AT&T Inc.(NYSE:T) Faces Margin Pressure With $10 Billion Pension Charge

Northern, WI 1/21/2013 (avauncer) - AT&T Inc.(NYSE:T), which is a U.S. largest phone company, has recorded a charge of $10 billion, in the fourth quarter, for its pension plan and stated that costs and discounts of Smartphone related to Superstorm Sandy cut into profit. The Dallas based Company stated in the filing yesterday that the same reason resulted in decreasing the long term rate of return on the pension to 8 percent, citing “continued uncertainty” for the stock market as well as the U.S. economy.

AT&T Inc.(NYSE:T), slated to report the earnings of full year on January 24. The Company said that it sold nearly 10.2 million Smartphones in the last quarter. Superstorm Sandy and other storms also resulted in decreased earnings, specifically in the wireless segment. These events lead to lowered operating income to $175 billion in the fourth quarter.

According to Laurence Balter, the chief investment strategist at Oracle Investment Research in Fox Island, Washington, “The Company has deep pension problems – they are not funding the pension enough”. He said “They spend a lot of money on building out, on competing against Verizon, and they need to focus on the balance sheet.” The Company’s shares rose about 1 percent and closed at $33 in New York and the stock raised 11 percent during the last year. The Company is looking to take its place back in the stock market from the third quarter and it added 151,000 contract subscribers. On the other side AT&T Inc.(NYSE:T)’s biggest rival, Verizon Wireless added 1.5 million subscribers. On December 31, the company reduced the discount rate for pension to 4 per cent which resulted in the loss of about $12 billion.

The shares of AT&T Inc.(NYSE:T) were up byy 0.72% to close at $33.44