AT&T Posts Q3 Profit Decline, Looks Ahead to Q4

It’s the week that everyone waits for, when American tech and telecommunications companies post their Q3 results. Who am I kidding? No one waits for this. But as expected, in a fiscal quarter—ending September 24^th—that saw no new iPhone release and no significant other new smartphone options, AT&T’s revenues took a hit, dropping from $12.3 billion in Q3 2010, to $3.6 billion in this quarter (Verizon’s fiscal report will be released today).

To be fair, last year’s Q3 results were buoyed by a large tax settlement and the sale of one of its business divisions, but nevertheless AT&T’s revenues this quarter still fell short of Wall Street’s estimates.

Despite this drop in revenue, AT&T executives certainly aren’t worried, as it doesn’t take a financial analyst to see that big things are coming for the telecommunications giant  in Q4. With iPhone 4S sales breaking mobile market sales records, AT&T is looking forward to an “unbelievable” Q4, confident that Santa will bring the company everything on its wish list, and not a lump of coal.

Let’s be honest here, fiscal reports aren’t the most gripping news to end the week on, but such revenue reports and financial projections provide a tantalizing glimpse into the direction of a company in the months ahead. That said, while doom and gloom predictions make interesting headlines, news about missed revenue projections is often misleading, with profit declines and fiscal estimates often communicated amidst confusing market speak and a myriad of meaningless numbers. So some explanation is often required.

In this particular case, although AT&T posted a significant decline in profits from Q3 2010 and despite the fact the telecommunications giant failed to match Wall Street’s profit predictions, the company actually did very well, and looks to do even better in Q4. There’s no way AT&T could have matched its revenues from a year ago, which were significantly higher than normal due to a profitable tax settlement.

So what can we get out of all of this? First, the profit report showed that while several areas of AT&T’s expansive telecommunications business are fading—particularly its wireline Internet services—it posted a huge increase in wireless subscribers, a point that surprised many in this era of post-iPhone exclusivity.

Combine that with the news that AT&T has already sold a whopping 1 million iPhone 4S smartphones in this current quarter, and it’s clear that AT&T, despite increased competition, has not suffered from any exclusivity hangover.

In fact, while confident in its Q3 numbers, the talk of the fiscal report was the future, particularly Q4, which AT&T expects to be “unbelievable,” as even more people look to the iPhone 4S as the perfect Christmas gift for themselves or others.

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Written by: Jeff Wiener. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.