AT&T Inc set a disappointing profit target after adding fewer wireless subscribers than expected in the fourth quarter, hinting at the troubles it may face once Verizon Wireless starts selling Apple Inc's iPhone. The operator's shares fell almost 3 percent as investors fretted about its growth prospects once market leader Verizon Wireless launches an iPhone next month, ending AT&T's more than three years of exclusive rights to the popular device.
The company, which has depended heavily on iPhone for growth, forecast 2011 earnings per share growth in the mid-single-digit percentage range, compared with Wall Street expectations for 10 percent, analysts said. Avian Securities analyst Gerard Hallaren said the guidance reflected the loss of exclusivity, which he sees as "a slow bleed on AT&T not a flip of the switch."
"I suspect they're coming to grips with the reality of the iPhone exclusivity wearing off," he said. Investors, who already had low expectations for AT&T's subscriber additions in 2011, were worried about how much customer growth AT&T had baked into the profit estimate, said another analyst, Christopher Larsen from Piper Jaffray.
Adding to negative sentiment, AT&T's additions of 400,000 net contract customers in the fourth quarter compared poorly with the average expectation for almost 504,000 from eight analysts contacted by Reuters. AT&T's figure was also less than half the 872,000 new contract customers reported by Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc.
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