Thursday, October 20, 2005

AT&T Reports Profit in Last Fiscal Quarter

In what is expected to be its final quarterly financial report prior to an expected acquisition by SBC, AT&T posted Q3 2005 consolidated income was $1.0 billion in the third quarter of 2005, and a margin of 14.4 percent. This compares to a consolidated operating loss of $11.3 billion in the prior-year third quarter.


Consolidated revenue of $6.6 billion, which includes $5.1 billion from AT&T Business and $1.5 billion from AT&T Consumer, a decline of 13.3 percent versus the third quarter of 2004, primarily due to continued declines in long distance (LD) voice and data revenue. Notably, IP&E-services revenue increased 7.3 percent over the prior-year Q3, led by growth in services such as Enhanced Virtual Private Network (E-VPN) and IP-enabled frame relay services, partially offset by declines in mature products such as Managed Internet Access and Virtual Private Networks.


Some highlights from the quarterly report:


AT&T Business

  • Revenue was $5.1 billion, a decline of 9.5 percent from the prior-year third quarter, primarily driven by ongoing pricing pressure in traditional voice and data services and volume weakness in data services. Continued year-over-year growth in IP&E services favorably impacted revenue.


  • Long distance voice revenue decreased 12.7 percent from the prior-year third quarter. Ongoing pricing pressure led to revenue declines, despite an approximate 10 percent increase in volumes, as growth in wholesale more than offset the decline in retail volumes.


  • Data revenue declined 11.1 percent from the prior-year third quarter as a result of continued pricing pressure and lower volumes, including the impact of technology migration. Data revenue was also negatively impacted by approximately 1.5 percentage points due to higher customer disconnects of prepaid network capacity in the prior-year third quarter.


  • Local voice revenue declined 19.7 percent from the prior-year third quarter, reflecting lower payphone-related revenue as a result of the sale of the company's National Public Markets business. The decline also reflects the company's ongoing strategy of selectively approaching the small business market, placing a greater focus on profitability than overall market share.


  • IP&E-services revenue increased 7.3 percent over the prior-year third quarter.


  • CAPEX was $344 million at AT&T Business.


AT&T Consumer

  • Revenue was $1.5 billion, a decline of 24.3 percent versus the prior-year third quarter, largely driven by a decline in standalone long distance revenue due to volume declines associated with competitive customer losses and the continued impact of wireless and Internet substitution, partially offset by targeted price increases. In addition, the revenue decline was impacted by decreased bundled revenue./li>
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