|
AT&T profit tumbles
|
 |
January 29, 2001: 2:15 p.m. ET
No. 1 phone company's results match estimates; pressure seen ahead
|
NEW YORK (CNNfn) - Struggling phone giant AT&T Corp. reported a sharply lower fourth-quarter profit Monday that matched Wall Street forecasts on steadily declining revenue in its consumer long-distance business and asset write-downs.
The nation's biggest long-distance telephone and cable company said it earned 26 cents a share excluding one-time items, well below the 53 cents a share earned a year earlier. The average forecast was for profit of 26 cents a share, according to First Call, which tracks estimates by Wall Street analysts.
Fourth-quarter sales increased 3 percent to $16.9 billion.
In three years, the company's stock steadily plunged from a high more than $60 to under $20. In trading Monday, AT&T shares rebounded in afternoon trading Monday after being down more than 2 percent earlier in the day. Shortly before 2 p.m. shares were up 22 cents to $23.53.
 AT&T (T: Research, Estimates), which is splitting itself into four pieces in a bid to boost some of its troubled business units, also said profit would continue to come under pressure, especially in the first quarter of 2001. It said first-quarter profit excluding one-time items would come in at 17-to-20 cents a share, below Wall Street forecasts of 23 cents a share.
The company also anticipates a pro forma revenue percentage decline in the mid-to-high teens for the full-year 2001, as customers continue migrating to cheaper long-distance calling plans and pre-paid card products.
The company said its acquisition of cable company MediaOne and Excite@Home dragged down fourth-quarter earnings. AT&T incurred a $4.6 billion write-down of assets related to its investment in Excite@Home.
Check out other telecommunications stocks
AT&T's consumer long-distance business also suffered, with revenue declining 14.7 percent to $4.3 billion in the quarter in light of stepped-up competition and consumers who switched to cheaper calling plans. The company also blamed a growing shift of customers to wireless services.
"In 2000, the industry felt the impact of the long-distance decline we anticipated when we put our new strategy in place three years ago," Chairman C. Michael Armstrong said. "Our results reflect the acceleration of that decline, but also clearly demonstrate that we are successfully scaling our growth businesses."
There were a few bright spots. The company's wireless unit reported a 39.1 percent revenue increase in the fourth quarter and a 37 percent increase in full-year revenue. Operational earnings before interest, taxes, depreciation and amortization, excluding other income, were $272 million in the fourth-quarter, an increase of 33 percent from a year ago.
AT&T Wireless (AWE: Research, Estimates) CEO John Zeglis is upbeat about the company's performance in 2001. "We've had a fabulous year of growth in our first year as a publicly traded equity," Zeglis told CNNfn's "Market Coverage." (533K WAV) (533K AIFF).
Zeglis also said he expects the number of subscribers to increase 20 percent in 2001, on top of the 15 million it logged last year.
AT&T Wireless shares gained 73 cents to $24.86 Monday.
Broadband services saw revenue grow 11.8 percent in the quarter, compared with a year ago, and 10.4 percent for the year.
In October, AT&T unveiled a plan to split the 123-year-old company into four separate units following Armstrong's three-year effort to meld the company into a conglomerate that could offer consumers everything from cable television to Internet service.
"The benefit of the split is you clearly have some jewels in that financial empire. Wireless and broadband are doing very well," Deutche Banc Alex Brown Analysts Gary Jacobi told CNNfn's In the Money Monday. 
|
|
|
|
|
 |
|
