AT&T; Lowers Q3 Earnings, Cites Impact of Excite@Home
CHRISTINE ROMANS, CNN ANCHOR: AT&T; warns earnings will fall 5 cents below expectations in the third quarter.</s>DAVID HAFFENREFFER, CNN ANCHOR: And that could be more trouble for its stock today. Back now with details on that and other stocks to watch is Jennifer Westhoven. And that AT&T; graph doesn't look so great.</s>JENNIFER WESTHOVEN, CNN CORRESPONDENT: No, it looks terrible. I think we have one coming up, or we're supposed to.</s>HAFFENREFFER: There it is.</s>WESTHOVEN: There we go, down for the year. It is one of the worst-performing stocks in the Dow 30.</s>HAFFENREFFER: What's going on here?</s>WESTHOVEN: Well, you can imagine a lot of people not liking the transition that's going on there. What's going on today is that they're talking about -- they're bringing in Excite@Home, and a little bit earlier than expected. Of course, this is the broadband Internet firm. And the reason it contributes to a loss is because it's not profitable. So that means it will cut into AT&T;'s earnings. So the actual earnings numbers that we're looking at now for the third quarter are 35 to 38 cents a share. Previously, Wall Street had been looking for earnings per share of 40 to 43 cents a share. One thing, though, is that AT&T; is actually increasing its stake just a little bit from 24 to 25 percent, we were saying, but their voting stake goes up by a lot more. It goes up to 74 percent from 56 percent. So they're really getting a lot of voting control over this company. Even if, right now, it's hurting their bottom line, you've got to wonder what they plan to do with this in the future that they really want to have control of it, whether or not they might take out the rest of the company at some point.</s>HAFFENREFFER: The interesting thing, too, about this stock, AT&T;, is that, you know, it was the behemoth in domestic long distance, and now, you know, the focus is not on domestic long distance anymore, there's so many other things. So it's sort of hard, traders are saying, for investors to sort of get a good grip on what, you know, what to invest in and why in terms of</s>AT&T.; WESTHOVEN: Right. And this is a really hard stock to pick in terms of when you want to choose your bottom, because you still keep hearing about C. Michael Armstrong being under all this pressure. Of course, he's the chairman there. We, of course, just -- it was only, you know, a week or two ago we were hearing his report, too, about whether or not Liberty Media was going to get all over them and try to fine them to spin off their consumer business. But really the bright spot for them has been business in terms of selling their long distance and selling broadband and selling it to the business segment.</s>HAFFENREFFER: So what they're doing today, essentially, is just earlier than expected, they're going to bring Excite@Home home. And had they waited the original amount of time to bring it in, were they expecting the company to be profitable by then so that it would have made their picture look a little rosier?</s>WESTHOVEN: No, it's just coming a little bit earlier.</s>HAFFENREFFER: Interesting. Well, we'll have to see how the Street reacts to that.</s>WESTHOVEN: Yes.</s>HAFFENREFFER: Thank you, Jennifer.