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CSFB Downgrades AT&T to Underperform


CS First Boston downgraded AT&T (T) to underperform from neutral.

Analyst Lara Warner says she thinks AT&T is increasingly viewing pricing pressures as a longer-term price war. She thinks fundamentals will be pressured into 2005. Given the extended timeframe of a price war, she also believes any potential M&A interest will be delayed until visibility improves.

Warner cut the 2004 revenue estimate to $30 billion, and cut the EBIT to $1 billion. She also cut the 65 cents 2004 EPS estimate to 18 cents. Given the expectations for continued pricing pressure as well as a likely debt ratings downgrade, she cut the 33 cents 2005 EPS estimate to a 36-cent loss. She reduced the $18 target to $14.


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