AT&T Q1 Profit 1 Cent over Analyst Prediction

WASHINGTON (05/02/2000) - AT&T Corp. today reported a first quarter profit of US$1.7 billion, or 54 cents per share, on strong revenue from business, wireless and broadband services, but the company also lowered revenue and earnings forecasts for the year.

The first-quarter profit compared with $1 billion, or 38 cents per share, in profit reported during the same quarter last year, and it beat forecasts from analysts polled by First Call/Thomson Financial by 1 cent.

Revenue for the first quarter was $15.8 billion, an increase of 12.3 percent over the $14.9 billion in revenue during the first quarter of 1999, the company said. Revenue for the first quarter increased 5.8 percent on a "pro forma" basis, which treats purchases and transactions that took place later in the year as if they were in effect during the first quarter of 1999 to provide a more realistic quarter-to-quarter comparison.

AT&T completed its merger with Tele-Communicatons Inc. (now AT&T Broadband) in March last year, and the IBM Global Network (now AT&T Global Network Services) merger was completed in May.

AT&T said a number of factors, including new information regarding its merger with MediaOne Group Inc., forced it to update its previous statement on anticipated revenue and earnings for 2000. [See "MediaOne to Sell Off Time Warner Telecom Stake," March 23.]The estimated per share operational earnings forecast for the year was lowered by 9 cents from a range of $1.80 to $1.85 to include the estimated impact of the recently announced Excite@Home Corp. and Net2Phone Inc. acquisitions. The company had previously said per share earnings would fall between $1.89 and $1.94.

The company also said that its pro forma revenue for 2000 would increase approximately 7 percent to 8 percent, rather than the previously estimated 8 percent to 9 percent, due to slower growth in legacy long distance services.

Reductions in access fees AT&T pays local phone companies for handling long distance calls are expected to further reduce pro forma revenue growth to a range of 6 percent to 7 percent.

Revenue from AT&T's wireless business in the first quarter of 2000 took the biggest leap among AT&T's business units, with growth of more than 40 percent.

There now are more than 10 million subscribers to AT&T's wireless service, a 32 percent increase over the first quarter of 1999. AT&T's high-speed data and Internet protocol business services experienced growth in the high teens, according to the company.

Overall, business services revenue was $7.1 billion, up 6 percent from the same quarter in 1999, and consumer services revenue was $5.1 billion, down 5.6 percent. AT&T's broadband business unit's revenue for the quarter was $1.5 billion, an increase of 7.9 percent. AT&T's broadband offering now has nearly 2 million digital cable customers and adds an average of 3,000 new customers a day, AT&T said.

AT&T Corp., based in Basking Ridge, New Jersey, is at http://www.att.com/.

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