This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

Slowing Sensation at Cingular

Cingular is showing signs of thinning at the top.

The wireless joint venture of SBC (SBC) and BellSouth (BLS) managed to improve its bottom line despite posting a second consecutive disappointment on the subscriber front.

Cingular added 867,000 net new subscribers in the third quarter ended last month, well below the 1 million or more analysts were looking for. And the company's defection rate, or churn, increased 10 basis points from the previous quarter to 2.3%. The company is the nation's largest cell phone service with 52.3 million subscribers.

Financially, the telco was a little more solid, posting earnings of $222 million on service revenue of $7.7 billion. That compares with a profit of $147 million on the same amount of service revenue a year earlier. On an adjusted basis, excluding one-time charges, net income rose to $504 million from $317 million in the second quarter. Average revenue per user in the third quarter was flat with the prior period at $49.65.

Some observers see Cingular's slowing subscriber growth as a sign that the industry itself may be finally reaching a plateau. With two of every three people in the U.S. already owning cell phones, the pool of new customers has nearly been drained.

But some investors saw it is an encouraging sign that despite the cooling trend, Cingular managed to widen its margins a bit.

"Next Wednesday, October 26, marks the first anniversary of Cingular's life as the largest wireless company in the United States, and our third-quarter results show once again that we are making solid progress delivering on the promise of the merger," said CEO Stan Sigman in a press release Wednesday.

Cingular's smaller-than-expected net subscriber numbers may also reflect the company's effort to clean out some of the miscounted customers that have plagued its rolls for the past year.

Last week the Atlanta-based telco said it had overstated its first-half subscriber count by 154,000. That move came just nine months after Cingular reduced its reported fourth-quarter gross-subscriber gains.

Still, some analysts wonder if Cingular is struggling to keep its customers, particularly those who were originally with AT&T Wireless. With the two-year contracts now expiring after number portability rules went into effect, industry observers are looking for consumer trends that may favor one carrier over another.

So far, with new subscriber growth still humming, telcos have not had to slash prices to attract users. But as the industry leader, Cingular's sluggish performance may mean rivals are chipping away at its business -- or that the sector is headed for some slack times.

Wall Street will be watching next week for reports from Verizon Wireless, a joint venture between Verizon (VZ - Get Report) and Vodafone (VOD), and Sprint Nextel (S).

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs