AT&T Inc. may post higher second- quarter earnings tomorrow after an exclusive contract to sell Apple Inc.’s iPhone helped the largest U.S. phone company cut the rate of customer turnover to a record low.
The company, reaping savings from $140 billion in takeovers, may say profit jumped 71 percent from a year ago. Net income may have gained to $3.1 billion, or 44 cents a share, from $1.81 billion, or 46 cents, according to the average of 12 analysts’ estimates in a Bloomberg survey. Sales probably climbed 87 percent to $29.6 billion.
In Randall Stephenson’s first quarter as chief executive officer, some customers stuck with AT&T because it was the only carrier available on the iPhone, said William Power, an analyst at Robert W. Baird & Co. in Dallas. He’s forecasting an all-time low for subscribers ending service. The period includes two days of iPhone sales and weeks of customer anticipation.
«All that free advertising for the iPhone could be an influence,» said Power, who rates the shares «outperform» and doesn’t own them. «They’ve made good progress on regaining share on the subscriber growth side.»
San Antonio-based AT&T sold out of the combination phone and iPod music player at most stores in less than a week.
AT&T’s rate of turnover, or «churn,» may have dropped to 1.69 percent amid interest in the iPhone and higher marketing to win more monthly customers, Power said. The old record, 1.70 percent, was set in the first quarter. Small changes in churn matter because they equate to thousands of customers paying for more-profitable features such as text messages and video downloads.
Shares Rise
Stephenson, 47, declined to comment on the earnings, AT&T spokesman Fletcher Cook said. The company will report results tomorrow before regular New York Stock Exchange trading opens.
Shares of AT&T rose 45 cents to $39.51 at 9:32 a.m. in New York Stock Exchange composite trading. The stock had gained 9.3 percent this year before today and was up 43 percent in the past year, compared with a 23 percent gain for the Standard & Poor’s 500 Index.
Of 31 analysts that follow the company, 26 recommend investors buy shares, four say hold and one advises selling.
AT&T turned to the iPhone to broaden the appeal of the company’s mobile-phone service and boost sales of other products. Consumers who choose AT&T’s wireless plan will be more likely to keep or add its traditional phone service and buy its new television packages, Stephenson said at an in industry conference last month.
iPhone, the ‘Driver’
AT&T had 62.2 million mobile-phone customers at the end of March, compared with 60.7 million for No. 2 Verizon Wireless, jointly owned by Verizon Communications Inc. and Vodafone Group Plc.
Shoppers bought up to 700,000 of Cupertino, California-based Apple’s iPhones in the first weekend of sales, Goldman Sachs Group Inc. analyst David Bailey said July 2. That was double the New York-based analyst’s initial projections.
The iPhone «is going to be a driver of market share for AT&T,» said Todd Rethemeier, an analyst with Soleil Securities in New York. He rates AT&T shares «hold» and owns some personally. «The vast majority of customers seem to be pretty happy with it.»
AT&T may have had a 1.14 million net gain in subscribers for the second quarter, a dip from 1.19 million in the previous three-month period, according to a survey of eight analysts. New subscribers typically fall at this time of year, analysts said.
More Spending
Verizon Wireless last week reported 1.3 million net new subscribers for the second quarter, for a total of 62.1 million.
AT&T plans to spend as much as $6.5 billion over five years to upgrade its equipment in the 13 states in which it operated before acquiring BellSouth Corp. last year. The improvements may help sell the TV service, now available in 23 markets.
On June 12, the company said it had more than 40,000 subscribers to the TV and Internet service it calls U-verse, with an average of 600 installations a day.
«It’s costing a lot of money, but we expect to see customer growth in the second quarter,» said Todd Rosenbluth, an analyst at Standard & Poor’s in New York with a «hold» rating on AT&T shares. «We’re starting to see the benefits.»
Fuente: Bloomberg
