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Earnings

AT&T Posts Loss, Warns on 2nd Quarter

April 25, 2001|From Reuters

NEW YORK — AT&T Corp. on Tuesday reported a drop in first-quarter profit, hurt by stiff competition and weak telephone calling prices, and said its second-quarter earnings would be below Wall Street's expectations.

The telecommunications giant, which plans to break into three companies beginning this summer, said operating profit declined to 6 cents a share from 34 cents a year ago.

The results, which exclude one-time items, were in line with Wall Street's tempered expectations of a 5-cent profit, according to research firm First Call/Thomson Financial.

AT&T said a charge for the lower value of At Home Corp., which AT&T controls, of $739 million, or 7 cents a share, and an accounting charge of 6 cents a share, resulted in a loss of $366 million, or 10 cents a share, compared with profit of $1.74 billion, or 54 cents, a year ago.

Revenue rose 5.4% to about $16.76 billion as growth in its wireless and broadband units offset shrinking sales in its core consumer and business long-distance operations.

"There were a number of charges that really make the results very confusing and somewhat meaningless . . . but since revenue were not that bad and [cash flow] was a bit better [than expected] that gives people comfort," said Tim Ghriskey, a portfolio manager of the $4-billion Dreyfus Fund.

AT&T has been trying to shift away from its traditional voice telephone businesses to focus on faster-growing wireless, cable television, data and Internet services. The company plans to split its units in a move to jump-start growth.

AT&T executives said the breakup plan is on schedule, with the spinoff of AT&T Wireless Group and Liberty Media Group slated for completion this summer, and first steps toward a cable spinoff expected by year-end. The creation of a separately traded stock representing the consumer business also is scheduled to occur by year-end.

For the second quarter, AT&T said it expects earnings to be in the range of 1 cent to 4 cents a share. That forecast excludes an impact of the AT&T Wireless exchange offer, which is part of the company's restructuring plan.

In the first quarter, sales to consumers fell 16.2% to $4 billion, while business sales fell 1.1% to $7.2 billion despite higher calling volumes.

Wireless revenue jumped 46.2% to $3.2 billion. Average monthly revenue per wireless customer fell 7.4% to $62.20, due to competitive pricing pressures, expansion into a broader base of consumers who spend less per month and recent acquisitions.

AT&T Wireless, the No. 3 U.S. wireless telephone company, said it added 585,000 mobile customers, which was more than some analysts' forecasts of up to 535,000 new subscribers, bringing its subscriber base to 15.7 million.

AT&T's Broadband cable television revenue rose 10.9% to $2.5 billion, missing some analysts' expectations.

Shares of AT&T gained 14 cents to close at $22.12 on the New York Stock Exchange. AT&T's stock has fallen about 55% in the last year amid concerns of weakness in the long-distance market, and uncertainty over the company's massive restructuring plan.

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