AT&T reports loss of $975m

AT&T posted a net loss of $975m (£671m) for its first fiscal quarter as revenue continues to deteriorate in long-distance...

AT&T posted a net loss of $975m (£671m) for its first fiscal quarter as revenue continues to deteriorate in long-distance telecommunications, despite the company's results being above analysts' expectations.

AT&T reported a net loss of five cents per diluted share from continuing operations and a total loss of 28 cents per diluted share, the company said.

The results include an accounting charge of $856m (£589m) related to adopting new financial accounting practices. AT&T reported net losses of $192m in the same quarter last year. Analysts polled by Thomson Financial/First Call expected earnings of three cents a share in a consensus estimate.

Pro forma revenue for the company was $12.02bn (£8.4bn), an 8.4% decline from the first quarter of 2001. Pro forma revenue adjusts for the closure of Excite@Home, the bankrupt cable Internet service provider in which AT&T held a 38% ownership stake. Pro forma also adjusts for the acquisition or sale of other cable assets. Reported revenue including those items declined 11.3% from the same quarter last year.

The profit margins for several AT&T business units remain under pressure from competition. AT&T Business reported a margin of 13.5% for earnings before interest and taxes, excluding other expense and income, compared with 16.5% in the quarter last year.

AT&T Consumer reported a margin of 26.3% compared with 32.8% in the same quarter. AT&T Broadband reported a margin of 19% compared with 20.4% in the first quarter of 2001, excluding the impact of the costs of merging the unit with Comcast.

It is still a tough market, said David Dorman, AT&T's president. The company is facing pressure from "tightened customer spending, coupled with industry overcapacity and the tactics of several cash-starved players", he said.

Data and IP services continued to grow rapidly, while long-distance revenue continued to shrink. Packet services revenue, including frame relay, IP and ATM grew about 20%, the company said. Long-distance revenue declined about 19%.

With the spin-off of AT&T Wireless Services and the pending sale of AT&T Broadband, the remaining parts of AT&T are under pressure to produce.

"They spun off all the growth in the business," said David Cooperstein, research director for the telecom market at Forrester Research. "They're basically in a spiral. This is a technology-driven decline, not a market-driven decline."

The question AT&T must answer is whether it can quickly change its networks from primarily carrying voice traffic to carrying data traffic, Cooperstein said. It must do this as soon as possible, because, increasingly, customers are choosing to use Internet-based communications - such as e-mail, instant messaging and voice over IP - instead of long-distance calls.

The company predicted annual revenue growth of in the low double digit percentages for its cable unit, long-distance revenue to decline by 20% or more for the year, and a 2% to 3% decline in revenue for its business services unit.

Read more on Voice networking and VoIP

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close