AT&T income, revenue up thanks to iPhone

AT&T's net income was up 5.5 percent and revenue up 4 percent from the third quarter of 2007, with the growth driven by wireless subscribers signing up for Apple's new iPhone 3G, the company said Wednesday.

AT&T reported net income of $3.23 billion for the third quarter of 2008, up from $3.06 billion in the third quarter of 2007. Revenue grew from $30.1 billion to $31.3 billion, the company said.

About 2.4 million AT&T customers activated iPhone 3G devices during the quarter, with 40 percent of them new AT&T customers, the company said. Apple rolled out its new iPhone 3G in July, early in the third quarter, and AT&T is the iPhone's exclusive mobile service provider in the U.S.

However, AT&T missed analyst expectations for the quarter. The company posted an adjusted earnings per share of $0.67, while the consensus expectation from analysts polled by Thomson Reuters was $0.71.

AT&T executives said they were pleased with the results, given that the overall U.S. economy is slumping. "While no business is immune to the broader environment, our business mix is more resilient than most," Richard Lindner, AT&T's senior executive vice president and chief financial officer, said during a conference call. "We're very sound financially, and we're executing with a great deal of discipline."

AT&T's Wireless division posted $12.6 billion in revenue for the third quarter, up more than 15 percent from its $10.9 billion revenue in the third quarter of 2007. Wireless income was up more than 20 percent, from $1.9 billion to $2.3 billion.

"I am particularly pleased with the customer response to the iPhone 3G," Randall Stephenson, AT&T's chairman and CEO, said in a statement. "We're expanding the market, as users adopt more data and media-rich services and access a wide array of applications."

The gains in wireless revenue were nearly offset by drops in wireline revenue. AT&T's wireline operations posted revenue of $17.6 billion, down more than 2 percent from the third quarter of 2007. Net income was down nearly 8 percent. Telecom carriers have seen their wireline revenue drop in recent years, as customers convert to fixed-price long-distance calling plans or dump their wireline phones for mobile service or VoIP (voice over Internet Protocol).

The company did report a 5 percent increase in wireline data revenue, which was $6.4 billion for the quarter.

AT&T reported a net gain of 232,000 customers for its U-verse IP television service, compared to an increase of 170,000 in the second quarter.

The company added 148,000 wireline broadband customers in the quarter. In the second quarter, AT&T reported an increase of just 34,000 consumer broadband subscribers, compared to an increase of more than 365,000 in each of the three previous quarters.

IDG News Service

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