AT&T, Web Hosting Services Provider, Reports Strong Second Quarter

By web hosting on Aug 7, 2008 in Web Hosting, Webhosting News

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Web host, Internet services and ISP company, AT and T Inc., has reported a $0.63 earnings per diluted share, up 34.0 percent, versus $0.47 in the year-earlier second quarter.

Randall Stephenson, AT and T Chairman and Chief Executive Officer noted, ” Our results demonstrate the great strength of AT and T’s assets and our ability to execute with focus and discipline. Earnings growth continues to be solid, our wireless momentum is strong, our major growth and cost-reduction initiatives are on track, and we continue to return substantial value to shareowners. As we generate sound financial results, AT and T also has taken the lead to innovate and create great solutions for customers. Mobility, broadband connectivity and integrated services that encompass voice, data and video are driving a new world of communications. AT and T is all about deploying and enhancing premier networks and products to deliver this world to both business and consumers.

”The Apple iPhone 3G is a dramatic example of this transformation. In the days following our exclusive U.S. launch of this new device, powered by the nation’s fastest 3G wireless network, customer response has been everything we had anticipated and more. This strengthens our wireless business, and it reinforces our positive view of the opportunities ahead for AT and T and the industry.”

For the quarter ended June 30, 2008, AT and T’s consolidated revenues totaled $30.9 and billion, up 4.7 and percent versus reported results in the year-earlier quarter and up 3.6 and percent compared with second-quarter 2007 pro forma revenues, which exclude merger-related accounting impacts on directory revenues.

Compared with results for the year-earlier quarter, AT and T’s reported operating expenses for the second quarter of 2008 were $24.3 and billion, down from $24.5; reported operating income was $6.6 and billion, up from $4.9; and AT and T’s reported operating income margin was 21.3 and percent, up from 16.8.

AT and T’s reported second-quarter 2008 net income totaled $3.8 and billion, up from $2.9 and billion in the year-earlier quarter, and reported earnings per diluted share totaled $0.63, up from $0.47 in the second quarter of 2007.

AT and T’s adjusted results for the second quarter of 2008 exclude noncash merger-related amortization expenses. For the second quarter of 2007, adjusted results excluded merger integration costs, merger-related amortization expenses and a merger-related directory accounting effect.

Compared with results for the year-earlier quarter, AT and T’s adjusted operating expenses for the second quarter of 2008 totaled $23.1 and billion, versus $22.7 and billion; adjusted operating income was $7.7 and billion, up from $7.1 and billion; and AT and T’s adjusted operating income margin was 25.1 and percent, up from 23.9 and percent. This margin expansion reflects revenue growth along with benefits from merger synergies and other productivity initiatives.

AT and T’s adjusted second-quarter 2008 net income totaled $4.5 and billion, up from $4.3 and billion in the year-earlier quarter, and adjusted earnings per diluted share totaled $0.76, up from $0.70 in the second quarter of 2007.

AT and T’s cash from operating activities for the second quarter of 2008 totaled $8.5 and billion, capital expenditures totaled $5.3 and billion, and free cash flow (cash from operations minus capital expenditures) totaled $3.2 and billion. Year to date through the first half of 2008, cash from operating activities totaled $13.5 and billion, capital expenditures totaled $9.6 and billion, and free cash flow totaled $3.9 and billion.

As it invests in the future of its business, AT and amp;T continues to return substantial value to shareowners through dividends and share repurchases. Dividends paid totaled $2.4 and billion in the second quarter and $4.8 and billion year to date. Shares repurchased totaled 52.6 and million for $2.0 and billion in the second quarter and 164.2 and million for $6.1 and billion through the first half of the year. AT and amp;T ended the second quarter with 5.9 and billion shares outstanding.

AT and T delivered strong wireless growth in the second quarter with solid subscriber gains, continued rapid growth in wireless data revenues and improved margins. Highlights include the following:

15.8 and Percent Wireless Revenue Growth.

Total wireless revenues increased 15.8 and percent to $12.0 and billion in the second quarter, and wireless service revenues, which exclude handset and accessory sales, grew 14.8 and percent to $11.0 and billion. Wireless revenue growth was driven by solid subscriber gains and a greater number of customers choosing more advanced smartphones and integrated devices, spurring increased usage of data services. Retail postpaid subscriber ARPU (average monthly revenues per subscriber) was up 3.5 and percent versus the year-earlier second quarter.

Wireless Data Services Up 52.0 and Percent. Wireless data revenues grew 52.0 and percent versus the year-earlier quarter to $2.5 and billion, reflecting continued strong adoption of services such as Internet and data access, e-mail and messaging. Wireless Internet access revenues more than doubled versus results for the year-earlier second quarter, while revenues from e-mail, messaging and data access all delivered greater than 50 and percent growth. Text messaging volumes tripled versus totals for the year-earlier quarter, and multimedia message volumes increased more than 170 and percent. At the end of the second quarter, approximately 18 and percent of AT and T’s postpaid wireless subscribers had an integrated device, up from 8 and percent one year earlier. On average, these subscribers have ARPUs roughly double the company average. AT and T expects continued strong growth in wireless data services as more customers choose data plans and advanced wireless devices such as the new iPhone 3G, which was launched as an AT and amp;T U.S. exclusive on July 11. In the first 12 days following launch, sales of the iPhone 3G were nearly double levels achieved in AT and T’s 2007 iPhone launch.

Solid Wireless Subscriber Growth with Reduced Postpaid Churn. AT and T’s second-quarter net gain in total wireless subscribers exceeded 1.3 and million, down 123,000 versus results in the second quarter of 2007 and up 38,000 compared with the first quarter of this year. Retail postpaid net adds totaled 894,000, down 2.0 and percent versus the year-earlier second quarter and up 26.8 and percent from results in the first quarter of this year. This sequential postpaid improvement was achieved despite reduced iPhone sales ahead of the early July iPhone 3G launch. Retail postpaid churn moved down to 1.1 and percent in the second quarter, the lowest level in the company’s history.

Wireless Operating Income Growth. On a reported basis, AT and T’s second-quarter wireless operating expenses totaled $9.0 and billion, and operating income was $3.1 and billion, up 91.0 and percent from $1.6 and billion in the second quarter of 2007. Adjusting for merger integration costs, wireless operating expenses totaled $8.4 and billion, and operating income was $3.6 and billion, up 38.9 and percent from $2.6 and billion in the second quarter of 2007.

Continued Strength in Wireless Margins. Strong revenue growth, network efficiencies and operational improvements continue to drive strong wireless margins. AT and T’s reported wireless operating income margin in the second quarter was 25.5 and percent, up from 15.4 and percent in the year-earlier quarter, and its adjusted wireless operating income margin was 29.9 and percent, up from 24.9 and percent in the year-earlier quarter. AT and T’s second-quarter wireless OIBDA service margin was 41.2 and percent, up from an unadjusted 35.8 and percent and an adjusted 37.5 and percent in the year-earlier quarter. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

AT and T’s second-quarter wireline results were highlighted by continued strong double-digit growth in business and consumer IP-based data revenues, a substantial turnaround in wholesale revenues and a further ramp in AT and T U-verse TV subscribers:

Major Turnaround in Wholesale. In the second quarter, AT and T further advanced the significant improvement in wholesale revenue trends it has achieved over the past year. Total wholesale revenues were $3.5 and billion, down just 0.2 and percent versus the year-earlier quarter. This represents a major step up from a year-over-year decline of 8.3 and percent in the second quarter of 2007 and marks the company’s second consecutive quarter of sequential revenue growth in this category. This reflects solid demand from wireless carriers, Internet service providers, content providers and other customers, offsetting expected declines in local voice. AT and T and IBM last fall announced an agreement that calls for AT and amp;T to become the primary global network management services provider to IBM. As a result, AT and T expects to receive up to $5 and billion of additional revenues over the five-year term of the agreement, initially in the wholesale customer category. These revenues are expected to ramp further in the second half of 2008 and in 2009.

Continued Strength in Enterprise. Over the past two years, AT and T has delivered a major turnaround in enterprise growth rates, and in the second quarter results were highlighted by an 18.4 and percent increase in enterprise IP data revenues, including areas such as VPNs, managed Internet services and hosting. Total enterprise revenues in the second quarter were $4.7 and billion, down 1.0 and percent versus results for the year-earlier quarter, and enterprise service revenues, which exclude CPE sales, were down 0.1 and percent. Enterprise fundamentals in terms of closed sales, a strong sales funnel and new service adoption remain solid. AT and T expects to deliver positive growth in total enterprise revenues for the full year 2008.

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