AT&T rings up first quarter profit

Weathering competition from wireless and Internet service providers as well as an overall decline in calling rates, AT&T reported solid first quarter earnings of $571 million, or $0.73 per share, after losing $975 million or $1.32 per share in the first quarter of 2002.

Weathering competition from wireless and Internet service providers as well as an overall decline in calling rates, AT&T reported solid first quarter earnings of $571 million, or $0.73 per share, after losing $975 million or $1.32 per share in the first quarter of 2002.

Income from continuing operations was $529 million, or $0.67 per share, for the first quarter of 2003.

Revenue for the first quarter, which ended March 31, was $9 billion, compared with $9.5 billion in the same quarter a year ago, with declines in both the AT&T Business Services and AT&T Consumer Services business units.

Despite declining revenue, the Basking Ridge, N.J., telecommunications company squarely beat analysts’ expectations of $0.52 per share for continuing operations, according to Thomson First Call, the investment research network.

Revenue declines were steepest in the AT&T Consumer Services group, which brought in $2.5 billion in the first quarter, compared with $3.0 billion in the year-ago quarter.

In a statement, AT&T attributed the decline to stiff price competition from other wireless and Internet providers as well as low-priced calling plans.

Revenue for the Business Services unit was $6.4 billion for the first quarter, compared with $6.5 billion in the first quarter of 2002. The 1.4 percent decline reflected the continued drought in telecommunications spending and retail demand, according to AT&T.

AT&T attributed its healthy numbers to healthier operating margins and growth in key business areas.

In the Business Services unit, for example, AT&T lost business in its long distance voice services, but saw its local voice service grow by 25% from $268 million in the first quarter of 2002 to $335 million in the just-ended quarter. The company said it now serves more than 2.8 million local phone customers, an increase of 119% over last year.

The company’s data services declined slightly from $2.01 billion in the year-ago quarter to $2 billion, but its IP and enhanced (IP&E) services grew by almost 7% during the same period, from $408 million in the year-ago quarter to $445 million in the first quarter of 2003.

In the Consumer Services unit, revenue from stand-alone long distance services and non-voice products declined sharply, from $2.87 billion in the year-ago quarter to $2.11 billion in the just completed quarter. However, those losses were somewhat offset by revenue from bundled services, which almost doubled from a year ago from $217 million to $424 million.

The first quarter earnings continued a turnaround that began in the third and fourth quarters of 2002, when AT&T reported income of $217 million and $516 million respectively after suffering bruising losses earlier in the year.

With a stronger balance sheet and free of its Broadband unit, which it sold to Comcast in November, AT&T is now considered by analysts to be in a better position to focus on winning new customers for its core voice and data services.

The company said that it would meet or exceed its previously stated estimates for revenue growth and income in 2003.