AT&T Warns of $10B Charge Ahead of 4Q Earnings

Shares of AT&T had stabalized Friday after news of a $10 billion charge, as well as the impacts of smartphone subsidies, and Superstorm Sandy sent shares lower.   

The carrier said in a filing [1] with the Securities and Exchange Commission that it expects a non-cash, pre-tax charge of approximately $10 billion related to actuarial gains and losses on pension and postemployment benefit plans. 

AT&T also lowered its assumed discount rate to 4.3 percent, resulting in an actuarial loss of approximately $12.0 billion. The losses were partially offset by assett gain of $1.9 billion. 

AT&T also said that previously announced fourth-quarter total smartphone sales of 10.2 million devices came at a price. Due to the high subsidies on these devices, the carrier expects a near-term pressure on operating income, margins, and earnings per share in the fourth quarter of 2012.

Superstorm Sandy also left an impact. AT&T expects reduction in fourth-quarter 2012 operating income as a result of storms approximately $175 million, which primarily impacts AT&T Mobility. 

Shares oof AT&T had recovered some in early trading Friday to $33.17. 

AT&T can take comfort in knowing that its largest competitor, Verizon Wireless, also recently reported some bad news ahead of Q4 earnings. 

While Verizon had a record fourth quarter, adding 2.1 million net subscribers, Verizon also said it would be writing down a total of $9 to $10 billion in one-time charges, related to everything from refinancing costs to superstorm Sandy.

AT&T is scheduled to report its fourth quarter earnings on Jan. 24.