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AT&T 4Q profit up 45%
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January 25, 1999: 8:57 a.m. ET
Results meet forecasts; telecom firm sees 1999 revenue growing 5% to 7%
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NEW YORK(CNNfn) - AT&T posted a 45 percent jump in fourth-quarter operating profit Monday, fueled by lower costs and acquisition growth, while telling investors that earnings in the first quarter of 1999 could grow another 38 percent.
The New York-based telecommunications firm reported net income of $2.8 billion, or $1.12 per share, compared with $1.3 billion, or 70 cents a diluted share, in the year-ago quarter.
Operating income reached $3.2 billion, or $1 per share, up from $2 billion last year. The results were in line with Wall Street estimates, according to First Call.
During the quarter, AT&T's revenue also climbed 4.8 percent to $13.5 billion.
"For the fourth quarter in a row, AT&T delivered strong earnings and met investors' expectations," said AT&T Chairman C. Michael Armstrong. "We took aggressive action in 1998 to strategically reposition AT&T for the future. We will continue to build on that momentum this year, focusing on reducing costs, building top line revenues and investing to grow."
AT&T's quarterly results were impacted by a pre-tax benefit from restructuring and other charges of $313 million primarily from the settlement of pension obligations for former employees who accepted the company's voluntary retirement incentive program, as well as a pre-tax benefit of $42 million from the adoption of a new accounting standard.
The company said it expects 1999 revenue growth to range from 5 percent to 7 percent on a pro-forma basis, including the effects of its planned mergers with TCI and Vanguard Cellular Systems as well as the previously announced agreement to acquire IBM's Global Network business.
Daniel Somers, the company's chief financial officer, said single-digit growth rates are "clearly is not where we ultimately want to be, but we are doing it one year at a time."
He noted, too, that AT&T's acquisition of TCI should boost its bottom line this year and will contribute to revenue growth "much more strongly in 2000."
"Clearly with our merger with TCI and some of the joint ventures we've announced, we feel strongly that broadband is where the growth and future of bundled services is and that's where we are putting our capital and that's where we are putting our growth," he said, adding that AT&T expects to "do very well" in the future as a diversified provider of local, long-distance and bundled services.
For the first quarter of this year, AT&T also said it expects earnings in the range of 92 to 95 cents per share, which would represent growth of 33 percent to 38 percent.
For the year, AT&T earned $6.4 billion, or $3.55 a share, compared with $4.4 billion, or $2.50 a share, in 1997.
Shares of AT&T (T) finished up 3/16 at 88-1/4 Friday on the New York Stock Exchange. 
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