AT&T sales down 9.5% in fourth quarter

Long-distance carrier notes competition, drop in use from job losses

January 31, 2002|By BLOOMBERG NEWS

NEW YORK -AT&T Corp., the biggest U.S. long-distance telephone company, posted a 9.5 percent decline in fourth-quarter sales yesterday, saying it lost customers to competitors and phone use fell after job cuts at U.S. companies.

The fourth-quarter loss narrowed to $1.39 billion, or 39 cents a share, from $1.64 billion, or 45 cents, in the fourth quarter of 2000. Sales fell to $12.6 billion from $13.9 billion. Total expenses fell 32 percent to $12.4 billion.

AT&T's consumer long-distance revenue tumbled 18.3 percent to $3.47 billion, and calling volume fell as regional phone companies such as Verizon Communications Inc. entered the U.S. long-distance market and consumers relied more on mobile phones and e-mail. The U.S. recession and corporate firings also hurt AT&T's long-distance revenue, executives said.

"A lot of people who used to make calls aren't there anymore," AT&T President David Dorman told analysts on a conference call, noting job cuts at Merrill Lynch & Co., an AT&T customer.

Merrill Lynch eliminated 15,000 jobs last year. Long-distance calling volume declined "at a mid-teens rate" in the fourth quarter, AT&T said without being more specific.

The revenue decline also reflects increased consumer use of prepaid calling cards, the company said. Chairman Michael Armstrong has cut more than 10,000 jobs to stem the revenue decline.

"The question going forward is: Will the revenue growth pick up again?" said F. Drake Johnstone, an analyst at Davenport & Co. who has a "hold" rating on AT&T shares and doesn't own them. "Consumer [long-distance] remains a big concern."

Shares of AT&T fell 36 cents yesterday to close at $17.45. They have declined 10 percent in the past year.

Revenue at AT&T's consumer long-distance business likely will decline in the mid-20 percent range this year, less than an earlier estimate for a drop of as much as 30 percent, the company said.

Revenue at AT&T's business services unit may decline 7.5 percent in the first quarter from $6.87 billion in the fourth.

AT&T expects first-quarter earnings per share of 2 cents to 5 cents and cash flow, or earnings before interest, taxes, depreciation and amortization, of $3 billion.

Capital spending at AT&T's telephone business will be $4.2 billion to $4.5 billion this year, AT&T said. Spending at AT&T's cable-TV business will be $4.2 billion to $4.4 billion this year.

Fourth-quarter revenue at AT&T's cable-TV operations, which the company agreed to sell last month to Comcast Corp., rose 10.2 percent to $2.38 billion.

Armstrong spent more than $100 billion to build AT&T's cable-TV business, the largest in the U.S. Last month, he agreed to sell the AT&T Broadband unit to Comcast for $72 billion, including the assumption of $20 billion in debt. Armstrong, who will leave AT&T to become chairman of the merged AT&T Comcast, piled up $65 billion in debt buying the cable assets.

The company said long-term debt was $40.5 billion as of Dec. 31.

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