AT&T Inc. (T) is scheduled to report the third quarter results on Thursday, October 22, 2009. In the last four quarters, the company's actual earnings exceeded the market's consensus significantly.
Analysts estimates for the quarter ending September 2009 (Q3) range from a low of $0.71 to a high of $0.95, with a consensus of $0.826. For the fiscal quarter ending September 2009, the consensus EPS forecast has decreased over the past week from $0.501 to $0.500 (-0.20%) and decreased over the past month from $0.506 to $0.500 (-1.19%). Of the 26 analysts making quarterly forecasts, 1 raised and 8 lowered their forecast.
In the third quarter last year, AT&T activated 2.4 million iPhones, of which 40% were for subscribers who jumped over from other carriers. Apple said Monday that it sold more than 7.4 million iPhones in the quarter, half a million more than in same quarter a year ago. So, AT&T should have benefited from increased iPhone sales as it is the exclusive carrier for the device.
In Q3-2009, AT&T could have added 1.42 million wireless subscribers, of which 1.26 million are the coveted customers who sign contracts rather than prepaying for service. The higher numbers could be attributed to iPhone sales and AT&T's investment in to complete a substantial upgrade of its local 3G wireless network in the Dallas-Fort Worth area. In Q3-2009, the company unveiled devices from Dell with 3G wireless built-in, enabling small businesses to access the 3G network.
On the costs side - AT&T is coming out after negotiating a batch of labor contracts covering more than 100,000 workers on the wireline side. In the process, it has reduced its health care costs, curbing what it contended were extremely generous benefits. However, these cost reductions wouldn't be reflected in the third quarter figures.
Going forward, for the fiscal year ending December 2009, the consensus EPS forecast has remained the same over the past week at $2.071 and decreased over the past month from $2.076 to $2.071 (-0.24%). Of the 30 analysts making yearly forecasts, 1 raised and 8 lowered their forecast.
AT&T expects to close its $2.8 billion acquisition of cellular carrier Centennial Communications Corp. in the fourth quarter. Regulatory scrutiny delayed a deal initially expected to close in the second quarter. The acquisition will expand AT&T's coverage, particularly in Puerto Rico.
The company's stock closed Tuesday at $25.99, compared to the 52 week range of $21.44 and $30.65. I guess the stock is slightly overvalued at the current levels.
