What happened
Shares of AT&T (T 1.17%) were sliding today after the telecom giant posted disappointing results in its first-quarter earnings report. The company reported weak subscriber growth and cash flow underwhelmed.
As of 10:08 a.m. ET, the stock was down 8.6%.
So what
Revenue in the quarter rose 1.4% to $30.14 billion, which was just short of estimates at $30.26 billion.
The company added 424,000 wireless subscribers in the quarter, and 272,000 AT&T Fiber customers. Domestic wireless service revenue rose 5.2%.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose from $10.2 billion to $10.6 billion, and earnings per share fell from $0.63 to $0.60, mostly due to a decline in other income, which beat estimates at $0.58.
Operating cash flow declined from $7.6 billion to $6.7 billion, and free cash flow was down from $2.8 billion to $1 billion, which is not enough to fund the company's dividend payments.
CEO John Stankey said, "The work we're doing today is establishing a foundation for durable, long-term growth, and we remain confident in our full-year guidance."
Now what
AT&T did not update its guidance, but had previously called for wireless service revenue growth of at least 4%, adjusted EBITDA growth of at least 3%, free cash flow of at least $16 billion (up $2 billion from last year), and adjusted earnings per share of $2.35 to $2.45.
Based on that forecast, the stock looks cheap, but the weak free-cash-flow performance is a reminder that AT&T has struggled in the past to live up to its promises as the stock has been a chronic underperformer.
Given that history and the challenges the company faces in a high interest rate environment and with a potential recession around the corner, it's understandable why the stock is down today.
