John Curto (4:50)

Obviously the latter.

Anne Barry (4:51)

Or do you hold your supplements to the same standards?

John Curto (4:54)

I've never thought about it, but I guess not.

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Anne Barry (5:33)

Are getting into the thick of earnings season. We've got a lot of the buzzy tech names reporting this week. We are going to get to those as those come on out. But today we're focusing in on two companies that have been around for a while. We've got one that's a perennial dividend play and the other a giant that perhaps you haven't heard of yet. Well, the buzzwords you're going to hear as we talk about these two particular names are longevity and adaptation. And we'll start with at&t. Now John, yesterday we talked about Corning Glass which has been around for 175 years. Just announced an eye catching new deal in supplying more fiber optic cables to Meta to support the social media giant's infrastructure build. ATT has an ever so slightly shorter history but in terms of pedigree it's definitely on up there. So let's crack down on the latest.

John Curto (6:24)

Absolutely. AT&T is closer to 150 years old, just shy of that 175 ticker T on the New York Stock Exchange and only 11 companies have been listed on that exchange longer than AT&T. I found that interesting, has a market cap of $172 billion. Stock was up 5% today after reporting estimates that beat earnings. Revenue of $33.5 billion was up 3.7 year over year. Adjusted earnings per share of 52 cents beat estimates by 6 cents. And AT&T essentially operates three divisions. You've got mobile broadband and believe it or not still the copper wire telephone service, the landline that's being phased out. And the company is actively consolidating mobile and broadband in the battle of convergence. More on that in a moment.

Anne Barry (7:09)

So I'm really excited to talk about AT&T because one of my favorite interviews on our sister podcast, our podcast after earnings was with the CFO of AT T, Pascal Des Roche. And I remember kicking off that conversation and at the core of it was this conundrum which is when you think about these sort of utility companies are mobile. I consider my mobile phone, my cell phone, a utility. I need it. In this day and age it's really hard for businesses like that, which are capital intensive, to do anything more than grow in a sort of steady eddy inflation level kind of growth rate. And so in the search to try and find something more than that, funnily enough, these sort of mobile companies have to get pretty creative and they really have to lean in to persuading consumers like you and me that there's more that we want out of their steady Eddie service. So it's sort of an interesting one to try and squeeze growth out. Not surprising therefore that a nearly 4% revenue growth rate is actually getting such a positive reaction from the market. So let's start with, start with mobile and what they're doing in that core mobile segment. AT&T added 421,000 post paid customers. Postpaid is just a fancy way of saying, saying you get your cell phone and then you get the bill every month after you've used it and you pay retroactively. A little bit below estimates that 421,000 postpaid edition. But churn, which is what offsets winning new customers, actually came in lower than expected. So fewer than expected subscribers who canceled or switched out their service. Now the reason that that is key in wireless is that when a new device comes out, which happens with some regularity, for example, Apple's iPhone 17, what happens is the carriers, whether it's AT&T or Verizon or Sprint, whoever it is, they typically use those as windows of opportunity. They launch promotions and price cuts as a way to try to lure customers away from their competitors. So the fact that there was limited churn for AT&T in this promotional environment was pretty good news for the company. Wall street definitely pleased to see that that net mobile customer retention was better than expected. And particularly because AT and T was signaling very strongly that it was making the most of keeping customers without having to really discount to achieve that quote discipline and offering the right value proposition is the way it got there. So not giving away the farm on discounts and still delivering up pretty good subscriber growth.

John Curto (9:37)

That was the story today. I saw Pascal on multiple media outlets.

Anne Barry (9:40)

He's great on media, really impressive.

John Curto (9:42)

And that word discipline, discipline, it kept coming out. And so AT and T is looking for revenue growth from getting those mobile customers into the company's broadband fiber as well. And according to the earnings release, AT&T just had their best year for broadband subscriber growth in a decade. And 42% of households have AT&T fiber. They also have AT&T for wireless. That's where they focus on the discounts, where if you have the fiber, they're going to try to get you into mobile and the other way around. And that's the case in my life. I've been a Verizon customer forever.

Anne Barry (10:13)

Same.

John Curto (10:13)

And I recently got Verizon fios for my home. And Verizon really incentivized that by trying to put the two together for me and bundling discounts. I will say, if we're going to talk about pet peeves in this segment. Yes, yes, they are having growing pains over there with Verizon. It's multiple logins. Sometimes they think I'm a residential, sometimes they think I'm mobile. The passwords change differently. Customer service sometimes is the same for both, sometimes it's different. So growing pains there. But the discount is sound, I will tell you.

Anne Barry (10:42)

So just to sort of talk about rising for a second, when I moved home, the thing I fear, you know, there are things that you really fear doing, like getting a driver's license. Right. You really don't want to go and sit in the DMV right when you move or you switch out your service. Having the cable technician turn up the window is really long. You're never quite sure whether someone's going to turn up on time. I will tell you, the Verizon team, they turned up early. They were super fun. There was great banter. They did a great job. I was actually massively, massively impressed. I give that same experience.

John Curto (11:14)

Yeah, it was a highlight. At the end of the day. How was your day? I met the Verizon guy. He's hilarious.

Anne Barry (11:18)

And one of them plays in the band. And then when I moved again, it was the same guy. I'm like, how's your band going? So it's brilliant. So, you know, we're friends now, so I enjoy that. Well, att, just to go back to them for a moment, is so in on convergence that it is revising its operating segments. Okay, this is a bit of a nerdy moment, but I do want to talk about this. If you go to the investor relations website of your pick, your favorite public company and you download the annual report or you download, download the quarterly results, this segment, reporting, which is sometimes broken out in the footnotes, yes, some of us go to that place. Basically, it breaks down your revenue and your profit of the company and says this is what the different business lines did to contribute to those numbers. Now, the reason for folks who want to really pay attention to the details, which, as we know, I like to do, is that level of disclosure is what really helps analysts to dig into the financials. And, you know, really pass through, which are the hidden gems, which are the nuggets, which are the core parts of the business. There's a clarity and consistency in the reporting that allows insights and patterns to be spotted over a period of time. And typically when operating segments are changed, for example, two different operating segments now being smushed together, like fiber and wireless being smushed together for the consumer, some of that consistency and visibility goes away. So, personally, this is a pet peeve of mine. You know, I prefer to see companies just keep operating segments reported consistently and if they say, look, start adding them together because now they're converging. That makes sense to me. But I actually don't like detail being taken away from me.

John Curto (12:55)

Well, it's difficult to compare apples to apples.

Anne Barry (12:57)

That's exactly right. That's exactly right. Also, you know, and Netflix does things like takes away certain sort of subscriber numbers that I don't like. Information being removed. More is more, More is fine, but reducing it I don't like so much. So I just thought. I thought I'd vent about that a little bit. Well, let's talk about acquisitions again. One of the ways in which utilities companies or telephony companies like this one look for growth, because it is not easy to get in an organic fashion, is, of course, through acquisitions. And AT&T has been spending some of its money delivering on exactly that. Both sides of the house actually getting the benefit of its balance sheet. AT&T bought Lumen for nearly $6 billion in cash that's expected to close this year, adding about a million customers in new markets like Denver and Phoenix and Seattle. And then a whopping 20 billion acquisition of spectrum from EchoStar, which will allow AT&T to expand its 5G mobile services in the United States. And again, just to reference that conversation that we had with the chief financial officer of AT&T, Pascal Deroche. I remember speaking to him right before the election. I think it's the inauguration. And he said that one of the bugbears to AT and T was the fact that so little spectrum had been available for purchase, and therefore there are real limitations on how AT and T could expand in its 5G coverage. So that acquisition of Spectrum over the course of 2025 was a really big deal for this company.

John Curto (14:22)

Right. New FCC look and sort of a different guidance.

Anne Barry (14:26)

That's right.

John Curto (14:26)

All right, well, we can't talk about AT&T without highlighting the dividend from the earnings report. The company posted $4.2 billion of free cash flow last quarter, and it plans to return more than $45 billion to shareholders over the next three years through stock repurchases. And a dividend that currently sets sits at A$11 a share.

Anne Barry (14:44)

So it's doing all the things. It is doing all the things. But expectations for these kinds of businesses, good free cash flow, good steady eddy dividend means again, even with growth, it's hard to persuade the market that this thing's going to be rocket ship. So good share price reaction today. It is down though 12 over the past six months. Pretty flat over the last 12. So at and T still having to figure out a way to persuade the market. There's a level set that's it's that it deserves in its valuation. That's its mission in educating the market. Right now let's move on to Seag which produces hard drives PCs. So quite a different business but an important one because what it does is produce mass capacity data storage. Now Seagate's earnings came out today, the Stock up nearly 20% at points today in reaction touching an all time high. And we've got investors asking is this a lead indicator? Is this going to bode well for some big name tech and AI companies reporting later on this earnings season because maybe is this an early sign of demand for upgraded hardware, for in demand AI capabilities? So let's put some numbers around the quarter and then let's just figure out a little bit what's going on with this one over time.

John Curto (15:54)

Right. I think the most popular headline today was the AI rally is back.

Anne Barry (15:59)

Yes. So we'll see about that everywhere.

John Curto (16:00)

Yeah, back talking About Seagate ticker STX on NASDAQ market cap of $95 billion. Earnings beat estimates the company reported revenue of 2.83 billion which was up 22% year over year. Adjusted earnings of $3.11 beat estimates by 20 cents. And guidance this is the important part for the current quarter was way above forecast. The company expecting revenue of nearly $3 billion and adjusted earnings of 340 a share.

Anne Barry (16:29)

Well we're talking data storage here of course as part of the AI build out. And Seagate has done something very interesting. It successfully transitioned to the sort of next gen magnetic recording technology that helps it participate in this build out in this way the new product forecast to increase capacity per drive so that computational power really impress by 30% in turn lowering unit costs and increased margins. And the market certainly liked it. Really glowing things to say about the way it's going about this.

John Curto (16:57)

Absolutely. They see Seagate as innovating and one analyst said that the move was executed near flawlessly.

Anne Barry (17:04)

That's high praise actually coming out of, coming out of the market. There are, there are, though, a couple of bearish ones even who change their tune. So it's interesting when people say that it's quite hard as an analyst to say, I'm changing my mind. Susquehanna Financial Group, the analyst, they're upgrading the stock from negative to neutral, saying, quote, we acknowledge that our earlier, more negative hard disk drives industry thesis has proven incorrect, particularly with respect to stx, because there had been speculation that hard disk drives or HDD would be replaced by flash memory. But just given the way that HDD is innovating, looking unlikely that it's going to be displaced.

John Curto (17:40)

That's right. And it sent the stock on a tear for the last six months. Seagate shares are up 188% for the last year, up 332%. Even the rivals were up today. Western Digital WDC saw its share price up 10%. It reports its earnings tomorrow, so we'll look out for that. And Flash memory maker SanDisk was up 7% after a blowout share price performance in 2025. It was the best performer in the S&P 500.

Anne Barry (18:08)

Well, Seagate hasn't been around as long as AT&T, but it's. If you grew up with PCs, you did. Did. I did, yes. It's a familiar name to folks. The company founded over 40 years ago, first went public in 1994, moved exchanges, was taken private, was IPO'd again in 2002. I love these stories of these companies because they are, you know, public private at different stages of their life. John, we spoke earlier. You said this reminded you a little bit of Nvidia.

John Curto (18:34)

Nvidia was making graphics processors in the 90s for video games. And then all of a sudden, these companies are finding new life with AI, with new applications. And I'll see another one. Texas Instruments. I grew up with the TI86 graphic calculator.

Anne Barry (18:49)

Yes.

John Curto (18:49)

And my niece is using one in high school currently. They're still using it.

Anne Barry (18:53)

Still using it.

John Curto (18:54)

The number is higher than 86, but still using it. So Texas Instruments, the maker of that and the inventor of the first handheld calculator back in the 60s, they're still going strong ticker TXN market cap of $193 billion. That company reported mixed earnings this morning, but with an optimistic outlook. The shares were up 9%.

Anne Barry (19:15)

Other tech stocks are going to be reporting this evening. IBM, Microsoft, Matter. We'll hit the highlights on those as they come out. And then ultimately we will do one big tech wrap up and earnings wrap up to sort of find the common threads amongst those. Once we've seen the full suite of players get their numbers on out there. Well, let's take a quick break and when we come back, a quick spin through the headlines. Moving the markets today, public.com just launched generated Assets which helps you turn any idea into an investable index. With AI. Start with any prompt, say renewable energy companies with high free cash flow or semiconductor suppliers growing revenue over 20% year over year and it'll get to work.

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Anne Barry (20:11)

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John Curto (20:51)

Historic day for the S&P 500 crossing 7,000 for the first time at the open of the day. Ultimately, it closed flat. The Dow also finished flat and the NASDAQ stack finished up nearly 2.10of a percent today. Some market headlines as expected, the Fed decided to hold rates steady, choosing not to cut for the first time since July. Two FOMC members dissented, wanting a quarter point rate cut.

Anne Barry (21:15)

Well, the press conference is what everyone had their eyes on, so we were glued to our screens listening to that one. Fed Chair Jay Powell commented that, quote, economic activity has been expanding at a solid pace. Remember, while that's been true, he has been pointing out risks to the economy and previous press conferences. He did highlight though, that in amongst the fairly solid news, the housing sector has remained a weak spot. And then with respect to the labor market, the Fed's official statement, which gets released with the decision, described the Unemployment rate as having, quote, shown some signs of stabilization. So that was a good news in the eyes of the market. Inflation remains, of course above the 2% target of the Fed. So overall a pretty balanced economic overview ultimately informing the decision to keep rates flat for now.

John Curto (22:01)

Now and of course this week we've been talking about Corning Ticker glw, the glass maker turned fiber optics giant who just struck the $6 billion revenue agreement with Metta. Corning stock jumped on that news off the back of a more than 80% rise already last year.

Anne Barry (22:16)

Well, what a difference a day makes because today Corning share price reversed a little bit. It didn't give back these enormous gains it had, but it did tick down about 5% today, which was sort of a lesson, actually a little bit of a window into what we might perhaps expect this earnings season because Corning did release a pretty good earnings this morning. It beat expectations with full year 2025 core sales growth of 13%. So it hit over $16 billion in revenue and its core EPS grew nearly 30% year over year. Adding on to all of that, Corning had a rosy outlook for the first quarter of this year. We know it's all about sentiment for the for the forecasts and the company projected 15% core sales growth year over year for this Q1 period. So why is that share price down about 5%? Well, it looks as though valuation gotten a little bit too high in ant anticipation of today's results. And as strong as they were, just couldn't persuade the market to keep on up there at those recent high levels. Just to put that in perspective, by the way, the price to earnings ratio trading level of the Corning stock has been over 60 times, which is a pretty hefty multiple.

John Curto (23:21)

And finally, shares in Starbucks ticker SBUX were up over three and a half percent today after the coffee giant reported earnings that missed estimates but saw transactions growing grow for the first time in two years. CEO Brian Niccol boasted that his Back to Starbucks initiative is working, perhaps even ahead of schedule.

Anne Barry (23:40)

So the magic metric that the market was focusing on here we talk about a lot is same store sales growth. And Starbucks did deliver its second straight quarter of that same store sales or SSS growth international same store sales also increased by 5%. So pretty good news across the two core markets.

John Curto (23:59)

And here in the US same store sales rose 4% fueled by demand for its holiday offerings like Starbucks viral Bare Easter Cup. And that was for the holidays and classic menu items like the peppermint mocha Nickel. Also credited the company's Green Apron Service program which focuses on hospitality and efficiency to improve the customer experience.

Anne Barry (24:18)

I gotta tell you, I so this is an admission. I'm a Dunkin Donuts coffee person. I love Dunkin Donuts coffee. I understand why America has run on Dunkin on Dunkin. But I now find myself going into Starbucks more frequently just to try from a user experience perspective to see how it's actually going and to try to spot tangible differences. Well, I'm pretty excited because tomorrow morning, starting early, I'm going to be there at 6:45. Tomorrow morning I'm going to be at a special Starbucks Investor Day. So I'll be behind the scenes seeing what new product innovations might be unveiled by Starbucks. Don't know yet. I'll find out when I get there if there are any and to hear an update on how the turnaround plan is going straight from the management team themselves. I'm very excited to go do that tomorrow morning and then report back to you all tomorrow afternoon. That's it for today's Brew Markets Daily.

John Curto (25:05)

Brew Markets Daily is hosted by Anne Barry and produced by John Curto, Tarka Delatif and Emily Millarn. Our Technical Director is Uchena Walogu, Jim Orso is our Audio engineer and the President of Morning Brew Inc. Is Devin Emery. If you have any feedback or a company you'd like us to COVID leave a comment or send an email to brewmarketshoworning brew.com Wake up tomorrow with the.

Anne Barry (25:22)

Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place.

John Curto (25:37)

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