July 23, 2002, 10:05 AM — AT&T Corp. posted a loss of US$12.7 billion for the second quarter of 2002 as revenues from both business and consumer telephone services continued to drop sharply.
The company also took a $13.1 billion after-tax charge in the quarter based on the adoption of new accounting standards by the company and a reassessment of the value of the company's broadband cable assets.
Based on generally-accepted accounting principles (GAAP), the company posted a loss from continuing operations of $12.7 billion for the quarter, sharply higher from a loss of $51 million in the second quarter 2001. That loss translates to a loss of $3.49 per share for the quarter, compared to a loss of $0.10 per share in the same quarter last year.
The company posted $3.4 billion in EBITDA (Earnings Before Interest, Taxes, Debt and Amortization) earnings, excluding expense/income, for the quarter, down from $3.9 billion in the second quarter 2001.
AT&T reported earnings of $0.07 per share diluted from continuing operations, excluding other expense/income, goodwill and franchise impairment. That figure was up from $0.04 per share in the same quarter 2001 and above the $0.03 per share that the 13 analysts polled by Thomson Financial/First Call had expected from the company for the quarter.
AT&T's revenue for the quarter, on a pro forma basis, was $12.1 billion, down from $13.3 billion in the second quarter last year.
Despite the company's loss for the quarter, AT&T posted "solid second quarter results, despite tough economic and other challenges," said Michael Armstrong, AT&T chairman and chief executive officer, on a conference call held Tuesday.
The company's AT&T Business telephony division posted earnings before interest and taxes (EBIT), and excluding other expense/income, of $879 million for the quarter, down from $1.17 billion in the second quarter 2001. Those earnings were achieved based on revenue of $6.74 billion for the quarter, down from $7.01 billion in the same period last year.
The AT&T Consumer telecommunication division posted EBIT earnings, excluding other expense/income, of $787 million, down from $1.21 billion in the second quarter of 2001. Revenue for this quarter was $2.91 billion, down from $3.72 billion in 2001.
Results for AT&T's telephone businesses are down due to weaker business spending, as well as increased Internet traffic, said David Dorman, AT&T president, also speaking on the conference call.
"We continue to see the telecom sector recovery lagging the broader economy," he said.
For the quarter, more IP (Internet Protocol) traffic crossed AT&T's network than did long distance telephone traffic, he added.