Thursday July 29 5:09 PM,,,,,AT&T, MCI WorldCom Meet Forecasts
By BRUCE MEYERSON AP Business Writer
NEW YORK (AP) - AT&T Corp. and MCI WorldCom Inc. (Nasdaq:WCOM - news)
posted strong second-quarter results Thursday, with both companies trumpeting their
progress on the divergent paths they've chosen for melding telephone calls with the
Internet.
AT&T's earnings for the April-June period rose 8.2 percent compared with the same
operations a year earlier. The profit of $1.59 billion, or 49 cents per share, edged most Wall
Street forecasts for what was AT&T's first full quarter since the purchase of
Tele-Communications Inc. (Nasdaq:TCOMP - news) - the opening move in an ambitious
transition from phone wires to cable TV wires for communications.
Revenues from continuing operations totaled $15.82 billion, an increase of 6.7 percent from
the combined $14.83 billion generated in last year's second quarter by AT&T, TCI's cable
systems and an Internet business acquired from IBM. However, consumer services,
including AT&T's core long-distance calling business, suffered a 3.4 percent decline in
quarterly revenues to $5.50 billion.
MCI WorldCom, which has placed the greatest emphasis on fiber-optic and wireless
networks to carry floods Internet data between businesses, tripled its second-quarter
earnings to $857 million, excluding the impact of the company's investment in Embratel in
Brazil. The profit amounted to 44 cents per share, matching most analyst projections.
Revenues rose 16 percent to $8.14 billion, excluding Embratel and sales of $120 million
from the SHL network services unit sold in April. In addition to their profits and revenues,
both companies stressed their successes during the quarter in positioning themselves for the
ongoing explosion of Internet traffic from data, phone calls and entertainment.
AT&T's new Broadband and Internet Services unit, which includes the cable operations
acquired with TCI, had second-quarter revenues of $1.42 billion, an increase of 7.6 percent
from what those operations generated a year ago before the merger.
The TCI deal and the pending acquisition of MediaOne Group, the nation's fourth-largest
cable TV company, are the linchpins of AT&T's plan to mbypass the local Bell monopolies
for delivering local and long-distance telephone calls - packaged with TV and high-speed
Internet access over the same cable wire.
Thus far, the centerpiece of AT&T's cable foray has been a pilot program in Fremont,
Calif. In the first extensive update on that trial, AT&T said Thursday it has about 1,000
cable-telephone customers in Fremont, more than half of whom had opted for multiple
phone-line packages.
Most striking about Fremont, industry analysts and company executives said, was that the
service was being marketed through a cold-calling campaign with a success rate of 18
percent to 20 percent.
''Those are the annoying calls you get during dinner. Normally, only 4 percent of those will
be result in a sale,'' said Mel Marten, an industry analyst at Edward Jones in St. Louis. The
response so far in Fremont ''is an extremely high acceptance rate for that type of
marketing.''
In terms of high-speed Internet access over cable lines, there were 83,000 subscribers to
AT&T's majority-owned Excite At Home service, which is currently available to 3 million
homes, including 1.4 million that buy AT&T cable service.
By year-end, about 5 million homes are expected to have the necessary digital access for
Internet service, with the number of Excite At Home subscribers expected to reach 175,000
to 200,000, said Leo Hindery, the head of AT&T Broadband and Internet Services.
At MCI WorldCom, executives stressed how revenues from data and Internet traffic now
account for about a third of the company's overall communications revenues. They also
stressed the increasing savings - $319 million in the second quarter - generated by
switching that traffic to company-owned ''backbones'' of fiber-optic cables from lines that
were leased prior to the merger between WorldCom and MCI Communications.
''Our communications services revenue growth is being driven by continued strong top line
performance in data, Internet and international (services) - three of the fastest growing and
most profitable areas within communications,'' said Bernard J. Ebbers, president and chief
executive of MCI WorldCom.
Shares of both companies fell amid a broad downturn in trading Thursday. AT&T was off
$1.433/4 to $53.50 on the New York Stock Exchange, while MCI WorldCom was down
$2.561/4 to $84.121/2 on the Nasdaq Stock Market.
============---------------============---------------============
Thursday July 29 7:16 PM ET ,,,Teleglobe Shares Plummet On Profit Warning
MONTREAL (Reuters) - Shares of Teleglobe Inc. (NYSE:TGO - news), which owns the
world's third-largest international
telecommunications network, lost about a quarter of their value Thursday following a profit
warning issued by the company
after markets closed Wednesday.
Teleglobe shares ended down C$9.35 at C$32.75 on the Toronto Stock Exchange on a
brisk volume of more than 6 million shares. The stock dipped to C$31.75 early in the
trading session. On the New York Stock Exchange, they were down $5.06 at $21.69 after
opening at a day's low of $21.
The decline came after the company's announcement Wednesday that it expected net
income for the second quarter and full year to fall short of expectations because of pricing
pressures in the wholesale long-distance telecom market.
''It was reasonable to expect the stock to trade down,'' said Glen Campbell, analyst at
Merrill Lynch.
Citing continued price pressure in the North American wholesale long-distance market and
losses on the conversion of foreign currencies, Montreal-based Teleglobe Wednesday
lowered its outlook for second-quarter net income to 10 cents a share from the 15 cents
forecast earlier this year.
Teleglobe also said it was lowering its forecast net income for the year to 70 to 80 cents a
share, instead of the $1 a share predicted earlier.
Analysts said the markets were reacting to indications that Teleglobe is facing stiff pricing
competition in its core business -- wholesale long distance telecom services -- especially in
the U.S. market.
''We also are looking at a sequential decline in revenues in their core business. The
wholesale voice business had been ticking along quite nicely, now pricing pressure has
caused some trouble there,'' Campbell said.
Through its Teleglobe Communications Corp. (TCC) division, the company owns and
operates a far-reaching web of satellites and submarine cables that make it the world's
third-largest international telecom network. TCC also has licenses to sell or resell
facility-based telecom services in 26 countries.
Lehman Brothers analyst Dan Fletcher said Teleglobe's ''near-term earnings visibility
remains very cloudy,'' in part because of the tougher wholesale market.
''The numbers have come down a good deal since the beginning of the year and there needs
to be a credible case for a turnaround in those earnings for the stock to perform in the
medium term,'' he said.
In a conference call with analysts early Wednesday evening, Teleglobe Chief Financial
Officer Claude Seguin said the company is rearranging routing arrangements to lower costs
at the end points of certain long-distance telephone call routes.
''We were able to replace some of the destinations with other destinations that were not
under the same pricing pressure,'' he said.
Since Teleglobe's $7 billion takeover and merger with Dallas-based Excel Communications
Inc. group last year, analysts have been focusing of the company's efforts to reorganize and
turn around that business.
Excel uses a technique called ''networking marketing '' to sell long-distance services to retail
customers in the United States and Canada. Its sales force consists of a large network of
independent representatives, many of whom work out of their homes.
Excel's revenues and profits dropped quickly after the merger as the company had trouble
retaining both customers and independent sales representatives. But during the conference
call, Teleglobe said it is seeing a rebound in margins at Excel.
Seguin told analysts he expects Excel to post a second-quarter pretax operating income
similar to the $30 million recorded in its most recent first quarter.
============---------------============---------------============
Thursday July 29, 8:31 PM, ,,Macromedia 1st-qtr net beats estimates by a cent
SAN FRANCISCO, July 29 (Reuters) - Macromedia Inc., (Nasdaq:MACR - news) which
develops
software tools used by Internet developers, reported slightly better-than-expected earnings,
fueled by sales
of its Web publishing products.
In the first fiscal quarter ended June 30, Macromedia said that its net income was $7.2
million, or 15 cents a
share, up from 2.9 million, or 7 cents a share, a year ago.
According to First Call, which tracks analysts' estimates, the consensus on Wall Street was
for 14 cents a share.
Revenues for the San Francisco-based company jumped over 50 percent to $48.9 million,
up from $32.3 million a year ago.
''The new Web products, Dreamweaver, Flash and Shockwave, are doing great,'' said Rob
Burgess, Macromedia's chairman and chief executive, in an interview. ''They now account
for 57 percent of our overall revenue. That is the primary driver.''
Macromedia said that its Flash and Shockwave player products achieved record download
levels, with 48 million downloads over the Internet, during the quarter. Flash is
Macromedia's popular authoring software which lets Web developers create sites that
deliver sound, interactivity, graphics and animation across multiple browsers.
''Flash is now ubiquitous,'' said Burgess. ''It has an equivalent reach to Java,'' he added,
referring to Sun Microsystems Inc.'s (Nasdaq:SUNW - news) programming language.
A new study by NPD, the parent company of Media Metrix, shows that over 83 percent of
the Web population can now view Flash content, up from 77 percent just four months ago.
Users download the Flash and Shockwave players to view content created in Macromedia's
Flash and Director, respectively.
''The strength in new products, being the Internet products, was very strong,'' said Greg
Vogel, an analyst with Banc of America Securities. 'Macromedia has tremendous
momentum selling into the Internet market for Web site designers and developers, and I
think that strength will continue.''
Burgess also said that the company's new Web site, shockwave.com, just went live
yesterday. The Web site is the central part of Macromedia's new consumer entertainment
business, called shockwave.com. It will also have two devices, including one called a
Shockmachine, a virtual entertainment console for playing games, cartoons, music and
movie previews.
Shockmachine will cost $19.99 and an easy-to-use interface that is similar to a remote
control, called Shockwave Remote, is free. Macromedia should see some of the results
from the new consumer business in its next quarter.
Separately, Macromedia announced a pact with International Business Machines Corp.'s
(NYSE:IBM - news) Lotus Development Corp. to buy Macromedia's training software
business. The deal calls for Macromedia to receive up to $30 million over three years.
============---------------============---------------============
OUSTON (CBS.MW) -- BMC Software posted better-than-expected
first-quarter earnings Thursday, saying a 43 percent leap in revenue
highlighted a solid performance in its Asia Pacific market.
Analysts surveyed by
First Call expected the
Houston-based company to earn 40 cents in its first quarter.
Sales for the period were $400.7 million, compared with $279.3 million a
year-earlier.
BMC Software said growth was particularly strong in its North American and
Asia Pacific markets.
"Our first quarter for fiscal 2000 was the one in which BMC Software
completed its transition into a top-tier systems software provider," Max
Watson, chairman, president and CEO, said in a statement. "Following the
merger with Boole & Babbage in March 1999, we successfully completed the
acquisition of New Dimension Software." |
