Investment firm frowns at AT&T, Verizon
Goldman Sachs worries over revenue from enterprise
December 15 2008 - 12:42 pm ET | Allie Winter | RCR Wireless News
Goldman Sachs is no longer recommending investors “buy” into AT&T Inc. The research firm downgraded AT&T to “neutral” and cut the company’s share price target from $33 to $30, according to various media reports. Goldman Sachs lowered the rating due to negative pension impact and weak enterprise revenue.
The company also lowered estimates for 2009 earnings for AT&T and Verizon Communications Inc, also predicting that pension plans for both companies will be down 28% and 33%.
"AT&T has historically accelerated the recognition of any shortfall between the market and fair value of assets beyond 20%, which we estimate to be a $0.19 drag on 2009 EPS," Jason Armstrong wrote in a note to clients dated Dec 13.
It’s also expected that AT&T and Verizon’s 2009 enterprise revenue will be down by about 7% each, the report said. Armstrong also has negative expectation for the companies’ voice average revenue per user (ARPU) rates, predicting that both will be down.
AT&T’s stock was down almost 4% after the news to around $27 per share. Verizon’s stock was down around 2% to around $32 per share.
Sprint Nextel Corp. also received worrisome news recently. Moody’s Investor Service downgraded the carrier’s un-secured debt rating to “junk”, or non-investment grade.
December 17, 2008 06:14 am
Ok Will, thanks for clearing that up. So you actually have no excuse at all for your goofy comments about the investment report on AT&T and Verizon.
December 17, 2008 06:05 am
To Denny Doyle. I do not work for AT&T or Verizon. I do not own Goldman shares. You're making assumptions like the GS analyst. You speak about which you do not know. Mr. Doyle - you are inflated hot air.
December 17, 2008 06:05 am
Wow, Who do you believe anymore. Interesting with one technology that probably has gotten a necessary as our utilities, they would downgrade the top two providers. Next they will tell us that we should invest in the automotive industry.
December 17, 2008 06:05 am
Those of you complaining about Goldman's report either (a) work for AT&T and Verizon Wireless and apparently get freaked out by any legitimate analysis of your companies; or (b) are shareholders of Goldman Sachs and are angry because its stock price has dropped a lot. The fact that Goldman's management made some mistakes (though not even close to those made by Lehman, AIG, etc) has zero to do with what a sell-side investment analyst says about companies he covers. Your criticism of Goldman's report is nonsensical.
December 16, 2008 06:02 am
SO who does Ed suggest investing in? Sprint Nextel, HA!
December 15, 2008 01:00 pm
goldman is a fine one to voice an opinion. they obviously can't even manage their own affairs.
December 15, 2008 12:47 pm
I can't help but wonder how Goldman Sachs contributed to the downgrade by destroying the companies that AT&T and Verizon had invested the pensions in. Truly the pot calling the kettle black. I can only hope that Goldman Sachs to the person will one day reap what they sow.
December 15, 2008 12:47 pm
I can't help but wonder how Goldman Sachs contributed to the downgrade by destroying the companies that AT&T and Verizon had invested the pensions in. Truly the pot calling the kettle black. I can only hope that Goldman Sachs to the person will one day reap what they sow.
December 15, 2008 12:47 pm
Good. These 2 big boy ripoff companies of the wireless industry shouldn't be supported anyway. There are better options these days in wireless both as a service and as an investment. Go with one of them instead.
December 15, 2008 12:47 pm
Who believes sell side investment banks nowadays? They have as much credibility as the boy who cried wolf. And they have as much sincerity as MacBeth. They are conflicted souls. They've scammed your money, and enriched themselves, at your 401k's expense, and with your hard earned tax dollars. We're in the economic mess that we are in, because of their wayward ways. The evil that men do lives long after they are gone.