AT&T investors angry over $4 billion breakup fee

— -- Q: Should I sell my AT&T stock since the company had to pay a $4 billion breakup fee after the failed acquisition of cellular competitor, T-Mobile?

A: Nothing burns frugal consumers up more than the realization they've wasted money. And it's that same feeling of regret that plagues some investors when they find out a company they own has squandered cash.

There's no question the penalty is a huge hit. The company had a pile of $2.4 billion in cash plus $5.2 billion in long-term investments at the end of the first quarter of 2012. The $4 billion breakup fee is certainly a big black eye for the company, making the loss of the T-Mobile deal even more painful.

Should this big hit, though, be enough to convince you to sell the stock? That mistake in itself isn't enough to warrant a sell, but it should get you to start questioning the company's performance so far.

Investors this year have been thankful they've been along for the ride. Shares of AT&T are up more than 17%, as the company enjoys expanding profitability as more consumers adopt wireless-data hungry devices like smartphones and tablets.

But with that big increase in the stock price, the value of the company is less compelling. New Constructs, a company that analyzes companies based on their cash flow and fundamentals, rates AT&T as dangerous. In other words, the stock's price is well above the present value of the company's future cash flows.

One of the biggest problems with the stock, New Constructs says, is that company's low return on invested capital. This means the company's level of profitability is relatively low given the amount of shareholder money that's at risk. The big penalty AT&T paid connected to the T-Mobile deal is another example of poor returns on investors' money.

There's no question the breakup fee should bother AT&T investors. It's a fee that might have been avoided had the company had a closer handle on the regulatory environment and climate toward consolidation in the industry. And some AT&T investors may certainly use the fee as an excuse to look closely at the company and sell, primarily due to the fact the stock is up so much.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz