Yesterday, AT&T (NYSE:T) released it fourth quarter 2013 numbers with earnings beating the Zacks Consensus Estimate comfortably, while revenues barely managed to scrape by analyst predictions. In fact, lower-than-expected performance in some key metrics and a pessimistic outlook for 2014 failed to stir optimism among investors.
4Q Earnings in Focus
The company reported adjusted earnings of 53 cents per share, up 20.5% from the year-ago quarter and 3 cents ahead of the Zacks Consensus Estimate. A record low churn rate, a 4.8% quarter-on-quarter increase in wireless subscriptions and a 7.0% decline in the share count were possibly the reasons behind the beat.
Revenues inched up 1.8% year over year to $33.2 billion, and managed to exceed the Zacks Consensus Estimate of $33.06 billion. Growing demand for wireless data service along with strong U-verse and strategic business helped AT&T to log year-over-year revenue growth in the quarter.
However, investors might have demanded more from the No. 2 U.S. mobile services provider as AT&T slipped into red in after hours trading, while it also struggled in the Wednesday session too. Actually, the telecom giant fell shy of Street estimates on indicators like wireless subscriber growth. Total wireless subscribers growth came in at 809,000 in the fourth quarter which was short of analyst expectations of 1.25 million.
If this was not enough, the muted guidance completely undermined investors’ confidence. While the revenue guidance for 2014 was slightly higher than the consensus view, the earnings guidance was short of estimates.
Thanks to the not-so-inspiring overall AT&T earnings picture its shares fell 2.05% in after hours trading on slightly elevated volume. However, this dip might open up a buying opportunity as the long-term outlook for AT&T seems bright. Its bullish Zacks Industry Rank in the top 40% also affirms this fact.
AT&T has sizable exposure (at least 14%) in telecom and technology funds likeVanguard Telecommunication Services ETF (VOX), Fidelity MSCI Telecommunication Services Index ETF (FCOM) and iShares Global Telecom ETF (IXP). This suggests that the performance of the fund is highly dependent on AT&T (see: all the Telecom ETFs here). Below, we have highlighted some of these funds in detail.