AT&T Hangs Up On Small Shareholders.

MAMARONECK, NY--(BUSINESS WIRE)--June 3, 1998--AT&T Corp., the most widely held stock on the New York Stock Exchange, has altered its dividend reinvestment and stock purchase plan (or DRP), apparently spurning the "widows and orphans" that made it a staple in many portfolios. The plan will now levy a charge of $5 per cash investment, while keeping intact the fee charged for reinvestment of dividends (10% up to $1). The plan also requires that a minimum of $100 be invested at any one time.

"This is the type of plan that we suggest people avoid," said publisher Vita Nelson, who explained, "because the high cost virtually erases the benefit of using DRPs to build a stake over the long haul. To begin with, the $100 minimum is more than many want to invest regularly, and that would cost 5% upfront and more in the form of a fee on reinvestment. Frankly, AT&T is signalling that it doesn't want small investors, and we can see no reason to invest in this stock, especially when other telecomm companieshold more promise and don't soak their shareholders."

"Companies that adopt high DRP fees make two mistakes," Ms. Nelson went on to say, "in that they drive away plan participants while alienating loyal customers, who are often one-and-the-same." AT&T also announced recently that it plans to levy a surcharge on its long-distance charges of approximately 1.6%, a move that was widely condemned by both regulators and analysts. "After a recent run-up, the stock may be vulnerable to a sell-off, and its voracious appetite for fee income may have a prolonged negative impact," she continued, "so ejecting AT&T may be a good idea for many portfolios now. Those who want to make substantial investments should use a broker. DRPs are for accumulating shares over a period of time."

There are about 700 companies that don't charge fees to invest (among them, BellSouth and SBC Communications). "There are lots of choices," Ms. Nelson said. "Even Sprint has a DRP that doesn't charge fees." You can find a complete list of companies that offer direct investing plans at www.moneypaper.com. The companies that don't charge fes are shown in boldface.

  CONTACT: Maria Blasi, 800-388-9993, ext. 219