Phone cos. see gains in 4th quarter

January 28, 1994|By New York Times News Service

AT&T and MCI Communications Corp. both reported solid increases in sales and operating earnings for 1993's final quarter yesterday, but MCI continued to gain on its larger rival by growing twice as quickly as the long-distance industry as a whole.

Meanwhile, American Telephone & Telegraph Co.'s equipment business grew faster than Wall Street analysts had expected, largely because of sharp increases in international sales of big switching and transmission systems.

Each company, however, took charges in the fourth quarter that caused its net income to decline.

MCI reported that revenues climbed more than 13 percent, to $3.13 billion, during the fourth quarter. Net income for the quarter dropped to $107 million from $160 million, but the company attributed that decline to one-time pretax charges of $150 million.

Excluding those charges, which stemmed from expenses associated with an organizational restructuring, the company's earnings increased 24 percent, to $199 million. For the year as a whole, MCI earned $582 million on sales of $11.9 billion.

Traffic over MCI's network climbed 15.6 percent last year, compared with 8 percent for the industry overall. The results reaffirmed MCI's consistent marketing success.

Throughout last year, AT&T played catch-up with MCI on discounting programs, and it has lost a number of clients to toll-free "800-number" lines.

"MCI is the premier market-share gainer in this business," Daniel P. Reingold, a telecommunications analyst at Merrill Lynch, said.

AT&T reported that it earned $982 million, or 72 cents a share, on sales of $18.4 billion, for the quarter. Its net income dipped slightly from $1 billion, or 75 cents a share, in the last quarter of 1992, but the decline was a result of a previously announced one-time charge of $167 million.

Excluding those charges, which stemmed from restructuring expenses and accounting changes related to retirement benefits, the company said its operating income for the quarter grew 15 percent, to $1.15 billion, or 85 cents a share.

The brightest spot in AT&T's report was in sales of equipment. Revenues from big switching systems, such as those bought by local telephone companies, climbed 10.8 percent to $2.8 billion.

Sales of computer equipment from NCR, recently renamed AT&T Global Information Solutions, climbed more than 20 percent, to $1.26 billion.

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