AT&T Revenue Drops 4.5% and Crisis Impairs Outlook for 2020

Scott Moritz, Bloomberg News

Signage is displayed outside an AT&T Inc. store in Chicago, Illinois, U.S., on Tuesday, Oct. 22, 2019. AT&T is scheduled to release earnings figures on October 28. Photographer: Taylor Glascock/Bloomberg , Bloomberg

(Bloomberg) -- AT&T Inc. posted a 4.5% drop in revenue from a year ago and withdrew its forecast of 2% revenue growth for the year, saying it can’t provide a financial forecast for 2020 due to the coronavirus pandemic.

Homebound customers craving videoconferencing and cellular connections helped improve some of AT&T’s slumping consumer businesses. AT&T lost 1 million TV subscribers but gained 27,000 wireless customers. Earnings, excluding certain items, were 84 cents a share on $42.8 billion in sales. Analysts predicted 84 cents on $44 billion, according to an average of more than 18 estimates compiled by Bloomberg.
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Key Insights

AT&T said the Covid-19 crisis hurt earnings by 5 cents a share in the quarter and knocked $600 million off of revenue.
AT&T’s efforts to transform itself into a modern media powerhouse hinge on the $15-a-month HBO Max streaming platform, which the phone giant plans to launch on May 27. The service is a late and expensive entry in the crowded online video arena, following product debuts by Walt Disney Co. and Comcast Corp. AT&T Chief Executive Officer Randall Stephenson has said HBO Max will have 50 million subscribers in five years.
AT&T has lost a record 5.1 million TV subscribers in the past five quarters. Most of those were satellite-TV cancellations, adding pressure on AT&T to find a buyer or partnership for DirecTV.
Cash from operating activities fell to $8.9 billion from $11.1 billion a year ago. Capital spending edged down to $5 billion from $5.2 billion a year ago. AT&T is facing a costly 5G wireless upgrade and a $14 billion dividend payment, and it’s in a spending battle with other media giants to create compelling new shows -- all while a health crisis wallops the nation’s economy.

Market Reaction

AT&T shares rose 0.8% to $30.10 in premarket trading. The stock is down 24% this year through Tuesday, compared with a 7.5% fall by peer Verizon Communications Inc. and a 15% drop in the S&P 500 Index.

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