AT&T; Sees 8% Profit Gain; Big Loss at Salomon

AT&T; Corp. reported an 8% increase in second-quarter profit and a surge in revenue Thursday, indicating it has recovered some business lost in the long-distance brawl with competitors.

The nation’s biggest telecommunications company was also helped by strong growth in telephone equipment sales, particularly for cellular systems.

AT&T; earned $1.13 billion, or 83 cents a share, in the quarter ended June 30. It earned $1.04 billion, or 77 cents a share, in last year’s second quarter, before a 3-cents-a-share charge for an accounting change. Revenue rose 9% to $17.7 billion, from $16.3 billion a year ago.

AT&T; said its volume growth was led by new customers for toll-free 800 lines. The company also credited a change in its consumer marketing, including the launch of products around the “True” brand name.

Revenue from long-distance and other telecommunications services was up 5% from the second quarter of 1993.

Sales of telephone equipment and computer systems rose 19%, led by wireless products, as cellular phone companies improve their systems.

Revenue from financial services, including the AT&T; Universal credit card, was up 23%.

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Stung by turmoil in bond markets, Salomon Inc. reported a huge second-quarter loss.

Salomon said weak second-quarter results at its investment banking and securities firm Salomon Bros. were linked to drops in prices for fixed-income products such as bonds and a decline in liquidity.

The parent firm showed a net loss of $204 million, or $2.08 a share, contrasted with a profit of $433 million, or $3.32 a share, for the second quarter of 1993.

Revenue fell to $1.28 billion from $2.59 billion.

Salomon Bros. had a $410-million pretax loss for the quarter, mostly due to a loss of $291 million in client-driven businesses, which is the trading of securities--mostly bonds, in Salomon’s case--for pension funds and large investors.

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Southwest Airlines Co. reported a 39% increase in its second-quarter net income, which it attributed to lower operating costs.

Dallas-based Southwest, considered the master of low air fares, said net income rose to $58.52 million, or 40 cents a share, from $42.15 million, or 29 cents a share, a year earlier.

Revenue rose 16% to $661.1 million, from $568.3 million.

The results were higher than the company and most analysts had forecast. A survey of 13 analysts by Zacks Investment Research produced a mean estimate of 37 cents a share.

Southwest’s costs, already among the lowest in the industry, dropped to 7.18 cents per mile for each available seat, from 7.41 cents a year ago.

Southwest attributed the drop in operating costs to lower fuel prices and lower overhead at its Morris Air unit.

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Mattel Inc.’s second-quarter profit roared to a record $57.1 million, up 40%, as toys tied to “The Lion King” added to the Barbie, Hot Wheels and Fisher Price franchises.

Mattel’s earnings in the quarter ended June 30 work out to 31 cents a share. That compares to net income of $40.8 million, or 23 cents a share, in the same 1993 period. Sales were $650 million, up 13%.