UPDATE: AT&T (T) Posts 8% Rise in Q2 Net Income as Wireless, Data Lead the Way

July 24, 2012 9:09 AM EDT
(Updated - July 24, 2012 10:24 AM EDT)

Shares of AT&T (NYSE: T) are up about 0.6 percent in Tuesday morning's pre-open session following mixed second-quarter results. The company said the quarter had AT&T's best-ever wireless margins and churn.

Sales totaled $31.58 billion, up 0.3 percent from revenue of $31.5 billion in the same quarter last year. Analysts were expecting total quarterly sales of $31.72 billion.

AT&T saw sales to the Wireless segment rise 4.3 percent to $14.77 billion, Data sales were up 7.8 percent to $7.92 billion, and Voice revenue fell 10.1 percent to $5.7 billion.

Net income was up 8.4 percent from $3.66 billion in the year-ago quarter to $3.97 billion. Net income attributable to AT&T holders totaled $3.9 billion, bringing the per-share profit to 66 cents. Analysts were looking for EPS of 63 cents.

Operating income margin of 30.3 percent, post-paid churn fell to 0.97 percent. 1.3 million total wireless net adds, with gains in every customer category; 320,000 postpaid net adds.

Strong smartphone sales of 5.1 million with more than one-third of all postpaid smartphone subscribers now on 4G-capable devices. In the quarter, the company activated 3.7 million iPhones, with 22 percent new to AT&T.

Randall Stephenson, AT&T's Chairman and CEO, said, "We executed well across the business and posted another strong quarter with growing revenues, expanding margins and double-digit earnings growth. Our mobile Internet leadership continues, with solid gains in smartphones and tablets, plus our wireless margins have never been better. And most impressive, with this growth, we also achieved our best-ever postpaid wireless churn, which points to the premier experience customers receive on our network. All of these things add to our confidence and enthusiasm looking ahead.

"In addition, with disciplined cost management our cash generation continues to be strong," Stephenson added. "This allows us to invest aggressively in our growth platforms while returning substantial value to shareowners through dividends and share repurchases."

Wells Fargo issued a research report pointing to several highlights from the results. Post-paid net additions of 320,000 which were sharply better than the Street estimate of 225,000 additions and the firm's estimate of 270,000 additions. Wells Fargo called wireless margin "extremely impressive at 45 percent."

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