Falling long-distance profits dragged
fourth-quarter earnings down 51% from year-ago levels, in line with analysts' lowered expectations.
The telecom giant earned 26 cents a share, excluding charges, down from 53 cents a share in the fourth quarter of 1999. The consensus earnings estimate of 18 analysts surveyed by
First Call/Thomson Financial
was 26 cents a share. That estimate was lowered following a warning by AT&T on Dec. 20 that its fourth-quarter earnings wouldn't meet the previous target of 29 cents to 33 cents per share.
Taking one-time charges into account, AT&T incurred a $1.7 billion loss, or 45 cents a share, for the quarter, due primarily to a non-cash charge of $1.6 billion, or 42 cents per share, associated with the acquisition of
. That compares with a profit of 36 cents a share in the year-ago period.
Total debt at year end was $65 billion, an 81.4% rise above the $35.9 billion recorded in the year-ago period, due primarily to the acquisiton of broadband provider
. Capital expenditures were $4.5 billion for the fourth quarter and $14.6 billion for the full year. AT&T said 2001 capital expenditures were expected to be in the same range.
AT&T said it was unable to provide estimates of full-year 2001 results due to its plan to split the company into four parts. But it said that revenue growth for the first quarter is expected to be similar to that produced in the fourth quarter of 2000. For the fourth quarter, pro forma revenue increased 2.5% over the year-ago quarter. Also, the company said earnings before interest, taxes, depreciation and amortization, or
EBITDA, would be in the mid-$4 billion range for the first quarter, compared with $5.4 billion in the fourth quarter of 2000.
AT&T said last October it would restructure and spin off its wireless, broadband and consumer long-distance units sometime in 2002 in what many observers saw as an admission that it could not effectively be the one-stop communications shop Chairman C. Michael Armstrong spent $110 billion to build.
AT&T's consumer long distance service will have its own tracking stock. This will allow AT&T to isolate its rapidly deteriorating toll-calling business in an arguably separate accounting book yet as a tracker it will share the board of directors of the parent company.
AT&T is also expected to announce more job cuts in its cable broadband services division in an effort to cuts costs, though the number of people to be fired may be far less than the 6,000 or so total last year.
To meet the conditions of its merger with MediaOne, AT&T is
faced with the option of having to sell off its cable holding in other companies such as
. It may also still be considering a spinoff of its cable programming tracking stock