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Boosted by its acquisition of the original AT&T last year, the musician formerly known as SBC and now known as AT&T (NYSE:T) reported a 50% jump in sales and a 74% rise in profit. Profit of 63 cents, excluding costs of the merger with Old AT&T, beat a mean estimate by analysts of 58 cents.

Sanford Bernstein analyst Jeff Halpern says that despite strong results at Cingular Wireless, the largest U.S. cell phone provider (profit tripled to $847 million), the upside in earnings was entirely a result of cleaning up the Old AT&T balance sheet and some non-operating income from the company’s interest in Latin American telcos Telmex and America Movil.

Halpern said prospects seem limited for profit improvement following the planned merger with Bellsouth (BLS), and he recommended against the shares:

[W]hile we do expect AT&T to deliver on its commitments for double digit (non pro-forma) earnings growth over the next few years, at this point we do not believe investors should chase AT&T’s shares. We see it as unlikely that AT&T can deliver another year of significant outperformance versus the S&P 500 with risk now evenly split between the up- and down-side cases. [E]xpectations now appear to be baking in a significant announcement by the company increasing its synergy guidance for the BellSouth merger. We continue to rate AT&T Marketperform with a target price of $33.

AT&T shares are up just slightly at $34.57.

Xerox (NYSE:XRX) beat by a penny analysts’ expectations for profit of 22 cents as earnings rose 27% from the year earlier period, primarily on the strength of color copier sales. Sales of $3.84 billion rose a meagre 2% but also beat analysts expectations, which were for $3.82 billion.

The company’s outlook for the fourth quarter is a little tepid, in a range of just 34 cents to 37 cents a share, meaning it’s slightly below the 37 cents average estimate of analysts.

Xerox shares were up almost 1% at $16.12.

Source: AT&T Beats Street; Xerox Profit Jumps