AT&T’s earnings report for the fourth quarter was released yesterday, showing strong growth for the company, along with a substantial $6.7 billion loss due to the failed T-Mobile takeover bid which cost AT&T $4 billion in break up fees. At the same time last year, AT&T had reported a profit of $1.09 billion. This year, it has not fared so well with Earning Per Share (EPS) falling to 42 cents from 55 cents last year. Despite the substantial loss, AT&T has been able to beat the results of all its competitors with record sales of the iPhone 4 and iPhone 4S. The company’s revenue shot up by 4 percent in the 4th quarter, up from $31.4 billion in 2010 to $32.5 billion, beating analysts’ predictions of $31.95 billion by almost $550 million.
This holiday season saw the iPhone 4S going on to become a huge hit, with robust sales propelling Apple to the position of the world’s largest smart phone maker and beating Samsung to the top spot. AT&T sold a record-breaking 7.6 million iPhones, while the total number of smartphones sold was 9.4 million. Its closest competitor Verizon reported on Wednesday that it sold 4.2 million iPhones and a total of 7.7 million smartphones during the same time period; figures much lower than AT&T. AT&T has outsold its competitors in every quarter of 2011 in terms of sales of the iPhone. The chairman and chief executive of AT&T, Randall L. Stevenson attributed the stupendous results to healthy sales during the holiday season.
Verizon showed its largest growth in five quarters in terms of post paid wireless subscribers, adding 717,000 new customers. AT&T increased its wireless subscriber base to 103.2 million, of which 2.5 million were added in the 4th quarter. Verizon’s base increased to 108.7 million with 1.2 million new customers. Overall, though Verizon is still the bigger carrier AT&T is showing faster growth.
AT&T’s larger subsidies on smartphones have however come at a heavy cost with its margins sliding down to 28.7 percent from 37.6 percent during the same period last year. Craig Moffet, an analyst for the wireless industry in Sanford C. Bernstein said that despite the smartphone boom, profit margins of telecom companies are still shrinking, as seen in AT&T’s case. He went on to say that despite carrying the iPhone exclusively for more than three years, AT&T has still not shown drastic improvement in curbing subsidy pressures. Investors were also disappointed with the quarterly reports as AT&T shares saw a fall of 2.52 percent to $29.45.
