Newspaper article THE JOURNAL RECORD

Analysts Foresee AT T Profit Hike

Newspaper article THE JOURNAL RECORD

Analysts Foresee AT T Profit Hike

Article excerpt

Bloomberg Business News

NEW YORK _ AT T Corp. will post higher second quarter earnings as increases in long-distance revenue and earnings will offset an operating loss in the company's computer unit, analysts say.

AT T, the No. 1 long distance carrier, is expected to post a 10 percent increase in earnings per-share to 85 cents, based on an average estimate of 18 analysts surveyed by Zacks Investment Research. The company is scheduled to report its results Thursday morning.

By comparison, MCI Communications Corp., the No. 2 carrier, is expected to post a 2.7 percent earnings increase, Zacks reported. Sprint Corp., the No. 3 long-distance company, Tuesday said earnings rose a more-than-expected 12 percent.

AT T's year-ago net income for the quarter was $1.1 billion or 83 cents a share on revenue of $17.7 billion. AT T restated the results to 77 cents a share for its acquisition of McCaw Cellular Communications Inc.

In its long-distance business, AT T will benefit from an increase in traffic on its network as well as a reduction in the charges it pays to complete phone calls over local phone companies' networks. However, those gains will be hampered as its Global Information Solutions computer unit continues to post losses, analysts said.

"AT T should experience stable to improved long-distance volume growth in the 8 percent to 8.5 percent range with 4 percent revenue growth," Linda Meltzer, analyst at UBS Securities, wrote in a research report. "But there is continued weakness in its GIS (formerly NCR) business."

In the first quarter, the loss at Global Information Solutions widened as the unit posted more sales from products with lower profit margins, with price competition contributing to the wider loss. At the time, AT T said the unit will continue to focus on reducing its product and distribution costs and improving the product mix to higher-margin products.

New York-based AT T needs to turn around its Global Information Solutions unit, which makes computers, analysts said. In the first quarter, the unit said its operating loss widened to $143 million from $57 million.

Richard Klugman, analyst at PaineWebber Inc. …

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