Shares of AT&T (NYSE:T) plunged on Thursday morning following the release of disappointing first-quarter results. The telecommunications giant missed Wall Street's estimates across the board, sending the stock 6.9% lower as of 11:40 a.m. EDT.
In the first quarter, AT&T's top-line revenue fell 3.6% year over year to land at $31.8 billion. Adjusted earnings rose 15% to $0.85 per share, but analysts had been expecting earnings near $0.87 per share on sales in the neighborhood of $39.3 billion.
AT&T added 2.2 million net new subscribers to its domestic wireless networks in the first quarter. But that gain included the addition of 4.7 million connected devices, better known as connections under the Internet of Things banner. The company added just 300,000 prepaid subscribers and lost 400,000 customers under the flagship category of postpaid contracts.
AT&T's TV service business also failed to impress investors, losing subscribers for the DirecTV satellite service and holding steady in the fiber-based U-verse segment. In a sign of the times, streaming video service DirecTV Now reported 27% subscriber growth during the quarter while tripling in size compared to the year-ago period.
At this point, AT&T's stock prices have fallen 15% lower in 2018. I don't see any reason to believe that the negative trends will end anytime soon and would hesitate to recommend AT&T as an investment. This dinosaur is struggling to preserve an outdated business model, and it won't work in the long run.