ROANOKE TIMES 
                      Copyright (c) 1997, Roanoke Times

DATE: Tuesday, March 4, 1997                 TAG: 9703040072
SECTION: BUSINESS                 PAGE: B-6  EDITION: METRO 
DATELINE: BASKING RIDGE, N.J.
SOURCE: Associated Press

GLOOM AHEAD AT AT&T

In his first major meeting with Wall Street analysts, AT&T Corp.'s new president sent the company's stock reeling Monday by predicting that increased costs and rivalry would depress profits this year.

John R. Walter and his hand-picked executive team disclosed plans for $2.6 billion in new cost cuts and up to $9 billion in investments in a fresh blueprint to revitalize the struggling telecommunications titan. In what analysts said was an unusually forward-looking appraisal of the company's finances, Walter predicted AT&T's drive to cut costs and fresh investments in local, wireless, and other new businesses would result in double-digit growth in profits and revenues over the next five years.

But the nation's most widely held stock plunged 7.5 percent after Walter forecast that near-term results would continue to disappoint. Walter said profit in the current quarter would be nearly 10 percent below the 76 cents a share earned in the final quarter of last year. That would be down even more from profits of 90 cents a share in the first quarter of 1996.

While AT&T mostly cited the cost of investments and fierce rivalry that has eroded profits in its core long-distance business, some analysts put more blame on a bloated organization.

The company has unnecessary layers of management, lack of a coherent business strategy and the ``crushing weight of an inefficient system'' for delivering products, said David Goodtree of Forrester Research, one of about 200 analysts who attended an investment conference at AT&T's operational headquarters in Basking Ridge, N.J.

The disappointing profit ``just speaks to the fundamental problems inside the company,'' Goodtree said.

LENGTH: Short :   40 lines