AT&T Posts Strong Earnings, iPhone Activations Drop 43% from Previous Quarter
April 24, 2012 1:18 PM
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The news is mostly good for America's second largest carrier, despite Apple's misfortune
AT&T, Inc. (
) ended 2011 on a high note. Despite the
loss of its bid to take over
the nation's fourth largest carrier, T-Mobile USA (a Deutsche Telekom AG (
at the hands
U.S. Department of Justice
, AT&T's fourth quarter
earnings beat estimates
on strong sales of the Apple, Inc. (
I. AT&T Posts Bullish Profit, But Stagnate Phone Subscriber Figures
Now it's delivered
another blockbuster quarter
, hinting that the failed deal will not stymie the carrier's bid for market dominance. Revenue checked in at $31.8B USD, squarely in line with the $31.85B USD analyst consensus, but profits handily beat estimates, coming in at $0.60 USD/share (versus a consensus of $0.573 USD/share).
The profit win represents a 4.7 percent surge over the analyst estimates and a 5.3 percent rise from Q1 2011. As if that wasn't enough good news, AT&T added 726,000 wireless service subscribers (about the same number that
T-Mobile recently lost
), taking its total to 103.9m subscribers up from 103.2m in Q4 2011.
AT&T posted a strong profit, but failed to grow its cellular phone subscribers.
[Image Source: Reuters/Shannon Stapleton]
AT&T and rival Verizon Wireless -- a joint venture between Verizon Communications Inc. (
) and Vodafone Group Plc. (
) remain far ahead of third-place Sprint Nextel Corp (S) and fourth place T-Mobile USA. Together, AT&T and Verizon control over two-thirds of American wireless subscribers.
The only trouble spot in AT&T's earnings came on the cellular front. While its wireless contracts grew (see above), the numbers were a bit deceptive as only 187,000 of those new subscribers were postpaid (cell phone or tablet) and nearly all of those customers were tablet plan subscribers.
In other words AT&T added no actual
customers, versus Verizon Wireless, who added 501,000 new plan customers in Q1 2012. Verizon Wireless has 88m post-paid customers, while AT&T has 69.5m post-paid subscribers.
II. It's Sophomore Slumpsville for iPhone 4S's Second Quarter
AT&T, the original carrier of Apple iPhone, did outsell Verizon Wireless in iPhones, posting 4.3 million activations vs. 3.2m activations. The numbers are good news for AT&T, but bad news for Apple, hinting at a lackluster quarter and sharp drop in iPhone 4S sales after a
record setting holiday quarter
While iPhone sales are still up on a year-to-year basis, they are unquestionably a letdown for the company, which has grown accustomed to beating sales on both a consecutive quarter and year-to-year basis. They hint that Apple's
revived ambitions to challenge Android
for market dominance may have been short-lived. The weaker sales hit Apple's stock this morning, putting on hold its bid to become the first company with a $1T USD market cap.
iPhone 4S sales have failed to sustain their early sprint. [Image Source: The Tech Journal]
In the good news department AT&T recently earned high praise from
as the "best" 4G carrier. The publication raised an interesting point, in that
AT&T's HSPA+ 3G network
-- much faster than Verizon's CDMA 3G -- makes service less painful when a fast LTE (4G) connection drops out.
In January AT&T switched on a number of new cities -- New York City, NY; San Francisco, CA; Oakland, CA; Los Angeles, CA; San Diego, CA; San Jose, CA; Austin, TX; Phoenix, AZ; Raleigh, NC; Chapel Hill, NC; Orlando, FL -- bringing its total LTE coverage to 26 markets and 76m Americans.
Since then it's picked up the pace, adding more cities, including
Tampa/St. Petersburg, FL
Staten Island, NY
St. Louis, MO
AT&T reports that approximately 30 percent of its contract customers now have LTE-capable smartphones.
AT&T is trying to remain diverse, pushing new entrants like
the Lumia 900 LTE
from Nokia Oyj. (
), a Windows Phone handset which launched Easter weekend, in what AT&T called its
most important market launch
The service provider also continues to quietly grow its cable TV and internet offerings. Its Uverse branded services are up to 6 million internet and 4 million TV subscribers, although availability remains limited to certain markets.
This article is over a month old, voting and posting comments is disabled
4/25/2012 10:21:01 AM
If the subsidy were broken out into a separate contract (i.e. loan), I think it would cause people to think about what they're doing a little bit more. It'd be a similar situation, but the customer would have more clarity regarding what's actually going on. It'd also put people who "bring their own" in a better place. Right now, you're basically throwing away a few hundred bucks by doing that with the major carriers.
Also, good point about everyone else subsidizing iPhone customers. Blame the carriers, for that, though - they're collectively accepting Apple's terms.
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