AT&T Earnings Beat Estimates

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AT&T said Monday that third-quarter earnings per-share, excluding gains and charges, tallied $1, beating Wall Street estimates by 5 cents.

The long-distance provider, which earned 60 cents a share in the year-earlier quarter excluding onetime items, attributed its improvement to continued cost-cutting efforts and to greater demand for its wireless and business services, especially for high-speed data.

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AT&T (T)
Revenue climbed 4.3 percent to $13.65 billion from $13.09 billion a year earlier.

Including gains and charges, AT&T (T) earned $1.96 billion, or $1.09 a share, up from $1.16 billion, or 65 cents, a year earlier.

"AT&T's record earnings, coupled with revenue growth, demonstrate that we're successfully executing our strategy to reduce costs, achieve profitable growth and win in a competitive environment," said AT&T Chairman C. Michael Armstrong.

In the latest quarter, the company had a pre-tax gain of $602 million related to a voluntary retirement program. In addition, it recorded a $137 million charge tied to the retirement of $1.05 billion in debt. However, "this debt retirement will produce a significant amount of interest expense savings over time," the company said.

Leading the way in the latest quarter: wireless and business services. Revenue from wireless rose $230 million, up 19.4 percent from the third quarter of 1997, spurred by demand for the company's Digital One Rate cellular plan.

Business service revenue business services increased 4.7 percent to $262 million from a year earlier. "This increase was driven primarily by strong double-digit growth in high-speed data services such as frame-relay and high-speed private line services," the company said.

On the downside, revenue from consumer services fell 2.9%, or $171 million, compared with a year earlier. "As the company reported last quarter, the decline in revenue reflects competitive pressures as well as reductions in access charges that the FCC imposed in 1997 and 1998," AT&T said.

Costs, meanwhile, continued to be reined in. Selling, General & Administrativexpenses, for example, declined $564 million, or 14.5 percent, from a year earlier. "This demonstrates the company's ongoing success in reducing costs," AT&T said.

Written By Jeffry Bartash