AT&T;’s Profit Up 19%, Beating Analysts’ Reported Forecasts
AT&T; Corp. said Tuesday that its second-quarter profit rose 19%, beating Wall Street expectations, and that third-quarter earnings would exceed analysts’ estimates.
The largest U.S. long-distance and cable company said operating earnings grew to $1.88 billion, or 57 cents a share, from $1.59 billion, or 49 cents, a year ago, as increased wireless, data and corporate sales offset a decline in sales to residential customers.
The results topped Wall Street’s reduced forecasts of 53 cents a share, according to research firm First Call/Thomson Financial.
Revenue rose 3% to $16.22 billion. Sales to corporate customers rose 4% to $7.1 billion, missing some analysts’ expectations. Sales to consumers fell 7.2% to $5 billion.
Profit in the third quarter should reach 40 to 43 cents, Chief Financial Officer Charles Noski said on a conference call, above the 37-cent estimate of analysts polled by First Call/Thomson Financial.
In May, AT&T; cut its growth forecasts for the rest of the year, citing faster-than-expected declines in sales of communications services to residential customers and sluggish sales to corporate customers.
AT&T; Chairman C. Michael Armstrong said the New York-based company is more than halfway toward its goal of slashing costs by $2 billion this year. Cost cuts have helped mask continuing problems in the company’s main long-distance operations, where AT&T; is facing unprecedented competition for businesses and consumers, analysts said.
AT&T; declined to comment on whether it would try to boost its lagging stock price by creating new tracking stocks or by splitting the company, spinning off its fast-growing data and Internet businesses from its shrinking consumer operations.
Sources close to the company have said AT&T; has been mulling over such steps, which analysts say would highlight the strong growth of its new businesses that are masked by the weaker consumer business.
In the latest quarter, revenue from wireless services jumped 32% as average monthly revenue per customer rose 7.7% to $71.50.
Broadband sales, which includes its cable television operations, rose 10.5% to $1.7 billion. AT&T; completed its $44-billion acquisition of cable television company MediaOne Group Inc. during the second quarter and acquired Tele-Communications Inc. last year.
Shares of AT&T; gained $1.44 to close at $34.75 in heavy trading on the New York Stock Exchange.
At a Glance
Other technology sector earnings, excluding one-time gains or charges unless noted, include:
* BMC Software Inc., which makes software to speed corporate databases, said its fiscal first-quarter net income including some unspecified charges fell 39% to $10 million, or 4 cents a share. Excluding the charges, BMC earned $49.9 million, or 20 cents a share, exceeding analysts’ reduced estimates of 19 cents a share, the average from a poll of 15 analysts by First Call/Thomson Financial. Revenue fell 7% to $372.7 million.
BMC had earlier warned that its earnings would miss estimates, and the company blamed slower sales of mainframe computer software to companies for the shortfall.
* Compaq Computer Corp. reported a second-quarter net profit versus a loss a year ago, as it returned its commercial personal computer sales unit to profitability ahead of schedule. The largest maker of personal computers reported net income of $387 million, or 22 cents a share, including investment gains. Earnings were 21 cents a share excluding the gains, meeting Wall Street expectations. In the year-ago period, Compaq lost $184 million, or 10 cents. Revenue rose 8% to $10.1 billion. The company reported results after the close of trade Tuesday. The shares had closed 69 cents higher at $27.44 on the NYSE.
* EBay Inc.’s second-quarter earnings more than doubled to $13.2 million or 5 cents a share, from $5.1 million, or 2 cents, a year ago, exceeding forecasts of 3 cents, as the Internet auction site attracted more users. Revenue nearly doubled to $97.4 million from $49.5 million. Gross merchandise sales climbed 108% to $1.3 billion from a year ago, while the registered user base nearly tripled to 15.8 million from 5.6 million a year ago.
* Egreetings Network Inc. said its second-quarter net loss narrowed to $7.8 million, or 23 cents a share, from $5.5 million, or 34 cents, as revenue climbed to $3.1 million from $621,000.
* Electronic Arts Inc., the No. 1 maker of video game software, reported a fiscal first-quarter loss versus a profit a year ago as sales slowed while users waited for new products. The company posted a loss of $38.7 million, or 60 cents a share, a much better performance than the 67-cent loss analysts expected, contrasted with earnings of $4.2 million, or 6 cents, a year ago. Net revenue dropped 17% to $154.8 million.
* Imation Corp. reported a 29% rise in second-quarter profit to $13.8 million, or 39 cents a share, that missed analyst expectations by 1 cent, and said full-year results will also be below forecasts. Sales fell 13% in the latest quarter to $309.1 million, hurt by a drop in demand from business customers for data-storage products. The company cut prices by 7% to help clean out excess inventory in the quarter. Imation said it now expects operating income of $67 million to $71 million for the year, a growth rate of 6% to 12%. Imation had previously forecast $76 million during the year, or a 20% increase. In response, Imation’s shares dropped $7.31 to close at $22.13 on the NYSE.
* LSI Logic Corp., the No. 1 maker of custom semiconductors, said second-quarter profit more than tripled to $98.2 million, or 29 cents, from $31.2 million, or 10 cents, a year ago, on increased demand for its chips. The results met the consensus estimate, but some estimates published on the Internet were as high as 48 cents. Revenue rose 29% to $644.3 million. LSI shares dropped $6.81 to $42 in after-hours trading. The shares closed up $3.13 at $48.81 before the results were released.
* Nortel Networks Corp. reported second-quarter profit of $561 million, or 18 cents, beating analyst forecasts of 15 cents, on a 48% jump in revenue to $7.82 billion. In the year-ago period, Nortel had a net loss of $745 million, or 26 cents. Most analysts were expecting revenue of less than $7 billion. Sales of optical network equipment climbed 150%, while gear for high-speed Internet access over cable and telephone networks jumped 80%.
* Ticketmaster Online-CitySearch said operating losses narrowed in the second quarter as revenue jumped 141%, and outlined a plan to hasten the arrival of the day it turns a profit. The Pasadena company, which uses the Internet to sell tickets and operate local city guides, said it lost nearly $6.7 million compared with an operating loss of about $7.1 million a year ago, as it took in $61.4 million in revenue. Its loss of 11 cents a share was better than the 13 cents forecast by analysts surveyed by earnings tracker IBES.
About two-thirds of total revenue came from online ticket sales, a division which is already profitable, said Chief Executive John Pleasants. Advertising and sponsorship revenue climbed 265% but amounted to only 7% of total revenue. Pleasants also said the company would consolidate its advertising sales staff and focus on selling national ads to cut costs. The change will result in 150 layoffs around the country, though none at the Pasadena headquarters, he said. The company will also boost its efforts to sell online classified ads. As a result, he said, the firm will become profitable by the third quarter of 2001, at least one quarter sooner than analysts had expected.
Shares of Ticketmaster Online-CitySearch rose 69 cents to $20.81 on Nasdaq before the earnings results were released.
* TiVo Inc.’s net loss widened to $29 million, or 82 cents a share, in the second quarter from $24 million, or 68 cents a year ago. Revenue grew 70% to $719,000.
