Excite charge leads to AT&T loss

(Telephony) Suffering from the drag of Excite@Home, AT&T reported a loss per share for its first quarter of 10 cents.

The Excite@Home charge came to light last week in a filing AT&T made with the SEC. AT&T said that it would take an impairment charge of $740 million to $780 million because of a slowdown in Excite@Home’s media business.

Even discounting the charge, the quarter was significantly slower compared to last year. Excluding the Excite@Home charge and other income, the company posted earnings per share of 6 cents, down from an EPS of 34 cents in the first quarter of 2000, though ahead of the consensus analyst estimates from First Call/Thompson Financial of 5 cents. The company posted revenue of $16.76 billion, up 5.4% year over year.

Pro forma revenue was down across some key units. AT&T business reported a 1.2% decline to $7.17 billion, consumer was down 16.2% to $4.01 billion. However, broadband pro forma revenues increased 10.9% to $2.5 billion.

During the quarter, AT&T reduced its net debt from $56 to about $48 billion. The debt should be lowered even further with the completion of asset sales to Charter Communications, Mediacom Communications and Japan Telecom.

“We are executing on the aggressive deleveraging plan. It will continue to be a top priority,” said AT&T Chairman and CEO C. Michael Armstrong.

Among the problem areas for AT&T was Concert, said Armstrong. The underachieving joint venture with BT has been the subject of regular discussion between the two companies.

“We have issues with Concert. There are pricing issues, industry issues, global issues and. in fact, structural issues,” he said. “We are absorbing bad debt from some of our customers, who are carriers. We’re seeing some softening in the distributor sales, particularly in Europe, and we’re experiencing higher depreciation levels on undersea cables than we did in 2000.”

For the remainder of the year, AT&T said that it is not able to accurately estimate revenue, EBITDA and EPS because of its restructuring.

For the second quarter, however, the company projects EBITDA to be in the mid-$4 billion range and EPS to be between 1 cent and 4 cents, lower than the average analyst estimate of 8 cents.