AT&T Investors Unhappy Despite 1 Million New Wireless Subs, Analysts ‘Remain Cautious’

By Kelly Teal Comments
Posted in News, AT&T, Wireless, Financial
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AT&T added more wireless subscribers in 2014’s second quarter than it has in quarters over the past five years.

But that news did not please investors, as evidenced by stock prices. Shares traded down after AT&T announced its earnings on Wednesday afternoon and remained lower on Thursday.

That’s because AT&T’s 1 million new customer were attracted to the provider’s cheaper plans, such as AT&T Next (which some pundits have ripped as “greedy" and “smoke and mirrors."). CEO Randall Stephenson said in a prepared statement the move to no-device-subsidy plans “is repositioning the wireless business model, resulting in our best postpaid net adds in nearly five years and our lowest-ever postpaid churn."

Even so, Canaccord Genuity analysts said they are a little wary of AT&T’s new mobile approach.

“A level of incremental competitive pressure remains in the business to the extent that we remain cautious on the shares as they transition to a no-device-subsidy model," analysts wrote in a July 23 client memo.

Meanwhile, AT&T is moving ahead with its plans to buy DirecTV. That deal is valued at $48.5 billion and Stephenson told investors on a conference call yesterday that the acquisition will “improve our video position and our ability to bundle broadband, mobility and video services nationally."

Overall, AT&T reported $32.6 billion in revenue for the second quarter, up 1.6 percent. Analysts were expecting $33.2 billion. Net income, on the other hand, fell 7.2 percent to $3.5 billion.

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