Dow Earnings Preview: AT&T

The Dow's telecom stalwart wants to grow as fast as its rival. Can AT&T get the job done?

Jul 23, 2014 at 11:00AM

The Dow Jones Industrials (DJINDICES:^DJI) have seen more than half a dozen component companies report their latest earnings this week alone, as earnings season hits its busiest point. But more than half of the Dow 30 have yet to report, and AT&T (NYSE:T) will give investors its latest picture of the state of the telecom industry when it issues its earnings numbers later today. What AT&T says will confirm or contrast with the results seen from Verizon (NYSE:VZ) yesterday and give investors another perspective on opportunities in the wireless niche.

T Wikimedia

AT&T will release its latest quarterly results this afternoon after the market closes. Following its release, the company has scheduled a conference call for 4:30 p.m. EDT to discuss its financials.

Investors don't have clear expectations of how AT&T is likely to perform this quarter, with analysts expecting slight gains in revenue but mildly weaker earnings compared to year-ago figures. But with so much going on in the telecom industry lately, Dow investors should focus as much on AT&T's long-term strategy as on its short-term results.


Source: AT&T.

Specifically, AT&T and Verizon are sparring to figure out which of their strategies is likely to be most lucrative. Verizon has made its intentions clear to focus on the U.S. wireless market, with a huge nine-figure buyout of its former joint-venture partner to take full control of the Verizon Wireless business. Having taken on huge amounts of debt, Verizon will almost certainly have to spend years consolidating its purchase before considering another major strategic acquisition.

Dtv Wikipedia

Source: Wikipedia.

By contrast, AT&T appears to recognize that when it comes to the domestic market, it is hemmed in by its competitors and by its size. Its failed attempt to buy T-Mobile showed that antitrust regulators are simply unwilling to allow AT&T to grow beyond its current size domestically; to satisfy growth-hungry investors, that means AT&T has to look at other avenues for expansion. The company has two main choices: expand its geographical reach or broaden its offerings to encompass a greater array of telecom and related services. AT&T's planned acquisition of DIRECTV takes the Dow telecom giant in both directions, with the opportunity to serve more video customers while also opening the doors to a presence in Latin America.

Of course, both AT&T and Verizon must face their smaller competitors. AT&T in particular has been a target of ads urging users to switch providers, and to some extent it has had to respond in order to maintain market share. Yet until smaller carriers can improve their service quality, AT&T will have some flexibility to choose its desired strategic direction without worrying too much about competition from below.

AT&T is one of the oldest companies in the Dow Jones Industrials, and it has adapted to new business models in the past. Doing so this time will take additional effort, and investors should watch closely to see if the company can hold its own in an increasingly cutthroat industry.

Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. 


Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers