ATT earns $207 million
AT&T Corp. eked out third-quarter net earnings of $207 million and beat Wall Street expectations Tuesday despite an 8 percent drop in revenue that largely resulted from continuing weakness in the long-distance market. In the three months that ended Sept. 30, AT&T’s earnings amounted to 5 cents a share, on revenue of $12 billion. In the comparable quarter last year, AT&T posted earnings of $11.3 billion, or $3.13 a share, on revenue of $13 billion, but the profits at the time were hugely inflated by AT&T’s spinoff of its wireless business. Taking only continuing operations into account, AT&T’s comparable figure in the year-ago quarter was a loss of 69 cents per share.
Excluding one-time events this quarter, AT&T said its continuing operations earned 6 cents a share, beating the consensus Wall Street estimate of 5 cents, according to Thomson First Call. Revenue was slightly higher than expected.
Bedminster, N.J.-based AT&T expects to complete the spinoff of its cable business, AT&T Broadband, and that division’s merger with Comcast Corp. this quarter. That move will leave phone and data services to businesses and consumers as the company’s primary focus.
Despite what AT&T called a “continued decline” in long-distance, the company said its sales of network-managing services to businesses are growing. The company also benefited significantly from a $40 million pretax gain in the third quarter from the sale of its old headquarters in Basking Ridge, N.J. AT&T’s earnings release and conference call with analysts, held before the stock market opened, marked a farewell for the chairman and chief executive, C. Michael Armstrong, who is retiring from the company after five years at the top and being replaced by David Dorman.
Armstrong announced that AT&T would begin to treat stock options as an expense in 2003, adding another well-known American business name to the list of companies that have adopted the policy. General Electric Co., General Motors Corp. and Coca-Cola Co. have also begun treating options as an expense, which advocates say provides investors a more accurate picture of corporate financial health.
Armstrong said he was proud that AT&T maintained its stability and conservative accounting practices, unlike telecom rivals such as WorldCom Inc. – which he did not mention by name – that had to restate earnings.
“We’re not just the last telecom standing,” he said. “We’re the telecom that is best built to serve our customers’ future.”
Even so, AT&T executives said they did not expect to see a meaningful bump in business from corporate customers fleeing WorldCom, a so-called “flight to quality,” until next year.
The business division’s revenue in the third quarter was $6.7 billion, down 1.6 percent from the same quarter last year. The part of that brought in by selling businesses long-distance calls dropped 8 percent. Local phone service sales to businesses rose 5 percent, however.
The consumer side of the business brought in $2.8 billion in revenue, a drop of 26 percent because of the telecom industry’s extreme competition and low prices, and thanks to the increased trend of people giving up home landlines for cell phones. Consumer revenue is expected to drop in the “mid-20 percent range” in the current fourth quarter.
In the first nine months of the year, AT&T posted a net loss of $13.6 billion on revenue of $36 billion. In the comparable period of 2001, AT&T earned $11.3 billion on revenue of $39.8 billion.
—
On the Net:
http://www.att.com