|
AT&T holds costs in 3Q
|
 |
October 26, 1998: 10:28 a.m. ET
Operating profit before items soars 67.8% on 4.3% increase in revenue
|
NEW YORK (CNNfn) - Operating profit, excluding all items, soared 67.8 percent for North America's leading long-distance provider as cost cutting helped exaggerate the impact of a 4.3-percent increase in quarterly revenue, AT&T Corp. reported Monday.
In addition, the Basking Ridge, N.J.-based company told investors it expects profit to grow to a range of $3.40 to $3.45 a share for the full year from the $2.74 a share posted in 1997.
The news was warmly greeted by investors, who sent shares of AT&T (T) up 1-7/16 to 65-1/4 in early Monday trading on the New York Stock Exchange.
In the third quarter of 1998, AT&T said income from continuing operations rose to nearly $2.1 billion, or $1.16 a share, from $1.08 billion, or 60 cents, in the year-ago period.
However, the latest profit includes gains of $287 million, or 16 cents a share. AT&T recorded a $602 million pretax gain from the settlement of pension obligations for retired employees as well as pretax charges totaling $85 million for its acquisition of Teleport Communications Group.
Excluding the items, operating profits amounted to $1.00 a share, compared with analysts' consensus estimate of 96 cents, according to First Call.
"Our costs throughout the business have come down and we've said this year would be a year in which we would take costs out of the business while we reposition the company to grow revenues," said Dan Somers, chief financial officer at AT&T.
Revenue rose to $13.65 billion from $13.09 billion a year earlier. Meanwhile, total operating expenses declined 8.8 percent to $10.34 billion.
Specifically, AT&T's headcount has dropped by 15,000 thus far in 1998 to 113,000 employees. Selling, general and administrative expenses in the third quarter dropped 14.5 percent to $564 million.
"We're getting the fat out of the company," said C. Michael Armstrong, AT&T chairman.
Nearly all the top-line growth came from gains in AT&T's wireless business, which increased revenue by $230 million, or 19.4 percent, to $1.42 billion.
Revenue from consumer long-distance -- which formerly was the largest division -- dropped 2.9 percent to $5.8 billion as competitive pricing plans that AT&T was forced to implement eroded top line growth by 3 to 4 percent, Somers told CNNfn. (267K WAV) (267K AIFF)
Business services revenue climbed 4.7 percent to $5.8 billion, driven by double-digit growth in high-speed data services.
Still, company officials emphasized to analysts during a conference call that AT&T was able to reach its previous forecasts for the third quarter.
"We expect to deliver on that commitment" of operating profits of 95 cents to $1.00 a share in the fourth quarter, compared with 81 cents in the 1997 fourth quarter, Somers said.
The guidance would translate to $3.40 to $3.45 a share on revenue growth of about 2 to 4 percent for the year, leaving AT&T "well-positioned to accelerate that in 1999," he said.
However, company officials declined to give specific guidance for 1999.
In 1997, AT&T recorded income from continuing operations of $4.47 billion, or $2.74 a share, on revenue of $51.3 billion.
In the latest nine months, income from continuing operations rose to $3.15 billion, or $1.74 a share, on revenue of $39.7 billion. Including income from discontinued operations of $1.29 billion, net income totaled $4.3 billion, or $2.38 a share.
Revenue inched higher to $39.7 billion. 
|
|
|
|
|
|
AT&T
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
