Executive Business Briefing

Here is a look at Tuesday's top business stories:

Stocks fall in Tokyo

TOKYO, Oct. 22 (UPI) -- Stock prices on the Tokyo Stock Exchange ended lower, pressured by concerns the government would be unable to produce effective anti-deflation and non-performing loan measures.

The blue-chip Nikkei Stock Average of 225 selective issues, which lost 107.72 points Monday, fell another 289.02 points, or 3.2 percent, to 8,689.39, its lowest closing level since Oct. 10. The broader Topix Index dropped 26.54 points, or 3 percent, to 862.54.

Declines overwhelmed advances 1,333 to 93, while another 64 issues settled unchanged.

Volume rose to an estimated 744.04 million shares from 647.63 million shares changing hands on Monday.

Economy and Bank Minister Heizo Takenaka's bad-loan task force was expected to compile a proposal of measures to reform Japan's long-ailing banking sector.

Analysts said the likely contents reported by the local media, however, disappointed the market.

The Nihon Keizai Shimbun said in its Tuesday morning edition Takenaka's task force is considering a plan to make it easier for banks to treat bad-loan write-offs as losses on their taxes.

Analysts doubted the feasibility of the reported plan, indicating that the Ministry of Finance is likely to resist any falloff in revenue.

Skepticism also remained about whether the Takenaka panel will be able to come up with an effective way to inject taxpayer money into banks.

Prime Minister Junichiro Koizumi Monday again ruled out the possibility of a supplementary budget to buoy the economy.

In trading, among some of the active issues, Sony Corp. fell 3.5 percent, NEC Corp. dropped 8.0 percent, Sumitomo Mitsui Banking lost 5.3 percent, Mizuho Holdings dropped 5.4 percent and Mitsubishi Tokyo Financial Group slipped 0.2 percent.

In an active auto sector, Toyota Motor lost 2.9 percent, Honda Motor slipped 0.4 percent and Nissan Motor eased 0.9 percent.

Precision maker Shimadzu lost 5.7 percent, sliding for the first time since Koichi Tanaka won the Nobel Prize for chemistry. The issue rose for seven straight sessions until Monday.

Elsewhere in Asia, prices ended marginally lower on the Hong Kong Stock Exchange as cautious investors cashed in recent gains, fearing Wall Street's sudden rally was coming to an end. The blue-chip Hang Seng Index, which fell 42.71 points Monday, slipped 21.42 points, or 0.22 percent, to 9,548.94.

In trading, micro motor maker Johnson Electric lost 3.5 percent, garment trader Li & Fung lost 3 percent, China's largest oil producer PetroChina fell 2.7 percent and Chinese offshore oil giant CNOOC fell 4.5 percent.

Meanwhile, prices ended lower on the Taiwan Stock Exchange, snapping their six-day winning streak on weakness in high tech issues. The Weighted Index, which added 5.35 points Monday, lost 77.06 points, or 1.7 percent, to 4,386.46. The index had risen nearly 17 percent in the last six days.

In trading, Taiwan Semiconductor Manufacturing fell 4.4 percent. After the market closed, the world's foundry leader posted a 250 percent rise in its net profits during the third quarter ended Sept. 30. The results failed to meet analysts' forecast. Sales declined 10 percent on year.

Meanwhile, United Microelectronics, which is scheduled to release its earnings next week, lost 3.6 percent.

Prices also ended lower on the South Korean Stock Exchange, pressured by weakness in high technology issues. The key Kospi Composite Index, which lost 18.12 points Monday, dropped 13.90 points, or 2.1 percent, to 639.27.

The world's largest maker of TV and computer screen tubes Samsung SDI tumbled 8.2 percent. The stock sank over 9 percent on Monday after the company reported a weaker-than-expected third-quarter net profit.

Samsung Electronics lost 1.4 percent while Hyundai Engineering and Construction rose 1.6 percent.

Elsewhere around the Pacific region, prices ended higher on the Australian Stock Exchange, lifted by Monday's gains on Wall Street. The blue-chip All Ordinaries Index, which lost 19.60 points Monday, rose 12.90 points, or 0.4 percent, to 2,960.70.

The market was led higher by a 2 percent jump in News Corp.

AT&T posts lower earnings

BEDMINSTER, N.J., Oct. 22 (UPI) -- Long-distance telephone and cable television giant AT&T Corp. posted lower third-quarter net income amid weak demand for telephone and data services in the turbulent economy.

AT&T, which plans to sell its cable television business to Comcast Corp., said its third-quarter net income fell to $207 million, or 5 cents a share, from $11.3 billion, or $3.13 a share during the same period last year.

AT&T said its latest results reflects other income due to taxes associated with the impairment charges recorded on certain leveraged leases of aircraft. Excluding the charges, AT&T posted a net income of 6 cents a share.

Last year's results included losses of 95 cents a share related to equity investments and other income of 28 cents a share. Excluding the items, the loss from continuing operations was 2 cents a share.

Analysts on Wall Street had expected AT&T to report a net income of 5 cents a share, according to Thomson First Call.

Revenues fell 8.3 percent to $12 billion from $13 billion a year ago.

The telecommunications company attributed the lower revenue to continued declines in long-distance voice services, partially offset by growth at AT&T Broadband in telephony, high-speed data and digital video, and growth areas of AT&T Business.

C. Michael Armstrong, chairman and chief executive officer, said, "We had a good third quarter and posted solid results as we remained focused on executing the operational basics of our business.

"Following the spin-off of AT&T Broadband and its merger with Comcast, AT&T will be well positioned for the future with a top-notch leadership team, a world-class network, a sound financial structure and a wealth of opportunity in the marketplace," Armstrong said.

Following the anticipated spin-off of AT&T Broadband later this quarter, the primary business of AT&T will be communications services, provided by the AT&T Business and AT&T Consumer units.

"Our communications services units made a solid showing in the quarter, reflecting our focus on the fundamentals of operating strong voice and data businesses and seizing growth opportunities," said David Dorman, AT&T chairman and chief executive officer-elect.

"AT&T Business rededicated itself to executing in the marketplace and meeting customer needs across its product portfolio, and AT&T Consumer accelerated its local service momentum, entering two more states and increasing its 'any distance' customer count by 24 percent over the previous quarter," Dorman added.

The company said AT&T Business recorded third-quarter revenue of $6.7 billion, down 1.6 percent. EBIT, excluding other income, was $876 million, while EBIT margin on the same basis fell to 13.1 percent from 14.5 percent. EBIT reflects earnings before interest, taxes, extraordinary item, cumulative effect of accounting changes, dividend requirements on preferred stock, premium on exchange of AT&T Wireless tracking stock and discontinued operations.

AT&T Business expects its full-year forecast to meet or slightly beat prior expectations for a revenue decrease of 4.5 percent to 5 percent and an EBIT margin decline of 2 percentage points to 3 percentage points from last year's 13.3 percent.

During the third quarter, the long-distance voice revenue decline slowed to about 8 percent.

AT&T Consumer experienced a 25.9-percent decline in third-quarter revenue to $2.79 billion on continued trends of wireless and Internet substitution, competition, and customer migration to lower priced plans and products. EBIT was $595 million excluding other income, while EBIT margin on the same basis dropped to 21.3 percent from 33.9 percent.

Within the consumer segment, AT&T maintained its full-year 2002 forecast for revenue at the favorable end of a mid-20 percent range decline and an EBIT margin with a high-single-digit percentage decline.

AT&T Communications Services, which primarily includes AT&T Business Services and AT&T Consumer Services, isn't providing a fourth-quarter earnings-per-share outlook because of the expected AT&T Broadband spin-off and reverse split. However, the company does expect capital expenditures to be at the low end of the $3.8 billion to $4.2 billion range.

Last week, AT&T said it expected to complete the spin-off of the broadband unit to Comcast Corp. by the end of the year. AT&T shareholders approved a 1-for-5 reverse split in July.

AT&T's broadband segment had third-quarter revenue of $2.5 billion, up 6.4 percent on a reported basis and 8.2 percent on a pro forma basis.

EBITDA was $569 million, or $676 million excluding other income and Comcast merged-related costs. EBITDA margin was 22.3 percent, or 26.5 percent excluding other factors. EBITDA refers to EBIT, excluding depreciation and amortization, and pretax minority interest other than Excite-at-Home's minority interest.

During the third quarter, AT&T Broadband basic video subscribers declined about 129,000, primarily because of competition. This is greater than the second-quarter decrease of 125,000 subscribers, thereby missing the July 23 projection for a lower loss of basic video subscribers in the third quarter from the second quarter.

For full-year 2002, AT&T Broadband still expects revenue growth in the low-double-digit percentage range and EBITDA, excluding other income, of $2.4 billion to $2.5 billion.