Long-distance telephone and cable-television leader AT&T Corp. Wednesday posted a fourth-quarter loss as revenues fell 9.5 percent, and said long-distance revenues would decline further in 2002.

AT&T's core long-distance business suffered from low calling rates, competition from the Baby Bells and a shift by customers to wireless telephones and electronic mail.

Even AT&T's new businesses suffered. Sales of data and Internet services rose, but the rate of growth slowed as corporate customers curtailed spending in the weak economy. Revenue growth at AT&T Broadband, the cable television business being sold to Comcast Corp. , also slowed due to lower advertising sales.

New York-based AT&T had a net loss of $1.39 billion, or 39 cents a share. That compared with a loss of $1.64 billion, or 45 cents a share, a year before.

"Our results reflect a business managing through a difficult economic and industrywide climate," said AT&T Chairman C. Michael Armstrong.

Excluding a $1 billion charge to cut 10,000 jobs, and other items, fourth-quarter profits dropped to 5 cents a share, from 24 cents a share in the year-earlier quarter.

Wall Street analysts had expected AT&T to earn 1 cent to 6 cents a share, with a mean forecast of 4 cents a share, according to research firm Thomson Financial/First Call.

Revenues fell 9.5 percent to $12.59 billion from $13.91 billion. Adjusted for the failure of high-speed Internet access company ExciteAtHome Corp., and the sale of cable assets, revenues fell 6.1 percent.

Shares of AT&T lost 60 cents, or 3.37 percent, to $17.21 in morning trading on the New York Stock Exchange. The stock has fallen about 25 percent over the past 12 months, but still outpaced the North American Telecommunications Index by about 18.5 percent.

"The one slight positive is that pace of revenue-decline in AT&T Business slowed ... but that's outweighed by consumer, where the pace of decline accelerated," said Davenport & Co. analyst Drake Johnstone.

"A big area of concern is that cash flow is declining so much (in the Consumer business). Revenue is declining faster than they can keep up pace with reducing costs," Johnstone said.

Consumer operating cash flow, excluding other income, dropped 41 percent in the fourth quarter, compared with a 23 percent drop in the third quarter, he said.


AT&T, the No. 1 U.S. long-distance telephone and cable-television company, said sales to corporate customers fell 4.5 percent to $6.88 billion. Business sales fell 4.7 percent in the third quarter.

AT&T Consumer revenues were $3.47 billion, down 18.3 percent from the year-ago quarter -- a decline that exceeded the 17.8 percent drop in the third quarter.

Revenues at AT&T Broadband fell 6.2 percent due the sale of cable systems. Adjusted for those sales, revenues rose 10.2 percent to $2.38 billion. In the third quarter, AT&T Broadband's sales rose 15.2 percent after adjustment.

"The first quarter of 2002 will tell the tale. If their revenue growth picks up -- great. If it doesn't one has to wonder what's going on," Johnstone said.


AT&T expects first-quarter earnings from continuing operations, excluding one-time items, to be in the range of 2 cents a share to 5 cents a share. Total first-quarter revenues should decline at a slightly accelerated pace, compared with the fourth quarter of 2001, it said.

For the full year 2002, sales to business customers will decline by about three percentage points more than the 2001 rate, while sales to residential customers will decline in the mid-20 percent range, AT&T said.

In 2002, AT&T Broadband expects to offer new services to subscribers, increase revenue and aggressively manage profitability. For the full year, the unit expects revenue growth to improve from the restated pro forma 2001 level of $9.16 billion, with percentage growth in the low to mid teens.