AT&T; Cuts Costs, Returns to Profitability

Long-distance telephone and cable television giant AT&T; Corp. on Tuesday ended a streak of three straight quarterly net losses, but revenue remained under pressure on weak demand for telephone and data services.

Deep cost-cutting helped the company return to profitability for the first time since the same quarter a year ago, when its results got a boost from the spinoff of its AT&T; Wireless division.

AT&T; -- which plans to sell its cable television business to Comcast Corp. -- said third-quarter net income fell to $207 million, or 5 cents a share, compared with $11.3 billion, or $3.13 a share, a year earlier.

Revenue fell 8.3%, to $12 billion, driven by plunging long-distance telephone sales. AT&T; also lost more basic cable television customers than expected.

AT&T; and other long-distance telephone companies have struggled against a glut of communications networks, slack demand and increased competition from the Baby Bells.

To offset the decline in its core long-distance business, AT&T; has wooed some customers from troubled rivals and expanded into new markets such as local telephone service. It also slashed third-quarter operating expenses by 8.3% to $10.7 billion.

“The business and consumer arms performed well enough to compensate for higher-than-expected subscriber loss in broadband, and that resulted in financial outperformance for the entire group,” said Banc of America Securities analyst David Barden.

Excluding one-time items, AT&T;’s third-quarter earnings totaled 6 cents a share, compared with a loss of 2 cents a share in the year-earlier quarter. That exceeded Wall Street analysts’ forecasts, which averaged 5 cents a share, according to research firm Thomson First Call.

Shares rose 52 cents to $13.05 on the New York Stock Exchange. AT&T; announced results before markets opened.