7/25...AT&T....Profits Rise, Beating Expectations
NEW YORK (Reuters) - Telephone and cable television giant AT&T Corp. said on Tuesday its second-quarter profits rose, beating Wall Street expectations as increased wireless, data and corporate sales offset a decline in sales to residential customers.
New York-based AT&T's profits, excluding one-time items, rose 18.5 percent to $1.882 billion, or 57 cents a share, compared with $1.588 billion, or 49 cents a share, a year ago.
The results topped Wall Street's reduced forecasts of 53 cents a share, according to research firm First Call/Thomson Financial. Including one-time items, AT&T's second-quarter net income was $1.745 billion, or 53 cents a share.
Shares of AT&T closed 11/16 higher at 34 in heavy trading on the New York Stock Exchange. Shares of AT&T have fallen nearly 36 percent over the past year.
In May, AT&T cut its growth forecasts for the rest of the year, citing faster-than-expected declines in sales of communications services to residential customers and sluggish sales to corporate customers.
Second-quarter revenues rose to $16.221 billion, compared with $15.752 billion a year ago. Sales to corporate customers rose 4 percent to $7.1 billion, below some analysts expectations. Sales to consumers fell 7.2 percent to $5.0 billion.
``Our second quarter results demonstrate that AT&T's focus on execution across the business is paying off. We are building momentum and scaling our growth businesses as we tackle the operational and competitive challenges outlined last quarter,'' AT&T Chairman C. Michael Armstrong said in a statement.
AT&T has been trying to transform itself from the custodian of a shrinking long-distance business into an Internet-era company that provides high-speed data, wireless and cable television services.
AT&T said it expects its total revenue growth to average about 7 percent in the second half of 2000, compared with average revenue growth of about 5 percent in the first half.
AT&T expects full-year operational earnings to be in the range of $1.75 to $1.80 a share, in line with current Wall Street expectations of $1.79 a share. Third-quarter operational earnings will be in the range of 40-43 cents a share, the company said. That's above current expectations of 37 cents a share, according to First Call/Thomson Financial.
AT&T declined to comment on whether it would try to boost its lagging stock price by creating new tracking stocks or splitting the company, spinning off its fast-growing data and Internet businesses from its shrinking consumer operations.
Sources close to the company have said AT&T has been mulling such steps, which analysts say would highlight the strong growth of its new businesses that are masked by the weaker consumer business.
AT&T said it would only consider such moves when the businesses to be split were operationally ready to stand on their own.
Without the consumer business, AT&T said, its remaining businesses have annual sales of about $42 billion, with growth of about 12 percent a year.
``Several quarters of performance that we anticipate -- from this second quarter and going forward -- certainly should put us in the position operationally to be in the condition that I would expect to be in for such a consideration,'' Armstrong said.
In April, AT&T launched an initial public offering of a tracking stock for its wireless telephone operations, AT&T Wireless Group Inc. (NYSE:AWE - news)
During the second quarter, wireless revenues increased nearly 32 percent to $2.5 billion, driven by strong subscriber growth and higher average monthly revenues per customer. For the full-year, AT&T said it expects wireless revenues to increase about 30-35 percent.
AT&T added 532,000 wireless subscribers in the second quarter, an increase of 27.1 percent over the first quarter. Total subscribers, including partnership markets in which AT&T does not have a controlling interest, were nearly 14.0 million at the end of the second quarter, a 22.3 percent increase over the prior.
AT&T sold about 15.6 percent of the wireless unit in the IPO. It expects to distribute another portion of the group later this year through a stock dividend, public offering or exchange offering, with the final distribution expected next year.
Broadband sales, which includes its cable television operations, rose 10.5 percent to $1.7 billion. AT&T completed its $44 billion acquisition of cable television company MediaOne Group Inc. during the second quarter and acquired Tele-Communications Inc. last year.
By the end of the second quarter, AT&T provided broadband telephony service to about 223,600 customers, an increase from 137,800 customers at the end of the first quarter. It added more than 200,000 digital video customers, bringing its total to more than 2.2 million.
Email this story - (View most popular) | Printer-friendly format
Earlier Stories |
