San Antonio – Shares of AT&T Inc. posted their first annual gain in eight years in 2006 as investors endorsed chief executive Ed Whitacre’s creation of the largest U.S. telephone company.
AT&T ended the year by completing its $86 billion purchase of BellSouth Corp. The stock rose 46 percent in 2006, outpacing advances by Verizon Communications Inc. and the Standard & Poor’s 500 Index.
That increase pared a 54 percent drop between 1999 and 2005 as Whitacre racked up $30 billion in debt with purchases to bolster the former SBC Communications Inc. AT&T, which changed its name from SBC after buying AT&T Corp. in 2005, may report a 34 percent jump in earnings for 2006 as those acquisitions started to pay off.
“I don’t think we’re going to see another year like 2006,” said Kent Custer, an analyst at A.G. Edwards & Sons Inc. in St. Louis.
He has a “hold” rating on AT&T shares and doesn’t own any.
Earnings per share, before some costs to integrate purchases, may have risen to $2.30 in 2006 and may reach $2.57 in 2007, according to the average estimates in a Bloomberg survey of analysts. Of 30 analysts, 21 recommend buying AT&T shares, six advise holding the stock, and three say sell.
“We’re a large-cap company, and our share price tends to track and correlate pretty well with our earnings-per-share growth and cash flow,” chief financial officer Richard Lindner said last month.
