AT&T share price: Third-quarter profit beats estimates

US mobile carrier faces intensified competition

AT&T share price: Third-quarter profit beats estimates, Thursday, October 24: AT&T (NYSE:T), the second-largest US mobile carrier, posted third-quarter profit that exceeded analysts’ expectations, albeit slightly. The company benefited from a rise in the number of new customers that was also ahead of Wall Street expectations.

AT&T shares were little changed in extended trading yesterday after having closed 0.14 percent up at $35.28 on the Nasdaq.

Earnings beat estimates

AT&T reported third-quarter profit of $3.81 billion, or 72 cents per share, compared with $3.63 billion, or 63 cents per share, in the year-ago quarter. Excluding one-time items earnings were 66 cents per share, slightly ahead of the average market forecast of 65 cents. The carrier’s mobile service profit margin remained flat from a year ago at 42 percent. Analysts had projected 41.3 percent.

The company’s revenue increased to $32.16 billion in the third quarter from $31.46 billion a year earlier but was slightly behind the $32.19-billion Wall Street estimate, according to Thomson Reuters I/B/E/S.

AT&T is investing in expanding its fourth generation LTE mobile network and its U-verse fibre-optic system and those efforts have helped growth, according to Randall Stephenson, AT&T chairman and CEO.

“We’re setting the standard for 4G LTE speeds and network reliability. Our fiber and U-verse expansion projects are ahead of schedule bringing high-speed broadband to millions more customers,” Stephenson said in a statement.

AT&T added 363,000 contract mobile customers in the third quarter, a significant increase compared with the year-ago growth of 151,000 and above 342,000, an average estimate of nine analysts surveyed by Bloomberg.

“This is impressive, especially given significant fears about AT&T losing share to other Big 4 carriers,” Jennifer Fritzsche, an analyst at Wells Fargo & Co. in Chicago, wrote in a note as quoted by Bloomberg.


Despite the jump in new customers, AT&T remained well behind its main rival Verizon Wireless, which last week reported 927,000 new contract users for the last quarter (Verizon share price jumps on 40% profit growth). The company is also losing share to smaller rival T-Mobile, according to MoffettNathanson analyst Craig Moffett and Cowen & Co’s Colby Synesael.

“Unfortunately for AT&T wireless, the competitive challenges they are facing will only intensify through the first half of 2014 as T-Mobile and Sprint play catchup on their national LTE rollouts,” said Kevin Roe, an analyst at Roe Equity Research LLC, as quoted by Bloomberg.

As of Wednesday buy AT&T shares at $35.50

As of Wednesday sell AT&T shares at $34.78

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