Updated from 8:46 a.m. EDT

Shares of

AT&T

(T) - Get Report

fell 12% Tuesday after the nation's leading telecommunications company issued a profit and revenue forecast that was unexpectedly gloomy.

Although the company's first-quarter earnings met Wall Street expectations, investors grew concerned over AT&T's assessment of the year after it warned that previous estimates of growth were far too high because consumer services are weaker than thought and business services are not expanding as robustly as the company had anticipated a few months ago.

Shares of AT&T, the most widely owned stocks in the country, were down 6 to 43 in Tuesday morning trading. (AT&T finished Tuesday trading down 7, or 14%, at 42.)

AT&T said it now expects full-year operational earnings to fall in the range of $1.80 to $1.85 a share, below its previous guidance last December of $2.10 to $2.15 a share, taking into account the imminent acquisition of

MediaOne

(UMG)

and other pending transactions.

In addition, pro forma full-year revenue are expected to grow only 6% to 7%, as opposed to the previously expected 8% to 9%. Revenue for the consumer services business are expected to drop 5% to 7%, more than its previous forecast of 3% to 5%. The business services segment is projected to grow 8% for the year, below the 9% to 11% previously forecast. Growth for other segments, meanwhile, remain on track.

AT&T also said it will lay off 6,200 employees by the end of the year, as had been previously announced.

For the first quarter ended March 31, operational earnings fell to $1.732 billion, or 53 cents a diluted share, from $1.717 billion, or 61 cents a share, a year earlier, matching the consensus estimate of analysts polled by

First Call/Thomson Financial

.

The figures exclude $707 million, or 22 cents a share, in gains and $477 million, or 14 cents a share, in restructuring charges, as well as the impact of its ownership in

Cablevision Systems

(CVC)

and

Excite@Home

(ATHM) - Get Report

.

The New York-based company ascribed the tumble to the acquisition of

TCI

, now

AT&T Broadband

, and the issue of additional shares.

Net income rose to $1.741 billion, or 54 cents a diluted share, from $1.076 billion, or 38 cents a diluted share, a year ago.

Pro forma revenue rose to $15.836 billion from $14.974 billion a year ago. The revenue figures include the acquisitions of TCI and the

IBM Global Network

, now

AT&T Global Network Services

. They also include the impact of

Concert

, its joint venture with

British Telecommunications

(BTY)

, and some divestments abroad.

Strong revenue gains were recorded by the business services segment, up 6% to $7.1 billion; wireless services segment, up 41% to $2.2 billion; and broadband segment, up 8% to $1.5 billion. Meanwhile, the consumer services segment posted a drop of 6% to $5.1 billion.

"AT&T's growth businesses are delivering," said C. Michael Armstrong, chairman and chief executive, in a statement. "We'll continue to cut costs in our legacy businesses while ramping up our high-growth businesses."