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Archive for April 22nd, 2009

Equinix Reports First Quarter 2009 Results

Equinix Reports First Quarter 2009 Results

Increased quarterly revenues to $199.2 million, a 4% increase over the previous quarter and a 26% increase over the same quarter last year

Increased quarterly adjusted EBITDA to $91.4 million, a 9% increase over the previous quarter and a 47% increase over the same quarter last year

Maintains 2009 annual revenue guidance of $855.0 million to $875.0 million and tightens EBITDA guidance to $370.0 million to $385.0 million

FOSTER CITY, CA — April 22, 2009 — Equinix, Inc. (Nasdaq: EQIX), a provider of global data center services, today reported results for the quarter ended March 31, 2009.


Revenues were $199.2 million for the quarter, a 4% increase over the previous quarter, and a 26% increase over the same quarter last year, including a negative impact due to foreign currency fluctuations of $1.1 million. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $191.3 million for the first quarter, a 5% increase over the previous quarter, and a 27% increase over the same quarter last year. Non-recurring revenues were $7.9 million in the quarter, consisting primarily of professional services and installation fees.


Cost of revenues was $111.8 million for the quarter, a 3% increase over the previous quarter and an 18% increase over the same quarter last year. Excluding depreciation, amortization, accretion and stock-based compensation expense of $39.9 million for the quarter, cost of revenues was $71.9 million for the quarter, which the Company refers to as cash cost of revenues, a 9% increase over the previous quarter, and a 16% increase over the same quarter last year. Cash gross margins, defined as gross profit less depreciation, amortization, accretion and stock-based compensation expense, divided by revenues, for the quarter were 64%, down from 65% the previous quarter and up from 61% the same quarter last year.


Selling, general and administrative expenses were $49.5 million for the quarter, an 11% decrease from the previous quarter and flat over the same quarter last year. Excluding depreciation, amortization and stock-based compensation expense of $13.6 million for the quarter, selling, general and administrative expenses were $35.9 million for the quarter, which the Company refers to as cash selling, general and administrative expenses, an 11% decrease over the previous quarter, and a 5% increase over the same quarter last year. The Company recorded a reversal of a previously-recorded restructuring charge totaling $5.8 million in the quarter as a result of the Company’s decision to utilize a space previously abandoned in order to expand its original Los Angeles IBX center. Interest and other expenses, net, was $16.6 million for the quarter, a 13% increase over the previous quarter, and a 71% increase over the same quarter last year.


The Company recorded income tax expense in the quarter of $11.6 million as compared to an $88.0 million income tax benefit in the previous quarter and $0.5 million of income tax expense in the same quarter last year. This was primarily a result of the Company’s decision in the fourth quarter of 2008 to release the valuation allowance against the Company’s net deferred tax assets related to its domestic and Australian operations. As a result, net income for the first quarter was $15.5 million as compared to net income of $97.9 million in the previous quarter and net income of $3.8 million in the same quarter last year. This represents a basic net income per share of $0.41 and diluted net income per share of $0.40 based on a weighted average share count of 37.9 million and 38.7 million, respectively, for the first quarter of 2009.


Adjusted EBITDA, defined as income or loss from operations before depreciation, amortization, accretion, stock-based compensation expense and restructuring charges for the quarter was $91.4 million, an increase of 9% from the previous quarter, and up 47% from the same quarter last year.


“Equinix delivered strong results in the first quarter despite a challenging economic environment,” said Steve Smith, president and CEO of Equinix. “Our commitment to investing in disciplined and measured expansion for our customers will provide us a long-term competitive advantage.”


As of March 31, 2009, the Company’s cash, cash equivalents and investments were $284.0 million, as compared to $307.9 million as of December 31, 2008.


Capital expenditures in the first quarter were $75.0 million, of which $10.3 million was attributed to ongoing capital expenditures and $64.7 million was attributed to expansion capital expenditures.


“Equinix achieved higher-than-expected cash gross margin growth and adjusted EBITDA performance in the first quarter,” said Keith Taylor, chief financial officer of Equinix. “With our strong balance sheet, continued focus on our discretionary spend levels, and the favorable operating cash flow attributes of our business model, we have a solid financial foundation to build on our market leadership position in 2009.”


Company Metrics


To view Equinix’s Non-Financial Metrics, please visit the Investors section of Equinix’s web site at www.equinix.com/investors and click on View Equinix’s Non-Financial Metrics


Adoption of Recent Accounting Pronouncements


As a result of the Company’s adoption of FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion” and FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” effective January 1, 2009, the Company adjusted its comparative condensed consolidated financial statements previously issued to reflect such changes in accounting principle.


Business Outlook


For the second quarter of 2009, the Company expects revenues to be in the range of $206.0 to $210.0 million. Cash gross margins are expected to range between 63% and 64% and includes incremental costs from expansion IBX centers opening in the quarter. Cash selling, general and administrative expenses are expected to be approximately $39.0 million. Adjusted EBITDA for the quarter is expected to be between $92.0 and $94.0 million. Capital expenditures for the second quarter of 2009 are expected to be $110.0 to $120.0 million, comprised of approximately $20.0 million of ongoing capital expenditures and $90.0 to $100.0 million of expansion capital expenditures.


For the full year of 2009, total revenues are expected to be in the range of $855.0 to $875.0 million. Total year cash gross margins are expected to range between 62% and 63% and includes incremental costs from our expansion IBX centers opening throughout the remainder of the year. Cash selling, general and administrative expenses are expected to range between $160.0 million and $170.0 million. Adjusted EBITDA for the year is expected to be between $370.0 and $385.0 million. Capital expenditures for 2009 are expected to be in the range of $325.0 to $375.0 million, comprised of approximately $60.0 million of ongoing capital expenditures and $265.0 to $315.0 million of expansion capital expenditures. Expansion capital expenditures are for the announced expansions in the Amsterdam, Chicago, Frankfurt, Hong Kong, London, Los Angeles, New York, Paris and Singapore markets.


The Company will discuss its results and guidance on its quarterly conference call on Wednesday, April 22, 2009, at 5:30 p.m. ET (2:30 p.m. PT). To hear the conference call live, please dial 1-210-234-0004 (domestic and international) and reference the passcode (EQIX). A simultaneous live Webcast of the call will be available over the Internet at www.equinix.com/investors.


A replay of the call will be available beginning on Wednesday, April 22, 2009, at 7:30 p.m. (ET) through May 22, 2009 by dialing 1-402-220-4602. In addition, the Webcast will be available on the Company’s Web site at www.equinix.com/investors. No password is required for either method of replay.


About Equinix


Equinix, Inc. (Nasdaq: EQIX) provides global data center services that ensure the vitality of the information-driven world. Global enterprises, content and financial companies, and network service providers rely upon Equinix’s insight and expertise to protect and connect their most valued information assets. Equinix operates 42 International Business Exchangeâ„¢ (IBX®) data centers across 18 markets in North America, Europe and Asia-Pacific.


Important information about Equinix is routinely posted on the investor relations page of its website located at www.equinix.com/investors. We encourage you to check Equinix’s website regularly for the most up-to-date information.


Non-GAAP Financial Measures


Equinix provides all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Equinix uses non-


GAAP financial measures, such as adjusted EBITDA, cash cost of revenues, cash gross margins, cash operating expenses (also known as cash selling, general and administrative expenses or cash SG&A), adjusted EBITDA margins, free cash flow and adjusted free cash flow to evaluate its operations. In presenting these non-GAAP financial measures, Equinix excludes certain non-cash or non-recurring items that it believes are not good indicators of the Company’s current or future operating performance. These non-cash or non-recurring items are depreciation, amortization, accretion, stock-based compensation and restructuring charges. Legislative and regulatory requirements encourage use of and emphasis on GAAP financial metrics and require companies to explain why non-GAAP financial metrics are relevant to management and investors. Equinix excludes these non-cash or non-recurring items in order for Equinix’s lenders, investors, and industry analysts who review and report on the Company, to better evaluate the Company’s operating performance and cash spending levels relative to its industry sector and competitor base.


Equinix excludes depreciation expense as these charges primarily relate to the initial construction costs of our IBX centers and do not reflect our current or future cash spending levels to support our business. Our IBX centers are long-lived assets, and have an economic life greater than ten years. The construction costs of our IBX centers do not recur and future capital expenditures remain minor relative to our initial investment. This is a trend we expect to continue. In addition, depreciation is also based on the estimated useful lives of our IBX centers. These estimates could vary from actual performance of the asset, are based on historic costs incurred to build out our IBX centers, and are not indicative of current or expected future capital expenditures. Therefore, Equinix excludes depreciation from its operating results when evaluating its operations.


In addition, in presenting the non-GAAP financial measures, Equinix excludes amortization expense related to certain intangible assets, as it represents a cost that may not recur and is not a good indicator of the Company’s current or future operating performance. Equinix excludes accretion expense, both as it relates to its asset retirement obligations as well as its accrued restructuring charge liabilities, as these expenses represent costs, which Equinix believes are not meaningful in evaluating the Company’s current operations. Equinix excludes non-cash stock-based compensation expense as it represents expense attributed to stock awards that have no current or future cash obligations. As such, we, and many investors and analysts, exclude this stock-based compensation expense when assessing the cash generating performance of our operations. Equinix excludes restructuring charges from its non-GAAP financial measures. The restructuring charges relate to the Company’s decision to exit leases for excess space adjacent to several of our IBX centers, which we did not intend to build out, or our decision to reverse such restructuring charges. Management believes such items as restructuring charges are unique transactions that are not expected to recur, and consequently, does not consider these items as a normal component of expenses or income related to current and ongoing operations.


Our management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. However, we have presented such non-GAAP financial measures to provide investors with an additional tool to evaluate our operating results in a manner that focuses on what management believes to be our core, ongoing business operations. Management believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with past reports and provides a better understanding of the overall performance of the business and its ability to perform in subsequent periods. Equinix believes that if it did not provide such non-GAAP financial information, investors would not have all the necessary data to analyze Equinix effectively.


Investors should note, however, that the non-GAAP financial measures used by Equinix may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies. In addition, whenever Equinix uses such non-GAAP financial measures, it provides a reconciliation of non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure.


Equinix does not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, net income (loss) from operations, cash generated from operating activities and cash used in investing activities, and as a result, is not able to provide a reconciliation of GAAP to non-GAAP financial measures for forward-looking data. Equinix intends to calculate the various non-GAAP financial measures in future periods consistent with how it was calculated for the three months ended March 31, 2009 and 2008, presented within this press release.


Q1 2009 Financial Statements


——————————————————————————–


Press Contacts

Equinix Investor Relations Contact

Jason Starr

Equinix, Inc

+1 (650) 513-7402

E-mail

North America

David Fonkalsrud

K/F Communications, Inc

(415) 255-6506

E-mail


——————————————————————————–


Forward Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the challenges of acquiring, operating and constructing IBX centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of companies we have acquired or will acquire into Equinix; a failure to receive significant revenue from customers in recently built out or acquired data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; and other risks described from time to time in Equinix’s filings with the Securities and Exchange Commission. In particular, see Equinix’s recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.


Equinix and IBX are registered trademarks of Equinix, Inc. Internet Business Exchange is a trademark of Equinix, Inc.

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Conexant to Sell Broadband Access Product Lines to Ikanos

Conexant to Sell Broadband Access Product Lines to Ikanos

Transaction Expected to Close in Fourth Fiscal Quarter; Focus for Continuing Company Will Include Imaging, Audio, Video, and Embedded Modems


NEWPORT BEACH, Calif.–(BUSINESS WIRE)–Conexant Systems, Inc. (NASDAQ:CNXT) today announced that it has signed a definitive agreement to sell its Broadband Access product lines to Ikanos Communications, Inc. (NASDAQ: IKAN) for $54 million in cash. Conexant’s Broadband Access business provides solutions for DSL, ADSL, VDSL, SHDSL, and PON applications. The transaction, which is subject to customary closing conditions and regulatory approvals as well as approval by Ikanos shareholders, is expected to close in the fourth fiscal quarter.


“Over the past decade, Conexant’s Broadband Access team has developed and delivered an outstanding portfolio of solutions for DSL applications and maintained a leading position in an extremely competitive market,” said Scott Mercer, Conexant’s chairman and chief executive officer. “The combination of Conexant’s and Ikanos’s DSL assets will create a company with the focus, resources, and customer base required to achieve continued success for the foreseeable future.


“The divestiture of our Broadband Access business represents another major step in our efforts to restructure our operations,” Mercer said. “When the transaction is completed this summer, the continuing Conexant will be focused exclusively on providing solutions for imaging, audio, video, and various embedded-modem applications. We occupy leading positions in each of these areas, which are expected to grow over the next several years.


“We expect the continuing Conexant to deliver improved financial performance,” Mercer said. “Proceeds from the transaction will provide us with additional flexibility to make targeted investments to further expand our product portfolio. We also have the option of using some or all of the proceeds to strengthen our balance sheet by retiring debt. As we get closer to completing the transaction, we will provide additional information on the performance we expect from our continuing company.”


Approximately 400 Conexant employees at locations in the United States, India, and China will join Ikanos when the transaction closes. At that time, Conexant’s continuing business will consist of Imaging and PC Media.


About Conexant’s Imaging and PC Media Business


Conexant’s Imaging and PC Media team is focused on delivering solutions for imaging, audio, video, and a variety of embedded-modem-based applications.


The company’s comprehensive imaging product portfolio includes highly integrated system-on-chip (SoC) solutions for multifunction inkjet and laser printers, and photo printers. Additional products include high-performance system solutions for high-growth digital photo frame and interactive-display appliances, and a suite of fax SoCs and fax datapumps.


In the audio segment, Conexant is leveraging its expertise in voice-processing technology and its comprehensive audio intellectual property portfolio to deliver high-definition (HD) audio products, HD audio codecs, and speakers-on-a-chip solutions for personal computers, PC peripheral sound systems, speakers, notebook docking stations, voice-over-IP speakerphones, intercoms, door phones, and audio-enabled surveillance applications.


Conexant’s video solutions include video decoders and media bridges for the rapidly growing video surveillance and security segment. The company also offers components and system solutions for a variety of analog video-based multimedia applications.


Conexant’s suite of embedded-modem solutions are used in products that include desktop and notebook PCs, set-top boxes, point-of-sale systems, home automation and security systems, and other industrial applications.


Second Quarter Fiscal 2009 Conference Call


Conexant will not be hosting a conference call on today’s announcement. The company will report financial results for the second quarter of fiscal 2009 on April 30, 2009, and will hold a conference call for analysts and investors at that time.


About Conexant


Conexant’s comprehensive portfolio of innovative semiconductor solutions includes products for imaging, audio, video, and Internet connectivity applications. Conexant is a fabless semiconductor company that recorded revenues of more than $500 million in fiscal year 2008. The company is headquartered in Newport Beach, Calif. To learn more, please visit www.conexant.com


Safe Harbor Statement


“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as Conexant or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, statements in this release that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.


These risks and uncertainties include, but are not limited to: the ability of Ikanos Communications, Inc. to receive any necessary shareholder approval in connection with its acquisition of our Broadband Access product lines; our ability to successfully execute asset acquisitions, dispositions, mergers and restructurings; our ability to identify and execute acquisitions, divestitures, mergers or restructurings, as deemed appropriate by management; the availability of manufacturing capacity; changes in our product mix; pricing pressures and other competitive factors; our ability to timely develop and implement new technologies and to obtain protection for the related intellectual property; the cyclical nature of the semiconductor industry, which is subject to significant downturns that may negatively impact our business, financial condition, cash flow and results of operations; the cyclical nature of the markets addressed by our products and our customers’ products; volatility in the technology sector and the semiconductor industry; the risk that capital needed for our business and to repay our indebtedness will not be available when needed; our successful development of new products; the timing of our new product introductions and our product quality; demand for and market acceptance of our new and existing products; our ability to anticipate trends and develop products for which there will be market demand; product obsolescence; the ability of our customers to manage inventory; the financial risks of default by tenants and subtenants in the space we own or lease; the risk that the value of our common stock may be adversely affected by market volatility or failure to meet all applicable listing requirements of the NASDAQ Global Market; the substantial losses we have incurred; the uncertainties of litigation, including claims of infringement of third-party intellectual property rights or demands that we license third-party technology, and the demands it may place on the time and attention of our management and the expense it may place on our company; general economic and political conditions and conditions in the markets we address; and possible disruptions in commerce related to terrorist activity or armed conflict, as well as other risks and uncertainties, including those detailed from time to time in our Securities and Exchange Commission filings.


Conexant is a registered trademark of Conexant Systems, Inc. Other brands and names contained in this release are the property of their respective owners.

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MetroPCS First North American Carrier to Offer Unlimited Calling to Mexico for $3 per Month

MetroPCS First North American Carrier to Offer Unlimited Calling to Mexico for $3 per Month

Wednesday April 22, 2009, 8:00 am EDT


DALLAS–(BUSINESS WIRE)–Continuing to provide consumers with the most economical wireless service in the United States, MetroPCS Communications, Inc. (NYSE: PCS - News), the nation’s leading provider of unlimited, flat-rate, no signed contract wireless communications service, announces unlimited calling to select locations in Mexico for $3 a month. MetroPCS customers will be able to make unlimited calls to more than 200 landline destinations throughout Mexico and unlimited SMS text messages without any additional charges to four major Mexican cellular carriers: America Movil (Telcel), Telefonica (Movistar), Nextel Mexico and Iusacell.


MetroPCS offers a diverse selection of wireless service plans, which allow customers to talk 24-hours-a-day, seven days a week, and enhanced service options so customers can create a wireless experience that best fits their lifestyles. With MetroPCS, customers pay by the month, not by the minute, and services do not require a signed contract, deposit or credit check. For an additional $3 a month, unlimited calling to Mexico can be added to MetroPCS’ $35, $40, $45 and $50 service plans, which already includes unlimited long distance service to the 48 continental United States. MetroPCS offers the first month of service free with the purchase of a phone and there is no activation fee or other charges.


“Unlimited calling to Mexico at such an affordable rate is yet another example of MetroPCS’ commitment to providing exceptional value to consumers in today’s tough economic climate,” said Roger D. Linquist, president, chief executive officer and chairman of the board of MetroPCS. “Nearly 60 percent of Hispanics living in the United States are of Mexican descent, and this unlimited calling plan will help keep them connected with their family, friends and loved ones at an affordable rate.”


MetroPCS’ service plans range from $30 to $50 per month and allow subscribers to talk all they want, 24-hours-a-day, seven days a week. Unlike most carriers, MetroPCS does not require a signed contract, which means that consumers can activate service without going through a credit check or paying a deposit.


Additionally, MetroPCS offers unlimited family plans and MetroPCS Unlimited NationwideSM, which allows MetroPCS subscribers to use their affordable, flat-rate, no signed contract service in more than 4,600 cities and towns in the continental United States. This expanded network is included at no additional charge in MetroPCS’ current $45 and $50 service plans and can be added for $5 per month on other qualified service plans.


MetroPCS also offers GroupLINESM, which allows up to five MetroPCS’ Family Plan subscribers to receive calls on a shared GroupLINE number while still maintaining their individual mobile numbers. Any caller, whether or not they are a MetroPCS subscriber, can call the GroupLINE number, and reach all of the subscribers on the plan simultaneously. With GroupLINE, family members are all connected with each other as well as the incoming caller. There is also a shared GroupLINE voicemail that the subscribers can access. GroupLINE is available for subscribers on MetroPCS’ Family Plan for an additional $5 per month.


Consumers can visit any of MetroPCS’ current authorized dealer locations or visit MetroPCS’ web site at www.metropcs.com to sign up for service plans, choose from a lineup of wireless phones, including the Samsung Finesseâ„¢ and BlackBerry® CurveTM 8330, from the top handset manufacturers, and receive a complete list of locations where expanded coverage is offered.


About MetroPCS Communications, Inc.


Dallas-based MetroPCS Communications, Inc. (NYSE: PCS - News) is a provider of unlimited wireless communications service for a flat-rate with no signed contract. MetroPCS owns or has access to licenses covering a population of approximately 143 million people in the largest metropolitan areas in the United States, including New York City, Los Angeles, San Francisco, Dallas, Philadelphia, Atlanta, Detroit, Boston, Miami, Tampa, and Sacramento. MetroPCS ranked “Highest In Customer Satisfaction With Wireless Prepaid Service” in the J.D. Power and Associates third annual Prepaid Customer Satisfaction Study in July of 2008. As of March 31, 2009, MetroPCS had approximately 6.1 million subscribers. For more information please visit www.metropcs.com.


Contact:

For MetroPCS Communications, Inc.:

Edelman

Sarika Patel, 214-443-7555

Sarika.Patel@edelman.com

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AT&T’s First-Quarter Results Highlighted by Wireless Gains, U-verse TV Growth, Double-Digit Increase in IP Data Revenues

AT&T’s First-Quarter Results Highlighted by Wireless Gains, U-verse TV Growth, Double-Digit Increase

in IP Data Revenues


 EPS of $0.53 versus $0.57 for the year-earlier first quarter; incremental noncash pension/retiree benefit costs reduced first-quarter 2009 EPS by $0.05, consistent with full-year outlook

 1.2 million net gain in total wireless subscribers to reach 78.2 million; 875,000 retail postpaid net adds, up 24.1 percent versus results in the year-earlier first quarter

 26.0 percent wireless operating income margin, 40.9 percent wireless OIBDA service margin, with sequential expansion reflecting iPhone benefits and continued operational improvements

 Continued strong integrated device adoption including more than 1.6 million iPhone 3G devices activated during the first quarter; the number of AT&T postpaid wireless subscribers with integrated devices more than doubled over the past year

 38.6 percent increase in wireless data revenues to $3.2 billion, more than double the total for the first quarter two years earlier; growth driven by messaging, Internet access, e-mail, access to applications and related services

 Fifth consecutive quarter with a year-over-year increase in wireless postpaid subscriber ARPU, up 2.1 percent versus the year-earlier quarter to $59.21

 Strong growth in AT&T U-verseSM TV subscribers, with a net increase of 284,000, nearly double the company’s gain in the year-earlier first quarter, to reach 1.3 million in service

 471,000 net increase in total broadband connections — wireline and wireless LaptopConnect cards — to reach 16.7 million in service

 16.4 percent growth in wireline IP data revenues driven by rapid expansion in AT&T U-verse services and growth in business products such as Virtual Private Networks (VPNs) and managed Internet services

Note: AT&T’s first-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. ET on Wednesday, April 22, 2009, at www.att.com/investor.relations.

DALLAS, April 22, 2009 — AT&T Inc. (NYSE:T) today reported first-quarter results highlighted by improved postpaid wireless growth with a substantial step up in integrated device penetration, double-digit increases in revenues from IP-based and strategic


business services, and further AT&T U-verse TV subscriber gains. Advances in these areas and solid cost management largely offset continuing economic pressures on consumers and businesses.

AT&T’s first-quarter revenues totaled $30.6 billion, net income attributable to AT&T was $3.1 billion, diluted earnings per share totaled $0.53 and cash from operating activities totaled $7.9 billion.

“These results demonstrate focused and disciplined execution as we work through a tough economy,” said Randall Stephenson, AT&T chairman and chief executive officer. “Our cost-improvement initiatives are on track, earnings and cash flow were solid, our balance sheet and credit metrics continue to be strong.

“Most important, during this down cycle we continue to invest in key growth areas like mobile broadband, more bandwidth to the home through our all-IP AT&T U-verse platform, and advanced global business solutions delivered over AT&T’s premier Internet backbone network. We have good momentum in all of these areas.

“I am particularly pleased with the success of our iPhone 3G initiative, which has driven strong high-end customer growth and delivered financial benefits ahead of our original outlook. Business and consumer expectations for mobility are on the rise, wireless innovation is flourishing and the opportunities ahead are substantial. AT&T is strongly positioned to lead in the next generation of wireless growth.”

First-Quarter Financial Results

For the quarter ended March 31, 2009, AT&T’s consolidated revenues totaled $30.6 billion versus $30.7 billion in the year-earlier quarter, as growth in wireless and wireline data services in large part offset pressures from the macro-environment, including continuing declines in wireline voice access lines and business voice revenues.

Compared with results for the year-earlier quarter, AT&T’s operating expenses for the first quarter of 2009 were $24.8 billion versus $24.8 billion; operating income was $5.7 billion versus $6.0 billion; and AT&T’s operating income margin was 18.8 percent, compared with 19.5 percent.

First-quarter 2009 net income attributable to AT&T totaled $3.1 billion versus $3.5 billion in the year-earlier quarter, and earnings per diluted share totaled $0.53, compared with $0.57 in the first quarter of 2008.

First-quarter 2009 results included incremental noncash pension and retiree benefit expenses of more than $400 million, or $0.05 per diluted share, consistent with the company’s previously provided full-year outlook.

AT&T’s cash from operating activities for the first quarter totaled $7.9 billion, capital expenditures totaled $3.4 billion and free cash flow (cash from operations minus capital expenditures) totaled $4.6 billion. Dividends paid totaled $2.4 billion.

Wireless Operational Highlights

AT&T’s first-quarter wireless growth was highlighted by postpaid subscriber gains that were up significantly from year-earlier levels, continued rapid adoption of integrated devices (handsets with QWERTY or virtual keyboards in addition to voice functionality) and wireless data services, and substantial sequential margin expansion reflecting operational improvements and iPhone benefits. Highlights include the following:

 Strong Postpaid Subscriber Gains. AT&T posted solid organic wireless subscriber gains in the first quarter, driven by a significant step up in retail postpaid net subscriber additions, which were 24.1 percent higher than in the year-earlier quarter. Versus results for the first quarter of 2008, postpaid gross adds totaled 3.0 million, up 9.2 percent; postpaid churn was stable at 1.2 percent; and postpaid net adds totaled 875,000, up from 705,000. This marked AT&T’s third consecutive quarter of double-digit year-over-year improvement in postpaid net adds. Total wireless subscribers increased by 1.2 million in the first quarter to reach 78.2 million in service, up 6.9 million over the past year.

 38.6 Percent Wireless Data Revenue Growth. Powered by AT&T’s premier wireless data network and an attractive device lineup, wireless data revenues increased by $884 million, or 38.6 percent, versus the year-earlier first quarter to $3.2 billion. Data represented 27.2 percent of AT&T’s first-quarter wireless service revenues, up from 21.5 percent in the year-earlier quarter and 16.0 percent in the first quarter of 2007. Wireless text messages on the AT&T network totaled more than 94 billion in the first quarter, more than double the total for the year-earlier quarter. Internet access and media bundle revenues also continued their solid growth.

 More Than 1.6 Million Apple iPhone 3G Activations. AT&T’s postpaid subscriber growth reflects continued success with iPhone 3G. In the first quarter, AT&T’s iPhone 3G activations totaled more than 1.6 million, more than 40 percent of them for customers who were new to the company. AT&T’s U.S. iPhone exclusive continues to deliver subscribers with ARPUs (average monthly revenues per subscriber) that are approximately 1.6 times higher and churn rates that are significantly lower than the company’s overall postpaid subscriber base.

 Strength in Integrated Devices. Including the iPhone, AT&T markets a compelling array of integrated devices ranging from advanced multifunction handsets for business customers to attractive quick messaging devices. In the first quarter, integrated devices accounted for more than 100 percent of the company’s postpaid net adds, reflecting strength in new customer sales. Over the past year, the number of integrated devices on AT&T’s network more than doubled, and at the end of the first quarter, 31.7 percent of AT&T’s 61.0 million postpaid subscribers had integrated devices.

 3G Leadership. The number of 3G devices on AT&T’s wireless network also more than doubled over the past year, and at the end of the first quarter, 40.8 percent of AT&T’s postpaid wireless subscribers had a 3G device, up from 19.5 percent one year earlier. AT&T’s 3G network is the nation’s fastest, according to data compiled by leading independent wireless research firms. AT&T also offers the broadest global coverage of any U.S. provider, with voice roaming available in more than 200 countries; access to

e-mail, the Web and other data applications in more than 170 countries; and access to mobile broadband 3G networks in more than 70 countries.

 Continued Retail Postpaid Subscriber ARPU Growth. Driven by strong wireless data growth, AT&T continues to expand postpaid wireless subscriber ARPU. Postpaid data ARPU was $16.48 in the first quarter, up $3.48 or 26.8 percent versus the year-earlier period. Total postpaid ARPU increased 2.1 percent versus the year-earlier first quarter to $59.21. This marked the ninth consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU.

 40.9 Percent Wireless OIBDA Service Margin. Wireless operating income growth and wireless margins were also strong. Versus results for the year-earlier first quarter, wireless operating expenses totaled $9.5 billion, up 7.3 percent, and operating income was $3.3 billion, up 13.0 percent. AT&T’s wireless operating income margin was 26.0 percent, up from 25.0 percent in the year-earlier quarter and 20.9 percent in the fourth quarter of 2008. AT&T’s first-quarter wireless OIBDA service margin was 40.9 percent, compared with 41.7 percent in the year-earlier period, and up 510 basis points from 35.8 percent in the fourth quarter of 2008. In addition to solid revenue growth, sequential margin expansion was driven by the success of AT&T’s iPhone strategy, continued operational improvements in network and support functions and typical seasonality. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

Wireline Operational Highlights

AT&T’s first-quarter wireline results were led by further growth in AT&T U-verse subscribers, solid broadband results and a double-digit increase in revenues from IP-based and strategic business services such as Ethernet and VPNs. Highlights include the following:

 Strong AT&T U-verse Growth. AT&T U-verse TV subscribers in service increased by 284,000 in the first quarter — up from 148,000 added in the year-earlier first quarter and 264,000 in the fourth quarter of 2008 — to reach 1.3 million in service. This growth reflects the high quality of the AT&T U-verse video experience, which offers a host of advanced features including AT&T U-verse Total Home DVR, integrated voice and broadband service, and at least 100 High Definition channels in all markets in which the service is offered. AT&T U-verse TV continues to reach mid-teens penetration in areas marketed to for at least 18 months, and nearly 50 percent of AT&T U-verse TV subscribers take the largest video package. AT&T’s total video subscribers, which combine the company’s U-verse and bundled satellite customers, reached 3.5 million at the end of the first quarter, representing 12.6 percent of households served.

 Significant Step Up in Broadband Net Adds. AT&T U-verse TV’s high broadband attach rate, greater than 90 percent in the first quarter, combined with strong growth in stand-alone broadband bundles to drive a substantial sequential improvement in broadband net adds. Total broadband connections, which include wireline subscribers and wireless customers with 3G LaptopConnect cards, increased by 471,000 in the first quarter to reach 16.7 million in service. AT&T’s wired broadband connections increased by 359,000 in the first quarter versus 236,000 in the preceding quarter. In addition to AT&T’s high-quality wired and wireless options, broadband subscribers also benefit from access to AT&T’s industry-leading Wi-Fi footprint, with more than 20,000 hotspots in the United States and access to more than 80,000 hotspots around the world.

 Improved Trends in Consumer Revenue Connections. In the first quarter, U-verse TV net adds continued their growth, broadband net adds were up substantially versus the previous three quarters and the net gain in AT&T U-verse Voice connections was up more than 40 percent versus the fourth quarter of 2008. These improvements and the positive impact of AT&T U-verse penetration on access-line retention were reflected in AT&T’s smallest sequential decline in consumer connections (retail voice, high speed Internet and video) in three quarters. Combined, wireline consumer broadband and TV connections increased by 673,000 in the first quarter and 1.7 million over the past year. AT&T had 46.8 million total consumer connections at the end of the first quarter of 2009, compared with 49.3 million at the end of the first quarter of 2008 and 47.0 million at the end of the fourth quarter of 2008.

 Continued Growth in Revenues Per Household. Driven by increased U-verse and broadband penetration, wireline revenues per household were up 2.0 percent versus the year-earlier quarter. This marked AT&T’s fifth consecutive quarter of year-over-year growth in consumer wireline revenues per household. Total first-quarter wireline consumer revenues were $5.4 billion, compared with $5.8 billion in the year-earlier quarter, as declining voice revenues more than offset growth in video and broadband.

 16.4 Percent Growth in Wireline IP Data Revenues. AT&T posted its sixth consecutive quarter of mid-teens growth in total wireline IP data revenues, driven by expansion in AT&T U-verse services and growth in business products such as VPNs and managed Internet services. Consumer IP data revenues, from AT&T U-verse and broadband services, grew 23.0 percent, and business IP data revenues grew 10.5 percent. IP services now account for 46.8 percent of AT&T’s total wireline data revenues, up from 42.3 percent in the year-earlier first quarter and 37.9 percent in the first quarter of 2007.

 19.6 Percent Business Strategic Revenue Growth. Revenues from the new-generation capabilities that lead AT&T’s most advanced solutions — including Ethernet, VPNs, hosting, IP conferencing and applications services — grew 19.6 percent year over year, continuing strong trends for this category over recent quarters. Progress in these product areas reflects the strength of AT&T’s network and its advanced product sets for business customers. Total first-quarter wireline business revenues — which include results from enterprise, wholesale, government, education, medical and small/midsize customers — were $10.7 billion versus $11.2 billion in the year-earlier quarter, reflecting economic impacts on both retail and wholesale customers, primarily from voice products and CPE.

About AT&T

AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world’s most advanced IP-based business communications services, the nation’s fastest 3G network and the best wireless coverage worldwide, and the nation’s leading high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. As part of their three-screen integration strategy, AT&T operating companies are expanding their TV entertainment offerings. In 2009, AT&T again ranked No. 1 in the telecommunications industry on FORTUNE® magazine’s list of the World’s Most Admired Companies. Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at http://www.att.com.

© 2009 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Note: This AT&T news release and other announcements are available as part of an RSS feed at www.att.com/rss. For more information, please review this announcement in the AT&T newsroom at http://www.att.com/newsroom.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s Web site at www.att.com/investor.relations. Accompanying financial statements follow.

NOTE: OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from Segment Operating Income (loss), as calculated in accordance with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

NOTE: Free cash flow is defined as cash from operations minus capital expenditures. We believe this metric provides useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.

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