For the third quarter ending September 30, AT&T posted a staggering operating loss of $11.27 billion. However the net loss for the quarter was actually $7.11 billion, compared to a net income of $418 million in the year-ago quarter.
The write-down of $11.4 billion is partly due to the carrier’s July decision to withdraw from the consumer market, which therefore makes its network less valuable. The carrier is also having to bear costs of $1.1 billion due to CEO David Dorman’s strategy to axe 12,300 jobs this year, or 20% of the workforce.
Only this week, Dorman eliminated 1,600 jobs as part of his plan to bring AT&T’s workforce to about 49,300 by year-end. The carrier said this month it plans to trim at least an additional 3,800 jobs in the first part of 2005.
Meanwhile, sales at the carrier have declined 11.7% to $7.63 billion, down from $8.64 billion in the year-ago quarter. Revenues were hurt by the price competition with long-distance provider MCI Inc and regional phone companies such as Verizon Communications Inc.
Revenue in the company’s consumer unit, which includes long- distance, local and Internet calling, dropped 15% to $1.98 billion. The consumer unit is struggling as mobile phone usage spreads and customers switch to regional telephone companies.
Sales in the core business unit, which sells voice and Internet services to corporations, fell 10% to $5.65 billion.
AT&T had 26 million consumer customers at the end of the third quarter, down from 34.2 million at the end of 2003.
In July the carrier revealed it was shifting its focus away from wireline residential telephone services and concentrating its growth efforts on business markets and emerging technologies such as VoIP that can serve business as well as consumers.
Unfortunately for AT&T, the business market is scarcely a growth sector as companies seize on new technologies to lower their communications costs.
