AT&T Earnings: Stock Gains as Business Booms, Spinoffs Loom

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AT&T stock rose despite a “disappointing” earnings outlook.

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AT&T

‘s reported fourth-quarter results on Wednesday that continued a streak of solid performance for the company, but merger limbo remains impossible to ignore for many investors eyeing its cheap stock.

AT&T (ticker: T) showed growth in most of its divisions and led the U.S. wireless industry in subscriber growth in 2021. But it’s also a company still in the midst of a major portfolio reshuffling, with several major assets recently divested or still on their way out the door, and an upcoming dividend reduction.

AT&T stock gave up an early gain Wednesday to slip 1.4%, to $26.11, in recent trading—compared with a 1.6% rise for the

S&P 500.
AT&T stock has lost about 4% after dividends over the past year, versus a 15% return for the index.

On Wednesday morning, AT&T reported 69 cents in earnings per share for the fourth quarter, or 78 cents per share when adjusted for one-time costs and benefits. That compares with an adjusted 75 cents in the year-ago period and Wall Street analysts’ consensus estimate of 76 cents. AT&T’s net income was $5 billion in the fourth quarter.

Revenue was $41.0 billion, beating the $40.3 billion average forecast. That was down 10% year over year, but AT&T said that without the divestment of its DirecTV unit and other pay-TV operations, revenues would have been up about 4% in the quarter.

AT&T’s adjusted earnings before interest, taxes, depreciation, and amortization—or Ebitda—was about $1.2 billion below consensus, at $11.3 billion. That was down 12% year over year. The largest contributor to that decline was WarnerMedia, which won’t be part of AT&T for much longer.

Free cash flow beat by a wide margin, coming in at $8.7 billion—up almost 14%—versus Wall Street’s $7.3…

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