AT&T; Pulls Off Turnaround in Third Quarter

NEW YORK — American Telephone & Telegraph Co. said Thursday that it earned $963 million in the third quarter, contrasted with a loss of $1.8 billion in the same quarter last year, when it reduced earnings by $4.2 billion to pay for a restructuring.

The profit in the three months ended Sept. 30 equaled 72 cents a share, versus a loss of $1.40 a share a year ago.

Without the one-time charge against earnings in last year’s third quarter, AT&T;’s profit was up 16% in the quarter just ended. Industry analysts consider this operating profit figure more significant than the net loss because it depicts how the company’s business is doing apart from any one-time accounting charges.

Revenue rose 3.8% to $16.2 billion from $15.6 billion a year ago.

The phone company credited the better showing to stronger long-distance revenue, higher equipment sales, tight cost controls and the first profitable quarter by its Universal credit card.

“The double-digit growth we experienced in operational results is especially gratifying because it was achieved against the drag of a slowly growing economy,” said Robert E. Allen, AT&T;’s chairman.

Industry analysts generally were pleased by the results, though they said it appeared that the company’s profit growth came more from cost cutting than revenue enhancement.

Richard Toole of Merrill Lynch & Co. said it was a good showing for AT&T;, considering the condition of the economy. But he pointed out that AT&T;’s largest long-distance competitor, MCI Communications Corp., reported a 15% rise in long-distance calling volume in the quarter, while AT&T;’s rose 6%.

“It does seem as though MCI gained some market share,” Toole said.

AT&T;’s stock--the most widely held in the nation--rose $1 a share to close at $42 in consolidated New York Stock Exchange trading.

AT&T; said its NCR Corp. computer subsidiary, which it bought a year ago, contributed $49 million to the parent company’s operating profit, despite the computer industry’s slump. But that profit contribution was less than half what NCR contributed in the second quarter.

The one-time earnings reduction in last year’s third quarter covered such cost-cutting moves as the elimination of 14,000 jobs, which stemmed partly from the NCR purchase.