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AT&T ads target WorldCom woes

An ad campaign strikes an ironic chord as the telecom giant woos WorldCom customers while announcing a $12.7 billion quarterly loss.

AT&T heated up an offensive to lure customers from WorldCom, launching a major advertising campaign Tuesday in some of the nation's largest publications.

But the timing of the campaign may strike an ironic chord with customers navigating the troubled telecommunications sector. Hours after the print ads debuted, AT&T announced its own $12.7 billion quarterly loss after charges to write down the value of some assets. Revenue in the second quarter fell 6.2 percent to $12.1 billion.

The full-page ads, which ran in USA Today, The Wall Street Journal and dozens of smaller regional papers, promised that the New York-based long-distance telephone and cable-television giant would be around "through good times and bad." The ads also featured a huge blue AT&T logo made with fine-print names of hundreds of workers.

"You can count on us," the ad stated. "And since communication is everything, we'd like to take this opportunity to let you know there's never been a better time to choose AT&T. So contact us today and let us find the plan that's right for you."

The ads don't specifically mention WorldCom, which filed for bankruptcy on Sunday, saddled with a $3.85 billion accounting scandal and $32 billion in debt. The Justice Department and the Securities and Exchange Commission are conducting investigations on the Clinton, Miss.-based company, whose assets include MCI, the country's No. 2 long-distance provider, and UUNet, which carries the bulk of the Internet's traffic.

The bankruptcy filing and investigations sparked concern among many customers, who scrambled last week to find backup providers and create contingency plans in the unlikely event of a total WorldCom collapse.

AT&T spokesman John Heath said Tuesday the ads definitely relate to the recent trouble at WorldCom--as well as in the telecommunications sector at large. Also on Tuesday, Lucent announced a $7.91 billion net loss, and the telecommunications equipment maker announced plans to ax 7,000 jobs.

"Our competitors have run into a lot of troubles of late, and we thought it would be good to remind customers that we don't have many of their issues--the accounting problems, the business plan problems," Heath said. "We've got a strong brand and a long history."

Heath would not say how long the advertising campaign would run. Although it did not include any online publications, the newest campaign appeared in all major national and regional newspapers, as well as daily and non-daily publications targeting the Latino market, one of the nation's fastest growing demographic groups.

When asked whether the ads and AT&T's staggering quarterly loss sent a mixed message to customers already worried about a broader telecommunications meltdown, Heath was dismissive. He noted that the second-quarter profit, excluding costly one-time items, rose to 7 cents a share. That beat Wall Street forecasts of 3 cents a share, according to research firm Thomson First Call.

"We're on track with all of our business results and still have a relatively healthy business structure and low debt," Heath said. "It was a very healthy report, and we're seeing some promising signs."

Officials at WorldCom bristled at AT&T's showy advertisements. Spokeswoman Debbie Lewis said she didn't want to discuss the newest ad campaign of her company's largest competitor, but she couldn't help referring to the ads' wording in her brusque retort.

"We expect to be here in good times and in bad as well," Lewis said. She noted that WorldCom has not lost a single anchor customer in recent weeks, including the Nasdaq and a number of large government agencies. She said rates of attrition among customers are similar to what they were in previous quarters.

"Of course there'd be concern when a company goes into bankruptcy," Lewis admitted Tuesday. "But we've had every indication from management that we'll continue to operate through Chapter 11. Our No. 1 focus is keeping customers happy--from our perspective, it's business as usual...We've seen a lot of support from customers."