What's important about at&t's fourth quarter results is less the robust wireless and broadband services gains; or the matching financial performance. The fourth quarter included growth contributed by the purchase of BellSouth, so comparisons to the same quarter of 2006 do not mean much. More important is the guidance at&t offers about its 2008 performance, as that will reflect more directly--but not exclusively-- internal or organic growth, rather than growth by acquisition.
The company says it is confident about sustained double-digit growth in adjusted earnings per share in 2008. Some of that will be delivered by merger synergies or other cost cuts, as revenue will be growing at a mid-single-digit range in 2008. Growth in 2009 and subsequent years is expected at about that same rate: at mid-single-digits, possibly better.
Mid-teens wireless service revenue growth is expected in 2008, but again that partially is driven by the acquisition of Dobson Communications.
Enterprise revenue growth is expected to be in the mid-single-digit range by 2010. In-region consumer revenues will "be positive." In-region business services will grow in the mid-single-digit range as well.
So the company says it is "confident" it has the ability to deliver sustained double-digit growth in adjusted earnings per share and strong growth in free cash flow in 2008 and on an ongoing basis.
Some of that performance is driven by cost savings over the next few years because of the BellSouth merger. Company executives say they wrung about $2 billion in cost out of the company in 2007 and will save $5.9 billion in 2008 as well. Savings will grow to "more than $7.0 billion in 2010."
The forward-looking guidance arguably is more important than the fourth-quarter results themselves, which obviously were driven by acquisition-inflated numbers.
The company's net gain of 2.7 million wireless subscribers was the highest quarterly subscriber increase ever for any U.S. wireless provider, up 13.5 percent from 2.4 million net adds in the year-earlier fourth quarter.
But that performance includes the impact of the acquisition of Dobson Communications, which added 1.7 million subscribers.
That's not to denigrate at&t's performance. It was a good quarter. The point is that we all need to separate out organic rates of change from those wrought by the impact of acquisitions. Lots of companies in communications hide slow or lagging internal growth by buying other companies, with a predictable growth in revenue or customer base. That sometimes is a sign of weakness, not strength.
The company says it is confident about sustained double-digit growth in adjusted earnings per share in 2008. Some of that will be delivered by merger synergies or other cost cuts, as revenue will be growing at a mid-single-digit range in 2008. Growth in 2009 and subsequent years is expected at about that same rate: at mid-single-digits, possibly better.
Mid-teens wireless service revenue growth is expected in 2008, but again that partially is driven by the acquisition of Dobson Communications.
Enterprise revenue growth is expected to be in the mid-single-digit range by 2010. In-region consumer revenues will "be positive." In-region business services will grow in the mid-single-digit range as well.
So the company says it is "confident" it has the ability to deliver sustained double-digit growth in adjusted earnings per share and strong growth in free cash flow in 2008 and on an ongoing basis.
Some of that performance is driven by cost savings over the next few years because of the BellSouth merger. Company executives say they wrung about $2 billion in cost out of the company in 2007 and will save $5.9 billion in 2008 as well. Savings will grow to "more than $7.0 billion in 2010."
The forward-looking guidance arguably is more important than the fourth-quarter results themselves, which obviously were driven by acquisition-inflated numbers.
The company's net gain of 2.7 million wireless subscribers was the highest quarterly subscriber increase ever for any U.S. wireless provider, up 13.5 percent from 2.4 million net adds in the year-earlier fourth quarter.
But that performance includes the impact of the acquisition of Dobson Communications, which added 1.7 million subscribers.
That's not to denigrate at&t's performance. It was a good quarter. The point is that we all need to separate out organic rates of change from those wrought by the impact of acquisitions. Lots of companies in communications hide slow or lagging internal growth by buying other companies, with a predictable growth in revenue or customer base. That sometimes is a sign of weakness, not strength.
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