Pactel Corp.’s Initial Stock Offering Comes Out Ringing

The new Pactel Corp. made an impressive debut as a public company Friday as investors eager for a pure play in the fast-growing cellular phone business bid up the share price more than 10% to $25.50 in heavy trading.

Late the day before, underwriters of the new issue--a spinoff of Pacific Telesis Group encompassing its cellular phone and paging operations--had priced the offering at $23 a share and placed 60 million shares, or about 12% of the company, with investors. On Friday, 25.3 million shares changed hands on the New York Stock Exchange.

The offering, valued at $1.3 billion, was the third-largest in history, after Allstate and Conrail.

Pacific Telesis shares, meanwhile, slipped 37.5 cents to $57.25. San Francisco-based Pacific Telesis, owner of Pacific Bell and Nevada Bell, will carve up the remaining 88% of the wireless operation among its shareholders within the next six months.

Wall Street sentiment about the stock issue varies widely.

“I don’t think it is a slam-dunk,” said Michael Murphy, a short seller who publishes the Overpriced Stock Service newsletter in Half Moon Bay, Calif. Selling short means selling borrowed shares, hoping the price drops so they can be bought for less when the time comes to pay them back.

Murphy said he is not shorting wireless companies such as Pactel Corp. on the assumption that their values will slide. “But we’re sure not buying them at this level,” he added.

Oscar Castro, managing director of Montgomery Global Telecommunications Fund in San Francisco, offers a rosier view. Pactel Corp., the nation’s largest cellular provider, is “really making money and has no debt,” he said.