AT&T Corp reported second-quarter income from continuing operations of $959m, or $0.59 per share, down 38% from the same period a year ago, barely beating the First Call estimate of $0.58, on revenue that rose just 2.5% to $13.17bn. The slide in earnings resulted from the telecom giant’s growth strategy, which saw increased investment in local service and wireless operations, as well as its Worldnet internet access business. The company, which warned in March of diluted earnings to come, estimates that growth initiatives had a negative second-quarter impact of about $0.23 per share. The gain in revenue was driven mostly by an increase in long-distance and wireless service, but was partially offset by a 16% decline in financial services revenue to $351m. Revenue, when compared to calling volume, also suffered due to pricing pressures and the use of free minutes in customer retention. Business long-distance revenues grew 4% while consumer long distance revenues slipped roughly 1%. AT&T shares had no noticeable reaction to the news, in spite of a Reuters report, later picked up by CNet, which – based on an error in a press release – trumpeted that earnings for the quarter plunged 90% to only $95m. Looking ahead, AT&T says it feels comfortable with Wall Street estimates of $0.64 for the third quarter. For the first six months of the year, net income dropped 31% to $2.08bn, or $1.28 per share, on revenue up 2% at $26.22bn.