Corpus Christi Caller Times Caller.com - AT&T profits slip; cable plan snagged

Marketplace \| Services \| Contact Us \| Community \| Arts & Entertainment \| Local Guides

Tuesday, October 26, 1999

AT&T profits slip; cable plan snagged
Some losses are attributed to TCI takeover
By Bruce Meyerson
Associated Press

   NEW YORK - Third-quarter profits stumbled at AT&T Corp., and there are reports of snags in the company's plans to provide telephone and Internet service via cable TV.
   AT&T said Monday that its core operations, including the Tele-Communications Inc. cable television business and the IBM network and online services business, earned $1.75 billion, or 54 cents a share, in the three months that ended Sept. 30.
   Those figures were 4.5 percent lower than AT&T's operating profit of $1.84 billion, or 68 cents a share, in the same period last year, but slightly better than most projections, according to a survey of industry analysts by First Call/Thomson Financial.
   After the report, AT&T's share price gained 3 percent, rising $1.18 to $44.18 amid a steep slide on the New York Stock Exchange.
   The decline in operating profits reflects the heavy expenses involved in absorbing a huge company like TCI but excludes the losses from AT&T's ownership interests in the cable TV company Cablevision and the cable-Internet service ExciteAtHome, both acquired along with TCI.
   Including all those factors, AT&T had a net profit of $1.63 billion or 50 cents a share in the just-ended quarter, down from $2.12 billion or 78 cents a share a year earlier.
   Third-quarter revenues totaled $16.31 billion, an increase of 5.6 percent compared with the $15.44 billion that all of AT&T's businesses, including the recently-acquired ones, would have generated as a single company a year ago.
   The report provided a forum for AT&T officials to address market and media speculation about possible missteps and wrinkles in the handling of various issues facing the company's bid to create a national telephone network using the cable TV wires reaching into most U.S. homes.
   The most prominent obstacles have been negotiations to sell its new cable-telephone service on cable systems AT&T doesn't own, as well as demands by Internet service providers like America Online who want access to AT&T's cable systems to offer high-speed Web access.
   GTE sues AT&T
   Separately Monday, GTE Corp. filed a suit against AT&T, alleging monopolistic practices by the nation's largest cable operator in charging consumers extra to buy high-speed Internet access from companies other than ExciteAtHome.
   During a conference call with analysts after the profit report - but before the GTE suit was announced - AT&T chief executive C. Michael Armstrong rejected reports in The Wall Street Journal on Monday that the company has angered cable operators Time Warner and Cablevision Systems on both scores.
   "I'd like to refute that right out," Armstrong said, asserting that AT&T had been unable to make real progress with the Time Warner talks until last week, when the company received guidance from federal regulators regarding AT&T's proposed acquisition of MediaOne, a cable company that owns a quarter of Time Warner's cable operation. Relations also remain positive with Cablevision, which AT&T owns a third of through the TCI acquisition, he added.
   "I had a talk with Chuck Dolan the other day and I don't know of any problems, although the newspapers seem to," Armstrong said, referring to Cablevision's founder and top executive, Charles Dolan.
   Upgrades, pilot programs
   Meanwhile, AT&T reported continued progress in the costly process of upgrading its cable systems for two-way telephone and Internet communications, as well as pilot programs and marketing efforts for the new services.
   AT&T said it now has 113,600 subscribers to the ExciteAtHome Internet access service and expects to have 175,000 by the new year and 275,000 by the end of March.
   The company also said it has begun its seventh pilot program for local telephone service over cable TV lines with the addition of Salt Lake City. So far, there are 2,100 paying phone subscribers in the markets where AT&T has begun charging, mostly in Fremont, Calif. Those customers have been averaging $30 in charges on their monthly bills.
   Healthy wireless revenues
   Wireless revenues posted the healthiest increase again among AT&T's various operations, rising more than 40 percent for the third straight quarter compared with year-earlier levels.
   But overall, consumer services revenues fell 4.7 percent to $5.61 billion, squeezed by the price war being waged in the long-distance calling market.
   AT&T said its new 7-cents per minute offer, a counterattack to new long-distance plans launched by Sprint and MCI WorldCom, signed up 2 million customers in the first five weeks - about 30 percent switching from other long-distance companies and 70 percent coming from other AT&T plans.
   "That represents the fastest start in any program that anyone around here can remember," John Zeglis, the head of AT&T's consumer operations, said in a conference call with analysts after Monday's earnings report.

[ Printer-friendly version ]
[ Subscribe to newspaper ]