October 18, 1991

After shrinking sharply in the first half of 1991, the merchandise trade deficit swelled in August as foreigners unexpectedly slowed their buying of American goods. The deficit widened by $1 billion, to $6.8 billion, its highest level in seven months. It had dropped as low as $3.8 billion in June.

This weekend in Manhattan is for those who now yearn for then. Bibelots from Britain? Those are at an international dealers show, on Park Avenue. And there is Americana on the Hudson, at a fair on Pier 92. Details, C28.

As investigators tried to piece together a motive for the killing of 22 people in a Texas town, former acquaintances of the gunman described him in similar terms: "loner," "combative," "rude," "impatient," "troubled."

A.T.& T. and MCI, the nation's top long-distance companies, yesterday reported slow third-quarter revenue growth, with a huge loss at A.T.& T. because of one-time charges and an earnings gain at MCI. Three of the regional Bell operating companies reported mixed results, with profits off at Nynex and up at BellSouth and Southwestern Bell. Analysts said A.T.& T.'s performance was surprisingly strong, despite the reported net loss of $1.8 billion. The loss was entirely attributable to previously reported one-time charges, mostly related to its acquistion of the NCR Corporation. MCI apparently gained a small amount of market share in the quarter, analysts said, but at the expense of smaller competitors. The weak economy was apparent in both the volume of calling and the rate of new line installation reported by the three "Baby Bells." "From a telephone industry perspective, the recession is still with us," said Joel Gross, who follows the companies for Donaldson, Lufkin & Jenrette. Following are the details of the companies' results: A.T.& T. One-time charges resulting from the takeover of NCR reduced net income for the American Telephone and Telegraph Company in the quarterby nearly $2.65 billion, producing a net loss of $1.8 billion, compared with combined profits for the two companies of $803 million, or 62 cents a share, a year ago. Combined revenues rose 1.2 percent, to more than $11.04 billion, from $10.91 billion in the third quarter of 1990. Nearly all of A.T.& T.'s operating profits for the quarter came from the telephone business. The company's third-quarter net profits from what it owned before acquiring NCR rose 13.5 percent, to $808 million, from $712 million a year ago. About a fourth of that improvement was attributable to a one-time gain on the sale of Sun Microsystems stock. The rest came from strong operating revenues, including improved product and service margins. By contrast, NCR's operating earnings were just $40 million on revenues of $1.38 billion, compared with $91 million on sales of $1.53 billion a year ago. A.T.& T. attributed the decline to "general softness" in computer markets and the negative impact of a stronger dollar. "The good news in all these numbers is the continuing strength of A.T.& T.'s long-distance business and the strong actions we're taking for future earnings growth," said Robert E. Allen, A.T.& T.'s chairman and chief executive. Phone service sales rose 5.1 percent, to $5.24 billion, on volume growth of 6.5 percent. The company said that "800" numbers, WATS services and international and residential calling led the growth. Product and systems sales declined 5.5 percent, to $3.81 billion, from 1990's third quarter, mostly because of a 17.3 percent decline in computer sales to $818 million. Analysts believe A.T.& T., which is estimated to have between 63 and 65 percent of the long-distance market, has maintained that share. A.T.& T.'s write-off will include the severance costs for 14,000 employees to be laid off by the beginning of 1994. A.T.& T. shares fell 12.5 cents yesterday, to $39, on the New York Stock Exchange. MCI The MCI Communications Corporation earned $133 million, or 51 cents a share, in the third quarter, compared with a loss of $176 million in the 1990 period, when the company took a one-time charge of $550 million for modernization of its network. The Washington-based long-distance company's revenues were $2.15 billion, up 7.5 percent from $2 billion a year ago. The revenue gains came on a 12.4 percent increase in calling volume in the last year. Excluding the impact of last year's special charge, MCI's third-quarter operating earnings in 1990 would have been $334 million, nearly 22 percent higher than the $274 million reported yesterday for the recently completed quarter. That gap highlights how heavily MCI has been spending on programs to build market share, particularly a promotion gives 20 percent discounts to customers who create a personal circle of telephone contacts, all using MCI. Marketing and operations expenses for the recent quarter were $645 million, up 21 percent from a year ago. MCI's shares lost $3, to $27.125, in over-the-counter trading. The trading reflected, in addition to earnings, a report that I.B.M. was exploring the potential private sale of its $400 million in MCI preferred stock. I.B.M. said last night that the possible sale does not represent a loss of confidence in MCI. Nynex The Nynex Corporation said that it earned $291.8 million, or $1.44 a share, in the quarter, down 1.7 percent from $296.7 million, or $1.50 a share, last year. Revenues for the White Plains, N.Y.-based parent of New York Telephone and New England Telephone fell 3.5 percent, to $3.27 billion, from $3.39 billion a year ago. Nynex's operating income actually rose 3.3 percent, to $600.2 million, from $580.9 million a year ago, but that increase did not compensate for a $24 million rise in taxes and interest expenses. Operating expenses were $2.67 billion, down nearly 5 percent from $2.81 billion a year ago. Nynex is currently in the midst of a program to reduce both its hourly and managerial work forces. A one-time charge for the cost of the program will be estimated and taken against earnings in the current quarter, the company said yesterday. Nynex's shares rose 12.5 cents, closing at $75.875 on the New York Stock Exchange. BellSouth The BellSouth Corporation, based in Atlanta, said net income fell 12.5 percent, to $352.4 million, or 73 cents a share, from $402.9 million, or 84 cents a share, a year ago. But the current quarter included $42.9 million in one-time charges for an early-retirement program and another $11.4 million charge stemming from accounting changes in the company's cellular telephone operations. Without the one-time charges, earnings were essentially unchanged from a year ago. Revenues rose 2.3 percent, to $3.63 billion, from $3.55 billion a year ago. The number of access lines rose 2.9 percent, to 513,000, in the the last year. BellSouth said that continuing rate reductions, a weak economy, competition and the costs of its rapidly expanding investment in cellular and paging services affected its earnings. On the Big Board, BellSouth stock fell 37.5 cents, to $46.875. Southwestern Bell The Southwestern Bell Corporation said that net income for the quarter rose 12.2 percent, to $363.1 million, or $1.21 a share, from $323.6 million, or $1.08 a share, a year ago. The strong income gain came despite an increase of just more than 2 percent in revenues, to $2.42 billion, from $2.37 billion in the 1990 period. "Strengthened performance by our cellular and Yellow Pages subsidiaries contributed substantially to our growth," said Edward E. Whitacre Jr., the St. Louis-based company's chairman and chief executive. Analysts said the figures represented a mildly pleasant surprise. Southwestern Bell stock rose 37.5 cents, to $56.375, on the Big Board.

In 1987, John S. Reed, Citicorp's chairman, stunned the banking world when he conceded that the loans to less-developed countries made during the tenure of his predecessor and mentor, Walter Wriston, would never be repaid in full. That resulted in a $1.18 billion annual loss for Citicorp and applause from analysts for Mr. Reed's forthright recognition of nagging problems. Today, Citicorp is again burdened by a mountain of bad loans, only this time the loans were made on Mr. Reed's watch, and there is some question as to whether the bank has recognized all its problems this time.