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Why Telephone & Data Systems Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Telephone & Data Systems (NYSE: TDS  ) have dropped today by as much as 15% after the company reported earnings.

So what: Total operating revenue came in at $1.37 billion, a modest increase of 3%. Earnings per share of $0.27 fell far short of the $0.43 per share that investors were expecting. CEO LeRoy T. Carlson, Jr. said profitability was hurt by increasing smartphone subsidies, declining regulatory support and investment spending.

Now what: The company's U.S. Cellular business unit also announced that it was selling spectrum and customers to Spring Nextel (NYSE: S  ) . TDS also narrowed its guidance ranges and now expects U.S. Cellular service revenue in the range of $4.07 billion to $4.13 billion. Telecom operating revenue should be in the ballpark of $850 million to $860 million.

Interested in more info on Telephone & Data Systems? Add it to your watchlist by clicking here.

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