April 26, 2024

AT&T Profit Is Hit by Slowing iPhone Demand

ATT, the nation’s biggest telecommunications company, reported third-quarter results Thursday that just met analysts’ expectations, amid growing competition from rival wireless carriers Verizon and Sprint. The company posted a profit of $3.6 billion, or 61 cents a share, compared with a profit of $12.3 billion, or $2.07 a share, during the same quarter a year earlier, although the 2010 figures were bolstered significantly by the sale of assets. Analysts had expected ATT to earn 61 cents a share.

The company said that it activated only 2.7 million iPhones during the quarter. That number is the lowest the company has reported in several quarters, signaling that ATT is beginning to feel the competitive threat of rival carriers who are now also selling the iPhone. In addition, many wireless customers were probably waiting for the release this month of the next-generation iPhone.

Investors seemed slightly disappointed by the earnings, as shared dipped 2 percent in pre-market trading. Analysts say that the wireless industry is struggling for growth amid growing saturation.

“This may be the new normal,” said Craig Moffett, an analyst with Sanford C. Bernstein who follows the telecommunications industry. “It looks more and more like ATT is going to have to depend on organic growth and unfortunately, there isn’t any. The wireless industry just isn’t a growth industry anymore.”

ATT said, however, that during the quarter it sold 4.8 million smartphones, which made up nearly two-thirds of all device sales during that period. The company also said that the sale of Android devices more than doubled year over year.

“Mobile broadband growth continues to be robust, execution was strong across the business, and we delivered another solid quarter,” said Randall L. Stephenson, the chairman and chief executive of the company, in the statement. “The next waves in the mobile Internet revolution represent tremendous growth potential, and we are laying the groundwork required for that future.”

The company said that it added 319,000 wireless customers during the quarter. The company has faced greater competition from rival carriers who are also selling portfolios of smartphones and mobile devices.

ATT’s operating revenue slipped to $31.48 billion during the quarter, compared with $31.58 billion a year ago. Analysts surveyed by Thomson Reuters had expected the company to report operating revenues of $31.60 billion.

The operator is still looking for regulatory approval to move forward in its acquisition of T-Mobile, although Mr. Moffett said it is looking more and more like that deal may disintegrate under government scrutiny.

Mr. Stephenson said that ATT was still working “toward a successful completion of our planned T-Mobile USA merger.”

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Economix Blog: Your Economic Outlook: Mixed Up

Screen shot of The Times’s interactive feature.

Contradictory data are nothing new in economics, but amid the slump in the United States and Europe, readers may find themselves paying increasing attention to indicators that seem to point every which way.

Corporate earnings in the United States grew in 2011 — but that growth has slowed. Household income has fallen farther since the recession officially ended in June 2009 than it did during the recession itself. The American economy gained 103,000 new jobs in September, according to figures released Friday, but unemployment remained high at 9.1 percent. And of course, all this information is available through more and more channels, media, devices and platforms.

With this in mind, The Times last week presented an interactive feature, “What’s Your Economic Outlook?” We asked readers to express their views on four topics: their job status, their upcoming spending plans, job prospects for the next generation and the state of the economy next year. Participants were asked to choose from a list of words to summarize their view, and to explain in a few words.

More than 5,600 completed submissions, and the results show a broad range of results. Some of the results were unsurprising: people who described themselves as unemployed were mostly more pessimistic than people with jobs. But the distinctions between groups were suggestive: respondents in their 60s seemed a bit more pessimistic about the next generation than did respondents in their 20s.

Even more notable, perhaps, were the comments that readers left to explain their views. Readers who seemed most optimistic often explained themselves with reference to plans they were following or had made. One wrote:

We scaled back our lifestyle years before the downturn, so this recession hasn’t affected us like people who are in debt.

Another:

We have budgeted well for upcoming expenses and I feel comfortable with our income streams.

Many comments from readers with a negative outlook described dire circumstances, and more than a few sounded a note of desperation:

Seven people used to do my job. Now there are only two of us. Nobody cares. Drowning.

And:

I have no money. Barely buying food. No help available for single men.

Many younger contributors saw their own opportunities as narrowing, with high levels of debt and few well-paying jobs:

Because previous generations have left my generation with crushing burdens and almost no safety net.

And:

There is nothing left for the next generation, only a small percentage will see the success of previous generations.

A few young contributors sounded an exuberant note about potential development:

There are so many incredible opportunities arising in new fields.

And:

Because my generation was raised to be innovative, and we will find a way to improve the current landscape.

In what could be interpreted as a sign of optimism, on the whole, contributors seemed to be slightly more hopeful about their own prospects — for work and for spending — than for the economy as a whole or for the next generation. That view jibes with some recent statistical evidence, suggesting that the disparity in outlooks reflects sentiments just as mixed as the other economic signals.

The full interactive feature will remain online.

Article source: http://feeds.nytimes.com/click.phdo?i=2d41b94d0710812a3e815bdd99ee9888

Air Traffic System Update Encountered Turbulence

Those are the changes the Federal Aviation Administration has been promising for years through an ambitious program to modernize the nation’s air traffic system, and replace radars on the ground with satellite technology. The problem is that this new system, called NextGen, will cost an estimated $30 billion to $42 billion to complete. So far, the airlines have been reluctant to put up their half of the money for a system that will not be operational for at least a decade.

But NextGen, which stands for the Next Generation Air Transportation System, received a boost on Friday with House passage of a $59.7 billion bill that finances the F.A.A. over the next four years, providing much-needed stability to the agency’s flagship program. Since 2007, the F.A.A. bill had been repeatedly stalled and its budget temporarily extended 18 times.

The bill, which was approved 223 to 196, largely along party lines, also cuts overall spending on aviation by $4 billion and includes a provision that would curb the right of airline employees to unionize. The bill from the Republican-dominated House must still be reconciled with a vastly different version that the Senate, controlled by Democrats, approved in February. The White House has said it will veto a final bill that includes the labor provision.

And Representative Nick J. Rahall of West Virginia, the ranking Democrat on the House Transportation and Infrastructure Committee, assailed the deep cuts in the F.A.A. budget, which, he noted, came a week after two airliners landed at Washington National Airport without being able to contact the single air traffic controller on duty.

Modernizing the nation’s current air traffic system, which is based on technology invented during World War II, is universally seen as critical to coping with the congested airspace over the United States and to accommodate growing traffic. In its latest forecast, the F.A.A. estimated that United States airlines would carry 1.3 billion passengers in 2031, up from about 700 million in 2011.

Just like GPS for cars, satellite navigation gives pilots their exact location at any given time. Air traffic controllers would not have to wait 30 seconds for the next sweep of their radar screen to know the locations of planes. Radar’s limits means that controllers must now keep planes three miles apart when they approach airports. This limits the number of planes that can land each hour and contributes to the longer lines for takeoff.

“Today’s airspace is woefully antiquated,” said Steve Fulton, who helped pioneer satellite-guided navigation with Alaska Airlines in the 1990s and now works for GE Aviation.

Airlines burn an extra 10 percent of fuel today, he said, as they circle complicated approach routes or are put on a holding pattern by controllers juggling several flights.

“Instead of a chaotic and unplanned and unpredictable system, NextGen would provide precise synchronization,” he said.

Because of the surge in traffic in recent decades, the current system is often operating at the limits of its capacity. Robert W. Mann Jr., an aviation industry expert in Port Washington, N.Y., estimated that delays and airport congestion cost the industry as much as $12 billion a year in lost time and extra fuel costs.

The United States has also been lagging other countries that are already moving into this digital navigation age, including Australia, Canada, China, and several European countries like Sweden.

Yet airlines, which continue to be low in cash, have been reluctant to commit before they get a clearer sense on how the F.A.A. plans to transition to this new technology.

“Basically, it comes down to economics,” Mr. Mann said. “This is an industry that is not operationally driven. It is financially driven. And unfortunately, the airlines have learned to be very circumspect.”

Experts said the repeated delays in financing over the last few years have contributed to NextGen’s slow pace. The F.A.A. also has a history of being unable to complete large-scale investment programs on time and on budget.

In a report last month, the Department of Transportation’s inspector general said that another of the F.A.A.’s major technological programs, called En Route Automation Modernization, was four years behind schedule and could end up costing as much as $500 million more than its initial budget of $2.1 billion. The program, one of the building blocks of NextGen, is intended to track airliners at cruising altitude. It has suffered software glitches, including tagging flight numbers to the wrong planes, at its initial testing centers in Seattle and Salt Lake City.

“Yes, we have not been perfect in the past in technological rollouts,” said Michael P. Huerta, the F.A.A.’s deputy administrator. “But this one is different.”

Of NextGen, he added, “We are beyond this being a research and planning project and we are very much in implementations.”

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