Foolish Forecast: AT&T Pruning for Growth

AT&T (NYSE: T) is on the line again, this time with its first-quarter earnings results coming out on Tuesday. Let's see what's expected.

What analysts say:

• Buy, sell, or hold the line? Ma Bell has 27 analysts following it, with 19 espousing a buy rating, seven saying "Hold those shares," and one lonely sell recommendation. AT&T ranks as a four-star stock in our Motley Fool CAPS community, with more than 3,269 players offering an opinion on the company.
• Revenue. The average analyst expects revenue to rise 6% to $30.7 billion this quarter.
• Earnings. The average profit expectation is $0.74 per share.

What management says:
AT&T CEO Randall Stephenson spoke highly of what awaited the company in 2008, saying that "growth trends, combined with the significant opportunities we have for continuous cost improvements, reinforce the positive outlook we have for our business". These trends made him "very confident in our ability to drive strong results in 2008."

Now one quarter into 2008, just one of the "cost improvement" efforts has been announced: The company said it will cut total headcount by 1.5%. This will affect less-profitable areas such as wireline communications more, though, because AT&T will actually be adding positions to support growth in wireless and broadband TV.

What management does:
AT&T continues to pound on rivals Verizon Wireless -- a joint venture of Verizon Communications (NYSE: VZ) and Vodafone (NYSE: VOD) -- and Sprint Nextel (NYSE: S) by signing up record numbers of new subscribers. It has also done well at keeping churn in check and maintaining ARPU.

One Fool says:
With the recent wireless auctions now over, we now know that AT&T ponied up $6.6 billion for a big block of spectrum to complement what it already bought on a Hawaiian holiday excursion. This new wireless property will help AT&T plow ahead with new generations of wireless broadband technology, which help support new services such as its mobile TV offering with partner Qualcomm (Nasdaq: QCOM).

Many are also speculating that a better, faster, stronger version of Apple's (Nasdaq: AAPL) iPhone will hit shelves soon, though this one won't cost $6 million or include a bionic eye (one can always dream, though). But an iPhone encore -- certainly if it also includes a cheaper version -- could drive a large new demographic of consumers into the AT&T fold.

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