AT&T restructuring swallows $7bn
The price of change
Giant US telco AT&T revealed the cost of its restructuring - $7.1bn in the three months ended 30 September 2004. In the third quarter of last year the firm made income of $418m. The telco blamed an $11.4bn reduction in the value of its long-distance network for the loss which works out at $8.95 per share.
Excluding restructuring charges and writedowns the firm had net income of $593m. Revenue for the third quarter was $7.6bn, $5.6bn from AT&T Business and $2bn from its consumer business, a drop of 11.7 per cent from the third quarter of 2003 which it blamed on falling long-distance voice and data revenue. AT&T shares rose slightly on the news.
The costs are related to AT&T's move away from consumer telco services to business services with higher margins and the cost of cutting 7,400 jobs.
David Dorman, chairman and CEO at AT&T, said: "Our results for the third quarter demonstrate significant progress in transforming AT&T's cost structure and delivering a more effective business model for the future."
The company expects to beat expectations for the full year.
More details available here.