S&P may cut AT&T Corp.

Standard & Poor's said it placed its BBB long-term corporate credit and senior unsecured debt ratings for AT&T Corp. on CreditWatch with negative implications.

The action is based on continued weakening in the company's business risk profile as reflected in first-quarter 2004 results. In addition, the CreditWatch placement reflects the potential for AT&T business segment's revenue decline to be steeper than anticipated, with further compression in operating margins, the agency said.

The A-3 short-term corporate credit and commercial paper ratings on AT&T were affirmed and are not on CreditWatch.

S&P said the ratings continue to reflect AT&T's challenging business risk profile, mitigated somewhat by its solid capital structure and liquidity. The company's first-quarter 2004 results continued to demonstrate industry pricing pressures and the aggressiveness of the regional Bell operating companies in the small and midsize business and consumer segments.

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