AT&T reports quarterly loss of nearly $1 billion

Posted 3:13PM on Wednesday 24th April 2002 ( 23 years ago )

NEW YORK - Phone and cable carrier AT&T Corp. reported its loss widened to nearly $1 billion in the first quarter, blaming the performance on falling long-distance sales, an accounting change and a slide in the value of its investments. But its earnings before one-time items beat analysts' expectations and its shares were higher in midday trading. AT&T said Wednesday it lost $975 million, or 28 cents per share, in the three months ended March 31, compared to a loss of $192 million, or 10 cents a share, in the year-ago quarter. The company's revenues continued to slide, especially in its long-distance telephone businesses. Quarterly revenues of $12.02 billion were 11.3 percent below last year's $13.55 billion. The Basking Ridge, N.J.-based company said long-distance telephone sales continue to be punished by increasing competition from cellular service, e-mail and local telephone carriers that have been steadily gaining federal approval to enter the long-distance market. A required change in accounting methods resulted in a charge of $856 million, or 24 cents per share, AT&T said. The company's loss also reflected $580 million in pretax charges related to soured investments in other telecoms. The nation's biggest long-distance carrier said it expects a 1 percent to 2 percent improvement in the rate of revenue decline in the current second quarter. It could be years before the carrier's phone business finds its revenue growing again. "Our business over the long term, going out more than several years, will begin to turn and begin to grow," AT&T chief financial officer Chuck Noski said in a conference call with analysts. AT&T said it earned 6 cents a share from its continuing operations, excluding one-time charges and gains. On that basis, it beat expectations for earnings of 4 cents a share by Wall Street analysts surveyed by Thomson Financial/First Call. Also on that basis, AT&T said it expects its second-quarter earnings to be in the range of 1 cent to 4 cents per share. AT&T's business unit, which sells long-distance phone service to some of the country's largest corporations, reported an 8 percent decline in revenues, to $6.53 billion. The company said it expects AT&T Business revenues to decline by 2 percent to 4 percent in the second quarter, and by about 7 percent for 2002. AT&T's beleaguered consumer long-distance division reported a 22 percent drop in revenues, to $3.13 billion. AT&T said the unit's sales continue to suffer withering competition from Internet and cellular substitution and customers switching to low-priced prepaid calling cards and long-distance plans. At the same time, AT&T's consumer division entered the local telephone market in Michigan and Georgia, and now provides local service to 1.3 million customers in four states. AT&T expects revenues at the division to decline "in the mid-20 percent range" for the year. Drake Johnstone, a telecom analyst with Richmond, Va. brokerage Davenport & Company, said he expects consumer revenues to plummet 25 percent this year and another 20 percent in 2003, mostly due to competition from local phone carriers -- the four so-called Baby Bells -- who continue to enter the long-distance market. The division, said Johnstone, "is disappearing. AT&T hasn't even seen the brunt of the Baby Bells' entry into the long-distance market." Johnstone said he expects the Baby Bell companies to try to horn their way into AT&T's business market, which includes voice and high-speed data services. That, said Johnstone, will be a tougher battle. Even the company's touted cable division, AT&T Broadband, the country's largest cable television provider, reported a revenue decline of 1.1 percent, to $2.44 billion. If the costs related to the acquisition of ExciteAtHome are factored out, the division's revenue increased by 13.9 percent over the year-ago period. The company said second-quarter revenues at AT&T Broadband, which is under contract to be sold to Comcast Corp., would grow around 10 percent over the same period last year. For all of 2002, AT&T Broadband's revenue ought to grow in the "low double digits," the company said. AT&T also said it would cut this year's capital expenditures by $300-$400 million in its consumer and business divisions, to the range of $3.8 billion to $4.2 billion. In afternoon trading Wednesday on the New York Stock Exchange, AT&T's stock was up 7

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