AT&T, the largest U.S. provider of business telecommunications services, said its revenues fell 11 percent due to price cuts in business services and its decision last year to stop competing for residential customers. But it also said its 2005 revenues could total about $26 billion, equal to or slightly above its prior forecast.
The company said it earned $307 million, or 38 cents per share, compared to earnings of $108 million, or 14 cents per share, in the same period a year ago.
Excluding one-time charges from the SBC deal, a debt buyback and restructuring, AT&T said it had earned 62 cents a share on revenues of $6.76 billion. Analysts on average had estimated AT&T would earn 53 cents a share excluding charges on revenues of $6.63 billion, according to Reuters Estimates.
Last year, AT&T announced it would stop marketing its services to residential customers, blaming changes in federal regulations governing how it leased lines from dominant local telephone companies. Those companies — including SBC — had been able to attack AT&T's long-distance business by bundling local and long-distance service.
That retreat sparked the talks that eventually led to SBC's deal to purchase AT&T and reunite parts of "Ma Bell (search)" broken up by the U.S. government in the 1980s. It also allowed AT&T to cut the value of its assets last October by $11.4 billion, slashing its depreciation costs for the past quarter by $548 million from the second quarter of 2004.
SBC, the second-largest U.S. telecommunications company, is buying AT&T for its stable of large corporate customers and its global network. The companies have said they hope to close the deal by the end of the year, creating the largest U.S. telecommunications company.
Revenues in AT&T's key business services unit fell 8 percent to $5.2 billion, due to continued price cuts for traditional voice and data services. Its consumer unit posted a 21 percent drop in revenues to $1.6 billion.
Shares of AT&T closed up 3 cents at $19.15 on the New York Stock Exchange (search).