Still recovering from an April Fool's Day shocker, AT&T ( T) posted a quarterly profit Thursday.

The struggling New Jersey telecom giant reported first-quarter earnings of $304 million, or 38 cents a share. That's down from the year-ago $571 million, or 73 cents a share. Both quarters were affected by accounting items. Revenue fell 11% to $8 billion.

Analysts surveyed by Thomson First Call had called for a profit of 33 cents a share on revenue of $7.96 billion.

"AT&T continues to manage through a difficult industry environment characterized by oversupply and intense pricing pressure," said CEO David Dorman. "We remain focused on leading the technology transformation in telecom, diversifying our product offerings to include new offers such as VoIP and wireless, improving our cost structure and building on our financial strength."

Revenue beat analyst estimates but showed steep declines in both of the company's key businesses. The first quarter's top-line figure included $5.9 billion from AT&T Business and $2.1 billion from AT&T Consumer. Business revenue dropped 9% from a year ago and long distance revenue slid 16%. Data revenue dropped 10%.

The company cited continued declines in long distance voice and data revenue, partially offset by the continued success of AT&T Consumer's bundled local and long distance offering, as well as growth in several key markets of AT&T Business.

The company's consumer long-distance business has been under heavy pressure in recent years. In January AT&T trimmed 2004 guidance, saying it expected a full-year revenue decline of 7% to 10% from 2003 levels. That would put full-year consolidated revenue at $31.5 billion, about a billion dollars short of the Wall Street estimate. AT&T also called for a 4% to 7% decline in business revenue and a 15% to 17% decline at the sagging consumer unit.

AT&T has been whipsawed by a series of unsuccessful strategic repositionings in the last decade. The problems started in the early 1990s with Bob Allen's ill-fated acquisition of hardware outfit NCR and continued through C. Michael Armstrong's multibillion-dollar cable buying spree. AT&T has since spun off numerous offshoot business, ranging from NCR to Lucent ( LU). In 2002 it sold the cable rollup to Comcast ( CMCSA) -- which promptly wrung huge efficiencies out of the once-lagging group.

Thursday's report comes on the three-week anniversary of the company's most recent black eye, the decision of editors at The Wall Street Journal to yank AT&T from the closely watched Dow Jones Industrial Average. Industry observers said at the time of the move that the choice to replace AT&T with Baby Bell offspring Verizon ( VZ) reflected the shift of telecom-industry growth to wireless and broadband services, fields in which Verizon is a leader but AT&T isn't.

On Wednesday, AT&T rose 31 cents to $18.61.

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