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News > Companies
AT&T, SBC post strong 4Q
January 25, 2000: 12:03 p.m. ET

But AT&T warns of lower-than-expected 1Q, plans additional charges in 2000
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NEW YORK (CNNfn) - AT&T Corp. and SBC Communications Inc., the two telecom components of the Dow Jones industrial average, both posted gains in fourth-quarter earnings as each saw wireless and Internet services provide greater growth than their core telephone businesses.
    Leading long-distance carrier AT&T beat fourth- quarter earnings forecasts, but it warned analysts of lower-than-expected profits in the first quarter. It also announced a charge in the period and plans for additional charges this year.
    Regional phone company SBC posted a stronger gain in profits than ATT, but only met analyst expectations, making it one of the few Dow components not to exceed forecasts so far in the period.
    
Growth in non long-distance products

    ATT's earnings from operations before charges came to $1.84 billion, or 57 cents a diluted share, in the quarter. Analysts surveyed by First Call were looking for 55 cents a share.
    In the year-earlier period, operating earnings were slightly lower at $1.80 billion, but earnings per share were higher at 68 cents, due primarily to the impact of the TCI acquisition.
    In a conference call with analysts, Chuck Noski, AT&T's chief financial officer, said he expects earnings in the current quarter to be 50 to 54 cents a diluted share, not the 58 cents expected by analysts surveyed by First Call. The company earned 61 cents a share a year ago.
    He cited greater marketing and promotion spending for the decline in the current period.
    "A good portion of the performance you're going to see overall for AT&T is going to come in the second half of the year," he said.
    The company said it took a pretax charge of $804 million in the fourth quarter, reducing net income by $496 million, or 15 cents per diluted share. The charge relates to severance from an early retirement program and replacement of wireless infrastructure.
    Net income, including special items, was $1.2 billion, or 36 cents a diluted share, down from $2.0 billion, or 76 cents a share, a year earlier.
    Revenue rose 5.9 percent on a pro forma basis to $16.3 billion, with growth in cable, wireless and broadband communications greatly outpacing growth in long distance revenue.
    
Job cuts to continue

    AT&T Chairman C. Michael Armstrong told CNNfn Tuesday that AT&T will continue to cut its executive ranks this year, saying the company is top-heavy in the area. (7.66M movie) (404K WAV) (404K AIFF)
    He also said he doesn't see the need to make an acquisition in either the wireless equipment area or a content provider, such as Time Warner Inc. (TWX), the owner of CNNfn, which announced plans to be purchased by America Online (AOL) earlier this month.
    "We carry more content of Time Warner than their own infrastructure," he said. "I don't believe I have to own the content to be a premier provider of the content."
    The company also is looking at charges in the first half of 2000 related to continuing efforts to cut costs by $2 billion and the planned closing of the company's merger with cable operator MediaOne.
    For the year, the company earned $5.5 billion, or $1.77 a diluted share, down from $6.4 billion, or $1.96 a share, the previous year. Revenue rose to $62.4 billion from $53.2 billion.
    
SBC also seeks to diversify

    SBC said data services, such as high-speed Internet access over phone lines and wireless service, were the key drivers of its growth. It said starting next year it expects annual 15 percent earnings growth coupled with at least 10 percent annual gains in revenue as it moves to add long-distance services to its portfolio of offerings.
    The company also said it is ahead of schedule in achieving savings from its recent acquisition of Ameritech. It originally looked to save $1.4 billion by 2003, but now says it will exceed that amount sooner than anticipated.
    The San Antonio-based company, which completed its acquisition of Ameritech in the fourth quarter, had earnings before special items and charges of $1.9 billion, or 54 cents a share, in the quarter.
    That matches consensus estimates of analysts surveyed by First Call, and is up 8 percent from the $1.7 billion, or 50 cents a share, it made on the same basis in the year earlier period.
    Net income, including all items and charges, came to $3.1 billion, or 90 cents a share, compared with $1.5 billion, or 44 cents a share, a year earlier. Revenue rose 8 percent to $12.9 billion.
    For the year, SBC earned $7.4 billion, or $2.15 a diluted share before special items, compared with $6.6 billion, or $1.92 a share, in 1998. Revenue grew 8 percent to $49 billion.
    Net income including all items was $8.1 billion, or $2.36 a share, up from $7.7 billion, or $2.23 a share, in 1998.
    In Tuesday morning trading, shares of AT&T (T) were off 11/16 to 49-13/16, while SBC (SBC) was down 1-1/2 to 40-1/2.
    Reuters contributed to this report Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.