AT&T to take Q4 $2.7 billion charge on accounting change
AT&T Inc
The telephone operator's shares rose slightly in premarket trading after it said on Thursday it would recognize gains and losses from its pension and other post-retirement benefits in the year in which they are incurred instead of amortizing them over many years.
Despite the hefty charge, investors will likely welcome the change, which would make pension gains and losses easier to evaluate Piper Jaffray analyst Christopher Larsen said.
I think its good news for AT&T shareholders. It will be a little bit easier to figure out what's going on and focus on what's actually happening in their business, he said.
Rivals such as Verizon Communications Inc
Another big U.S. company, Honeywell International Inc
AT&T, which runs the second-biggest U.S. mobile service, said it will take a hit of 28 cents a share in the fourth quarter, during which it switched to the new accounting method.
AT&T said it expects 2011 adjusted benefit costs to be in line with 2010 adjusted levels.
Going forward, all forecasts regarding benefit costs will exclude this gain or loss adjustment to be taken each fourth quarter to reflect actual results, the operator said.
The Dallas, Texas-based company's shares rose to $28.16 in Nasdaq trading before the bell on Thursday. The stock closed at $28.04 on Wednesday.
(Reporting by Supantha Mukherjee in Bangalore and Sinead Carew in New York; Editing by Roshni Menon and Maureen Bavdek)
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