AT&T Preliminary Financial Profile Following Completion of the Transaction; Focused Total Return Strategy for Capital Allocation; After Close, Dividend Payout Ratio1 Expected to be Low 40s%.

Attractive dividend – resized to account for the distribution of WarnerMedia to AT&T shareholders. After close and subject to AT&T Board approval, AT&T expects an annual dividend payout ratio of 40% to 43% on anticipated free cash flow of $20 billion plus.

AT&T dividend cut in WarnerMedia-Discovery deal is a debacle for shareholders

May 21, 2021

When it comes to recent Wall Street fiascoes, it’s hard to beat AT&T’s adventure with Time Warner. AT&T, which bought Time Warner for $102 billion less than three years ago in an attempt to set up a diversified media empire, has just announced a deal to get $43 billion for unloading WarnerMedia’s assets — including HBO, CNN and Warner Bros. — onto Discovery Inc., creating a new gigantic entertainment company.

AT&T shareholders will also end up with a 71 percent stake in Discovery, assuming regulatory approval, but AT&T itself is getting whacked. Big time.

What prompted me to write about this deal, which has been covered extensively, is that AT&T is planning to trash the income of its retail stockholders by sharply cutting its annual cash dividend. The dividend was the stock’s major attraction for retail customers seeking income and safety. It’s something unthinkable, even heretical. It’s almost as if the heads of the world’s major religions got together to announce that God does not exist.

AT&T had increased its dividend for at least 36 straight years, according to Howard Silverblatt, a senior analyst at Standard & Poor’s who made the company a prominent member of the S&P Dividend Aristocrats club that he founded in 2003. “Unthinkable” is one of the words he used to describe the cut. At least, one of the printable words.

I’m not surprised to see the deal crater. Before it was completed, I wrote a column in which I said that, like many big Wall Street deals, AT&T-Time Warner had a good chance to work out badly for shareholders.

But it never occurred to me that the deal would go so bad so quickly. Or that AT&T would end up inflicting such pain on retail investors who thought they owned a safe, conservative, income-yielding investment.


[ . . . ]


AT&T hasn’t yet said how much it will cut its dividend, which is currently $2.08 a year. But based on AT&T’s public statements, analysts expect a cut in the 40 percent to 50 percent range sometime next year.


[ . . . ]

The bottom feeder thread

China clears Boeing 737 Max to fly again

2021-12-02

BEIJING (AP) — China’s aviation regulator cleared the Boeing 737 Max on Thursday to return to flying with technical upgrades more than two years after the plane was grounded worldwide following two fatal crashes.

China is the last major market where the Boeing 737 Max was awaiting approval after the United States allowed flights to resume in December 2020 and European Union regulators gave permission in January. Brazil and Canada also have given approval.

Chinese pilots will need to complete new training before commercial flights can begin, the Civil Aviation Administration of China said on its website. It said Boeing Co. is required to install additional software and components.

“CAAC considers the corrective actions adequate to address this unsafe condition,” the agency said in an airworthiness directive.

Boeing’s shares jumped 4.25% in pre-market trading Thursday.

“The CAAC’s decision is an important milestone toward safely returning the 737 MAX to service in China,” Boeing said in a statement. It said the company was working with regulators “to return the airplane to service worldwide.”

Boeing fired the chief executive in charge at the time the 737 Max was developed, Dennis Muilenburg.The company agreed in a settlement of a lawsuit by shareholders to add a board member with a background in aviation or aerospace engineering or product safety and create a safety ombudsman’s office.

China has the largest 737 Max fleet after the United States, with 97 aircraft operated by 13 carriers before the suspension, according to state media.

China is especially important to Boeing and its European rival, Airbus Industrie, because they are counting on its expanding travel market to propel sales growth.

Q3 2021 Earnings Call

27-Oct -2021

Following the completion of the 737 MAX flight test in China during the third quarter, we continue to work toward approval by the end of the year, with a resumption of deliveries to follow in the first quarter of next year. We also continue to make progress on the certification of the 737 MAX 7 and the 737 MAX 10. We currently anticipate the first delivery of the 737 MAX 7 in early 2022 and the first delivery of the 737 MAX 10 in 2023.

[ . . . ]

We currently have approximately 370 737 MAX airplanes built and stored in inventory, including those that we have successfully remarketed. We know where the vast majority of the airplanes are going, given the demand, and we anticipate delivering most of these airplanes by the end of 2023. This assumes we resume delivery to our customers in China during the first quarter of 2022.

[ . . . ]

In closing, while our business environment is dynamic, we're confident in the future. The key enablers for our business and our financial performance for the remainder of this year and into 2022 include vaccine distribution and travel protocols, which will ultimately facilitate the commercial market recovery, remaining 737 MAX regulatory approvals, US-China trade relations, and resumption of 787 deliveries.

AT&T’s ‘clearer’ story could give new life to beaten-down stock, analyst says in upgrade

Dec. 16, 2021

AT&T Inc. will soon have a “clearer” story that could help its shares recover from a disappointing recent stretch, in the view of one analyst.

Morgan Stanley’s Simon Flannery upgraded AT&T’s stock to overweight from equal-weight Thursday, citing several “important catalysts” in the first half of next year that could give new life to AT&T’s struggling stock, which has lost 24% over the past year as the S&P 500 has increased 27%.

AT&T shares are up 3.6% in Thursday morning trading.

Flannery is upbeat about the impending closure of Discovery Inc.’s merger with AT&T’s WarnerMedia, which could take place by the middle of next year. Once that deal is complete, AT&T will be left with “a much clearer and focused communications business,” he wrote.

Investors may come to better appreciate AT&T’s communications business after the WarnerMedia deal closes, according to Flannery. “We believe AT&T’s core communications business is undervalued and should re-rate as we get more clarity on the WarnerMedia/Discovery transaction,” he wrote, meaning that the market could assign a higher multiple to this part of the business.

Flannery expects that AT&T may provide a 2022 outlook for its core communications business when it reports fourth-quarter results in January, and that forecast could offer investors more clarity on the state of this key part of the company. Additionally, executives could soon shed more light about how they will approach dividend policy after the WarnerMedia spinoff.

Flannery cheered AT&T’s “solid” financials and recent operating performance, highlighting the company’s “industry-leading postpaid phone adds.” While a slowdown in overall wireless industry growth and emerging competitive threats “create clear downside risks” for the market, Flannery says those worries are already largely reflected in AT&T’s share price.

He cut his price target to $28 from $32 in conjunction with his upgrade, but he still thinks AT&T’s shares are undervalued: “At these levels we believe the stock is discounting an overly negative outlook; indeed less than one third of the covering analysts have a positive rating on the stock.”

The deals that loaded AT&T with debt.

May 18, 2021

AT&T is painting a rosy picture for the future of its media business, which it will spin off and merge with Discovery. That new streaming giant is a formidable stand-alone competitor to Netflix and Disney. The move leaves AT&T to focus on its telecom business, which looks less bright after being overshadowed by its expensive — and ultimately futile — deal-making binge in media and entertainment under its previous chief, Randall L. Stephenson.

The DealBook newsletter explains how AT&T got here, in three key deals:

• A $39 billion bid to buy T-Mobile. After regulatory pushback, in 2011 AT&T walked away from an effort to become the country’s largest wireless company. T-Mobile paired up instead with Sprint, and the two went on to buy huge amounts of spectrum in the high-stakes battle for 5G, leaving AT&T behind as it lobbies regulators to step in. The failed deal hit AT&T with a $3 billion dollar breakup fee, at the time the largest ever.
  

• The $67 billion acquisition of DirectTV. In 2015, AT&T bet on cable TV as a way to amass customers whom it could eventually convert to streaming. But DirectTV bled subscribers as customers cut the cord, and AT&T unloaded a stake in the company last year to TPG that valued DirectTV at about a third of its acquisition price. The deal also cost AT&T about $50 million in advisory fees, according to Refinitiv.
  
• The $85 billion acquisition of Time Warner. In 2018, Mr. Stephenson called the deal a “perfect match,” but the combined group struggled to invest in its telecom business while also spending enough to compete with the entertainment specialists at Netflix and Disney. Three years later, AT&T is now spinning off the company so it can (re)focus on its quest for 5G market share. AT&T paid $94 million in advisory fees to put the two companies together and an estimated $61 million to split them apart.

After all of that deal-making, AT&T is sitting on more than $170 billion in debt. As part of the deal with Discovery, AT&T will get $43 billion to help reduce its debt load. (The spun-off media business will begin its independent life with $58 billion in debt.)

IBM shares jumped as much as 7% in extended trading on Monday after the software and services company said revenue climbed 6% in the fourth quarter.

Here’s how the company did:

• Earnings: $3.35 per share, adjusted
• Revenue: $16.7 billion

During the period, IBM spun out is managed infrastructure services business into Kyndryl. For IBM’s continuing operations, revenue rose 6% from a year earlier, the company said a statement. Part of the growth comes from sales to Kyndryl.

IBM executives have been telling investors of late to look for mid-single digit revenue growth. In the prior quarter, IBM’s revenue from continuing operations increased by 2%. The company showed its fastest revenue growth since the third quarter of 2011.

Net income in the fourth quarter jumped 72% from a year earlier to $2.33 billion increased, while gross margin narrowed to 56.9% from 58.9%.

IBM streamlined its reporting segments for the fourth quarter in conjunction with the Kyndryl separation. Its software business, formerly known as Cloud and Cognitive Software, generated $7.27 billion in revenue, up 8% from a year earlier.

Revenue in the consulting unit, previously named Global Business Services, rose 13% to $4.75 billion. The IBM infrastructure business, which includes hardware, was down 0.3% to $4.41 billion.

As of the close on Monday, IBM shares are down 4% since the start of the year, while the S&P 500 is down 8%.

In addition to completing the Kyndryl transaction, IBM announced during the period the acquisitions of Australian cloud consulting company SXiQ and a consulting unit that handles Adobe implementations. It also announced a vertical semiconductor transistor architecture alongside Samsung.

Executives will discuss the results and expectations for the year with analysts on a conference call starting at 5 p.m. ET.

AT&T readies for revamped firm after sale of media unit

Wed, January 26, 2022

Jan 26 (Reuters) - AT&T Inc's WarnerMedia unit reported solid fourth-quarter revenue growth on Wednesday, helped by new customers for its HBO Max streaming service, but shares of AT&T fell 3% as the market absorbed whether its core wireless business could propel future growth.

After facing skepticism from investors over its expensive endeavor to become a media powerhouse, AT&T struck a deal to merge WarnerMedia with Discovery Inc, which it now expects to close in the second quarter.

The company will detail its plans to attract new types of wireless customers and how it will refine its brand post-WarnerMedia at a virtual analyst day in March, said AT&T Chief Executive John Stankey, during an earnings call with analysts on Wednesday.

AT&T will aim to have "a much more crisp and intense focus," on its core wireless and internet business, Stankey said.

Jonathan Chaplin, an analyst at New Street Research, wrote in a note on Wednesday that the rate of customer defections at AT&T increased "materially," and it remained a question whether the company could sustain its wireless customer growth.

Investors were also disappointed in AT&T's growth guidance for the communications business, Chaplin said in an email.

The company signed up 884,000 net new phone subscribers who pay a monthly bill in the quarter, in line with its preliminary result of 880,000 released earlier this month, but falling short of FactSet estimates of 906,500 new subscribers.

Rival carrier Verizon on Tuesday reported a better-than-expected 558,000 subscriber additions in its latest quarter.

Revenue at WarnerMedia, which houses premium TV channel HBO and streaming service HBO Max, rose 15.4% to $9.9 billion during the fourth quarter.

WarnerMedia CEO Jason Kilar said it was the business' highest revenue in its 99-year history, thanks to gains in streaming, the steady growth of its studio business and its game group.

HBO and HBO Max together added 4.4 million subscribers during the quarter, drawing viewers with releases such as "Dune", "The Matrix" and the newest season of TV show "Succession".

Total consolidated revenue was $41.0 billion in the quarter ended Dec. 31, beating analysts' estimates of $40.44 billion, according to Refinitiv Data.

AT&T's fourth-quarter net income swung to a profit of $5.0 billion, or $0.69 per share, from a loss of $13.89 billion, or $1.95 per share, last year. Excluding items, AT&T earned 78 cents per share, above analysts' average estimate of 75 cents.

AT&T has prioritized its fiber internet business as an area for growth, and said it added 271,000 net new customers during the quarter.

Including WarnerMedia and advertising business Xandr, AT&T now expects 2022 revenue growth in the low-single-digit percentage range.

The company expects annual adjusted earnings of between $3.10 and $3.15 per share in 2022, short of analysts' average estimate of $3.21.

AT&T, which faces fierce competition from rivals Verizon and T-Mobile US amid nationwide deployment of their 5G technology, forecast 2022 capital expenditure in the $20 billion range.

Boeing posts third annual loss in a row as Dreamliner costs hit $5.5 billion

Wed, Jan 26 2022

Boeing hit a key milestone in its yearslong 737 Max crisis as a jump in deliveries helped it generate cash in the fourth quarter for the first time in nearly three years.

But it now faces mounting expenses in its 787 Dreamliner program, disclosing Wednesday $5.5 billion in costs tied to manufacturing flaws that have prevented Boeing from handing over those new jets to customers for most of the last 15 months.

The manufacturer took a $3.5 billion pretax charge in the fourth quarter on the Dreamliner. It expects $2 billion in additional costs after it slashed production of the planes, double its previous estimate.

Boeing reported free cash flow of $494 million for the fourth quarter, up from an outflow of $4.27 billion a year earlier, a milestone Boeing executives previously said they wouldn’t hit until 2022. It was driven by a surge in deliveries last year of the 737 Max after regulators lifted bans on the jets following fatal crashes in 2018 and 2019.

Here’s how Boeing performed compared with analysts’ estimates complied by Refinitiv:

• Adjusted results: A loss of $7.69 a share vs. an expected loss of 42 cents a share.
• Revenue: $14.79 billion vs. $16.59 billion, expected.

Boeing lost $4.29 billion last year, its third annual loss in a row as the Covid pandemic and production issues continued to hurt its bottom line. It’s an improvement from 2020 when the company had a loss of $11.94 billion.

For the fourth quarter, Boeing reported a net loss of $4.16 billion, less than half of the $8.44 billion it lost a year earlier. Sales fell 3% from a year ago to $14.79 billion, lower than the $16.59 billion analysts expected.

Chicago-based Boeing’s aircraft sales and deliveries surged last year, but handovers of new planes to airlines still trailed European rival Airbus. The U.S. company said it has increased production of the 737 Max to 26 a month, closer to the 31 per month it has expected to produce this year and up from 19 a month it disclosed in its last quarterly report.

Boeing expects to roughly double 737 Max deliveries to about 500 this year.

Chewy Co-Founder Ryan Cohen Takes Large Stake in Bed Bath & Beyond, Pushes for Changes

March 6, 2022

Ryan Cohen, the billionaire co-founder of online pet-products retailer Chewy Inc. has a big stake in Bed Bath & Beyond Inc. and is pushing the housewares retailer to streamline its strategy and explore strategic alternatives.

Mr. Cohen, who also serves as chairman of videogame retailer GameStop Corp. owns a 9.8% stake in Bed Bath & Beyond through his investment firm, RC Ventures LLC, according to a copy of a letter sent to its board Sunday that was viewed by The Wall Street Journal. That makes him a top-five shareholder in the New Jersey-based chain, which has a market value of roughly $1.6 billion.

Bed Bath & Beyond has hundreds of physical stores around the country and operates the Buybuy Baby and Harmon retail chains. While its shares initially received a boost from the pandemic, they have fallen over the past year and closed Friday at $16.18, not far from where they were three years ago.

The chain has a turnaround plan that includes reducing the number of products in its stores and launching new private-label brands. But this plan left it vulnerable to supply-chain issues roiling the retail industry and caused it to cede more sales to rivals such as Amazon.com Inc. and Target Corp. Some analysts who initially backed Chief Executive Mark Tritton’s plan are now questioning its viability.

Mr. Cohen says in the letter that Bed Bath & Beyond’s strategy is failing to stem sustained market share losses, noting that core sales dropped 14% from a year ago in the most recent quarter.

He urges the company to take two main steps: narrow the focus of its turnaround plan and maintain the right inventory mix to meet demand, and explore a separation of the Buybuy Baby chain or a sale of the entire company.

He writes that given Buybuy Baby’s growth trajectory, it could be worth several billion dollars. He also writes that the entire company could be better off in the hands of a private-equity firm.

He says the company should better align leadership compensation with results.

Far from a typical activist, Mr. Cohen gained a cult following after he built a big GameStop stake and in November 2020 criticized the company for moving too slowly toward e-commerce. He joined GameStop’s board in January 2021, which contributed to the Reddit-fueled jump in its shares that followed, and took over as chairman in June 2021.

Mr. Cohen says in the letter that given his focus on GameStop, he isn’t in a position to become a Bed Bath & Beyond director himself, but he doesn’t rule out his firm nominating directors if necessary. The window to nominate directors to the company’s board is open now and closes mid-March.

This isn’t the first time that Bed Bath & Beyond has come under activist-shareholder pressure in recent years. Mr. Tritton was named CEO in 2019 after a trio of activists pushed to revamp the board, saying the company hadn’t adapted to the rise of e-commerce and shrinking profit margins. The activists reached a settlement agreement that put four new directors on the company’s board.

DALLAS, March 25, 2022 — Today AT&T Inc.* (NYSE:T) announced that it has declared a stock dividend to effect the spin-off of 100% of AT&T’s interest in WarnerMedia to AT&T’s shareholders. The record date for the stock dividend is the close of business on April 5, 2022. This stock dividend is in connection with the previously announced transaction to combine AT&T’s WarnerMedia business with Discovery, Inc. (NASDAQ: DISCA, DISCB, DISCK). On the closing date of the transaction, anticipated to be in April, AT&T shareholders will receive, on a tax-free basis, an estimated 0.24 shares of stock in Warner Bros. Discovery, Inc. (WBD) for each share of AT&T common stock.

AT&T Boss Sees Room to Raise Prices, Cut Costs After Media Exit

Apr. 9, 2022 5:30 am ET

AT&T Inc. Chief Executive Officer John Stankey says inflation could prompt the wireless and broadband company to raise prices for some core services while it continues to cut costs after getting out of the media business.

The company on Friday completed the planned separation of its film-and-TV empire into a new publicly traded company called Warner Bros. Discovery. AT&T shareholders will get a 71% stake in the new entity, which will be led by Discovery Inc.’s David Zaslav.

AT&T is returning to its roots as the ground shifts beneath it. Inflation has raised the cost of everything from labor to router parts, putting more pressure on its bottom line. But the average rate that U.S. cellphone carriers charge for wireless service has barely budged. AT&T, meanwhile, has been adding and keeping wireless customers for more than a year, partly by offering aggressive promotions for new smartphones.

In an interview, Mr. Stankey said the company might have some latitude to raise some prices to reflect the value of its services if inflation continues driving up the cost of other goods and services. “You’ll probably start to see it over the next several quarters, not just telecom -- more broadly in the economy because of the patterns that we’re seeing,” he said.

He said a potential economic downturn could make the company’s shares more attractive to investors looking for a business that tends to perform well during such a slowdown. Surveys show that consumers treat cellphone service like a must-have utility and will cut other household expenses before they touch their phone bill.

“We are a very, very safe place to put money right now,” he said.

Investors and analysts have questioned whether AT&T and its peers can continue racking up new cellphone subscriptions at last year’s breakneck pace. Wireless companies have so far lured new clients with deep discounts on new smartphones and by spreading out the cost of the device subsidies over time.

AT&T still faces challenges that include a high debt load, fickle customers and stiff competition, according to Craig Moffett, a researcher for the telecom and media analysis firm MoffettNathanson.

“The only way you can make this business grow is to grow subscribers,” he said. “They’re still in precisely the same pickle they were in back in 2014.”

AT&T said it plans to use most or all of the $39 billion of cash from its media sale to help pay down debt. The slimmed-down telecom company still generates about $120 billion of annual revenue.

Company executives said they would increase investment this year and next year to expand its fifth-generation wireless network before hemming in capital expenditures in 2024. They also want to more quickly add fiber-optic broadband customers in the coming years.

AT&T will also keep cutting costs. Executives in March sketched out a plan to halve AT&T’s network of copper telephone lines by 2025. Crews will replace some of that lost revenue by building new high-speed fiber-optic cables, but the company said it plans to shut down old landlines in areas where fiber upgrades aren’t cost-effective.

Securities filings show the postmedia AT&T employs about 173,000 workers, down from 253,000 in early 2015. Mr. Stankey said corporate overhead had plummeted over the past 18 months and would continue to drop to reflect the new company’s structure.

“It’s a different company now,” he said. “We don’t really need to run a superstructure corporate holding company and will continue to rationalize that.”

The Dallas company plunged into the entertainment sector in 2014 by agreeing to buy the satellite broadcaster DirecTV for about $49 billion. It followed that move with a roughly $85 billion cash-and-stock bid for Time Warner Inc., owner of HBO, CNN and Warner Bros. The media takeover closed in 2018 after the company won a federal antitrust trial.

Mr. Stankey, a company veteran who became AT&T’s CEO in 2020, started almost immediately exploring ways to unwind those media bets. The company spun off a controlling stake in DirecTV’s domestic business to a new venture with the private-equity firm TPG and later sold its Latin American operations. The CEO in May 2021 detailed plans to divest itself of the media wing by merging its studios and TV channels with those of a smaller rival, Discovery.

Company executives have said splitting up the company would give both media and telecom businesses the resources they need to grow. AT&T serves customers across the U.S. and Mexico, but the now-independent media company’s HBO Max streaming service is competing for subscribers world-wide against deep-pocketed rivals such as Amazon.com Inc. and Walt Disney Co.

“Both these businesses were going to require investment, and they were going to require probably a different shareholder base to tolerate” the amount of time it takes to make them successful businesses, Mr. Stankey said. “We’ve now managed to clean that capital structure up to enable that to happen.”

In the transaction, AT&T investors will receive 0.24 share in the new Warner Bros. Discovery for each share of AT&T they own. The new company will trade under the WBD ticker and isn’t expected to pay a dividend. AT&T, which has one of the most widely held stocks, says it expects to pay an annual dividend of $1.11 per share this year, compared with $2.08 a share in 2021.

Boeing’s Earnings Were Supposed to Get Better. They Got Worse.

April 27, 2022

Commercial aerospace and defense giant Boeing reported first-quarter earnings that missed forecasts. Shares were falling.

Boeing reported a loss of $2.75 a share from $14 billion in sales on Wednesday.

Wall Street was looking for a loss of about 15 cents a share from $15.9 billion in sales. A year ago, in the first quarter of 2021, Boeing reported a per-share loss of $1.53 from $15.2 billion in sales.

“It just got worse,” wrote Vertical Research Partners analyst Rob Stallard in a Wednesday report after the earnings. Defense and space sales were below his forecast and there is still no earnings guidance for investors to reference.

Investors have to go back to the first quarter of 2018 to find a first quarter unaffected by the pandemic or the 737 MAX, when the jet was grounded worldwide between March 2019 and November 2020 after two crashes. Back then, Boeing earned about $3.64 a share from $23.4 billion in sales.

Boeing delivered 95 commercial jets in the first quarter of 2022. That’s up from 77 jets delivered in the first quarter of 2021. Back in the first quarter of 2018, Boeing delivered 218 commercial jets.

Boeing burned through $3.6 billion in cash during the quarter. Wall Street was looking for cash burn of about $3 billion. A year ago, in the first quarter of 2021, Boeing burned through about $3.7 billion.

Over the past 12 quarters, stretching back to just after the second tragic MAX crash, Boeing has lost about $24 billion and burned through about $34 billion in cash flow.

“While the first quarter of 2022 brought new challenges for our world, industry and business, I am proud of our team and the steady progress we’re making toward our key commitments,” said CEO Dave Calhoun in the company’s news release. “We increased 737 MAX production and deliveries and made important progress on the 787 by submitting our certification plan to the FAA.”

The MAX jet was grounded worldwide between March 2019 and November 2020 following two deadly crashed inside of five months. Boeing has been delivering its backlog of MAX jets built during the grounding as well as ramping production back up. Boeing is also not delivering 787 jets now after the some production quality issues discovered by the FAA.

Over the 12-quarter span, Boeing has missed analysts’ estimates nine times. Including premarket trading Wednesday, the stock has dropped eight times following results.

Boeing Reports Quarterly Loss as Jet Problems Persist

April 27, 2022

Boeing Co posted a quarterly loss of $1.24 billion as it reported another round of setbacks on its jetliner and military programs, with supply-chain issues and Russian sanctions also weighing on results.

The aerospace giant on Wednesday again pushed back the expected first delivery of its new 777X twin-aisle jet until 2025, five years later than planned , though the company said it had moved a step closer to resuming deliveries of the 787 Dreamliner amid a prolonged freeze.

Aerospace companies continue to struggle with supply-chain issues, but Boeing has wrestled with a range of other challenges on many of its commercial and military aircraft, including the planes that will serve as the next Air Force One.

Boeing said it would pause production of the 777X, which can carry around 400 passengers, and start booking charges of $1.5 billion from the current quarter to reflect the move. The company had already taken a $6.5 billion charge two years ago on the 777X, which will be its largest jet when production of the 747 jumbo ends later this year.

The 787 Dreamliner, another Boeing wide-body jet, also continues to weigh on results, with production at low levels as the company addresses quality issues that have frozen almost all deliveries since October 2020.

Boeing booked $312 million in extra costs on the 787 in the quarter, part of an expected $2 billion bill for delayed production. The company said it has submitted a plan to resolve quality issues to the Federal Aviation Administration, which has the final say on allowing them to resume

Boeing missed Wall Street forecasts for profit and sales in the first quarter to March 31, though it maintained its guidance for free cash flow -- needed to pay down the debt it amassed to weather the pandemic -- to turn positive this year. It burned through $3.2 billion in cash in the latest quarter.

The adjusted per-share loss of $2.75 compared with the 25-cent loss consensus among analysts polled by FactSet.

Chicago-based Boeing took a $660 million charge on the VC-25B presidential jet and $367 million on the new T-7A Air Force trainer, which it said reflected supply chain issues, schedule delays and inflation pressures. It also took a $212 million charge to reflect contract costs related to sanctions on Russia and the war in Ukraine.

Sales in the quarter fell 8% to $14 billion, with analysts expecting $16 billion. Boeing has been delivering 737 MAX jets at a slower pace than analysts expected, and said it would raise monthly production of the plane to 31 during this quarter.

China hasn’t recertified the MAX to resume flights, and Boeing has still to secure approval from the FAA for two versions of the aircraft.

Boeing hasn’t provided guidance on sales, earnings and jet deliveries since 2019, but analysts had expected Boeing to rebound to a $2.7 billion profit this year after losing $4.3 billion in 2021 and almost $12 billion in 2020.

AT&T Raises Prices for Older Wireless Plans

May. 3, 2022

AT&T Inc. plans to raise its rates on older wireless plans as executives seek to shore up the company’s financial performance after its exit from the entertainment business.

The telecommunications company this week began informing employees about the price increases, which lift the monthly rates for older “Unlimited” and “Mobile Share” plans by $6 to $12. An AT&T spokesman said the changes go into effect starting June 1.

The monthly cost of urban wireless phone service, as measured by the Bureau of Labor Statistics, has been roughly flat for much of the past five years.

AT&T Chief Executive John Stankey told The Wall Street Journal last month that the company could lift the rates it charges for some services if prices in the broader economy were to continue climbing. The Dallas company had just shed its media division through a spinoff that created a new company called Warner Bros. Discovery.

AT&T, Verizon Communications Inc. and T-Mobile US Inc. collectively control more than 90% of mobile-phone connections in the U.S. A permanent price change at one of the big three carriers sometimes prompts rivals to follow suit.

New customers and federal government subsidies have driven growth for AT&T and its rivals over the past two years, though the average revenue they generate from each cellphone user has barely budged.

The planned AT&T price increase fits a familiar pattern among U.S. cellphone carriers, which tend to raise prices for older wireless plans that they no longer advertise. The price hikes can lift sales even further if they prompt customers to upgrade to more expensive unlimited-data plans that come with more features.

“We are encouraging our customers to explore our newer plans which offer many additional features, more flexibility for each line on their account and, in many cases, a lower monthly cost,” an AT&T spokesman said.

Wireless companies still offer plenty of low-cost smartphone plans, including some that aren’t widely advertised. T-Mobile offers a basic cellphone plan starting at $45 a month, while several prepaid calling services charge less. Cellphone carriers also offer low-cost plans that draw on a $9.25 monthly subsidy through the federal Lifeline program.

KEY POINTS

• A cellular outage Thursday hit thousands of AT&T users in the United States, disrupting calls and text messages as well as emergency services in major cities including San Francisco.
• About 58,000 incidents were reported around noon ET, according to data from outage-tracking website Downdetector.com.
• Shares of AT&T were down about 2% Thursday following the outages.