AT&T Rings Up Big Revenues in Q1
AT&T Inc. (NYSE: T) reported net earnings of $2.8 billion, or 45 cents a share, on revenues of $29 billion. For the first quarter a year ago, AT&T earned $1.4 billion, or 37 cents a share, on revenues of $15.6 billion.
AT&T's net income and EPS beat analysts expectations, as tallied by Reuters Research , by 13 percent.
The first quarter of 2007 is the first time AT&T and BellSouth are reporting as the same company, which explains the abnormally large percentage gains in revenue and income. AT&T now also includes Cingular Wireless in its earnings reports. Cingular had been a joint venture with BellSouth prior to the merger.
AT&T has spent the past couple of years in full-out acquisition mode, and the strategy as paid off as it has enjoyed eight consecutive quarters of double-digit EPS growth. The BellSouth integration has proceeded as planned and was cited as a major factor in this most recent quarter's strong earnings, with a reported $300 million in savings for the period.
As a result of the merger, operating margins for the year are expected to jump to the 23 to 24 percent range.
As has been the case in recent quarters, wireless led the way for AT&T, accounting for over a third of the company's revenues and an 11.2 percent increase from the same quarter last year. Wireless should continue to lead the way in future quarters as AT&T plans to further integrate its video services with its mobile services and also begins selling the highly anticipated Apple Inc. (Nasdaq: AAPL) iPhone.
On the video front, AT&T added 10,000 U-verse subscribers, bringing its subscriber total to 13,000 at the end of the first quarter, although AT&T says that number has now climbed to over 20,000.
The company is still on track to pass 8 million homes by the end of this year. It currently passes almost 3 million. CFO Rick Lindner also highlighted the company's success in gaining video franchise rights, saying "We're making good progress, especially at the state level."
AT&T also plans to expand IPTV service into the BellSouth territories with a goal of having its first market launch by the end of this year.
Despite the solid numbers, shares of AT&T are down 1.58 percent ($0.63) to $39.14 in late morning trading.
— Raymond McConville, Reporter, Light Reading