Foolish Forecast: Will AT&T's Bets Pay Off?

Telecommunications giant AT&T (NYSE: T) will soon be delivering its third-quarter 2007 results to investors. Before the mayhem ensues, we'll take a peak under the hood to see what's in store from Ma Bell.

What analysts say:

• Buy, sell, or hold the line? Out of 28 analysts weighing in on the company, 24 say buy. Three say "hold the phone," and one brave soul says to sell shares. AT&T also ranks as a four-star stock in our Motley Fool CAPS system, where more than 2,300 players have given input on the company.
• Revenue. The average expectation for revenue this quarter is $30.1 billion, up 41% from a year ago.
• Earnings. Profits are expected to climb 13% to $0.71 per share.

What management says:
While CEO Randall Stephenson acknowledged that "mobility is a major growth engine for AT&T," he also claims that "in the second quarter we improved our trajectory in key areas," including IP-based services. The company trumpeted that, in addition to super wireless results in the past quarter, its U-verse broadband offering and enterprise services showed solid improvements as well.

With its exclusive Apple (Nasdaq: AAPL) iPhone deal and its push to sell fiber optic-based broadband packages, AT&T hopes to not only stay on top of direct competitor Verizon Communications (NYSE: VZ), but also stave off threats from cable companies such as Comcast (Nasdaq: CMCSA) and Time Warner Cable (NYSE: TWC).

What management does:
Even without much of a boost from the iPhone last quarter, AT&T continued its positive trends of lowering churn and raising ARPU. The carrier should see a boost from the stylish Apple device this quarter, and the bigger benefits AT&T will see from hot devices like the Microsoft Windows-based HTC Tilt should help in future quarters, as well.

One Fool says:
All eyes this quarter will be on AT&T's metrics, particularly ARPU, for the "iPhone effect." Investors are keen to see just what impact the chic media phone will have on wireless-services growth at the company. With iPhone users still representing only a drop in AT&T's big bucket of customers, though, I don't expect to see any huge upside to the numbers yet. Also, rumors that AT&T is giving a sizeable cut of revenue to Apple, if true, will diminish its impact on the numbers.

Looking a little farther out, it will be interesting to see what money AT&T puts on the table to acquire new spectrum in an auction in January. Everyone from Verizon to Google (Nasdaq: GOOG) may be ponying up billions to snag the valuable airspace, so it will be interesting to see if management gives any indications of its interest level here.