AT&T Lifts Earnings Outlook

Separately, AT&T said the number of branded cellular net adds rose 2.2 percent to 755,000 from the year-ago quarter despite a sharp drop in postpaid-phone net adds.

AT&T almost doubled its entertainment and Internet services – up 96% to $10.9 billion – thanks to its July acquisition of satellite TV provider DirecTV.

Wednesday, AT&T told investors that third-quarter revenue could miss expectations because it says analysts have not been calculating the quarter’s value of the DirecTV business.

Verizon Communications (NYSE:VZ) on Tuesday said it added 1.3 million postpaid subscribers, including 430,000 phone accounts and 818,000 tablet users. Direct prepaid net additions were the next largest contributor, posting 466,000 net additions for the quarter, which was a strong turn around from the loss of 46,000 prepaid customers a year ago and showed continued success in integrating the Leap Wireless assets. “Our early integration efforts with DirecTV are going very well and we’ve just begun to scratch the surface on the video, wireless and broadband cross-selling opportunities”, said AT&T CEO Randall Stephenson, in a statement. Operating income was $5.9 billion compared to $5.6 billion, while the operating income margin was 15.2 percent, down from 17 percent in last year’s third quarter. Analysts had predicted revenues of $40.6 billion, up from $33 billion one year ago.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jeff Kvaal and John Hodulik have a total average return of 12.5% and 20.8% respectively. Business wireless and strategic services revenue growth ioffset declines in legacy wireline products, he said.

AT&T made a $49 billion bet that consumers are still willing to pay for a traditional package of television channels.

On another topic, Stephens said net new DirecTv subscriptions in the US picked up after the satellite-TV service was rolled out to nearly all of AT&T’s 2,300 company-owned wireless stores in the quarter. The consensus estimate for the full year is $2.61 per share.

Fixed broadband connections fell by 106,000 connections during the third quarter, as U-verse broadband additions of 172,000 were more than offset by the loss of 278,000 DSL subscribers. Following the release of the earnings report, shares traded up 2% at $34.65 in the after-hours trading session.