UBS Securities downgraded shares of carrier AT&T Inc. to "neutral" from "buy," citing expectations for lower earnings and free cash flow growth in 2011 and 2012. On Jan.27, the telecom giant AT&T reported a 60 percent fall in its fourth-quarter profit, weighed down by an asset impairment charge. However, excluding one-time items, the company's profit topped Street view by a penny. In 2010, AT&T earned $3.35 a share and excluding items, it earned $2.29 a share. The company, which is the second-largest wireless carrier in the U.S., behind Verizon spent $20.3 billion in capital expenditures, while generating $14.7 billion in free cash flow. Looking ahead, the company said it expects mid-single digit or better earnings per share growth versus 2010 earnings, excluding changes in capitalized interest. However, AT&T said it expects only a modest improvement in free cash flow, with capital expenditures in the low-to-mid $19 billion range. "Given slower growth in 4Q and expectations for increasing competitive intensity, we now expect AT&T to lose 100K postpaid subscribers in 1Q11 and another 50K in 2Q vs previous expectations for a gains of 100K and 50K," analyst John Hodulik wrote in a note to clients. Hodulik also lowered his 2011 earnings estimate to $2.38 a share from $2.55 a share.