Cingular Earnings Nearly Quadruple
This is the last time Cingular will report earnings separate from its parent company, after AT&T completed its acquisition of BellSouth last week. AT&T shares jumped by almost 4 percent on the Cingular report.
"Our last quarter as a joint venture operating under the Cingular name was our best ever on a variety of fronts," said Stan Sigman, the company's president and CEO, in a statement.
Cingular's subscriber growth came largely at the expense of Sprint Corp. (NYSE: S), which earlier said it had a net loss of more than 300,000 subscribers in the fourth quarter of '06. (See Sprint Wobbles Again.)
Particularly impressive was Cingular's ability to maintain profit margins while boosting subscribers. The Atlanta-based carrier has now raised its average revenuer per user year-over-year two quarters in a row -- bucking the industry trend of declining revenue for wireless subscribers.
For the entire year, Cingular earned $2.5 billion, a 67 percent increase over the $333 million it made in profits in 2005. Cingular now has 61 million subscribers, compared to 55 million for the No. 2 carrier, Verizon Wireless .
Verizon has traditionally beat out Cingular in terms of operating margins, but the AT&T division, which will be re-branded as AT&T Wireless in coming months, is narrowing that gap as well. Profit margin for the fourth quarter was 34 percent, and in its conference call this morning the company forecast margins in the "high 30s" for this year and above 40 percent in 2008.
Earlier this month Apple Inc. (Nasdaq: AAPL) released its highly anticipated iPhone with a multiyear deal with Cingular as the exclusive carrier. The iPhone hook-up could boost Cingular's performance in the market for high-end phones.
— Richard Martin, Senior Editor, Unstrung