AT&T Falls Short of Earnings Expectations

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AT&T CEO Randall Stephenson

But DirecTV overall added 125,000 users to 25.4 million.

AT&T, fighting a court battle to acquire Time Warner for $85.4 billion, posted first-quarter earnings on Wednesday that fell shy of Wall Street's expectations.

The company was expected to earn an adjusted 87 cents per share in the quarter on revenue of $39.4 billion, though it posted an adjusted 85 cents on $38 billion revenue. AT&T, though, said that accounting changes contributed to slightly lower revenue, and using historical methods it would have posted nearly $40 billion in sales.

The giant phone company is the parent of DirecTV, which has been losing subscribers as users cut the cord in favor of Hulu, CBS All Access, Amazon Prime and Netflix, and the data revealed Wednesday suggests things are improving via DirecTV Now, which competes with those others.

DirecTV overall added 125,000 users to 25.4 million, though only due to 312,000 additions to DirecTV Now, meaning the traditional satellite TV service was down about 187,000 subs.

DirecTV Now has nearly 1.5 million subscribers, and AT&T says its acquisition costs are "a fraction" of what it costs to acquire a subscriber to its linear DirecTV service. The company says new features still to come will drive additional revenue for the streaming service.

The company said it has tabled, for now, the idea of an initial public offering for DirecTV Latin America due to poor market conditions.

Shares of AT&T were up 1 percent during regular trading on Wednesday, but fell as much as 3 percent after the closing bell.

Executives said that they can't add much about the quest to acquire Time Warner, except that funding is in place and that they are prepared to close the deal as soon as regulators give their blessing.