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NEW YORK — AT&T Inc. reports its second-quarter results on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: The largest telecommunications company in the country was something of a safe haven for investors during the market turmoil last fall, but has missed out on the market recovery this year.
Analysts say investors expect the economic weakness to continue to weigh on results in the enterprise segment, which caters to large businesses and the government.
Dallas-based AT&T's wireless division continues to be a bright spot, propelled as it is by the success of the iPhone, but the number of new subscribers is tapering off every quarter for the whole industry, since nearly every adult now has a phone.
Meanwhile, AT&T has lost nearly a third of its landlines in three years, according to an analysis by Sanford Bernstein analyst Craig Moffett. Cable companies keep siphoning off phone subscribers, and many households are choosing to rely on cell phones alone.
BY THE NUMBERS: Analysts surveyed by Thomson Reuters expect the company to post earnings of 51 cents per share excluding items on $30.7 billion in revenue. In the year-ago period, AT&T recorded profit of 76 cents per share on $30.9 billion in revenue.
Apple said Tuesday that it sold more than 5.2 million iPhones in the quarter, more than seven times what it sold in the same quarter a year ago. The figure includes overseas sales, so it's unclear what AT&T's share was. Apple and AT&T launched the latest model of the phone on June 19. Since AT&T subsidizes new iPhones, a jump in sales actually reduces immediate earnings, but sets the company up to receive longer-term benefits from the high service fees paid by iPhone subscribers.
ANALYST TAKE: David Dixon at FBR Capital Markets said investors continue to discount AT&T shares because they feel its high exposure to business customers means revenue will lag in the economic recovery. Fear of increased competition from other wireless carriers is also a factor.
James Breen at Thomas Weisel Partners expects AT&T to add 1.3 million wireless subscribers, 300,000 U-Verse TV subscribers and 200,000 broadband customers, while losing 1.1 million consumer landlines.
WHAT'S AHEAD: AT&T is negotiating a batch of labor contracts covering more than 100,000 workers on the wireline side. Last week, it reached a tentative agreement on a new contract for 18,500 employees in the Midwest, which could set the tone for the remaining districts. The contract would make workers shoulder more of their health care costs in return for wage increases of about 3 percent per year.
AT&T had expected to close its $2.8 billion acquisition of cellular carrier Centennial Communications Corp. in the past quarter, but said in early July that it now expected it to close in the third quarter, apparently because of added regulatory scrutiny. The deal would expand AT&T's coverage, particularly in Puerto Rico.
Verizon Communications Inc., AT&T's largest rival, reports second-quarter results on Monday.
STOCK PERFORMANCE: AT&T's shares fell 1.3 percent in the second quarter, compared to a 17 percent rise in the S&P 500.
