posted a fourth-quarter profit on stronger-than-expected revenue, but warned that 2005's top line won't match Wall Street's expectations.
For its fourth quarter ended Dec. 31, the Bedminster, N.J., telco earned $625 million, or 78 cents a share. That's up from the year-ago $340 million, or 43 cents a share. The latest quarter includes an after-tax depreciation benefit of $337 million, or 42 cents a share, linked to the company's third-quarter asset impairment charges. Without that boost, the quarter appeared to miss the Wall Street analyst consensus estimate by 22 cents.
Revenue fell 10% from a year ago to $7.3 billion but beat the $7.14 billion Wall Street estimate. The company cited continued declines in long-distance voice and data revenue -- both dropped more than 13% from a yera earlier -- partially offset by an increase in bundled services revenue and solid growth in key services in the enterprise market, such as Internet Protocol & Enhanced services. Revenue in that business rose 13% from a year ago, AT&T said.
"AT&T's results reflect the solid progress we've made in transforming this company for the long-term, and the considerable momentum we've established entering 2005," said CEO David Dorman. "While the pricing environment in our industry remains challenging, we're encouraged by the strengthening of AT&T's competitive position in the enterprise market in recent quarters."
But AT&T said 2005 revenue would fall even faster than analysts had been counting on. The company set a full-year revenue target of $25 billion to $26 billion, which is down from 2004's $30.5 billion and short of the $26.5 billion Wall Street estimate.
AT&T cost-cutting, including savings from ongoing headcount reduction efforts and strategic reductions in marketing expenses, contributed to strong margins for the quarter. AT&T said this fall it would cut 20% of its workforce over the course of 2004, a target that meant the loss of 12,000 jobs. To reflect the shriveled value of its network assets, the company took an $11.4 billion impairment and restructuring charge in the third quarter.
The company said free cash flow was $1.1 billion for the quarter and $3.7 billion for the year.
On Wednesday, AT&T slipped 27 cents to $18.51.