AT&T Aims to Speed Dial Earnings for Investors - Barron's (T, AAPL, VZ, CMCSA, TWC)

November 23, 2009 12:36 PM EST
Though we can't think of a clever, phone-related cliché right now, AT&T (NYSE: T) needs no cliché when it comes to earnings potential for investors, a Barron's article reports today. The centurion AT&T is down about 1.8% YTD. AT&T is expected to realize an EPS of $2.12 for FY09 and $2.25 for FY10. Revs for FY09 are expected to be 123.06 billion and $124.30 billion for FY10, not exactly a gigantic spurt, but still good when considering cost-cutting and restructuring moves that make margins more attractive.

AT&T is also estimated to be nearing the end of their contract with Apple (NASDAQ: AAPL), though the terms of the contract haven’t been formally disclosed to the public.

Barron’s highlights that, though the Apple relationship may be nearing an end, investors may be overlooking other positives such as bountiful cash flow, 6.3% dividend yield, other attractive Smartphones, and a solid management team.

S&P Equity Research has a Strong Buy rating on AT&T and a 12-month price target of $31. Gabelli and Co. sees AT&T reaching $34 based on 2009 results.

For the third time in five quarters, AT&T reported reaching, or close to reaching, 2 million new subscribers, compared to Wall Streeter’s that expected a flat demand.

One area of concern is landline service, which was down 7.1% in the third quarter. AT&T says that they have undergone drastic cost-cutting in that area.

AT&T has created U-verse Internet powered TV and has partnered with DirectTV (NYSE: DTV) to combat losing market share to companies like Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC).

Free cash flow for T totaled $13.9 billion, more than the company had for all of 2008.

An area to mention as well is AT&T’s lawsuit over Verizon’s (NYSE: VZ) ads that show AT&T’s map coverage as second-rate to Verizon’s. An analyst at Fox-Pitt noted that “You’ll find bottlenecks in the networks in LA, San Francisco, and NYC…they need more towers and they’re getting them.” The plan is to increased network coverage by the time the iPhone contract expires next year.

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