AT&T Third Quarter Earnings Fall Short of Estimates

Posted by at 5:49 am on October 23, 2014

AT&T’s quarterly results fell short of industry projections when the company announced $32.9 billion in revenue for the third quarter of 2014. The resulting earnings per share (EPS) was $0.63, missing the projected $0.64 EPS on $33.25 billion in revenue. While the company may have missed projections, it announced that it picked up more than two million mobile and broadband customers.

Compared to the same quarter in 2013, revenue was up slightly from $32.2 billion. Operating expenses were up from the previous year, increasing to $27.6 billion compared to $26.0 billion for the quarter ending September 30. Operating income decreased to $5.4 billion from $6.2 billion, while operating margin went from 19.2 percent to 16.4 percent. AT&T posted a net revenue of $3 billion for the quarter, which is $0.58 per diluted share.

Wireless revenues were $15.4 billion for service and $2.9 billion for equipment. This represents an increase of roughly two percent for service and 4.7 percent for equipment over the previous quarter. After operating expenses, AT&T’s financial report indicates that the income for the segment was $4.4 billion. However, both wireless segments posted a lower overall income compared to the $4.6 billion recorded last year. Service revenues dropped approximately 0.2 percent year-over-year from $15.4 billion. Equipment revenue increased 44.3 percent from $2.02 billion. Operating expenses hit $13.8 billion in total.

AT&T credited gains in postpaid customers and connected devices for its subscriber growth of two million. Postpaid subscribers totaled 785,000 of the new users, with connected devices being credited for 1.27 million. Connected cars are responsible for 500,000 of new subscribers. Losses for postpaid subscribers totaled 140,000. However, AT&T said it gained 87,000 reseller subscribers – the first gain in seven quarters. AT&T Next saw growth, with approximately 3.4 million smartphones adds and upgrades routed through the program.

Wireline revenues were down quarter-on-quarter, with revenues for service and equipment totaling $14.61 billion. This was only a slight decrease from the $14.63 billion posted during the second quarter. Service was responsible for $14.3 billion of the third quarter’s revenue, while equipment recorded $247 million. Compared to the previous year, revenues were down about 0.3 percent, with equipment dropping $20 million and service dropping $35 million. Total income for the wireline segment was $1.2 billion, a 9.7 percent decline from the second quarter and a 17.1 percent decline from the previous year. Operating expenses were $13.3 billion.

The consumer market was responsible for $5.7 billion in wireline revenue for the quarter, with business customers marking $8.6 billion. U-verse Internet added 44,000 business customers, to bring the subscriber count over 12 million for the company. Television subscribers increased by 216,000, pushing the subscriber count to more than six million.

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