AT&T Friday reported net income of $520 million for the third quarter of 2005, up from a net loss of $7.1 billion in the third quarter of 2004, though the company experienced a drop in long-distance voice and data revenue.
AT&T’s loss in the third quarter of 2004 was due to charges of $11.4 billion for a write-down of the value of its networking equipment and a $1.1 billion charge for restructuring costs. Without the special charges, AT&T’s income in the third quarter of 2004 was $593 million, compared to $612 million without special charges for the third quarter of this year.
AT&T, based in Bedminster, N.J., reported revenue of $6.6 billion, including $5.1 billion from AT&T Business and $1.5 billion from AT&T Consumer. Revenue declined 13.3% from $7.6 billion in the third quarter of 2004, mainly because of declines in long distance voice and data revenue, the company said. The quarter ended Sept. 30.
AT&T posted earnings per share of $0.64, or $0.70 without a special charge of $92 million. The company’s earnings per share beat analyst expectations of $0.51 per share, according to Thomson First Call.
AT&T is in the midst of being acquired by SBC, and company officials said this may be the last quarter AT&T reports its own quarterly results. The merger still needs the U.S. government’s approval.
As AT&T moves toward the merger, the goal has been to expand the company’s competitive position with large-business customers and to broaden its products and services, said David Dorman, the company’s chairman and CEO.
“Our results this morning demonstrate AT&T’s ability to execute against each of these commitments and deliver another solid quarter in advance of our merger with SBC,” Dorman said. “We’re staying on task and building great momentum as the SBC merger nears completion.”
Revenue for AT&T’s Internet Protocol and enhanced services grew 7.3%, to $630 million, from the third quarter of 2004. During the past quarter, the company signed contracts with Wal-Mart Stores, Northrop Grumman and other large businesses, Dorman said.
Dorman reflected on the challenging telecom environment of the last few years as he spoke on what may be AT&T’s last earnings conference call. Recent years have brought “dramatic” pricing competition and a changing regulatory landscape, he said.
“It’s been a period of significant challenge and change in the entire telecom industry,” he said. “AT&T has dealt with these challenges, however, making the tough calls to reinvent the company when many had written us off.”
As AT&T’s history as a stand-alone company comes to an end, the company posted strong quarterly results, said Jeff Kagan, an independent telecom analyst. “AT&T’s numbers were actually quite good,” Kagan said. “They did not lose as much business as everyone expected.”
AT&T Business revenue declined 9.5% from the third quarter of 2004, with AT&T saying the declines primarily coming from pricing competition in voice and data services. Long-distance voice revenue declined 12.7%, and data revenue declined 11.1%, from the third quarter of 2004.
AT&T Consumer revenue fell 24.3% from the third quarter of 2004, due to customer losses and competition from wireless and Internet telephone services, AT&T said. AT&T announced in July 2004 it would shift its focus away from recruiting customers in the consumer market.
