AT&T losses rise sharply

The leading US long-distance telephone and cable TV group AT&T has reported a five-fold increase in its net losses for the first three months of this year.

The company's losses ballooned to $975m (£673m) from $192m a year earlier after sales fell 11% compared with a year earlier to $12.02bn.

AT&T blamed companies' cut-backs on their telecoms spending during the recession and in the wake of 11 September.

Sales to business customers fell 8% $6.53bn.

Competing technologies

In addition, the company was hit by price wars with its long-distance rivals and stiff competition from mobile phones and email.

"The consumer business was definitely the weak part here," said Tim Ghriskey of Ghriskey Capital Partners.

"They're getting hurt competitively and by technology substitution with cell phones and email, and by pricing."

Sales to residential customers fell 22% to $3.13bn, with the company predicting the fall for the year to reach 25%.

Long-distance wobbles

Analysts said the AT&T results confirmed their concerns about the industry's health.

"The downturn in long distance is much longer and deeper than anyone thought," said Friedman Billings Ramsey analyst Susan Kalla.

"It's very clear at this point that these carriers just can't sustain the business at the current price levels."

Continued weakness

During the April to June quarter, AT&T's sales are expected to continue to fall by 8.4% compared with a year earlier.

The company has moved to cut costs, including cuts in capital spending for its main telephone operations and the sale of its cable television operations, AT&T Broadband, to Comcast later this year.

"This company is in the midst of selling off major pieces of its business," said Mr Ghriskey.

AT&T shares fell 1% to close at $13.75 on Wednesday, down 35% over the past year.