threw Wall Street a bone Thursday, and its long-suffering shareholders jumped on it.
Shares in the telecom behemoth jumped 3% in early trading after the company posted lackluster second-quarter results but took up two plans to return cash to investors. AT&T said it would boost its quarterly dividend by 27% and spend up to $2 billion to buy back debt, enhancing its balance sheet.
The money-for-nothing swap struck the market as a good idea and it rewarded the struggling company, sending its shares up 52 cents to $20.05. This despite the fact that growth at AT&T's closely watched business services unit remained on hold in the latest period, while sales on its consumer side continued their steady slide, posting a 6% sequential drop.
On the bright side, AT&T said it was making headway with its bundled service offerings of flat-rate local and long-distance services. But some analysts wondered how effective those packages really are, since
said this morning that it had seen a dramatic slowing in customer losses at the hands of resellers like AT&T and
For the second quarter, AT&T earned $536 million, or 68 cents a share. A year ago, AT&T lost $12.8 billion, or more than $17 a share, including a loss of $13.4 billion from discontinued operations. Earnings from continuing operations in the second quarter of 2002 totaled $603 million, or 80 cents a share.
AT&T's second-quarter revenue fell 8% to $8.8 billion. Total revenue included $6.4 billion from AT&T Business Services and $2.4 billion from AT&T Consumer Services. The company had revenue of $9.6 billion a year ago.
The company attributed the top-line drop to continued declines in long-distance voice revenue, which was partially offset by the results from AT&T Consumer Services' bundled local and long-distance plan, as well as growth in several markets of AT&T Business Services.
Analysts polled by Thomson First Call were expecting earnings of 53 cents a share on revenue of $8.8 billion.
"AT&T's second-quarter results reflect our relentless focus on managing costs and driving share gains in key areas of our business despite ongoing economic weakness and increased competitive pressures," AT&T Chairman and CEO David W. Dorman said in a press release. "We continue to leverage our industry-leading scale and global networking expertise to widen our competitive advantages and position AT&T for the eventual economic turnaround."
AT&T's board plans to raise the quarterly dividend by 5 cents to 23.75 cents, beginning with the third-quarter payout in November. This gives AT&T a dividend yield of 4.8%, putting it on par with local phone rivals like SBC and
, with their 4.8% and 4.4% payouts.