EARNINGS PREVIEW: US Telecom Cos Likely To See Mixed Results

15th Jul 2010 17:30

By Nathan Becker Of DOW JONES NEWSWIRES TAKING THE PULSE: Mixed earnings for U.S. telecom companies are expected for the second quarter as wireless providers continue to elbow each other in a saturated cellphone market, dueling via flashy new handsets. Several companies saw significant smartphone launches on their networks during the quarter, including the debut of a new version of the iPhone. Companies without wireless operations, meanwhile, have kept licking their wounds as customers continue to ditch their landlines. COMPANIES TO WATCH: AT&T Inc. (T) reports July 22 Wall Street Expectations: Analysts polled by Thomson Reuters most recently forecast earnings of 57 cents a share on $30.92 billion in sales. A year earlier, the company posted a 54-cent profit and $30.73 billion of revenue. Key Issues: The iPhone remains the name of the game for AT&T. The company has built its profits from Apple Inc.'s (AAPL) landmark handset, and it released the latest iteration of the device - the iPhone 4 -in late June. While the debut has been anything but smooth with ordering and equipment troubles, AT&T has offered to push up the date on which existing iPhone users can renew their contracts and get the latest version of the phone - a move that could be seen as locking in customers before the iPhone liely becomes available at Verizon Wireless. Verizon Communications Inc. (VZ) reports July 23 Wall Street Expectations: Analysts' average forecasts call for 56 cents of earnings and $27.04 billion. In the prior-year period, the company earned 52 cents, or 63 cents excluding merger and other charges, while revenue was $26.86 billion. Key Issues: Verizon has seen demand improve, as Chairman and Chief Executive Ivan Seidenberg has said the company has been helped by growth in wireless data and a healing economy. Verizon Wireless, jointly owned by Verizon and U.K.'s Vodafone Group PLC (VOD, VOD.LN), has posted continued strong subscriber growth. But Verizon's operating performance still seems to take a back seat in most conversations to chatter about whether, and when, the carrier will get its hands on the iPhone and what it will do about its joint ownership structure with Vodafone. Sprint Nextel Corp. (S) reports July 28 Wall Street's Expectations: The company is seen posting an 18-cent loss and $8.02 billion of revenue, worse than a year-earlier 13-cent loss and $8.14 billion of revenue. Key Issues: Sprint has pinned its hopes on building its 4G network through partner Clearwire Corp. (CLWR), and demand for its first device to run on the super-fast network, the Evo 4G, has exceeded supply - Chief Executive Dan Hesse in June noted that the company had seen spot shortages of the handset. Evo's first-day sales tripled the combined three-day sales of the Palm (PALM) Pre and Samsung (005930.SE) Instinct, the company's previous two bestsellers. The company hopes the Evo's success will help to reverse its trend of losing customers. Motorola Inc. (MOT) reports July 29 Wall Street's Expectations: Analysts anticipate 8 cents of earnings on $5.19 billion in revenue. A year earlier, Motorola saw a 1-cent profit and $5.5 billion of revenue. Key Issues: Motorola has benefited from Verizon Wireless heavily pushing its flagship Droid phone. In April, co-Chief Executive Sanjay Jha said he was growing more comfortable with Motorola's position in the smartphone market because of its relationship with wireless carriers. But competition ramped up during the quarter with the launches of Evo and iPhone 4. Meanwhile, Motorola's bottom line has benefited from aggressive cost cuts despite still-falling market share. Qwest Communications International Inc. (Q) reports Aug. 4 Wall Street's Expectations: Analysts project earnings and revenue to fall to 9 cents and $2.92 billion, respectively, from 12 cents and $3.09 billion a year earlier. Key Issues: Qwest has continued to bleed its traditional landline subscribers, although it has said downward trends are beginning to slow in some spots and broadband subscribership has risen. Qwest in April agreed to be bought by CenturyLink Inc. (CTL) for $10 billion in stock. Many smaller or regional players have teamed up, trying to defend themselves against wireless and cable operators who generally offer bundled services. (The Thomson Reuters estimates and year-earlier results may not be comparable due to one-time items and other adjustments.) -By Nathan Becker, Dow Jones Newswires; 212-416-2855; [email protected]; (END) Dow Jones Newswires July 15, 2010 12:30 ET (16:30 GMT)