AT&T; Sees Lower 2nd-Quarter Income : Sale of Products Falls Short; Demand for Universal Card Soars
AT&T; today said its profit in the second quarter probably will be lower than last year’s in part because sales of various products have fallen short of expectations.
The softness will make it more difficult for American Telephone & Telegraph Co. to meet its long-term objective of achieving 10% to 12% growth in annual earnings, the company said in a news release.
But AT&T; said it stands by its earlier projection that net income for all of 1990 will rise to a record level. This year’s profit is expected to surpass the 1989 earnings of $2.7 billion, or $2.50 a share.
The company blamed market conditions and a sluggish economy for weakening its product sales in the quarter that ends Saturday.
AT&T; spokesman Dick Gray said results from April and May indicate sales to small and large U.S. businesses of telephone equipment, including such things as electronic switchboards, have been unexpectedly low.
Sales of network telecommunications products, such as switching equipment, cable and transmissions systems, also have been below anticipated levels, Gray said. There has been some weakness in sales to the federal government, he added.
Meanwhile, heavy demand for AT&T;'s Universal Card has caused expenses to rise in the second quarter, the company said. AT&T; called the demand for the new credit card, introduced in March, unprecedented and twice the level expected.