AT&T announced today that they are changing the way that they recognize profits in accounting. Rather than amortize them over a period of many years they will recognize them on the year that they are incurred. What exactly does this do for the company’s long-term outlook?
I contend that it does nothing. Their obviously is a short-term market reaction based on the stock currently being up over 29%. I feel this news, conveniently, is a response to them losing the market of being the only exclusive carrier of the Apple Iphone. Verizon already has a stronger and larger customer base for the simple fact of fewer dropped calls.
I feel AT&T needs to do more than change their accounting procedures to mask the fact that they have just taken a shot in the gut.
Long-term, I would say, short AT&T and invest in the growth, and stability of Verizon.