds transactions entered using prior versions of Quicken or whether or not it finds prior stock splits, sales, acquisitions, etc. And Intuit may see fit to change the way existing Quicken versions behave, almost certainly not telling us exactly what they're doing.

I think about all we can hope to do is make sure that for each lot of SBC and T that we previously held, that we correctly keep the correct cost basis for that lot and that we compute the correct new number of shares in that lot.

John Pollack and I have proposed different methods that both seem to accomplish this goal for holders of both old AT&T and SBC.

For holders of old SBC only, John Blaustein has posted what I believe to be the best solution.

For holder of old AT&T only, I would recommend using a Corporate Name Change, followed by a .77942 for 1 stock split and a sale of any resulting fractional shares. John Pollack and others would probably recommend using the same method he gives for holders of both AT&T and SBC. If you download transactions from your broker, I'm not sure which method, if either, is better.

For people who are also interested in keeping accurate price history, rate of return, etc. I think the whole situation is still up in the air.

And that's just my opinion - I'm probably wrong :-)

Jerry

UPDATE: It looks like Quicken continued to track the SBC ticker symbol from

11/18 through 11/30 then dropped it on 12/1. That shoots down my above philosophical argument and probably makes John Pollack's method the best way of handling the acquisition for all cases.

Jerry,

So, does your UPDATE (below) mean that my method might have been incorrect as a shareholder of only SBC?

***** Copy of my method: Since I only own(ed) SBC, and the acquisition didn't change the number of shares I own or the share price, I took what seems like the easiest path -- I simply changed the security name from SBC to AT&T and changed the ticker symbol. Here are the steps:

Open Security List

-Delete AT&T Inc. (which I'd added yesterday, but didn't do anything with)

-Highlight SBC

-Click Edit

-Change name from SBC to AT&T INC

-Change symbol for SBC to T

-Checkboxes -- no change -- Download asset... checked; Tax free... unchecked; Matched w/online... checked

-Click OK

-A dialog opened about historical prices and I clicked Default which lets Quicken decide what to do

*****

(By the way, the other John is Pollard, not Pollack.)

John B.

No, I think you're fine. Your method is the proper *subset* of John P's method for those who don't have any old AT&T stock to manipulate.

And I still don't think my method is wrong. It just looks like John P was correct and I was wrong about what the quote servers are going to do. That means that for consistency with the quote servers, even holders of old AT&T only might want the history of old SBC rather than the history of old AT&T stored under their T symbol.

Also, *at this time*, I like your choice of Default rather than Copy SBC quotes to T. The Quicken designers have had more time to think about this kind of problem than we have.

I also still like the proper subset of my method for holders of AT&T only, i.e. entering a corporate name change and .77942 for 1 stock split of their old AT&T stock.

If you use a corporate acquisition (John P's method) older versions of Quicken, and perhaps even fairly current versions, overwrite the lot purchase date with the date of the latest transaction for actions like acquisitions. This messes up your holding period. Newer Quicken versions may do it correctly, but I think they might generate a separate acquisition transaction for each lot. These newly-generated transactions get scattered all over your investment register because they each have the date that the individual lot was purchased. Especially if you're in a dividend reinvestment program, if you make a data entry error, e.g. entering .77492 instead of .77942 or a wrong market value, you have an absolute mess to clean up. If you discover the error quickly you can restore your database from a backup. But often these types of errors aren't discovered until many subsequent transactions have been entered (ask Hank Arnold about this!).

If holders of only old AT&T enter a stock split (my method) instead, they get a single entry in their Quicken register, which is easily fixed if they make a mistake. This method also gives the correct current and past values for the stock price and market value of their holdings. But if their quote file ever gets too large or corrupted, they'll have to use Get Historical Prices to restore historical values and, *as I currently suspect*, they'll then get the history of old SBC rather than old AT&T for dates before

11/18/2005.

I still think that both my method and John P's properly calculate the two most important values for each lot of old AT&T and old SBC stock, namely the cost basis of that lot and the number of new SBC shares in the lot after the acquisition. For holders of both AT&T and SBC who use either method (mine or John P's), I think older versions of Quicken are going to mess up the holding period of the lots of the company that is "acquired" by the method that you use. Be prepared to keep manual records of your acquisition dates.

I'm still mulling all this stuff over and coming up with new twists and angles, so I hope no one will take action, based on any of my recommendations anyway, until we all reach a concensus. At that point I'd recommend that someone (I nominate John Pollard) will post our concensus opinion under a separate thread.

Jerry

P.S. Thanks for posting the shareholder info from sbc.com. Now that my stock is in street name at Vanguard I don't get this type of info in a timely manner anymore (my ONLY complaint about Vanguard) and I'm too lazy to look this stuff up for myself. Having owned AT&T since the late 60's and been in the DRIPs of the regional Bells, I've seen so much of this cr*p that I go into a coma at even the thought of looking at another prospectus.

Jerry,

Thanks for the reply.

Oh good. Whew... I'm not sure what I'd do if it weren't correct.

I got nothing from SBC about any of this! What I posted was a page I found in the investor relations section of sbc.com. I discovered it when I did an online Quicken update and it asked me what to do with a new security that was downloaded -- namely AT&T Inc. Then, I remembered seeing a recent TV commercial (or was it a radio ad?) that said SBC was buying AT&T and was going to use the AT&T name because of its "place in American history" (my words, not theirs, but you get the idea). Anyway, when Quicken presented the option to add AT&T as a new security or select an existing one to use for the download, I pointed it to SBC. I can't remember what Quicken did then, but it added a transaction that I subsequently deleted. I then added AT&T as a new security and started fiddling with acquisitions, etc. That's when I posted my original question.

As I said, I ended up deleting AT&T from the security list. I then simply edited SBC and changed the name and ticker. There are no new transactions in the register. So far, so good.

Thanks for your help.

John

You're welcome!

But John Pollack deserves the bulk of the credit in your case (SBC only owners) since it's [part of] his method and not mine that you used. If you got it from me it's because I stole it from him and confirmed it using the sbc.com info you posted.

Jerry

Jerry,

You are gracious to acknowledge John Pollard's input. John P. is enormously generous with his time here and has offered help to countless numbers of "stranded" users. Thanks, John P.!

John B.

Hi, John, Jerry - and all...

I've read through this long thread to date. I don't currently hold either AT&T or SBC shares, thank goodness, although I've owned both of them in years past. And I used to have many clients with AT&T shares, both before and after the big breakup. I have just a couple of thoughts on the matter.

First, don't forget the Golden Rule of recording things in Quicken, also known as the 2-step process:

1. Find out what happened in the real world.

1. Record that in Quicken.

Don't try to do them in reverse order. Trying to record a transaction before you understand what happened is a recipe for disaster - or for having to undo it and do it again.

Your message waaay down near the end of this thread is the key, John. Your post dated 12/2/05 at 10:02AM CST, wherein you quoted the official announcement from SBC. That spells out what most of the other posts here were only speculating about.

It clarifies that, at the time of the name/symbol change, NOBODY owned shares of the OLD AT&T. By that time, SBC had already acquired the old company's shares and issued SBC shares to replace them. So, even Jerry Boyle had NO old shares when the name changed. And note the slight-but-significant difference in the names - from "Corp." to "Inc." The old company was AT&T Corp. The former SBC is now AT&T Inc.

There actually were three transactions, all dated 11/18/05. They were structured to happen in this order:

1. .30 per share dividend paid to (old) AT&T Corp. shareholders.

1. SBC acquired (old) AT&T Corp. by exchanging SBC shares for (old) AT&T Corp. shares. Immediately after this transaction, there were no longer any (old) AT&T Corp. shareholders, only SBC shareholders.

2. SBC changed its name to (new) AT&T Inc. and its ticker symbol to T.

So the transaction sequence (as opposed to the name change sequence) is straightforward for OLD AT&T shareholders, whether or not they also owned SBC shares before. First record the $1.30 dividend paid just before the acquisition, which you will receive soon. (If you record the acquisition first, you'll show no shares remaining on which the dividend can be paid.) Second, record a Corporate Acquisition: "As a result of the acquisition, each share of old AT&T common stock was converted into .77942 of a share of new AT&T common stock." Third, of course, record the sale of fractional SBC shares immediately after the acquisition. All these transactions took place on November 18, 2005. But be sure to record them in the proper sequence so that Quicken can calculate numbers of shares and cost bases, step by step.

So, Jerry, after the acquisition, you no longer owned shares of both companies. You held shares of SBC ONLY, just like John.

Now, all you both have to do is record the name/symbol change. The official announcement doesn't make it crystal clear, but it says the name changed "After the closing of the acquisition", which "was completed on Nov. 18,

2005."

So now figure out how to get this into Quicken. I'd say record, all on

11/18/05: (1) the special dividend, (2) the corporate acquisition (AT&T Corp. by SBC), (3) sale of any fractional share of SBC, (4) the name to AT&T Inc., (5) the AT&T Inc., symbol change to T.

At least, that's the way it looks from here. And I'm not about to get into the DRIPs and the long history of AT&T capital changes!

If I've overlooked something or misinterpreted something. please straighten me out. Remember that I've been retired over a decade and I'm out of practice in more ways than one! :^}

RC

Hi, Jerry.

I'm drafting a longer response to this thread, but I have quick comment on one paragraph here...

The NYSE only allows 1, 2 or 3-letter symbols, so there are only 18,278 possible combinations. And only 26 of those are 1-letter symbols.

RC

Hello R.C.,

I of course recognize your name from years of "attendance" here. Thanks for chiming in, to say nothing of all your help to so many people over the years.

While you may be old and rusty and out of practice, you are still more familiar with all of this than I am.

Would you indulge me with the following: Given that I only owned SBC stock, did I do the right thing by simply using the Edit function in the Security List to change the SBC name to AT&T Inc. and changing the symbol from SBC to T? As it stands, there is no transaction in my register, but it seems the necessary change was made. Given that there appears to be no download history available for the SBC symbol, I'm not sure what I would have gained by doing it another way.

Any thoughts?

John

And only 18 of those are in use. Not used are H, I, J, M, P, U, W, Z. This may be of interest on some trivia show. ;-)

Hi, John.

Thanks for the kind words. ; Hello R.C.,

R.C.,

Oh good!

John

Hmmm.....26 letters taken either 1, 2, or 3 at a time in a sum of three permutations of 26 objects taken 1, 2, or (inclusive) 3 at a time.

The formulas yield a one letter set of 26 items taken 1 at at time = 26, two at a time = 650, and 3 at a time = 15,600. Add those up you get 16,276. So I am just wondering how you got 18,278? Just trying to see where the error in the math is coming from!

---------

Regards -

- Andrew

And it could very well be me! Didn't mean to automatically infer I am correct! I may very well be missing something - I often do at my advanced age.

Andrew,

R.C. and I may both be wrong, but I agree with him.

We computed 26 + 26x26 +26x26x26 = 26 + 676 + 17576 = 18278.

I think you computed 26 + (26-1)x26 + (26-2)x(26-1)x26 = 26 + 650 + 15600 16276.

Your method does not allow A, AA, AAA etc. as different symbols.

Jerry

R.C. ,

Thanks for the interesting fact.

I was including mutual funds in this group - the symbol for my Seligman Communications Fund is SLMCX.

Jerry