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AT&T misses revenue guidance, blames customer transition to AT&T Next

updated 04:56 pm EDT, Wed July 23, 2014

Company still rolling in cash, pulls down $5.6 billion in income

Communications giant AT&T has released its quarterly earnings report for its second quarter of the fiscal year. AT&T's consolidated revenues totaled $32.6 billion, up 1.6 percent versus the year-earlier period. Compared with results for the second quarter of 2013, operating expenses were $27.0 billion versus $26.0 billion; operating income was $5.6 billion versus $6.1 billion; and operating income margin was 17.2 percent versus 19.1 percent.

Wireless revenues for AT&T were up 3.7 percent year-over-year to $17.9 billion. Wireless service revenues decreased 1.4 percent in the second quarter to $15.1 billion, and wireless equipment revenues increased 44.8 percent to $2.8 billion as the company transitions its postpaid subscriber base to "equipment installment plans" from the "device subsidy" model. Second-quarter wireless operating expenses totaled $13.6 billion, up 7.8 percent versus the year-earlier quarter, and wireless operating income was $4.3 billion, down 7.5 percent year over year.

AT&T added 1,026,000 postpaid subscribers in the second quarter, the strongest postpaid net gain in nearly five years. Total wireless subscribers increased by 634,000 in the quarter, led by postpaid net adds and 175,000 connected device net adds. These gains were offset somewhat by a net loss of 405,000 prepaid subscribers, due to declines in tablet-centric data plans and the expected second-quarter reduction in Cricket subscribers as the company begins its integration of Leap Wireless.

Sales of AT&T Next also increased during the second quarter. More than 50 percent, or 3.1 million, of all postpaid smartphone gross adds and upgrades were on AT&T Next during the quarter.

Total second-quarter wireline revenues were $14.6 billion, down 0.9 percent versus the year-earlier quarter, and up 0.2 percent versus the first quarter of 2014. Total U-verse revenues grew 24.8 percent year-over-year. Second-quarter wireline operating expenses were $13.2 billion, up 0.6 percent versus the second quarter of 2013. AT&T's wireline operating income totaled $1.4 billion, down 12.9 percent versus the second quarter of 2013. The company's wired division margin continues to drop, due to declines in legacy services, and content cost increases.

Revenues from residential customers totaled $5.7 billion, an increase of 3.0 percent versus the second quarter a year ago. U-verse, which includes high-speed Internet, TV and Voice Over IP, now represents 62 percent of wireline consumer revenues, up from 51 percent in the year-earlier quarter. Consumer U-verse revenues grew 24.5 percent year over year.




by MacNN Staff

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  1. Inkling

    Senior User

    Joined: 07-25-06

    I've got AT&T cell service and it's dreadful for good reason. The company has two stores within about 3 miles but the closest tower is about 7 miles away. Their solution: they'll sell me a $200 device to provide the service they don't want to bother with. Verizon has a tower about a mile away.

  1. Lifeisabeach

    Fresh-Faced Recruit

    Joined: 05-25-10

    @Inkling

    I could have said that exact same thing about Verizon when I got my first cell phone about 12 years ago. Their service in my apartment at the time was almost non-existent, but their store was 3 blocks away.

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