AT&T; Posts 84% Rise in Net Income

AT&T; Corp. on Thursday reported its first quarterly increase in profit after six straight quarterly declines as the nation’s largest long-distance phone company struggled to overhaul its operations.

The company credited new corporate customers as well as hefty tax benefits, workforce cuts and other expense reductions with boosting fourth-quarter net income 84% to $625 million, or 78 cents a share.

AT&T; earned $340 million, or 43 cents, in the same period the previous year.

Continuing a long slide, quarterly revenue fell 10% to $7.3 billion from $8.1 billion. Even so, it was nearly $140 million more than analysts had expected, according to a survey by Thomson First Call.

For the year, AT&T; posted a loss of $6.1 billion, or $7.68 a share, after writing down the value of its network by $11.4 billion in the third quarter. In 2003, it earned $1.9 billion, or $2.37 a share. Annual revenue fell 12% to $30.5 billion.

The 130-year-old company once known as Ma Bell is in the midst of transforming itself from a general services phone company to a networking operation focused on large corporate customers.

It stopped marketing conventional residential phone service last summer.

“We clearly evolved into a more tightly focused company in 2004, centered on the enterprise market where we hold our deepest market penetration and our greatest potential for long-term growth,” Chairman David W. Dorman told industry analysts in a conference call.

The transformation, said independent industry analyst Jeff Kagan of Atlanta, is making AT&T; a “very different company with a better cost structure and cash flow and, hopefully, a better future.”

But the company’s forecast that revenue will fall as much as 17% this year from continued price competition helped push its shares down 44 cents Thursday to $18.07 on the New York Stock Exchange.

AT&T; ended the year with 24 million residential customers, down from 30.3 million a year earlier.

The company said it also cut more expenses than it had anticipated, slashing its workforce by 23% instead of 20%. Altogether, it eliminated nearly 14,200 jobs, mostly on the consumer side, and ended December with 47,400 employees.