AT&T Earnings Call INSIGHTS: Strong Buyback Position, Churn Investments
Strong Buyback Position
John Hodulik – UBS: Two quick ones. First John, just based on your comments on the business market, you turned positive on the enterprise side. Do you expect that to remain positive going forward and as the slight change to some incremental weakness on the low end SME side? Then on the buyback, obviously you guys have made a lot of progress there. Do you expect to be substantially complete with the buyback by year-end?
A Closer Look: AT&T Earnings Cheat Sheet>>
John Stephens – SVP and CFO: Let me take the second question first. With regard to the buyback, two things; we do expect to continue in the marketplace and participating in buyback. That will be impacted by market conditions, continued strong cash flows and the other factors that we’ve spelled out. We have not guided towards when or how much will buyback in any of the future quarters, but I think as we said at the beginning of the year on the January call, we are in a position with the cash on the balance sheet at the beginning of the year and strong cash flows in this year than we have an ability to buy back a large part of the authorized share repurchase and we’ll continue to monitor that and continue to pursue those opportunities. On the business side, we do have continued growth in strategic services and that growth is encouraging to us, but we are seeing businesses to be very careful. It seems like whether they’re hesitant about the elections, about the tax law changes, about the federal deficit, they have abilities to spend, so we’re encouraged by that, but they’re being very careful we’re seeing a lot of no decisions. So we’re certainly hopeful to be able to continue our positive enterprise revenue story, but we’ll have to prove that as will everybody else. We’re still optimistic about our wireline business and believe particularly our business revenues are going to be positive going forward, It just may take us a little bit longer than we would have expressed to you in January.
Simon Flannery – Morgan Stanley: John, I wonder if you could update us on the status of the review of the rural lines and also churn investments this quarter. You went through some of the factors driving that, how should we think about churn going forward from here? You had a pretty substantial drop. Is there more room for year-over-year improvements in that or is this as good as you think it can get to?
John Stephens – SVP and CFO: First on the question with regard to kind of our strategic initiatives, you’ve seen the directory sale and the completion of that. We’ve seen the continued movement on spectrum in the 12 acquisitions – smaller acquisitions. Especially we closed on a number of deals that are sitting before the SEC and I think you have seen on the (indiscernible) side our filing with Sirius where we are jointly going there to clear up some – improve some usability of some of the WCS spectrum we own. So those are parts of the strategy. We are continuing our review on the other pieces of our business and as soon as we have something worth sharing we will. But we are going through that process and we will continue to go through that process. Just want to be careful to make sure we complete that analysis and have a full story for you when we are ready to share it Simon.
Simon Flannery – Morgan Stanley: Because there was some talk of you IPT (indiscernible) and so forth but that’s still an option rather a choice at this stage is that right?
John Stephens – SVP and CFO: Everything quite frankly at this stage is an option and we are looking at a whole host of different opportunities or different alternatives, as you might expect, our shareholders would expect from us.
Simon Flannery – Morgan Stanley: On the trends?
John Stephens – SVP and CFO: On the trends side it was very encouraging. It was (not only) encouraging on the post paid but it was encouraging that it was across the board we saw improved churn. We are optimistic about our ability to hold on to those kinds of levels and continue to improve it. We will see as we go through some of the seasonality in the business in the second half of the year how that impacts it. But this is a process that’s been going on for a long time. We have been making significant investments over a number of years and improving the quality of our network and our wireless team including our business wireless team has put a lot of effort into improving the customer experience. So yes, we are seeing better but the customer experience is getting a lot better and so we’re optimistic that we will be able to move forward building from this positive base. But as we go into the second half of the year and a part of the wireless business year that is much more seasonal, we’ll have to work through that and see if we can meet our goals.