AOL Time Warner, AT&T, eBay post profits; Lucent records a loss

IDG News Service - AOL Time Warner Inc. returned to profit in the first quarter of this year, as revenue in its movie and TV business increased and restructuring measures took hold.
Net profit was $396 million for the quarter, which ended March 31, compared with a net loss of $54.2 billion for the same period a year ago, the company said this morning in a statement (download PDF).
Revenue increased 6% over the same period in 2002 to $10 billion, while operating income climbed 9% to $1.2 billion.
The company still faces a hefty debt load. New York-based AOL Time Warner's net debt rose from $25.8 billion at the end of 2002 to $26.3 billion in the first quarter. That net debt balance, according to the company, includes $2.1 billion of incremental borrowings upon the closing of its Time Warner Entertainment Co. restructuring transaction.
For 2003, AOL Time Warner expects revenue for the entire group to grow in the mid-single digits. In 2002, the company posted revenue of $41 billion. Growth in earnings before interest, taxes, depreciation and amortization is expected to be in the low to mid-single digits. Earnings were $8.7 billion last year.
Meanwhile, AT&T Corp. reported solid first-quarter earnings of $571 million, or 73 cents per share, after losing $975 million or $1.32 per share in the first quarter of 2002.
Weathering competition from wireless and Internet service providers as well as an overall decline in calling rates, the company reported income from continuing operations of $529 million, or 67 cents per share, for the first quarter of 2003.
Revenue for the first quarter, which ended March 31, was $9 billion, down from $9.5 billion in the same quarter a year ago, with declines coming in both the AT&T Business Services and AT&T Consumer Services business units.
Despite slipping revenue, the Basking Ridge, N.J., telecommunications company squarely beat analysts' expectations of 52 cents per share for continuing operations, according to Thomson Financial/First Call, a Boston-based investment research network.
Revenue declines were steepest in the AT&T Consumer Services group, which brought in $2.5 billion in the first quarter, compared with $3 billion in the year-ago quarter.
In a statement, AT&T attributed the decline to stiff price competition from other wireless and Internet service providers as well as low-priced calling plans. The company also said it would meet or exceed its previously stated estimates for revenue growth and income in 2003.
The tough economy is paying off for online auction company eBay Inc., which yesterday reported first-quarter net revenue of $476.5 million, up 49% from a year ago.
For the quarter ended March 30, San Jose-based eBay reported its highest consolidated net income ever: $104.2 million, or 32 cents per diluted share. The company's pro forma consolidated net income, excluding certain items, was a record $116.2 million, or 36 cents per diluted share.
Meg Whitman, the company's president and CEO, said she was pleased with the company's financial performance. "Q1 was a terrific quarter for eBay, delivering record results across every part of the business," she said. "We are now more confident than ever in eBay's long-term potential across every facet of our business."
Net transaction revenue, booked on items listed and sold on eBay, rose to $465.6 million, up 118% from one year ago, when $213.6 million in transaction revenue was brought in. About $92.2 million in transaction revenue was brought in through the company's PayPal Inc. electronic payments unit, which was purchased last October.
Based on the latest figures, eBay said it now expects that revenue for 2003 could be as high as $2.05 billion, $150 million higher than the company's most recent guidance.
The company said it expects second-quarter revenue could be $500 million, with third-quarter revenue of $510 million and an estimated fourth-quarter revenue of $564 million, based on the first-quarter results.
Carol Baroudi, an analyst at Baroudi Group in Arlington, Mass., said eBay's good results are very much in line with the poor condition of the U.S. economy. As times gets tougher, people look for extra cash by getting rid of items they have in their homes.
"We're an ecosystem that's dependent on the flow of money. When we stop spending, it hurts not only ourselves, but it hurts everybody" because money needs to spread through the economy for people to have jobs and buy goods, Baroudi said. "I believe eBay is critical to our survival right now," she added. "It's one reason, I think, that we have not literally hit the [trash] can."
As for Lucent Technologies Inc., it posted yet another quarterly loss as its network-operator customers continue to spend sparingly.
The telecommunications equipment manufacturer reported a loss for the second quarter, which ended March 31, of $553 million, compared with $535 million for the same period a year ago. The company's loss from continuing operations was $351 million, it said in a statement.
The second-quarter 2003 results amounted to a loss of 14 cents per share. Excluding one-time items and including charges associated with the global settlement of Lucent's shareholder litigation, the loss was 8 cents per share. That was narrower than the forecast of 10 cents per share, also excluding one-time charges, from analysts polled by Thomson Financial/First Call.
Revenue for the second quarter dipped to $2.4 billion from $3.5 billion a year ago.
Lucent provided no forecast for its third or fourth quarters but said it continues "to work toward a return to profitability in late fiscal 2003."
At the end of March, Lucent had $3.4 billion in cash and short-term investments, representing a decline of approximately $300 million in the quarter, according to the statement. But the Murray Hill, N.J.-based company reaffirmed that it has sufficient liquidity to fund its plans and said it expects to end the 2003 business year with $2.5 billion in cash.
In the second quarter, Lucent announced several large contracts in the Americas, Europe and Asia.
Paul Roberts of the IDG News Service contributed to this report.

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