AT&T Unveils Earnings Growth, Updates Outlook

July 22nd, 2010 by · 1 Comment

Telecommunications giant AT&T (NYSE:T, news, filings) reported its Q2 earnings this morning.  On the wireless front, the company activated another 3.2M iPhones and added a net 1.6M wireless subscribers to reach 90.1M in service.  Revenues of $30.8B were slightly under analyst projections, but entirely within the normal range.  Earnings per share were $0.68, of which $0.07 came from a stock transaction with Telmex.  Even excluding that, however, earnings per share of $0.61 outpaced expectations.

The company updated its 2010 earnings per share outlook from ‘stable to improved’ to ‘strong’, which means things are looking up.  Guidance for operating income margins and free cash flow also advanced to ‘improved’.  Exactly what those verbal volleyballs mean in terms of the numbers is an entirely different question, but still.  An improving profitability profile for AT&T would be a good thing for many in the sector, as its spending can be expected to become a bit more aggressive.

On the wireline front, revenues declined slightly sequentially but were basically flat.  Consumer wireline revenues rose on the back of U-Verse, while business wireline revenues declined.  The story is a familiar one, voice revenues continued to fall, while data revenues picked up most but not all of the slack.  They saw 15.8% growth in strategic business services such as Ethernet, Virtual Private Networks (VPNs), hosting and application services over the same period last year.  Growth in such services was 4.6% over the first quarter, implying some acceleration.  Wireline voice customers fell to 25,780, which will surprise nobody.

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Categories: Financials · ILECs, PTTs

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1 Comment, Add Yours!

  • carlk says:

    I know certain CLEC’s, and other BIG (3)’s who would be hammered for results like this. Of course, the Masters of the Universe are continuing to present a face to “earnings and growth” season that is nothing short of a Bizaro World! Liars, liars, catch your pants on fire.

    In the mean time, when one examines what was the last growth frontier for T REX in their wireless space- content in link provided-you see no growth and the cannibalizing of their customer base either internally or externally via changing product lines by Iphone customers or strong competition.

    My conclusions about “Mr. Market” remain correct. He’s a dictator and price manipulator always and forever due to his influence over the money supply and partnership with the US Government.

    On the other hand, I guess I should be happy that T Rex is now in a position to “outsource” so much more “bandwidth” to that other Big (3), who hardly catches a bid in the marketplace due to its inability to truly “grow” according to the Wall Street pundits who make its price! imo

    “The margins in the wireline business were much better than we were expecting,” said Hudson Square analyst Todd Rethemeier who said the strength appeared to come entirely from cost cuts.

    For example, the company cut its work force by 1.3 percent or 3,860 people, in the quarter and said the cuts were all in the wireline side of the business.

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