AT&T Earns $520 Million in Third QuarterAT&T Earns $520 Million in 3rd Quarter Ahead of Acquisition by Ex-Subsidiary SBC Communications

AT&T Corp. painted a positive picture Friday with what may be its
final earnings report before becoming part of SBC Communications Inc.,
topping Wall Street forecasts with third-quarter income of $520
million and boosting its revenue forecast for the second time this
year.

The iconic telephone company, which in January agreed to be acquired
by SBC for $16 billion, also expressed optimism the deal would close
before year's end, winning regulatory approval without concessions
such as asset sales or price freezes.

Despite the upbeat report, AT&T's results reflected the persistent
competitive turmoil of the telecommunications industry, which has
reduced the once mighty company's customer base by two thirds over the
past decade from roughly 60 million at the peak to less than 20
million at the end of the latest quarter.

"AT&T's employees across all areas of the company have done a
fantastic job of transforming our business in the face of adverse and
chaotic conditions in our sector," Chief Financial Officer Thomas
Horton said during a conference call with industry analysts.

The profit reported Friday amounted to 64 cents per share for the
three months ended Sept. 30. The results included a $92 million
expense relating to investments in aircraft leases with airlines that
have filed for bankruptcy, as well as $20 million in expenses for the
SBC deal and a $41 million pretax benefit.

In the third quarter of 2004, AT&T lost $7.15 billion, or $8.99 per
share, as the company wrote down the book value of its national
telecommunications network by $11.4 billion following a decision to
retreat from the consumer telephone business. Excluding that expense,
other restructuring charges and one-time tax benefits, it would have
earned $262 million, or 33 cents a share, a year ago.

The latest results appeared to top Wall Street forecasts by a sizable
margin, though Thomson Financial said the assortment of one-time
charges and credits made it unclear whether the 51 cent profit
forecast from its analyst survey was directly comparable to the
figures emphasized in AT&T's report.

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