A. You think you're confused: Because of recent telecommunications trends, San Francisco Giants fans may not be quite sure what ballpark they're in.
At least this means good business for signmakers.
If regulators approve the new AT&T's recent $67 billion all-stock deal to acquire BellSouth Corp., the company will be nearly as large as when it was the Bell parent company before the government broke it up in 1984.
This deal, expected to be completed a year from now, would give it full control of Cingular, the nation's No. 1 wireless carrier, and make it the nation's largest phone company and biggest provider of broadband Internet service. It already has a profitable directory publishing business and strong balance sheet.
AT&T shares (T) are up 4 percent this year, following a 5 percent drop last year.Chairman and Chief Executive Edward Whitacre Jr. predicts $18 billion in savings from merger synergies, including up to 10,000 jobs eliminated mostly through attrition. Whitacre, whose annual cash compensation rose to more than $12 million last year, rebuts critics who say the merger will give the company a near-monopoly for Internet access.
The move follows last year's $16 billion acquisition of AT&T Corp. by SBC Communications Inc., after which SBC changed its name to AT&T Inc. It announced 26,000 job cuts related to that deal. SBC had grown during the 1990s with purchases of regional Bells Ameritech and PacTel.
The consensus analyst rating on AT&T shares is "hold," according to Thomson Financial. Diverse opinions include four "strong buys," seven "buys," 17 "holds," two "underperforms" and one "sell."
The primary risk is whether it can handle this dramatic growth effectively or is moving too far too fast. In addition, the bulk of revenue and cash still comes from fixed-line local and long-distance phone services, which are in decline and facing increased competition.
A more complete package of services should be one result of these deals, yet telecoms often encounter difficulty maintaining their quality of service during megamerger turmoil.
Earnings are expected to increase 16 percent this year, versus the 9 percent gain predicted for the domestic telecommunications services industry. Next year's projected 10 percent rise is in line with peers. The forecast of an 8 percent five-year annualized gain compares with 5 percent predicted industrywide.
Q. What do you think of Third Avenue Value Fund? Is it still well-respected or running out of gas? --K.R., via the Internet
A. It is difficult to find fault over the long haul with this fund, whose well-known portfolio manager Martin Whitman has a history of finding relatively safe stocks selling at big discounts.
He travels to the beat of his own drum, investing in stocks of many different sizes, putting money in distressed debt from time to time and currently keeping about one-third of his portfolio in foreign stocks. Another plus to owning these shares is receiving one of the most informative shareholder reports.
The $7.8 billion Third Avenue Value Fund (TAVFX) is up 18 percent over the past 12 months to rank just above the midpoint of mid-cap growth and value funds. Its three-year annualized return of 31 percent puts it in the top 7 percent of its peers.
"We recommend this fund because we like Whitman's experienced and disciplined approach," said Kerry O'Boyle, analyst with Morningstar Inc. in Chicago. "It could serve as an investor's core holding, but be aware that it's going to move around, making it harder to pin down and balance with your other holdings."
Whitman, in his 80s and in charge of this fund since 1990, has made no indication that he wishes to retire. He tries to buy stocks at discounts of at least 20 percent, considers the strength of a firm's balance sheet a key factor in investing and uses a buy-and-hold style.
More than half of Third Avenue Value Fund's assets are in financial services, with industrial materials and consumer goods other concentrations. Top holdings were recently Toyota Industries, Brookfield Asset Management, St. Joe, MBIA, Millea Holdings, Cheung Kong Ltd., Posco, Legg Mason, Forest City Enterprises and Henderson Land Development.
This "no-load" (no sales charge) fund requires a $10,000 minimum initial investment. Its annual expense ratio is 1.10 percent.
Q. I've heard there are U.S. Savings Bonds that can be used to pay for education. I asked my banker, but he didn't know anything about that. Can you please address this? I want to buy one for my 10-month-old grandson to pay for college someday. -- M.P., East Hartford, Conn.
A. The U.S. Treasury Department education bond program makes interest on certain savings bonds tax-free when the bonds are redeemed to pay qualified higher-education expenses.
Eligible are Series EE Bonds issued after Dec. 31, 1989, and all Series I Bonds.
"However, only a parent can take the exclusion," said Stephen Meyerhardt, a spokesman for the Bureau of the Public Debt in Washington. "A grandparent could only claim the exclusion if the grandparent can also claim the child as a dependent and is going to be the one paying for college."
To receive the tax exclusion, the bonds must be cashed in during the same calendar year you're paying for higher-education tuition and fee expenses. They must be registered in the name of the taxpayer, not the child. The child can be listed as beneficiary but not as owner or co-owner.
Parents must meet income requirements that are adjusted annually for inflation. In 2006 the full interest exclusion is available for couples filing jointly with income of $94,700 or less and single filers with income of $63,100 or less.
A phase-out of the exclusion begins at higher income levels before it is eliminated altogether for couples with income of $124,700 and single filers with income of $78,100.
Andrew Leckey is a Tribune Media Services columnist. E-mail him at email@example.com.