AT&T Earnings Call Nuggets: Legacy Services vs Strategic and U-verse Details
Legacy Services vs Strategic
Michael Rollins – Citi Investment Research: I was wondering if could talk a little bit about the business revenue in more detail in terms of the implied erosion of legacy services relative to strategic. Is that being hurt by the cyclical as well as the secular? And is that something that continues at this rate or do you see some improvement coming over the next 12 to 24 months in that segment?
John Stephens – SEVP and CFO: If you break down the three segments so to speak of our business revenues into the small business add, we are encouraged by the acceptance of high speed broadband, U-verse type products, but the business is still challenged by a lack of starts. We are seeing some positive improvement in our wholesale business, but government, education and medical are still being really challenged by the economy and by funding. And enterprise is continuing to be challenged by uncertainty, and if you will, delaying decisions even though they are spending on speed and advanced data services. When we look at the overall business services, Mike, I think about it this way. It’s hard to predict until we get some economic clarity, because while unemployment or regulatory concerns or government spending maybe affecting us as an individual company separately, in different ways, it’s definitely affecting our customers and until we get some clarity on that, it’s hard to predict. But what we do feel good about it is the position we are in when it turns, because we can provide that combination of integrated services like no other. Hopefully, that answers your question, Mike.
Simon Flannery – Morgan Stanley: You had very good U-verse numbers. Can you talk about what was driving that specifically? It doesn’t sound like your footprint is expanded dramatically that’s going to be later on. Was it promotional activity? I see you’ve got a few new offers out there, and do you think that this is sort of a new kind of turning the corner as you – the DSL base becomes lower? And then, given your sort of leverage is moving up towards your 1.8, what’s the latest thinking around potential for asset sales or other monetizations? Thanks.
John Stephens – SEVP and CFO: Thank you, Simon. And quite frankly, on our U-verse positive development both in small business and in consumer, I would tell you that the simple answer is really, really quality execution by our people and their teams. Certainly, there were some promotions, certainly, there was good opportunities that presented itself from existing assets, but I would tell you, they focused on reducing churn, they focused on shortening installation times, they focused on converting customers from legacy DSL services to the high speed U-verse services. It was really a whole collection of really quality execution by the team, and I think that’s what really drove it. As you can see, we still drove revenue growth and we still are getting very good revenues on the triple-play on the consumer side. So, it wasn’t just incentive-driven, it was really performance. With regard to our balance sheet and – I guess the first item I’d point out to, Simon, with regard to your second question is, as we’ve shown, we’ve got a great balance sheet, very strong cash flows, very great coverage of all of our responsibilities, so we feel good about where we’re at, clearly aware what’s going on in the industry with regard to monetization strategies. We have a responsibility to look at all of those because we’re here to monetize and maximize value for our shareholders. But with the strength of our balance sheet, we can be careful and prudent with regard to taking those steps and are not necessarily in a position where we need to do any of that.
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