AT&T Inc. (T): What Is It Hiding From Its Investors?

AT&T Inc. (NYSE:T)On Friday, April 26, I attended the AT&T Inc. (NYSE:T) annual stockholders meeting. When I got my proxy information I was pleased that the meeting would be held in Cheyenne, Wyoming. Cheyenne is close enough for me to drive there and back in a day. Then I started thinking – why would this major blue-chip, multi-national firm hold its annual meeting in such an out-of-the-way place? I would have more questions than answers by the time the meeting was over.

When I arrived, I was surprised by the size of the ballroom. It was pretty darn small, and had seats for approximately 200 to 250 people. Once the meeting started, there were several empty seats, no one was standing, and at least a third of those seats were filled by company representatives.

I haven’t been to an AT&T Inc. (NYSE:T) stockholder meeting in several years, so perhaps things have changed and shareholders are just more apathetic about their investments. The last AT&T meeting I attended was held several years ago at the Colorado Convention Center in Denver. There were thousands of investors there interacting with hundreds of AT&T Inc. (NYSE:T) employees. At this point, I’m wondering what the company is hiding for them to hold the meeting in such a remote location. Were they purposely trying to limit attendance?

No Q&A

I was also surprised that the agenda had no time scheduled for public comments and questions. This is the first annual meeting for any company I’ve attended where public questions were not allowed. Other investors in attendance were also surprised and highly disappointed. This is in stark contrast to the Berkshire Hathaway Inc. (NYSE: BRK.A) meeting I’ll attend next week.

Another observation was the huge police presence. As I took the long walk down multiple hallways toward the only ladies room, I passed at least four clusters of three-to-five uniformed police. Two of those clusters were just outside the meeting room. Wow!

Other observations included:

One of the shareholder proposals asked for shareholder ratification for every executive severance package. The SNET retirees proposing this item stated that on average the executive severance packages exceeded 2.9 times base pay. This item was voted down, but only by 54% of the votes. Afterwards, I talked to the woman who presented the proposal. She was quite pleased by the results, especially since this was the first time this item had been proposed. She fully expects it to pass next year.

Another proposal asked that the board of directors be led by an independent Board Chairman. I’m just wondering when the title – at the very least – will be changed to chairperson. Or is AT&T Inc. (NYSE:T) such an old and stodgy company that it would never consider a woman to lead the board of directors?

AT&T Inc. (NYSE:T) can not currently refer to itself as a new media company. This firm is incredibly out-of-touch with social media. I have two reasons for my bold statement.

1. I pulled out my AT&T Inc. (NYSE:T) iPhone and opened the 4Square app to check in. I easily found  the Little America Hotel, but was very surprised that an event wasn’t set up. I found the same results in Facebook Inc (NASDAQ:FB).

2. I asked three separate people what the Twitter hash-tag was for this event. All three said:  “That’s a great question! Let me see if I can find out.” To be fair, the first two were ushers, but the last person I asked was charged with media relations for the event. He conferred with someone else and told me to “just use #AT&T.”

CEO Randall Stephenson made some brief remarks while voting results were tabulated. He touched on the additional network capacity added last year, the company’s goal of having 300 million people on AT&T Inc. (NYSE:T)’s 4G-LTE by the end of 2013, the U-Verse goal of 9-million subscribers, and the freshly launched Digital Life. As he adjourned the meeting, he invited shareholders to the next room for brunch and product demos.

One booth highlighted Digital Life, a brand new service which allows homeowners to remotely view front and back doors, change the room temperature, check if all doors are locked, etc. I spoke with one of the Digital Life product managers who indicated that the service would be rolled out to 50+ markets by the end of 2013. It is currently available in 15 cities throughout the US.

Another exhibit was for HD Voice. This service provides a higher quality of voice transmission for mobile conversations (there’s a more technical explanation of how it works here). A big drawback is that both parties need to have a compatible cellphone in an area where AT&T’s voice over LTE is provided.

Wireless market

I talked at length with the HD Voice Product Manager, especially about the decreasing growth in AT&T’s wireless segment (wireless revenue grew by 8% from 2010 to 2011, but only 5.6% from 2011 to 2012). His message was that the wireless market is pretty well saturated, and there are only so many kids getting old enough for their parents to buy them a phone.

AT&T needs to look to new applications and services such as Digital Life and HD Voice for new growth. However, it doesn’t appear to me that HD Voice will add to the revenue stream directly. With other companies like Sprint Nextel Corporation (NYSE:S), Verizon Communications Inc. (NYSE:VZ) and T-Mobile providing this service, AT&T Inc. (NYSE:T) will need to provide this upgrade simply to motivate customer retention.

Highlights from the last year (with comparisons to some of AT&T’s competitors) include:

Stock price changed from $30 at the beginning of 2012 to $37 in recent days, a 23% increase. This compares to an increase of 204% for Sprint and 35% for Verizon during the same time-frame.

The change in revenue from FY2011 to FY2012 was an increase of 0.6%, compared to 4.9% for Sprint Nextel Corporation (NYSE:S) and 4.5% for Verizon Communications Inc. (NYSE:VZ).

Gross profit margin for FY2012 was 10%, compared to -5% for Sprint Nextel Corporation (NYSE:S) and 11% for Verizon Communications Inc. (NYSE:VZ).

PE for AT&T is around 28, compared to 134 for Verizon. The industry average PE for Domestic Telecom is 35.9 and 15.3 for the wireless industry indicating an overvalued situation for Verizon.


Overall, this was a disappointing annual meeting. The lack of transparency on the part of AT&T’s executive team was unimpressive and did little to boost my confidence in the firm.

The article What Is AT&T Hiding From Its Investors? originally appeared on and is written by Gail P..

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