from WSJ:
May 20, 1998
AT&T Chmn Stresses Revenue Growth,
Plans At Hldr Meeting
By SHAWN YOUNG
Dow Jones Newswires
SECAUCUS, N.J. -- With AT&T Corp. (T) on track to meet its
cost-cutting goals, the company will push hard for revenue growth,
Chairman and Chief Executive C. Michael Armstrong told shareholders
at an annual meeting Wednesday.
Armstrong said he expects revenue growth to roughly double this year
from last year's 1.5%. The company has targeted revenue growth of
2% to 4% this year. Armstrong said revenue growth needs to double
again next year to pull even with the industry's low double-digit rate.
AT&T has been plagued with poor revenue growth as its market share
declined and a leadership crisis shook its top ranks. Armstrong took
over the reins of the New York long-distance giant in November.
He came in vowing to cut the company's costs but also expressing a
willingness to make investments that could revive growth.
In January, AT&T agreed to buy Teleport Communications Group Inc.
(TCGI) for $11.3 billion. The deal would catapult AT&T into the
difficult local market. It recently announced that it was adding $325
million to spending on its Internet backbone, a crucial area of growth.
Segments of AT&T's business that are growing well should continue to
do so, Armstrong said.
He announced designs on a new niche created by Qwest
Communications International Inc. (QWST) when it announced
long-distance marketing deals with two of the Baby Bells.
AT&T is pursuing similar deals, even though it is arguing in court that
they are illegal.
AT&T believes they may be illegal, Armstrong said, but the company
wants the revenue if it turns out they aren't. Such pacts could help
revive AT&T's ailing consumer business, which also is trying to figure
out how to serve customers who rarely make long-distance phone calls.
AT&T lost $500 million on such customers last year. The company has
14 million customers who spend less than $3 a month on long-distance.
AT&T is considering issuing calling cards to such customers. It also is
considering creating services such as MCI Communications Corp.'s
(MCIC) 10-321 plan, which has been very popular with consumers.
The company's business segment is likely to grow 5% to 7% this year,
set by triple-digit growth in data, Internet and outsourcing revenue,
Armstrong said.
The company is investing more in its Internet backbone. It may be
interested in buying some of MCI's wholesale Internet assets if MCI
sells them to quell regulatory opposition to its $37 billion proposed
merger with WorldCom Inc. (WCOM), Armstrong said.
AT&T also is seeking to expand its presence in the consumer Internet
market and has struck marketing deals with some of the field's largest
players.
AT&T's wireless unit is working toward double-digit revenue growth,
Armstrong said.
The shareholder annual meeting drew 796 of AT&T's 3.5 million
shareholders. AT&T is the most widely held stock in the U.S.
-Shawn Young; 201-938-5248
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