This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

AT&T: iPhone an Anchor, Not an Albatross

Updated from 2:39 p.m. EST

Investors looking for insight into the health of the telecom sector got some mixed messages this week when AT&T (T - Get Report) and Verizon (VZ - Get Report) released quarterly results.

Buoyed by the growth of its wireless business and the popularity of Apple's (AAPL - Get Report) iPhone, AT&T is forecasting low single-digit revenue growth during 2009, despite an increasingly tough economy.

The telecom bellwether reported a 2.4% rise in revenue in its fourth-quarter profit Wednesday but saw its profit fall more than 23%.

Inevitably, telecom firms are feeling the strain of the recession. Rival Verizon also reported a mixed bag of results earlier this week. Unlike AT&T, however, Verizon was unwilling to offer specific 2009 guidance, citing the lack of visibility into its customers' spending.

"That TelCo growth should slow in the recession is obvious -- the big question is how much?" wrote Craig Moffet, senior analyst at Bernstein Research, in a note released Wednesday. "Unlike Verizon, AT&T offered relatively clear guidance, with an expectation of at least some revenue growth -- Verizon has indicated only that they expect to grow earnings."

AT&T also predicted approximately 19 cents of earnings pressure from benefits charges in 2009, and forecast wireless margins in the low 40% range by the end of the year. The Dallas, Texas-based company expects longer-term margins in the mid-40% bracket, it said, during a conference call Wednesday.

This growth will inevitably affect other parts of AT&T's business, according to Moffet.

"The company expects continued margin expansion in wireless, which unquestionably remains the bright spot for AT&T, but, therefore, by implication, expects continued margin contraction in wireline," he wrote.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.03 0.21%
T $38.64 0.00%
VZ $51.02 0.00%
FB $116.73 0.00%
GOOG $691.02 0.00%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs