AT&T Corp., the No. 1 U.S. long-distance telephone company, on Thursday posted lower fourth-quarter net income as weak customer demand and pricing pressures eroded revenues.
It forecast further sales declines in 2004 and said it would repurchase $3 billion in debt. Some industry analysts had expected AT&T to repurchase stock and hike its dividend.
AT&T and other long-distance carriers also have suffered from a shift by customers to wireless telephones, intensifying competition as the Baby Bells attack the long-distance market and lackluster spending by corporate customers.
Its fourth-quarter net income totaled $340 million, or 43 cents a share, compared with $516 million, or 66 cents a share a year ago.
AT&T said income from continuing operations of $340 million, or earnings per diluted share of 43 cents, for the fourth quarter of 2003.
That compared to a loss of $611 million, or a loss per diluted share of 79 cents, in the fourth quarter of 2002, which included more than $1.2 billion of asset-impairment charges.
AT&T’s fourth-quarter revenues dropped 12.8 percent to $8.1 billion. That reflected continued declines in long distance telephone revenue, partially offset by growth in some business products, such as wholesale long-distance services, and sales of consumer packages of service.
Wall Street analysts expected AT&T to earn 40 cents a share on revenues of $8.2 billion, according to tracking firm Reuters Research, a unit of Reuters Group Plc.
In the fourth quarter, business revenues dropped 10.9 percent to $5.9 billion. It saw continued weakness in overall telecommunications spending as corporations keep a tight grip on their wallets. Sales of data and retail long-distance service continued to plunge, but that was partially offset by growth in wholesale long-distance and local telephone service.
Consumer revenues sank 18.9 percent to $2.2 billion. Sales of stand-alone long-distance service continued to evaporate, but it saw success with its new packages of service that include both local, long distance and Internet services.
The company said it expects its 2004 revenue-decline to be in the range of 7 percent to 10 percent, business revenues down 4 percent to 7 percent and consumer sales down 15 percent to 17 percent.
The company also said it would repurchase up to $3 billion of debt as it continues to cut costs and reduce interest expenses. It had $14.4 billion in total debt as of Dec. 31, 2003.