to right last quarter's
wrongs just yet. The phone giant may be preparing to guide earnings estimates lower for the second time this year, says an influential telecom analyst.
In a report issued Friday by
Salomon Smith Barney
Jack Grubman says AT&T has failed to gain any "traction" in long distance and data services to businesses. As a result, Grubman cut his 2000 earnings estimate by 4 cents to $2.29 and his 2001 estimate by a dime to $2.45. The analyst has a buy rating on AT&T, and his firm helped underwrite the offering of its wireless tracking stock this spring.
AT&T shares were flat Friday at 33 11/16, near their 52-week low and barely half of their April high.
An AT&T spokesman declined to comment on Grubman's report but said: "We are focused on executing our growth strategy. Let's leave it at that." AT&T is scheduled to report earnings before the market opens July 25.
In May, AT&T lowered its earnings guidance for the year by 5%, citing a faster-than-expected decline in long-distance revenue. The company also cited problems in its business-solutions division, including a rough restructuring of sales and management staff, the integration of its
international joint venture with
, and the loss of a huge government contract.
AT&T shares dropped 14% in a day in the wake of that shortfall.
AT&T Chairman and CEO C. Michael Armstrong told analysts during a May 2 earnings conference call, "We took our foot off the accelerator." Armstrong also said the missteps in the business-services division were being addressed, though the company lowered its expected growth rate in that division to 8% from 10%.
Grubman says AT&T's mishandling of big-ticket accounts in the first quarter of the year was a boon to rivals
, which won over some dissatisfied AT&T customers. He says the slippage continues and will spill over into 2001.
"The stock is absolutely dirt cheap, but will stay that way until visibility of operational turnaround occurs," Grubman wrote.
AT&T's woes have only mounted this year.
, previously known as Bell Atlantic, opened 2000 by getting the green light to offer long-distance service in New York and immediately began plucking customers from Ma Bell. In January, heads began
rolling in AT&T's long-distance unit. In April, AT&T sold shares tracking its wireless business, but the Street wasn't
impressed, sending the new stock down more than 27% from its debut high. And last month,
reported that AT&T was
huddling with bankers and consultants to determine whether to set up a tracking stock for its long-distance business or sell it outright.