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Technology Stocks : AT&T -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1874)	1/25/1999 11:04:00 AM
From: Ben Beale	Read Replies (1) \| Respond to of 4298

From Briefing.com: A very strong profit gain on very little revenue increase. Before the open Monday, telecommunications giant AT&T (T) reported a fourth quarter profit of $1.00 per share. That was in-line with market expectations, but up sharply from the year-ago operating profit of $0.81 a share. That big profit increase was managed on a relatively small 4.8% year-over-year revenue gain. T also said that it expects 1999 earnings of between $4.20 and $4.30 per share before $1.00 per share dilution for the TCI merger, with the first quarter coming in between $0.92 and $0.95 per share. These numbers appear to be slightly at the low range of expectations. Also, T said that revenue growth next year would be in the 5% to 7% range. Overall, these are decent numbers that should keep Wall Street bullish on the stock. However, T stock has surged dramatically from 60 in late October. That puts T at a fairly steep 27 times projected 1999 operating earnings of $3.20 to $3.30 per share. T paid a very high price for TCI and that dilution next year is obviously a factor in keeping earnings down, and the P/E up. Still, Wall Street is generally upbeat about T's prospects and pleased to see them moving forward. Wall Street loves action, whether it be divesting, merging, restructuring, or expanding, and T finally fits that description. Still, T is yet another big company that is managing to keep profits up to expectations while struggling to keep revenue growing. T's excuse is that they are focusing on profitable consumer customers, and letting some go. They also emphasize that expenses are being kept under control, as total operating expenses fell 5.2% this quarter, due to "the benefit from restructuring and other charges as well as the adoption of a new accounting standard relating to the capitalization of certain costs for internal-use software development." Even excluding these impacts, however, operating costs fell 2%. So, T has managed a solid profit jump on little revenue growth, and is proceeding with their big TCI merger. The stock probably has seen its best move relative to the market, and may simply be a market performer going forward. The numbers today are in-line, with a slight dose of caution going forward. Underlying revenue growth is decent, but not of the level that suggests continued big profit gains. T is a very important and widely held Dow 30 stocks, and today's report won't shake it up much.