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4/24/2002
03:08 PM
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AT&T Posts 1Q Loss As Revenue Falls

The telco reported a loss of $975 million, more than four times the $192 million loss it reported for the same period last year.

Stung by declining revenue from its business and residential long-distance voice services, AT&T said its first-quarter revenue dropped 11.3%, to $12.02 billion, from $13.55 billion a year ago.

"Revenue decline was largely driven by the ongoing weakness in the economy, industry pricing, and volume pressures," AT&T chairman and CEO Michael Armstrong said Wednesday during a teleconference. For the quarter ended March 31, AT&T reported a loss of $975 million, more than four times the $192 million loss it reported for the same period last year. The loss included an $856 million write-off of goodwill and other intangible assets required by new accounting rules, plus a $580 million pretax write-off for investment losses, according to AT&T.

Including additional revenue of $575 million to $675 million that the company expects to book during the rest of 2002 as a result of the break-up of its Concert joint venture with British Telecom, offset by $200 million to $250 million in additional losses and costs from the breakup, AT&T expects to contain its revenue decline in the second quarter to 9% or 10% below the second quarter of 2001.

In the most recent quarter, revenue from AT&T's business-services division dropped 8%, to $6.53 billion, compared with the same quarter a year ago, led by a 19% decline in its business long-distance voice revenue. Including the effects of the Concert breakup, AT&T expects its business-services revenue for the second quarter to be 4% to 6% less than its second-quarter revenue last year and, for the full year, 4.5% to 5% below 2001 revenue.

On the positive side, AT&T said its sales of packet data services such as frame relay, asynchronous transfer mode, and IP to businesses in the second quarter increased 20% over the same period last year. The company says IP services alone increased 37% compared with last year.

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