In a tale of two phone service providers, AT&T's Q2
earnings and revenue recently missed Wall Street views, while
Verizon Communications topped forecasts.
) on July 23 reported a profit of 62 cents a share excluding
items, a decline of 7% from the same quarter a year earlier --
its first decline since Q4 2011. Revenue climbed nearly 2% to
$32.6 billion for the fifth straight period of low single-digit
In order to compete with rivals, the Dallas-based company has
unbundled service and device charges and cut prices on its
service plans. And as more customers choose to pay for their
phones to get a lower-cost service plan, average revenue per user
has fallen and equipment revenue has risen. AT&T expects
two-thirds of customers to be on its unbundled plan by year's
The stock, up about 1% this year, is working on a flat base
with a 36.96 buy point.
It's making up for the lackluster stock price performance with
a quarterly dividend of 46 cents a share, or $1.84 for the full
year, for a 5.1% annualized yield. That's more than double the
S&P 500's 1.9%.
RivalVerizon Communications (
) also pays a sizable dividend: 53 cents, or $2.12 for the year,
which works out to a 4.1% yield.
The New York-based telecom giant last week said it earned 91
cents a share ex items in Q2, up 25% from the prior year.
Revenue rose 6% to $31.5 billion, its best growth in the past
six quarters, as the amount of wireless customers and tablet
Unlike other service providers, Verizon hasn't been
aggressively discounting or pushing unbundled wireless service
It said 18% of wireless subscribers switched to the
Its wireless revenue increased 7.5%, thanks to service-revenue
gains. Its average monthly revenue per account grew 4.7%.
The stock, which has been consolidating along its 10-week
moving average, is up about 3% this year.
No clear entry has yet materialized.