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AT&T warns about 2Q
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April 24, 2001: 11:25 a.m. ET
AT&T's 1Q profit drops but edges target as revenue misses goal; Qwest hits mark
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NEW YORK (CNNfn) - AT&T Corp. reported sharply lower first-quarter profits Tuesday that edged past Wall Street forecasts, but the nation's biggest long-distance phone company warned that it expects second-quarter results well below current estimates.
The warning marked the third straight quarter that AT&T, also the biggest U.S. cable operator, has warned of lower than expected results in the upcoming quarter.
The New York-based company, which plans to break into four separately traded companies beginning this summer, earned 6 cents a share excluding special items, down from 34 cents a share a year earlier. Analysts were looking for 5 cents a share, according to First Call, which tracks Wall Street profit forecasts.
With special items, AT&T reported a net loss of $366 million, or 10 cents a share, compared with profits of about $1.7 billion, or 54 cents a share, a year earlier.
Sales rose 5.4 percent to $16.76 billion as growth in its wireless and broadband operations offset shrinking sales in its core consumer and business long-distance operations. Analysts had forecast sales of $17.3 billion for the quarter.
The company said it is looking for second-quarter earnings of 1 cent to 4 cents a share, well below forecasts of 8 cents a share.
The company saw somewhat better than expected revenue at its AT&T Wireless Group (AWE: Research, Estimates) unit, which has its own tracking stock. The wireless unit saw revenue rise 46.2 percent to $3.21 billion. First Call had been forecasting revenue of $3.16 billion for the unit.
The company said broadband, including cable television and high-speed Internet service, is growing revenue at a 10 percent annual rate. And it said business data services revenue continued to grow at about 20 percent, despite pricing pressures.
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But the company's core long-distance service continued to have problems, as its consumer business revenue fell 16 percent and its business service revenue slipped 1 percent.
"Our business, along with others in the industry, continues to feel the impact of declines in long-distance voice revenue," CEO Michael Armstrong said in a statement.
AT&T (T: Research, Estimates) stock, one of 30 in the Dow Jones industrial average, rose 41 cents to $22.39 Tuesday morning, a gain of nearly 2 percent.
Qwest hits profit forecast
In other telecom earnings news, telephone and data services company Qwest Communications International Inc. (Q: up $0.93 to $38.05, Research, Estimates) said on Tuesday its first-quarter pro-forma net income fell 9 percent as costs to build its wireless and data operations offset strong revenue growth.
Qwest, which acquired Baby Bell U S West Inc. last year, said net income fell to $218 million, or 13 cents a share, compared with $239 million, or 14 cents a share a year ago. Pro forma results were reported as though the merger had occurred as of the beginning of the periods. The results were in line with First Call's forecast.
The company also repeated its earlier guidance on earnings and revenue. Revenue for the most recent quarter came in at $5.05 billion, up 12 percent on a pro forma basis.
-- from staff and wire reports 
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