AT&T; Closes Book on Tough Year as Profit Plunges in 4th Quarter
AT&T; Corp. on Monday reported a 42% drop in operating profit for the fourth quarter, citing falling prices for long-distance service, and again tempered its profit forecasts.
The nation’s largest long-distance and cable TV company, which plans to split itself into three companies over the course of this year, said earnings declined to $978 million, or 26 cents a share, in the fourth quarter, from $1.7 billion, or 53 cents, a year earlier.
Revenue rose 3% to $16.9 billion, while operating expenses jumped 52% to $21.2 billion.
The latest results exclude a $2.7-billion charge from the plunge in value of its Excite@Home high-speed Internet business.
A robust showing by AT&T;’s fast-growing wireless business, where revenue climbed 39% to $3 billion, helped put AT&T;’s profit in line with analyst expectations. New York-based AT&T; slashed its growth outlook several times last year, citing weakness in the long-distance telephone market.
For the full year, AT&T; said total sales rose 5.4% to nearly $66 billion. Operating earnings fell 22% to $1.63 a share.
Sketching a vague outlook for 2001, management said Monday the consumer long-distance and dial-up business should see revenue decline by a “mid- to high teens” percentage, eroded by price wars, new competition from the Baby Bells and enticing alternatives such as wireless phones and e-mail.
Those problems also plague AT&T;’s largest unit, business services, where the target is to hold revenue steady at 2000 levels despite a slight first-quarter drop. The unit’s fourth-quarter revenue grew just 0.7% to $7.1 billion.
Separately, Richard Roscitt, head of the business services unit, resigned to become chairman and chief executive of equipment maker ADC Telecommunications Inc.
Roscitt, 49, had been seen by some analysts as a top candidate to replace C. Michael Armstrong as head of AT&T; in a few years. He becomes the latest of several marquee executives to leave AT&T; in the last three years.
Under AT&T;’s restructuring plan, which was announced in October, the company will split its major units--consumer, business, broadband, and wireless--into separately traded companies.
In the fourth quarter, revenue in the consumer unit, which included long-distance and the dial-up Internet business, fell 14.7% to $4.3 billion. The cable operation, AT&T; Broadband, posted an 11.8% gain in revenue.
AT&T; said it expects first-quarter profit, excluding certain costs and other income, to be in the range of 17 cents to 20 cents a share, less than the average of 23 cents in a First Call/Thomson Financial survey.
Excluding the exchange of as much as $10 billion in shares for AT&T; Wireless stock, which may begin in March, and other income, the company said first-quarter per-share earnings should be 4 cents to 7 cents.
AT&T; said it could not provide full-year guidance for the company as a whole because of its pending restructuring.
AT&T;’s stock rebounded after sinking early Monday to finish the day up 50 cents a share at $23.81 on the New York Stock Exchange.
