AT&T; Sees Net Income, Sales Jump
AT&T; Inc. on Tuesday reported a 63% increase in profit and a 54% jump in revenue, as the former SBC Communications Inc. released its first full quarterly results as a combined company.
AT&T; posted net income of $1.4 billion, or 37 cents a share, for the first three months this year, compared with earnings of $885 billion, or 27 cents, a year ago. Revenue soared to $15.8 billion from $10.2 billion.
Acquisition-related costs this year and costs last year from Cingular’s 2004 acquisition of AT&T; Wireless hurt the bottom line.
Without those one-time costs, AT&T; would have earned 52 cents a share for the first quarter, 3 cents more than analysts expected, according to a survey by Thomson Financial.
Last November, regional carrier SBC completed its acquisition of AT&T; Corp., the nation’s largest long-distance company. SBC changed its name to AT&T; Inc.
Under accounting rules it follows, the company’s combined first-quarter results were compared with only SBC’s first-quarter results in 2005.
Were it combined last year, results this year would have been solid but less stellar. Net income would have risen 8% from $1.3 billion and revenue would have fallen 5% from $16.7 billion. The decline came mainly from a drop in large corporate business and the old AT&T;’s withdrawal from the consumer market.
Nevertheless, analysts praised the results, which were attributed largely to cost cutting and growth of majority-owned Cingular Wireless. But they remained cautious about AT&T;’s future.
Competition for local and long-distance phone service and slower growth in key initiatives, such as wringing out acquisition-related cost savings, pose some risk, analyst David W. Barden at Banc of America Securities said.
And, said CIBC World Markets analyst Timothy Horan, AT&T; must navigate industrywide technology changes that are letting customers buy cheaper Internet telephony from competitors and luring them into giving up land lines altogether for wireless.
Only months after the deal closed, AT&T; embarked on a $67-billion all-stock deal for regional carrier BellSouth Corp.
“Evidence of the SBC-AT&T; Corp. merger integration success will be central to the AT&T; story” as it looks to complete the BellSouth deal by the end of the year, Barden said.
The company is charging ahead, fueled by big strides in Cingular’s operations, higher sales in residential and small-business markets and continued growth as the nation’s biggest provider of DSL, or digital subscriber line, high-speed Internet access.
AT&T; shares rose 7 cents to $25.60.
