While the market was bracing for the worst, telecom giant AT&T (NYSE: T ) soothed some nerves with a solid earnings report yesterday. America's iconic communications company broke new records in its wireless business and cited improved growth in broadband and enterprise services.
AT&T reported fourth-quarter revenue of $30.4 billion, which is up 3% from last year when compared with consolidated results from the mergers of BellSouth and Cingular Wireless. The bottom line swelled to $3.1 billion, or $0.51 per share, after taking into account merger costs that sapped $0.19 per share in the quarter.
The wireless business continued to shine this quarter, as AT&T stomped on rivals Sprint Nextel (NYSE: S ) , Verizon Wireless -- a joint venture between Verizon Communications (NYSE: VZ ) and Vodafone (NYSE: VOD ) -- and Deutsche Telekom's (NYSE: DT ) T-Mobile, with a record 2.7 million net subscriber additions in the quarter. Apple's (Nasdaq: AAPL ) iPhone was a significant boost here, and the carrier noted that it now services about 2 million iPhone subscribers. With about 40% of these subscribers coming from other carriers, the company is happily picking the pockets of its competition.
Other wireless metrics fared well, too -- churn came in at 1.7%, while ARPU bumped up nearly 2% to $50.28. AT&T also now has its U-verse broadband video offering deployed to 231,000 customers and believes it is on track for its goal of 1 million-plus subscribers by the end of 2008.
Along with the progress on the U-verse buildout, recent news that the company will give free Wi-Fi hotspot access to all broadband customers marks a significant effort to jump ahead of competition. AT&T wants to offer complete, bundled service packages that include video and television services, to compete with cable concerns such as Comcast (Nasdaq: CMCSA ) .
So after CEO Randall Stephenson fanned fears a few weeks ago when he alluded to some impact from a softening consumer market, investors digested yesterday's results and breathed a little easier after finding that the sky wasn't really falling after all. With AT&T reiterating its 2008 growth targets, investors may want to consider that the economy really isn't as bad off as many (including Ben Bernanke) are saying.
For more Foolishness: