Over the holiday season, ATT sold a record number of smartphones. But its quarterly earnings took a hit from pension costs and Hurricane Sandy.
Despite the setbacks, ATT’s business had a strong fourth quarter. It sold more smartphones than its main competitor, Verizon Wireless. It also added many new contract subscribers and increased the revenue that it gets from mobile data, the fees that people pay to use the Internet on its network.
“We had an excellent 2012,” said Randall Stephenson, ATT’s chief executive, in a statement. “Looking ahead,” he added, “our key growth platforms — mobile data, U-verse and strategic business services — all have good momentum with a lot of headroom.”
On Thursday, ATT reported a loss in the fourth quarter of $3.9 billion, or 68 cents a share, up from a loss of $6.7 billion, or $1.12 a share, from the same quarter a year earlier.
The company said revenue was essentially flat at $32.6 billion.
Its adjusted per-share earnings were 44 cents a share, excluding pension costs, the impact of Hurricane Sandy and the sale of its advertising units. Wall Street analysts had expected 45 cents a share on earnings of $32.2 billion, according to Thomson Reuters.
The company, based in Dallas, said that it sold 10.2 million smartphones over the quarter, the most ever sold by any American carrier. A majority of those smartphones were iPhones: ATT sold 8.6 million iPhones, in contrast to Verizon Wireless’s 6.2 million iPhones.
ATT did not, however, beat Verizon in an important metric for carriers: the number of new contract subscribers, who are the most valuable type of customer. ATT gained 780,000 new contract subscribers over the quarter, compared with Verizon’s 2.1 million. In the wireless industry, subscription growth is crucial as carriers joust for the few remaining people who do not already own cellphones.
The iPhone, the most popular smartphone in the world, has been an important weapon for carriers to get new subscribers. Although ATT still leads as the nation’s top seller of iPhones, Verizon has been increasing its iPhone sales every quarter, and it is getting close to catching up, said Chetan Sharma, an independent mobile analyst.
“There’s always been this attachment in consumers’ minds that ATT is the brand for iPhone,” Mr. Sharma said. “I think that’s starting to even out in the marketplace.”
Similar to Verizon, ATT last summer started offering shared data plans, which allow customers to share a single pool of data across multiple devices, including smartphones, tablets and computers. It said on the earnings call that it already had 6.6 million subscribers on these plans, about a quarter of whom are opting for plans with at least 10 gigabytes. Thanks in part to these new shared data plans, revenue from mobile data grew 14.7 percent over the quarter, to $6.8 billion, up from $5.9 billion last year.
ATT’s success with shared data plans is good news for the company, because they help to pry customers off flat-rate, unlimited data plans so that they eventually pay more for data, said Jan Dawson, an analyst with Ovum, a research firm. Indeed, ATT said more than 15 percent of shared data plan customers were switching from unlimited data plans.
ATT also saw a rise in customers for U-verse, its digital phone, television and high-speed Internet service for households. It added 609,000 U-verse customers over the quarter, bringing the total number of subscribers to about 7.7 million.
The carrier has big plans this year to attract more customers. It is in the process of a major wireless network expansion. It said late last year that it would invest an extra $14 billion to expand its wireless and broadband services through 2015. It expects that its fourth-generation network technology, called LTE, will cover 300 million people by the end of next year.
Beyond making upgrades to its wireless network, ATT has plans to offer new services that might create new revenue streams. In March, it will begin selling its new wireless home security system, Digital Life, which will allow people to use tablets or phones to monitor their homes from afar. If a burglar trips a motion sensor in the house, for example, a user can receive a text message, then call the police. Ralph de la Vega, chief executive of ATT Mobility, has said that he believes home security will be a big opportunity to increase revenue, because only 20 percent of American homes have security systems, leaving millions of homeowners as potential buyers.
ATT’s Mr. Stephenson said he was excited about the “vibrant options” for phones set to arrive in the coming year, including devices with Research in Motion’s new BlackBerry 10 system.
“I’m very optimistic about BlackBerry 10,” Mr. Stephenson said. “I hope that it’s as good as it appears to be.”
This article has been revised to reflect the following correction:
Correction: January 24, 2013
An earlier version of this article published online misstated the expectation of Wall Street analysts for ATT’s quarterly per-share earnings. It was 45 cents, not 48 cents.
Article source: http://www.nytimes.com/2013/01/25/technology/pensions-and-storm-hurt-att-earnings.html?partner=rss&emc=rss
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