AT&T Corp. Tuesday reported it attained a
5.8 percent increase in its earnings over comparable first quarter results
in 1999.
AT&T (T)
reported first quarter revenues of $1.7 billion, or $0.54 per diluted
share, compared to $0.38 per diluted share, or $1.1 billion, during the
first quarter of 1999.
AT&T’s operational earnings, which exclude certain gains and charges as
well as the impact of certain ownership interests, were $0.53 per diluted
share, or $1.732 billion, lower from the year-ago quarter of $0.61 per
diluted share or $1.717 billion.
AT&T attributed the drop in operational earnings to pro forma effect of the
company’s acquisitions of TCI and the IMB Global Network, respectively
dubbed AT&T Broadband and AT&T Global Network Services.
The company’s Business Services, Wireless Services and Broadband service
segments all reported strong revenue gains on the quarter. Lower Consumer
Services revenue was attributed to the competitive long distance market but
is also indicative of AT&T’s accelerated migration of customers to optional
calling plans and increased use of its wireless services as a substitute
for calling card and direct dial wireline services.
C. Michael Armstrong, AT&T chairman and chief executive officer, said
AT&T’s growth reflects that its businesses are delivering services
customer’s demand.
“We’ll continue to cut costs in our legacy businesses while ramping up our
high-growth businesses,” Armstrong Said.
“Wireless revenue grew more than 40 percent and we now have nearly 10
million subscribers,” he continued. “In Business Services, our high speed
data and Internet protocol revenue grew at a high-teen rate and AT&T
Solutions posted a 25 percent increase in revenue.”
Armstrong noted that its broadband service leads the industry as AT&T
possesses nearly 2 million digital cable customers, adding an average of
3,000 new customers per day.
“Our Consumer business margins continue to generate significant cash flow
to reinvest in our growth businesses and our local market entry efforts are
getting strong customer response,” Armstrong concluded.
AT&T’s first quarter earnings report detailed its earnings on Business
Services Revenue at $7.1 billion and Consumer Services Revenue accounting
for $5.1 billion. It’s Wireless Services Revenue totaled $2.2 billion in
the first quarter while its AT&T Broadband services posted $1.5 billion in
earnings.
AT&T first quarter earnings further reported that its wireless
telecommunications division provides services to 13.1 million subscribers,
up 30 percent over the same period of 1999. The customer based includes
integration of clients purchased in its acquisition of Vanguard Cellular
Systems in 1999.
The telecom giant’s 1999 revenue was adjusted for the pro forma impact of
the TCI acquisition and for all closed cable transactions with Excite@Home, but excluded certain gains and
charges from AT&T’s ownership interests in Cablevision Systems Corp. (CVC)
and Excite@Home (ATHM).
AT&T announced it recorded a pretax charge of $773 million against
first-quarter earnings, reducing net income by $477 million. The charge
includes $682 million relating to business unit downsizing, which includes
severance costs for approximately 6,200 employees, nearly all of which are
from the company’s traditional business venues.
AT&T employees have been notified and will be leaving the company by the
end of the year. Thec
ost-cutting action was taken as a result of the
company’s commitment to streamline operations and reduce operating costs by
$2 billion by the end of the year. AT&T made the move due to competition in
the long-distance market and converging telecommunication technologies.
A highlight of AT&T’s first quarter report came from it’s its Business
Services outsourcing revenue, which increased nearly 25 percent to $782
million in the first quarter. The quarter equally marked a low point in
comparable Consumer Services for AT&T. It Reported a 5.6 percent decline
down from 1999’s $5.4 billion first quarter earnings to $5.1 billion for
the same period of this year.
AT&T attributed the decline to shifting technologies which are moving away
from calling card and direct dial wireline services toward wireless
services. AT&T further contends that its customers are migrating to
optional calling plans in an extremely competitive long distance
environment, like AT&T’s One Rate offer which currently serves nearly 8
million customers since its introduction seven months ago.
AT&T WorldNet Services revenue increased
26.3 percent compared to the year-ago quarter. AT&T’s WorldNet Services
provided Internet access to nearly 1.5 million residential subscribers, an
increase of just 4.5 percent from the first quarter of 1999.
AT&T@Home currently provides
high-speed services to approximately 294,000 customers at the end of the
quarter. In the first quarter of 2000 AT&T’s broadband division added
91,000 new high-speed Internet access customers.
