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Monday, 29 January, 2001, 18:13 GMT
Telecoms giant rings the changes
Michael Armstrong, chairman, AT&T
Michael Armstrong: Wireless division delivering "exceptional revenue growth"
Telephone and cable TV giant AT&T has become the latest in a series of US tech firms to report a drop in profits - down 42% in the last three months of 2000.

AT&T, which last month cut its dividend for the first time in its 100 plus year history, announced that profits fell to $978m (671m) during the three months.

The firm blamed intense competition and falling prices in the long-distance telecoms market for the fall, and warned that, thanks largely to the implementation of restructuring, it would not meet forecasts for the first three months of this year.

"In 2000, the industry felt the impact of the long distance decline we anticipated when we put our new strategy into place three years ago," chairman Michael Armstrong said.

"Our results reflect the acceleration of that decline."

Shake-ups

The firm has sought to link a shake-up announced three years ago, which ushered in a period of bold acquistions under a 'single-provider' banner, to a further restructuring plan announced in October.

Under the October plan, the telecoms firm will split into its four major units - consumer, business, broadband and wireless - each of which will be run as a separately traded company.

Monday's results, which were in line with Wall Street expectations, follow a series of earnings drops for US technology companies, including Texas Instruments and Gateway.

Office equipment maker Xerox on Monday revealed it had run at a $198m (136m) loss between October and December.

Mobile phone arm

AT&T said its overall decline in profits hid a strong performance in the firm's wireless division, where revenue grew 39% over the quarter, while the broadband unit attracted twice as many customers as it did in the same three months last year.

The wireless arm, which had 15.2 million customers at the end of December, expects to achieve revenue growth of about one third this year.

AT&T Wireless, which is set to be spun off in the middle of this year "is delivering exceptional revenue growth", Mr Armstrong said.

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