Updated from 2:39 p.m. EST
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.