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AT&T Delivers Mixed Q3

AT&T’s third quarter results delivered a mixed bag as earnings beat Wall Street expectations, but revenues came up short.

AT&T, fresh off its acquisition of DirecTV, posted Q3 earnings of 74 cents per share on revenues of $39.09 billion, up from $32.96 billion in the year ago quarter. Analysts were expecting 69 cents on revenues of $40.42 billion. Yesterday, AT&T warned that Q3 revenues could fall short of expectations because of “inflated” estimates that did not properly factor in its acquisition of DirecTV.

"With our DirecTV merger having closed on July 24, 2015, we want to make an important clarification for investors heading into our earnings announcement on Thursday," AT&T said yesterday, per CNBC. "It is clear many revenue estimates for DirecTV include the full month of July."

Update: John Stephens, AT&T’s SVP and CFO, reiterated on Thursday’s call that the company’s Q3 results excluded the first 24 days of DirecTV operations in July. "If you add those revenues to our GAAP number, consolidated revenues for the quarter would have been more than $41.2 billion," he said.

AT&T shares were up 60 cents (1.77%), to $34.56 each in after-hours trading Thursday.

On the video front, DirecTV added 26,000 subs, extending its total to 19.57 million. U-verse TV lost 92,000 subs in the third quarter, versus 212,000 adds in the year-ago quarter, and currently has about 5.85 million subs in the category. With both U-verse and DirecTV factored in, AT&T now has about 25.42 million video subscribers.

AT&T wireline broadband lost 106,000 subs in the quarter, ending with a total of 25.42 million. Broken into specific categories, AT&T added 172,000 “IP” broadband subs (which includes business customers), and shed 278,000 DSL subs.

On the wireless side, AT&T Mobility scored 2.5 million domestic net sub ads, including 466,000 prepaid net ads, which was its best result in the category in nearly eight years, the company said

“We now have integrated solutions that are unlike any competitor in the market,” said Randall Stephenson, AT&T chairman and CEO, in a statement. “With our national wireless and video capabilities, as well as our extensive broadband network, we now have assets that make us a unique competitor and the first scaled, fully-integrated U.S. service provider.

“We turned in outstanding financial results in the quarter. Our early integration efforts with DIRECTV are going very well and we’ve just begun to scratch the surface on the video, wireless and broadband cross-selling opportunities.

AT&T also revised its outlook for full year 2015, and now expects adjusted EPS of $2.68 to $2.74, and free cash flow of at least $15 billion.