AT&T said it has yet to see a turn around in overall corporate telecommunications spending and does not expect a significant improvement this year. The company reported Q4 2002 revenue of $9.3 billion, a decline of 8.6% from the year-ago quarter. There was a loss per diluted share from continuing operations of $0.79. AT&T attributed the revenue decline to continued pricing pressure in long distance voice services. Other negative factors included charges for its past investment in AT&T Latin America, special charges for layoffs, and a write-down of its DSL network due to the recent outsourcing agreement with Covad. These declines were partially offset by the disposition of AT&T Broadband and growth in local voice as well as data/IP and managed services. Some highlights of the report:
- Full-year 2002 revenue was $37.8 billion, a decline of 10.4% from the previous year. AT&T Business recorded Q4 revenue of $6.6 billion, down 3.0%. Long distance volume growth of 7% was offset by price declines, leading to an overall decline in long distance voice revenue of 10% in the quarter. Local voice revenue grew more than 25% in the quarter.
- AT&T said UNE-P remains an important means of reaching small business customers and now accounts for more than 15% of its total access lines. The company added more than 180,000 local access lines in Q4, for a total of 3.6 million business local access lines at year-end.
- Ten of AT&T's all-time highest traffic days for long distance voice occurred in 2002 (excluding the week of 11-September-2001).
- Data/IP/Managed services revenue, including customer premises equipment sales, grew about 3% in the quarter. Packet service revenues (Frame Relay, ATM and IP) increased 16% in Q4 compared to the same quarter in 2001 - this was led by roughly 20% growth in IP. Managed services felt the effect of weak IT spending and grew by 6% in the quarter. Managed hosting grew by more than 20% for the year. AT&T said it is seeing stabilized pricing trends in its data business, particularly with Frame Relay, where price increases held during the quarter.
- Earlier this week, AT&T crossed over the 1,000 Terabyte per day traffic threshold on its IP network
- AT&T Business expects a slower rate of revenue decline in 2003 compared to 2002.
- AT&T Consumer recorded Q4 revenue $2.7 billion, down 20% from a year ago. AT&T Consumer expects the 2003 rate of revenue decline to be slightly less than the decline in 2002.
- AT&T said it is hopeful that UNE-P will remain available as a vehicle to kick start local competition.
- AT&T expects capital expenditures for 2003 to be approximately $3.3 to $3.5 billion. CAPEX spending was $3.9 billion in 2002, down 31% compared to $5.6 billion in 2001.
- Earlier this month, AT&T announced $1.1 billion in special charges for Q4 2002 associated with its past investment in AT&T Latin America. The company also announced a pre-tax restructuring charge of approximately $240 million in its Q4 2002 financial results to cover the costs of approximately 3,500 planned employee separations.
Separately, AT&T offered to repurchase for cash up to $4.3 billion of debt (6.375% Notes due March 15, 2004 and 6.50% Notes due March 15, 2013).
A webcast of AT&T's quarterly conference call is archived online.
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