Shares of AT&T hit a low of $13.03, and traded at $13.12, down 74 cents, or 5.3 percent, in afternoon trading on the New York Stock Exchange.

"If AT&T Consumer is a money loser by year-end 2003, we expect management to shut it down or sell it," said Lehman Brothers analyst Blake Bath, who cut his rating on AT&T's stock to "underweight" from "equalweight."

AT&T did not immediately return calls seeking comment.

Later on Monday, New York-based AT&T is expected to complete the sale of its AT&T Broadband cable television unit to Comcast Corp. (NasdaqNM:CMCSK - News). That would leave AT&T with its core consumer and business services units, which sell telephone, data and Internet services to about 60 million residential and 4 million corporate customers.

The consumer business generates about 29 percent of AT&T's revenue, and 25 percent of its EBITDA (earnings before interest, taxes, depreciation and amortization), according to UBS Warburg analyst John Hodulik.

Lehman Brothers cut its 2003 consumer revenue forecast to $8.1 billion from $9.0 billion due to an accelerating shift by consumers to wireless and electronic mail, and increasing competition from the Baby Bells.

"We see nothing in store that can reverse trend-like decline in revenue and cashflow as its non-facilities based (local) strategy is not large enough in scale, nor profitable enough to offset the declines in its core long distance business," Bath said in a research report.

Even though AT&T's business unit has seen an increase in demand due to financial troubles at rivals such as WorldCom Inc. and Qwest Communications International Inc., Hodulik said pricing pressures continue to offset any market share gains.

"In short, the bright spot for AT&T, namely the loss of market share that WorldCom is expected to experience, has begun to dim," Hodulik said.