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AT&T profits meet expectations; new wireless group nets surprise

SHARE AT&T profits meet expectations; new wireless group nets surprise

NEW YORK — AT&T Corp.'s second-quarter profits improved nearly 10 percent to match Wall Street's tempered expectations, while the company's new separately traded wireless group posted an unexpected profit for the period.

Net profits totaled $1.75 billion or 53 cents a share for the April-June quarter, up from $1.59 billion or 49 cents a share in the same period in 1999 and even with the consensus forecast of industry analysts surveyed by First Call/Thomson Financial.

Second-quarter revenue totaled $16.87 billion, if adjusted to include a full quarter from the MediaOne, the cable TV company that AT&T acquired in mid-June. That represents a 4.5 percent increase from the combined second-quarter revenues generated last year by the same operations, including MediaOne and other businesses AT&T had not yet acquired and excluding other operations that have been sold over the past 12 months.

AT&T said its business, wireless and cable units all posted revenue gains for the quarter, while the consumer long-distance business continued to weaken as expected, pressured by the heavy price competition in that market and ongoing shift among users toward alternatives such as wireless calling.

"We continue to cut costs in our legacy long distance voice businesses so we can invest in our high-growth businesses," AT&T Chairman and Chief Executive C. Michael Armstrong said in a statement. "We have taken action where we're not making the progress we should. We've redeployed people from staff jobs to sales and marketing."

The AT&T Wireless Group earned $22 million or 6 cents a share in an abbreviated second quarter that began April 27, when the company was created through an initial public offering of a new stock tracking the performance of AT&T's wireless operations. Analysts had expected the group, which is still fully owned by AT&T, to show a loss of 1 cent per share, according to First Call.

Wireless revenues grew 31.9 percent to $2.48 billion compared with a year-ago tally of $1.88 billion. The average monthly revenue per subscriber was $71.50, an increase of 7.7 percent from the $66.40 reported for the second quarter of 1999.

In AT&T's cable "broadband" business, which in addition to TV programming provides high-speed Internet access and telephone service, second-quarter revenues including MediaOne came to $2.370 billion, an increase of 10.5 percent from last year's second-quarter revenues produced by the same businesses.

With the completion of the MediaOne acquisition on June 15, AT&T became the country's largest cable TV company with about 16.1 million customers. At the end of the quarter, there were about 689,000 subscribers to the cable-Internet service AT&TAtHome and 223,600 customers buying AT&T's cable-based telephone service.

The pace of new installations for cable-telephone service, a major concern among those who've grown dubious about AT&T's $100 billion foray into cable, were averaging 1,600 per day at the end of the second quarter, up from 1,300 per day at the end of March.