AT&T this morning reports an increase in quarterly profit. From the Reuters story:
AT&T’s first-quarter profit rose to $3.46 billion, or 57 cents per share, from $2.85 billion, or 45 cents a share in the same quarter a year earlier.
The positive report results mostly from strong growth in AT&T’s wireless business. Traditional phone subscriptions were down.
One could read different messages from this. Wireless products are still what I consider a luxury, though more and more people see it as a necessity. However, I find it hard to believe that anyone would cling to their cell phone if it meant skipping meals to afford it. So is this a sign that we’re not in a recession after all?
Although that is one view, another would be that many people, especially the younger generation, have figured out that a land-line is not required to live, and that for about the same cost paid for a tradition stuck-in-your-house phone they can drop that service and keep their cell phone. As such, the assertion that increased profits for AT&T means we’re not in a recession lacks credibility (so I won’t say it). On the other hand, AT&T tends to be a pricier and less available service than others, so one also must wonder if these smart young whippersnappers made the financial jump in logic simply to justify purchasing an iPhone?
Reading into reports and events like this can make your head spin.
What is worth saying is that if a major corporation, especially one of the 30 Dow Jones Industrial Average companies, performs this well, it should create a strong positive response in the current market. Look for a strong day on Wall Street, assuming the Fed doesn’t make any announcements.
Hat Tip to Reuters.