AT&T;, MCI, Regional Firms Boost Earnings

From Times Wire Services

American Telephone & Telegraph and its leading competitor, MCI Communications, on Wednesday said their third-quarter earnings rose substantially from the same quarter a year earlier.

In other financial reports, a number of regional telephone companies, spun off in the 1984 breakup of AT&T;, also showed improvements in earnings.

AT&T; said its income after taxes increased to $378 million in the quarter ended Sept. 30 from $317 million in the same 1984 quarter. Revenue grew to $8.9 billion from $8 billion.

The latest profits were reduced $97 million by a write-down that AT&T; took on certain obsolete equipment, including technologically outdated business phone systems, the company said. But that write-down was partially offset by an adjustment for tax expenses. The adjustment added $30 million to earnings.

AT&T; Chairman Charles L. Brown wasn't entirely satisfied with the figures.

Despite the third-quarter profit improvement, he said that AT&T;'s performance "still falls short of our long-range financial target."

"At divestiture we turned from what was a stable, well-defined track into a new and much more twisting path in which the going has been difficult at times. This early part of the journey is uphill, as we knew it would be."

Sounding a more positive note for the future, Brown said AT&T;'s balance sheet should be strengthened by good demand for its products and savings resulting from the previously announced elimination of 24,000 jobs in its Information Systems group.

He also said the company will benefit from the Federal Communications Commission decision in September to allow AT&T; to combine its equipment and long-distance operations rather than keep them separate, as formerly required by the FCC.

MCI Communications said its net income rose to $30.3 million in the quarter ended Sept. 30 from $7.1 million a year earlier.

The third quarter after-tax earnings were boosted by a pretax gain of $18.2 million from the sale of unused real estate in Arlington County, Va., near the company's Washington headquarters.

Revenue totaled $649.0 million in the third quarter, up from last year's revenue of $478.3 million.

MCI, the nation's second-largest long-distance telephone company behind AT&T;, said revenue has been enhanced because upgrading the "equal access" process has allowed MCI to gain new customers. Under that process, local telephone companies can connect MCI users directly to MCI long-distance lines without the need for the customer to dial a long access-code number.

Among the regional operating companies, these results were reported Wednesday:

- Ameritech, based in Chicago, had net income of $285 million on revenue of $2.3 billion, compared to earnings of $266 million on revenue of $2.1 billion.

- BellSouth Corp., based in Atlanta, had net income of $386 million on revenue of $2.7 billion, compared to earnings of $326 million on revenue of $2.4 billion.

- Southwestern Bell Corp., based in St. Louis, had net income of $244 million on revenue of $1.99 billion in the third quarter, up slightly from last year's net income of $242 million and revenue of $1.84 billion.

- Bell Atlantic, based in Philadelphia, reported net income of $285 million on revenue of $2.33 billion in the third quarter. A year earlier, the company reported net income of $250 million and revenue of $2.01 billion.

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