Media and telecommunications giant AT&T Inc. (T, Financial) reported disappointing first-quarter results before the opening bell on Wednesday, sending shares lower.
The Dallas-based company, which provides wireless, satellite TV and fixed-line services, posted adjusted earnings of 84 cents per share, which were down slightly from 86 cents in the prior-year quarter and were just shy of Refinitiv’s estimates of 85 cents. Further, AT&T noted that the impact of the coronavirus reduced earnings by 5 cents per share and had a $435 million impact on its earnings before interest, taxes, depreciation and amortization.
Revenue came in at $42.8 billion, which was down from $44.8 billion a year ago and was below analysts’ expectations of $44.2 billion. AT&T noted that advertising and equipment sales were impacted by the Covid-19 virus as live sports events like March Madness were postponed, resulting in a $600 million decline.
Despite shutting down more than 40% of its retail stores to prevent spreading the virus, one area of strength was monthly phone subscribers. AT&T added 163,000 net new monthly phone subscribers during the first three months of the year, beating Wall Street’s estimate of 90,700 by a wide margin.
In contrast, the company also lost 897,000 premium TV subscribers, which encompasses both DirecTV and its U-Verse service, as the pandemic increased cord-cutting among consumers.
The division that suffered the most from the virus outbreak, though, was WarnerMedia. It posted $7.4 billion in sales, which was down from $8.4 billion last year.
Due to the uncertainty surrounding the coronavirus outbreak, AT&T also withdrew its guidance for the year. Despite the volatility in the market, Chairman and CEO Randall Stephenson said the company has a strong cash position and balance sheet and the “core businesses are solid and continue to generate good free cash flow.”
“In light of the pandemic’s economic impact, we’ve already adjusted our capital allocation plans and suspended all share retirements,” he added. “As a result, we’re able to continue investing in critical growth areas like 5G, broadband and HBO Max, while maintaining our dividend commitment and paying down debt.”
With a $214.56 billion market cap, shares of AT&T were trading around $30.47 on Wednesday morning. According to GuruFocus, the stock has lost an estimated 25% year to date.
With 0.21% of outstanding shares, Pioneer Investments (Trades, Portfolio) is AT&T’s largest guru shareholder. Other top guru investors include Paul Singer (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, Richard Pzena (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and the T Rowe Price Equity Income Fund (Trades, Portfolio).
According to the Industry Overview page, AT&T is the second-largest company in the telecom services sector at 31.3%. Other top players are Verizon Communications Inc. (VZ, Financial), T-Mobile US Inc. (TMUS, Financial), Zoom Video Communications Inc. (ZM, Financial) and Altice USA Inc. (ATUS, Financial).
Disclosure: No positions.
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