Earnings: AT&T Net Income Falls 23.6 Percent; iPhone Subsidies Continue To Bite
Fourth quarter earnings fell 23.6 percent at AT&T (NYSE: T), which posted net income of $2.4 billion, or 41 cents a share, on revenue of $31.1 billion. Last year, the telecoms giant reported earnings of $3.1 billion, or 51 cents per share. It reported adjusted earnings of 64 cents a share, falling just shy of the $0.65 share estimate from a *Thomson Reuters* poll of analysts. Revenues, which grew 2.4 percent, meeting analyst expectations, were boosted by 13.2 percent growth in its wireless unit and a 14.2 percent increase in wireline IP data revenues. Wireless revenues came in at $12.9 billion, while the wireline business contracted 3.3 percent to $17 billion. Voice revenues, however, were hard hit, as expected, falling 10 percent to $9 billion. The iPhone continued to lure users to its wireless unit, but subsidies of the handset continued to hit EPS. AT&T said $0.07 of the EPS came from its iPhone subsidies, as well as hurricane related expenses and forex impacts.
Wireless Unit:
– Wireless revenue up: Wireless revenues grew 13.2 percent to $12.9 billion in the fourth quarter.
– Wireless customer additions: AT&T added 2.1 million net wireless subscribers in the fourth quarter, up slightly from 2 million net adds in Q3. This was one bright spot, beating analyst expectations of 1.9 million. It now has a total of 77 million.
– iPhone details: 1.9 million iPhones were activated in the fourth quarter, down from 2.3 million in the third quarter. Approximately 40 percent of iPhone activations were for customers new to AT&T, as it was in Q3. This amounts to around 760,000 new customers coming to AT&T for the iPhone. Again, AT&T touted the iPhone
Having checked out the Palm Pre at the CES it will be interesting to see if ATT can continue to foster revenue growth in their wireless division. The Pre in my opinion is far from an Apple killer, but rather leaps and bounds ahead of the current Apple 3G iPhone. Take my word, the Palm Pre is going to a destructive force in the current status quo in wireless telecomunnication. I was awestruck when I first used the phone. Being a user of an iPhone and Blackberry Bold I can make a definate statement that this Palm Pre is a winner in every category you can imagine. Palm has definately raised the Ante and it is now for Apple to make efforts to catch up and emulate Palm. This is going to be difficult to do but it is not impossible.
It now makes sense why Sprint appeared to be lagging in leadership, by having missed out locking itself with a manufacturer; it already had secured its position with Palm. Had Palm kept to its original intro date Sprint would have been in much better shape, nevetheless Sprint will definately benefit from the Palm Pre's introduction and its stock will begin to manifest these results.