Investment firm frowns at AT&T, Verizon: Goldman Sachs worries over revenue from enterprise

Goldman Sachs is no longer recommending investors “buy” into AT&T Inc. The research firm downgraded AT&T to “neutral” and cut the company’s share price target from $33 to $30, according to various media reports. Goldman Sachs lowered the rating due to negative pension impact and weak enterprise revenue.
The company also lowered estimates for 2009 earnings for AT&T and Verizon Communications Inc, also predicting that pension plans for both companies will be down 28% and 33%.
“AT&T has historically accelerated the recognition of any shortfall between the market and fair value of assets beyond 20%, which we estimate to be a $0.19 drag on 2009 EPS,” Jason Armstrong wrote in a note to clients dated Dec 13.
It’s also expected that AT&T and Verizon’s 2009 enterprise revenue will be down by about 7% each, the report said. Armstrong also has negative expectation for the companies’ voice average revenue per user (ARPU) rates, predicting that both will be down.
AT&T’s stock was down almost 4% after the news to around $27 per share. Verizon’s stock was down around 2% to around $32 per share.
Sprint Nextel Corp. also received worrisome news recently. Moody’s Investor Service downgraded the carrier’s un-secured debt rating to “junk”, or non-investment grade.