Broadband, Wireless Drive AT&T Profit

AT&T on Tuesday reported net income of US$1.45 billion for the first quarter of 2006, a slight increase over the combined net incomes as reported a year ago by the old AT&T and SBC, the two companies that merged in November.

The old AT&T and SBC had a combined net income of $1.41 billion during the first quarter of 2005, and using those numbers, net income grew about 3 percent year over year.

But in its financial statement, the new AT&T compares its latest quarterly results to SBC’s numbers from the first quarter of 2005. Using that comparison, year-over-year net income rose more than 63 percent, from SBC’s $885 million. SBC acquired the old AT&T in a deal worth about $16 billion.

The company will hold an earnings conference later Tuesday to discuss results.

The new AT&T posted operating revenue of $15.84 billion during the first quarter of this year, which ended March 31. That’s an increase of nearly 55 percent from SBC’s reported revenue of $10.25 billion a year ago.

But the new AT&T’s revenue is down more than $1.4 billion, or about 9 percent, when compared to the combined revenue of SBC and the old AT&T, which reported revenue of $7 billion in the first quarter of 2005.

The new AT&T posted earnings per share of $0.52 this past quarter, while analysts polled by Thomson Financial expected earnings of $0.48 per share. Taking out merger-related costs, earnings per share were $0.37 this quarter.

This was a “strong quarter,” Ed Whitacre, AT&T chairman and chief executive officer, said in a press release. The new AT&T is on track to achieve merger-related cost-cutting goals of $600 million to $800 million this year, he said. In addition, he said, the company is moving ahead with its plan to acquire rival telecom carrier BellSouth, a move announced in March.

Among the quarterly highlights, AT&T reported: