AT&T Posts $571 Million Profit, Denies Merger Speculation

The shares shoot up as the earnings easily exceed forecasts.
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AT&T's

(T) - Get Report

first-quarter earnings improved on both a continuing and bottom-line basis, but revenue slipped due to continuing weak consumer long-distance traffic.

The company, which sold its cable operations to

Comcast

(CMCSA) - Get Report

earlier this year, said it earned $571 million, or 73 cents a share, in the latest quarter, compared with a year-ago loss of $975 million, or $1.32 a share, last year.

On a continuing basis the company earned $529 million, or 67 cents a share, in the latest quarter compared with earnings of $446 million, or 60 cents a share, last year. The 67-cent figure was about 15 cents better than analysts' forecasts.

Premarket traders liked what they saw, sending the stock up 10% to $15.15. Some of the juice could be attributable to a

Wall Street Journal

story Wednesday suggesting

SBC Communications

(SBC)

or

BellSouth

(BLS)

might be interested in acquiring AT&T. AT&T denied in its earnings release that it was in any merger talks and said it isn't for sale.

Revenue slipped 5.9% to $9.0 billion, which included $6.4 billion from its business segment and $2.5 billion from its consumer segment. The company cited continued declines in long-distance voice services, partially offset by growth in some areas of AT&T Business Services, and success selling bundled local and long-distance packages to consumers.

AT&T Business Services revenue fell by 1.4% from a year ago, while AT&T Consumer Services revenue fell 17.8%.

The company backed previously issued guidance for revenue growth and operating income margin in 2003, but cut guidance for 2003 capital spending from a prior range of $3.3 billion to $3.5 billion to around $3.0 billion.