updated 1/20/2005 1:07:08 PM ET 2005-01-20T18:07:08

AT&T Corp.’s fourth-quarter earnings climbed nearly 84 percent to $625 million, with more than half of the profit coming from a tax benefit related to last fall’s huge writedown in the value of the huge long-distance telephone company’s assets.

The profit for the final three months of a rough year for AT&T amounted to 78 cents per share, the company said Thursday. In the same period in 2003, AT&T earned $340 million, 43 cents per share.

Fourth-quarter revenues totaled $7.27 billion, down 10.2 percent from the year-ago tally of $8.10 billion as fierce price competition and last year’s unexpected regulatory changes continued to erode the company’s telephone and data businesses.

The business services division generated $5.45 billion of the revenues, down 7.4 percent from a year earlier, while the consumer services unit saw revenues decline 7.9 percent to $1.8 billion.

The fourth-quarter profit included an after-tax depreciation benefit related to last fall’s multibillion-dollar writedown in the value of AT&T’s assets. The company recorded a charge of $12.5 billion in the third quarter to cover the asset writedown and severance costs for more than 12,500 job cuts.

Because quarterly depreciation expenses are based on an estimate of the wear and tear on the total value of various types of equipment and property, the reduced book value of AT&T’s assets meant a drop in that cost in calculating the company’s profit.

For all of 2004, the company swung to a net loss $6.11 billion, or $7.68 per share, including $12.8 billion in charges for the asset writedowns and other restructuring moves. In 2003, AT&T earned $1.87 billion, or $2.36 per share.

Full-year revenues declined 11.6 percent to $30.54 billion compared with $34.53 billion in 2003.

The sharp drop in revenues is expected to continue in 2005, shrinking from 15 percent to 18 percent to between $25 billion and $26 billion, the company estimated Thursday.

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