AT&T..

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AT&T Reports Earnings Tomorrow. Here’s What to Expect.

AT&T’s DirecTV satellite TV and WarnerMedia entertainment units were already facing pressure from changing technologies and consumer preferences before the coronavirus appeared.

 

Telecom and media conglomerate AT&T will report its first-quarter earnings on Wednesday before the market opens. Unlike its main rivals, the company has expanded beyond the traditional phone business in recent years. That gives it a very different profile entering a coronavirus and social-distancing induced recession.

The U.S. wireless industry is a relatively good place to be during a global pandemic. High recurring revenue, little person-to-person contact, and increasing demand for connectivity are all advantages. Even in the ensuing recession, most cash-strapped consumers will be slow to cancel their monthly phone plans when looking to save.

The traditional media industry, on the other hand, is hurting and will continue to face headwinds. Major advertisers are cutting back on TV spending, movie theaters are closed, and production of new content is delayed as long as physical distancing requirements remain in place.

AT&T (ticker: T) has exposure to both, with a highly profitable wireless business focused on transitioning to next-generation 5G networks. Its DirecTV satellite TV and WarnerMedia entertainment units were already facing pressure from changing technologies and consumer preferences before the coronavirus appeared.

On Wednesday, investors will be paying close attention for any details on how the company’s businesses performed at the end of the first quarter, when the coronavirus impact began to be felt. They will also be listening for any forecasts management can give for the rest of the year, and any details on plans to return capital.

Reflecting its more cyclically exposed profile, AT&T stock has lagged behind its competitors and the broader market this year. The stock had lost 18.3% after dividends through Monday’s close. That compares with a 10.5% drop for the S&P 500 and 3.3% for Verizon Communications (VZ). T-Mobile US (TMUS) shares, meanwhile, have climbed 14.7%, boosted by the long-sought approval of its acquisition of Sprint, which closed on April 1.