AT&T profit leaps 42% as sales accelerate

Quarter is viewed as endorsement of Armstrong's initiatives

April 28, 1999|By BLOOMBERG NEWS

NEW YORK -- AT&T Corp., the No. 1 U.S. long-distance provider, said yesterday that first-quarter profit rose 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 is adding cable TV companies with TCI and a $62.5 billion offer for MediaOne Group Inc. to deliver more services and add customers AT&T does not reach in its phone business.

"Armstrong's done everything he said he would," said Michael Funsch, an analyst at Independence Investment Associates. "They've executed very well so far."

AT&T Chief Financial Officer Daniel Somers said sales growth this year will be at the upper end of the company's 5 percent to 7 percent forecast. In 2000, sales are expected to rise 10 percent or more, he said.

Shares of AT&T rose 6.25 cents to $53.

Separately, AT&T and Nippon Telegraph & Telephone Corp. of Japan said they are in talks for an alliance to sell data services to multinational companies.

AT&T's 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 United States. The company has more than 1 million Digital One Rate customers and is adding more than 100,000 a month.

The plan also helped 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 charges customers 10 cents a minute for wireless, calling card and long-distance services.

Somers said the company expects second-quarter earnings of 45 cents to 49 cents a share, including TCI. Analysts expect 48 cents a share, the average estimate of eight analysts polled by IBES International Inc.

Pub Date: 4/28/99

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