Oct. 23 -- AT&T Inc., the biggest U.S. telephone company, posted a 41 percent increase in third-quarter profit, buoyed by record wireless revenue and savings from $140 billion in acquisitions.
Almost two million customers signed up for mobile phone service, lured by new handsets including the iPhone. AT&T slashed jobs and marketing costs to bolster earnings after the purchase of BellSouth Corp., which also gave the San Antonio-based company full control of its mobile-phone venture.
``Wireless results were extremely impressive,'' said Jennifer Fritzsche, an analyst at Wachovia Securities in Chicago. She rates AT&T shares ``outperform.''
Net income rose to $3.06 billion, or 50 cents a share, from $2.17 billion, or 56 cents, a year ago, AT&T said today in a statement. The shares outstanding increased after the company bought BellSouth in December, causing earnings-per-share to fall from a year ago. Sales almost doubled to $30.1 billion.
Profit was 71 cents excluding some costs, such as acquisition expenses, matching the average estimate of 22 analysts in a Bloomberg survey. Sales excluding some accounting items rose to $30.3 billion. Estimates averaged $30.1 billion.
AT&T rose 33 cents to $41.50 at 9:37 a.m. in New York Stock Exchange composite trading. The shares had increased 15 percent this year before today.
Wireless Advances
Chief Executive Officer Randall Stephenson cut customer turnover in the wireless business and signed a record number of new users to contracts, helping to counter the loss of more home- phone lines. About 1.2 million people agreed to long-term deals, and AT&T now has a total to 65.7 million wireless users.
The rate of turnover, known as churn, fell to 1.7 percent. That's down from 1.8 percent last year and an average of 2.15 percent from the first quarter of 2004 through the second quarter of 2007, according to data compiled by Bloomberg.
The company's exclusive deal to sell Apple Inc.'s iPhone helped lift revenue in the mobile-phone unit by 14 percent to $10.9 billion. AT&T has activated 1.1 million of the handsets from their June 29 debut through today.
Apple said yesterday it has sold 1.4 million iPhones through the end of September, with about 250,000 purchased with the intention of altering them for use outside AT&T's network.
Sprint Slides
AT&T, formed from the 2005 merger of SBC Communications Inc. and AT&T Corp., took customers from Sprint Nextel Corp., the third-biggest U.S. wireless provider. Reston, Virginia-based Sprint lost 337,000 users on long-term contracts in the quarter amid complaints of dropped calls and customer service problems.
Verizon Communications Inc., majority owner of No. 2 U.S. mobile-phone service Verizon Wireless, is scheduled to report earnings Oct. 29.
Twenty-six analysts suggest buying AT&T stock, three recommend holding it and one says ``sell,'' according to data compiled by Bloomberg.
Following the $86 billion BellSouth acquisition, AT&T announced plans to cut 10,000 jobs by combining operations such as technology and marketing. The company has saved $2.8 billion from the purchase through the third quarter and reiterated its forecast for $3 billion in reduced costs this year.
Stephenson is betting sales of wireless and television services will help replace revenue from home-phone customers who are switching to Internet-based calling plans offered by cable providers such as Comcast Corp. Consumer phone lines fell 4.7 percent from a year ago to 35.8 million.
AT&T is spending as much as $6.5 billion over five years to expand its U-verse TV service, which uses Microsoft Corp. software to send video over phone lines. The service crashed on Oct. 21, leaving many customers without cable channels until technicians fixed the glitch that night, AT&T said yesterday.
AT&T had 126,000 television customers at the end of the quarter, up from 100,000 at the beginning of September.
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