AT&T shares surge on jump in Cingular Wireless 4Q profits

01/25/07 - newratings.com

NEW YORK, January 25 (newratings.com) – Shares of AT&T Inc (T) Wednesday surged 3.6% after the company’s Cingular Wireless unit announced that its quarterly profits had nearly quadrupled on robust customer growth.

Cingular Wireless, the largest US wireless service provider, said its net income in the three months jumped to $782 million, from $204 million in the year-ago quarter. The company’s sales climbed 10.2% to $9.76 billion in the fourth quarter. Atlanta-based Cingular Wireless said it added 2.4 million new customers during the quarter, handily beating the average expectations of Wall Street analysts. The company’s new customer adds were boosted by the holiday season that is typically the heaviest selling season for cell phones.

Although Cingular Wireless’ churn rate in the fourth quarter remained sequentially flat, the company expects the churn rate to rise with the rebranding of Cingular to AT&T. The company, which would from now onwards report results separately from its parent, projected its operating profit margins in the high 30% range for 2007 and over 40% for 2008.

AT&T’s share price rose 1.71%, or $0.63, to $37.50 in after hours trade on the NYSE on Wednesday, after having closed up 3.59%, or $1.27, at $36.87.