Larsen writes that “the weakening macro economic environment and more aggressive wireless competition has had a significant impact on the telcos in Q2.” He believes wireless and technology substitution was greater than anticipated. He also thinks DSL growth was slower than expected.
For AT&T, he also thinks wireless margins in the quarter may be lower than previously forecast; he contends a shortage of Apple (NASDAQ:AAPL) iPhones in the quarter pushed the company to be more aggressive in pricing other handsets to maintain its net add share.
For Verizon, he adds that FiOS growth now looks slower than previously forecast. He now sees net adds in the quarter at 240,000, down from 274,000; he notes that this would be a sequential reduction in net adds from Q1.
Larsen cut his Q2 estimate for AT&T to 76 cents from 77 cents. For ‘08, he goes to $2.99 from $3. For ‘09, he’s now at $3.35, down from $3.40. Larsen maintained his Q2 Verizon estimate at 64 cents, but cut his 2008 number to $2.56 from $2.58.
Thursday morning, AT&T is down 36 cents, or 1.1%, to $32.53; Verizon is up 9 cents, or 0.3%, at $35.72.