American Telephone & Telegraph Co. earned $1.3 billion in profits during its quarter ended May 31, the company reported yesterday.

AT&T has reported at least a billion dollars in profits in all quarters except one since September 1976, when it was the first U.S. corporation to earn at such a rate.

Net income for the May 31 quarter amounted to $1.92 a share, compared with $1.14 billion ($1.77 a share) in the year-earlier period. For the most re-billion ($7.31 a share) compared to $4.6 cent 12 months, AT&T earned $4.86 billion ($7.31 a share) compared to $4.16 billion ($6.50) in the previous 12 months.

Operating revenues for the quarter were $10.14 billion, up from $8.97 billion in the year-ago period; for the recent 12 months, revenues rose to $38.4 billion against $34.27 billion.

Chairman John D. deButts attributed the improved earnings to greater demand coupled with expense controls, a vigorous marketing program and accelerated introduction of costsaving technology.

Electric Co., would not boost equipment prices and that AT&T said it no longer will make investments in a major subsidiary because of government rulings that could force the payment rulings that could force the payment of $750 million in back taxes as well as refunds to customers.

Involved in the AT&T decision is California-based Pacific Telephone & Telegraph Co., 90 percent of which is owned by AT&T in an investment valued by the Bell System as $3.4 billion.

Concluding a major assessment of Pacific Telephone operations last year, the California Public Utilities Commission ordered the ATT subsidiary to make refunds of $206 million to customers, to reduce rates by $60 million a year, and to adopt a new method of accounting under which taxes deferred during new construction benefitted the company and helped to finance additional construction.