AT&T Sees 3Q Slowdown in iPhone Activations

With release of iPhone 4S, AT&T may have already made up for poor 3Q

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    NEWSLETTERS

    TK

    AT&T Inc. on Thursday reported a decline in the number of iPhones activated in its latest quarter, as buyers waited for the new model.

    The country's largest telecommunications company said it activated 2.7 million iPhones in the third quarter, the lowest number in a year and a half. A new iPhone model the 4S, was launched just after the end of the quarter.

    On Tuesday, Apple Inc. surprised investors with global iPhone sales figures that were below lofty expectations. But sales of the 4S were very strong in the first three days in stores, so AT&T may already have made up for a slow third quarter.

    AT&T's recruitment of subscribers to its contract-based plans continued to recover in the third quarter after being slashed earlier this year by the advent of the iPhone at Verizon Wireless. Contract-based plans are the most lucrative.

    In the quarter, Dallas-based AT&T gained a net 384,000 subscribers on contract plans, excluding the effects of two minor acquisitions. That was roughly in line with analyst expectations and an improvement from the first quarter's figure of 62,000. However, it was still only half the number it gained in last year's third quarter. Most phone companies are finding it harder to gain subscribers now that almost everyone has a phone.

    AT&T added a total of 2.1 million phones and other devices to its wireless network, for a total of 100.7 million phones and other devices on its wireless network. Half of the gains were non-phone, low-margin devices like Kindles.

    Net income fell to $3.62 billion, or 61 cents per share, for the July to September period. That's down from $12.3 billion, or $2.07 per share, a year ago, which was boosted by the sale of a subsidiary and a tax settlement. Excluding those items, last year's earnings were 54 cents per share.

    The latest earnings matched the average forecast of analysts polled by FactSet.

    Its revenue slipped 0.3 percent to $31.5 billion from $31.6 billion a year ago. That was slightly below analysts' expectations of $31.6 billion.

    In premarket trading, AT&T shares fell 69 cents, or 2.4 percent, to $28.40. The stock trades in a tight band, but is closer to its 52-week high low of $27.20 than its 52-week high of $31.94.

    Trends on the wired side of the business were less favorable, as cable companies kept sniping broadband customers, and AT&T's buildout of U-Verse, its own cable-TV service, slowed down. It added 176,000 TV subscribers to U-Verse, the lowest number in three years. Total broadband subscribers were flat -- the worst third-quarter showing yet for the company.

    AT&T did manage to eke out a 0.2 percent increase in consumer wireline revenue compared to last year, as U-Verse barely made up for the loss of phone lines.