AT&T (T) Q3 2010 Earnings Call October 21, 2010 10:00 am ET Executives Rick Lindner - Chief Financial Officer, Principal Accounting Officer and Senior Executive Vice President Brooks McCorcle - Senior Vice President of Investor Relations Ralph de la Vega - Chief Executive Officer of AT&T Mobility and Consumer Markets and President of Mobility & Consumer Markets Analysts John Hodulik - UBS Investment Bank Jonathan Chaplin - Crédit Suisse AG Timothy Horan - Oppenheimer & Co. Inc. Michael Rollins - Citigroup Inc David Barden Brett Feldman - Deutsche Bank AG Jason Armstrong - Goldman Sachs Group Inc. Presentation Operator
This presentation may contain certain non-GAAP financial measures, and reconciliations between the non-GAAP financial measures and the GAAP financial measures are also available on our website.Before I turn the call over to Rick, let me call your attention to Slide 4, which provides a financial summary. Reported earnings per share for the quarter was $2.08, which includes the $0.13 gain from the cash sale of Sterling Commerce during the quarter and another $1.40 gain from a previously disclosed tax settlement. Excluding these gains, EPS was $0.55. That's up about 4% versus EPS for the third quarter a year ago and up about 9% year-to-date versus the same period last year. That's our third consecutive quarter of EPS growth before significant items. Consolidated revenues were $31.6 billion, up both year-over-year and sequentially. And that was led by strong growth in mobile broadband U-verse services and advanced business offerings. Even with record integrated device sales, our consolidated operating margin was essentially flat from the prior year, reflecting operational improvements in network and support functions and solid execution on cost initiatives. And free cash flow continues to be strong, $4 billion in the quarter and $11.6 billion year-to-date. With that, I will now turn the call over to AT&T's Chief Financial Officer, Rick Lindner. Rick? Rick Lindner Thanks, Brooks. Good morning, everyone. Before we get into the highlights on Slide 5, let me first just say we're very pleased with what we accomplished in the third quarter. First off, we are excited about the trends that we're seeing with revenue growth. Not only did we have a solid consolidated revenue growth quarter that was fueled by double-digit Wireless revenue growth, but we also saw Wireline consumer revenues grow for the first time in more than two years. Second, we continue to see the benefits of our mobile broadband strategy. We had just an incredible Wireless quarter across most every metric.
New customers are choosing AT&T and existing customers are renewing their contracts in record numbers. And I think that speaks volumes about both the strength of our network and the ever-widening selection of devices that we carry. Ralph will give you more details in a moment, but we are very pleased with the improvement that we're seeing in revenue trends.We also continue to see improving revenue trends in our business markets, and I'll speak to those in just a few minutes. But from my perspective, the thing I'm most encouraged by is that even with pressure on margins from integrated device sales, we delivered good, consolidated margins with earnings growth and continued free cash flow. And I think that puts us in great position to have a solid year in 2010 with good momentum going forward. With that overview, let's take a look at revenues on Slide 6. Consolidated revenue totaled $31.6 billion. That's up nearly $850 million versus third quarter a year ago, and that growth is due to strong Wireless growth to solid U-verse gains and to improved business trends. Our overall revenue mix continued its transformation in the third quarter, with 73% of revenues coming from Wireless, Wireline Data and Managed Services. That's up from 68% a year ago and 62% two years ago. Combined, the revenues from these sources were up nearly 10% in the third quarter, and we expect this shift to continue, and it's one of the reasons we have a positive long-term view of the business going forward, as growth of Wireless and Data outstrips declines of legacy services. Read the rest of this transcript for free on seekingalpha.com