AT&T Earnings: Brace For Impact

After a good day in telecom marked by the solid results released by peer Verizon (NYSE:VZ), AT&T (NYSE:T) will be the next U.S. giant in the space to report on its own 3Q performance. Quite a bit of the surprise factor might be absent from the print, however, as AT&T’s management has issued a partial pre-announcement in the wake of the season’s natural disasters, softness in legacy video subscription (well covered by Stone Fox Capital) and fewer handset equipment upgrades.

(Photo Credit: Business Insider)

The Street is betting on revenues of $ 40.1 billion, suggesting a -2% YOY decline that will be caused, to a small extent, by the U.S. storms and the earthquake in Mexico. Likely driving a larger piece of the drag will be legacy video, expected to see a record high, and a worrisome decrease in the subscriber base of 390,000. The projected strong user metrics on the DirecTV Now side of the business will probably not be enough to counter the DirecTV and U-verse headwinds, considering the lower per user revenue generated by the online platform. EPS is estimated to come in at $ 0.75, no lower than the earnings expectations from before the pre-announcement.

On the wireless side, and if Verizon can be used as a leading indicator, I would not be surprised to see margins dip in the YOY comparison. The Big Four carriers in the U.S. have been fighting a fierce competitive war that saw all players introduce unlimited postpaid plans in 2017 (Business Insider covered the plan comparison across the industry very well). As I have argued recently, the likely impact of these initiatives will be lower pricing and network cost pressures to support the large data services. On a more positive note, AT&T shareholders are probably hopeful to see postpaid net adds maintain the momentum gained in 2Q17, as well as churn at or around 1% – which would be in line with management’s October statement that it “continues to see low postpaid phone churn levels.”

Considered by me to be one of AT&T’s less-talked-about jewels, Mexico mobility could have a tough 3Q17 in the wake of the natural catastrophe in the country. But regarding this piece of the business, I continue to hold a long-term view that the runway is set for AT&T to continue to generate solid growth in the region.

My thoughts on AT&T stock

The last few months have not been a walk in the park for the giant Dallas-based telecom company. With headwinds hitting from many directions (at times literally so, in the case of September’s hurricanes), the stock has suffered a rarely seen -10% decline in a short period of only two weeks and is now back to February 2016 levels.


T PE Ratio (Forward) data by YCharts

Company/Ticker Forward P/E LT EPS Growth Forward PEG
AT&T (T) 12.2x 3.8% 3.3x
Verizon (VZ) 13.2x 3.3% 4.0x

The silver lining, however, is that T hasn’t looked this inexpensive in a while – since January 2016 on a forward P/E basis, to be more precise. Assuming that its dividends will be safe (check out this great article on the subject) and, better yet, will continue to grow in a near-straight line like they have over the past 30 years, the company’s impressive 5.5% trailing yield makes an investment in the stock look more like a convertible bond play. In other words, investors that buy T today collect on the very rich quarterly payments with the option of benefiting from the eventual appreciation in the stock price over time.

Call me a biased shareholder, but despite the known challenges, I find an investment in T at the current depressed levels a rare opportunity ahead of what I believe will be positive long-term catalysts for the company.

Note from the author: If you have enjoyed this article and would like to receive real-time alerts on future ones, please follow D.M. Martins Research. To do so, scroll up to the top of this screen and click on the orange “Follow” button next to the header, making sure that the “Get email alerts” box remains checked. Thanks for reading.

Disclosure: I am/we are long T.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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7 Lessons I Learned When I Started Speaking Internationally

Getting up to speak in front of a live audience can be a nerve-wracking experience. Those nerves are heightened even more when the audience you’re speaking to is a global one.

Today there are almost 7.5 billion people in the world, according to the United States Census Bureau, and each of them has their own unique view of the world. Age, gender, language, culture, socioeconomic status and other factors all affect that view.

In his book, “Unlimited Power,” motivational speaker Tony Robbins wrote, “To effectively communicate, we must realize that we are all different in the way we perceive the world and use this understanding as a guide to our communication with others.”

When you’re speaking to a multicultural audience, you need to figure out how to connect despite your differences. Here are seven of my top tips for speaking to an international audience.

1. Speak clearly and articulately

If no one can understand what you’re saying, they won’t be able to take in the message of your speech. The average rate of speech for an English speaker from the United States is about 150 words per minute, according to the National Center for Voice and Speech. You need to make sure you speak slower than that for non-native English speakers.

Even if they know the language, they probably aren’t as familiar with it as a native speaker would be. That means if they miss a word, it will be difficult to fill in the blanks and gain the meaning of what you’re saying. To avoid this, make sure you speak clearly and enunciate each word.

2. Be aware of your body language

In the United States, leaders are often passionate, expressive and charismatic. But these characteristics aren’t respected in all cultures. To make the right impression, you need to be aware of your body language and how it is interpreted.

For example, in the U.S., eye contact is seen as showing confidence, while in other countries, it is taboo. Make sure you understand these nuances of culture by doing research on your audience before giving your speech.

As Dale Carnegie says in “The Quick & Easy Way to Effective Speaking,” “Only the prepared speaker deserves to be confident.”

3. Leave the jokes at home

While humor is a tool that is often used to better connect with an audience and put them at ease, it may have the opposite effect on an international audience. Humor is not universal and what one culture finds funny, another may not.

Worst-case scenario, your jokes could end up offending, while best case, they’d fall flat. To avoid both, simply skip the jokes completely. Instead, focus on being relevant and making sure your speech is about a topic your audience cares about.

Blogger Seth Godin writes on his blog, “The topic of the talk isn’t you, the topic of the talk is the audience, and specifically, how they can use your experience and knowledge to achieve their objectives.”

4. Stick to your own language

When you’re in a foreign country, it may be tempting to learn a few phrases in the native language and try to incorporate them into your speech. While using the word for “hello” may be all right, anything too complicated could have terrible results.

If you end up mispronouncing a word, one wrong syllable could make an enormous difference in meaning. You could end up offending your audience. Unless you are fluent in the native language, it’s best to stick to English.

5. Avoid slang, jargon and idioms

To ensure your speech is relevant for your audience, you want to make sure the words and phrases you’re using are easily understood. If you’re littering your speech with complicated jargon and obscure slang words, not only are you alienating your audience, but you’re also being unprofessional. Idioms and metaphors should also be omitted as they are not easily translated across cultures.

Put yourself in your audience’s shoes and try to see your speech from their perspective. What parts may not be easily understood?

Henry Ford once told the National Association of Corporation Schools Bulletin, “If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle as well as from your own.”

6. Research your audience

The first rule of any speech, no matter which country you’re speaking in, is to know the audience you’re speaking to. That means doing some research ahead of time to better understand the nuances of the culture.

You also need to find out what the audience’s pain points or needs are. Your speech should be as relevant and relatable as possible for the audience. A human attention span is only 8.25 seconds, according to the National Center for Biotechnology Information, so if you aren’t relevant, you won’t be able to capture their attention.

In an article for Ragan, digital marketing consultant Lee Odden said, “Always ask: What do my audience members care about? What are their pain points and goals? Sure, I have things I want to say, but ‘me, me, me’ is boring, boring, boring.”

7. Don’t overthink it

No matter how hard you try, you will never be able to please everyone. But as long as you do your research in advance and avoid the main pitfalls I’ve mentioned, you’ll be fine. Just be yourself and deliver your speech the way you know will work best.

In “How to Stop Worrying and Start Living,” Carnegie said, “Each time I spoke, I gained a little courage. It took a long while–but today I have more happiness than I ever dreamed possible. In rearing my own children, I have always taught them the lesson I had to learn from such bitter experience: No matter what happens, always be yourself!”

Have you spoken in front of a global audience before? What was the experience like and what did you learn from it? Share in the comments below:


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