AT&T Q4 Net Down; Executives Upbeat Despite Loss of iPhone Exclusivity
AT&T’s Q4 profit of $1.1 billion represents a 60 percent drop year-over-year and is a result of a previously announced accounting changes, it said. The carrier added fewer contract customers in the quarter. AT&T is confident it will “grow through the disruption” of losing iPhone exclusivity, executives said on a conference call Thursday.
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AT&T added 400,000 net new postpaid customers in the quarter, down from 910,000 in the year-ago quarter. During the latest quarter, AT&T activated 4.1 million new iPhones, down from 5.2 million the previous quarter. The company also added 442,000 iPads and Android tablets, 90 percent of which are prepaid accounts. AT&T’s loss of iPhone exclusivity could make early 2011 “rocky, volatile and hard to predict,” CEO Randall Stephenson said. But AT&T’s confident it will still have healthy subscriber growth, he said. There might be some volatility this year and “certainly in the first half” but the carrier is seeing continued strong iPhone sales, despite the anticipation of Verizon iPhone, said Chief Financial Officer Rick Linder.
AT&T expects to increase sales of its Windows and Android devices, Stephenson said. The company hasn’t been very aggressive with the Android portion of the sale mix but “you will see a lot of activities” from AT&T in the Android market this year, he said. Additionally, AT&T will launch its LTE network this year atop its 3G network, he said. “We have accelerated our LTE deployment plans and we expect to add 20 4G devices to our lineup this year.” The company isn’t expecting any dramatic economic improvement this year but there have been signs of job growth, he said.
Meanwhile, consumer wireline customers totaled around 24.2 million at the end of 2010, an 11.5 percent decline from the end of 2009. But the operator posted net broadband additions of 210,000, well above the 148,000 in the previous quarter. “Guidance is disappointing,” said Credit Suisse analyst Jonathan Chaplin. AT&T may be assuming contract-subscriber gains for this year, which would drive up handset-subsidy costs and lower earnings growth, he said. The loss of iPhone exclusivity will hurt revenue, but margins should improve as subsidy payments decline, said Gimme Credit analyst Dave Novosel.