Well, as you can probably guess by the tone, they didn’t. Unfortunately for the telecommunications giant, pension costs and lingering effects from, believe it or not, Hurricane Sandy sent earnings per share a penny below analyst expectations of 45 cents per share.
Yet, even with the minor setbacks, AT&T managed to sell more smartphones than Verizon Communications Inc. (NYSE:VZ), increase U-Verse sales, add wireless subscribers, and increase revenue from mobile data usage. In response, Randall Stephenson, AT&T’s CEO, remarked, “We had an excellent 2012.”
An interesting statement, considering that the company had just reported a fourth quarter loss of $3.9 billion, meaning 68 cents per share, to accompany essentially flat revenue of $32.6 billion; however, the numbers are worth relishing considering the improvement over the same quarter last year in which AT&T reported losses of $6.7 billion, meaning $1.12 per share.
These numbers seem puzzling. AT&T sold a record amount of smartphones—most of which (84%, to be exact) were iPhones. The iPhone sales crushed Verizon’s by 39%. However, while they did claim the advantage in smartphone sales over Verizon, they failed to prevail in a possibly more critical area: the quantity of new wireless contract subscribers—regarded as the most valuable type of consumer in the telecommunications market. In fact, Verizon torched AT&T in this area, boasting a 269% advantage in new contract subscribers.
Another new tactic used by both major providers is the idea of shared data plans. Although Verizon may advertise theirs more than AT&T, both have similar shareable data plans. A rumored 6.6 million customers for AT&T have already flocked to such plans, 25% of whom are choosing plans with caps with at least 10 gigabytes. As a result, mobile data revenue grew 15% in the fourth quarter alone, finishing at $6.8 billion—good news for the company which is still trying to erase the ever-disappearing flat rate unlimited data plan.
AT&T doesn’t plan on stopping there, either. They recently announced a major $14 billion investment plan to expand wireless services through 2015. Furthermore, they plan to introduce their new home security division in March, a market they are particularly excited about. Only 20% of homes in America have security systems, leaving a mostly untapped market for the taking, unlike the cell phone market.
AT&T isn’t the only company that’s noticed this. Dish Network and Comcast Corporation (NASDAQ:CMCSA) have also jumped into this market. Comcast is using the home security market to provide a new revenue stream as it continues to lose its cable customers to satellite companies and AT&T U-Verse. “It’s a new market and a new revenue stream, but it makes sense because we’re already there with the broadband,” said Bryan Byrd, a spokesman for Comcast.