Will This Charge Hurt AT&T’s Earnings?
And that’s not the end of the bad news. While the wireless carrier said it expects that the $10 billion charge will be partially offset by an asset gain of $1.9 billion, AT&T estimated a net operating income loss of $175 million for the quarter in its wireless sector, resulting from Superstorm Sandy-related damages and higher-than-expected smartphone costs. Like its rival service providers, Verizon (NYSE:VZ), Sprint (NYSE:S), and Deutsche Telekom’s (DTEGY.PK) T-Mobile, AT&T’s cellphone towers and cables were affected by the October storm, which caused service outages on its cellular networks.
The “uncertainty in the securities markets and U.S. economy” also contributed to the company’s negative outlook for the quarter, according to the filing, in which AT&T said that the current economic environment caused it to lower its long-term rate of return from 8.25 percent to 7.75 percent.
AT&T’s filing contained good news as well. The company predicted that device sales will likely surpass the number sold in the year-ago quarter; approximately 10.2 million devices were activated in the three-month period, a figure higher than last year’s 9.4 million and higher than the 9.8 million smartphone sales reported by Verizon for the quarter. AT&T’s competitor is also facing a charge of $7 billion because of similar pension obligations, ZDNet reported on Friday.
Fourth-quarter and 2012 fiscal year results will be reported on January 24.
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