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AT&T, Telmex Internacional, Apple, 3M and United Parcel Services

^{Published on 2010-07-23 14:11:00 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: AT&T Inc. (NYSE: [ T ]), Telmex Internacional (NYSE: [ TII ]), Apple (Nasdaq: [ AAPL ]), 3M Co. (NYSE: [ MMM ]) and United Parcel Services (NYSE: [ UPS ]).

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Here are highlights from Thursdaya™s Analyst Blog:

AT&T Outperforms Expectations

AT&T Inc. (NYSE: [ T ]) declared its second-quarter earnings of 61 cents per share, surpassing the Zacks Consensus Estimate of 57 cents. The results were declared before the market opened on July 22, 2010. Earnings increased 13% year over year, excluding the one-time gain from the Telmex Internacional (NYSE: [ TII ]) transaction.

Net income in the quarter jumped 25.9% year over year to $4 billion, driven by continued growth in mobile broadband, gains in IP-based and strategic business services and cost-cutting measures.

Revenue inched up 0.6% year over year to $30.8 billion, approximately in line with the Zacks Consensus Estimate. The increase in revenue was driven by strong growth in Wireless revenue.

Segment Results

Wireless

The momentum for Applea™s (Nasdaq: [ AAPL ]) iPhone continues, with highest-ever new activations of 3.2 million (approximately 27% represented by new customers) in the quarter. Post-paid 3G wireless devices also registered solid quarterly net additions with 2.9 million new activations to reach 29.7 million.

AT&T registered a net gain of 1.6 million wireless subscribers in the second quarter to reach 90.1 million total subscribers in service, up 14.2% year over year, attributable to strong iPhone activations. This represents an all-time high quarterly net addition in the companya™s history. Retail post-paid additions in the quarter totaled 496,000 million (32% of total net additions).

Total Wireless revenue climbed 10.3% year over year to $13.2 billion owing to reduced churn, strong data network and continued growth of subscribers. Wireless data revenue increased 27.2% year over year to $936 million, driven by strong handset sales and greater usage of AT&Ta™s mobile broadband network. Both total churn (customer switch) and post-paid churn improved for the sixth consecutive quarter and achieved record lows. Total churn was 1.29% compared with 1.48% in the year-ago quarter, while post-paid churn was 1.01% compared with 1.07% in the year-ago quarter.

Post-paid ARPU (average revenue per user) was $62.63, up 3.4% year over year, driven by healthy data growth.

Wireline

Total U-verse TV subscribers reached 2.5 million in the quarter with a net addition of 209,000 customers (up 60% from the year-ago level), as well as continued high broadband and voice attach rates. AT&T U-verse revenues exceeded to $1 billion for the first time, which is more than twice the U-verse revenues in the year-ago quarter. AT&T's total video subscribers, which includes the company's U-verse and bundled satellite customers, reached 4.6 million (representing 17.9% of households served).

Wireline revenues recorded the smallest year-over-year decline in the last five quarters, at 3.7%. Revenues of $15.4 billion in the second quarter was driven by improved consumer and business customer trends.

However, total consumer connections plunged to 44.3 million from 46.3 million in the year-ago quarter, primarily due to a drop in traditional voice access lines, partially offset by increases in U-verse TV and VoIP (Voice over Internet Protocol) connections. AT&T U-verse Voice connections increased by 183,000 in the quarter. The company added 404,000 customers from the year-ago quarter to reach 16 million total broadband connections.

3M Beats, Boosts Forecast

3M Co. (NYSE: [ MMM ]) released its earnings results for second quarter of 2010 before the opening bell today, reporting earnings per share of $1.54, beating the Zacks Consensus Estimate of $1.48. With a 28.3% increase in its earnings, the companya™s sales improved in all its business and geographic regions.

The company continues to deliver sustainable increases in sales, earnings and free cash flow.

Revenue

Total revenue for the quarter increased by 17.7% year over year to $6.7 billion. The increase in sales was 17.9% in terms of local currency and including acquisitions. Sales in the quarter were negatively impacted by 0.1% on account of divestures and foreign exchange.

The increase in revenue was primarily led by sales growth of 32% in the Electro and Communications division followed by Display and Graphics sales growing at 30% and Industrial and Transportation at 23%. Though sales increased in all geographical regions, sales in emerging economies were a major contributor to revenue growth, increasing by 38% year over year.

Income

The companya™s operating income in the quarter was approximately $1.6 billion, and operating margin was 23.7%. Operating margin in all the segments was 22% or above, performing well even in the current uncertain market environment.

Net income in the quarter was $1.12 billion versus $783 million in the second quarter of 2009. The companya™s performance reaffirms its long-term strategy of accelerating investment in higher growth opportunities.

Balance Sheet

The company continues to maintain a sustainable free cash flow position. Cash and equivalents stood at $3.0 billion with long-term debt at $4.9 billion and shareownera™s equity at $14.3 billion.

Outlook

This is the third consecutive quarter in which 3M Co. increased its full-year 2010 revenue guidance. Revenue of the company is now expected to grow by 13% to 15% organically compared with the prior expectation of a 10% to 12% growth. The company also increased its expectation for operating margin to above 22.5% from prior expectation of above 22%.

Earnings per share expectation have been increased to $5.65 to $5.80 from the prior expectation of $5.40 to $5.60. The 2010 earnings per share guidance exclude the Medicare Part D-related charge recorded in the first quarter of the year.

UPS Tops, Raises Outlook

On July 22, United Parcel Services (NYSE: [ UPS ]), the world's largest package delivery company, declared its adjusted second-quarter 2010 earnings of 84 cents per share, which surpassed the Zacks Consensus Estimate of 77 cents. Earnings per share shot up 71.4% year over year from 49 cents in the year-ago quarter. Earnings were driven by higher package volume as well as strong revenue growth.

On a reported basis, earnings saw a whopping increase of 90.9% year over year in the second quarter. In the year-ago quarter, UPS considered a $48 million one-time after-tax charge for the re-measurement of certain foreign currency obligations.

Total revenue increased 13% year over year to $12.2 billion, reflecting consolidated volume growth of 4% and a 7% increase in total revenue per piece. Adjusted operating income spurred 56% year over year to $1.4 billion, reflecting an operating margin of 11.5%, up 320 basis points year over year. Growth in the international sector outpaced growth in domestic sector.

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