AT&T Gives Upbeat Digital View

AT&T today beat Wall Street forecasts for the third quarter and gave an upbeat assessment of its digital initiatives. Net income rose 74 percent to $2.2 million, or 56 cents a share, compared with $1.2 million, or 38 cents a year earlier, on revenue of $15.6 million. Excluding some costs, profit was 63 cents, beating Wall Street forecasts of a 58 cent-per-share profit. The number of connections for its high-speed Internet service, which includes DSL, AT&T U-verse and satellite services, jumped by 26 percent, or 380,000 in the quarter, to 8.2 million. AT&T’s video connections (AT&T| Dish network satellite television plus AT&T U-verse, were up 53,000 to 586,000. In June, AT&T began to roll out U-verse, which includes next-generation television and high-speed Internet, in San Antonio. Next month, the service will be launched in Houston where a trial including HDTV is underway. So far, about 3,000 or 10 percent of the homes who were marketed U-verse signed up for it, AT&T says. By the end of the year, the service will be available in 15 markets.
Phone and cable companies are increasingly turning to these types of services as their core businesses become increasingly commoditized.
As Bloomberg News points out, AT&T is spending $4.6 billion through 2008 to build a fiber-optic network to deliver Internet TV and the fastest broadband network to as many as 19 million homes. “It’s imperative that they move into the market of offering their own video services,” Standard & Poor’s analyst Todd Rosenbluth told Bloomberg.
Wall Street will closely scrutinize the digital efforts of AT&T’s competitors including Comcast and Verizon in their upcoming earnings reports.