Wednesday, April 14, 2010

AT&T Inc. (NYSE: T): Q1 Earnings Preview 2010

AT&T is scheduled to release its Q12010 earnings before the market open on Wednesday, April 20, 2010. Analysts, on average, expect the company to report earnings of $0.54 per share in the first quarter with estimates ranging from a low of $0.51 per share to a high of $0.59 per share. Revenues for the quarter are estimated to be $30.72 billion. In Q12009, the company reported earnings of $0.53 per share on revenue of $30.57 billion.

AT&T Inc. provides telecommunication products and services to consumers, businesses, and other telecommunication service providers under the AT&T brand worldwide.

In the preceding Q12010, the Dallas, Texas-based company's income increeased to $3.019 billion or $0.51 per share from $2.404 billion or $0.41 per share in the previous year. Revenue slipped to $30.858 billion from $31.076 billion reported last year. Analysts, on average, expected the company to report earnings of $0.51 per share on revenue of $30.86 billion. Postpaid wireless subscriber average monthly revenues per subscriber, or ARPU, grew 2.6% during the latest quarter. AT&T's fourth-quarter integrated-device growth included 3.1 million iPhone activations, the second highest quarterly total so far.

iPhone has worked wonders for AT&T. AT&T is the sole provider of Apple's iPhone, and it has been a major driver of new subscriber growth. AT&T has added millions of iPhone customers since Apple unveiled a faster model early last summer.

Looking ahead to 2010, AT&T expects to deliver ''stable consolidated revenues and stable-to-improved consolidated operating income margins, leading to stable-to-improved earnings per share.'' The company expects total capital expenditures to be in the range of $18 billion-$19 billion. AT&T expects to achieve a wireless OIBDA service margin in the low 40-percent range in 2010, and its longer-term wireless OIBDA service margin outlook continues to be in the mid-40 percent range.

Late in March, the telecommunications giant said Friday that it plans to take a non-cash charge of about $1 billion in the first quarter to reflect a change in the tax treatment of the Medicare Part D subsidy as a results of the new U.S. health-care reform law.

Despite sharp wireless growth in the past few years, the telecommunication companies face rising pressure on profits as mobile and video competition boils over and their older businesses decline. Meanwhile, AT&T's iPhone exclusivity deal with Apple is rumored to end later this year. According to media reports, Apple plans to begin producing a new iPhone this year, which could allow U.S. phone carriers other than AT&T to sell the gadget.

Recently, AT&T said that as part of its overall existing capital plan it would invest about $1 billion in 2010 to scale its delivery for global companies, to expand small business services within the U.S. and to extend its network globally. The company's planned investment in 2010 include expansion of global network, improving capacity and offering of services in new markets, and expanding the global OPT-E-WAN service footprint from 31 countries to 37 countries. With continued proliferation of high speed communication networks and mobile computing devices worldwide, AT&T said it would enhance flexible collaboration services and applications such as managed hosting, cloud-based services, Telepresence, Unified Communications, Digital Media Solutions and Security.

In terms of stock performance, AT&T shares have lost nearly 8 percent since the beginning of the year.

Full Disclosure: None.

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