AT&T Blames Microsoft Software For IPTV Delays

AT&T is blaming delays in the successful rollout of its IPTV service on glitches in the Microsoft software on which it operates. AT&T's in-home TV service was supposed to be available in 15 markets by the end of 2006; it has instead only been rolled out in 11, and in limited form. As a result, the Wall Street Journal reports that AT&T CFO Rick Lindner has decided against heavily marketing the service so as not to increase demand until the problems are solved. But AT&T stopped short of losing hope in its partnership with Microsoft or in the effectiveness of its software. AT&T CEO Edward Whitacre told analysts during the company's conference call yesterday his company was staying the course stating, "It works and it's the right thing financially." Executives on the conference call made sure to point out that delays in the IPTV service had been caused by software issues and did not reflect any problems with the network architecture. AT&T hopes to have IPTV in eight million homes by year's end. AT&T shares rose $0.16 to $36.79 yesterday after reporting earnings before the market opened.

• Sources: AT&T Q4 2006 Earnings Call Transcript, Wall Street Journal, cnet news
• Related commentary: AT&T Boosts Earnings, Revenue On Strong Cingular Growth, Cingular Triples Profits On Addition of 2.4 Million New Subscribers, Cramer's Take on T
• Potentially impacted stocks and ETFs: AT&T (T), Microsoft (MSFT). Competitors: Verizon Communications Inc. (VZ), Comcast (CMCSA), Time Warner Inc. (TWX), DIRECTV Group (DTV), EchoStar Communications (DISH), Cablevision Systems (CVC), Sprint Nextel Corp. (S), Vodafone (VOD), Qwest Communications International Inc. (Q). ETFs: iShares S&P Global Telecom ETF (IXP), iShares Dow Jones U.S. Telecom Sector Index ETF (IYZ), PowerShares Dynamic Telecom & Wireless ETF (PTE), PowerShares FTSE RAFI Telecommunications & Technology Portfolio (PRFQ), Vanguard Telecom Services ETF (VOX), Telecom HOLDRS ETF (TTH)

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