Led by Wireless Unit, AT& T Reports a 21.5 Percent Gain
Wednesday, April 23, 2008
AT&T's first-quarter earnings rose 21.5 percent as its wireless division continued strong growth and the enterprise services division reversed a slide, the company said yesterday. The country's largest telecommunications company earned $3.46 billion in the quarter, compared with $2.85 billion in the first quarter of 2007.
Revenue rose 6 percent, to $30.74 billion.
Chief Financial Officer Richard G. Lindner said that apart from some "softness" in local phone lines, there was little sign of the weakness in the U.S. economy affecting the company.
Analyst David Barden of Bank of America said AT&T's results supported the view that the big phone companies are resilient in an economic downturn.
Shares of AT&T closed up 22 cents, to $37.81.
The company said last week that it plans to cut about 4,600 jobs -- 1.5 percent of its workforce -- as it shifts resources from traditional phone operations to growing parts of its business such as wireless services. It said it expects its total workforce of 310,070 employees to keep expanding.
AT&T lost 5 million local phone lines in the past year, ending the quarter with 60.4 million. That trend is affecting all phone companies, as customers switch to wireless or cable services. As of late last year, cable companies now offer phone service in nearly all of AT&T's 22-state local-phone-service territory. However, AT&T said an increase in video services and broadband more than offset the falloff in revenue from voice customers. It added 491,000 broadband customers in the quarter, for a total of 14.6 million, and 148,000 customers for its U-verse video service, which is delivered over phone lines.
The company said it was well on its way to meeting its goal of 1 million U-verse customers by year-end.
In AT&T's enterprise business with the government, corporations and other large customers, revenue rose 1.2 percent from a year earlier. It was the first year-over-year increase in more than a year.
The wireless division added a net 1.3 million subscribers, for a total of 71.4 million, even though it lost 330,000 subscribers with the shutdown of an older network. Revenue was $11.8 billion, up 18.3 percent. During the quarter, AT&T spent $6.64 billion for spectrum licenses it will use to expand its broadband services.