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Shares of AT&T (T 1.13%) were sliding today after the telecom giant posted disappointing results in its first-quarter earnings report. The company reported weak subscriber growth and cash flow underwhelmed.
As of 10:08 a.m. ET, the stock was down 8.6%.
Revenue in the quarter rose 1.4% to $30.14 billion, which was just short of estimates at $30.26 billion.
The company added 424,000 wireless subscribers in the quarter, and 272,000 AT&T Fiber customers. Domestic wireless service revenue rose 5.2%.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose from $10.2 billion to $10.6 billion, and earnings per share fell from $0.63 to $0.60, mostly due to a decline in other income, which beat estimates at $0.58.
Operating cash flow declined from $7.6 billion to $6.7 billion, and free cash flow was down from $2.8 billion to $1 billion, which is not enough to fund the company’s dividend payments.
CEO John Stankey said, “The work we’re doing today is establishing a foundation for durable, long-term growth, and we remain confident in our full-year guidance.”
AT&T did not update its guidance, but had previously called for wireless service revenue growth of at least 4%, adjusted EBITDA growth of at least 3%, free cash flow of at least $16 billion (up $2 billion from last year), and adjusted earnings per share of $2.35 to $2.45.
Based on that forecast, the stock looks cheap, but the weak free-cash-flow performance is a reminder that AT&T has struggled in the past to live up to its promises as the stock has been a chronic underperformer.
Given that history and the challenges the company faces in a high interest rate environment and with a potential recession around the corner, it’s understandable why the stock is down today.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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