CNBCs Jim Cramer on Tuesday heightened criticism of the past and present AT & T. Leading company for dealing with WarnerMedia, the movie and television content and streaming unit that the telecommunications giant is now looking to break off and combine with discovery.
In particular, Cramer questioned AT & T’s plans to cut its dividend after the merger is complete, which essentially reverses the telecommunications giant’s $ 85 billion acquisition of Time Warner in 2018.
AT&T shareholders have a right to excitement, Cramer said, as the stock fell more than 6% on Tuesday, extending its 2.7% drop from Monday’s meeting.
“The way they did it was completely sub-optimal and the people who sell it are the long-term owners who feel very cheated,” said Cramer, while speaking to AT&T board member Geoffrey Yang, that appeared on, blew up “Squawk Box” early Tuesday, defending planned dividend cut.
“I’m not a dealer,” said Yang. “Just looking at what is in the best interests of long-term shareholders for both Discovery and AT&T, I think this deal makes a lot of strategic and financial sense. It was clearly a tough bond yesterday, but as I said, I’m not a trader and I’m only looking at one kind of long term. “
“I think resizing the dividend makes a lot of sense and still leaves it in the top 95th percentile of any dividend company. It gives us more flexibility in allocating capital to grow the business in its core strengths of broadband, business and wireless,” added Yang added.
Cramer was sparked by Yang’s “not a dealer” comment. “This is owned by grandmothers. What an insult to their shareholders,” said the “Bad money” said. “It’s just an insult. I’m sure they’ll say, ‘Oh Cramer, what a joke.’ But I mean, they’re the joke. “He added,” I know you have to say something, it’s Corporate America. I expected better. “
“What a ill-advised strategy to come into our network and say that after not all that long ago having a CEO, we stand by the dividend,” said Cramer, referring to comments from John Stankey, CEO of AT&T, late last month and back in March.
When Stankey was asked about AT&T dividend priority on April 22nd said CNBC: “My first priority is to raise the share price so the dividend yield isn’t 6.9%. That’s what I want to fix the problem. That’s what this management team is focusing on. And if we continue to work consistently in fashion, that is what we are now, this problem takes care of math by itself. “In addition to these comments, Stankey also defended AT & T’s dividend strategy in a CNBC interview on March 12.
In fact, Cramer said AT&T should use a more forgiving tone throughout the WarnerMedia ordeal. On Monday evening, he called AT & T’s purchase of Time Warner – which lasted a drawn out battle with the Ministry of Justice under the then President Donald Trump“One of the stupidest mergers in recent history.” AT&T shares have fallen more than 20% over the past five years.
“I mean, why not just say, ‘We screwed it up.’ Why not just say, “We paid too much.” Why not just say, “We said the dividend was safe and we were wrong,” said Cramer on Tuesday morning.
AT&T could also say, “We have to do it for the company to be competitive and the way to do that is to outsource something that doesn’t really fit, even though we said it fits and … the Randall logic wasn’t logic. ” ever, “added Cramer, referring to former CEO Randall Stephenson, who was responsible for AT&T in 2016, as the The Time Warner deal was first announced.
Neither AT&T nor Yang were immediately available to respond to CNBC’s request for comments on Cramer’s remarks.
In an interview on Monday on CNBC, Stankey defended AT & T’s dividend approach.
“It is not unexpected that we have subsequently adjusted the dividend as we shift as much cash flow as we did with the media company transaction and the DirecTV transaction.” Stankey said.
“But more importantly, if we can use that cash flow to do something that we know we can get really attractive returns, well above the 5% return that the dividend yield may represent, this is it.” the shareholders, “he said.