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AT&T, MCI rally in 2Q
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July 29, 1999: 3:17 p.m. ET
AT&T tops estimate on wireless gains; MCI in line as net soars 199%
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NEW YORK (CNNfn) - Two of the nation's top telecommunications companies Thursday met or beat Wall Street earnings estimates for the second quarter, pointing to booming demand for wireless and Internet-related services.
AT&T Corp. (T), the nation's largest phone company, said its wireless business help power income up 8 percent in its second quarter, while recently merged rival MCI WorldCom Inc. said profits tripled on gains in its Internet, data and global units.
"They're both seeing improvement in their existing businesses," said Frank Governali, an analyst at Goldman Sachs.
AT&T, the nation's largest phone company, said earnings from continuing operations rose to $1.59 billion, or 49 cents per diluted share, from $1.47 billion, or 54 cents per share, a year ago. Per-share profit fell because of an rise in shares outstanding after its March acquisition of Tele-Communications Inc.
That latest figure was 1 cent better than the analysts' consensus estimate, as compiled by earnings research firm First Call Corp. Revenues rose seven percent to $15.8 billion.
"AT&T's strong second-quarter earnings reflect steady progress in executing our strategy," C. Michael Armstrong, chairman and CEO of AT&T, said in a statement. "In fact, two of our growth businesses, AT&T Wireless and AT&T Solutions, grew revenue more than 40 percent each."
While its business services unit and wireless operations both surged, AT&T underwent further decline in its consumer long-distance business. Its revenue from that unit fell 3.4 percent to $5.5 billion.
Analysts said one highlight of the report was a seeming effort to pay for its recent purchases faster than Wall Street had expected.
"The company is spending more up front than we thought to pay for the TCI purchase," said Richard Klugman, an analyst at Salomon Smith Barney.
Meanwhile, Jackson, Miss.-based MCI WorldCom (WCOM) earned $873 million, or 44 cents per diluted share, up from its pro forma net income of $287 million, or 16 cents a share, a year ago.
Those results exclude a one-cent per share gain from its Embratel phone venture in Brazil and were in line with the analysts' consensus estimate.
The pro forma 1998 figure takes into account how MCI WorldCom would have performed as a united company prior the merger that formed the company last year.
On a reported basis, MCI WorldCom had net income of $227 million, or 21 cents a share, in the year-ago period.
Revenue rose to $8.3 billion from $2.6 billion a year ago. Pro forma revenue a year ago was $7.5 billion.
"Our communications services revenue growth is being driven by continued strong top-line performance in data, Internet and international -- three of the fastest growing and most profitable areas within communications services," said Bernard Ebbers, president and CEO of MCI WorldCom.
Shares of AT&T, one of the 30 issues in the Dow Jones industrial average, fell 1/16 to 54-15/16 while MCI WorldCom shed 1 to 86-11/16 Wednesday.
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AT&T
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