Investors will be closely monitoring AT&T (T)'s fourth-quarter results Wednesday to gauge the health of the telecom market.
Analysts estimatethat the telecom behemoth will report revenue of $31.35 billion and earnings of 65 cents a share at a time when few firms have visibility into their long-term performance.
Bank of America analyst David Barden explained that he will be looking to see how the economy is affecting AT&T's volume-based voice revenue, the migration to IP from legacy data systems, and, crucially, the company's forward-looking statements."We expect guidance to be less detailed than in the forecasts provided prior to 2008," he wrote, in a note released Tuesday. Many companies, not just in the telecom sector, are struggling to project even short-term revenue. AT&T rival Verizon, for example, was unwilling to offer forward-looking revenue guidance in its fourth-quarter results, released Tuesday. Investors reacted negatively to Verizon's fourth-quarter results, heralding a broader slump in tech stocks that saw AT&T's shares slip 90 cents, or 3.35%, to $25.93. Set against this backdrop, Barden is also keen to measure the economy's impact on AT&T's wireless and wireline businesses, particularly after the latter proved problematic for Verizon. "Key issues we are watching into the quarter [include] wireline performance and how wireless, cable, and the economy are impacting line loss relative to one another," he said, adding that Apple (AAPL)'s recent performance could also impact its AT&T partner. "Results from Apple imply that fourth-quarter iPhone [3G] sales fell short of the third-quarter launch period, in line with our expectations, which should push up margins sequentially."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV