AT&T stock falls as telcos lower free cash flow forecast


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AT&T shares tumbled Thursday after the telco added more wireless postpaid phone subscribers than expected in the June quarter but lowered its full-year free cash flow forecast. The selloff in T shares slowed down in the afternoon.


AT&T’s earnings do not include WarnerMedia, which was spun off in early April, and DirecTV. AT&T (T) said second-quarter adjusted earnings from continuing operations were 65 cents, down 11% from a year earlier. T shares revenue fell 17% to $29.6 billion.

Analysts had forecast earnings of 61 cents per share for AT&T on revenue of $29.5 billion, according to FactSet. A year earlier, AT&T stock earned 73 cents a share on $44 billion in revenue. AT&T said its adjusted profit from select operations alone, excluding WarnerMedia and DirecTV, was 64 cents a year earlier.

Shares of AT&T fell 7.2% to 19.01 in today’s afternoon stock market trading.

AT&T Stocks: Free Cash Flow Outlook Lowered

In addition, AT&T said it added 813,000 pay-per-use wireless phone subscribers, up from an expected increase of 562,000. .7 billion dollars.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 2.5% to $8.2 billion.

Free cash flow generated from ongoing operations in the second quarter was $1.4 billion on higher capital expenditures, the company said in a statement. This falls short of the consensus forecast of $4.62 billion in free cash.

“Free cash flow of just $1.4 billion was a very big draw for the second consecutive quarter as it came in 70% below consensus,” Craig Moffett, an analyst at MoffettNathanson, said in the report.

AT&T cut its full-year free cash flow guidance to $14 billion from $16 billion.

In its earnings report, AT&T said, “This forecast reflects an expectation of more than $3 billion in lower device payments, approximately $2 billion in capex cuts, benefits from first-half customer growth, including recent price increases, and smaller interest payments in cash.”

AT&T added, “We expect these benefits to be partially offset by reduced distribution from DirecTV and our expectation of some increased pressure on fundraising.”

Stock T in 2022

AT&T stock is up 10% in 2022 ahead of its earnings report.

According to AT&T’s earnings report, telecom stocks had a relative strength rating of 91, according to the IBD Stock Checkup. In addition, shares of T approached the entry point at 21.49 from the bottom of the cup and handle.

WarnerMedia merged with Discovery in early April. The new media company is called Warner Bros. Discovery (VBD).

AT&T cut its annual dividend by 46% to $1.11 per share due to the WarnerMedia spin-off. However, AT&T offers a dividend yield of 5.43%.

“Management has not taken any future action on dividends, in particular not postponing the board’s decision on any future dividend growth, which we believe is the most important aspect,” Raymond James analyst Frank Lauthan said in a report. “We continue to hope for an increase in dividends in tokens, and a buyback is also possible. We expect more clarity on this issue before the end of the year.”

Additionally, in August 2021, AT&T transferred DirecTV to TPG Capital.

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Follow Reinhardt Krause on Twitter @reinhardtk_tech updates on 5G wireless networks, artificial intelligence, cybersecurity and cloud computing.


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