The article “Leading the News: AT&T Corp. Resorts to Unusual Motion: Reverse Stock Split—Market Capitalization Stays Constant, but Measure Would Boost Share Price,” by Deborah Solomon, was published in the Wall Street Journal on April 11, 2002.

Instructions Read the article and answer the following questions.

(a) Why is AT&T doing a reverse stock split? What advantage does it expect?

(b) Why are reverse stock splits seen as a sign of weakness? How is a reverse stock split recorded, and how is it reported in the financial statements?

(c) Why are share buybacks considered “a sign of strength”? How are they recorded, and how are they reported in the financial statements?

(d) If you were an AT&T stockholder, would you agree to this reverse stock split? Why or why not?