NEW YORK -(Dow Jones)- AT&T expects to post adjusted operating income margin of 24% in 2008, Chief Financial Officer Rick Lindner said Wednesday.
In addition, the company continues to see free cash flow in the $16 billion range for the year, Lindner told analysts during a conference call to discuss the company's second-quarter results.
The Dallas telecommunications company reported earnings growth as a result of continued strength in wireless.
In the second half, Lindner said he expects revenue growth on a pro forma basis to be similar to the 4% the company reported in the first half.
AT&T plans to use its free cash flow to pay down debt in the second half of the year, after bearing the expense of buying back stock and paying for wireless spectrum from the Federal Communications Commission.
While Lindner said he would like to do more stock repurchases, the focus will be on debt in the second half. There was also no change expected for its dividend, which will be reviewed in December.
Lindner also backed AT&T's forecast of capital expenditures in the mid-teens as a percentage of revenue.
Lindner also backed adjusted earnings before interest, taxes, depreciation and amortization margins in the 39% to 40% range for the wireless business this year.
The telcos typically see weaker results in the second quarter, but AT&T was pleased with the numbers.
"In what is always a seasonally difficult quarter, we delivered solid results," Lindner said.
He did note that the seasonal issues heightened by the economic weakness. But he doesn't believe competition from cable had a big impact on AT&T's numbers, and attributed the weakness to the macro environment. The consumer business continues to see pressure, but AT&T has offset the weakness by pushing its U-Verse service, which is expected to ramp further in the second half, he said.
The enterprise business, meanwhile, is holding up well in the current environment, he said.
Excluding the staff added from its deal with International Business Machines (IBM) and for U-Verse, AT&T's work force declined by more than 8,000 since the end of last year, Lindner said. The company is continuing to cut costs to offset declines in its slower businesses.
AT&T shares recently rose $1.07, or 3.4%, to $32.89.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 23rd July 2008
Posted to: www.cellular-news.com/story/32622.php