EARNINGS / TELECOMMUNICATIONS : Interest Costs Cited as AT&T; Posts Flat Income : Phone Firms: US West reports a modest gain; Nynex rebounds from 1889 fourth-quarter loss.

American Telephone & Telegraph Co.’s profit slipped about 1% in the fourth quarter despite record revenue.

Separately, Nynex Corp. and US West reported higher fourth quarter profits.

AT&T; said it earned $698 million in the three months ended Dec. 31, compared to $705 million a year earlier.

Revenue totaled $9.96 billion, up 7% from $9.31 billion.

The nation’s largest long-distance phone company blamed the decline on several factors, including higher interest expenses on debt. It also set aside more money for the potential settlement of lawsuits and had higher tax costs, said spokesman Dick Gray.

In addition, AT&T; had lower income from other sources during the 1990 quarter. In the 1989 quarter, the company reported a one-time gain of $69 million when it exchanged its holdings in the Italian company Olivetti for a stake in Olivetti’s parent company, Gray said.

AT&T; said its long-distance calling volume grew about 8% in the fourth quarter. For the year, calling volume was up 7.5%.

For all of 1990, AT&T; had a record profit of $2.74 billion, up about 1.4% from almost $2.7 billion in 1989. Revenue totaled a record $37.3 billion, up 3.1% from $36.2 billion in 1989.

“We are pleased with these results, achieved in the face of a deteriorating economy in 1990,” AT&T; Chairman Robert E. Allen said in a statement.

AT&T; said the higher long-distance calling volume, increased product sales and strong growth in financial services and leasing contributed to the record revenue for the year.

However, profit continued to be hurt by high start-up costs for AT&T;’s Universal credit card, Gray said. The card has been more popular than the company anticipated, resulting in steeper processing costs for new cardholders.

In addition, Gray said, “marketing and sales expenses are still strong because of the competitive markets we’re in.”

AT&T;’s stock rose 12.5 cents to close at $30.875 a share on the New York Stock Exchange. AT&T; is the nation’s most widely held stock.

Nynex, which provides local phone service in New York and New England, said it earned $60.7 million, contrasted with a loss of $43.7 million in 1989’s fourth quarter.

The earnings for both periods were decreased by several one-time charges. In the 1990 quarter, Nynex took a $211 million after-tax charge to pay for a restructuring, while the 1989 period included a $325 million after-tax charge for asset writedowns, a strike and other factors.

Revenue rose 2.3% to $3.44 billion from $3.37 billion a year earlier.

For all of 1990, Nynex, which is based in White Plains, N.Y., said it earned $949.9 million, up from $807.6 million in 1989. Revenue totaled $13.6 billion, up 2.9% from $13.2 billion in 1989.

The full-year 1990 results also were affected by a one-time charge of $48 million after taxes for a management early retirement plan.

US West, based in Englewood, Colo., said it earned $348 million in the fourth quarter, up 1% from $344.4 million in 1989’s fourth quarter. Quarterly revenue totaled $2.64 billion, up 3.9% from $2.54 billion in 1989’s fourth quarter.

For all of 1990, US West said it earned $1.20 billion, up 7.9% from $1.11 billion, or $3.01 a share, in 1989. Revenue for 1990 totaled $9.96 billion, a 2.8% increase over $9.69 billion in 1989, the company said.