AT&T;’s Profit Slips on Acquisition Costs, Consumer Sales
AT&T; Corp. said its fourth-quarter profit fell 16% to $1.84 billion, or 57 cents a share, but topped expectations, as acquisition costs and declining consumer sales offset strong sales of wireless and business communications services.
Analysts were expecting earnings of 55 cents for the telecommunications giant, according to research firm First Call/Thomson Financial. Pro forma revenue grew 5.9% to $16.34 billion.
AT&T;’s efforts to move away from its past as the custodian of a shrinking long-distance business to a leader in the high-speed data, cable television and voice market have weighed on its near-term earnings.
AT&T; also said first-quarter earnings likely will fall below analyst expectations of 58 cents a share--to between 50 cents and 54 cents--because of higher marketing and promotional costs.
But investors apparently focused instead on AT&T;’s commitment to meet its full-year operations earnings goal of $2.10 to $2.15 a share, analysts said.
AT&T; shares closed up 81 cents at $51.31 on the New York Stock Exchange amid weakness throughout the telecommunications sector.
AT&T;, which is set to become the No. 1 U.S. cable television operator through its planned purchase of MediaOne Group, also said it may take an unspecified charge in the first half of 2000 for costs related to its acquisitions and its plans to cut $2 billion in costs by the end of the year.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
TELECOMMUNICATIONS:
* Qualcomm Inc. said its fiscal second-quarter profit more than tripled to $192 million, or 25 cents a share, a penny better than the average estimate, as revenue rose 19% to $1.12 billion. The company also warned that it may ship fewer chips and cellular phones in the current than the previous quarter. Unofficial “whisper number” estimates ranged from 27 cents to 29 cents.
* SBC Communications Inc.’s fourth-quarter profit rose 8.2% to $1.85 billion, or 54 cents a share, in line with estimates, as sales of data and Internet services surged and its wireless business added customers. Revenue increased 7.5% to $12.9 billion at the nation’s largest local phone company.
OTHER INDUSTRIES:
* American Home Products Corp.’s fourth-quarter profit rose less than 1% to $593 million, or 45 cents a share, in line with estimates, as increased research and sales costs ate into revenue from higher drug sales. Revenue rose 7% to $3.47 billion.
* Electronic Arts Inc.’s fiscal third-quarter profit rose 28% to $92.9 million, or $1.38 a share, beating forecasts of $1.34, on a 15% rise in sales to $600.7 million.
* Merrill Lynch & Co.’s profit more than doubled in the fourth quarter to $764 million, or $1.80 a share, from $359 million, or 86 cents a share, as the stock market rally boosted trading and commissions and a boom in mergers and equity underwriting increased investment banking. The performance beat the $1.45-per-share figure that was the highest of 11 published estimates collected by First Call/Thomson Financial. Net revenue grew 44% to $5.9 billion.
* Musicland Stores Corp. said fourth-quarter profit rose 9.5% to $54.8 million, or $1.53 a share. The operator of the Sam Goody, Musicland and Suncoast Motion Picture Co. chains said sales rose 3.2% to $722.6 million.
* Procter & Gamble Co. said fiscal second-quarter profit rose 11% to $1.26 billion, or 88 cents a share, as new products and a recovery in Asia boosted sales the most in at least two years. Sales rose 6.6% to $10.59 billion.
* Raytheon Co. said fourth-quarter profit plunged 79% to $72 million, or 21 cents a share, because of fewer missile shipments, accounting adjustments, and project delays in its aircraft and construction divisions. Sales fell 8% to $4.83 billion. The earnings were a penny better than analysts’ estimate of 22 cents, which was lowered last week after Raytheon issued its third profit warning since September.
* TRW Inc. posted a 48% jump in profit to $164.8 million, or $1.33 a share, a penny better than estimates, as revenue climbed 58% to $4.63 billion. The LucasVarity car-brake business, which TRW acquired in May, fueled much of the rise in sales.
* Textron Inc., the No. 1 U.S. maker of commercial helicopters and mid-size business jets, said fourth-quarter profit from continuing operations climbed 42% to $170 million, or $1.12 a share, a penny better than estimates. Revenue rose 25% to $3.23 billion.
* Xerox Corp said its fourth-quarter profit fell 52% to $294 million, or 41 cents a share, on a 6% decline in revenue to $5.4 billion. The company also said it plans a reorganization and would provide details in a few weeks.
