Updated from 2:39 p.m. EST
Investors looking for insight into the
of the telecom sector got some mixed messages this week when
(T - Get Report)
(VZ - Get Report)
released quarterly results.
Buoyed by the growth of its wireless business and the popularity of
(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
Wednesday but saw its profit fall more than 23%.
Inevitably, telecom firms are feeling the strain of the recession. Rival Verizon also reported a
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
?" 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
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
in wireline," he wrote.