Steady results expected for AT&T in 2nd quarter

Earnings Preview: Steady results expected for AT&T, fresh off deal to buy Leap Wireless

Associated Press

NEW YORK (AP) -- AT&T Inc., the largest telecommunications company in the U.S., reports second-quarter results Tuesday. It's the first report after AT&T announced that it's buying Leap Wireless.

WHAT TO WATCH FOR: There's a rash of merger activity in the wireless industry, and AT&T has jumped back in for the first time after regulators quashed its bid to buy T-Mobile USA.

On July 12, AT&T announced that it had agreed to buy Leap Wireless International Inc., a provider of low-cost, contract-free cellphone service. The $1.2 billion deal seems motivated mainly by AT&T's desire to bulk up on spectrum, or space on the airwaves. Executives will likely talk more about the deal on the conference call that follows the earnings report. AT&T expects the deal to close in six to nine months.

There have also been rumors this year that AT&T is interested in investing in Europe, but the company has so far lent no support to those ideas. They may come up again as analysts get a chance to talk to executives on the conference call.

Investors usually look at the number of net new devices signed up on service contracts each quarter, but the figures have become rather predictable for AT&T. It regularly adds a few hundred thousand devices, but not as many as Verizon Wireless, which already has more customers. Mike McCormack of Nomura Equity Research expects AT&T to report adding a net 500,000 devices in the quarter, of which 200,000 are phones.

WHY IT MATTERS: Dallas-based AT&T bills 77.8 million devices on its network directly, and there are tens of millions more connected through wholesale contracts. It also has 31.1 million landlines. Its stock is a component of the Dow Jones industrial average.

WHAT'S EXPECTED: Analysts polled by FactSet expect earnings of 68 cents per share on revenue of $31.8 billion.

LAST YEAR'S QUARTER: AT&T earned $3.9 billion, or 66 cents per share, in the second quarter of 2012. Revenue was $31.6 billion.

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