AT&T Wireless Bounces Back, Nextel Reports Strong Quarter

Company ends string of bad financial quarters.

July 21, 2004

2 Min Read
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AT&T Wireless ended string of bad financial quarters Wednesday by reporting a small profit and an increase in new customers during the second quarter of 2004 while Nextel continued on its roll by reporting yet another strong quarter.

AT&T Wireless, which is in the process of being acquired by Cingular Wireless, reported net income of about two cents a share for the second quarter compared to a two cent per share loss in the first quarter of 2004. However, it was a significant decrease from income of eight cents per share in the same quarter the previous year.

The company noted in its statement, however, that it had increased expenses for customer acquisition. Those expenses paid off, however, as it added 15,000 new customers during the quarter, compared to losing 380,000 in the first quarter of the year. It also had significant customer losses in the last quarter of 2003.

The company reported it has reduced "churn," or the rate at which customers leave for other operators, to 3.4 percent compared to 3.7 percent the previous quarter. That still represents a high churn rate compared to other U.S. wireless carriers and is far higher than the company's 2.2 percent churn rate in the same quarter in 2003.

The company has acknowledged a series of technical glitches starting last year that are credited with decreasing the quality of customer service. The company has acknowledged that it handled wireless local number portability poorly, a government initiative that enables customers to switch wireless carriers and retain their phone number.The company hailed the results as proof that it has returned to solid footing.

"Our second quarter results show we are on the rebound from our disappointing first quarter," John D. Zeglis, AT&T Wireless chairman and CEO, said in a statement. "Sequential improvements in practically all of our key metrics demonstrate that the initiatives we launched earlier this year are making a difference."

Meanwhile, Nextel reported another strong quarter with a 25 percent increase in operating income to a total of about $1.3 billion. It reported earnings per share of $1.17. The company it added 546,000 new subscribers, which is a 15 percent increase compared to the first quarter.

It said the results mean that it still expects to meet or exceed its financial guidance for 2004.

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