AT&T Inc. Earnings Cheat Sheet: Higher Expenses Shrinks Margins, Profit Declines

S&P 500 (NYSE:SPY) component AT&T Inc. (NYSE:T) reported its results for the second quarter. AT&T Inc. is a holding company whose subsidiaries and affiliates provides wireless and wireline telecommunications services and products to consumers and businesses worldwide. It also provides directory advertising and publishing services in the United States and international markets.

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AT&T Earnings Cheat Sheet for the Second Quarter

Results: Net income for the telecom services company fell to $3.59 billion (60 cents per share) vs. $4 billion (68 cents per share) a year earlier. This is a decline of 10.3% from the year earlier quarter.

Revenue: Rose 2.2% to $31.5 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: T beat the mean analyst estimate of 59 cents per share. Analysts were expecting revenue of $31.33 billion.

Quoting Management: “We delivered another strong quarter capping a solid first half of the year,” said Randall Stephenson, AT&T chairman and chief executive officer. “Mobile broadband growth continues to be robust, and we are seeing encouraging signs in wireline revenues. This adds to our confidence as we look ahead. Mobile broadband with IP infrastructure and cloud services are transforming our industry and are creating unprecedented opportunity. AT&T is strongly positioned to lead in this new era. Our planned acquisition of T-Mobile USA will accelerate development of next-generation capabilities, and it will lay the groundwork for continued high-tech innovation for years to come.”

Key Stats:

Gross margin shrank 2.1 percentage points to 57.7%. The contraction appeared to be driven by increased costs, which rose 7.7% from the year earlier quarter while revenue rose 2.2%.

Revenue has risen the past four quarters. Revenue increased 2% to $31.25 billion in the first quarter. The figure rose 1.6% in the fourth quarter of the last fiscal year from the year earlier and climbed 2.4% in the third quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after being in line with expectations in the first quarter with net income of 57 cents per share.

The company has now been profitable for the last nine quarters, and for the last five, profit has risen year over year by an average of 54.7%. The quarter with the biggest boost was the third quarter of the last fiscal year, which saw a more than threefold surge.

Competitors to Watch: Verizon Communications Inc. (NYSE:VZ), Sprint Nextel Corporation (NYSE:S), CenturyLink, Inc. (NYSE:CTL), General Communication, Inc. (NASDAQ:GNCMA), Cbeyond, Inc. (NASDAQ:CBEY), MetroPCS Communications, Inc. (NYSE:PCS), Cincinnati Bell Inc. (NYSE:CBB), PAETEC Holding Corp. (NASDAQ:PAET), and Frontier Communications Corp (NYSE:FTR).

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(Source: Xignite Financials)

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