Broadband, wireless drive AT&T profit

AT&T Tuesday reported net income of $1.45 billion for the first quarter of 2006, a slight increase over the combined net incomes as reported a year ago by the old AT&T and SBC, the two companies that merged in November.

The old AT&T and SBC had a combined net income of $1.41 billion during the first quarter of 2005, and using those numbers, net income grew about 3% year over year.

But in its financial statement, the new AT&T compares its latest quarterly results to SBC's numbers from the first quarter of 2005. Using that comparison, year-over-year net income rose more than 63%, from SBC's $885 million. SBC acquired the old AT&T in a deal worth about $16 billion.

The company will hold an earnings conference later Tuesday to discuss results.

The new AT&T posted operating revenue of $15.84 billion during the first quarter of this year, which ended March 31. That's an increase of nearly 55% from SBC's reported revenue of $10.25 billion a year ago.

But the new AT&T's revenue is down more than $1.4 billion, or about 9%, when compared to the combined revenue of SBC and the old AT&T, which reported revenue of $7 billion in the first quarter of 2005.

The new AT&T posted earnings per share of 52 cents this past quarter, while analysts polled by Thomson Financial expected earnings of 48 cents per share. Taking out merger-related costs, earnings per share were 37 cents this quarter.

This was a "strong quarter," AT&T Chairman and CEO Ed Whitacre, AT&T said in a press release. The new AT&T is on track to achieve merger-related cost-cutting goals of $600 million to $800 million this year, he said. In addition, he said, the company is moving ahead with its plan to acquire rival telecom carrier BellSouth, a move announced in March.

Among the quarterly highlights, AT&T reported:

* A 1.7 million net growth in subscribers at Cingular Wireless, the wireless carrier AT&T co-owns with BellSouth. Cingular now has 55.8 million subscribers, and Cingular's revenue grew more than 9% to $9 billion.

* IP data revenue, including DSL, dedicated Internet access and other services, increased 14% from the first quarter of 2005. An increase of 511,000 regional DSL connections, raising the number of lines in service to 7.4 million.

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