ATandT Hints at iPhone Refresh During Quarterly Earnings Report
AT&T boasted strong first-quarter 2010 numbers, though earnings fell by 21 percent, after the closure of a long-time tax break. The carrier activated 2.7 million Apple iPhone smartphones during the quarter, and boosted subscriber numbers to 87 million, not too much lower than those of competitor Verizon Wireless, which will report first-quarter results on April 22.AT&T reported consolidated revenues of $30.6 billion April 21 for its first quarter of 2010, representing a growth of 0.3 percent, or $78 million, from a year earlier. The carrier additionally added 1.9 million wireless subscribers-the highest first-quarter total in its history-for a total of 87 million subscribers. (Competitor Verizon Wireless, which will report its earnings April 22, currently has more than 91 million subscribers.)
AT&T's profits, however, were another matter. The newly passed health care reform laws eliminated a long-term tax break, which companies have to pay the entire cost of in the quarter that the law took effect. For AT&T, this meant anteing up $995 million, causing earnings to drop by 21 percent.
Net income for the carrier, then, was $2.5 billion, or $0.42 a share, down from $3.1 billion, or $0.53 a share, from the first quarter of 2009.
"I'm pleased to be able to say that we had a terrific start to the year," AT&T Chief Financial Officer Richard Lindner said during the conference call with investors. "Earnings per share before the non-cash charge was up double digits. Consolidated revenues were up, margins expanded, cash flow was strong and I think all of these reflect good execution on the plans that we outlined for you in January."
New focus has additionally been turned on the carrier due to rumors that Apple may be working on a device for Verizon, which would leave AT&T without its prized possession: exclusive rights to the iPhone. Before that happens, though, AT&T is expected to enjoy one more iPhone refresh in June. Lindner perhaps hinted at this, saying the carrier will have "new products and product refreshes we're excited about."
During the quarter, AT&T activated 2.7 million iPhones, more than a third of which were owned by new customers to AT&T. Additionally, wireless data revenues were up $947 million over the year, for a total of more than $4 billion for the quarter.
Lindner said mobile data represented an over-$16 billion annualized revenue stream for AT&T, and explained that driving this type of growth required three things, the first of which is a great data network.