Summary:
In this article AT$T revenue for their third quarter is up 2.8 percent from last year. Mobile data revenue and mobile subscriber gain from the iPhone contribute to the growth. Operating income for AT&T was up slightly, from 5.4 billion to 5.5 billion. AT&T mobile data revenue included texting, mobile web application and web access grew 30.5 percent from the third quarter of 2009 which total 4.8 billion. Also the AT&T network carried 161 billion text messages during the quarter, increase of 34 percent from the previous, year while multimedia messages doubled to 2.8 billion. They also gain 2.6 million costumers, its largest increase ever in a third quarter, now AT&T has 92.8 million mobile costumers. AT&T mobile growth came largely from the activation of Apple’s iPhone. About 5.2 million iPhones were activated on AT&T network during the quarter, the largest number of iPhone addition has reported during any quarter. 24 percent of the iPhone costumers are new. Overall, mobile revenue for AT&T grew 11.4 percent from the third quarter of 2009 and they have reported $15.2 billion from mobile service and equipment sales.
Connection:
This article show an example mostly about revenue and profit (page 83) because the inflow or revenue of AT&T is worth more than there outflow or expenses in the exchange, they have generated a profit from the sale transaction. For example AT&T revenue grew because there mobile growth increase mostly from mobile data revenue and there sales of iPhones. Another example of a connection in chapter 2 is profitability ratio. Even though AT&T revenue is really high their operating income increases slightly which is a problem. To figure out the profitability ratios for AT&T you have to divide the operating income (5.5 billion) by AT&T’s profit (31.6 billion) = 17.4%. This show that AT&T has a high net profit but their profit margin ratio is pretty low. This is a problem because all of AT&T’s revenues are increasing more than their operating income which only increases a billion dollars. This probably happen because their services supplying the text and media messages is costing them a lot of money and in the article it said that AT&T carried 161 billion text messages , that a lot messages and it’s going to cost a big deal of money to supply the costumers.
Reflection:
In my opinion I think AT&T mobile growth will increase in the near future. The only major problem is their competitions like T-Mobile, and Verizon Wireless because most of these mobile companies will compete and try to lure costumers in with great plans that the other companies can’t offer. Also another problem is the cost of services providing for text and media messages because if many people have a plan they like for example a plan that have unlimited text messages, it’s good for us but not the company. I think that AT&T can overcome their problems by giving out better offers than their competitions, and advertising on TV can help too. For example having a celebrity advertise the new phones on TV even though it cost a lot many people might consider buying it when a celebrity is advertising or they own it.
Joshua Thang
ReplyDeleteFinancial Accounting 12
I agree with your connection because in the future, I believe there will be many new models of mobiles coming out. There will never be an end to our world of technology because technological changes generate a lot of revenue for manufacturers who produce electronic devices. However, I thought you could of discussed some in-depth connections such as how the revenue generated by AT&T concerns the revenue recognition criteria. When companies follow the GAAPs, they concern how revenues and expenses are recognized when they are earned and not necessarily in the period in which the cash inflow or outflow occurs. The AT&T follows the accrual accounting method because it recognizes revenue and expenses in their accounting period. Whenever there is revenue, there has to be some expenses related that helped to generate revenue. The expenses must be matched with the revenue on the income statement in order to be recognized. You could also have included what accounts in the business journal would have been affected by these increase in sales. If the transactions involve sales, it would mean that cash or accounts receivable would be debited and sales would be credited. If expenses are involved in a transaction such as advertising expense, we would debit advertising expense and credit cash or accounts payable. At the end of the accounting period, if there was more revenue than expenses, it would generate a net profit in the business income statement and an increase in the owner's equity in the business balance sheet. I agree with your opinion because there are many mobile producers that sell mobiles. It just depends who has the better products and which company can attract the most consumers.