AT&T Has Lackluster 4Q; Roscitt Quits



It's just another manic Monday for struggling telco AT&T. In addition to detailing a lackluster fourth-quarter financial performance as it splits into four separate businesses, the company revealed that Rick Roscitt, president of the Business Services unit, has resigned to become CEO and chairman of the board for networking equipment vendor ADC Telecommunications Inc.

Roscitt had been brought over from AT&T's successful Solutions outsourcing unit more than a year ago to run Business Services, a unit that provides staple voice, data, and IP communications services to businesses. He had been widely considered the heir apparent to CEO and chairman Michael Armstrong until Dave Dorman was named to the long-vacant post of president. Dorman had served as CEO of Concert, AT&T's international services joint venture with British Telecom. AT&T has no immediate plans to fill Roscitt's position, and, for now, Dorman will oversee the operations, says an AT&T spokesman.

On the financial front, for the fourth quarter ended Dec. 31, AT&T posted $16.8 billion in revenue, up only 3% from the same period in 1999. Although the company reported a $4.3 billion loss in operating income, compared with a $2.4 billion profit for the same quarter the previous year, it spent $6.2 billion in net restructuring and other charges, roughly double what it spent for the same period in 1999. For the full year, revenue was $65.98 billion, compared with $62.6 billion in fiscal 1999. Net restructuring charges for fiscal 2000 were $61.7 billion, compared with $51.74 billion in fiscal 1999.

Advances in Business Service sales were largely offset by accelerated shrinkage (14.7%) in consumer business revenue. But there was good news in the financial performance of the Wireless Group tracking stock, which will be completely spun off by midyear. It posted revenue growth of 39.1%, to $3 billion, compared with $2.1 billion for the same period in 1999.

AT&T's projected flat growth in business services this year could benefit companies as price competition intensifies between AT&T its and rivals, says Lisa Pierce, a VP at consulting firm Giga Information Group. "But that could hurt AT&T by driving margins down. Beyond the good news in wireless, the news in most other areas is abysmal." She adds that it's likely other top execs may depart as the company progresses with its breakup.

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