At&t Reports 24% Drop, With More To Come

April 22, 1997|By BLOOMBERG NEWS

NEW YORK -- AT&T Corp. said yesterday that its first-quarter profits dropped 24 percent and warned that second-quarter earnings will fall further as the company spends more to enter new markets and fight rivals in its long-distance and wireless businesses.

Profits from continuing operations fell to $1.12 billion, or 69 cents a share, from $1.47 billion, or 92 cents, in the year-earlier period. That's a penny short of the average estimate of 70 cents from 18 analysts surveyed by IBES International Inc.

The lower-than-expected results show that AT&T's split into three companies has yet to be the promised boon to shareholders. Shares are down 20 percent since Dec. 31, when AT&T completed the spinoff of its computer and equipment businesses, leaving it a long-distance and wireless provider. The stock lost 50 cents to close at $33.125.

"The split has clearly exposed where AT&T is most vulnerable," said Brian Adamik, an analyst at the Yankee Group.

AT&T's sales rose just 1.5 percent -- the slowest pace in at least two years -- to $13.05 billion from $12.85 billion. AT&T didn't break out sales for its long-distance and wireless businesses before 1995. By comparison, Sprint Corp., the No. 3 U.S. long-distance phone company, had a 7.3 percent jump in first-quarter sales.

Sales in AT&T's consumer long-distance business fell 1 percent to $6.06 billion, while calling volume, or the minutes of use on AT&T's network, was unchanged from a year earlier.

AT&T said it expects new businesses to reduce earnings by about 25 cents a share in the second quarter, the same as in the first. That would push down profit to less than 61 cents a share. Analysts were expecting earnings of 66 cents.

In the 1996 second quarter, AT&T earned $1.52 billion, or 94 cents, on sales of $13.03 billion.

Pub Date: 4/22/97

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