Earnings Preview: AT&T;, Inc. (T) – Strong Handset Sales to Boost Results
By:NewsyStocks   Wednesday, January 25, 2022 3:32 PM

AT&T, Inc. (T) is set to report its fourth quarter earnings on January 26, 2012. The telecommunications major is set to have a blowout quarter thanks to the release of the iPhone 4S coinciding with the holiday season which has driven subscriber additions for the quarter.

Consensus AT&T EPS for the quarter is $0.43 with estimates in the range of $0.34 and $0.58. Revenue for the quarter is expected to top $32 billion indicating year-over-year growth of 2 percent.

Margins this quarter will weigh in on profits as the company faces the expense of subsidizing premium smartphones to rope in long-term customers.  Analysts estimate that AT&T strong smartphones sales added about 650,000 net subscribers this quarter but short of Verizon's 1.2 million net subscriber additions this quarter.

Analyst views on AT&T have considerably deteriorated over the last 3 months when it had consensus EPS of 55 cents.

Analysts at Deutsche Bank foresees improving trends in AT&T's Enterprise, Wholesale and SMB segments while expecting its Consumer segment to remain flat.

Morgan Stanley expects significant margin dilution from existing users upgrading to Apple's newest smartphone.

On an average, analysts maintain an Overweight rating on T and a mean price target of $31.80

Third Quarter Results & Earnings History

Revenue declined by 0.3 percent in the third quarter and ended AT&T's run of 3 consecutive quarters of growing its revenue.

Net Profit declined by 70.6 percent in the third quarter. Profit margins have fallen in the last two reported quarters.

Our Take

AT&T had to abandon plans to acquire T-Mobile USA but is now focused on increasing its wireless spectrum through other means. The iPhone 4S was the first Apple phone to be released to all major carriers in the United States and tomorrows figures should provide an insight into how well AT&T has fared against peers. The holiday season has given smartphone sales a boost among major Telcos but this will result in thinner margins. However, high data consuming smartphone users should help boost revenues going into FY2012.