AT&T Posts 4Q Profit, But Market Still ToughAT&T Posts 4Q Profit, But Market Still Tough

NEW YORK (AP) -- Struggling phone company AT&T Corp. said Thursday it earned $516 million in the fourth quarter, but that was largely helped by gains from selling off its cable division, and the current quarter's results could be below analysts' expectations.

Having spun off AT&T Broadband, its cable division, to Comcast Corp. in November, AT&T is focusing on selling communications services to businesses and Internet access and phone service to consumers, two tough markets these days.

The Bedminster, N.J.-based company recently cut 3,500 jobs in its business-services division and delayed merit raises for managers.

In the final three months of 2002, AT&T earned 66 cents per share on revenue of $9.3 billion. In the comparable period of 2001, AT&T lost $1.4 billion, $1.97 a share, on revenue of $10.2 billion.

The consensus estimate of analysts surveyed by Thomson First Call was for earnings of 71 cents per share on revenue of $9.2 billion.

But that estimate often excludes certain one-time events, and researchers at First Call weren't immediately sure whether the 66-cent result could be directly compared to the 71-cent estimate.

In any event, this quarter's net profits included gains from selling AT&T Broadband.

Taking those out of the mix but counting $1.5 billion in previously announced charges, including a $1.1 billion write-off on a failed investment in a Latin American subsidiary and severance for laid-off workers, AT&T's ongoing operations lost $611 million, or 79 cents per share.

AT&T's chairman and chief executive, David Dorman, said the company was seeing growth in local phone services, which it is increasingly going after to make up for declines in the long-distance business. Consumer revenue dropped 22.3% in 2002, compared with a 4.1% decline in business revenue.

Although he expects total telecommunications industry spending to decline again in 2003, Dorman said AT&T is poised to take more market share, meaning revenue should drop less this year than the 10.4% overall drop the company saw in 2002.

He said earnings per share in the current first quarter would be between 50 cents and 55 cents, well below Wall Street's consensus estimate of 69 cents.

"We're entering 2003 with a strong focus on meeting customer needs, improving shareowner value, and maintaining our financial discipline and flexibility," Dorman said.

For all of 2002, AT&T lost $13.1 billion, $17.08 per share, on revenue of $37.8 billion. However, those results included the broadband business and other discontinued operations, and the company said its ongoing operations had a profit of $963 million, or $1.26 per share.

In 2001, AT&T had a profit of $9.1 billion, or $12.51 per share, on revenue of $42.2 billion.