AT&T;’s net income climbs
AT&T; Inc.’s fourth-quarter earnings rose 17%, the telecommunications company reported Thursday, reaffirming its growth target for 2007 and raising projections for the cost savings expected from the just-completed buyout of BellSouth Corp.
The nation’s largest provider of local phone, cellular and DSL Internet services posted net income of $1.94 billion, or 50 cents a share. In the same quarter a year earlier, earnings totaled $1.66 billion, or 46 cents a share.
Revenue reached $15.9 billion, a 23% increase from $12.9 billion.
The AT&T; results included only negligible amounts of revenue and profit from BellSouth, as the $86-billion acquisition closed only two days before the end of the quarter.
The deal gave San Antonio-based AT&T; full ownership of Cingular Wireless and extended the company’s local phone territory across the Southeast. Cingular was still 40% owned by BellSouth for most of the fourth quarter, so AT&T;’s revenue figure included only two days’ worth of sales by the cellphone venture.
In its final quarter as an independent company, BellSouth earned net income of $1.2 billion, 29% higher than the $963 million earned a year earlier. Revenue increased nearly 5% to $9.1 billion from $8.7 billion.
AT&T;’s latest results included expenses from late 2005’s acquisition of the AT&T; long-distance business by SBC Communications, which adopted the AT&T; name.
Excluding those expenses, AT&T;’s fourth-quarter profit would have been 61 cents a share, surpassing the 59 cents predicted by analysts surveyed by Thomson Financial.
The stock finished 16 cents higher at $36.79 after reaching a one-year high of $37.70.
The company said full-year savings from the purchase of the AT&T; long-distance business totaled $1.1 billion, surpassing the $600 million to $800 million initially projected.
Management also boosted the forecast for savings expected from the BellSouth takeover, to between $800 million and $1.2 billion in 2007.
Patrick Comack, an analyst for Zachary Investment Research, said merger savings and improved margins don’t change a fundamental problem: AT&T; is grappling with declining demand for traditional phone service, while the rapid growth of the wireless business is bound to slow as the pool of potential first-time cellphone users shrinks.
One potential growth driver for the cellular operation may come this year with the launch of iPhone from Apple Inc.
