Earnings Outlook Bright, AT&T; Chairman Insists

The chairman of American Telephone & Telegraph acknowledged Monday that the company’s recent earnings have not met expectations, but he insisted that “the overall picture is bright” and that he expects demand to soon increase for computers and other key products.

Speaking to the New York Society of Security Analysts here, Charles L. Brown said the company’s long-distance operations and its business with local telephone companies have performed well. But he added that AT&T; “has the major challenge to improve its financial performance” in marketing computers and office telephone systems.

AT&T; had predicted that it would endure a period of slow earnings growth for several years after the January, 1984, breakup of the Bell System.

Nonetheless, many Wall Street analysts were stunned last month when the company reported that earnings had declined 1.6% in the fourth quarter of 1985 to $364 million.

Brown pointed to a softening of demand for computers and office communications systems, which he said forced prices down.

Those falling prices and shrinking revenue from AT&T;’s lucrative equipment leasing business “more than offset the solid gains we had achieved in the sales of new products,” Brown said.

The company’s earnings have been hurt by customers’ increasing tendency to purchase, rather than lease, equipment.

The chairman said AT&T; is now “up close to the No. 2 position” in sales of personal computers, following IBM and Apple Computer. The telephone company’s sales of minicomputers have gone “reasonably well, although not as well as we had hoped,” Brown said.

The company, which cut its staff by 36,000 employees in the last two years, does not currently plan any further layoffs or major reorganization, he said.