10-QPeriod: Q3 FY2001

AT&T INC. Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 8, 2001For Securities:TT-PCTBBT-PA

Summary

SBC Communications Inc. (now AT&T Inc.) reported a notable decline in operating revenues for the third quarter and the first nine months of 2001 compared to the previous year. This decrease was driven by a combination of factors including a weakening U.S. economy, increased competition, and strategic sales of non-core assets. Despite the revenue challenges, the company managed to keep operating expenses relatively stable in the third quarter, but saw an increase in operating income for the wireline segment. The wireless segment, heavily influenced by the Cingular Wireless joint venture, showed subscriber revenue growth. Management anticipates continued economic headwinds and regulatory pressures, signaling potential challenges for future growth.

Key Highlights

  • 1Operating revenues decreased by 15.5% in Q3 2001 and 13.2% for the nine months ended September 30, 2001, compared to the prior year.
  • 2Net income declined to $2,072 million ($0.61/share diluted) in Q3 2001 from $2,999 million ($0.88/share diluted) in Q3 2000.
  • 3The company made significant capital expenditures, investing $8,096 million in construction and capital projects for the nine months ended September 30, 2001, primarily in the wireline segment for its broadband initiative.
  • 4Wireless subscriber revenues grew by 8.9% in Q3 2001, reaching 21.3 million Cingular customers.
  • 5The company reported an extraordinary loss of $18 million, net of tax, related to the early redemption of preferred securities.
  • 6SBC Communications Inc. experienced a decrease in its workforce by several thousand employees and plans to cut capital spending for 2002 due to the weak economy.
  • 7The company entered into a definitive agreement to acquire Prodigy Communications Corporation in October 2001.

Frequently Asked Questions

The primary reasons for the decline in operating revenues were the weakening U.S. economy, increased competition within the telecommunications industry, and strategic decisions to sell non-strategic assets.

The Cingular Wireless joint venture contributed to growth in wireless subscriber revenues, with Cingular reaching approximately 21.3 million customers by the end of Q3 2001. However, other revenues, such as roaming revenues, saw a decrease.

SBC anticipates that the economic downturn will persist through 2002. Combined with a challenging regulatory and competitive environment, this is expected to put significant pressure on the company's ability to generate meaningful growth in 2002. The company plans to reduce its workforce and capital spending accordingly.

SBC invested $8,096 million in construction and capital expenditures for the first nine months of 2001, largely focused on the wireline segment and its broadband initiative, Project Pronto. This included investments in fiber, electronics, and technology equipment.