AT&T to Include Pretax Loss of $7.9 Billion in its Fourth-Quarter Results
AT&T Inc. said that its fourth-quarter results will include a pretax loss of $7.9 billion, in order to account for changes in its pension and retiree benefit plans.
The American multinational telecommunications corporation will also include about $2.1 billion for the abandonment in place of certain assets for its fourth quarter.
AT&T along with 30 other companies, in the past few years has switched to mark-to-market pension accounting to make it easier for investors to measure plan performance.
This switch has caused pension gains and losses flow into earnings quicker than under the old rules, which are still in effect and allow companies to stabilize the impact over several years.
Companies that switch to valuing assets at up-to-date market price might incur more volatility in their earnings. But experts said that the switch offers a more recent picture of a pension plan's health.
According to the average of analysts' estimates compiled by Bloomberg, the pension adjustments have become a regular event before the announcement of the fourth-quarter results. Profit will be 56% a share, which is up from 53% of a year earlier, showed estimates.
Shares of AT&T fell as much as 1.3% to $33.37 after US market closed in New York. The company is scheduled to report earnings results on January 27.
It was found that the company on December 31 reduced its assumed discount rates for the pension to 4.3% and 4.2% for the retiree benefits. This resulted in an actuarial loss of about &7.9 billion.
The company on Fridays said in a statement that copper, which it used for wiring, is not needed as customer demand for its older voice and information solutions has declined.
The requirement for a lot of copper landlines is disappearing as buyers opt for cell phones and net-based telephone service that arrives over cable TV and fiber optic wiring.
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