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.