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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Anton Posch who wrote (1612)	4/27/1999 2:51:00 PM
From: porcupine --''''>	Respond to of 1722

AT&T's 1st-Quarter Profit Rises More-Than-Expected 42% on Soaring Sales -- !!!!:> New York, April 27 (Bloomberg) -- AT&T Corp., the No. 1 U.S. phone company, said first-quarter profit rose a better-than- expected 42 percent as sales climbed at the fastest rate in three years, an early sign of success for Chairman C. Michael Armstrong's push into new markets and businesses. Profit from operations rose to $1.78 billion, or 67 cents a share, from $1.25 billion, or 46 cents, a year earlier. That beat the 63-cent average forecast from First Call Corp. The results exclude Tele-Communications Inc., the No. 2 U.S. cable-TV company, which AT&T bought last month for $59.4 billion. Armstrong boosted sales 6.1 percent to $13.61 billion by focusing on wireless, Internet, data and international services, the fastest-growing areas in the communications market. Now he's adding cable-TV companies with TCI and an $62.5 billion offer for MediaOne Group Inc. to deliver more services and add customers AT&T doesn't reach in its phone business. ''Armstrong's done everything he said he would,'' said Michael Funsch, an analyst at Independence Investment Associates, which owns about 8.84 million AT&T shares. ''They've executed very well so far.'' AT&T rose 1/2 to 53 7/16 in midafternoon trading of 11.5 million shares, making it the fifth-most active U.S. stock. Earlier, it touched 55 11/16. To be sure, AT&T hasn't shown its move into cable will pay off. The company will sell phone services over TCI's network in only a few markets this year. TCI's sales rose 7.1 percent to $1.31 billion on a pro-forma basis, not much better than sales of AT&T's phone services. AT&T shares have dropped about 6 percent since Thursday, when the company unveiled the offer for MediaOne. The stock has gained only 5 percent this year, less than the 11 percent increase in the benchmark Standard & Poor's 500 Index. Separately, AT&T and Nippon Telegraph & Telephone Corp. of Japan said they will form an alliance to sell data services to multinational companies. 1999 Outlook Sales to business customers rose 7.5 percent to $6.21 billion, while residential revenue fell 3.4 percent to $5.49 billion. Wireless sales increased 40 percent and revenue from AT&T Solutions and international ventures surged 69.1 percent. AT&T is boosting wireless sales with its Digital One Rate calling plans that charge a single rate for all calls made anywhere in the U.S. The company now has more than 1 million Digital One Rate customers and is adding more than 100,000 a month. The plan also is helping AT&T reverse a decline in the average monthly bill for its wireless customers. AT&T said its average bill rose 15 percent to $60.60, well above the industry average of less than $50. The company added 130,000 customers for its new personal network service that lets customers have one per-minute price for wireless, calling card and long-distance services. Chief Financial Officer Daniel Somers said the company expects second-quarter earnings of 45 cents to 49 cents a share, including TCI. Analyst expected 48 cents a share, the average estimate of eight analysts polled by IBES International Inc. On a conference call with analysts and investors, Somers forecast second-quarter revenue growth of 5.5 percent to 6.5 percent. He expects per-shares earnings for 1999 at the ''top end' of a range of $2.13 to $2.20. AT&T also raised its forecast for 1999 wireless revenue growth to more than 20 percent. That's up from earlier growth estimates of mid- to high-teens. Including TCI, AT&T's total first-quarter sales rose 9.9 percent to $14.1 billion. TCI Upgrade Armstrong said an update of TCI's network that will allow it to provide phone services is ahead of schedule, and Somers said the cost of the upgrade is in line with targets. AT&T expects TCI's cash flow, or earnings before interest, taxes and depreciation, to rise by the ''high single digits'' in 1999. Operating expenses excluding TCI and charges fell less than 1 percent to $10.77 billion. Fees paid to local phone companies to complete long-distance calls fell 5.2 percent. Selling, general and administrative expenses fell to 22.4 percent of sales from 25.5 percent in the year-earlier quarter. Last year, AT&T reduced SG&A expenses by about $1.65 billion as it cut more than 20,000 jobs. ''They've definitely taken the costs out,'' said Eric Strumingher, an analyst at PaineWebber Inc., who rates AT&T ''buy.'' In a bid to gain shareholder support for the MediaOne bid, Armstrong has vowed to cut another $2 billion in costs by the end of next year. The first-quarter earnings reflect New York-based AT&T's recent 3-for-2 stock split. ©1999 Bloomberg L.P. All rights reserved.

To: Anton Posch who wrote (1612)	4/27/1999 3:16:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Anton: "Re: 4yr. fwd. ann. cash earnings yld. How is this calculated?" See: web.idirect.com -- especially the part that begins with the subsection: "Forecasting Future Cash Earnings". "Is this meant to imply that the companies at the top of the list are better "values" at their current prices than those at the bottom?" It is meant to imply that they are "cheap", according to the most commonly employed (though not necessarily the most meaningful) of valuation criteria: p/e -- with "cash earnings" (cash flow minus capital spending) substituted for the "net profit" figure that one finds in the newspaper's calculations of p/e. Whether or not they are "better values", though, depends upon whether they are cheap because they are "bow-wows" (usually the case), or "bargains" that are currently being overlooked by Mr. Market. Listing stocks according to "cheapness" is easy. Figuring out whether or not they are really bargains is the difficult part. (At least it is for porc.) For example, a few years ago the then Dow components Bethlehem Steel and Woolworth were near the top of the list. Now they're not even part of the Dow. And, Philip Morris's 4yr. projected cash earnings yield was awesome; further, unlike the first two, MO was not a hoped for turnaround. Indeed, it was one of the more prodigous cash generators of the past quarter century. The numbers are only the beginning.