Investing.com - AT&T (NYSE:T) said Thursday its revenue and earnings both fell in the second quarter as the Covid-10 pandemic hit all its lines of business.
The company, which is still carrying $152 billion of net debt after its acquisition of Time Warner, said revenue fell over 10% from a year earlier to $41.0 billion while underlying earnings per share fell 6.8% to 83 cents a share, from 89c a year ago.
Earnings were around 5% higher than expected, while revenue was broadly in line with street forecasts.
AT&T company said that almost all of the profit decline - 6c a share – was due to pandemic-related impacts that it expected to be transitory. It estimated that Covid-19 had reduced revenue by $2.81 billion, largely through lower advertising revenue, and had depressed EBITDA by $510 million. Despite this, net debt stayed largely stable at 2.63 times EBITDA.
The pattern of recent quarters continued, with the loss of another 886,000 premium TV customers in the quarter. However, this was partially offset by the launch of HBO MAX at the end of May.
In contrast to the previous quarter, when it suspended its guidance completely, AT&T said it intends to pay out just over 60% of net profit, and expects gross capital investment of around $20 billion.
The earnings beat and reassurance on dividends pushed AT&T stock up by 1.1% in premarket trading by 7:40 AM ET (1140 GMT).
"AT&T looks quite vulnerable when the pandemic is still raging," said Investing.com analyst Haris Anwar. "The company is in the middle of a massive overhaul of its business, focusing on 5G wireless and its streaming platform HBO Max. These goals might not be easy to achieve when its old business model is under pressure and the economy is in a recession."
AT&T shares are down 22% from the beginning of the year and down 24% from their 52-week high of $39.70 set on November 18, 2019. They are underperforming the S&P 500 which is up 1.4% from the start of the year.
AT&T follows other major Services sector earnings this month
AT&T's report follows an earnings miss by Netflix on July 16, which reported EPS of $1.59 on revenue of $6.15 billion, compared to forecasts EPS of $1.82 on revenue of $6.08 billion.
Prologis had beaten expectations on Tuesday with second quarter EPS of $0.56 on revenue of $944 million, compared to forecasts for EPS of $0.47 on revenue of $893 million.
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