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AT&T bests forecasts, teams with NTT

AT&T reports first quarter earnings that surpass analysts' expectations and and inks a deal with Japan's Nippon Telegraph and Telephone.

AT&T, the country's largest long distance telephone carrier, today announced first quarter earnings that surpassed Wall Street analysts' expectations.

The telecommunications giant said profits grew 39 percent, mainly on the strength of its business and wireless services which offset declines in consumer services.

Separately, AT&T announced today that it has agreed to collaborate with Japan's Nippon Telegraph and Telephone in the fast-growing global market for corporate network products.

Shares of AT&T rose slightly on the day, up 0.0625 to 53. The stock has traded as high as 64.08 and as low as 32.25 during the past 52 weeks.

The company pulled in a profit of $1.7 billion, excluding one-time charges, or 61 cents per share, beating the an estimate of 57 cents per share according to a consensus of analysts polled by First Call. AT&T's year-ago quarter profit was $1.2 billion or 46 cents a share.

"Our focus on execution is working," said AT&T chairman Michael Armstrong in a statement. "For the fifth consecutive quarter, top-line revenues are up and expenses are down. That allowed us to meet investor expectations by increasing operational earnings, excluding TCI, 46 percent, while continuing to invest in future growth."

AT&T's total revenue for the quarter, excluding TCI, jumped 6.1 percent to $13.6 billion, compared to $12.8 billion in the first quarter of 1998. Including TCI, the company's total revenue on a reported basis for the first quarter increased 9.9 percent to $14.1 billion, compared to $12.8 billion for the year-ago quarter.

AT&T's business services unit reported first quarter revenue of $6.2 billion, an increase of 7.5 percent, compared to $5.8 billion a year ago. The company's consumer services unit, however, had $5.5 billion in revenue for the first quarter, a decline of 3.4 percent, compared to $5.7 billion for the year-ago quarter.

Wireless services revenue rose 40 percent, adjusted for the sale of AT&T's messaging business in October 1998. Revenue from AT&T's other corporate unit, which includes AT&T Solutions and other international operations and ventures, climbed 69.1 percent to $351 million, compared to $208 million a year ago.

On a pro forma basis for a full quarter, revenue for AT&T's Broadband and Internet services unit, including businesses acquired in the TCI merger, increased 7 percent to $1.3 billion, compared to $1.2 billion a year ago. quarter of 1998. This number does not reflect AT&T's other announced cable partnerships or @Home interest.

Under terms of a memorandum of understanding, NTT and AT&T will immediately begin working together to develop ventures that provide value-added networking solutions for large and mid-sized multinational businesses and industries.

AT&T Solutions, as the managed professional services unit of AT&T, will represent AT&T in working with NTT.

Global networking solutions, or managed services, are delivered in the form of professional services for custom designing, deploying, and managing enterprise networks.

Both companies noted that the market for networking solutions is one of the fastest growing segments of the telecommunications industry.

"As businesses become more dependent on network technologies and as the promise of the Internet as a business platform for the future is realized, the issue of network reliability and quality across multiple borders is critical," Jun-ichiro Miyazu, president of NTT, said in a statement.

"NTT and AT&T hope to capitalize on this trend by bringing together their substantial capabilities to address these customer demands worldwide, he added.

During a conference call with analysts, Armstrong said that AT&T still could make acquisitions or alliances to enter the Asian and Latin American markets.