AT&T has reported an increase in third-quarter net
income but saw sales drop because of continued weak customer demand
and long-distance service pricing pressures.
Third-quarter net income was $418m, which ended 30 September,
compared with $207m, for the same period last year. The previous
year's figure was brought down by charges for discontinued
operations.
The company's effort to "relentlessly reduce costs" led to the
higher income, said Thomas Horton, chief financial officer.
AT&T is nearly finished with its goal to cut its workforce from
about 71,000 to 65,000 in 2003, company officials said, and those
cuts will save about $650m in 2004.
AT&T also reported a $125m accounting error discovered in
September. The company's expenses relating to access and
connections was understated by that amount, Horton said, for costs
incurred in late 2001 and 2002.
The error reduced AT&T's 2001 net income by $32m and its
2002 net income by $45m. After discovering the error, the company
reported it immediately.
Third-quarter operating income - including revenue from core
businesses but excluding related expenses - dropped to $829m from
$1.4bn for the same period a year earlier.
Total revenue in the third quarter was $8.6bn, compared with
$9.4bn a year earlier.
Long-distance voice revenue, AT&T's core business, dropped
10.5% on a quarter-over-quarter basis, driven by continued pricing
pressure.
AT&T had a "solid" quarter despite stiff competition in the
telecommunications industry, said Dave Dorman, the company's
chairman and chief executive officer.
"While the impact of a weak economy, pricing pressures,
increased competition and technological substitution are affecting
sector performance, AT&T continues to operate from a position
of industry leadership and strength," Dorman said.
"We believe AT&T is positioned as a significant beneficiary
of the eventual economic recovering filtering through to the
telecom market, though there is still much more work to be
done."
Grant Gross and John Blau write for IDG News
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