AT&T Corp, the No 3 US telephone company, on Thursday reported a $7.1 billion third-quarter loss due to $12.5 billion in charges for cutting asset values and jobs after its retreat from consumer services.
The $11.4 billion asset writedown, along with $1.1 billion in charges related to 7,400 job cuts announced earlier this month, are part of ATT's to shift its focus to business services and cut costs amid increasing competition from the dominant US local telephone companies.
AT&T executives said the cuts were already improving profitability, but warned that the fourth quarter would be weaker due to seasonal effects and continued price pressures.
The net loss of $8.95 a share compares with net income of $418 million, or 53 cents a share, in the same year-earlier quarter. Excluding charges in both periods, AT&T said it earned $593 million, or 75 cents, up from $141 million, or 18 cents a share, in the same period a year earlier.
Revenues of $7.6 billion were down 11.7 percent from the third quarter of 2003. Consumer revenues fell 15 percent, while business revenues fell 10 percent.
AT&T's retreat from consumer services followed a court decision earlier this year that threw out rules forcing local carriers to lease consumer lines to AT&T at wholesale rates. The "Baby Bells" such as SBC Communications and Verizon Communications Inc have been able to grab a large share of AT&T's consumer business by bundling local and long-distance service, an advantage AT&T said was too great to overcome.
AT&T said it lost about 200,000 local customers during the quarter, but improved operating profits due to cost cuts.
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