AT&T Falls Short on Subscriber Additions, Earnings Guidance

For the full year the company posted EPS of $2.50 on revenues of $128.8 billion. Last year’s comparable numbers were EPS of $2.31 on revenues of $126.41 billion. The consensus estimate called for EPS of $2.47 on revenues of $128.63 billion.

The telecom firm said yesterday that it had no intention of making an offer to acquire Vodafone plc (NASDAQ: VOD). Under U.K. regulations, AT&T may not now make an offer for Vodafone for at least six months.

Wireless revenues totaled $18.44 billion in the quarter, including equipment sales. That total marks a 4.5% year-over-year increase. Wireless operating margins rose 21.4%..

Wireline revenues totaled $14.72 billion for the quarter, down 1.4% year-over-year. Operating margins fell from 12% a year ago to 9.9% this year.

AT&T said it added a net 566,000 postpaid wireless customers in the quarter, its second highest level of new subscribers in four years. Of that number, 299,000 are smartphone subscribers. AT&T also added 440,000 tablet subscribers in the quarter. The company added a total of 809,000 net new subscribers in the quarter. The company sold 7.9 million smartphones in the quarter.

The company’s CEO said:

The next steps are to make our networks even more powerful and layer on services that will drive new growth in the years ahead. We have good momentum in areas like connected car, home automation and mobile business solutions. We’re also committed to transforming our operations to make them more responsive and efficient.

AT&T guided 2014 revenue growth of 2% to 3% and expects stable consolidated margins due to better wireless margins. Adjusted EPS growth is expected to improve in the mid-single digit range, not including share buybacks. Revenue guidance is higher than the consensus estimate of $131.12 billion for 2014, while the midpoint of earnings guidance appears to be a little short of the consensus estimate of $2.67.

Shares are down about 1.1% at $33.33 in after-hours trading after closing at $33.70. The stock’s 52-week range is $33.09 to $39.00. Prior to today’s release Thomson/Reuters had a consensus price target of around $37.00 on the company’s shares.