AT&T cited increasing pricing pressures and predicted declining overall revenues for 2004. The company reported Q4 2003 consolidated revenue of $8.1 billion, which included $5.9 billion from AT&T Business and $2.2 billion from AT&T Consumer. This represented a consolidated revenue decline of 12.8% versus Q4 2002, primarily due to continued declines in long distance (LD) voice revenue, partially offset by the continued success of AT&T Consumer's bundled local and LD offering, as well as growth in several key markets of AT&T Business. Net income from continuing operations was $340 million and earnings per diluted share were $0.43. Free cash flow was $0.7 billion for Q4. The company met its 2003 financial guidance. Some highlights for the quarter:
- Q4 revenue for AT&T Business was $5.9 billion in the fourth quarter of 2003, a decline of 10.9% from the prior-year. AT&T blamed Pricing pressure, LD voice competition, demand weakness in data and retail LD voice, as well as overall weakness in telecommunications spending for the decline.
- AT&T Business long distance voice revenue declined 13.1% on a quarter-over-quarter basis, reflecting a shift from retail to wholesale services. Volumes grew nearly 7% on a quarter-over-quarter, also reflecting the same wholesale shift.
- AT&T Business local voice revenue grew 15.0% from the prior year Q4. Local access lines totaled nearly 4.5 million at the end of 2003, representing an increase of almost 136,000 lines from Q3.
- AT&T Business data revenue declined 6.7% from the prior-year quarter and 4.6% for the full year. Growth rates were negatively impacted by pricing pressure, particularly on high-capacity bandwidth circuits, as well as weak retail demand.
- AT&T Consumer revenue was $2.2 billion for Q4, representing 18.9% compared to Q4 2002. Declines were driven by lower standalone LD revenue as a result of the continued impact of competition, wireless and Internet substitution, and customer migration to lower-priced products and calling plans, partially offset by pricing actions. These revenue declines were also partially offset by growth in bundled revenue, which grew nearly 65%.
- Consolidated revenue decline between 7-10%;
- Consolidated operating income margin between 6-8%;
- AT&T Business revenue decline between 4-7%;
- AT&T Consumer revenue decline between 15-17%;
- Capital expenditures of approximately $2.5 billion, compared to $3.4 billion for 2003.
AT&T also announced the following expectations for 2004:
