AT&T Thursday reported a net loss of $7.1 billion, or $8.95 per share, for the third quarter of 2004, but that loss included asset re-evaluation and other charges of $12.5 billion.
AT&T Thursday reported a net loss of $7.1 billion, or $8.95 per share, for the third quarter of 2004, but that loss included asset re-evaluation and other charges of $12.5 billion.
AT&T’s third quarter financial statement included asset impairment charges of $11.4 billion and net restructuring and other charges of $1.1 billion. The company announced Oct. 7 that it would include the charges in the third quarter, which ended Sept. 30.
The asset-related charges were caused by “pricing pressure and the evolution of services toward newer technologies in the business market as well as changes in the regulatory environment, which led to a shift away from traditional consumer services,” according to an AT&T press release.
The quarter’s net loss compares to the net income of $418 million, or 53 cents per share, that the company reported in last year’s third quarter.
AT&T reported third-quarter 2004 consolidated revenue of $7.6 billion, which included $5.6 billion from AT&T Business and $2 billion from AT&T Consumer. Consolidated revenue was down 11.7% from the third quarter of 2003. The company blamed the decline on sagging long-distance voice and data revenue. Nonetheless, AT&T exceeded the revenue consensus expectation from analysts polled by Thomson First Call of $7.3 billion.
AT&T is encouraged by its competitive position, said David W. Dorman, the company’s chairman and CEO. “Our third-quarter results reflect significant progress that we’re making in transforming AT&T into a more effective competitor,” Dorman said during a conference call. “In a difficult and often chaotic market, we’re successfully improving our business fundamentals, reducing costs, and driving significant cash flow.”
Earlier this month, AT&T announced it was laying off about 20% of its workforce this year, a change from the original plan to cut 8% of the staff. The new layoffs affect about 7,400 employees.
In July, AT&T announced it was shifting its focus away from residential telephone services. The company’s long-distance revenue was down 16.3% from the third quarter of 2003.
“Clearly, we’ve made some tough choices this year,” Dorman said. “However, as our third-quarter results demonstrate, those choices are beginning to pay off.”
Excluding the asset impairment and other charges, AT&T posted an adjusted net income of $593 million, or 75 cents per share, for the third quarter of 2004, compared to an adjusted income from continuing operations of $458 million for the third quarter of 2003. The adjusted net income included an after-tax benefit from lower depreciation of $331 million, or 42 cents per share, due to the asset impairment charges. Analysts surveyed by Thomson First Call expected earnings of 51 cents per share.
The company’s third-quarter 2004 consolidated operating loss was $11.3 billion. Excluding the asset impairment and other charges, adjusted operating income was $1.2 billion. AT&T posted an operating income of $829 million in the third quarter of 2003.
