AT&T trimmed its financial outlook for 2004, citing ongoing pricing pressure, recent changes in FCC policy and new product initiatives. Key points of the market update include:
- a recent escalation in competitive pricing pressure is expected to negatively impact AT&T's Business division in the near-term. As a result, the company now expects a sequential increase in the year-over-year rate of revenue decline for AT&T Business in the second quarter of 2004, and a full-year revenue decline exceeding the company's previous forecast.
- due to the new regulatory environment, AT&T Consumer is scaling back its customer acquisition efforts, resulting in an expected decline in the high-teens percentage for 2004 revenue versus 2003 levels.
- the company is reaffirming an aggressive roll out plan for its AT&T CallVantage VoIP service. AT&T now offers CallVantage in 46 major markets across 12 U.S. states and anticipates offering the service in over 100 domestic markets by the end of the third quarter, ahead of its prev y announced year-end target. As a result, AT&T will incur higher than expected marketing expenses.
- the previously mentioned market conditions affecting both AT&T Business and AT&T Consumer are expected to result in full-year 2004 consolidated operating income between $1.0 billion and $1.4 billion, excluding restructuring charges.
- the company is ahead of its previously announced 8% headcount reduction for 2004. This will result in a charge of approximately $70 million in the second quarter primarily related to employee separation costs.
- AT&T now expects to spend approximately $1.8 billion in capital for 2004.
