To The Moon

When it comes to investing, do we “buy” the latest hyped stocks eg. (for now) it would have to be anything that remotely has to do with Artificial Intelligence (AI).

Do we take a step back, look at the “big” picture and identify the things that a rational user consumes daily and then invest in those “essential” companies.

For example:

• No items are too strange to be found & sold on eCommerce platform. What’smore we could browse and shop for them in the comfort of our bed. For that, we could invest in $Amazon.com(AMZN)$ and $Alibaba(BABA)$.

• However, if we look beyond the eCommerce’s big picture, what is facilitating a user to buy what he or she wants at Amazon or Alibaba?

• Why, it is the telephony / telecommunication services that each user owns, at least one - agree?

With that, it brings me to one of the earlier US stocks I have bought when I started dabbling in the US stock market - $AT&T Inc(T)$.

Hard facts:

• AT&T is an American multinational telecommunication holding company.

• It is the 4th-largest telecommunications company by revenue, in the world.

• It is the largest wireless carrier in the US.

• As of 2023, AT&T was ranked 13th on the Fortune 500 rankings of the largest US corporations, with revenues of $120.7 Billion.

• Its steep history goes way back to 1885 where one of the founders Alexander Graham Bell has been credited for inventing the first telephone.

Q4 2023 Earnings.

Just last Wed, 24 Jan 2024, AT&T reported its Q4 2023 earnings, that have exceeded Wall Street’s estimates, based on an average of analysts’ estimates compiled by Refinitiv:

Cash from operating activities:

• Q4 2023 : $11.4 billion, up $1.0 billion or 10.0% YoY.

• FY 2023 : $38.3 billion, up $2.5 billion versus the prior year.

Free Cash Flow (FCF):

• Q4 2023 : $6.4 billion.

• FY 2023 : $16.8 billion, exceeded previously increased guidance, and up +$2.6 billion versus the prior year.

Revenue:

• Q4 2023: $32.0 billion, up +2.2% YoY.

Operating Income:

• Q4 2023: $5.3 billion, with adjusted operating income of $5.8 billion.

• FY 2023: $23.5 billion, with adjusted operating income of $24.7 billion, up +5.0% YoY.

Other important data:

1) 526,000 postpaid phone net adds in Q4 2023 and more than 1.7 million for FY 2023. (see above)

2) 273,000 AT&T Fiber net adds in Q4 2023; 1.1 million net adds for FY 2023.

3) Achieved $6 billion+ run-rate cost savings target in mid-year 2023.

4) Strong early progress on achieving an incremental $2 billion+ run-rate cost savings target by mid-2026.

5) AT&T continues to enhance the largest wireless network in North America and expand the most reliable 5G network; mid-band 5G spectrum now covers 210 million+ people, achieving end-of-year target.

6) AT&T grew the nation’s largest fiber network, which now passes 26 million+ consumer and business locations; on track to pass 30 million+ locations with fiber by the end of 2025.

2024 Outlook.

For 2024 full year, AT&T expects:

1) Wireless service revenue growth in the 3% range.

2) Broadband revenue growth of 7%+.

3) Adjusted EBITDA growth in the 3% range.

4) Capital investment in the $21-$22 billion range.

5) Free cash flow in the $17-$18 billion range.

6) Adjusted EPS guidance of $2.15 to $2.25, driven by:

• Higher depreciation ($0.17): Includes accelerated depreciation from Open RAN transformation.

• Lower non-cash income ($0.12): Due to reduced pension and postretirement benefits amortization.

• Lower interest and equity income ($0.08): From capitalized interest and DIRECTV investment.

My viewpoints : (mine & mine only)

• Quarterly earning is already a done deal.

• For Q4 2023, it is comforting to know that AT&T has exceeded Wall Street’s expectations.

• To me what is more important is AT&T’s 2024 outlook.

• If Management team is able to perform consistently each quarter, hitting the targets they set for themselves, then by year end it will be the best report card for share.

Did I mention that AT&T has a pretty decent dividend as well?

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