AT&T;’s Income Climbs Higher Than Expected
AT&T; Corp. on Monday reported modest profit growth in the first quarter as strength in business, wireless and international operations offset a decline in long-distance revenue.
The nation’s largest long-distance telephone company said it earned $1.3 billion, or 81 cents a diluted share, up from $1.1 billion, or 69 cents a diluted share.
Revenue rose to $12.63 billion from $12.55 billion.
Excluding one-time items, AT&T; earned 80 cents a share, which was better than the 75 cents a share expected by Wall Street analysts surveyed by First Call Corp.
The company’s latest results benefited from reduced expenses from cutting 4,500 jobs. The staff cuts were part of a plan Chairman C. Michael Armstrong announced in January to eliminate up to 18,000 jobs, or 14% of the company’s work force.
“We delivered a solid quarter with earnings surpassing expectations and reflecting the benefits of our cost-reduction efforts,” Armstrong said Monday.
“As expected, revenue growth was modest as we divested nonstrategic businesses, lowered prices to pass through access-charge reductions to customers and systematically refocused our consumer marketing.”
The 5% decline in long-distance revenue disappointed investors, however. AT&T;’s shares fell $1.96 to close at $65.19 on the New York Stock Exchange on the earnings report.
One-time items in the most recent period included a gain of 26 cents a share from the sale of AT&T; Solutions Customer Care and AT&T;’s holdings in LIN Television Corp., and a charge of 23 cents a share relating to AT&T;’s decision not to pursue the sale of local service on a total service resale basis.
Meanwhile, Baby Bell BellSouth Corp. said its first-quarter profit rose 15% amid strong demand for more phone lines and rising sales of data and international wireless services.
The Atlanta-based company’s profit rose to $796 million, or 80 cents a diluted share, from $693 million, or 70 cents, a year earlier. Revenue increased 12% to $5.43 billion. Analysts had expected earnings of 78 cents a share.
At a Glance
Other companies reporting earnings, excluding charges and gains unless noted, included:
FINANCIAL SERVICES:
* Bank of New York Co. said first-quarter earnings rose 7% to $284 million, or 73 cents a diluted share, beating estimates of 72 cents, led by growth in its securities processing businesses, from $265 million, or 64 cents, in the year-earlier quarter.
* Northern Trust Corp.’s first-quarter earnings rose 18%, fueled by surging fees from institutional and personal trust services. The trust and private banking firm said net income rose to $84.9 million, or 73 cents a diluted share, a penny short of estimates, from $71.7 million, or 62 cents, a year earlier.
* Pacific Western National Bank said first-quarter earnings rose to $374,000, or 49 cents a share, including a gain from the sale of part of its consumer loan portfolio, from $194,000, or 27 cents, a year earlier. Earnings from core operations, net of the gain on sale of loans, rose 42% over the first quarter of 1997.
* Imperial Bancorp, parent company of Imperial Bank and Imperial Bank Arizona, reported first-quarter net income of $13.4 million, or 32 cents per diluted share, up 68% from $8 million, or 20 cents, a year earlier. Net interest income increased 51% to $60.6 million at the Los Angeles-based company.
HEALTH SERVICES:
* Centocor Inc. reported first-quarter profit of $1.6 million, or 2 cents a diluted share, beating expectations, down from $3.27 million, or 5 cents, a year earlier. The drug company’s revenue rose 26% to $56.5 million. Analysts had expected the company to break even.
Centocor also said it’s considering selling its medical diagnostic unit so it can focus on its drug business.
* CN Biosciences Inc. of San Diego reported first-quarter net income of $1.15 million, or 20 cents per diluted share, up from $810,000, or 15 cents, a year earlier. Sales jumped 30% to $12.48 million.
* IDEC Pharmaceuticals Corp. said its first-quarter net income of $3.9 million, or 16 cents per diluted share, compared with a net loss of $2.2 million, or 12 cents, a year earlier. Revenue jumped to $18.1 million from $6.7 million.
OTHER INDUSTRIES:
* Delta Air Lines Inc. said net income for the fiscal third quarter rose 3% to $195 million, or $2.45 a diluted share, from $189 million, or $2.47, in the year-earlier period, as expenses rose and revenue from its critical Florida market fell short of expectations. Delta’s year-earlier earnings include a pretax charge of $52 million for closing its Frankfurt, Germany, hub and adding other trans-Atlantic routes. The airline said revenue fell 1% to $3.39 billion. The average estimate of analysts polled by First Call Corp. was for earnings of $2.40 a share, a figure that was recently lowered from a range of $2.75 to $2.80.
* IBP Inc., one of the world’s biggest meat processing companies, said its earnings in the first quarter fell to $14 million, or 15 cents a share, from $32 million, or 34 cents, as revenue fell to $3.2 billion from $3.1 billion a year earlier.
* Rockwell International Inc. said fiscal second-quarter earnings fell 30% because of lower semiconductor prices and lower-than-expected sales of computer modems. The Costa Mesa-based electronics maker reported net income of $109 million, or 53 cents a diluted share, up from profit from operations of $155 million, or 71 cents, a year ago. Revenue rose 2.2% to $1.94 billion. The results were a penny below analyst estimates but they matched the company’s prediction a month ago.
* Schlumberger Ltd.’s first-quarter profit rose 35% to $350.7 million, or 68 cents a diluted share, a penny higher than analyst estimates, from $259.9 million, or 51 cents, a year earlier. Revenue at the world’s largest provider of drilling equipment and related services rose 17% to $2.83 billion.
* Sherwin-Williams Co. said its first-quarter profit rose 9% to $25.2 million, or 14 cents a diluted share, from $23.1 million, or 13 cents a diluted share, a year earlier, as the paint and coatings company’s sales rose 3% to $1.1 billion.
* TRW Inc.’s first-quarter earnings rose 9%, including gains, as growth in its space and technology businesses more than offset declining profit at its automotive unit. The auto parts and aerospace company reported net income of $129.4 million, or $1.03 a diluted share, up from $119.2 million, or 92 cents, a year earlier. Revenue rose 16% to $3.09 billion. In the most recent quarter, the company took a $31.5-million gain for the settlement of a patent lawsuit and a $21.8-million charge related to its $975-million acquisition of BDM International Inc. The company’s profit excluding charges and gains wasn’t immediately available.
* Torchmark Corp.’s first-quarter earnings rose 13% to $95 million, or 67 cents a diluted share, exceeding estimates, from $84 million, or 60 cents, a year earlier, as the life and health insurer benefited from an 11% jump in investment income.
* Univision Communications Inc. reported a profit of $500,000, or less than a penny a diluted share in the first quarter, rebounding from a loss of $2.3 million, or 3 cents, a year earlier, on an increase in the Spanish-language broadcaster’s advertising revenue. Revenue rose 23% to $105.1 million.
