AT&T Earnings Down 23.6 Percent - A Good Thing?

January 28, 2009

(4 votes, average: 4.75 out of 5)

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AT&T stock is down on news that earnings took a 23.6 percent tumble in the recently reported quarter. However, the earnings were largely affected by strong sales of the iPhone which AT&T subsidizes at a hefty cost and increased costs from operations.

AT&T added 1.9 million new iPhones in the 4th quarter, 40% of which were new customers to the AT&T network. Average iPhone usage is 1.6 times higher than other AT&T phone subscribers, likely to be a long term win for AT&T once it gets past the initial pain of phone subsidies.

With the recently announced layoffs of 12,000 workers, AT&T will also suffer short term severance expenses but will benefit from overall lowered costs in future quarters.

What is being interpreted as bad news by Wall Street today may result in better numbers for the death star company in the future.

Written by Todd · Filed Under Business, Mobile