AT&T's quarter hits mark; Wireless churn falls; iPhone 3G sells well
AT&T on Wednesday reported second quarter earnings of $3.8 billion, or 63 cents a share, on revenue of $30.9 billion. Adjusted earnings were 76 cents a share, a tally that met Wall Street estimates.
In the second quarter a year ago, AT&T reported net income of $2.9 billion, or 47 cents a share.
But the big deal for AT&T was its wireless business, which saw churn fall to 1.1 percent--a record low for AT&T. In a statement, CEO Randall Stephenson said that the company is hitting on all cylinders and working to become an innovation leader. He cited the Apple 3G as the primary example of AT&T's transformation. Indeed, I'd argue that AT&T's partnership with Apple has changed the perception of the company.
The company said sales of the iPhone 3G were double what they were for the first launch in the first 12 days. AT&T added 1.3 million net subscribers in the second quarter, down 123,000 from a year ago. The company did note that iPhone sales slowed ahead of the iPhone 3G launch. Nevertheless, wireless operating income was $3.1 billion in the second quarter, up 91 percent from a year ago, and operating margins were 25.5 percent, up from 15.4 percent a year ago.
By the numbers:
- AT&T's operating expenses in the quarter were $24.3 billion, down from $24.5 billion a year ago.
- AT&T's wireless revenue growth jumped 15.8 percent in the second quarter to $12 billion. Wireless service revenue was $11 billion. Retail average revenue per subscriber was up 2.5 percent. Wireless data revenue was up 52 percent to $2.5 billion.
- Text messaging volumes tripled versus totals for the year-earlier quarter, and multimedia message volumes increased more than 170 percent.
- AT&T's enterprise business showed improvement in data services--an ongoing theme in recent quarters. Enterprise IP data revenue--VPNs, Internet services and hosting--was up 18.4 percent. However, total enterprise revenue was $4.7 billion, down 1 percent from a year ago. AT&T said it sees positive revenue growth in 2008 for its enterprise business.
- AT&T's U-Verse TV had a net subscriber gain of 170,000 to hit the 549,000 subscriber mark.