AT&T on Tuesday posted a $12.7 billion loss, its third straight quarterly decline, largely owing to a big drop in the value of its cable business.
The quarterly net loss was $3.49 a share. A year earlier, Ma Bell lost $191 million, or 10 cents a share.
During the quarter, the carrier wrote down the value of its AT&T Broadband unit by $13.1 billion. The company is selling that business to Comcast.
The charge is effectively a bookkeeping matter and doesn't involve cash, but it does reflect the extent to which AT&T overpaid for its cable assets during a buying spree at the height of the late 1990s bull market.
Sales slid 6 percent to $12.1 billion from $13.3 billion. The key culprit once again was consumer long-distance, a business that's steadily deteriorated over the last five years. Sales sank nearly 22 percent to $2.91 billion.
Excluding one-time items, AT&T earned an adjusted 7 cents a share, up from 4 cents a year earlier. It was expected to earn 3 cents, according to the consensus of analysts surveyed by Thompson Financial/First Call.
In the past few years, the decline in the long-distance business has accelerated amid intensified competition, falling prices and reduced demand.
The entry of the Baby Bells into the long-distance market, as well as customer reliance on new technologies such as e-mail and wireless communications, have steadily chipped away at the market share and profits of traditional market leaders such as AT&T.
Still, results of the No. 1 U.S. long-distance carrier did show some stabilization. The sharp decline in consumer long-distance eased slightly
AT&T also indicated that it's benefiting from difficulties at rival carriers such as WorldCom, which on Sunday filed the largest U.S. bankruptcy claim ever.
"AT&T Business is encouraged by signs of 'flight to quality,'" Chief Executive C. Michael Armstrong said in a statement.
The day before, WorldCom CEO John Sidgmore insisted that the No. 2 long-distance carrier has lost few major customers since the revelation last month that the carrier hid $3.85 billion in expenses.
Still, sales in AT&T's corporate-services division dipped 3.8 percent to $6.74 billion. Data and Internet revenue rose, but not enough to offset a decline in business voice sales.
At AT&T Broadband, sales rose 10 percent to $2.53 billion, adjusted for discontinued businesses. The cable unit is seen as the most attractive part of the company's operations.
On an unadjusted basis, sales actually fell 1.5 percent, as 115,000 basic-cable customers canceled service. The company cited tough competition, seasonal disconnects and increased apartment vacancies in some markets.
Looking ahead, AT&T largely stuck to its previous financial guidance for the rest of the year.
By Jeffry Bartash