After strong earnings from Apple on Monday, many analysts are looking for equally bright results from AT&T as it prepares to report third-quarter financial results tomorrow.
Pali Research today released a revision of its previous projections for AT&T’s third-quarter earnings, saying the firm’s analysts have now increased their predictions for postpaid subscriber growth and postpaid data ARPU.
According to a Pali Research note, the net impact of the analysts’ adjustments had no impact on their third quarter earnings per share (EPS) estimate of 50 cents or their 2010 EPS estimate of $2.02.
Additionally, Pali increased postpaid net addition estimates to 1.67 million from 1.20 million solely on higher gross addition estimates. The firm also increased third-quarter postpaid data ARPU by $1, which increases wireless data revenue by $200 million to $3.7 billion, reflecting 34 percent growth compared to the prior year.
The company points out the near-term gains represented by the iPhone and the possibility of what many believe could be an “iPhone hangover” for the carrier once its exclusivity deal with Apple expires.
“While the strong sales of the iPhone are positive for AT&T in the near term, they increase the company’s reliance on a product for which we do not believe it will be able to maintain exclusivity. We believe more than one-third of AT&T’s postpaid customer base is tied to an iPhone user and that mix is likely to rise significantly over the next few quarters,” stated the report.
Apple on Monday reported its fourth-quarter earnings, beating its own projections as well as analysts’ estimates. Apple said that it had sold 7.4 million iPhones in the fourth quarter, about 500,000 more than it sold in the year-ago quarter. AT&T activated 2.4 million iPhones in the third quarter last year. Forty percent of those iPhone activations were for subscribers who had churned from other carriers.
Rumors have been swirling over the expiration date for AT&T’s contract with Apple that gives the carrier exclusive rights to sell the iPhone. Many believe the contract will expire in 2010, leaving the door open for a CDMA version of the iPhone on either Verizon or Sprint. However, many say that in light of LTE rollouts this year and next, Apple would have little to gain by developing a CDMA version of the iPhone.
