American Telephone & Telegraph Co. announced better-than-expected second-quarter earnings yesterday, but at the same time it issued a stunning warning that it would take pretax charges of as much as $4 billion against earnings this year.
The charges will cover expenses related to cost-cutting programs and AT&T;'s takeover of NCR Corp.
Wall Street decided it was all good news. The earnings showed that the company could do well in a tough economic climate, and the write-offs, analysts said, signaled its intention to get rid of unprofitable operations and real estate holdings. AT&T;'s stock, the nation's most widely held, rose $1.625, to $39.625, on the New York Stock Exchange yesterday.
AT&T;'s net income rose 26 percent, to $828 million, or 75 cents a share, from $657 million, or 60 cents a share, in 1990's second quarter.
MCI Communications Corp.
The nation's second-largest long-distance phone company after AT&T; said its revenues had grown rapidly but that much higher expenses had led to a sharp decline in income from the second quarter of 1990.
MCI said that its net income in the second quarter was $137 million, or 50 cents a share, down 22.6 percent from $177 million, or 67 cents a share, in the 1990 quarter.
Revenues rose 12.4 percent, to almost $2.10 billion, from $2.03 billion a year ago, driven by an 18 percent increase in calling volume.
Texas Instruments Inc. reported the largest quarterly loss in its history yesterday, only moments after disclosing that it faced a legal battle in Japan to protect valuable computer-chip patents.
The loss of $157 million contrasted with net income of $11 million, or 2 cents a share, a year earlier. The company attributed the loss mostly to charges involved in cutting an additional 3,200 jobs in its global operations. Sales rose 6.3 percent, to $1.69 billion.
The legal fight stems from the refusal of Fujitsu Ltd., one of Japan's largest electronics makers, to pay any royalties on a patent granted to Texas Instruments in Japan for the first integrated circuit.
In a sharp contrast with other major banks suffering from bad loans and the recession, the company yesterday reported a 2 percent gain in second-quarter profit.
BankAmerica, the nation's second-largest banking company behind Citicorp, had net income of $272 million for the three-month period ending June 30, compared with $267 million for the 1990 period.
But earnings per share were lower at $1.16 vs. $1.17 per share a year earlier because the number of outstanding shares rose by 4 million in the second quarter.
BankAmerica's provision for loan losses dropped to $175 million, nearly 17 percent lower than $210 million in the second quarter of 1990.
Gannett Co. Inc.
The Arlington, Va.-based media giant said its earnings fell to $95.0 million, or 61 cents a share, in the three months ended June 30 compared with $105.3 million, or 66 cents a share, a year earlier.
Second-quarter revenue fell 2.1 percent to $874.6 million from $893.8 million a year ago.
The latest results reflected a gain on the sale of the company's Culver Studios in California.
John J. Curley, the chairman, president and chief executive, said a recovery seemed imminent but that "many advertisers remain cautious."
For the first six months, Gannett earned $145.1 million, or 92 cents a share, down 19.5 percent from $180.3 million, or $1.13 a share, a year ago. Revenue for the six months fell 2.7 percent to $1.66 billion from $1.71 billion a year ago.
New York Times Co.
The newspaper, magazine and broadcasting company earned $5.4 million, or 6 cents per share, in the second quarter compared with $26.8 million, or 35 cents a share, a year ago. Revenue for the quarter fell 6.1 percent, to $440.4 million from $468.9 million a year earlier.
The latest results included a $20 million pretax charge to cover severance and related costs of a program under which about 160 staffers are expected to leave voluntarily. The decline also reflected an 18.1 percent decline in ad volume at the company's flagship newspaper.