AT&T Corp. posted a loss of US$12.7 billion for the second quarter of 2002 as revenues from both business and consumer telephone services continued to drop sharply.
The company also took a $13.1 billion after-tax charge in the quarter based on the adoption of new accounting standards by the company and a reassessment of the value of the company's broadband cable assets.
Based on Generally Accepted Accounting Principles (GAAP), the company posted a loss from continuing operations of $12.7 billion for the quarter, sharply higher from a loss of $51 million in the second quarter 2001. That loss translates to a loss of $3.49 per share for the quarter, compared to a loss of $0.10 per share in the same quarter last year.
The company posted $3.4 billion in EBITDA (Earnings Before Interest, Taxes, Debt and Amortization) earnings, excluding expense/income, for the quarter, down from $3.9 billion in the second quarter 2001.
AT&T reported earnings of $0.07 per share diluted from continuing operations, excluding other expense/income, goodwill and franchise impairment. That figure was up from $0.04 per share in the same quarter 2001 and above the $0.03 per share that the 13 analysts polled by Thomson Financial/First Call had expected from the company for the quarter.
AT&T's revenue for the quarter, on a pro forma basis, was $12.1 billion, down from $13.3 billion in the second quarter last year.
Despite the company's loss for the quarter, AT&T posted "solid second quarter results, despite tough economic and other challenges," said Michael Armstrong, AT&T chairman and chief executive officer, on a conference call held Tuesday.
The company's AT&T Business telephony division posted earnings before interest and taxes (EBIT), and excluding other expense/income, of $879 million for the quarter, down from $1.17 billion in the second quarter 2001. Those earnings were achieved based on revenue of $6.74 billion for the quarter, down from $7.01 billion in the same period last year.
The AT&T Consumer telecommunication division posted EBIT earnings, excluding other expense/income, of $787 million, down from $1.21 billion in the second quarter of 2001. Revenue for this quarter was $2.91 billion, down from $3.72 billion in 2001.
Results for AT&T's telephone businesses are down due to weaker business spending, as well as increased Internet traffic, said David Dorman, AT&T president, also speaking on the conference call.
"We continue to see the telecom sector recovery lagging the broader economy," he said.
For the quarter, more IP (Internet Protocol) traffic crossed AT&T's network than did long distance telephone traffic, he added.
AT&T Broadband, on an EBITDA basis and excluding other expense/income, goodwill and franchise impairment charges, earned $541 million for the quarter, up from $403 million in the second quarter 2001. The unit, which provides cable television, digital telephony and high-speed Internet access, brought in $2.53 billion in revenue, up from $2.30 billion in the same quarter last year.
Both Armstrong and Dorman also commented on the impact of the bankruptcy of WorldCom Inc. on AT&T.
"AT&T is performing in contrast to many of our peers. We are not distracted by investigations into our reporting practices ... or other external factors," said Armstrong.
Those distractions for its competitors will help AT&T, Dorman said, adding that AT&T has already won customers from WorldCom.
"Industry turmoil is clearly heightening AT&T's prospects," he said. "We ought to be the biggest beneficiary of (the bankruptcy)."
AT&T's stock (T) closed down $0.40, or 4.03 percent, on Monday at $9.52. In off-hours trading, The Island ECN Inc. reports that AT&T stock was trading at $9.92.